Wednesday, 5 December 2018

ITAT : Allows ICC sponsorship fees; Benefit to group companies irrelevant for Sec. 37(1) deduction

Delhi ITAT allows deduction u/s. 37(1) to PepsiCo India (assessee) for sponsorship fees paid to ICC during AY 2009-10; Rejects Revenue’s stand that since the expenditure benefitted other group entities across the globe, it could not be said to have been incurred wholly and exclusively for the business of the assessee; ITAT clarifies that “Benefit factor to other related parties is relevant under transfer pricing provision and not while allowability of business expense u/s. 37(1)”; Observes that the commercial expediency was not disputed, further acknowledges that owing to large viewership of Cricket, advertising on such platforms is common; Separately, treats subsidy received under West Bengal Incentive Scheme of 2004 as a capital receipt as it was given for the purpose of industrialization of the State, notes that it was based upon fixed capital investment made by assessee and only the mode of disbursement was in the form of re-payment of sales tax paid.:ITAT 

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