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2010 (5) TMI 59 - HIGH COURT OF DELHIDeduction under section 30 / 37(1) - The assessee had paid certain settlement expenses. The Assessing Officer had disallowed an amount of Rs 29,05,678/- on account of rent. CIT(A) had also confirmed the disallowance both under Section 30 as well as 37 (1) of the Income Tax Act, 1961 - ITAT came to the conclusion that though the amount was not allowable under Section 30 of the said Act, the same could be allowed under Section 37(1) as it had been incurred for a business purpose Held that: an expense would be allowed under Section 37(1) of the said Act if it is shown to have been commercially expedient and that commercial expediency must be viewed from the perspective of a prudent businessman and not from the point of view of the revenue. - Tribunal came to the conclusion that the settlement in the present case was also by way of commercial expediency and the amount was paid in terms thereof. The Tribunal particularly noted that, in fact, the assessee in the present case was in a better footing than in the case of Microsoft Corporation (2008 -TMI - 30427 - HIGH COURT DELHI) because the liability to pay the rent for a minimum period of nine months was a contractual liability and the amount finally settled was actually less than the amount which would have been payable by it as per the agreement. – Deduction u/s 37(1) allowed.
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