9911796707
|
Home
Issues involved: Whether the expenditure incurred by the assessee on account of travelling expenses and for purchase of utensils for presentation to its members on the occasion of the silver jubilee are admissible as business expenditure?
Summary: The High Court of Gujarat considered the case of a cooperative society engaged in the business of dealing in various products celebrating its silver jubilee. The society incurred expenses on travelling and purchasing utensils for presentation to its members. The Income Tax Officer (ITO) initially disallowed these expenses, but the Appellate Authority Commission (AAC) and the Income-tax Appellate Tribunal allowed the deduction. The Tribunal held that the expenses were incurred to encourage business activities and maintain good relations with members, not for advertising purposes. The High Court referred to previous judgments emphasizing the importance of generating goodwill and maintaining business relationships. It concluded that the expenses were indeed business expenditures and should be allowed. The court ruled in favor of the assessee, directing the Commissioner to pay the costs of the reference. The judgment highlighted the importance of maintaining good relations with members and generating goodwill in business operations. It referenced previous cases to support the decision that expenses incurred for such purposes are considered business expenditures. The court emphasized that the expenses were not for advertising but to enhance goodwill and business relationships. Consequently, the court ruled in favor of the assessee, allowing the expenses as business expenditures.
|
