Appeal partially allowed: Exhibition expenses approved, sale promotion expenses disallowed.

The tribunal partially allowed the appeal, permitting the exhibition expenses as a business expenditure for the current year but confirming the adhoc disallowance of sale promotion expenses.

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Issues:
1. Adhoc disallowance of Rs. 2,06,254 being 10% of sale promotion expenses.
2. Disallowance of Rs. 7,75,861 being exhibition expenses incurred for the next year.

Analysis:

Issue 1: Adhoc disallowance of Rs. 2,06,254 for sale promotion expenses
The assessee, engaged in manufacturing automobile parts, claimed expenses on diamond and gold jewellery under 'Sales Promotion'. The Assessing Officer disallowed 10% of the expenditure due to lack of documentary evidence. The CIT (A) upheld the disallowance. The appellant argued that the jewellery was for sales promotion, supported by details in the paper book. However, the tribunal found no evidence linking the jewellery to business promotion activities, leading to the dismissal of the appeal.

Issue 2: Disallowance of Rs. 7,75,861 for exhibition expenses
The assessee paid Rs. 5,75,861 to book a space for an exhibition in the next year. The Assessing Officer disallowed the expense as it did not relate to the current year. The CIT (A) upheld the disallowance citing the exhibition's schedule. The tribunal noted the payment was for participation in an international trade fair, supported by relevant documents. As the payment was for a business purpose, it was allowed as a business expenditure for the current year, leading to the partial allowance of the appeal.

In conclusion, the tribunal partly allowed the appeal, allowing the exhibition expenses as a business expenditure for the current year but upholding the adhoc disallowance of sale promotion expenses.

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