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“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
61
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
46
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
46
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
38
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
28
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
27
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

My Guest House Accomodations P.Ltd, New Delhi vs. DCIT, Circle-17(1), New Delhi

ITA 4542/DEL/2017[2012-13]Status: DisposedITAT Delhi30 Sept 2021AY 2012-13

Bench: Shri Kuldip Singh & Shri Prashant Maharishi

For Appellant: Shri R.P. Mall, AdvocateFor Respondent: Shri Gaurav Pundir, Senior DR
Section 143(3)Section 271(1)(c)Section 274

extent of 50% of the expenditure claimed by the assessee on account of salary & wages, communication expenses, marketing expenses, professional & legal expenses and tour & travel expenses by holding the same to be capital in nature itself shows that the AO himself was not satisfied as to in which

El El Hotels & Investments Ltd., New Delhi vs. DCIT, New Delhi

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

ITA 918/DEL/2010[2006-07]Status: DisposedITAT Delhi16 Feb 2021AY 2006-07
For Appellant: Shri Ajay Wadhwa, Advocate &For Respondent: Ms Nidhi Srivastava, CIT-DR
Section 115JSection 132Section 143(3)Section 153A

commercial exploitation of the lease right. If the assessee-company had taken legal proceedings against the Textile Mills, it would have incurred huge legal expenses and substantial time might have been spent in getting the leasehold premises vacated. By making payment of Rs. 6.96 lakhs, the assessee was able

ACIT, New Delhi vs. M/S Opus Projects Ltd., Delhi

Appeal is dismissed

ITA 5470/DEL/2016[2012-13]Status: DisposedITAT Delhi19 Jan 2021AY 2012-13

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri C. S. Anand, AdvFor Respondent: Shri H. K. Chaudhary, CIT DR
Section 30Section 40Section 40A

closely held company by assessee. He noted that about 80% of total expenses incurred by assessee are either on account of consultancy expenses of legal expenses has been shown to be claimed in name of related parties. He noted that modus operandi of assessee is diverting funds in name

DCIT, New Delhi vs. M/S. Opus Projects Ltd., New Delhi

Appeal is dismissed

ITA 3939/DEL/2015[2011-12]Status: DisposedITAT Delhi19 Jan 2021AY 2011-12

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri C. S. Anand, AdvFor Respondent: Shri H. K. Chaudhary, CIT DR
Section 30Section 40Section 40A

closely held company by assessee. He noted that about 80% of total expenses incurred by assessee are either on account of consultancy expenses of legal expenses has been shown to be claimed in name of related parties. He noted that modus operandi of assessee is diverting funds in name

DCIT, New Delhi vs. M/S. Opus Projects Ltd., New Delhi

Appeal is dismissed

ITA 3938/DEL/2015[2010-11]Status: DisposedITAT Delhi19 Jan 2021AY 2010-11

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri C. S. Anand, AdvFor Respondent: Shri H. K. Chaudhary, CIT DR
Section 30Section 40Section 40A

closely held company by assessee. He noted that about 80% of total expenses incurred by assessee are either on account of consultancy expenses of legal expenses has been shown to be claimed in name of related parties. He noted that modus operandi of assessee is diverting funds in name

Commissioner of Income Tax VIII vs. Gopal Dass Estates & Housing Pvt.Ltd

Appeals of the Revenue are dismissed

ITA - 742 / 2009HC Delhi20 Mar 2019
Section 260

Mangal Tirth Estates Ltd. (supra) where in para 41 it was held as under: “41. The expenses amortized in the accounts consisted of legal expenses advertisement expenses and sales promotion expenses. As far as legal expenses are concerned the kind of the legal expenses incurred demanding the amortization ... business and the relevancy of expenditure and the character of the same, we uphold the order of the Tribunal in so far as legal expenses and advertisement are concerned. In the circumstances, we hold that the assessee is entitled to have the deduction of the expenditure on advertisement and legal

Commissioner of Income Tax vs. Gopal Dass Estates & Housing Pvt.Ltd

Appeals of the Revenue are dismissed

ITA - 548 / 2010HC Delhi20 Mar 2019
Section 260

Mangal Tirth Estates Ltd. (supra) where in para 41 it was held as under: “41. The expenses amortized in the accounts consisted of legal expenses advertisement expenses and sales promotion expenses. As far as legal expenses are concerned the kind of the legal expenses incurred demanding the amortization ... business and the relevancy of expenditure and the character of the same, we uphold the order of the Tribunal in so far as legal expenses and advertisement are concerned. In the circumstances, we hold that the assessee is entitled to have the deduction of the expenditure on advertisement and legal

The Commissioner of Income Tax vs. Gopal Dass Estates & Housing Pvt.Ltd

Appeals of the Revenue are dismissed

ITA - 400 / 2009HC Delhi20 Mar 2019
Section 260

Mangal Tirth Estates Ltd. (supra) where in para 41 it was held as under: “41. The expenses amortized in the accounts consisted of legal expenses advertisement expenses and sales promotion expenses. As far as legal expenses are concerned the kind of the legal expenses incurred demanding the amortization ... business and the relevancy of expenditure and the character of the same, we uphold the order of the Tribunal in so far as legal expenses and advertisement are concerned. In the circumstances, we hold that the assessee is entitled to have the deduction of the expenditure on advertisement and legal

Commissioner of Income Tax vs. Gopal Dass Estates & Housing Pvt.Ltd

Appeals of the Revenue are dismissed

ITA - 581 / 2010HC Delhi20 Mar 2019
Section 260

Mangal Tirth Estates Ltd. (supra) where in para 41 it was held as under: “41. The expenses amortized in the accounts consisted of legal expenses advertisement expenses and sales promotion expenses. As far as legal expenses are concerned the kind of the legal expenses incurred demanding the amortization ... business and the relevancy of expenditure and the character of the same, we uphold the order of the Tribunal in so far as legal expenses and advertisement are concerned. In the circumstances, we hold that the assessee is entitled to have the deduction of the expenditure on advertisement and legal

Yoshio Kubo vs. Commissioner of Income Tax

The appeals are disposed of accordingly

ITA - 441 / 2003HC Delhi31 Jul 2013

cannot be therefore taxed. The question of law is therefore, answered against the revenue, and in favour of the assessees. Question No 7: Legal expenses incurred 55. This question arises in ITA 441/2003. In the said appeal, the other main issue was regarding taxability of the amount paid towards income

Commissioner of Income Tax vs. M/S Uberoi Sons Machines Ltd

ITA - 166 / 2006HC Delhi31 Aug 2012
Section 147Section 147(1)

specifically pointed out and explained to the AO by the assessee that the reason for the heavy expenditure claimed under the head of legal expenses was that this expenses was in respect of Advocate fee and cost of Civil Suit filed in the High Court for possession and eviction against

CIT vs. Ravinder Kumar Arora

ITA - 1106 / 2011HC Delhi17 Sept 2011
Section 54F

corporation tax at the time of the registration of the sale deed of the house so purchased and has also paid commission and legal expenses in connection with the purchase of the house. The Tribunal further records that whole of the purchase consideration has been paid by the assessee

Commissioner of Income Tax vs. Dcm Limited

In the result the appeal is dismissed

ITA - 987 / 2007HC Delhi13 Jan 2009

Unit on its closure? (iv) Whether ITAT was correct in law in allowing a sum of 2009:DHC:57-DB interest and legal expenses is the revenue expenditure or capital in nature? (vi) Whether ITAT was correct in law in allowing deduction ... purposes of making payment of Retrenchment compensation and Provident Fund to the employees; and a sum of Rs 3,57,700/- expended towards Legal expenses. As noticed above, the answer to this question turned on whether closure of the DCM mill unit would amount to closure of business as contended