TaxTMI 
TaxTMI 
2019 (3) TMI 551
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....essee. The assessee derived income from representation and consultancy in the field of aviation. In the assessment proceedings, the Assessing Officer observed that the assessee has debited a sum of Rs. 24,42,554/- under the head entertainment expenses. On being asked for the details of this claim, the assessee submitted the details of these expenses. The Assessing Officer observed that some of the expenses have been incurred for purchase of gift items and as such these gifts were purely personal in nature and not for legitimate business needs of the assessee company. The Assessing Officer further observed that for the assessment year 2008-09, the ITAT in appeal No. 2366/Del/2012 vide order dated 14.06.2013 has confirmed the major part of th....
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....her, the business exigencies of the appellant company viz a viz the aforesaid gifts has not been established by the appellant company. In the absence of any nexus between the gifts and the business of the appellant company, in my opinion, the Assessing Officer has rightly disallowed the aforesaid expenditure of Rs. 4,58,170/-, and therefore , the impugned addition made by the Assessing Officer is hereby confirmed." 3. The ld. AR submitted a paper book containing 38 pages, which is placed on record. He also submitted a written synopsis, which reads as under : This appeal has been filed by the assessee against the Order of the CIT(A) upholding the action of the Assessing Officer in disallowing a sum of Rs. 4,58,170/- on account of gifts e....
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....ant submitted during the course of assessment proceedings, the complete details of gifts together with the names of persons to whom the gifts were made were furnished before the Assessing Officer. Being a consultant, in the field of Aviation and Aeronautics, the assessee requires maintaining personal contacts and goodwill with foreign principals and their representative in India. Whenever the foreign principals and their representatives visit in India for business discussions, they have to be properly looked after and entertained for maintaining good business relations. The foreign principals have to be presented with expensive gifts so that the assessee can get business. Therefore, these business development expenses are essential in the f....
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.... 27,36,198 4.44% Allowed 2. 2006-07 2007-08 5,41,58,380 18,12,901 3.35% Allowed 3. 2007-08 2008-09 4,62,85,299 18,47,838 3.99% Partially Allowed 4. 2008-09 2009-10 7,04,26,871 12,16,165 1.73% Allowed 5. 2009-10 2010-11 7,29,35,094 17,14,534 2.35% Allowed 6. 2010-11 2011-12 3,22,64,141 4,58,170 1.42% Under Appeal 1. Assessment Year 2006-07 A disallowance of Rs. 4,43,5137- out of above was made which was allowed by the CIT(A) as per the copy of the Order enclosed at Pages 23to 28. 2. Assessment Year 2007-08 No disallowance/no scrutiny assessment Pages 21to 22. 3. Assessment Year 2008-09 Disallowance of Rs. 18,80,3267- was made out of which the disallowance of Rs. 11,51,260/- was upheld be....
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....as against as high as 4.4% in Assessment Year 2006- 07 which had been subject to scrutiny and ultimately allowed. As already clarified, these type of expenses have always been accepted to have been incurred wholly and exclusively for the purpose of business and keeping in view the complete history of these expenses, the expenses during the year under consideration being the lowest of all the years which has so far been examined, may kindly be held to be allowable to the assessee. 4. The ld. DR relied on the orders of the authorities below. 5. After hearing both the sides and perusing the entire materials on record, we observe that it is, no doubt, customary in our country to give gifts to clients which serve as expenses on business promo....
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....essment order. Bills and vouchers of the gifts purchased were mostly found in the name of the assessee and some of the bills, some names were written by hand, which nowhere suggest to place credence on the contention of the assessee that these gifts were given to its customers even. 6. The next contention of the assessee is that such disallowances have a history in assessee's favour. He has referred to assessment years 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11, when it is stated that such disallowances have been deleted or not made by the Assessing Officer itself. It is also submitted that therefore rule of consistency should be followed by the authorities below. We have gone through respective orders of the aforesaid years and we fin....