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2018 (2) TMI 344 - AT - Income TaxDisallowance of the legal and professional expenses - assessee claimed that said amount has been paid to the Government account as TDS, and therefore it is a business expenditure allowable to the assessee - whether TDS paid to the Government account without incurring expenditure cannot be held to be a business expenditure for earning income? - Held that:- The tax has been deducted as tax liability of the deductee and it is not the tax liability of the assessee. In other words the tax deducted at source is the amount paid to the government on behalf of those parties, which means the said amount has been paid to those parties. Now the question arises whether this amount paid to those parties is allowable to the assessee, when those parties have not rendered any services and the balance liability of ₹ 43, 89, 165/-has already been written back by the assessee in subsequent assessment year. In our view, the amount of ₹ 5, 60, 835/-deposited as TDS, is an expenditure, which the assessee has failed to explain as incurred wholly and exclusively for the purpose of business. We also note that the assessee has failed to explain before the Assessing Officer whether this amount of tax deducted at source was deposited in Government account. - Decided against assessee Disallowance of the legal and professional expenses on the ground that same was incurred in connection with issue of preference shares and thus it was in the nature of capital expenditure - Held that:- CIT-(A) has given the finding that said expenditure was incurred for issue of redeemable preferential shares to M/s Kitson PTE Ltd and though the said express was incurred during financial year 2006-07 but has been claimed during the year as liability to pay these expenses crystallised during the year. This factual finding of the Ld. CIT-(A) has not been rebutted by the Ld. counsel of the assessee. Thus, in view of the finding of the Ld. CIT-(A) that expenses are in relation to issue of share capital, same are not allowable. In our opinion finding of the Ld. CIT-(A) on the issue in dispute is well reasoned and we do not find any error in the same. Accordingly, we uphold the same. The ground of the appeal of the assessee is dismissed.
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