2016 (9) TMI 1265 - AT - Income Tax

Deduction u/s.80P(2)(a)(vi) - Held that - As decided in assessee s own case for A.Y. 2007-08 CIT(A) was justified in directing the Assessing Officer to allow the claim of the assessee. This view is fortified by the judgment of Hon ble Supreme Court in the case of Kerala State Co-operative Marketing Federation Ltd & Others Vs. CIT 1998 (5) TMI 6 - SUPREME Court - Decided in favour of assessee Allowability of advertisement expenses - AO disallowed the same on the ground that the assessee has not provided proof that it was for the purpose of business purpose - Held that - It is not a case of the Assessing Officer that the expenditure has not been incurred. Since the assessee has established the expenditure incurred on account of commercial expediency, so the commercial expediency is to be viewed from the view point of businessman / assessee. The facts on record indicate the impugned expenditure is on account of public visits of State ministers, local elected representatives and other dignitaries to the city of Nashik and the premises of society, who have helped the assessee in getting more contracts for labour, therefore, commercial expediency established. In the facts and circumstances, the expenditure was rightly made by the assessee for business purpose and the same was rightly directed by the CIT(A) to deleted the expenditure incurred wholly and exclusively for the growth of assessee s business. Accordingly, the same is upheld.- Decided in favour of assessee

Summary

Issues involved:
1. Allowability of deduction u/s.80P(2)(a)(vi) of the I.T. Act for a Cooperative Society.
2. Disallowance of advertisement expenses.

Detailed Analysis:
Issue 1: Allowability of deduction u/s.80P(2)(a)(vi) of the I.T. Act for a Cooperative Society
The case involved an appeal by the Revenue against the order of the CIT(A)-I, Nashik concerning the Assessment Year 2012-13. The assessee, a Cooperative Society, declared a net profit which was adjusted and deemed taxable. The main contention was the entitlement to deduction u/s.80P(2)(a)(vi) of the I.T. Act. The AO disallowed the deduction, citing a previous decision not accepting the claim. However, the CIT(A) and Tribunal had consistently allowed the deduction in the past years. The Tribunal upheld the CIT(A)'s decision, emphasizing that the decision was in line with previous rulings and the commercial expediency of the expenses incurred, leading to the dismissal of the Revenue's appeal.

Issue 2: Disallowance of advertisement expenses
The AO disallowed a portion of the advertisement expenses claimed by the assessee. The CIT(A) reversed this disallowance, considering the commercial expediency and benefits derived by the business from the expenses. The Tribunal supported the CIT(A)'s decision, highlighting that the expenditure was incurred for business purposes and was beneficial for the growth of the business. The Tribunal emphasized the reasonableness and necessity of the expenditure, ultimately upholding the CIT(A)'s order to allow the claimed expenses. The Tribunal noted that similar issues had arisen in other years, and the consistent reasoning led to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal upheld the decisions of the CIT(A) regarding both the deduction u/s.80P(2)(a)(vi) and the advertisement expenses, based on consistent past rulings and the commercial expediency of the expenses incurred. The Revenue's appeal was dismissed, affirming the orders of the lower authorities.