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Documents citing Sassoon J. David & Co. (P) Ltd., Bombay vs C.I.T., Bombay on 3 May, 1979

The Dcit, Circle-1(1)(2),, Ahmedabad vs Cytespace Research Pvt. Ltd.,, ... on 30 July, 2019

Asst.Year -2013-14 2.6.3. On a careful examination of the entire facts of the case, it is noted that the AO has nowhere disputed that the employees/directors have not rendered any services to the Appellant company. Hence, there is no dispute on factum of services rendered by Directors/employees. Further, the AO has not disallowed any expenses u/s 40A(2)(b) of the Act. It is a settled law that the reasonableness of employee expenses is not relevant to claiming deduction of expenses under section 37(1) of the IT Act. Additionally, the commercial expediency / business rationale of a particular expenditure incurred by an assessee for the smooth functioning and furtherance of its business is its prerogative and hence, the same cannot be questioned by the AO. Further, I find that in following judicial precedents, Hon'ble Supreme Court has specifically held that it is for the assessee to decide which expenditure has to be incurred in its business and the same cannot be decided by the AO. Sassoon J David and Co (P) Ltd v CIT (118 ITR 261), observed as follows:
Income Tax Appellate Tribunal - Ahmedabad Cites 17 - Cited by 0 - Full Document

Star India (P) Ltd. vs Additional Commissioner Of Income Tax on 28 July, 2006

40. After considering the rival submissions, we are of the view that no disallowance of expenditure on advertisement was warranted in law. There is no dispute that expenditure was incurred on advertisement. The disallowance was made by AO on the ground (i) that advertisements by assessee only increased the viewership of Star TV and, therefore, it was neither obligatory nor necessary for the assessee to incur such expenditure, (ii) that advertisement had no nexus with assessee's activity since advertisements were in the name of Star TV. In view of these grounds, the AO held that expenditure was not incurred wholly and exclusively for the purpose of business. Such grounds taken by AO are in conflict with the settled legal position as explained by the apex Court in the case of Sassoon J. David and Co. (P) Ltd. v. CIT . In that case, it was held that no disallowance could be made on the ground that it was not necessary for the assessee to incur such expenditure or it benefited the third party. Accordingly, the AO was not justified in considering these factors for the purpose of disallowance. The only relevant factor is whether incurring of expenditure was for the purpose of assessee's business. The assessee was carrying on its business activity exclusively for Star TV and, therefore, survival of its business depends on the success of programmes transmitted by Star TV. assessee was required to solicit the advertisements for Star TV channel. No person would give advertisement unless he is sure of large viewership of programmes on Star TV. Therefore, if assessee incurs expenditure on advertisement with a view to increase the viewership of Star TV, in our opinion, such expenditure would be in the interest of assessee's business though it may also benefit its principal. Accordingly, no disallowance was warranted in law. The order of the learned CIT(A) is, therefore, modified and disallowance sustained by him is hereby deleted.
Income Tax Appellate Tribunal - Mumbai Cites 78 - Cited by 1 - Full Document

Bmg Enterprises Ltd., New Delhi vs Department Of Income Tax on 4 December, 2015

and Sasson J. David & Co. Pvt. Ltd. Vs CIT 118 ITR 261 (S.C.) , we are of the considered view inter alia that the A.O. has made addition of Rs. 17,14,534/- by disallowing the expenditure made by the assessee company in respect of gifts on the basis of his conjectures an surmises and has lost sight of the objectivity required in this case; that the A.O. has also lost sight of the fact that when claim of assessee for deduction of expenses in respect of the gifts to the tune of 5 ITA No.6440/Del/2013 Rs.12,16,165/- in the previous year has been accepted by the Revenue from whom assessee has earned business of Rs.7,00,00,000/- the rule of consistency is required to be followed; that when the assessee has brought on record the entire evidence as to the purchase of gifts, names of persons to whom such gifts have been given along with vouchers bearing name of the donee, the disallowance was not required to be made by the A.O.; that even otherwise, assessee company being a juristic person under the Income Tax Act, 1961, cannot incur any expenses of personal nature and all the expenses are to be incurred for the business purpose only; that CIT(A) has rightly observed that the amount of Rs.17,14,534/- has been incurred by the assessee company to maintain its personal contacts and goodwill with the clients necessarily to advance the business interest in the subsequent assessment year; that A.O. has merely disallowed the expenses on the ground of suspicion; that even otherwise the A.O. has not disputed the vouchers bearing name of done and list of persons to whom the gifts have been given and other records furnished by the assessee during assessment proceedings and in these circumstances, Ld. CIT(A) has rightly deleted the addition vide impugned order.
Income Tax Appellate Tribunal - Delhi Cites 5 - Cited by 0 - Full Document

Commissioner Of Income-Tax vs Chandrie And Company (P.) Ltd. on 19 April, 1994

8. The decision in Gordon Woodroffe Leather Manufacturing Co. v. CIT , relied on by the Revenue has been considered at length and explained in the later decision of the Supreme Court in Sassoon J. David and Co. P. Ltd. v. CIT [1979] 118 ITR 261. The court has clarified that the three tests formulated in its earlier ruling have to be read dis-junctively.
Madras High Court Cites 6 - Cited by 0 - R J Babu - Full Document

Tupperware India Pvt. Ltd. vs Commissioner Of Income Tax on 25 March, 2015

"„For the purpose of business‟ is a word of wide import and includes expenditure which a businessman incurs for business and commercial expediency. The question of reasonableness is not for the revenue to decide. Further, expression „wholly and ITA 686/2014 Page 8 exclusively‟ as observed by the Supreme Court in Sasson J. David and Co. (P) Ltd. v. CIT [(1979) 118 ITR 261(SC)], does not mean „necessarily‟. Even expenditure incurred voluntary and without any necessity, but for promoting business and earning profit is allowable."
Delhi High Court Cites 13 - Cited by 2 - Full Document

Acit Central Circle, Salem vs Thriveni Earthmovers Pvt. Ltd., Salem on 25 September, 2019

Consequently when section 37 was finally enacted into law, the :- 69 -: ITA Nos.2280-83 /2018 word "necessarily" came to be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under section 10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law.
Income Tax Appellate Tribunal - Chennai Cites 70 - Cited by 0 - Full Document
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