TaxTMI 
TaxTMI 
2025 (6) TMI 143
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....ppeal Centre (in short "NFAC"), Delhi vide order dated 17.12.2024 passed for A.Y. 2018-19. 2. The Assessee has taken the following grounds of appeal:- "1. The Hon'ble CIT(A) erred in law and facts of the case by upholding an addition of Rs. 27,46,312/-, being 75% of the exhibition expenditure, without appreciating the fact that the entire exhibition expenditure has been laid out wholly and exclusively for the purpose of the business. It is submitted that the entire exhibition expenditure should have been allowed to the appellant and hence disallowance confirmed by learned CIT(A) at Rs. 27,46,312/- be deleted. 2. The Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal." ....
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....ubstantiate the business motive behind incurring such substantial expenditure or demonstrate any projected revenue outcomes from the same. During assessment proceedings, the assessee submitted that the assessee was a partner in Shree Parshwanath Corporation, and the expenditure was incurred to enhance the visibility of the group's projects, particularly through an event called 'Gihed Credai Converse' held on 5th November 2017. However, the AO rejected the explanation given by the assessee by observing that Shree Parshwanath Corporation, the partnership firm, is a separate legal entity for tax purposes. Any expenditure incurred on it's behalf cannot be treated as a business expense of the assessee company. Furthermore, even assuming ....
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....company is also a 10% partner in the said firm. That has given it the confidence and authority to organize the entire event for the said firm. The AO, however, did not agree and disallowed it. AO is technically right to an extent, as the expenditure to be allowed u/s 37 should be the business carried on by the assessee itself and not some other business. However, to be fair, the company has a 10% stake in that other firm. To that extent, a portion of this expenditure may be allowable. However, to be extremely fair to the assessee company, 25% of the entire expenditure can at best be ascribed to it for furthering its own business and investment, we can see that, as apart from being a 10% stakeholder, it also shares the same nature of busines....
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....s or profession" 7. Now in case of business expenses covered under section 37 of the Act, the natural presumption would be that the expenses have been incurred by the assessee for it's own business and not business of a third party entity in which the assessee may be having a shareholding or partnership interest or any other commercial interest or commercial or business relationship, from which any indirect benefit may accrue to the assessee. Now, admittedly in this case the expenses were incurred for a third party firm, in which the assessee had a 10 percent share in profits. The claim of the assessee is that since "brand promotion" was involved, therefore substantial benefit accrued to the assessee as well and the entire expenditure wa....