ITAT Ahmedabad Allows Full Sales Promotion Expense – Rejects AO’s Restriction as Arbitrary

Dahyabhai Laljibhai Patel Vs ITO (ITAT Ahmedabad)

Facts

• Assessee, engaged in pharmaceutical distribution, filed return for AY 2018-19.
• During scrutiny, AO noticed sales promotion/distribution expenses paid to Welable Pharma at 13.5% of sales, which he held excessive.
• AO restricted it to 5% of sales, disallowing ₹25,88,504/-, terming the excess “beyond market limits.”
• CIT(A)/NFAC confirmed the restriction, leading to the present appeal before ITAT.

Assessee’s Submission

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