The Tax Publishers2020 TaxPub(DT) 2837 (Mum-Trib)

INCOME TAX ACT, 1961

Section 37(1)

Where AO denied deduction of professional fee under section 57(iii) on the ground that said expense could not be shown by assessee to have been laid out or expended wholly and exclusively for the purpose of making or earning of income shown under the head 'other sources' and even assessee failed to fortify alternate claim under section 37(1), except for harping on his claim that expenses were incurred in lieu of professional advice for issues relating compliances in the course of his business, etc. to serve the interests of justice matter was referred back to AO with direction to verify allowability of the aforesaid claim of expense raised by assessee under section 37.

Business expenditure - Professional fees - Original claim made under section 57(iii) denied by AO - Assessee failed to fortify alternate claim of business deduction

Assessee originally claimed deduction of professional fee under section 57(iii) against the income which was earned by him from 'other sources' viz., interest on FDR's interest on infrastructure bonds and other interest income. AO denied assesse's claim holding that aforesaid expense could not be shown by assessee to have been laid out or expended wholly and exclusively for the purpose of making or earning of income shown under the head 'other sources'. But then, it was claim of assessee that as aforesaid expenses was incurred in lieu of professional advice for issues relating to litigation, tax appeals, accounting and compliances in the course of his business, therefore, the same was allowable under section 37. Held: There was no material available on record to substantiate claim of assessee that professional fees as claimed by him was incurred for availing of certain professional services in the course of his business. In fact, assessee except for harping on his claim that aforesaid expenses was incurred in lieu of professional advice for issues relating to litigation, tax appeals, accounting and compliances in the course of his business, however, failed to fortify the same on the basis of any corroborative material. However, to serve the interests of justice matter was referred back to AO with direction to verify allowability of the aforesaid claim of expense raised by assessee under section 37.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 37(1)

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