Tribunal allows appeals, overturning disallowance of free sample expenditure for assessment years.

The tribunal allowed the appeals, deleting the disallowance of expenditure on free samples for the assessment years in question. The decision was based on the finding that the disallowance was made on an estimate basis, and the assessee had provided necessary details justifying the expenditure. The tribunal also noted that the cost of free samples as a percentage of total turnover was minimal and lower compared to other years. The tribunal dismissed other grounds raised in the appeals as premature or general.

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Issues:
Delay in filing appeals, Disallowance of expenditure on free samples

Delay in filing appeals:
The appeals by the assessee were filed with a delay of 64 days, which was pointed out by the registry. However, it was argued that there was no actual delay as the limitation period was extended due to the prevailing pandemic situation. The tribunal considered this argument and admitted the appeals for adjudication on merits.

Disallowance of expenditure on free samples:
The dispute in the appeals revolved around the disallowance of expenditure incurred towards free samples provided to doctors, medical practitioners, and others. The assessing officer disallowed the cost of free samples in all the assessment years under consideration, leading to appeals by the assessee. The tribunal noted that the disallowance was made purely on an estimate basis. The assessing officer accepted that the assessee provided details of the samples, doctors, and their addresses. The tribunal observed that the distribution of free samples was a regular business practice for the assessee, carried out by marketing representatives. The tribunal found that the disallowance was not justified, especially considering that the cost of free samples as a percentage of total turnover was minimal and lower than in previous and subsequent years. Consequently, the tribunal held that no disallowance was warranted for the cost incurred on free samples in the assessment years in question and deleted the additions.

Conclusion:
The tribunal allowed the appeals, deleting the disallowance of expenditure on free samples for the assessment years in question. The decision was based on the finding that the disallowance was made on an estimate basis, and the assessee had provided necessary details justifying the expenditure. The tribunal also noted that the cost of free samples as a percentage of total turnover was minimal and lower compared to other years. The tribunal dismissed other grounds raised in the appeals as premature or general.

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