Allowable Expenditures

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This query is : Resolved

CA Kapil B Gupta (Querist)

19 October 2009 There are two business units : One Manufactruing Unit (Under Construction) Second Trading Units (Started Trading)

In Case of Manufactruing Unit (Under Construction), all the expenditures trfd to CWIP for capitalization nothing debited to PNL

In Case of Trading Units (Started Trading)
There is no any revenue generated but there are some expenditures like Office Rent, Telephone Exps, Travelling Exps, Salary and other Admin Exps and Depreciation on Computers, Car, Office Equipments.

My simple questin is ??
whether all the expenditures of trading units will be allowable and loss will also be allowable to carry-forward.

Have any case law in this regard?

CA. Vinod Pandey

CA. Vinod Pandey (Expert)

19 October 2009 Expenditure can not be disallowed on the ground that there is not income subject to expenditure should not be incurred towards income which is exempt from tax.

CA Kapil B Gupta

CA Kapil B Gupta (Querist)

19 October 2009 Thanks for reply but it is a case pending for assessment, is it possible to a have decided case law on these points?

CA. Vinod Pandey

CA. Vinod Pandey (Expert)

19 October 2009 On what ground AO is going to disallow the expenditure.

Rajeev

Rajeev (Expert)

20 October 2009 All the above expenditures mostly fall u/s 37(1)/32(dep) .
incurred wholly for the purpose of business .
Question of disallowance doesnt arise .

CA. Bikash Bogi

CA. Bikash Bogi (Expert)

20 October 2009 In any case the AO cannot disallow the expenditure unless he has concrete evidence that expenditure had not fall u/s 37.
Losses will allow to be set off.

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