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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-7, New Delhi dated 01.06.2018.
Following grounds have been raised by the assessee:
“1. That on facts and in law, the ld. CIT(A)-7 erred in upholding the disallowance off expenditure of Rs.28,93,984/- made by the AO (out of ‘subscription & Membership Fee’) u/s 37(1) of the Act, being annual participation fee paid to the World Economic Forum – Switzerland for the Director of the appellant during the year, by holding that the said expenditure was not incurred wholly and exclusively for the purpose of business of the appellant.”
2 RHC Holding Pvt. Ltd. 3. Brief facts of the case are that the assessee filed its return of income on 29.11.2012 declaring an income of Rs.178,84,46,890/-. The assessee company is a registered non- banking financial company with Reserve Bank of India. The assessee company has been primarily engaged in granting loans and advances. The assessee company was also engaged in the business of investment in shares and mutual funds.
The only issue involved in the appeal relates to disallowance of Rs.28.93 lacs being the annual participation fee paid to World Economic Forum – Switzerland for the Director of the company during the year. The AO held that this expenditure doesn’t have any relation to the existing business being carried out by the assessee and held that the visit was the individual capacity of the persons who are promoters of the group and discussions in the forum regarding the Global Business Environment doesn’t in any way appear to have any connection so as to claim the expenses were related to a set up of a business based on new strategies or models learnt by them in the said forum.
The ld. CIT(A) has also confirmed the addition based on his order for the A.Y. 2011-12 and A.Y. 2013-14. At the outset, it was argued that this matter has been adjudicated by the Co- ordinate Bench of ITAT in assessee’s own case vide order dated 05.03.2020 in ITA No. 4269/Del/2016. The relevant portion of the said order is reproduced herewith for ready reference which is as under:
“7. We have heard both the parties and perused the material available on record. It is pertinent to note that 3 RHC Holding Pvt. Ltd. in the Assessment Order, the Assessing Officer has not taken into account that the assessee has shown the subscription and Membership Fees in Schedule 18 attached to the Profit and Loss account. Besides that there is no separate finding given by the Assessing Officer as well as by the CIT(A) as to on what basis this expenditure has not been incurred for business purpose. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for fresh adjudication. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.”
Keeping in view the order of the Tribunal and the history of the issue, we hereby remand the matter to the file of the Assessing Officer to examine the issue in proper prospective and pass a speaking order.
In the result, the appeal of the assessee is allowed for statistical purposes. Order Pronounced in the Open Court on 25/11/2021.