Corporate spent on IPL tickets to be considered business expense: ITAT

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The corporates spending on buying match tickets of events like the Indian Premier League should be considered a business expenditure and shall be liable for deduction in tax computation.

The Hyderabad bench of the Income Tax Appellate Tribunal has ruled that the tickets bought and distributed free for the purpose of business promotion and corporate relationship should be treated as a business expenditure.

The tribunal further rejected the contention of tax authorities and allowed deduction of expense on distribution of free IPL tickets for the purpose of business, business daily Economic Times has reported.

The Income Tax act of 1961 has Provisions to allow for the deduction on such expenses for the spending “wholly or exclusively for the purpose of business”.

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The ITAT, Hyderabad, had delivered the verdict in the EPE Process Filters & Accumulators Pvt Ltd matter regarding free distribution of IPL tickets to customers and business associates in the financial year 2009-2010.

The company had failed to produce any evidence of free distribution of the tickets.

The tribunal while ruling in favour of the company has re-directed the matter to the tax authorities to reconsider the case on the available evidence.

The Income Tax Act specifies business expenses that are allowed as deduction and for other expenses which are not specified, the principle to be followed is that such expense should be incurred wholly and exclusively for business purposes, tax experts said.

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