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DATE: August 11, 2015 (Date of pronouncement)
DATE: August 21, 2015 (Date of publication)
AY: 2009-10
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S. 40(b)(v): Provision in partnership deed for payment of salary at percentage share of profits multiplied by “allocable profits” is valid and entitles claim for deduction. S. 37(1): Contribution by law firm to IFA to create awareness of its activities is business expenditure

A plain reading of Clause 6(a) leads us to a conclusion that the term ‘allocable profits’ was used to mean ‘book profits’ as used in Section 40(b)(v) of the Act or otherwise the reference to the section in the Clause has no meaning. When the partners have understood and meant that the word “allocable profits” to mean surplus/book profits, prior to calculation of partners’ remuneration, and when such an understanding is manifest in its actions, we do not see any reason why the Revenue authorities should not understand this term in the same sense

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DATE: May 13, 2015 (Date of pronouncement)
DATE: June 10, 2015 (Date of publication)
AY: 2006-07
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S. 37(1): Even if no business is carried, the expenditure incurred to maintain the corporate entity has to be allowed as a deduction

There is no doubt that the assessee is a corporate entity. Even if it is not carrying on any business activity it has to incur some expenditure to keep up its corporate entity. Therefore expenditure incurred by it has to be allowed

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DATE: March 10, 2015 (Date of pronouncement)
DATE: March 12, 2015 (Date of publication)
AY: -
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S. 37(1): principles for deduction of business expenditure reiterated

The question that was posed by the High Court was whether acceptance of the agreements, affidavits and proof of payment would debar the assessing authority to go into the question whether the expenses claimed would still be allowable under Section 37 of the Act. This is a question which the High Court held was required to be answered in the facts of each case in the light of the decision of this Court in Swadeshi Cotton Mills Co. Ltd. Vs. Commissioner of Income Tax 1967 (63) ITR 57 and Lachminarayan Madan Lal vs. Commissioner of Income Tax West Bengal 1972 (86) ITR 439

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DATE: November 19, 2014 (Date of pronouncement)
DATE: December 3, 2014 (Date of publication)
AY: 2007-08
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S. 37(1): Non-compete fee to ex-MD is revenue expenditure

A payment has to be seen from the context of commercial and business expediency. If the outgoing expenditure is so inextricably linked or related to carrying on or conduct of the business, that is, it can be regarded as integral …

ACIT vs. Clariant Chemicals (I) Ltd (ITAT Mumbai) Read More »

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DATE: November 5, 2014 (Date of pronouncement)
DATE: November 14, 2014 (Date of publication)
AY: 2008-09
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S. 14A/ Rule 8D: Interest expenditure attributable to a taxable business cannot be disallowed. Expenditure on creating assets which do not belong to the assessee is revenue expenditure

(i) Once it was duly established that no borrowed funds on which interest was paid had been invested for earning tax free income, no disallowance was permissible under Section 14A. The Tribunal has observed that under Rule 8D(2)(ii), a proportionate …

ACIT vs. Dhampur Sugar Mill Pvt. Ltd (Allahabad High Court) Read More »

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DATE: October 31, 2014 (Date of pronouncement)
DATE: November 4, 2014 (Date of publication)
AY: 2007-08
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S. 37(1): Law on deductibility of expenditure incurred on legal fees to defend criminal proceedings explained

(i) The ratio of the decisions in CIT vs. Birla Brothers 82 ITR 166 (SC), CIT vs. Dhanrajgiri Raja Narsinghgiri (1973) 91 ITR 544 (SC), CIT Vs. H. Hirjee (1953) 23 ITR 427 (SC) and CIT Vs. Chaman Lal & …

Praveen Saxena vs. JCIT (ITAT Delhi) Read More »

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DATE: October 14, 2014 (Date of pronouncement)
DATE: October 15, 2014 (Date of publication)
AY: 2005-06 & 2006-07
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CITATION:
Expenditure by way of royalty for use of technology cannot be disallowed on the ground of being capital in nature or for non-business purpose

The arrangement between the assessee and the Australian company has been duly signed by both the parties. The rate per piece has also been specified therein. The royalty has been paid in actual. MACNAUGHT is not a related concern of …

Groz Engineering Tools Pvt. Ltd vs. DCIT (ITAT Delhi) Read More »