Allowability of expense

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 December 2012 Dear Sir

Expenses incurred on occassion of marriage of Director himself such as hotel, loadging boarding arrangement for dealer and distributors of company for attending and staying for marriage function be allowable as business expenditure of company ?

Taranjit Singh

Taranjit Singh (Expert)
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04 December 2012 Look there are 2 things as regards to Personal Expenses of Director:-

1) IF COMPANY HAS SPECIFICALY AGRRED TO BEAR THE PERSONAL EXPENSES OF DIRECTOR THAT IS TO SAY THAT THERE IS NO MANIPULATION TO INCREASE THE EXPENSES, THEN IT IS ALLOWED AS DEDUCTION IN INCOME TAX AND NO ADDITIONAL RESPONSIBILITY IS THERE ON THE AUDITOR..

2) IF PERSONAL EXPENSES HAVE BEEN DEBITED TO PROFIT/LOSS A/C AS A MEANS TO REDUCE PROFIT THAT IS TO SAY THERE IS MANIPULATION, THEN SUCH EXPENSES WILL NOT BE ALLOWED AS DEDUCTION UNDER INCOME TAX..FURTHER AUDITOR IS REQUIRED TO CLEARLY MENTION THE FACT IN HIS REPORT OR QUALIFY IT AS MAY BE APPROPRIATE.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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04 December 2012 This is a PERSONAL expense and NOT incurred wholly and exclusively for business.

Accordingly, this expense shall NOT be allowed as deduction.