Case Law Details
Fact that a particular expense does result in a profit for the Assessee in the immediate proximity cannot form the basis of its dis allowance. In incurring an expense, a business person could have a short and a long term perspective. The fact that in the short term the expense incurred does lead to a profit, cannot rule out the possibility of accretions of profits to the Assessee in the long run. These are business decisions best left to the wisdom of those who run and manage the business. Therefore, as long an expense is incurred, wholly and exclusively for the purpose of the business carried on by the Assessee, it ought to be, ordinarily, allowed under Section 37 of the Act.
Full Text of the Judgment
1. This appeal is directed against the judgement of the Income Tax Appellate Tribunal (in short ‘the Tribunal’), dated 11.08.2016, qua the Assessment Year (A.Y) 2006-07.
2. The only issue, which arose for consideration, before the Tribunal was, whether the order of the Commissioner of Income Tax (Appeals) [in short, ‘the CIT(A)’], dated 23.12.2010, was required to be sustained.
3. The CIT(A) vide order dated 23.12.2010, had reversed the findings of the Assessing Officer, with regard to the dis allowance of the expenditure, claimed by the Assessee qua legal fee and the expenses incurred towards Professional Indemnity Insurance.
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