The Tax Publishers2021 TaxPub(DT) 0412 (Del-Trib)


Section 37(1)

Subscription fee paid by assessee to one of partners was nothing but reimbursement and no profit element was there, hence, allowable as business expenditure.

Business expenditure - Subscription fee - In earlier years revenue allowed deduction -

AO observed that the assessee had paid subscription fees to a company registered in USA. According to the AO, it cannot be claimed as business expenditure. Such observation of the AO does not hold any water, because under the Companies Act, a company can be incorporated under any other law also. The AO had further mentioned that in the partnership deed, there is no clause relating to payment of DTT. AO was of the opinion that on the one hand DHS Mumbai is making payment as fees for profession or technical services and, on the other hand, the assessee is claiming the same as subscription fees. AR submitted that ground pertained to disallowance of subscription fees which was identical to assessee's appeal for assessment year 2011-12 and the arguments would be the same on the issue. Per contra, the Sr. DR submitted that as far as the issue of subscription fees paid to Deloitte Touche Tohmatsu in both the years was concerned, he was strongly supporting the findings of the AO as well as the CIT(A). It was submitted that the assessee could not furnish the details of quantification of subscription fees and further the assessee could not establish that these expenses had been incurred wholly and exclusively for the purposes of assessee's business. CIT(A) deleted the addition. Held: Amount was towards the reimbursement of the expenses, which was, in fact incurred on behalf of the assessee and threre was no profit element. That being so, the Tribunal declined to interfere with the order of CIT(A) deleting the aforesaid addition and the AO was, therefore, directed to delete the disallowance.

Followed:Ahmedabad's ITAT Bench in assessment years 2013-14 & 2014-15 ITA No. 1983/Ahd/2017 and 1984/Ahd/2017 vide Order, dated 1-10-2019, Delhi Bench of Tribunal in assessment year 2009-10 in ITA No. 2927/Del/2013 vide Order, dated 23-10-2018 and Delhi Bench of the Tribunal in assessment year 2009-10 ITA No. 2927/Del/2013 vide Order, dated 23-10-2018.

REFERRED : Deloitte Haskins and Sells, Mumbai ITA No. 5096/Mum/2011 vide Order, dated 30-11-2016 : 2017 TaxPub(DT) 701 (Mum-Trib) and Deloitte Haskins and Sells, Kolkata in ITA Nos. 587 and 588/Kol/2016 vide Order, dated 11-7-2018.

FAVOUR : In assessee's favour.

A.Y. : 2011-12 & 2012-13


Section 40(a)(ia)


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