Pooja Expenses are allowable business expenditure u/s 37 of Income Tax Act

Pooja Expenses incurred allowable business expenditure under section 37 of the Income Tax Act, 1961 – ITAT 

In a recent judgment, ITAT Nagpur has held that Pooja Expenses incurred were allowable business expenditure under section 37 of the Income Tax Act, 1961.

ABCAUS Case Law Citation:
4311 (2024) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition made by the Assessing Officer holding that the pooja expenses are not business expenditure.

The assessee company was engaged in the business of manufacturing of industrial products. It filed its return of income for the relevant Assessment Year. Books of account were subject to audit under Companies Act and section 44AB of the Income Tax Act, 1961 (“the Act”).

The case was opened for scrutiny assessment under section 143(3) of the Act. The Assessing Officer made addition being Pooja Expenses incurred at the factory premises, holding that the same were not business expenses and hence not allowed as deduction. The assessee was not satisfied with the order passed by the Assessing Officer and hence filed appeal before the first appellate authority.

The CIT(A) confirmed the order passed by the Assessing Officer holding that the expenditure was not incurred wholly and exclusively for the purpose of business of the assessee company.

Before the Tribunal the assessee submitted that the Pooja Expenses incurred during festivals like Ram Navami, Navratri, Diwali, Vishwakarma, etc. Evidences were produced relating to the claim. The assessee had also appointed one Poojari for daily office Pooja on monthly payment basis to ensure maintaining positivity in working environment.

The Tribunal observed that the issue under consideration was appropriately considered by the Co-ordinate Bench of the Tribunal wherein similar issue was decided by the Bench in favour of the assessee. In the said case, the assessee had relied upon the CBDT Circular No. 17(F.No.27(2)-IT/43) dated 6-5-1983 & Circular No.13A/20/68-IT-II dated 3-10-1968, wherein, it was emphasized that expenses incurred on the occasion of Diwali and Muhurat are in the nature of business expenditure.

The Tribunal, relying upon the said jurisprudence, held that Pooja Expenses incurred were allowable under section 37 of the Act. The Revenue could not bring out any cases favouring the Revenue.

Accordingly, the ITAT set aside the impugned order passed by the CIT(A) by allowing all the grounds raised by the assessee.

Download Full Judgment Click Here >>

• Limitation u/s 34 of Arbitration Act commences on disposal of application u/s 33 by Arbitral Tribunal – SC
• Case remanded in absence of finding if disallowance u/s 40A(3) covered by Rule 6DD
• For investment in share capital, source of investment is outside the control of the investee company
• ICAI issues revised Code of Ethics (13th edition)- Applicable Dates
• Modified Norms for Nomination in Demat Accounts and Mutual Fund Folio