“legal expenses”

Business ExpensesSection 37Section 37273 judgments

The decision most relied on for legal expenses is CIT v. Calcutta Agency Ltd. (19 ITR 191), cited in 164 judgments on BharatTax.

Leading authorities on legal expenses

CIT v. Calcutta Agency Ltd.

19 ITR 191 · 1951 · Supreme Court

164

citing judgments

The assessee bears the burden of proving necessary facts to claim deductions. If the assessee fails to establish these facts, the deduction is not admissible.

CIT v. Goetze (India) Ltd.

361 ITR 505 · 2014 · High Court

121

citing judgments

Disallowance under Section 14A for expenses relating to exempt income is required while computing book profit under Section 115JB. An Assessing Officer's order is erroneous for revision under Section 263 if the view taken was not plausible, legally unsustainable, and incorrect, requiring a recorded finding.

Kesoram Industries & Cotton Mills Ltd. v. CIT

196 ITR 845 · 1992 · High Court

citing judgments

Expenditure incurred for exploring the feasibility of expanding or extending an existing business by setting up a new unit in the same line of business is revenue expenditure, not capital expenditure. Such expenditure, including obtaining project reports or legal opinions on desirability or feasibility, does not constitute the setting up of a new business.

Commissioner of Income Tax v. India Discount Co. Ltd.

75 ITR 191 · 1970 · Supreme Court

citing judgments

Accounting entries do not override the legal effect of a transaction, and the legality of any transaction must be established independently. The mere nomenclature of an entry in the books of accounts is not determinative of the true nature of the transaction.

CIT v. Ganga Properties Ltd.

199 ITR 94 · 1993 · High Court

citing judgments

Expenditure incurred by a company for the purpose of its business, including expenses to fulfill statutory legal obligations or those related to an erstwhile business post-transfer, is allowable as revenue expenditure under Section 37 of the Income-tax Act.

CIT v. Finlay Mills Ltd.

20 ITR 475 · 1951 · Supreme Court

citing judgments

Expenditure that is incurred for the protection of a running business without generating a new asset is deductible as a business expense. Such expenditure does not result in an enduring benefit of a capital nature.

CIT v. Bombay Dyeing and Manufacturing Co. Ltd.

219 ITR 521 · 1996 · Supreme Court

citing judgments

Expenses incurred on amalgamation, legal and professional fees, and contributions to a State Housing Board for worker tenements are considered revenue expenditure, not capital expenditure. This is because these expenditures do not result in an enduring benefit and are part of the company's operational costs.

Sayaji Iron & Engineering Co. v. CIT

121 Taxmann 43 · 2002 · High Court

citing judgments

Expenses incurred by a company cannot be considered personal, as a company is an artificial legal entity incapable of incurring personal expenses. Therefore, disallowances on this basis are not sustainable.

Judgments citing legal expenses

Maharashtra State Electricity Transmission Company Ltd., Mumbai vs. The Income Tax Officer, Ward-14(2)(3), Mumbai

In the result, the appeal of the assessee is al

ITA 990/MUM/2022[2011-12]Status: DisposedITAT Mumbai29 Dec 2022AY 2011-12

Bench: Shri Vikas Awasthy () & Shri Om Prakash Kant () Assessment Year: 2011-12 Maharashtra State Electricity Income-Tax Officer, Ward Transmission Company Ltd., 14(2)(3), Plot No. C-19 E Block, Vs. Aayakar Bhavan, Maharshi Prakashganga, Bandra-Kurla Karve Road, Complex, Bandra (East), Mumbai-400020. Mumbai-400051. Pan No. Aaecm 2936 N Appellant Respondent Assessee By : Mr. Ketan Ved, Ar Revenue By : Mr. Harishankar Lal, Dr : Date Of Hearing 15/11/2022 Date Of Pronouncement : 29/12/2022

For Appellant: Mr. Ketan Ved, ARFor Respondent: Mr. Harishankar Lal, DR

Section 148

material facts with reference to the deductions all material facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and claimed by the Petitioner in respect of the legal expenses and claimed by the Petitioner in respect of the legal expenses and charges, were

M/S Sun Direct Tv Private Limited, Chennai vs. ITO, NFAC, Chennai

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 861/CHNY/2022[2015-2016]Status: DisposedITAT Chennai30 Nov 2022AY 2015-2016

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./I.T.A. No. 861/Chny/2022 िनधा"रण वष"/Assessment Year:2015-16 M/S. Sun Direct Tv Private Limited, Vs. The Assistant Commissioner Of 73, Murasoli Maran Towers, Income Tax, Mrc Nagar Main Road, Non Corporate Circle 7(1), Chennai 600 028. Chennai. [Pan:Aaics7671L] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri K. Ramakrishnan, Ca ""थ" की ओर से/Respondent By : Shri R. Boopathi, Addl. Cit सुनवाई की तारीख/ Date Of Hearing : 24.11.2022 घोषणा की तारीख /Date Of Pronouncement : 30.11.2022 आदेश /O R D E R Per V. Durga Rao: This Appeal Filed By The Assessee Is Directed Against The Order Of The Ld. Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), New Delhi, Dated 26.08.2022 Relevant To The Assessment Year 2015-16. 2. Brief Facts Of The Case Are That The Assessee Filed Its Original Return Of Income For The Assessment Year 2015-16 On 24.11.2015 Admitting Total Loss At ₹.123,55,22,939/-. Subsequently, The Return Was 2

For Appellant: Shri K. Ramakrishnan, CAFor Respondent: Shri R. Boopathi, Addl. CIT

Section 143(3)

short] assessing total loss at ₹.119,65,13,457/- after making addition towards interest income short offered at ₹.2,49,848/- and disallowance of legal expense of ₹.1,25,000/-. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer. 3. On being aggrieved, the assessee ... available on record and gone through the orders of authorities below. In this case, against the assessment order of addition towards interest income and legal expenses, the assessee filed an appeal before the ld. CIT(A). Despite various opportunities given to the assessee and due to non- compliance either

DCIT Cent. Cir-2(3), Mumbai vs. Soma Enterprises, Mumbai

In the result, the appeals of the revenue are dismissed and cross objections of the assessee are dismissed

ITA 1818/MUM/2021[2017-18]Status: DisposedITAT Mumbai28 Nov 2022AY 2017-18

Section 127(2)Section 132Section 143(2)Section 153A

para- 6) 8,49,695 (iv). Disallowance of foreign travel as per para— 7 4,11, 091 4,27,63,483 (v).Disallowance of legal expenses as per para— 8 Income from other sources(As per return 50,849 II of income) Gross Total Income 4,28,14,332 Chapter

DCIT Central Cir 2(3), Mumbai vs. Soma Enterprises Ltd, Hyderabad

In the result, the appeals of the revenue are dismissed and cross objections of the assessee are dismissed

ITA 1817/MUM/2021[2016-17]Status: DisposedITAT Mumbai28 Nov 2022AY 2016-17

Section 127(2)Section 132Section 143(2)Section 153A

Classic Share & Stock Broking Services Ltd, Mumbai vs. Deputy Commissioner of Income Tax, CC-7(1), Mumbai

In the result, both the appeals of the assessee are partly allowed

ITA 678/MUM/2022[2008-09]Status: DisposedITAT Mumbai17 Oct 2022AY 2008-09

vide paragraph 7.3.4 of the order, held that the expenses incurred to maintain corporate status of the assessee and also the legal expenses are allowable as deduction. He dismissed remaining grounds urged by the assessee. Still aggrieved, the assessee has filed this appeal. 6. The Ld A.R submitted that ... accepted in principle that the expenses incurred to maintain corporate status of the assessee and legal expenses are allowable. However, the quantification of such expenses was not realistic and accordingly, the Ld A.R prayed that the quantification requires reconsideration. He submitted that the depreciation and all legal expenses claimed

Asst CIT Cir 2(2)(1), Mumbai vs. Mahindra & Mahindra Ltd, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 1739/MUM/2015[2010-11]Status: DisposedITAT Mumbai04 Oct 2022AY 2010-11

Bench: Shri M. Balaganesh () & Smt. Kavitha Rajagopal () Mahindra & Mahindra Limited Vs Asst.Commissioner Of Income-Tax, Corporation Taxation, P.K. Kurne Circle-2(2)(1), Mumbai Chowk, Worli, Mumbai-400 018 Aayakar Bhavan, M.K. Road Pan : Aaacm3025E Mumbai-400 020 Appellant Respondent Asst.Commissioner Of Income-Tax, Vs 020Mahindra & Mahindra Limited Circle-2(2)(1), Mumbai Corporation Taxation, P.K. Kurne Aayakar Bhavan, M.K. Road Chowk, Worli, Mumbai-400 018 Mumbai-400 Pan : Aaacm3025E Appellant Respondent

Section 143(3)Section 144CSection 14ASection 35Section 40Section 80I

observed that the AO has considered the above mentioned expenses as capital investments in nature which include legal expenses incurred on entering into joint venture with Renault S.A.France and Rs. 27 lakhs towards legal and professional charges incurred in connection with the acquisition of Reva Electric car company private limited

Mahindra & Mahindra Limited, Mumbai vs. ACIT, Cir -2(2)(1), Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 1676/MUM/2015[2010-11]Status: DisposedITAT Mumbai04 Oct 2022AY 2010-11

Section 143(3)Section 144CSection 14ASection 35Section 40Section 80I

M/S Well Wisher Construction P.Ltd, Mumbai vs. Dy CIT - 15(3)(1), Mumbai

In the result, the appeal of the assessee is partly allowed

ITA 1912/MUM/2020[2012-13]Status: DisposedITAT Mumbai28 Sept 2022AY 2012-13

Section 143(3)

opinion, it makes no difference whether the proceedings are civil or criminal. All that the court has to see is whether the legal expenses were incurred by the assessee in his character as a trader, in other words, whether the transaction in respect of which proceedings are taken arose

M/S.Lakeside Properties Pvt. Ltd, Mumbai vs. DCIT, Central Circle -1(4), Mumbai

In the result, the appeal filed by the assessee is dismissed

ITA 1631/MUM/2022[2017-18]Status: DisposedITAT Mumbai27 Sept 2022AY 2017-18

Bench: Shri Kuldip Singh () & Shri Om Prakash Kant () Assessment Year: 2017-18 M/S Lakeside Properties Private Dcit, Central Circle-1(4), Limited, Room No. 902, 9Th Floor, Old 312/3 Sharda Chamber No. 131, Vs. Cgo Building, M.K. Road, Keshavji Naik Road, Bhat Bazar, Mumbai-400020. Masjid (West), Mumbai-400 009. Pan No. Aabcl 4041 Q Appellant Respondent Assessee By : Mr. Siddharth Kothari, Ar Revenue By : Ms. Shailja Rai, Cit-Dr Date Of Hearing : 25/08/2022 Date Of Pronouncement : 27/09/2022

For Appellant: Mr. Siddharth Kothari, ARFor Respondent: Ms. Shailja Rai, CIT-DR

Section 139Section 37(1)

assessment proceedings, the Ld. Assessing Officer disallowed a sum of Assessing Officer disallowed a sum of ₹4,00,000/- claimed by the assessee as legal expenses and filing fees, by invoking the assessee as legal expenses and filing fees, by invoking the assessee as legal expenses and filing fees

Ambitious Plastomac Company Limited, Mumbai vs. The Dy CIT, Central Circle-39, Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 1485/MUM/2022[2009-2010]Status: DisposedITAT Mumbai27 Sept 2022AY 2009-2010

Bench: Shri Kuldip Singh () & Shri Om Prakash Kant () Assessment Year: 2009-10 Ambitious Plastomac Company The Dcit, Cc-39, Ltd., Mumbai. 405, Royal Square, Nr. Jbk Arcade, Vs. Science City Road, Sola, Ahmedabad-380 060. Pan No. Aaaca 3237 A Appellant Respondent Assessee By : None Revenue By : Mr. Manoj Kumar Sinha, Dr Date Of Hearing : 24/08/2022 Date Of Pronouncement : 27/09/2022

For Appellant: NoneFor Respondent: Mr. Manoj Kumar Sinha, DR

Section 144Section 271(1)(b)

Related to business activity Related to business activity Internet Expenses Internet Expenses 1,685 Related to Business activity Related to Business activity Legal Expenses Legal Expenses 56,500 Statutory Expenses Statutory Misc Expenses Misc Expenses 56,226 Related to business activity Related to business activity Telecommunication Charges Telecommunication Charges ... From the above expenses, it is seen that the expenses of audit fees of Rs.6,500/-, electricity expenses of Rs.65.701/ , electricity expenses of Rs.65.701/-, legal expenses of , legal expenses of Rs.56.500/-, bank charges of Rs.4,303/ , bank charges of Rs.4,303/- and depreciation of and depreciation of Ambitious Plastomac Company

Shariuzzaman Shamsuzzaman Shaikh, Mumbia vs. Assistant Commissioner of Income Tax-26(3), Mumbai

In the result, appeal filed by the assessee is partly allowed

ITA 5416/MUM/2019[2010-11]Status: DisposedITAT Mumbai05 Sept 2022AY 2010-11

Bench: Shri Pavan Kumar Gadale & Shri Gagan Goyalmr. Shafuzzaman Shamsuzzaman Shaikh Shop No.2, Building No.2, Mubarak Complex, V.B. Nagar, Kurla (West),Mumbai-400070 Pan: Ayips7233B ...... Appellant Vs. Acit-26(3), C-11, Pratyakshakar Bhavan, B.K.C,. Bandra (East), Mumbai-400051. ..... Respondent Appellant By : None Respondent By : Ms. Kavita Kaushik Date Of Hearing : 07/06/2022 Date Of Pronouncement : 05/09/2022 Order Per Gagan Goyal, A.M:

For Appellant: NoneFor Respondent: Ms. Kavita Kaushik

Section 147Section 148Section 151Section 69

Assessee further made payment of Rs 1.51/-lakhs on 10-08-2009 and legal expenses of Rs 36,000/- on 30-10-2009 i.e. relevant F.Y. 5. During the year under consideration assessee deposited cash in his bank account with Kotak Mahindra bank vide account no 09580010008580 amounting

ACIT Cent.Cir-2(1), Mumbai vs. M/S. Lilavati Kirtilal Mehta Medical Trust, Mumbai

In the result, Revenue’s appeal stands dismissed

ITA 1568/MUM/2021[2018-19]Status: DisposedITAT Mumbai30 Aug 2022AY 2018-19

Bench: Shri Amit Shukla & Shri Gagan Goyal

For Appellant: Smt. Shailja Rai, CIT-DRFor Respondent: Sh. Vijay Mehta

Section 12ASection 131Section 250Section 269SSection 271D

Pr.CIT(A)-48, Mumbai had erred in deleting the addition of Rs. 78,79,641/- on account of disallowance of legal expenses without appreciating the facts that these expenses were incurred to settle the dispute among the trustees and these expenses are not incurred for the benefit of the trust ... treated and taxed the surplus as 'business income of the Appellant. The Ld. AO also disallowed the claim of the assessee towards legal expenses by treating the same as personal expenses of the trustees. Consequently the Ld. AO assessed total income of the assessee trust

Rakeshkumar Wadhawan, Mumbai vs. ACIT- CC 5(4), Mumbai

In the result, the appeal of the assessee stand dismissed

ITA 3025/MUM/2018[2013-14]Status: DisposedITAT Mumbai29 Aug 2022AY 2013-14

Bench: Shri Pavan Kumar Gadale & Shri Amarjit Singhshri Rakesh Kumar Vs. Acit, Central Circle 5(4) Wadhawan, Room No. 1927, 19Th Thar & Co., 203, Capri Floor, Air India Building, Building, Opp. Hdil Nariman Point, Towers, Anant Kanekar Mumbai – 400 021 Marg, Bandra (E), Mumbai – 400 051

For Appellant: NoneFor Respondent: Smt. Mahita Nair

Section 143Section 143(2)Section 143(3)Section 14ASection 23(4)Section 234D

profit and loss account. The assessee had debited administrative expenses aggregating to Rs.73,48,067/- including rent, rates and taxes, society charges, electricity charges, legal expenses, professional fees, bank charges, printing and stationery expenses, audit fees and miscellaneous expenses, ITA No.3025/Mum/2018 A.Y. 2013-14 5 Shri Rakesh Kumar Wadhawan

Anil Bhagwan Advani, Mumbai vs. ITO (It) 1(1), Mumbai

In the result, appeal of the assessee is allowed

ITA 4385/MUM/2015[2011-12]Status: DisposedITAT Mumbai28 Jul 2022AY 2011-12

Bench: Shri Amit Shukla & Shri Gagan Goyal

For Appellant: Sh. Tapas MisraFor Respondent: Smt. Shailja Rai, CIT-DR

Section 154Section 251(1)Section 45(5)(b)Section 48Section 55A

Without prejudice to Ground 1 above, the CIT (A) erred in restricting the deduction u/s 48(I) of the Income Tax Act, 1961 to legal expenses incurred by Mr. Kishore Mansukhani, ignoring the fact that the entire payment to Mr. Kishore represents expenditure incurred wholly and exclusively in connection with ... facts and circumstances of the case and in law, the Ld. CIT(A) was justified on directing the AO to allow the legal expenses, if any, directly incurred by the assessee u/s 48(1) of the Act, while working out the Capital Gain as directed?” 2. “The appellant prays that

M/S Gokula Education Foundation Medical, Bangalore vs. Additional Director of Income Tax Range-17, Bangalore

In the result, appeal of the assessee is partly allowed

ITA 946/BANG/2017[2011-12]Status: DisposedITAT Bangalore25 Jul 2022AY 2011-12

Bench: Shri N.V. Vasudevan, Vice Preseident & Shri Padmavathy Sassessment Year : 2011-12

For Appellant: Shri Narendra Sharma, AdvocateFor Respondent: Shri T. Roumuan Paite, CIT(DR)(ITAT), Bengaluru

Section 11Section 11(1)(a)Section 11(2)Section 12ASection 139(1)Section 143(2)Section 143(3)

Particulars Conveyance Reimbursement 1,11,693 Court Attachment Payable 1,000 53,19,207 Electricity Charges Payable House Keeping charges Payable 1,05,218 Legal Expenses Payable 1,19,850 Living Expenses Payable 4,78,845 NSS Program Expenses Payable 20,000 54,644 Office Expenses Payable Other Expenses

Leila Advani, Mumbai vs. ACIT - 16(2), Mumbai

In the result, appeal of the revenue is dismissed

ITA 2270/MUM/2016[2011-12]Status: DisposedITAT Mumbai18 Jul 2022AY 2011-12

For Appellant: Sh. Tapas MishraFor Respondent: Smt. Shailja Rai, CIT-DR

Section 143Section 143(2)Section 45(5)(b)Section 48Section 48(1)Section 54F

facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in directing the AO to allow the legal expenses, if any, directly incurred by the assessee, u/s. 48(1) of the Act, while working out the Capital Gain as directed.?" 4. "Whether ... Without prejudice to Ground 1 above, the CIT (A) erred in restricting the deduction u/s 48(i) of the Income Tax Act, 1961 to legal expenses incurred by Mr. Kishore Mansukhani, ignoring the fact that the entire payment to Mr. Kishore Mansukhani represents expenditure incurred wholly and exclusively in connection

Thyagarajan Rajkumar, Bangalore vs. The Assistant Commissioner of Income Tax Circle-1(1)(1), Bangalore

In the result, appeals in (i) ITA No

ITA 692/BANG/2019[2014-15]Status: DisposedITAT Bangalore15 Jun 2022AY 2014-15

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Respondent: Sri.Sankar Ganesh K, JCIT -DR

Section 142(1)Section 143(2)

connection with the demand notice dated 15th July 2010 issued to Leadage by the Assistant Commissioner, Commercial Taxes (Enforcement)-8, South Zone, Bangalore. Legal expenses and other expenditure incurred by Leadage in connection with the said demand notice, if any, will be reimbursed from the maturity proceeds of Fixed Deposit