Case Law Details
HPL Additives Ltd Vs DCIT (ITAT Delhi)
Introduction: The Income Tax Appellate Tribunal (ITAT) Delhi has issued an order upholding the enhanced addition for Advertising & Marketing Expenses in the case of HPL Additives Ltd Vs DCIT. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2014-15.
Analysis: The assessee contended that the disallowance of the expenses was arbitrary and not supported by business exigencies. The expenses were incurred through a credit card by the Joint Managing Director (JMD) of the company during his foreign visit for promoting the export business. However, the tribunal found that the assessee failed to substantiate the business purpose of the expenses adequately.
The CIT(A) conducted a detailed examination of the documentary evidence provided by the assessee and enhanced the disallowance of the Advertising & Marketing Expenses from Rs. 3,00,000 to Rs. 18,18,624. The tribunal agreed with the CIT(A)’s findings that the information provided by the assessee was vague and did not establish the specific nature of the expenses or the identity of the customers or guests for whom the expenses were incurred.
The tribunal also noted that the credit card statements showed that a significant portion of the expenses were on personal items like apparels, electronic items, shoes, and sunglasses, indicating personal consumption rather than business purposes. The lack of supporting bills, vouchers, and detailed records further weakened the assessee’s case.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
