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Are Pooja expenses incurred by the company allowed as expenditure?


If a business establishment spends money towards performing pooja for the betterment of business whether it can be allowed as expenditure while computing the profits? What does your common sense says Can this be allowed? Is it not customary to perform pooja in office premises? According to you, can anyone raise objection to such expenses?

If you answer ‘No’, then you are wrong! Income Tax department has a problem with pooja expenses! They feel the government will heavily loose on account of taxes, if pooja expense is allowed while computing the profits of companies.

Let me run a case pertaining to this point. After you read this, you will know why our courts are flooded with crores of pending cases.

M/s Gillander Arbuthnot and co Ltd, had spent Rs.1,32,282 towards pooja expenses and Rs.1,92,966 towards temple (in the premises of the company) expenses.

While assessing the taxes of the company, the Income Tax Officer felt that such expenses are non-business in nature. Ithas no nexus between the necessity of such expenditure and the purpose of the business carried on by the company. Thus he disallowed such expenditure and levied tax on it. (you wan to know the turnover of the company? It is over Rs.200 Crores)

Aggrieved by the order of the Income Tax Officer, the company filed an appeal in front of Commission of Income Tax (Appeals) – [CIT(A)]

CIT (A) understood the intentions of the company and directed the Income Tax Officer to allow Pooja and Temple expenses.

Now started the fun! The Income Tax department (other than CIT(A) who passed the above Order) got aggrieved by the Order of its own officer for allowing pooja expenses. Thus, they filed a petition before The Income Tax Appellate Tribunal (ITAT) challenging the Order of CIT(A).

This case was pertaining to Assessment Year 2007-08. The judgment by ITAT was pronounced on 19th December 2013. Friends, what is your view on this? Is it not a waste of time? This is one of the examples of wasting precious time of company, government and courts. Can’t department drop such demands? God, when will some sense prevail upon our law makers? I only hope that the new government comes out with some directives for not wasting time by harassing taxpayers.

Want to know what the Order of ITAT? They said “We find that the puja expense incurred on occasion of Diwali and Mahurat are customary expenses and going by the turnover of the assessee-company and the nature of the business of the assessee, we feel that these are incurred for the harmony of the assessee-company’s employees and these are for the purpose of business. Similar are the reasons for incurring temple expense. Hence, we confirm the order of CIT(A) and this issue of Revenue’s appeal is dismissed”


Thought for the day

Oh God, our taxman is not allowing exemption on money spent on you! Common sense is a flower that doesn’t grow in everyone’s garden.



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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm. For further information or query, please email it to [email protected]