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Issues:
1. Disallowance of trip expenses amounting to Rs. 69,448. 2. Disallowance of Rs. 1,47,465 by way of cost of time-share and Rs. 2,01,135 by way of advance membership incurred to acquire time-share in a holiday resort. Analysis: 1. The first issue pertains to the disallowance of trip expenses amounting to Rs. 69,448. The appeal was filed against the order of the CIT(A) disallowing the expenditure on the grounds that it was for personal pleasure. However, it was argued that the trip was organized to enhance rapport between partners and employees for business purposes. The ITAT held that the partner's participation in the trip was for business interests, not personal pleasure, and directed the allowance of the claimed amount as a deduction. 2. The second issue concerns the disallowance of expenses related to time-share acquisition in a holiday resort. The AO disallowed the deduction, considering it as capital expenditure for personal purposes of the partners. The ITAT noted the argument that the expenditure was for staff welfare and not capital in nature as it did not involve acquiring a physical asset. The Departmental Representative contended that there was no evidence of business purpose or employee benefit. The ITAT found the explanation unsubstantiated and remanded the issue to the AO for further examination to ascertain the nature of the expenditure, emphasizing it was not capital expenditure due to the absence of acquiring a physical asset. In conclusion, the ITAT partly allowed the appeal, directing the allowance of the trip expenses and remanding the decision on the time-share acquisition expenditure for further substantiation and examination by the AO to determine its nature and business purpose.
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