In Mrs. Kinty Suri v. ITO, the Delhi ITAT held that foreign visits by a non-employee Director and shareholder for the purpose of business of company is not a perquisite within the meaning of section 17(2)(iii) of the Income Tax Act.
In the instant case, assessee had undertaken foreign travel tour to UAE, Singapore etc. while completing assessment, the AO disallowed the claim of travel expenses by the assessee under section 17(2)(iii) of the IT Act on ground that she had not produced any evidence proving the claim.
On appeal, the assessee contended that she is a shareholder/ Director of the Company, M/s. Design & Development India Pvt. Ltd and therefore, section 17(2)(iii) as invoked by the AO is not applicable to the facts of the case. it was also contended that no foreign travel expenditure have been claimed in the hands of the assessee because same have been incurred by the company.
After considering the arguments from both sides, the bench noted that the assessee has not received any salary and any meeting fees from the company. it was noted that Section 17(2(iii) of the I.T. Act does not apply to the assessee as assessee was not an employee of M/s. Design & Development (P) Ltd.
“It may also be noted here that assessee filed certificate and Board resolution of M/s. Design & Development India Pvt. Ltd. in which it is clarified that Board has sent the assessee to foreign trip for business purposes and all the expenditure are borne by the company. It is also certified that assessee was a non-employee director and share holder in the company and no salary or director’s fees was paid to her by the company during the year under consideration. These evidences on record clearly prove that assessee undertaken foreign visits for the purpose of business of company and is not a perquisite within the meaning of section 17(2)(iii) of the I.T. Act.”
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