Income Tax Appellate Tribunal Delhi Dcit, New Delhi vs M/S. Delhi State Industrial & ... on 13 May, 2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA No.2180/Del/2015 Assessment Year: 201011 DCIT, Circle 7(1), Vs Delhi State Industrial and New Delhi. Infrastructure Development Corporation Ltd., N36, Bombay Life Bldg., Connaught Circus, N.Delhi. PAN: AAACD1257F Assessee by: Shri Yogesh Jain, CA Revenue by: Ms Ashima Neb, Sr. DR Date of Hearing 01.05.2019 Date of Pronouncement 13.05.2019 ORDER PER K. NARASIMHA CHARY, JM Challenging the order dated 22.1.2015 in Appeal No.514/1415 passed by the ld. Commissioner of Incometax (Appeals)14, New Delhi (for short 'Ld. CIT(A)}, revenue preferred this appeal. 2. Brief facts of the case are that the assessee is a State Government Corporation engaged in the activities of industrial development of National Capital Region of Delhi as a developing agency. For the Assessment Year 201011, they have filed their return of income on 24.3.2011 declaring a total income of Rs.34,82,83,107/. Learned AO by 2 order dated 14.3.2013 assessed the income at Rs.48,03,00,500/ by making certain additions which includes for the purpose of this appeal a sum of Rs.1,10,21,002/ under the head "Administration and Selling Expenses" and a sum of Rs.87,45,643/ in respect of maintenance charges. Aggrieved by these additions, assessee preferred appeal and the learned CIT(A) by way of the impugned order deleted these two additions also. Hence, the revenue preferred this appeal stating that the ld. CIT(A) erred in deleting these two additions. 3. It is the argument of the ld. DR that there was no evidence available before the ld. CIT(A) also to reach a different conclusion from the one reached by the ld AO, who had recorded that this expense was not wholly and exclusively for the purpose of business. She further submitted that in respect of the addition of Rs.87,45,643/ also no evidence was available on record and, therefore, ld. AO was justified in making such additions. 4. It is the submission on behalf of the assessee that this expense was incurred on the occasion of Diwali, Holi etc., which is customary on such occasion to give gifts to the employees and associates as a matter of cordiality and incentives for better performance. He submits that since no doubt has ever been raised against the incurrence of the expense in any preceding or subsequent year, it is clear basing on what the ld. AO concluded that it is not wholly and exclusively for the purpose of business of the assessee. He further submitted that similar expenses have been incurred in the earlier years and subsequent years also and they were allowed by the ld. AO. Lastly, he submits that the expense incurred by the assessee is linked with business and it has direct nexus 3 with their business and, therefore, it cannot be said that such an expense is not wholly and exclusively for the purpose of assessee's business. 5. Reliance is placed by the assessee on the decision of the ITAT, Chandigarh Bench in the case of Punjab Power Packs Ltd. vs DCIT (1999) 71 ITD 163 (Chd) where it is held that the distribution of gifts/sweets by the PSU to employees and associates is an allowable expense. 6. It could be seen from the record that the ld. AO does not doubt the genuineness of the expense. It is also not in dispute that this is a routine expenditure incurred by the assessee for the years prior to and subsequent to the Asstt. Year 201011 and it is also not the case of the revenue that such an expense was disallowed by the ld. AO for any of such years other than the year under consideration. 7. Learned CIT(A) gave a factual finding that similar expenses were incurred by the assessee for the years prior to the year under consideration and such an expense was incurred under the sub head of "staff welfare and benefit". Further, it is customary to make the small gifts on the occasion of celebrations like Diwali, Holi etc., as an incentive for better performance. 8. In the case of the Panjab Power Packs Ltd (supra), the assessee was also a public sector undertaking and claimed deduction of a sum of Rs. 2,16,394/ under the head 'Diwali expenses' incurred on gifts/sweets provided to the employees and other business associates, which w