Case Number: ITA 1299/DEL/2021
Appellant: Finesse International Design Pvt Ltd, New Delhi
Respondent: DCIT, Central Circle-14, New Delhi
Assessment Year: 2018-19
Case Filed On: 2021-10-04
Order Type: Final Tribunal Order
Date of Order: 2023-05-10
Pronounced On: 2023-05-10
This case involves the appeal of Finesse International Design Pvt Ltd against the order passed by the Learned Commissioner of Income Tax (Appeals)-23, New Delhi. The primary contention involves disallowance of expenses related to salaries, incentives, and business promotion expenditures claimed by the company for the assessment year 2018-19.
The appellant challenged the disallowance of Rs.1,17,710 related to the payment of salaries and incentives to helpers and guards and a further disallowance on business promotion expenses initially made by the AO and partially upheld by the CIT(A). The Income Tax Appellate Tribunal (ITAT) reviewed the details provided in the seized Tally Data, which included expenditure towards business promotion like hotel and restaurant expenses, payments to PVR, and purchase of invite cards. The ITAT found that these expenses were directly related to the business operations aimed at promoting the brand and facilitating sales. It held that the expenses were indeed for business purposes and not personal, thus overturning the earlier disallowances.
The Tribunal’s decision underlines the importance of clearly demonstrating the business purpose behind expenditures to avoid disallowances. The ruling favored the appellant, stating that the expenses were justifiable and necessary for business operations, leading to the deletion of the disallowance initially made. This case sets a precedent for similar disputes regarding the classification of business versus personal expenses.
Order pronounced in the open court on 10/05/2023.
Judicial Member: Shaktijit Dey
Accountant Member: M. Balaganesh
Order Dated: 10/05/2023
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