Assessee was a managing director of Company Indian Magnetics Ltd. He stood personal guarantee in respect of loan taken by company ‘On account of default in repayment of said loan, assessee in capacity of lawyer, entered into settlement with banks and paid agreed amount. Assessee claimed deduction of legal expenses in respect of aforesaid settlement against income generated through legal profession. AO rejected the claim on ground that said expenditure was of personal nature. Order of the AO is up held by the Tribunal. High Court affirmed the order of the Tribunal. Followed Shanti Bhushan v. CIT (2011) 11 taxmann.com 181 (Delhi) (HC)
Satinder Kapur. v. ACIT (2019) 110 taxmann.com 24/ 266 Taxman 378 (Delhi) (HC) Editorial: SLP of the assessee is dismissed; Satinder Kapur v. ACIT (2019) 266 Taxman 377 (SC)
S. 37(1) : Business expenditure–Legal settlement expenses– Capacity as manging director of the company-Not allowable as business expenditure of the company in his capacity as an advocate against professional income.