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2023 (6) TMI 667 - AT - Income TaxAddition towards Sales Promotion Expenses - purchase of Gold articles - assessee had paid the amount periodically to National India Billion Refinary HCA and Arihant Jewellers and the assessee stated that it purchased Gold articles from the above parties for gifting - HELD THAT - As no detail of the recipients of such gold items was furnished by the assessee by stating for the sake of confidentiality and oral non-disclosure agreement with the customers, we are unable to provide the details of Name and address of the parties to whom the gifts have been paid/given . The same position prevailed before the ld. CIT(A) as well. Assessee did not furnish even the primary details of the recipients of the gold items and, as such, the commercial expediency remained to be proved. Deduction can be allowed only on showing that the expenditure was incurred for the purpose of business. Assessee has not furnished any detail of recipients. DR is correct in apprehending that such gold items may have been utilised by the Directors for their personal use. In the absence of any detail of the recipients establishing link of the jewellery gifting with the business purpose, the authorities were justified in not granting the deduction. Decided against assessee.
Issues involved: Confirmation of addition towards Sales Promotion Expenses.
Summary: The appeal by the assessee was against the order passed by the CIT(A) in relation to the assessment year 2018-19, confirming the addition of Rs. 25,87,143/- towards Sales Promotion Expenses. The assessee claimed deduction for the purchase of Gold articles but did not provide details of the recipients of such items, citing confidentiality reasons. The authorities found that the commercial expediency was not proved as the assessee failed to establish a link between the expenditure and the business purpose. The lack of recipient details raised concerns that the gold items may have been used for personal purposes by the Directors. As a result, the deduction was not granted, and the view taken by the CIT(A) was affirmed. The appeal was dismissed, and the order was pronounced in the Open Court on 13th June, 2023.
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