Retainer Fee to US Agent Allowed as Business Expense; No Disallowance Without Exempt Income

JIL Information Technology Ltd. Vs ACIT (ITAT Lucknow)

Conclusion: Where payment made to foreign entities by way of retainership fee did not result in commensurate business in USA in the year relevant to assessment year 2008-09, it did not imply that the expenditure incurred was not for the purpose of the assessee’s business. AO was directed to delete the addition of Rs.64,88,451/- by observing that the expenditure was disallowed u/s 14A.

Held: Assessee-company was a computer software company. During the year under consideration it entered

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