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ITAT confirms disallowance of Advertisement Expenses relating to Construction of Swimming Pool Setback to Himalaya
December, 08th 2020

The Income Tax Appellate Tribunal (ITAT), bangalore confirmed the disallowance of advertisement expenses relating to the construction of the swimming pool.

The AO noticed that the assessee firm, Himalaya Drug Company has contributed a sum of Rs.99.66 lakhs to a School named M/s Mallya Aditi International school, Yelahanka, Bangalore for the purpose of construction of a swimming pool in that school.

The assessee claimed the payment as advertisement expenditure. In support of the said claim, it was submitted that the “name of the assessee company” is displayed near the swimming pool and hence the same would promote the brand of the assessee company.


It was submitted that over 500 children study in that school. Apart from them, parents of the children also visit School and the alumni of the school hold events etc., who will happen to see the advertisement Board.

Accordingly, it was submitted that the assessee’s brand would get promoted in this process. It was claimed that the above said contribution is in the nature of advertisement expenditure only.

The AO however, noticed that the children of Mr.Meeraj Alim Manal had studied in the school and the children of Ms. Lubna Manal, daughter of Shri Meeraj Alim Manal (i.e., grand children of Mr. Meeraj Alim Manal) continues to study in this school.

Hence, the AO took the view that the contribution for the construction of the swimming pool was made by Mr. Meeraj Manal on account of his personal gestures only and hence it is clearly in the nature of personal expenditure. i.e., there is no commercial consideration involved in it. Accordingly, the AO disallowed the above said claim of Rs.99.66 lakhs.  The DRP upheld the view so taken by the AO.


The coram headed by President N.V. Vasudevan noticed that the main objective of making a contribution to the school was on account of personal consideration & gesture of the ultimate owner of the assessee firm and no commercial consideration relating to the assessee herein was attached thereto. Therefore, the ITAT held that the AO was justified in treating the expenditure as not related to the business activity carried on by the assessee. Accordingly, confirmed the disallowance made by the AO.

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