Home Income tax Corporate Income tax Promotion & Tour Bills by Companions for Discharging Agency’s Duties Not Disallowed

Promotion & Tour Bills by Companions for Discharging Agency’s Duties Not Disallowed

Promotion & Tour Bills by Companions for Discharging Agency’s Duties Not Disallowed
Delhi ITAT's Order for Bharat Anand

The Revenue Tax Appellate Tribunal (ITAT) Delhi Bench not too long ago issued a ruling stating that the bills incurred for enterprise promotion and tour journey undertaken by corporations to fulfil skilled duties as companions shouldn’t be disallowed.

Bharat Anand, a full-time practising lawyer, turned a Associate at Khaitan Co. Advocates Solicitors, situated in New Delhi. Subsequently, the agency was transformed into an LLP and renamed Khaitan Co. LLP. The assessee conducts all skilled work on behalf of this agency.

Though KCO is related to Khaitan Co. LLP, the assessee’s skilled assignments for KCO are a part of his position as a associate of the agency. There is no such thing as a employer-employee relationship between him and KCO.

In the course of the evaluation course of, the Assessing Officer (AO) disallowed the enterprise promotion and tour journey bills claimed by the assessee.

Unhappy with the choice, the assessee appealed to the Commissioner of Revenue Tax (Appeals), who dismissed the enchantment. Consequently, the assessee filed a second enchantment earlier than the tribunal.

The assessee’s counsel, B. Okay. Anand, argued that these bills have been incurred to advertise the agency and fulfil skilled duties as a associate.

Learn Additionally: ITAT: Re-adjudication to AO for Disallowance Made Foundation of Absence of Enterprise Vouchers

Then again, the income’s counsel, Kanv Bali, contended that the assessee, as a associate in Khaitan Co. LLP, had a contractual association with KCO, which negated the justification for claiming bills associated to enterprise promotion and tour journey.

Furthermore, in line with Bali, any “enterprise and promotion expenditure” needs to be incurred by KCO or Khaitan Co. LLP, as these entities are liable for working the enterprise.

The assessee claimed the expenditure in opposition to receipts from KCO, the place the connection is only contractual. Consequently, the assessee shouldn’t be obligated to incur bills for “enterprise promotion” or “tour journey” in such a scenario.

After contemplating the arguments offered, the tribunal noticed that the earnings earned by the assessee is a part of their whole skilled earnings. This earnings contains the associate’s wage, curiosity on the capital steadiness within the agency, share in revenue, {and professional} remuneration acquired.

Moreover, the tribunal famous that the remuneration acquired by the assessee from KCO is a part of their skilled duties as a associate in Khaitan Co. LLP and doesn’t stem from an unbiased settlement or employment with the stated entity.

Consequently, a two-member bench comprising Dr B. R. R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) allowed the appeals filed by the assessee.


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