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TMI Blog2016 (11) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... ew taken by various High Courts of the country. It has been held so by the Delhi High Court in the case of Cheminvest vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT]. Accordingly, we are of the opinion that disallowance u/s 14A would not have been made and such disallowance is deleted. - Decided in favour of assessee Addition being the expenditure incurred for business promotion/advertisement - expenditure incurred for sponsoring of special box - Held that:- No commercial concern would employ a software concern for development of software through its exposure from hoardings at a cricket tournament. They would be looking into the skills of the concern to decide whether it would be an appropriate choice for developing software. It is also an adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 3. In Ground Nos.2 to 5, the grievance raised by the assessee is against sustaining disallowance of ₹ 2,20,841/- u/s 14A of the Act r.w. rule 8D. 4. Ld. AR submitted that the assessee had not earned any exempt income during the previous relevant to the impugned assessment year. Hence, according to him, invocation of sec. 14A was not called for. 5. Per contra, the ld. DR while admitting that assessee had not earned any exempt income, asserted that disallowance u/s 14A could not be linked to earning of exempt income as such. 6. We heard the rival contentions and perused the orders of the authorities below. The Assessing Officer had made a disallowance of ₹ 2,20,841/- by invoking sec. 14A r.w.r 8D(2)(iii). Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of software development, had filed its return declaring income of ₹ 4,81,080/-. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had claimed business promotion expenditure of ₹ 14,95,000/-. The details of the expenditure provided by the assessee read as under: 1. Chennai St. Bede's Sports foundation ₹ 45,000 2. Youth Association for classical music ₹ 50,000 3. The Tamilnadu Cricket Association ₹ 4,00,000 4. Sponsorship for special box at MA Chidambaram Stadium, Chennai ₹ 1000000 (1/6th of ₹ 60 lakhs) 9. Explanation of the assessee was sought as to why the above expenditure should not be disallowed since it was not wholly and exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In addition, assessee had paid ₹ 4,00,000/- for sponsoring 14 cricket tournaments conducted by Tamilnadu Cricket Association. Conclusion of the Assessing Officer was that the assessee was having a very limited clientele viz. M/s Infosys, M/s Standard Chartered Bank, The Cancer Institute and M/s Sundaram BNP Paribas. The only other client the assessee was having, as per the Assessing Officer, was based on US. The sponsorship of the special box did not result in any benefit to the assessee and as per the Assessing Officer, was not an expenditure relatable to the business of software development. The Assessing Officer also noted that the Managing Director of the assessee Shri K.V. Aiyappan was also the Vice President of the Tamilnadu Cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture was incurred in relation to the business of the assessee and the Assessing Officer ought not have sat in the chair of the businessman to decide whether the expenditure was required or not. 12. Per contra, the ld. DR strongly supported the orders of the authorities below. 13. We have considered the rival contentions and perused the orders of the authorities below. Out of the total expenditure of ₹ 14,95,000/- claimed by the assessee under the head business promotion, ₹ 14 lakhs was paid to Tamilnadu Cricket Association. Out of the balance sum of ₹ 95,000/-, a sum of ₹ 45,000/- was paid to Chennai St. Bede's sports foundation and ₹ 50,000/- was paid to Youth Association for classical music. Nothing whats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been made in the case of other concerns who had sponsored similar boxes. In our opinion, this would not help the assessee's case in any manner. Sec. 37 mandates that an expenditure could be allowed only if it was incurred wholly and exclusively for the purpose of business. The assessee has not been able to show the nexus of the business of the assessee with the expenditure incurred for sponsoring of special box. Hence, we are of the view that the CIT(A) had rightly confirmed the disallowance made by the Assessing Officer. We do not find any reason to interfere with the orders of the lower authorities. 14. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 9th September, 2016, at Chenn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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