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2016 (9) TMI 1061 - AT - Income TaxDisallowance of legal expenditure and travelling, hotel expenditure - Held that:- From the record we found that that the expenditure is incurred by the assessee in his character as a professional and is not an expenditure which is personal in nature. The assessee has in his professional capacity been a director of various limited companies has earned professional fees for the services rendered to these companies. He was a director of Nagarjuna Finance Limited (NFL) from 14-12-1982 to 28-04-1999. The assessee has earned professional income during all the years, he was, a director of NFL. The details of professional income earned during the said years are given in annexure ‘A’ which is placed on record. The assessee serves as an Independent Director on the Board of several leading Indian Companies such as Apollo Tyres Limited, Britannia Industries Limited, Deepak Nitrite Limited and KSB Pumps Limited and also a member of various Governing Boards of Centre for Policy Research, Indian Institute of Capital Markets, CII, SEBI etc. He regularly gets sitting fees and commission from many of these Companies. The assessee was also an independent Director on the board of Nagarjuna Finance Limited. Nagarjuna Finance Limited had collected Fixed Deposits from the public. Nagarjuna Finance Limited was charged with default in repayment of fixed deposits and interest thereon. Mr. Nimesh Kampani has been mentioned as one of the accused among several others, for non-payment of these fixed deposits by Nagarjuna Finance Limited. The Andhra Pradesh Government had since filed suit against directors of Nagarjuna Finance Limited including Mr. Kampani. To defend himself, Mr. Kampani has appointed various advocates to represent his case before various courts viz, District Court, High Court of Andhra Pradesh, Supreme Court of India. As the expenditure is incurred to protect his business interest the same is required to be allowed u/s. 37(1) of the Act. Accordingly we direct the A.O. to allow legal expenses. In respect of travelling expenditure, it appears that the assessee has filed details before the CIT(A) under Rule 46A, which was declined by the CIT(A) as additional evidence. Since the impugned expenditure also partake the character of professional expenses and which goes to the root of the issue while deciding allowability of hotel and travelling expenses, we restore the matter back to the file of the A.O. for considering the additional evidence filed with reference to expenditure incurred on travel and hotel and for deciding the same afresh after giving due opportunity to the assessee. - Decided partly in favour of assessee.
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