Help plz.......
This query is : Resolved
CA Jatin Kacha
(Expert)
27 December 2012
It was tax on expediture which is ultimatly contradict to income tax and constitution.
however, it was copy and pasted from australian laws.
however, it was copy and pasted from australian laws.
Message likes :
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27 December 2012
ok sir But I want To know Why ?
Actually one of interviewer ask me this question
Actually one of interviewer ask me this question
CA Jatin Kacha
(Expert)
27 March 2013
My dear friend,
Tax should be collected only on the income earned and not on the expenses incurred.
To maintain and grow business, any business man needs to incur some expenses.
If you are collecting tax on the such expenditure then that would be injustice with such person as you are collecting tax even in income and expenses.
Then in such situation, there would be no income on hand on such person. he will definitely go for tax evasion.
and the power to government to collect tax is given by constitution. it is not by itself.
As per constitution, there could not be tax on expenses as specially business expense.
so, such law was contradict to constitution, that's why it was abolished.
Tax should be collected only on the income earned and not on the expenses incurred.
To maintain and grow business, any business man needs to incur some expenses.
If you are collecting tax on the such expenditure then that would be injustice with such person as you are collecting tax even in income and expenses.
Then in such situation, there would be no income on hand on such person. he will definitely go for tax evasion.
and the power to government to collect tax is given by constitution. it is not by itself.
As per constitution, there could not be tax on expenses as specially business expense.
so, such law was contradict to constitution, that's why it was abolished.
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