SAMBA PUBLISHING COMPANY (P) LTD.,CHENNAI vs. DCIT, CHENNAI

The appeal filed by the assessee is delayed by two days, for which, the ld. Counsel for the assessee has filed a petition in support of an affidavit for condonation of the delay, to which; the ld. DR has not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of two days in filing of the appeal stands condoned and the appeal is admitted for adjudication.

Brief facts of the case are that the assessee filed his return of income for the assessment year 2013-14 on 29.09.2013 disclosing a total income of ₹.81,48,386/-. The assessment order under section 143(3) of the Act was passed determining the total income of the assessee at ₹.4,44,18,293/- after making various additions.

With regard to the disallowance of sales promotion expenses from the break-up of miscellaneous expenses furnished by the assessee, the Assessing Officer noticed that there was an item by name sales promotion expenses - ₹. 43,37,690/-. The assessee was requested to furnish the ledger account copy along with the narration on the nature of payments made. The assessee furnished the details called for. On-going through the same, the Assessing Officer observed that that most of the payments were through cash only though they were within the monetary limits prescribed for the purpose of section 40A(3) of the Act and the payments have been made to various schools. After considering various details and submissions, the Assessing Officer observed that even though there is business exigency involved in incurring these expenditure to sponsor various events in the school, as the schools are the main clients of the assessee contributing to bulk of its turnover, however, in the absence of concrete evidence and confirmation on the quantum of expenditure incurred, the Assessing Officer held that the entire expenditure is not liable to be allowable especially when they are cash payments based on self-made vouchers. Therefore, taking a broader view and also considering that few payments have been made by cheques and also in view of the genuine business exigency involved in incurring these expenses, the Assessing Officer justifiably allowed 50% of such expenditure and the balance expenditure was brought to tax.

The assessee carried the matter in appeal before the ld. CIT(A). After considering the written submissions and facts of the case, the ld. CIT(A) restricted the disallowance to 20% of the total claim of expenditure.

On being aggrieved, the assessee is in appeal before the Tribunal. By filing various details in the form of paper book, the ld. Counsel for the assessee has submitted that the genuineness of the claim of the assessee was not disputed by the Revenue, restricting the disallowance to 20% is unwarranted and prayed for deleting the disallowance restricted by the ld. CIT(A).

On the other hand, the ld. DR strongly supported the order passed by the ld. CIT(A).

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. The assessee claimed sales promotion expenses. On perusal of the paper book, we find that most of the payments were made in cash even though the payments are within the monetary limits of section 40A(3) of the Act and while the details in respect of some schools were produced, the assessee could not produce official receipts for all the schools. In fact, the genuineness of the claim of the assessee was not disputed by the Revenue, the Assessing Officer allowed 50% of the claim as genuine and the balance expenditure was brought to tax. After considering the written submissions and since the assessee could not produce official receipts for all the schools, the ld. CIT(A) restricted the disallowance to 20% of the total claim of expenditure and partly allowed the ground raised by the assessee. In view of the above, we find no infirmity in the order passed by the ld. CIT(A), who has given reasonable relief to the assessee. Thus, the ground raised by the assessee stands dismissed.

In the result, the appeal filed by the assessee is dismissed. Order pronounced on the 24th September, 2019 in Chennai.