On 24th Feb 2021, the Income Tax Appellate Tribunal in the case of Harish N. Salve v. ACIT comprising of Shri R.K. Panda (Accountant Member) and Shri K. Narasimha Chary (Judicial Member) allows Harish Salve’s claim and stated that Monetary help to students to pursue law at Oxford is “expenditure incurred for profession” under Income Tax Act.
Factual Background of the Case
The assessee is an Advocate by profession and derives income from business or profession, house property, capital gains and also income from other sources. During the course of assessments for the assessment years 2013-14 and 2014-15, the Assessing Officer found that the assessee claimed Rs.34,19,730/- for the assessment year 2013-14 and Rs.84,40,301/- for assessment year 2014-15 under the head “Assistance to Law Students”, and when asked, submitted that the assistance paid to law students Diksha Sharma and Krishna Prasad K. V. at Oxford is the justification for such claim. It was further stated by the Assessing Officer that the very same plea was taken by assessee for the assessment year 2014-15 also.
The Assessing Officer observed that the facts for this year are similar to the ones in earlier assessment years and therefore, similar disallowance had to be made on the ground that the assistance to law students, who are nowhere related to the profession of the assessee, and such claim as a business expense is not acceptable to have been incurred wholly and exclusively for the purpose of business/profession of the assessee.
Commissioner of Income Tax (CIT)
CIT did not accept the plea taken by the assessee and dismissed the same.
The Appellant in its submissions submits before the Court that the,
- the assessee who is an established Sr. Counsel in India, was focusing on international practice and spent considerable amount of time, taking on international arbitration work in London and other international centers such as Singapore; that in this process, since this whole profession is based on developing contacts and UK being a center wherein the academicians are an active part of legal fraternity, the Assessee decided to provide funding for education of Indian students in the Oxford University;
- support was to be provided to top Indian students interested in pursuing law degree in UK; that this move was not only to support the Assessee in creating goodwill amongst academia in UK and in turn creating a name/develop contacts in legal fraternity but also to support the juniors in chambers who may go abroad become technical sound and help in preparing the cases involving complex issue of international taxation and commercial laws;
- and that accordingly, in all circumstances, the decision to fund the students was a business decision to support the Assessee in his profession as a lawyer and therefore, expense of Rs.34,19,730/- and Rs. 84,40,301/-incurred for this purpose was claimed as an expenditure for both the assessment years respectively.
- when a similar disallowance was made in the assessment year 2011-12, a coordinate Bench of this Tribunal deleted the disallowance and the facts and question of law remained the same and such order has been followed by other coordinate Bench in ITA No. 2705/Del/2017 for assessment year 2012-13.
Respondent Submissions (DR)
DR placed reliance on the orders of the authorities below and submitted that the orders of the Tribunal are not available with him and he cannot offer any comments on the orders of the earlier assessment years.
The Court in its judgment stated that the,
“For the assessment year 2012-13 also in ITA No. 2505/Del/2017, such a view was followed by Tribunal. On the parity of facts of the cases on hand with the facts of earlier years, we are of the considered opinion that the consistent view taken by the Tribunal for earlier assessment years cannot be disturbed.”
Further the Court directed the Assessing Officer to delete the addition.
The Court, allowed the both appeals.