Disallowance of pooja expenses

KINDLY GUIDE US ON THE FOLLOWING ISSUES WITH CASE LAWS

Disallowance of Pooja Expenses

Issue 1

Under the head Office Maintenance the assessee has debited a sum of Rs. 3,00,000/- in P&L A/c.. On examination of the accounts maintained in Tally it is revealed that a sum of Rs.2,00,000/- was spent towards Pooja Expenses. Since the Pooja expenses are not allowable as business expenditure, the sum of Rs.2,00,000/- is disallowed and added to the total income of the assessee.

Issue 2

As per account maintained in Tally the assessee has debited a sum of Rs.3,00,000/- under the head Pooja expenses. However while preparing the P&L A/c the assessee has debited only a sum of Rs.50,000/- so as to avoid more disallowance in the computation of total income. When asked to explain the assessee has submitted that some of the expenses were reclassified and transferred to respective heads. This explanation cannot be accepted. Once the expenditure is treated as pooja expenses and booked in the Tally there is no question of reclassifying it and transferring to other heads. This is only to avoid more disallowance the assessee has resorted to showing a lesser amount in the P&L a/c. Hence the short fall in the expenses to the tune of Rs .2,50,000/- towards Pooja Expenses is disallowed and added to the total income of the assessee.

Disallowance u/s 40A(3)

Issue 3

The assessee company has paid on different occasions aggregating a sum of Rs.2,00,000/- to its managing director towards Reimbursement of Expenses incurred by way of cash, on each occasion exceeding Rs.20,000/- similarly a sum of Rs.1,00,000/- was paid to its director towards Reimbursement of Expenses incurred by way of cash on each occasion exceeding Rs.20,000/- Since the assessee company has violated the provision of section 40A(3) the above sum of Rs.3,00,000/- is disallowed u/s 40A(3) and added to the total income of the assessee.

JOHN / CHENNAI

There are no. of judgements in which the Pooja Exp. are held to be business exp. and allowed. Also the amt. being small, the assessee normally does not object. However, I would like to present case laws and the Letter from the board. Customary pooja exp. at the time of opening the assessee's books of account is an allowable deduction (Brijraman Das & Sons V. CIT - 1983). Exp. incurred on the occassion of Diwali and mahurat are in the nature of business exp. it has been decided not to lay down any monetary mimit for the purpose of their allowance Letter E no. 13A/20/68-IT dtd. 3rd October, 1968. Salari paid to pujari for performing puja in a temple in the mill premises for the general benefit of the employees (Commercial Ahmedabad Mills Co. Ltd. V. CIT - 1993204 ITR 140 (Guj)