Indian Kanoon - Search engine for Indian Law

Laboratories Griffon Pvt. Ltd., AY- 2011-12

18. Coming to the CO of assessee. The assessee is aggrieved by the order of Ld. CIT(A) in confirming the addition of Rs.20,97,900/- claimed by the assessee on account of promotional expenses. The assessee during the relevant financial year has debited an amount of Rs.20,97,900/- under the head "publicity expenses" on account of sales promotion. According to Assessee Company the said expenditure was incurred by the assessee on account of distribution of gift articles among the dealers/distributors as part of its Sales Promotional Schemes. However, the AO disallowed the same alleging that neither the assessee could produce copy of any agreement showing the basis for such distribution nor any confirmations from the dealers/distributors were filed acknowledging such receipt. The AO further observed that since almost the entire sales was made on consignment basis through the consignee, M/s. Franco-Indian Pharmaceuticals Pvt. Ltd. and since there was decrease in turnover in the current financial year, the claim of expenditure incurred on account of sales promotion is not justified. Moreover, the AO was also influenced by the information received by way of an internal communication to him from the investigation wing of the department that in consequence of survey/search conducted at the business premises of M/s. Subbhiksha Enterprises of Mumbai (from which party purchase of gift items were made) and the statement recorded in connection thereof wherein it was confirmed that the assessee company has not made any real purchase of gift materials of Rs.20,97,900/- and that the assessee is only the beneficiary of bogus entries by them in their books. Therefore, AO disallowed the claim which was upheld by the Ld. CIT(A). Aggrieved the assessee is before us.