Hi. A company incurred expenses for Diwali like giving sweets to Bank Officials, Customers,etc.
will this be treated as Business Promotion or Gifts.....? In case of Gifts, FBT value will be 50%. Otherwise 20%.
Hi. A company incurred expenses for Diwali like giving sweets to Bank Officials, Customers,etc.
will this be treated as Business Promotion or Gifts.....? In case of Gifts, FBT value will be 50%. Otherwise 20%.
RAMANJU
(here to updating the knowledge)
(485 Points)
Replied 24 June 2009
RAMANJU
(here to updating the knowledge)
(485 Points)
Replied 24 June 2009
CA. Dashrath Maheshwari
(TaXpert)
(15090 Points)
Replied 24 June 2009
Please go through the Judgement with reference to :
[1983] 142 ITR 509 (ALL.)
Brijraman Das & Sons v.
H.N. SETH AND V.K. KHANNA, JJ.
IT REFERENCE NO. 151 OF 1975
in relation to disallowance of Diwali Exp.
CA. Dashrath Maheshwari
(TaXpert)
(15090 Points)
Replied 24 June 2009
You can also note that : Expenses incurred on the occasion of Dewali and mahurat are in the nature of business expenditure. Letter : F. No. 13A/20/68-IT(A-II), dated 3-10-1968.
CA Jimmit D Mehta
(Employed)
(494 Points)
Replied 24 June 2009
i think it will be treated as gifts as per mine knowledge......................
Its depends upon the custom of companies.
If sweet distribution is of regular nature on festival Fringe benefit will be 20%.
But remember in first instance sweet distribution is not treated as gift.
Sweet distribution On any festival is a tradition followed by almost all over in India therefore it will not be treated as Gift.
CA Amit Pandya
(CA, M.com)
(419 Points)
Replied 24 June 2009
Hey think about client, always try to save client.
So, presently treat as sales promotion, will see what happens at the time of assessment.
You can go through the Judgement to know the fact with reference to : [1983] 142 ITR 509 (ALL.) Brijraman Das & Sons v. H.N. SETH AND V.K. KHANNA, JJ. IT REFERENCE NO. 151 OF 1975 in relation to disallowance of Diwali Exp.
CA.Sangam Aggarwal
(Professional)
(2575 Points)
Replied 25 June 2009
it should be part of business promotion.
MOHIT
(XYZ)
(67 Points)
Replied 25 June 2009
Hi Mr Dashrath,
The link Letter : F. No. 13A/20/68-IT(A-II), dated 3-10-1968. contains a very bulky file. Could you please highlight as to where it's stipulated that Expenditure on Dewali Gifts should be treated as Business Promotion Expenditure instead of Gifts or Festival Celebrations?
Regards
Mohit
CA. Dashrath Maheshwari
(TaXpert)
(15090 Points)
Replied 25 June 2009
Originally posted by :MOHIT | ||
" | Hi Mr Dashrath, The link Letter : F. No. 13A/20/68-IT(A-II), dated 3-10-1968. contains a very bulky file. Could you please highlight as to where it's stipulated that Expenditure on Dewali Gifts should be treated as Business Promotion Expenditure instead of Gifts or Festival Celebrations? Regards Mohit |
" |
Hi Mohit, and all other friends,
I know that the above link contains a huge descripttions and clarification of various items, I thought you will be able to find out by pressing CTRL+F (Believe me its very easy to find anything on any webpage by FIND Command).
Although I'm putting the relevant lines herewith:
338. Customary payments on Dewali/ mahurat - Whether permissible deduction - Monetary limits for their allowance withdrawn
I am directed to say that Circular No. 17 [F. No. 27(2)-IT/43], dated 6-5-1943 [Annex], referred to by you has long since been withdrawn.
As the expenses incurred on the occasion of Dewali and mahurat are in the nature of business expenditure, it has been decided not to lay down any monetary limits for the purpose of their allowance in the income-tax assessments subject to the Income-tax Officer being satisfied that the expenses are admissible as a deduction under the law and are not expenses of a personal, social or religious nature.
Letter : 13A/20/68-IT(A-II), dated 3-10-1968.
ANNEX - CIRCULAR, DATED 6-5-1943 REFERRED TO IN CLARIfiCATION
anurag
(none)
(38 Points)
Replied 25 June 2009
as per my knowledge it would be treated as festival celebration.
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