Appeal fees whether allowable or not

Tax queries 11199 views 11 replies

Whether fees for appeal paid under income tax or service tax allowable as deduction under income tax or not?

Replies (11)

APPEAL FEES ARE ALLOWABLE SINCE IT IS NOT INCURRED FOR ANY INFRACTION OF LAW AND LEGAL EXPENSES ARE ALLOWED TO BE DEDUCTED FROM P/G/B/P . IT IS A BUSINESS EXPENDITURE U/S 37(1)

i would beg to differ with Mr. Suahas since paymnt of income tax is specifically disallowed under IT act , i dnt think expenses incurred in relation to ascertainment of tax liability will be allowed either. Sec 37(1) allows legal expenses which are incurred for matters incidental to business, but appeal fees is not incidental to business. Thus, what needs to be checked is the source in regard to which the expense is incurred. I may be wrong, but this is what i feel. Thanks

i agree with souvik....

Appeals was done only when any show cause notice or any demand is made that means the company is in default , so in such case expenditure incured by the company is not allowed, but in case the company is not in guilty than expenses can be allowed.

I dont agree with CS bijoy

Appeals are mad when the assessee is eager to appeal against the tax demand raised by authorities,so there is no connection between the default made & appeal filed.Even when the assessee is correct on the question of fact raised,demand is raised, so the assessee has the right to file an appeal.

I agree that IT paid is disallowed for Individuals but it is allowed for Firms and Companies..

Yes it is allowed as deduction but not interest on penalties paid thereon

but appeal fees does not come under interest or penalty category..

According to my view, Fee paid for Income-Tax appeal is allowed on the following grounds:-
1.Nowhere in the head of Profit and Gain from Business and Profession is written, which specifically prohibits or disallows IT appeal fee like interest and penalty on Income Tax,TDS and Wealth Tax.
2. No Judicial decision found in this matter.
3. It is not incurred for any infraction of law and legal expenses are allowed to be deducted from Profit and Gain from Business and Profession, hence it can be allowed as a business expenditure u/s 37(1).

 

If payment is made in connection to the contravention of law, then such kind of payments is not allowable as deduction, such as penalty. But appeal is a right of assessee (being an aggreived party) as per the Income tax act , hence payment made in connection to fee related to appeals is allowed as a deduction u/s 37(1). 

So IT appeal expenses are allowed?? And IT paid is disallowed??


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