INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Allowability - Expenditure on account of designing work of assessee's premises - Invoices inadvertently issued by vendor in the name of assessee's group concern

Assessee-company claimed expenditure under the head repairs and maintenance of buildings. AO observed that the said expenditure was made for designing work of the assessee's premises; however, the invoices for the same were issued in the name of an entity 'T'. Since the payment was not made by assessee, AO disallowed the said expenditure. Assessee submitted that the 'T' was its group company and the vendor raised the invoices inadvertently in the name of 'T'. However, the payments for the said expenditure were made by the assessee after deduction of tax at source. Held: Although the invoices for designing work at assessee's premises was issued by vendor in the name of 'T', however, the ledger extract of the said vendor as appearing in assessee's books clearly showed that the assessee, itself, had made payment for the designing work, which had been cleared from the assessee's bank account. Further, assessee deducted due tax at source from the said payment. Thus, assessee's explanation that the invoices were inadvertently issued by the vendor in the name of its group concern was to be accepted. Further, the expenditure was in the nature of designing work of the premises from where the assessee's business was being carried on, therefore, the expenditure was to be treated as revenue in nature and hence, the same was allowed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 37(1)

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