|QUERY:||Is there any restriction or limit on refreshment/ gift paid to members whoever attends an annual general meeting? Can it be questioned by the AO?|
|ANSWER:||In case of listed companies, SEBI prohibits giving gifts to the share holders in AGM. However SEBI permits light refreshment, tea, coffee etc. to share holders in AGM.
Generally, the AO allows the expenses incurred at AGM, if it is reasonable and for the purpose of business.
In CIT v. Tirrihannah Co. Ltd. [195 ITR 393] the Calcutta High Court in case of Tea Manufacturing Company, has held that distribution of tea samples to share holders present at AGM and complimentary tea packets to the directors and friends to popularise the product is allowable deduction as it was for the purpose of business.
|EXPERT:||CA. H. N. Motiwalla|
|CATCH WORDS:||business expenditure, co-operative bank|
Opinion Of Eminent Legal Luminaries On Controversial Issues
Are AGM Expenses Allowable?
Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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