On appeal by the Department, the Tribunal observed that the payment made by Assessee should fulfill the conditions of section 37(1) of the Act and the payments, prima facie, seemed to be part of the acquisition process and therefore, it was imperative to find out the exact nature of services rendered by the individual. Accordingly, the Tribunal sent the matter to the AO for re-adjudication in light of the acquisition agreement. The complete onus to demonstrate that the expenditure qualified for deduction rested on the Assessee. If the expenditure was, at all, found admissible, deduction could be allowed only to extent of services being rendered by the individual for the benefit of the Assessee only and not for the other entities. (AY. 2011-12)
ACIT v. Sodexo Food Solutions India P. Ltd. (2019) 69 ITR 119 (Mum.)(Trib.)
S. 37(1) : Business expenditure-Deduction for professional fees paid to Individual for professional services was to be allowed only to the extent of services rendered for the benefit of the Assessee and not for other group entities.