Appellant's Global Trade Development expenses upheld as crucial for IT industry promotion.

The Tribunal allowed the appellant's appeal, overturning the partial disallowance of Global Trade Development (GTD) expenses. The Tribunal found the expenses crucial for fulfilling the society's objectives of promoting the Indian IT industry globally. Citing previous allowances by ITAT and the acceptance of such expenses in various assessment years, the Tribunal concluded that the disallowance by the CIT(A) was unwarranted. Consequently, the Tribunal quashed the disallowance of GTD expenses, leading to the dismissal of the Stay Applications by the appellant.

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Issues Involved:
Disallowance of Global Trade Development (GTD) expenses by Assessing Officer (AO) and partial disallowance by Commissioner of Income Tax (Appeals) (CIT(A)).

Analysis:
1. The appellant, a society registered under the Societies Registration Act, 1860, engaged in promoting the information technology and software industry, incurred GTD expenses during the relevant assessment year. The AO disallowed the expenses, stating they were not in line with the society's objectives. The CIT(A) partially upheld the disallowance, reducing it to Rs. 2,08,08,291, considering the grant received from the Government of India for GTD activities. The appellant appealed against this partial disallowance.

2. The appellant argued that similar GTD expenses were allowed in previous assessment years and were crucial to fulfilling the society's objectives. The appellant questioned the CIT(A)'s reasoning for the partial disallowance. On the other hand, the Revenue contended that each assessment must be independent, and the expenses were not for business purposes.

3. The Tribunal examined the objectives of the appellant's GTD activities, aimed at promoting the Indian IT industry globally and addressing various issues like software quality standards, trade cooperation, and market positioning. The expenses included consulting fees, global protectionism campaigns, public relations, and travel costs.

4. The Tribunal noted that a Co-ordinate Bench of ITAT had previously allowed similar GTD expenses for the benefit of the IT industry as a whole. Additionally, the revenue and Tribunal had accepted such expenses in various assessment years, indicating their allowability.

5. Considering the nature of the appellant's activities, the support received from the Government of India, and the consistent allowance of similar expenses in previous and subsequent years, the Tribunal concluded that the disallowance by the CIT(A) was unwarranted. Therefore, the Tribunal allowed the appellant's appeal, quashing the disallowance of GTD expenses.

6. As a result, the Tribunal dismissed the Stay Applications of the appellant, as the main appeal had been disposed of. The order was pronounced in the open court on 26/11/2020.

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