The Income Tax Appellate Tribunal, Pune Bench “A”, has delivered its decision in DCIT, Circle 1(1), Pune v. Coca Cola India Pvt. Ltd., concerning Assessment Year 2018-19. The appeal involved substantial disallowances relating to advertisement and sales promotion expenditure, marketing support expenses, service charges, depreciation on coolers and deduction claimed under Section 80G of the Income-tax Act, 1961. The order was pronounced on 27 July 2026.
Income Tax
The principal dispute concerned advertisement and sales promotion expenditure of ₹563.86 crore and marketing support expenditure of ₹32.90 crore. The Assessing Officer had disallowed these expenses on the ground that the assessee failed to establish that they were incurred wholly and exclusively for its own business. The CIT(A), however, deleted the additions by following earlier Tribunal decisions rendered in the assessee’s own cases.
The ITAT upheld the CIT(A)’s decision. It observed that the same issues had already been decided in favour of the assessee for several preceding assessment years. The Tribunal held that the mere pendency of the Revenue’s appeals before the Bombay High Court, or the intention to keep the issues alive, could not justify sustaining the additions in the absence of any distinguishing facts.
The Tribunal also upheld the deletion of the disallowance relating to service charges paid to Coca-Cola India Inc. It relied on the consistent view taken in the assessee’s earlier assessment years, under which the expenditure was accepted as having a sufficient nexus with the assessee’s business of manufacturing and selling beverage concentrates. The incidental benefit received by bottlers or other group entities did not, by itself, defeat the business character of the expenditure.
Another important issue concerned depreciation of ₹71.23 crore claimed on coolers installed at the premises of bottlers, vendors and retailers. The Assessing Officer had denied depreciation on the reasoning that the coolers were not physically used at the assessee’s premises and were used for selling finished beverages manufactured by bottlers. The Tribunal upheld the deletion of this disallowance by following its earlier orders in the assessee’s own cases. It accepted the commercial connection between the placement of coolers, increased sales of chilled beverages and the resulting demand for the assessee’s beverage concentrates.
The Revenue’s challenge concerning the deduction of ₹6.77 crore under Section 80G was, however, dealt with differently. The CIT(A) had allowed the entire claim after examining certain receipts on a sample basis. The Tribunal held that the complete supporting material, including donation receipts, eligibility of the recipient institutions and proof of payment through banking channels, required proper verification. The issue was therefore restored to the Assessing Officer, with a direction to verify the evidence and allow the deduction upon satisfaction.
Accordingly, the Revenue’s appeal was dismissed in relation to advertisement and sales promotion expenses, marketing support expenditure, service charges and depreciation on coolers. The Section 80G issue was remanded for verification, and the appeal was partly allowed for statistical purposes.
Why Read This Briefing?
This judgment is relevant for Advocates, Chartered Accountants, Company Secretaries, Tax Consultants, corporate tax teams, businesses and Income Tax practitioners dealing with the allowability of commercial expenditure, the principle of consistency, incidental benefit to third parties, depreciation on assets deployed outside an assessee’s premises and evidentiary requirements for Section 80G deductions. It also illustrates the limits of making recurring disallowances merely because earlier favourable Tribunal orders remain under challenge before a High Court.