M/s. G7 Health Care (India) Private Limited, Bangalore V. Income Tax Officer, Ward -3(1)(2), Bangalore

ITA 4/BANG/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8917 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-08-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 02-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND V CHAVAN
• Keywords: Business income; Business expenditure; Onus to prove; Revenue expenditure
• Section: 64; 13; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO . 4/BANG/201 7 ASSESSMENT YEAR : 2012 - 13 G7 HEALTHCARE (INDIA) PVT. LTD., C/O. K. JANARDHANAN & CO., NO.451, 64 TH CROSS, 5 TH BLOCK, RAJAJINAGAR, BANGALORE 560 010. P AN: AAECG 3312 N VS. THE INCOME TAX OFFICER, WARD 3(1)(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHR I ARVIND V. CHAVAN, ADVO CATE RESPO NDENT BY : SHRI KANNAN NARAYANAN, JT. C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 09. 0 8 .2021 DATE OF PRONOUNCEMENT : 12. 0 8 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(APPEALS)-3, BENGALURU DATED 31.10.2016 FOR THE ASSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUNDS:- 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3 IN THE CASE OF THE APPELLANT FOR THE AS SESSMENT YEAR 2012-13 IS OPPOSED TO LAW IN SO FAR AS IT IS PREJUD ICIAL TO THE INTEREST OF THE APPELLANT. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN LAW AS WELL AS IN FACT, IN NOT GIVING RELIEF TO THE EXTENT OF RS.1,03,37,972/- CLAIMED BY THE APPELLANT AS EXPENSES ITA NO.4/BANG/2017 PAGE 2 OF 9 IN THE NATURE OF 'TOUR AND PROGRAM' REIMBURSED TO T HE HOLDING COMPANY M/S. TEAM LIFE CARE COMPANY (INDIA) PRIVATE LIMITED UNDER AN AGREEMENT FOR ARRANGING A SALES PROMOTION MEETING AT SRILANKA. 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN OBSERVING THAT THE FUNCTION AT SRILANKA HAD NO NEXUS WITH THE PURPOSE OF THE BU SINESS CARRIED ON BY THE APPELLANT COMPANY. 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN IGNORING THE FACTS THAT THE VIDEO COVERAGE, WAS ALL ABOUT THE FOOD SUPPLEMENT P RODUCTS DEALT IN BY THE APPELLANT COMPANY. THE ENTIRE EXERCISE WA S MEANT FOR APPRISING THE SALES REPRESENTATIVES WITH THE DETAIL S OF FOOD VALUE OF VARIOUS INGREDIENTS OF THE PRODUCTS THEY WERE GO ING TO SELL IN THE MARKET. 5) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN IGNORING THE CONTENTS OF THE VIDEO COVERAGE AND CONCLUDED BASED MAINLY ON TH E FINDING OF THE ASSESSING OFFICER. 6) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN IGNORING THE BILLS PRESENTED BY THE EVENT MANAGER/ TRAVEL AGENT IN ARR ANGING THE VIDEO COVERAGE AT SRILANKA WITHOUT RECORDING ANY VA LID REASON. THOUGH THE BILL WAS DRAWN UP IN THE NAME OF M/S. TE AM LIFE CARE COMPANY (INDIA) PRIVATE LIMITED, THE HOLDING C OMPANY, THE APPELLANT COMPANY HAD AN AGREEMENT WITH THE HOL DING COMPANY TO PAY FOR SUCH BILL. 7) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN NOT ADJUD ICATING ON THE VERACITY OF THE REASONING PUT FORWARD BY THE LEARNE D ASSESSING OFFICER IN THE ASSESSMENT ORDER IN DISALLOWING THE PART OF EXPENSES OF RS.1,04,23,246/- UNDER THE HEAD `SALES PROMOTION' AND SUBSTITUTING THE REASONING OF THE LEARNED ASSES SING OFFICER BY HIS OWN ESTIMATE BASED ON SURMISE AND CONJECTURE . 8) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN DETERMINI NG THE ALLOWANCE ITA NO.4/BANG/2017 PAGE 3 OF 9 OF SALES PROMOTION EXPENDITURE BASED ON HIS OWN EST IMATE WITHOUT BRINGING IN ANY EVIDENCE ON RECORD AND REJE CTING THE BILLS AND VOUCHERS PRODUCED BY THE APPELLANT. IN FACT, AS A RESULT OF THE LEARNED COMMISSIONER OF INCOME TAX'S OBSERVATION, T HE AMOUNT OF DISALLOWANCE GOT ENHANCED BY A SUM OF RS.22,40,8 28/-, THOUGH NO NOTICE OF ENHANCEMENT WAS SERVED. 9) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN DETERMINI NG THE DISALLOWANCE OF SALES PROMOTION EXPENSES ON THE BAS IS OF HIS OWN ESTIMATE AND IN DEVIATION TO THE REASONING PUT FORW ARD BY THE LEARNED ASSESSING OFFICER IN THE ASSESSMENT ORDER. 10) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED BOTH IN FACTS AS WELL AS IN LAW, IN REJECTING THE BILL FOR PAYMENT TOWARDS SALES PROMOTION. 11) THE APPELLANT CRAVES LEAVE TO ADD AND ALTER GRO UNDS OF APPEAL DURING THE COURSE OF HEARING. 2. WITH REGARD TO THE DISALLOWANCE OF SALES PROMOTI ON EXPENDITURE AMOUNTING TO RS.62,53,938/-, THE APPELLANT HAS CLAI MED TO HAVE INCURRED AN EXPENDITURE OF RS.1,04,23,246/- TOWARDS 'SALES PROM OTION WHICH WAS DEBITED TO THE P&L ACCOUNT. THE AO HAS TAKEN INTO C ONSIDERATION THE FACT THAT THE BUSINESS ACTIVITIES OF THE APPELLANT HAD C OMMENCED ONLY ON 21.12.2011 WHEREAS THE APPELLANT HAS CLAIMED TO HAV E SPENT A SUM OF RS.87,88,429/- TOWARDS SALES PROMOTION BY 29.12.201 2. ACCORDINGLY, THE AO WAS OF THE VIEW THAT THE AMOUNT OF RS.87,88,429/ - COULD NOT HAVE BEEN SPENT TOWARDS SATES PROMOTION DURING THE SHORT TIME AFTER COMMENCEMENT OF THE BUSINESS OF THE COMPANY. THEREFORE, THE AO H ELD THAT 75% OF THE EXPENDITURE WAS INCURRED PRIOR TO THE COMMENCEMENT OF THE BUSINESS. ACCORDINGLY, 25% OF THE EXPENDITURE WAS ALLOWED AS DEDUCTION AND 75% OF THE EXPENDITURE (RS.78.17 LAKHS) WAS TREATED AS PRE OPERATIVE EXPENSES. THE AO HAS ALSO ALLOWED DEDUCTION OF 1/5 TH OF PRE-OPERATIVE EXPENSES AMOUNTING TO RS.15,36,487/-, THEREBY RESULTING IN N ET DISALLOWANCE OF RS.62,53,938/-. ITA NO.4/BANG/2017 PAGE 4 OF 9 3. BEFORE THE CIT(APPEALS), THE APPELLANT HAS CLAIM ED THAT IT HAD ENTERED INTO AN AGREEMENT WITH THE HOLDING COMPANY FOR CARRYING OUT THE MARKETING OF THE PRODUCTS TRADED BY THE APPELLANT C OMPANY INCLUDING THE SALES AND DISTRIBUTION OF THE PRODUCTS THROUGH ITS AGENTS. IT IS CLAIMED THAT FOR THESE ACTIVITIES, FOR EVERY SALE OF RS.2,000/- ONE POINT WAS ALLOTTED TO THE HOLDING COMPANY FOR MARKETING THE PRODUCTS, WHICH W AS REIMBURSED AT THE RATE OF RS.350/- PER POINT. AS PER THE DETAILS FURN ISHED, THE APPELLANT HAD CLAIMED THAT DURING THE YEAR, THE HOLDING COMPANY H AS EARNED 23280 POINTS. ACCORDINGLY, AT THE RATE OF RS.350/-PER POI NT, THE APPELLANT HAS STATED THAT THE HOLDING COMPANY HAD RAISED A BILL O F RS.87,88,429/- FOR SALES MADE UP TO FEBRUARY 2012 AND A BILL FOR RS.1, 98,952/- FOR MARCH 2012. THE APPELLANT HAS ALSO CLAIMED THAT APART FRO M THIS, VARIOUS OTHER SUNDRY EXPENDITURES WERE INCURRED IN CONNECTION WIT H THE SALES PROMOTION. 4. THE CIT(APPEALS) OBSERVED THAT THE AMOUNT OF RS. 1,04,23,246/- DEBITED TO THE P&L ACCOUNT INCLUDES THE BILLS FOR R S.87.88 LAKHS AND RS.1.98 LAKHS, WHICH WERE PAID TO THE HOLDING COMPA NY. THE BALANCE AMOUNT INCLUDES VARIOUS EXPENDITURES FOR AMOUNTS BE LOW RS.20,000/-, WHICH WERE INCURRED IN CASH. NO EVIDENCE HAS BEEN F URNISHED TO SUBSTANTIATE SUCH CASH EXPENDITURE. THE EXPENDITURE DEBITED ALSO INCLUDES RS.13.10 LAKHS FOR WHICH ENTRIES WERE PASSED BY WAY OF A JOURNAL ENTRIES AND NO EVIDENCE HAS BEEN FURNISHED TO SUBSTANTIATE THESE EXPENDITURES. IN THIS REGARD, HE NOTED THAT THE TOTAL SATES OF THE C OMPANY AS REPORTED IN THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 31.03.2012 IS FOUND TO BE RS.3.85 CRORES. THE APPELLANT CLAIMS TO HAVE INCURRED EXPEN DITURE OF RS.104,23,246/- TOWARDS SALES PROMOTION, WHICH ACCO UNTS FOR APPROXIMATELY 26.70% OF THE TOTAL SALES TURNOVER. IN THE SUBSEQUENT YEAR I.E. 31.03.2013, THE APPELLANT HAS CLAIMED TO HAVE INCURRED SALES PROMOTION EXPENSES OF RS.2.58 CRORES AGAINST WHICH THE TOTAL SALES WAS REPORTED AS RS.3.53 CRORES. THUS, THE AMOUNT OF SATES PROMOTION EXPENDITURE INCURRED ITA NO.4/BANG/2017 PAGE 5 OF 9 IS FOUND TO BE APPROXIMATELY 67.30% OF THE TOTAL SA L ES TURNOVER. THUS THE QUANTUM OF SALES PROMOTION EXPENDITURE INCURRED BY APPELLANT IS FOUND TO BE DISPROPORTIONALLY HIGH AS COMPARED TO THE TOTAL SALES MADE DURING THE YEAR, FOR WHICH THE APPELLANT HAS NOT FURNISHED ANY JUSTIFICATION. 5. THE CIT(APPEALS) FURTHER NOTED THAT PAYMENTS FOR SUCH EXPENDITURES HAVE BEEN MADE TO THE HOLDING COMPANY AND THE SPECI FIC SERVICES RENDERED BY THE HOLDING COMPANY HAVE NOT BEEN CLEAR LY ESTABLISHED. IN FACT THE BASIS OF ALLOTTING POINTS IN RESPECT OF THE SAL ES MADE AND THE BASIS FOR - REIMBURSING THE EXPENDITURE AT THE RATE OF RS.350/- PER POINT HAS NOT BEEN SUBSTANTIATED BY THE APPELLANT. THEREFORE, UNDER TH E CIRCUMSTANCES, THE ADEQUACY FOR MAKING THE PAYMENTS TO THE HOLDING COM PANY HAS NOT BEEN ESTABLISHED BY THE APPELLANT COMPANY. 6. CONSIDERING THESE FACTS, ACCORDING TO THE CIT(APPEA LS), THE ENTIRE AMOUNT OF RS.1,04,23,246/- CLAIMED AS SALES PROMOTI ON EXPENDITURE, WHICH IS APPROXIMATELY 26.70% OF THE TOTAL SALES TURNOVER , CANNOT BE ALLOWED AS DEDUCTION,. THE APPELLANT HAS NOT FURNISHED ANY DET AILS WITH REGARD TO THE SPECIFIC ACTIVITIES UNDERTAKEN BY THE HOLDING COMPA NY FOR MARKETING THE PRODUCT OF THE APPELLANT. HENCE PAYMENT OF SALES PR OMOTION EXPENSES AT THE RATE OF 5% OF THE SALES TURNOVER WAS FOUND TO B E REASONABLE AND ADEQUATE. FOR THE YEAR UNDER CONSIDERATION THE TOTA L SALES TURNOVER HAS BEEN REPORTED AT RS.385,69,609/- AND THEREFORE, THE ALLOWABLE SALES PROMOTION EXPENDITURE AT THE RATE OF 5% IS COMPUTED AT RS.19,28,480/-. ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW THE SAME AND ADD BACK THE EXCESS AMOUNT OF RS.84,94,766/-, IN PLACE OF RS.62, 53,9381- DISALLOWED IN THE ASSESSMENT ORDER. 7. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE CLA IMED AN AMOUNT OF RS.104,23,246 AS EXPENDITURE INCURRED TOWARDS SALES PROMOTION. IT IS THE ITA NO.4/BANG/2017 PAGE 6 OF 9 CONTENTION OF ASSESSEE THAT IT WAS INCURRED ON LAUN CH OF ITS PRODUCTS IN SRI LANKA AND IT HAS TO BE ALLOWED U/S. 37 OF THE ACT. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE COMMENCED BUSINESS ON 21 .12.2011 AND AS ON 29.12.2012 THE ASSESSEE HAS CLAIMED IT HAS SPENT RS.87,88,429 AND FOR THE NEXT MONTH I.E., MARCH, 2012, IT HAS EXPENDED R S.1,98,952. THE BALANCE AMOUNT WAS SPENT IN CASH AND THE AO DOUBTED THE GENUINENESS OF THE BALANCE PAYMENT. HOWEVER, HE CONSIDERED 75% OF EXPENDITURE I.E., RS.104,23,246 AT RS.78,17,245 AS PRE-OPERATIVE EXPE NSES AND OUT OF THIS, HE ALLOWED 1/5 TH AS REVENUE EXPENDITURE WORKED AT RS.15,36,4878. HE DISALLOWED THE BALANCE AMOUNT OF RS.62,53,938. 8. THE CIT(APPEALS) HAS OBSERVED THAT THE TOTAL SAL ES OF ASSESSEE DURING THE YEAR WAS RS.3.53 CRORES. TOTAL EXPENDIT URE UNDER THE HEAD SALES PROMOTION EXPENSES WORKED OUT AT RS.2.58 CROR ES WHICH WORKED OUT AT 67.30% OF TOTAL SALES TURNOVER. ACCORDING TO TH E CIT(A), IT WAS VERY DISPROPORTIONATE AS COMPARED TO THE TOTAL SALES OF ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. EVEN OTHERWIS E, AN AMOUNT OF RS.104,23,246 WHICH WAS CLAIMED AS SALES PROMOTION WORKS OUT AT 26.70% OF TOTAL SALES WHICH IS VERY UNREASONABLE. HE HELD MAXIMUM ALLOWABLE EXPENDITURE UNDER THIS HEAD COULD BE 5% OF TOTAL SA LES OF RS.385,69,609 WORKED OUT AT RS.19,28,480. ACCORDINGLY HE DIRECTE D THE AO TO DISALLOW RS.84,94,766 INSTEAD OF RS.62,53,938 ALLOWED BY THE AO AND FINALLY ALLOWED RS.19,28,480 OUT OF RS.104,23,246. 9. THE FIRST CONTENTION OF THE LD. AR IS THAT THIS ACT OF CIT(APPEALS) AMOUNTS TO ENHANCEMENT OF ASSESSMENT WHICH CANNOT B E ALLOWED. IN OUR OPINION, THE IMPLICATION OF PROPOSED ACTION OF CIT( APPEALS) WAS BROUGHT TO THE NOTICE OF ASSESSEE AT THE TIME OF PROCEEDINGS B EFORE THE CIT(A). THEREFORE, IT IS NOT CORRECT TO SAY THAT THE CIT(AP PEALS) HAS NOT ISSUED ANY SHOW CAUSE NOTICE BEFORE MAKING ENHANCEMENT OF DISA LLOWANCE. SINCE THERE IS NO STATUTORY NOTICE PRESCRIBED UNDER THE A CT AND THE ASSESSEE HAS ITA NO.4/BANG/2017 PAGE 7 OF 9 BEEN ALLOWED FULL OPPORTUNITY OF HEARING BEFORE ENH ANCING THE ADDITION, THERE IS NO ILLEGALITY IN THE ACTION OF THE CIT(APP EALS). LAW ONLY REQUIRES THE ASSESSEE MUST BE MADE AWARE OF THE PROPOSED ACT ION OF THE CIT(APPEALS) IN ENHANCING THE ADDITION AND EXPLANAT ION TO BE OBTAINED AND CONSIDERED. IN OUR OPINION, THE ASSESSEE HAS NOT B ROUGHT ANYTHING TO SHOW THAT THE ENHANCEMENT OF ADDITION AS MADE UNILATERAL LY BY THE CIT(APPEALS). THUS, IT HAS TO BE INFERRED THAT THE ASSESSEE WAS D ULY PUT TO NOTICE BEFORE MAKING THE ENHANCEMENT OF INCOME. ACCORDINGLY, THI S PLEA OF THE ASSESSEE IS REJECTED. 10. COMING TO THE MERITS OF THE ADDITION MADE BY TH E CIT(APPEALS), THE ASSESSEE HAS FAILED TO ESTABLISH THAT SUCH SALES PR OMOTION EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAS NOT PR ODUCED ANY WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND BENEFICIARY TO I NCUR THIS EXPENDITURE, THOUGH IT WAS NOT MANDATORY, TO CLAIM THIS EXPENDIT URE FOR THE PURPOSE OF BUSINESS. HOWEVER, THE ASSESSEE HAS TO ESTABLISH W ITH DOCUMENTARY AND COGENT EVIDENCE THAT SUCH EXPENDITURE WAS INDEED IN CURRED FOR THE PURPOSE OF ASSESSEES BUSINESS. BEFORE US THE LD. AR FOR T HE ASSESSEE HAS NOT BEEN ABLE TO LEAD ANY COGENT EVIDENCE ABOUT THE NAT URE OF SERVICES RENDERED BY THE BENEFICIARY ON THIS COUNT. WE HAVE GONE THROUGH THE VARIOUS EXPENDITURE DETAILS SUBMITTED BY THE ASSESS EE. MOST OF THE DETAILS INCLUDE HOTEL (LODGING) AND FOOD BILLS AND ALSO CAR HIRING CHARGES. IT WAS EXPLAINED BY THE LD. AR THAT 320 EMPLOYEES OF ASSES SEE WENT TO SRI LANKA TO LAUNCH ITS PRODUCTS AND IT IS REFLECTED IN THE V IDEO RECORDED BY THE ASSESSEE. THE ASSESSEE SUBMITTED LIST OF 320 PERSON S STATING THAT THEY ARE EMPLOYEES OF THE ASSESSEE COMPANY AND WENT TO SRI L ANKA TO LAUNCH THE PRODUCT OF THE COMPANY. HOWEVER, THERE IS NO DOCU MENTARY EVIDENCE TO SHOW THAT 320 PERSONS ARE EMPLOYED BY THE ASSESSEE AS THE ASSESSEE HAS NOT FILED ANY APPOINTMENT ORDERS OR ANY CORRESPONDE NCE OF THESE PERSONS ITA NO.4/BANG/2017 PAGE 8 OF 9 STATED TO BE EMPLOYEES OF ASSESSEE COMPANY. WE HAV E CAREFULLY GONE THROUGH A BILL ISSUED BY GLOBAL TRAVELS APPEARING I N PAGE 53 OF PB. WE FAILED TO FIND OUT NAMES OF PERSONS IN THIS BILL IN THE LIST OF 320 PERSONS SUBMITTED BY THE ASSESSEE. AT PAGE 47 OF PB, THE A SSESSEE HAS PRODUCED A BILL WHICH SAYS IT IS RELATING TO EXPENSES OF LAT E MR. RAMASWAMY. IT IS NOT EXPLAINED HOW THIS LATE MR. RAMASWAMY IS CONNEC TED TO ASSESSEE COMPANY AND WHAT SERVICES WERE RENDERED DURING THE PERIOD 11 TH TO 13 TH OCTOBER, 2011. THE ASSESSEE HAS PRODUCED BILL COP Y OF CAR HIRING CHARGES OF RS.1,55,300 FOR PICK-UP AND DROP FOR 35 CARS WIT HOUT MENTIONING NAMES OF PERSONS TRAVELLED IN THE CAR AND CAR NUMBERS. 11. FURTHER IT IS TO BE NOTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO LEAD ANY EVIDENCE AND EXPLAIN WHAT IS THE PRODUCT LAUNCH ED BY THE ASSESSEE WITH REFERENCE TO SALES BILL RAISED BY THE ASSESSEE IN SUBSEQUENT SALES. THERE IS NO EVIDENCE ABOUT THE ENQUIRIES RECEIVED F OR THE PRODUCT DURING THE COURSE OF LAUNCH OR ANY PRODUCT SOLD IN THAT RE GION SUBSEQUENT TO THIS LAUNCH. IN SUCH CIRCUMSTANCES, IT COULD NOT BE PRE SUMED THAT THE ASSESSEE HAS SOLD ANY PRODUCT IN THIS REGION WHERE THE ALLEG ED PRODUCT LAUNCH TOOK PLACE. THERE IS NOTHING ON RECORD TO SHOW THAT ANY SALES INCREASED DURING THIS ALLEGED LAUNCH OF PRODUCT IN SRI LANKA. IN OT HER WORDS, THERE IS NO EVIDENCE WHATSOEVER TO SUPPORT THE CLAIM OF ASSESSE E THAT THEY HAVE LAUNCHED ANY PRODUCT DURING THIS PERIOD SO AS TO CL AIM THIS EXPENDITURE AS PRODUCT LAUNCH EXPENSES. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS DISCHARGED ITS ONUS TO PROVE THAT THE EXPENDITU RE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THER E DOES NOT APPEAR TO BE ANY TRADE PRACTICE UNDERTAKEN BY THE ASSESSEE TO LA UNCH THE ASSESSEES PRODUCT IN SRI LANKA. SINCE THE ASSESSEE FAILED TO ESTABLISH THAT EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THE SAME COULD NOT BE ALLOWED AS BUSINESS EXPENDITURE. IN THE ABSENCE OF ANY EVIDENCE AND MATERIAL ON RECORD, WE ARE OF THE VIEW THAT ITA NO.4/BANG/2017 PAGE 9 OF 9 THE ASSESSEE MADE ATTEMPTS TO CLAIM SOME EXPENDITUR E IN SRI LANKA FOR SOME OBVIOUS PURPOSE AS SALES PROMOTION EXPENDITURE WHICH CANNOT BE ALLOWED. THE GROUNDS OF APPEAL BY THE ASSESSEE ON THIS COUNT ARE REJECTED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF AUGUST, 2021. SD/- SD/- ( N V VASUDEV AN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 12 TH AUGUST, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.