“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

Deputy Commissioner of Income Tax, Salem vs. Govinda Rajulu Srinivasan, Salem

In the result, appeal of the Revenue stands dismissed

ITA 1245/CHNY/2025[2014-15]Status: DisposedITAT Chennai04 Sept 2025AY 2014-15

Bench: Shri Aby T. Varkey & Shri Amitabh Shukla

For Appellant: Mr.Bhupendran, AdvocateFor Respondent: Mrs.C. Yamuna, CIT

Section 147Section 148Section 40Section 40A(3)

Disallowance of Salary - Rs. 18,90,000 (iv) Disallowance of JCB expenses - Rs.3,01,000 (v) Disallowance of legal expenses - Rs.22,00,000 (vi) Disallowance of advertisement exp - Rs.87,280 (vii) Disallowance of compensation exp - Rs.4,00,000 (viii) Disallowance of audit fees u/s 40(a)(ia) - Rs.60

Tigre Sas Liquors India Pvt. Ltd., New Delhi vs. DCIT, Circle-25(1), New Delhi

Accordingly, the ground no. 3 is allowed

ITA 7969/DEL/2018[2014-15]Status: DisposedITAT Delhi28 Aug 2025AY 2014-15

Bench: Shri Anubhav Sharma & Shri Krinwant Sahay, Accoutant Member

For Appellant: Respondent byFor Respondent: Sh. Vinod Kumar Bindal, CA &

Section 250Section 37

business, which was not launched and started and therefore expenses are liable to be disallowed. We note that the said expenses were the legal expenses which were not incurred in the commercial expenses and for all the expenses assessee had already submitted sufficient vouchers invoices to substantiate its claims, copies ... started supplying liquors and further decided to provide a good quality pizza which could have been served alongwith drinks and therefore incurred certain legal expenses for developing the brand launch strategy for pizza. The expenditure incurred by the assessee company to start new business, which could not be started should

Tigre Sas Liquors India Pvt. Ltd., New Delhi vs. DCIT, Circle-25(1), New Delhi

In the result, both the appeals filed by the assessee stand Partly

ITA 7968/DEL/2018[2013-14]Status: DisposedITAT Delhi28 Aug 2025AY 2013-14

Bench: Shri Anubhav Sharma & Shri Krinwant Sahay, Accoutant Member & Tigre Sas Liquors India Pvt. Ltd. Vs. Dcit, Circle-25(1), 406, 4Th Floor, Elegance New Delhi Tower, Jasola, New Delhi – 25, (Pan: Aaect2925Q) (Appellant) (Respondent) Appellant By : Sh. Vinod Kumar Bindal, Ca & Ms. Rinky Sharma, Itp & Sh. Anmol Jha, Adv. Respondent By : Ms. Harpreet Kaur Hansra, Sr. Dr. Date Of Hearing 19.08.2025 Date Of Pronouncement 28.08.2025 Order Per Krinwant Sahay, Am:

For Appellant: Sh. Vinod Kumar Bindal, CA &For Respondent: Ms. Harpreet Kaur Hansra, SR. DR

Section 250Section 37

Sarbjit Sharma, Delhi vs. ITO, Ward-61(3), Delhi

In the result, the appeal of the assessee is allowed

ITA 5568/DEL/2024[2017-18]Status: DisposedITAT Delhi27 Aug 2025AY 2017-18

Bench: Shri Challa Nagendra Prasad & Shri M Balaganeshआ.अ.सं/.I.T.A No.5568/Del/2024 िनधा"रणवष"/Assessment Year: 2017-18 बनाम Sarbjit Sharma Ito, 36, Gf, Paschimi Marg, Vs. Ward 61(3), Vasant Vihar, Vasant Vihar-1, Delhi. South West Delhi. Pan No.Aabps4256R अपीलाथ" Appellant ""यथ"/Respondent

Section 143(2)Section 143(3)Section 250Section 69A

erred both on facts and in law in confirming the addition of Rs.5,00,000/- on account of cash advance received for legal expenses invoking the provisions of section 69A of the Act. 7. On the facts and circumstances of the case, the Ld. CIT(A), ITD has erred both ... facts and in law in confirming the addition of Rs.36,00,000/- on account of cash advance received for legal expenses invoking the provisions of section 69A of the Act. 2 8. On the facts and circumstances of the case, the Ld.CIT(A), ITD has erred both on facts

The Visnagar Nagrik Sahakari Bank Ltd., Mehsana vs. The ACIT, Circle-Gandhinagar (Previously DCIT, Patan Circle, Patan), Gandhinagar

In the result, the appeals filed by the assessee are allowed for statistical purposes

ITA 738/AHD/2025[2013-14]Status: DisposedITAT Ahmedabad26 Aug 2025AY 2013-14

Bench: Shri Sanjay Garg & Shri Makarand V. Mahadeokarआयकर अपील सं /Ita Nos.738, 1414 & 1415/Ahd/2025 िनधा"रण वष" /Assessment Years : (2013-14, 2014-15 & 2015-16) The Visnagar Nagarik Sahakari The Assistant Commissioner Bank Ltd.,(Under Liquidation) बनाम Of Income Tax, / Market Yard, Circle Gandhinagar. V/S. Visnagar, (Previously Dcit, Mehsana-384315, Patan Circle, Patan) "थायी लेखा सं./Pan: Aaaft8764C अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri A P Nanavaty, Ar Revenue By : Shri Rignesh Das, Cit-Dr सुनवाई की तारीख/Date Of Hearing : 19/08/2025 घोषणा की तारीख /Date Of Pronouncement: 26/08/2025 आदेश/O R D E R Per Makarand V. Mahadeokar, Am: ] ] These Three Appeals By The Assessee Are Directed Against The Separate Orders Of The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [Hereinafter Referred To As “The Cit(A)”], All Passed Under Section 250 Of The Income-Tax Act, 1961 [Hereinafter Referred To As “The Act”], Arising From The Assessments Framed By The Assistant / Deputy Commissioner Of Income-Tax, Circle, Patan [Hereinafter Referred To As “The Assessing Officer Or Ao”] Under Section 143(3) Of The Act.

For Appellant: Shri A P Nanavaty, ARFor Respondent: Shri Rignesh Das, CIT-DR

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 250Section 80PSection 80P(4)

bank remained a registered co-operative society under the Gujarat Co- operative Societies Act, and carried on recovery operations, maintained staff, incurred administrative and legal expenses, and earned interest on recoveries from borrowers as well as on investments. The assessee contended that, being a co-operative society, it was entitled

The Visnagar Nagrik Sahakari Bank Ltd (Under Liquidation), Mehsana vs. The ACIT, Circle-Gandhinagar (Previously DCIT, Patan Circle, Patan), Gandhinagar

In the result, the appeals filed by the assessee are allowed for statistical purposes

ITA 1414/AHD/2025[2014-15]Status: DisposedITAT Ahmedabad26 Aug 2025AY 2014-15

For Appellant: Shri A P Nanavaty, ARFor Respondent: Shri Rignesh Das, CIT-DR

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 250Section 80PSection 80P(4)

Dasa Shetty Kantha, Bangalore vs. ACIT Circle 6(3)(1), Bangalore

ITA 299/BANG/2025[2010-11]Status: DisposedITAT Bangalore14 Aug 2025AY 2010-11

Bench: Shri Waseem Ahmed & Shri Soundararajan K

For Appellant: Shri Hari Pd. Nayak, ARFor Respondent: Shri N Balusamy, JCIT

Section 2(47)(v)Section 234A

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL

Dasa Shetty Kantha, Bangalore vs. ACIT Circle 3(2)(1), Bangalore

ITA 1926/BANG/2024[2013-14]Status: DisposedITAT Bangalore14 Aug 2025AY 2013-14

Bench: Shri Waseem Ahmed & Shri Soundararajan K

For Appellant: Shri Hari Pd. Nayak, ARFor Respondent: Shri N Balusamy, JCIT

Section 2(47)(v)Section 234A

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL

Estate of Nalini Manilal, Mumbai vs. ITO Ward 20(1)(1), Mumbai

In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes

ITA 2412/MUM/2025[2024-25]Status: DisposedITAT Mumbai31 Jul 2025AY 2024-25

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2024-25 Estate Of Nalini Manilal, Ito 20(1)(1), 57, Naiman Bhavan, Vinay Shah Piramal Chambers, Vs. Marg, Nariman Point, S.O. Mumbai-400012. Mumbai-400021. Pan No. Aaaae 0475 E Appellant Respondent

For Appellant: Mr. Asif Karmali, Sr. DRFor Respondent: Mr. Bhupendra Shah, CA

Section 168Section 168(1)Section 168(1)(b)Section 168(2)

debts and liabilities i debts and liabilities including all taxes and expenses for funeral ncluding all taxes and expenses for funeral ceremonies, probate fees, legal expenses and other court fees as ceremonies, probate fees, legal expenses and other court fees as ceremonies, probate fees, legal expenses and other court fees

Income Tax Officer 3(2)(1), Mumbai vs. Manas Agro Industries and Infrastructure Limited, Mumbai

In the result, the appeal of the revenue bearing ITA 1710/Mum/2024 is dismissed

ITA 1710/MUM/2024[2016-17]Status: DisposedITAT Mumbai24 Jul 2025AY 2016-17

Bench: Shri Narendra Kumar Billaiya, Account Member & Shri Anikesh Banerjeeincome-Tax Officer 3(2)(1), Vs Manas Agro Industries & Mumbai, Infrastructure Limited, 6Th Unit No.605, 6Th Floor, Raheja 673A, Floor, Aayakar Bhavan, Mumbai-400 020 Chambers, Nariman Point, Mumbai-400 021 Pan: Aaccf0662N Appellant Respondent

For Appellant: Shri Hitesh Shah (virtually appeared)For Respondent: Shri Leyaqat Ali Aafaqui – Sr.AR

Section 115JSection 143(3)Section 250Section 35D

following grounds:- “i)"Whether on the facts and circumstances of the case and in Law, the Ld CIT(A) erred in holding that the Legal expenses and consultancy charges of Rs. 2,05,11,106/- as fully revenue in nature and the balance of Rs. 49,53,764/- as Deferred ... section 115JB of the Act. The case was selected for scrutiny and the order was passed under section 143(3) with an addition of legal expenses for amalgamation under composite scheme of arrangement and amalgamation of the seven companies. The assessee has incurred amount of Rs.2,54,64,869/- which

DCIT, Central Circle 3(2), Mumbai vs. S.S. Jewellery, Mumbai

In the result, appeal of the assessee in ITA No

ITA 4652/MUM/2024[2021-22]Status: DisposedITAT Mumbai23 Jul 2025AY 2021-22

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Anikesh Banerjee, Hon’Ble

For Appellant: Shri Mani Jain, A/RFor Respondent: Shri Arun Kanti Datta, CIT, D/R

Section 74(1)

4652/Mum/2024, is automatically dismissed on this ground. 15. The second issue in the revenue’s appeal pertains to the deletion of the legal expenses. The underlying facts in this issue are that the assessee from had claimed legal fee expenses in respect of legal fees paid to Shri Kiran Javali ... release of jewellery which was seized by the Bangalore Police on 20/11/2020. Since the AO has treated the seized jewellery as unexplained assets, the legal expenses were accordingly disallowed. Since we have held that there is no unexplained jewellery u/s 69A of the Act and deleted the impugned addition

DCIT, Central Circle 3(2), Mumbai, Mumai vs. Divesh Prakashchand Jain, Mumbai

In the result, appeal of the assessee in ITA No

ITA 4651/MUM/2024[2021-22]Status: DisposedITAT Mumbai23 Jul 2025AY 2021-22

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Anikesh Banerjee, Hon’Ble

For Appellant: Shri Mani Jain, A/RFor Respondent: Shri Arun Kanti Datta, CIT, D/R

Section 74(1)

S S Jewellery, Zaveri Bajar, Mumbai vs. Assisstant Commissioner of Income Tax-Central Circle-3(2), Mumbai, Air India Building, Nariman Point

In the result, appeal of the assessee in ITA No

ITA 4542/MUM/2024[2021-22]Status: DisposedITAT Mumbai23 Jul 2025AY 2021-22

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Anikesh Banerjee, Hon’Ble

For Appellant: Shri Mani Jain, A/RFor Respondent: Shri Arun Kanti Datta, CIT, D/R

Section 74(1)

Gokul Prasad Patel, Hyderabad vs. ITO., Ward-13(3), Hyderabad

ITA 353/HYD/2025[2012-13]Status: DisposedITAT Hyderabad30 Jun 2025AY 2012-13

Bench: Us:

Section 143(3)Section 147Section 148Section 50CSection 64(1)(iv)

Income Tax (Appeals) erred in confirming the action of the Assessing Officer in determining the capital gain at Rs. 37 lakhs after allowing only legal expenses of Rs. 3 lakhs. 3) The learned Commissioner of Income Tax (Appeals) ought to have held that the indexed cost of acquisition as claimed ... colorable device aimed at hoodwinking the revenue. No cost of acquisition and cost of improvement can be claimed at this stage, only legal expenses connected with transfer can be claimed. After allowing Rs 300000, Capital Gains is arrived at Rs 3700000.” 9. The assessee, being aggrieved with the order

Jitendra Kantilal Shah, Khetwadi Lane, Charni Road, Mumbai vs. ACIT-19(2), Mumbai, Piramal Chamber, Lal Baug, Parel

ITA 350/MUM/2025[2013-14]Status: DisposedITAT Mumbai02 Jun 2025AY 2013-14

Bench: SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Rajkumar SinghFor Respondent: Ms. Kavita P. Kaushik

Section 143(3)Section 250

Assessee was holding opening and closing stock. Therefore, it cannot be said that no business activity whatsoever. We note that the Assessee had incurred legal expenses in respect of legal disputes pertaining to properties during the relevant previous yearand has been paying interest on loans taken for the purpose

Galaxy Developers, Ahmedabad vs. The ACIT., Circle-7(2), Ahmedabad

In the result, the Appeal of the assessee is allowed

ITA 1445/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad26 May 2025AY 2017-18

Bench: S/Shri T.R. Senthil Kumar & Makarand V.Mahadeokar

For Appellant: Shri Karan Shah, ARFor Respondent: Shri B.P. Srivastava, Sr.DR

Section 142(1)Section 143(2)Section 143(3)Section 22Section 23(5)Section 250Section 270A

acquisition of land parcels. The vakil fees, though paid in cash, are nominal in nature and supported by signed internal vouchers, and such legal expenses are consistent with standard commercial practices in real estate transactions. The Assessing Officer, in our view, erred in disallowing the entire differential cost solely

Assistant Commissioner of Income Tax, Madurai vs. S R Trust, Madurai

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

ITA 1549/CHNY/2024[2017-18]Status: DisposedITAT Chennai26 May 2025AY 2017-18

Bench: Shri S.S. Viswanethra Ravi & Shri S. R. Raghunathaआयकर अपील सं./Ita No.: 1549/Chny/2024 िनधा"रण वष" / Assessment Year: 2017-18 Assistant Commissioner Of S R Trust, Income Tax, Vs. 1, Melur Road, Lake Area, Central Circle -1, Madurai – 625 107. Madurai. [Pan: Aacts-0376-F] (अपीलाथ"/Appellant) (""थ"/Respondent)

For Appellant: Shri. Shivanand K Kalakeri, C.I.TFor Respondent: Shri. B. Ramakrishnan, F.C.A

Section 12A

expenses were incurred in connection with conferences, seminars and canvassing market for the hospital. 4. The Ld.CIT(A) erred in directing to consider the legal expenses of Rs.1,12,50,000/- as application of income, without appreciating that the assessee had not provided details of affidavits filed when called ... assessing officer, thus failed to prove that the said legal expenses are incurred in connection with handling of legal cases related to the trust. 5. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order

Sh.Pawan Anand, Dehradun vs. ITO, Dehradun

In the result, appeal of the assessee is allowed

ITA 33/DDN/2024[2016-17]Status: DisposedITAT Dehradun23 May 2025AY 2016-17

Bench: Shri Challa Nagendra Prasad & Shri Avdhesh Kumar Mishraिनधा"रणवष"/Assessment Year: 2016-17 बनाम Sh. Pawan Anand, Income Tax Officer, 43, Dhamawala Bazaar, Vs. Ward 1(1)(2), 13-A, Dehradun, Uttarakhand. Subhash Road, Dehradun, Uttarakhand. Pan No.Agqpa0214J अपीलाथ" Appellant ""यथ"/Respondent

Section 143(3)Section 271(1)(c)Section 50C

Dehradun for an amount of Rs.21,67,410/- out of which the sale consideration was Rs.20 lakhs and the stamp duty and other legal expenses were Rs.1,67,410/-. However, the market value as per the circle rate was Rs.30,68,000/- and therefore there was a difference of Rs.10

Gatti Valley Educational Foundation, Bengaluru vs. Commissioner of Income (Exemptions), Bengaluru

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

ITA 421/BANG/2025[2020-21]Status: DisposedITAT Bangalore20 May 2025AY 2020-21

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year: Na

For Appellant: Shri Aprameya K. AdvocateFor Respondent: Smt. Srinandini Das, CIT (DR)

Section 12A

There was no charitable activity carried out by the assessee so as to achieve its objects except claiming the expenditure under the head ‘legal expenses’ amounting to Rs. 12,09,735/- only. 4. In view of the above, the ld. CIT(E) concluded that the assessee is not carrying ... activity toward achieving its objects since the assessment year 2020-21, except for claiming a major expense of ₹12,69,735 under the head "Legal Expenses." 10.3 In view of the above, the learned CIT (Exemptions) concluded that the assessee had not furnished any evidence suggesting the genuineness

Subhash Pareta, Kota vs. ACIT, Circle-1, Kota

ITA 394/JPR/2025[2015-16]Status: DisposedITAT Jaipur19 May 2025AY 2015-16

Section 142Section 143(3)Section 250Section 40ASection 69Section 69C

PER GAGAN GOYAL, A.M: These two appeals by the assessee are directed against the order of CIT(A), Jaipur -04