| Question And Answer | |
|---|---|
| Subject: | ALLOWABILITY OF EXPENSES UNDER INCOME TAX |
| Category: | Income-Tax |
| Querist: | KARAN SHAH |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Business expenditure, Cricketer, insurance |
| Date: | August 3, 2022 |
CELEBRITY CRICKETOR WITH AN INTENT TO TO MAINTAIN GOOD IMAGE/SOCIAL STATUS AND TO GAIN MORE FOLOWERS AND NEW BRAND ENDORSMENT PURCHASES EXPENSIVE WATCH AND CLOTHES FOR HIM.
Q1. CAN SUCH PURCHASE OF CLOTHS / WATCH BE CLAIMED AS EXPENSE DEDUCTION FROM BRAND ENDORSMENT INCOME AND CRICKET INCOME.
CRICKETOR TAKES SHOULDER INSURANCE KNEE INSURANCE LEG INSURANCE I.E. IMPORTANT BODY PART REQUIRED TO PLAY CRICKET AND ALSO WITH A CLAUSE THAT IN CASE OF INJURY TO ANY SUCH PART DUE TO WHICH HE IS NOT ABLE TO PLAY MATCH INSURANCE COMPANY WILL REPAY.
Q2 – CAN SUCH INSURANCE AMOUNT BE CLAIMED AS EXPENSE
Claiming of expenses incurred on purchase of watches and clothes is precarious and not advisable. Further, as a professional cricket player, premium paid on insurance against injury has a direct nexus with the profession of the assessee. Therefore, the same should be allowable as an expense.
The Hon’ble Income-tax Appellate Tribunal – Ahmedabad Bench in the case of DCIT v. Parthiv A. Patel [2017] 78 taxmann.com 4 (Ahmedabad – Trib.) held that Direct nexus between professional income along with expenditure needs to be established before allowing expenses under section 37(1) of the Income-tax Act, 1961.