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2006 (2) TMI 159 - HC - Income TaxAdvertisement and sales promotion expenses for the purpose of business since the expenditure incurred by the assessee for the assessment years 1989-90 and 1990-91 was allowed the assessee was entitled to the deduction in the AY. 1991-92 also
Issues:
1. Disallowance of advertisement and sales promotion expenses. 2. Applicability of past practice and commercial expediency in disallowance of expenses. Issue 1: Disallowance of advertisement and sales promotion expenses The judgment pertains to an appeal filed by the assessee against an order passed by the Income-tax Appellate Tribunal regarding the disallowance of advertisement and sales promotion expenses. The court framed substantial questions of law related to the Tribunal's decision, questioning the correctness of the disallowance in light of relevant legal precedents. The court noted that a similar issue had been decided in favor of the assessee in a previous case involving the same party. The court emphasized that the assessment years differed between the two cases but concluded that the reasoning from the earlier judgment would apply to the current appeal. Consequently, the court allowed the appeal, answering the questions in favor of the assessee and against the Revenue. The court's decision was based on the reasoning provided in the previous judgment, thereby overturning the Tribunal's order on the disallowance of expenses. Issue 2: Applicability of past practice and commercial expediency The court considered the relevance of past practice and commercial expediency in the disallowance of advertisement and sales promotion expenses. Referring to a previous judgment involving the same assessee, the court highlighted that the reasoning from the earlier case would equally apply to the current appeal. By aligning with the previous decision, the court emphasized that the facts and circumstances of the case had already been addressed in the earlier judgment, which favored the assessee. Therefore, the court concluded that the appeal succeeded, answering the questions in favor of the assessee and against the Revenue. The court's decision underscored the importance of consistency in legal interpretation and application, especially concerning matters of commercial expediency and past practices in business expenses.
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