Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 1053 - ITAT AHMEDABADNature of expenses - Allowable expenses u/s 37(1) - Interest and late fee on TDS, Late payment & penalty charges, Interest on margin trading facility - AO had made disallowance treating the aforesaid expenses as being penal in nature, not allowable u/s 37(1) in the absence of the assessee being able to furnish any evidence to substantiate its claim that expenses were incurred wholly and exclusively for the purpose of business of the assessee - HELD THAT:- There was no basis with the AO/ld.CIT(A) to hold that these expenses were in the nature of penalty/expenses for any purpose being an offence or which is prohibited by law, not allowed in terms of Explanation to section 37(1) - that we completely agree with assessee that narration of these expenses, as noted by the AO/CIT(A) does not reveal any such nature of the expenses as far as interest on margin trading facility or TDS is concerned. And as for the late payment and penal charges also, the nomenclature mentioning late payment also, there was no basis to arrive at a conclusion that all referred to penalty paid by the assessee, that too infringement of any law. The books of accounts admittedly were all produced before the AO, and the ledger account of these expenses also did not reveal any such fact so as to arrive at a finding that these expenses were disallowable being penalty in nature. The ledger account of these expenses, coupled with the explanation of the assessee that these expenses were incurred for the purpose of business of the assessee substantially substantiated the claim of the assessee. Assessee being in the nature of trading in shares and securities, the expenses incurred on account of interest on margin facility and late payment to brokers is undoubtedly incurred in the course of business. There was no requirement for the assessee to prove they were not in the nature of penalty, disallowable u/s 37(1). We hold that the disallowance of aforementioned expenses holding the same to be penal in nature, is without any basis and without appreciating the facts on record. Decided in favour of assessee.
|