What did the Tribunal hold?

The Tribunal found that the expenses were incurred for organizing seminars and events to promote business, which is a common practice in the assessee's line of work. The Tribunal noted that similar expenses were incurred in subsequent years in the same ratio.

The assessee debited Rs. 38,20,529/- as sales promotion expenses for electronic items purchased from a third party. The assessee claimed these were incurred for organizing meetings and events to promote business and attract prospective customers.

What were the issues?

Whether sales promotion expenses incurred for organizing events and seminars to attract customers are allowable as a business expenditure.

Sab Creators Pvt. Ltd. vs I.T.O., Ward - 12(1) | ITAT Kolkata 2026

आयकर अपील�य अ�धकरण, कोलकाता पीठ “एसएमसी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH: KOLKATA �ी राजेश कुमार, लेखा सट�य के सम� [Before Shri Rajesh Kumar, Accountant Member] I.T.A. No.2055/Kol/2025 Assessment Year: 2018-19 SAB Creators Pvt. Ltd. Vs. ITO, Ward-12(1), Kolkata

(PAN: AARCS 6367 G) ( अपीलाथ� ) Respondent / ��यथ� Appellant / Date of Hearing / सुनवाई 08.07.2026 क� �त�थ Date of Pronouncement/ 13.07.2026 आदेश उ�घोषणा क� �त�थ For the Appellant/ Shri Siddharth Agarwal, Advocate �नधा�रती क� ओर से For the Respondent/ Smt. Pampa Ray, Sr. DR राज�व क� ओर से

ORDER / आदेश

This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 29.08.2025 for the AY 2018-19.

2 I.T.A. No.2055/Kol/2025 Assessment Year: 2018-19 SAB Creators pvt. Ltd. 2. The only issue raised by the assessee is against the confirmation of addition by the Ld. CIT(A) of Rs. 38,20,529/- on account of sales promotion expenses without properly appreciating the documentary evidences, explanations of the assessee and commercial expediency of such expenditure.

Facts in brief are that the assessee filed return of income on 14.07.2018 declaring total income of Rs. 1,67,520/- which was processed u/s 143(1) of the Act. Thereafter the case was selected for limited scrutiny for examination of sales promotion expenses and accordingly notices along with questionnaire were issued which were replied by the assessee. During the course of assessment proceedings, the AO noted that the assessee has debited a sum of Rs. 38,20,529/- as sales promotion expenses which were incurred by the assessee for purchase of electronic items like LED, tube lights, ceiling fans, clocks, alarm clocks etc. from M/s Murshidabad Marketing Pvt. Ltd. and accordingly asked to explain the same. The assessee replied vide letter dated 28.01.2021 that these expenses were incurred for participants in various organizing meetings, events and seminars for promotion of business alluring them to buy the products sold by the assessee. The assessee is noted to have submitted that these expenses were incurred to bring in new prospective customers. Since the assessee is wealth creator in different forms by way of agent of mutual funds, insurance companies , Mediclaim and fixed deposits etc. However, the plea of the assessee was not accepted and AO rejected the submission on the ground that there is no nexus between the income earned and the expenses incurred by the assessee. However the genuinity was not doubted. Finally the same were added to the income of the assessee in the assessment framed u/s 143(3) read with Sections 143(3A) and 143(3B) of the Act dated 23.03.2021.

In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee.

We have heard the rival contentions and perused the material on record. We note that the assessee is doing the business of wealth creator meaning thereby he is

3 I.T.A. No.2055/Kol/2025 Assessment Year: 2018-19 SAB Creators pvt. Ltd. involved in selling products of mutual fund, LIC, Reliance mutual fund etc. for which the assessee used to organize the seminars and other events and used to incur expenses to promote and allure the customers which is a common practice in such type of business. We note that the assessee has incurred these expenses for that purpose. We have also examined the balance sheets of the assessee for the subsequent years and find that in the same ratio approximately these expenses were incurred by the assessee. Considering these facts and circumstances, we are of the view that the disallowance made by the AO and as confirmed by the Ld. CIT(A) is wrong and cannot be sustained. Consequently we set aside the order of Ld. CIT(A) and direct the AO to delete the addition.

In the result, the appeal of the assessee is allowed.

Order is pronounced in the open court on 13th July, 2026 d/- - Sd/-

(Rajesh Kumar/राजेश कुमार) Accountant Member/लेखा सद�य Dated: 13th July, 2026 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- SAB Creators Pvt. Ltd., C/o, Subash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata- 700069. 2. Respondent – ITO, Ward-12(1), Kolkata 3. Ld. CIT(A)- NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata

SAB CREATORS PVT. LTD.,KOLKATA vs. I.T.O., WARD - 12(1),, KOLKATA

What did the Tribunal hold?

What were the facts?

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