Vinay Sanwarmal Nangalia Vs ITO (ITAT Mumbai)
Gold Gifts Glitter Halfway – ITAT Mumbai Strikes Balance- Disallows 50% of Business Promotion Claim for Lack of Evidence
Mumbai ITAT has delivered a significant ruling on the claim of business promotion expenses in the case of an Assessee, a Chartered Accountant & investment banker, who had claimed Rs 36.10 lakh as business promotion expenditure, primarily on distribution of gold coins & hospitality bills. Tribunal, while recognising the practice of gifting in professional circles, disallowed 50% of the gold coin expenditure citing lack of evidence regarding recipients & business nexus & partly allowed the appeal.
Assessee reported professional receipts of more than Rs 70 lakh during AY 2016-17. Against this, he claimed Rs 36.10 lakh as business promotion expenses, which included Rs 28.57 lakh spent on purchase of gold coins; & Rs 7.53 lakh on hospitality, lifestyle, club & travel bills. It was explained that gifting gold coins to business associates & contacts was a customary gesture in his line of financial consultancy & investment banking.
AO disallowed the entire claim on grounds that Assessee failed to provide names, addresses, & PAN details of recipients. Gold coin purchases were structured below Rs 50,000 each to avoid reporting obligations. Expenditure appeared personal & unverifiable.
