Delhi ITAT upholds CIT(A)’s
order disallowing a portion of the conference expenses relating to amount spent
on party and dinner, media event, purchase of expensive watches, jackets,
T-shirts, etc. by assessee (a Law firm) during AY 2010-11; Regarding expenses
on distribution of T-shirts, caps and jackets having assessee firm’s logo on
annual day celebration, ITAT remarks that“nothing is brought on record as how
the distribution of the merchandise among the counsels has served the business
purpose of the assessee firm, which is firm of the Advocates.”, further notes
no evidence of distribution was submitted; Likewise, for dinner / video
coverage expenses in relation to a party hosted to celebrate assessee-firm’s
achievements in which all clients and counsels of the firm along with various
dignitaries were invited, ITAT states that, “The assessee has not brought on
record anything to support that the dinner hosted was for furtherance of the
business interest.”; Also, ITAT disallows sponsorship fee paid by assessee for
the event “PEI India Forum” for enhancing its visibility and recognition, holds
the same was in violation of the Bar Council rules [whereby Indian Law firms
are not allowed to advertise their practice in the market] , thereby triggering
Explanation 1 to Sec. 37; With respect to the expensive watches distributed as
rewards to two employees for their exceptional work, ITAT observes that assessee
did not provide any rationale of watches distribution to only two such
employees:ITAT
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