Income tax case involving disallowance of expenses incurred by a ...

Tribunal Allows Deduction for Guest House Expenses, Citing Business Purpose and Supreme Court Precedent.

September 12, 2024

Case Laws     Income Tax     AT

Income tax case involving disallowance of expenses incurred by a company for maintaining a guest house. The legal ownership of the guest house was with the company during the relevant assessment year. The company incurred expenditure towards maintenance of the guest house for business purposes. The Tribunal held that the expenditure was for business purposes and should be allowed as a deduction. It cited the principle that it is for the assessee to decide whether an expenditure should be incurred in the course of business. The Supreme Court's decision in Sasoon J. David case was relied upon, which held that voluntary expenditure incurred for promoting business and earning profits is deductible. The Tribunal directed the Assessing Officer to allow the guest house maintenance expenditure and delete the additions made. The case was decided in favor of the assessee company.

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