Gifts given for business promotion - Allowability

Facts :

Assessee an airline company had agreed before lower authorities that certain gifts like gold jewellery were paid to its customers GoAir to secure business. This was considered illegitimate and was disallowed. On appeal, assessee took the stand that it was erroneously mentioned as gifts to customers to procure business but these were sales promotion and produced documents and photos to prove the salesman to whom these gifts were given manifesting that the spend was legitimate and for the purpose of business. CIT(A) retained the disallowance. On higher appeal -

Held in favour of the assessee that the genuine business expense needs to be allowed.

Ed. Note : Reference be made to amendments in Section 37 in Finance Act, 2022 to this effect. To manifest such promotional gifts etc. one has to go thru TDS provisions if the thresholds are met. Besides, details of the people to whom it is paid for what reasons etc. need to be maintained going forward.

Case: Green Airways (P) Ltd. v. ACIT 2023 TaxPub(DT) 2283 (Del-Trib)