Tribunal upholds deletion of sales promotion expenses, finds them genuine and necessary for business.

The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 1,62,67,130 made by the AO under 'Sales Promotion' expenses for the assessment year 2012-13. The Tribunal found the expenses genuine and necessary for business purposes, not covered by the circular relied upon by the AO. The Revenue's appeal was dismissed, affirming the CIT(A)'s order, as the Tribunal noted similar claims were allowed in subsequent years.

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Issues:
Appeal against deletion of addition made by AO under 'Sales Promotion' expenses for A.Y 2012-13.

Analysis:
The Revenue appealed against the deletion of an addition of Rs. 1,62,67,130 made by the AO under 'Sales Promotion' expenses for the assessment year 2012-13. The CIT(A) had deleted the addition, stating that the expenses were for the purpose of business. The Revenue contended that the assessee failed to substantiate the expenses claimed. The AO disallowed the expenses related to doctor investment. The CIT(A) observed that the expenses were for operational services, medical camps, and distribution of free medical samples, essential for business purposes. The Revenue challenged the CIT(A)'s decision, reiterating the AO's stance. The Tribunal noted that the AO's disallowance was based on a circular issued by the CBDT, which the assessee argued was not applicable for the relevant assessment year. The Tribunal referred to a judgment stating that the circular was prospective and not applicable for the year under consideration. The Tribunal found that the AO failed to provide substantial evidence to support the disallowance, relying on a retracted statement without corroborating evidence. The assessee submitted documentation during remand proceedings, which the AO did not find irregularities in. The Tribunal concluded that the expenses were genuine and necessary for business, not covered by the circular. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that similar claims were allowed in subsequent years. Consequently, the Revenue's appeal was dismissed, affirming the CIT(A)'s order.

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