Corporates can add expenditure incurred in exhibitions as business expenses for claiming tax benefits, the Income Tax Appellate Tribunal said in a recent decision.

ITAT gave the ruling was in a case pertaining to the Indian subsidiary of Austrian auto component manufacturer Styler Daimler Puch.

Exhibitions are aimed at propagating business and hence cannot be disallowed for claiming tax benefits by the tax department, ITAT president Vimal Gandhi said while turning down the decision of the assessing officer and commissioner of Income Tax (CIT), Pune.

The case pertains to participation of the Austrian company that set up its subsidiary Styler India, within months of the "Autoexpo 1998" exhibition. The company had included an expenditure of Rs15 lakh in its annual expenses.

While the company claimed the amount as business expenditure, the assessing officer disallowed it saying it cannot claim deductions as it had not started business then.

ITAT, however, ruled that 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.