MUMBAI: The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) Wednesday ruled that no tax will be applied on those companies gifting their special customers or business associates with free-of-cost tickets during the Indian Premier League (IPL) competition, Economic Times reports.
The purpose of these often is to improve business relations. As a result, the move will benefit the likes of sponsors and companies in the FMCG, telecom and consumer durables sectors. It has been allowed as a deduction from the total income while computing tax as per provisions of the Income Tax Act 1961.
The decision was made in the context of a court case fought by EPE Process Filters & Accumulators Pvt Ltd, a manufacturer of hydraulic & process filters and hydro-pneumatic accumulators. In the 2010 IPL season, the company had distributed IPL tickets to customers and business associates. However, tax authorities had disputed that they were unable to find receipts or similar evidence of the same, which couldn’t allow for deduction of expenses.
The ITAT had taken the case back to the tax officer previously on account of the company not submitting supporting evidence and in order to verify its claims. Eventually, the tribunal granted the matter in favour of the company.
