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Residuary business expenses applicability

Suyash Sancheti (Articleship) (25 Points)

25 May 2020

Ms. Shamita is running successfully the business of supplying &selling woolens on the digital platform. She is keen to understand how business expenses are allowed under the Indian Income Tax Act 1961. However, these days she is more concerned about whether there is any provision under the Act which allows claiming deductions in relation to residuary expenses. As a knowledgeable person in taxation, how will you address the worry of Ms. Urrjja. Is there any provision under the IT Act which allows to claim deductions of residual expenses? If yes, how can she avail the benefit of the said provision for her business?

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4 Replies

Asha Kanta Sharma (Manager - Finance & Accounts) (36355 Points)
Replied 29 May 2020

Expenses can only be allowed as deduction if all these are related to and for carry out of business/profession.

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debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 02 June 2020

expense can be allowed as deduction

CA Jyoti Tutorials (37 Points)
Replied 02 June 2020

Residuary Business Expenses shall be allowable as deduction.These category of expenses are covered in Section 37 and are only admissible as deduction only when:

These Expenses are not covered in the nature described in Sec 30 to Sec 36.They are incurred for the purpose of business/profession carried out by the assessee,These are incurred by the assessee in the financial year,These are neither in the nature of personal expenses nor capital expenses,These have been incurred when business was set up and are being laid out wholly and exclusively for the purpose of business.

CA Jyoti Tutorials (37 Points)
Replied 02 June 2020

Residuary Business Expenses shall be allowable as deduction.These category of expenses are covered in Section 37 and are only admissible as deduction only when: