The Income Tax Appellate Tribunal (ITAT), Delhi Bench deleted the deletes disallowance made under the head “Assistance to Law Students” against Former Solicitor General of India, Harish Salve.
The assessee, Harish N. Salve 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 the 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 a claim. It was further stated by the Assessing Officer that the very same plea was taken by the assessee for the assessment year 2014-15 also.
While disallowing such a claim of assessee, 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.
The assessee who is an established Sr. Counsel in India, was focusing on international practice and spent a considerable amount of time taking on international arbitration work in London and other international centers such as Singapore.
It was urged 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.
The assessee contended that the support was to be provided to top Indian students interested in pursuing law degrees in the UK. This move was not only to support the Assessee in creating goodwill amongst academia in the 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 issues of international taxation and commercial laws. 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.
The coram consisting of R.K.Panda and K.Narasimha Chary while deleting the disallowance ruled that 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.
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