Case Law Details
Shrimp Improvement Systems India (P) Ltd Vs DCIT (ITAT Delhi)
Introduction: This article analyzes the verdict of the Income Tax Appellate Tribunal (ITAT) Delhi in the case of Shrimp Improvement Systems India (P) Ltd vs. DCIT. The focal point is the disallowance of Rs. 1,00,89,351/- as capital expenditure related to due diligence expenses during the assessment year 2016-17.
Background of the Case: The appeal (ITA No. 6265/Del/2019) stems from the Commissioner of Income Tax (Appeals)-8, New Delhi’s order against the assessment order passed by the DCIT, Circle-23(1), New Delhi. The core issue revolves around the disallowance of Rs. 1,00,89,351/- claimed as capital expenditure.
Nature of Expenditure: Shrimp Improvement Systems India, engaged in aquaculture and fisheries, invested in Samudra Hatcheries Pvt Ltd to enhance shrimp production. The due diligence expenses of Rs. 1,00,89,351/- incurred for the acquisition were claimed as revenue expenditure under section 37 of the Income-tax Act.
Assessing Officer’s Decision: The Assessing Officer (AO) contended that since the expenses were related to the acquisition of another company, they should be treated as capital expenditure. Consequently, the claimed amount was disallowed during the assessment.
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