M/S. CHANG YUN INDIA LTD.,GURGAON vs. ACIT, NEW DELHI

The only issue involved in this appeal is against the confirmation of disallowance at 50% of the scholarship expenses on which FBT was not paid.

Briefly stated, the facts of the case are that the assessee claimed deduction for a sum of Rs.1,75,700/- paid as scholarship to the employees of the assessee company. On being called upon to explain as to why this expenditure be not disallowed as not for business purpose, the assessee submitted that this amount was paid as an incentive to the employees for education of their children and FBT was paid thereon. Not convinced, the AO held such expenditure to be not exclusively for the business purpose. Since the assessee had already paid FBT on 50% of such expenditure, the remaining 50% was disallowed and added back to the income of the assessee. This resulted into an addition of Rs.87,850/-. The ld. CIT(A) confirmed the addition.

Having heard the rival submissions and perused the relevant material on record, we find that similar issue came up for consideration in the assessee’s own case for the immediately succeeding assessment year 2009-10. Vide order dated 8.11.2013, the Tribunal in has deleted similar disallowance. A copy of such order has been placed on record. The ld. DR fairly conceded that the facts and circumstances of the instant year are mutatis mutandis similar to those of the immediately succeeding assessment year already decided by the Tribunal. Respectfully following the same, we delete the impugned addition.

In the result, the appeal of the assessee is allowed.