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2017 (7) TMI 950 - AT - Income TaxFee paid to ROC for increasing the share capital is to be treated as capital expenditure Disallowance u/s. 40(a)(i) - payment on account of International Private Leased Circuit (IPLC) charges and connectivity charges to non-resident parties without tax deduction at source - Held that:- Since in the call connectivity and transmission from end of the Indian Territory at Mumbai to the termination of call in USA, no technical knowledge has been made available to the assessee, respectfully following the decision of the Tribunal in the case of Bharti Airtel Ltd Vs. ITO ( 2016 (3) TMI 680 - ITAT DELHI), we hold that payment for the services of call transmission through dedicated bandwidth provided by the non-resident parties to the assessee , cannot be termed as Fee for Technical services under the treaty also, in the hands of the recipients Expenditure towards traveling and educational tuition fee incurred outside India on the education of promoter - Held that:- There is nothing on record to establish as to how the educational course (BBA/MBA) done by Karun Ansal abroad was beneficial to the business of call centre then run by the assessee-company. We, therefore, find no justification to discard the finding reached by the ld. CIT(A) that Sh. Karun Ansal did not attend any specialized course and the simple degree of BBA cannot be said to be directly linked to the business of running a call centre in which the appellant was engaged and therefore, the decision of the Board of Directors of the appellant company to sponsor Karun Ansal for foreign education was for other than business consideration. It is also evident from the record, that there was no agreement between the assessee company and Karun Ansal nor is there any such request from Karun Ansal for further MBA course. Suo moto extension of sponsorship of Karun Ansal by the assessee company without any agreement between the assessee company and Karun Ansal for such extension for MBA course speaks a lot against the assessee. No business expediency or necessity was established by assessee to bear such a huge expenditure on foreign education of son of assessee’s promoter, who was not even a regular employee of the assessee company at the time of joining the course abroad - Decided against assessee. FBT computation - Held that:- Direct the AO to recalculate the Fringe Benefit Tax after excluding the Training and Development Expenses for the reason that these expenses have not been treated as business expenditure deductible u/s. 37(1) of the Act. No justification to sustain the penalty imposed by the authorities below u/s. 271(1)(c) of the Act.
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