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Exhibition cost in 1st fiscal too is business expense: ITAT
May, 27th 2008
Companies can treat expenditure incurred on participating in autoexpo and other exhibitions as business expenses and claim tax benefits, the Income Tax Appellate Tribunal has said in a recent decision.

Giving its ruling in a hotly-contested case pertaining to the Indian subsidiary of Austrian auto component company Styler Daimler Puch, ITAT said expenditure on exhibitions are aimed to propagate business and hence cannot be disallowed for claiming tax benefits by the tax department.

"All the expenses were aimed to propagate the assessors business... I accordingly allow the expenses," said ITAT President Vimal Gandhi while turning down the decision of the assessing officer and commissioner of Income Tax (CIT), Pune.

The case pertains to participation of Austrian company`s subsidiary Styler India, within months of formation, in autoexpo 1998, on which the company incurred an expenditure of about Rs 15 lakh.

While the company claimed the amount spent as business expenditure, the assessing officer disallowed it saying it cannot claim deductions as it had yet to start business.

Once it was proved that the expense was incurred after the business was set up, the expenses of revenue nature incurred will become admissible for deduction, the tribunal ruled.
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