Law: Income Tax Act, 1922

Section: 10(2)(xvi)

Law: Income Tax Act, 1922

Section: 10(2)(xvi)

Income-tax Act, 1922 -- Section 10(2)(xvi) -- Business expenditure -- Proceedings before Appellate Authorities -- Legal fee incurred -- Whether allowable deduction - Held yes -- Business expenditure -- Expenses incurred as legal fee -- Held, allowable under section 10(2)(xvi) -- ORDER The order was passed by MIAN ABDUL KHALIQ, Judicial Member. ---The Department in this second appeal is aggrieved of the order of the learned Appellate Assistant Commissioner of Income-tax, Range, where by the assessee-respondent's claim of legal fee was allowed at Rs. 5,000/- in the assessment year 1973-74. The Income-tax Officer disallowed the assessee-respondent entire claim of Rs. 5,151/- as the claim did not pertain to the year under assessment. In appeal the learned Appellate Assistant Commissioner modified that disallowance holding that liability in respect of income-tax fee accrues when it became due. On this basis, assessee-respondent's claim was allowed at Rs.5,000/- resulting in disallowance of Rs. 100/- only. 3. The learned Departmental representative contended that reduction in disallowance out of legal fee was un-justified. The assessee-respondent's Authorised Representative, in his turn submitted that the Income-tax Officer's finding that the claim did not pertain to the year under assessment was factually incorrect as on 17-6-1972 two appeals were argued by M/s. S&C and bills for payment of fee were sent on 23-6-1972 M/s. S&C received payment on 12-8-1972. The assessee-respondent's system of accounting being mercantile year in his case having ended on 30-9-1972. the payment of Rs.5,000/- was thus made within the year under review. The Income-tax Officer's finding on this issue is factually…

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