INDIA BUSINESS WORLD - September 1^st - September 30^th - 2008

SONY WINS TAX TRIBUNAL’S FAVOUR ON AD EXPENSES

Sony India has been allowed by income tax tribunal to claim deductions on its expenses on advertisement and sales promotion for calculating its tax liability. The ruling by the Income Tax Appellate Tribunal (ITAT) pertains to financial year 2001-02 for an expenditure of over Rs 19.63 crore towards advertisement and sales promotion by Sony India Private Ltd. Sony India claimed deduction at the rate of 10% for the expenditure incurred on advertisement and sales promotion. However, assessing officer (AO) disallowed the deduction on the ground that the expenditure was going to strengthen the brand image of Sony worldwide and the benefit was going to flow to the parent company, Sony Corporation, Japan. The tribunal, however, rejected the disallowance made by the AO.