Case Law Details
Kadavanthara Builders Pvt Ltd Vs ITO (ITAT Bangalore)
ITAT Bangalore held that legal and professional charges being incurred towards business are allowable as revenue expenditure.
Facts- During the course of assessment proceedings, the AO observed that the main source of income during the impugned assessment year was income from deposits. As per the profit and loss accounts, the assessee had shown interest income of Rs. 17,35,627/- and advance written back of Rs.3 1,99,859/-. The fixed deposits were made out of its capital funds. The AO noted that assessee company has not carried out its main business and not generated any revenue from the main business activities. From the interest income, the assessee company has claimed expenses of Rs. 39,21,033/- which were not connected with the interest income earned since there was no nexus between income admitted and expenditure claimed. According to the AO, the expenditure claimed by the assessee cannot be allowed and the interest income received by the assessee is to be treated as income from other sources and he added the same to the total income of the assessee.
Conclusion- Held that the legal and professional charges has been incurred towards business of the assessee for maintaining the peaceful possession of the land acquired. Therefore, these expenditure would be treated as revenue expenditure. Accordingly, I allow these grounds raised by the assessee on this issue.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
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