We have carefully considered the rival contention and perused the orders
of the lower authorities. Issue involved in this appeal is whether the
expenditure incurred by the assessee is allowable u/s 37 (1) of the act or
not. Allowability of an expenditure incurred by the assessee u/s 37 (1) of
the act is required to be tested in accordance with nature and scale of
the business/ profession of the assessee. It may be a case that in case
of one assessee, particular expenditure is “ wholly and exclusively “
incurred for the purposes of business and in another case it may not
be so. Undoubtedly, assessee is a noted international lawyer who has
set up a scholarship for creating his visibility in international arena
and his social standing. The assessee has specifically submitted that it
has increased lot of value of the CV of the assessee and the government
of Singapore has appointed him on certain committees of repute. Even
otherwise, it is not open to the revenue to adopt a subjective standard of
reasonable as and decide whether the type of the expenditure of the
assessee should incur and in what circumstances. The opinion of the
learned assessing officer that attending the conferences et cetera would
have added more weightage to the professional profile of the assessee is
devoid of any merit. It is not the AO but the assessee is carrying on the
profession. He knows better that what kind of expenditure he should
incur for furtherance of his business. To judge allowability of an
expenditure, the learned assessing officer should put himself into the
shoes of the assessee and then decide that whether the expenditure
incurred by the assessee is necessary or not for the business of the
assessee. Thus, allowability of expenditure should always be judged
from the mindset of the assessee. The AO cannot put his thinking to say
that the expenditure incurred by the assessee is not wholly and
exclusively incurred for his profession, unless, he brings his level of
thinking to the level of the professional, like assessee. The requirement
of incurring the expenditure by a professional/businessman changes by
the changes in the dynamics of the business, its complexities and its
uniqueness. The level at which the assessee is carrying on the
profession, perhaps, he might not have thought it proper to increases
visibility by attending the conferences, seminars et cetera. He has
different vision of carrying himself in the professional field to increases
visibility and social status. He thought fit to set up a scholarship to
Indian students in Oxford University. Thus, in the present case
definitely there is a nexus between the expenditure incurred by the
assessee and the professional services rendered by the assessee. He has
also shown that the student to moving the scholarship has been granted
has helped him in famous case of Vodafone represented by him.
Therefore, we are of the opinion that the assessee has incurred the above
expenditure wholly and exclusively for the purposes of the business. In
the professional field there are innovative ways visualized by the
professional to make themselves visible in the professional circle and to
build their own professional profile for generating higher and valueadded
business. It may be, sponsoring a seminar, becoming knowledge
partners, setting up the prizes and awards, creating the competitive
award ceremonies, hosting vibrant summits of various states. Therefore,
it is apparent that at least in the case of the professionals, the way they
promote themselves, is changing very fast and the benefits of such
expenditure are huge and wide. Therefore according to us the impugned
expenditure incurred by the assessee is a revenue expenditure allowable
u/s 37 (1) of the income tax act. We do not subscribe to the view of the
learned CIT – A these expenditure is capital in nature. The expenditure
incurred by the assessee is the routine day-to-day expenditure incurred
by the assessee for promoting his professional profile. These expenditure
cannot be held to be capital expenditure in nature as no fresh new fixed
assets is created by paying the scholarship sum. Further merely
because in the agreement it is mentioned as an annual gift in the form of
scholarship, it does not become a gift. In fact, it is the expenditure
incurred by the assessee in furtherance of his business.
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “F ”: NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 2285/Del/2016 ( By Assessee)
&
ITA No. 2392/Del/2016 ( By AO)
(Assessment Year: 2011-12)
Shri Harish Narinder salve vs The Assistant Commissioner
of Income tax
Date of pronouncement 13/08/2019
O R D E R
PER PRASHANT MAHARISHI, A. M.
