This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-1, Coimbatore dated 04.10.2018 for assessment year 2013-14. ITA No.3386/Chny/2018 :- 2 -:

2. The appellant namely M/s.Matspin India P. Ltd., is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing of Wind Energy & Marketing Agencies. The return of income for the AY 2013-14 was electronically filed on 23.09.2013 disclosing loss of Rs.1,27,80,787/-. Against the said return of income, the assessment was completed by the Dy. The Commissioner of Income Tax , Corporate Circle-2, Coimbatore (hereinafter called AO) vide order dated

15.03.2016 passed u/s. 143(3) of the Income Tax Act, 1961 (in short the) at total loss of Rs. 32,25,348/- after making addition on account of disallowance of Advertisement expenses u/s. 37 of the of Rs.93,29,679/-. The Assessing Officer disallowed the advertisement expenses on account of the fact that to earn commission income of Rs.3,95,000/-, the advertisement expenditure of Rs.93,29,679/- was incurred. The Assessing Officer noticed that advertisement expenses were paid to a proprietary concern, namely, M/s.Venus Garments International, which is owned by Managing Director of the assessee-company. The Assessing Officer held that the transaction of payment of advertisement expenses is a bogus and accordingly, disallowed the said expenditure.

3. Being aggrieved by the above additions, the assessee-company preferred an appeal before ld. CIT(A), who vide impugned order confirmed the addition made by the Assessing Officer. Being aggrieved, the assessee is in appeal before us in the present appeal challenging the decisions of ld. CIT(A). ITA No.3386/Chny/2018 :- 3 -:

4. The ld.AR submitted that the assessee company entered into an Agency Agreement with M/s.Venus Garments International (VGL) , whereby the assessee was entitled to commission 3% on net sales of VGL and the cost of advertisement expenses are to be borne by the assessee and the advertisement expenditure was incurred with an intention of earning higher commission income. Further, ld.AR submitted that the commission expenditure is wholly and exclusively for the purpose of running business and should be allowed as a deduction.

5. On the other hand, the ld. Senior DR submitted that arrangement made by the assessee is a bogus and is intended to evade tax and should not be allowed as deduction. He strongly supported the orders of the Assessing Officer and the ld. CIT(A).

6. We have heard the rival contentions and perused the material available on record. The issue in the present appeal of assessee relates to allowability of advertisement expenses of Rs.93,29,679/-. Admittedly, the advertisement charges are paid to a proprietary concern, which is owned by the Managing Director of the assessee-company. The assessee has failed to prove that the said advertisement expenditure was actually incurred for the purpose of business. It is an admitted fact that the payments are made to the concern in which the Managing Director of the assessee-company is directly interested as a proprietor. In the absence of any material on record establishing the actual advertisement services are carried out by the assessee-company, it can be ITA No.3386/Chny/2018 :- 4 -: inferred that the expenditure is not incurred wholly and exclusively for the purpose of business and therefore, we uphold the disallowance. Accordingly, the sole issue raised in this appeal relating to allowability of Advertisement Expenses stands dismissed.

6. In the result, the appeal of assessee is dismissed. Order pronounced on the 20 th August, 2019 in Chennai. Sd/- Sd/- ( ) (GEORGE MATHAN)  /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER /Chennai, 3/Dated: 20 th August, 2019. K S Sundaram , *45 65/Copy to:

1. )/Appellant

4. 7/CIT

2. *+)/Respondent

5. 5 * /DR

3. 7 ()/CIT(A)

6.  /GF