radha (ggk) (44 Points)
12 December 2011Respected all,
Our company incurred expense of Rs.10200 for purchase of gold coin as gift to one of our customer on marriage of his daughter.now i am in doubt regarding the expense head. can we treat this as sales promotion or have to treat as gift. If as a gift , is it disallowable under Income tax Act?which Section I have to refer?
Pls help me to clear this.
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 19 December 2011
It can be showed as Gifts in the P&L A/c. the expenditure would not be disallowed. This can be from the fact that, to increase the business relationship between the co & customer so that the customer may provide more business to the co, the expense would not be disallowed from I-T point of view. You can show this expense under sec 37 of the I-T Act.
U S Sharma
(glidor@gmail.com)
(21056 Points)
Replied 19 December 2011
book the expenses under the head "business promotion" to avoid litigation, as gift is not an allowed expenditure under incometax.
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 20 December 2011
Mr Sharma. Could you please provide an case law & also the section reference under the I-T act, which shows that gift is not an allowable expenditure.
U S Sharma
(glidor@gmail.com)
(21056 Points)
Replied 20 December 2011
business expenditure is allowed from sec 30 to 37, in which gift is not included (sec 56), however such expenses are of general nature and may be booked under general expenses u/s 37.
to make gift to somebody, gift should be made from "tax paid money" i.e its capital outgo and can not be claimed as revenue expense under any circumstance.
LIVE Form 10 B and Form 10BB: Handle Tax Audit Reports of Charitable Organizations(with recording)
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