Appeal restored after approval delay; chikungunya outbreak cited; disallowed expenditure deleted.

The appeal was dismissed initially due to lack of approval from the Committee on Disputes (COD). However, after obtaining the necessary approval, the order was recalled, and the appeal was restored by the Tribunal. The delay in filing the appeal was condoned due to the Public Sector Undertaking's focus on addressing a chikungunya outbreak. The Tribunal allowed the appeal regarding the disallowed customer care expenditure, citing legal precedents, and ordered the deletion of the disallowed amount. Consequently, the appeal was allowed, and the impugned addition was deleted.

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Issues Involved: Appeal dismissed for want of approval from Committee on Disputes (COD); Condonation of delay in filing appeal; Allowability of customer care expenditure.

Issue 1: Appeal dismissed for want of approval from COD

The appeal was initially dismissed due to lack of approval from the Committee on Disputes (COD). However, after obtaining the necessary approval, the order was recalled and the appeal was restored to its original number by the Tribunal.

Issue 2: Condonation of delay in filing appeal

The appeal, filed by a Public Sector Undertaking engaged in procurement and distribution of medical items, was found to be time-barred by 120 days. The delay was attributed to the company's focus on addressing a chikungunya outbreak in the State of Tamilnadu. Despite opposition from the ld.DR, the Tribunal, citing relevant legal precedents, condoned the delay and admitted the appeal.

Issue 3: Allowability of customer care expenditure

The main issue in the appeal pertained to the assessee's claim of customer care expenditure amounting to Rs. 32,54,145, which was disallowed by the Assessing Officer. The expenditure in question involved providing equipments and furniture to Government hospitals as part of customer care. The ld. CIT(A) allowed only Rs. 3 lakhs of the claimed amount, considering it as business-related expenditure. However, the assessee contested this decision and filed the appeal.

In analyzing the merits of the case, the Tribunal noted that a similar issue had been addressed in a previous assessment year, where it was held that expenditure on providing free equipments to Government Hospitals was allowable. Citing decisions from the Hon'ble Madras High Court and the Hon'ble Supreme Court, the Tribunal found that the expenditure in question was for the promotion of the assessee's business and, therefore, allowable. Consequently, the Tribunal allowed the appeal and ordered the deletion of the disallowed amount.

In conclusion, the appeal filed by the assessee was allowed, and the impugned addition was deleted based on the Tribunal's findings and legal precedents cited in the case.

Order pronounced in the open court on 29.10.2010.

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