Saturday, February 2, 2013

ICL Exp. for buyback; Bank Restructurig Debts;

1. Amount paid for buyback of shares allowed as business expenditure
02 Feb 2013
<> The write-up, as per one’s reading and understanding, suggests rather doubts the correctness or otherwise of the expenditure in issue having been allowed, in full, by the ITAT.
According to the applicable provisions of the IT act, and if strictly construed, once an expenditure is held to be admissible on the grounds that it has been incurred or laid out, “wholly and exclusively” for the purposes of the business, and in the relevant ‘previous year’. As such, there is no scope for going into the question of whether it is allowable in full or not.
One is, no doubt, aware, there was a view taken/also being followed, that even if expenditure is of a revenue nature and is fully admissible, it was still open to the Revenue to , if so called for, allow it in instalments, i.e. in more than previous year, should the benefit of the expenditure is found to spill over more than one year. If remembered right, that was an instance in which the payment was for acquiring ‘know-how’. That is besides and apart from those special provisions which permit allowance likewise spread over a period.
I remain to be enlightened by the writer after relooking into in the light of above.

Cross refer>

Chemosyn Ltd. v. Assistant Commissioner of Income-tax, 8(3) (OSD), Mumbai (2012) 25 325 (Mum.)
Echjay Industries Ltd. v. Dy. CIT [2004] 88 TTJ 1089
USV Ltd. JCIT ((2007) 106 TTJ 535 Bom-Trib

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