Law: Income Tax Act, 1961

Section: 37(1)

Section 37(1) of the Income-tax Act, 1961 [Corresponding to section 10(2)(xv) of the Indian Income-tax Act, 1922] - Business expenditure - Allowability of - Assessment year 1953-54 - Whether expenditure incurred in preparation of statements and accounts for income-tax purposes and engagement of an income-tax consultant to satisfy tax authorities with regard to statements and accounts was not expenditure incurred wholly and exclusively for purpose of carrying on business and, hence, not allowable under section 10(2)(xv) of 1922 Act - Held, yes FACTS The assessee-company incurred an expenses of Rs. 8,600 as fees of chartered accountants and lawyers who appeared for it before the Income-tax Investigation Commission. The proceedings in which they appeared related to earlier years but the payment was made in the assessment year in question. The assessee claimed the amount as an admissible deduction under section 10(2)(xv) of 1922 Act. The Tribunal refused deduction on two grounds : (1) that an expenditure of this nature was not a permissible deduction under section 10(2)(xv) of 1922 Act and (2) that the payment was for services rendered in connection with the accounts of the income of not the year in question but earlier years. On reference : HELD In S.D. Sharma v. CIT [1962] 45 ITR 107 , the expenditure incurred in the preparation of statements and accounts for income-tax purposes and the engagement of an income-tax consultant to satisfy the tax authorities with regard to the statements and accounts was held to be not expenditure incurred wholly and exclusively for the purpose of carrying on the business. Accordingly, the sum in question was not a permissible deduction under section 10(2)(xv) of 1922 Act. Note: The case was decided against the assessee. CASES REFERRED TO S.D. Sharma v. CIT [1962] 45 ITR 107 (Bom.), Allen v. Farquharson Bros. and Co. [1932] 17 Tax Cas. 59, Rushden Heel Co. Ltd. v. Keene [1949] 17 ITR (Suppl) 19, Smith's Potato Estates Ltd. v. Balland [1949] 17 ITR (Sppl.) 1 and Worsley Brewery Co. Ltd. v. Commissioners of Inland Revenue [1932] 17 Tax Cas. 349. R.S. Pathak for the Applicant. Gopal Behari for the Respondent. JUDGMENT Brijlal Gupta,…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492