Payment as compensation is allowable expenditure

Last updated: 18 February 2021

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This Income Tax Appellate Tribunal ruling clarifies that payments made as compensation can be considered allowable expenditure for businesses. The case involved a partnership firm engaged in iron ore extraction and trading that filed a return declaring a significant loss. The tribunal's decision addresses the deductibility of such payments, impacting how businesses account for compensation expenses.

Court :
ITAT Bangalore

Brief :
Present appeal is filed by the assessee against order passed by Ld.CIT(A), Gulbarga dated 24.01.2019 on following grounds of appeal:

Citation :
ITA No.522/Bang/2019

IN THE INCOME TAX APPELLATE TRIBUNAL
‘B’ BENCH : BANGALORE
BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER
AND
SMT. BEENA PILLAI, JUDICIAL MEMBER

ITA No.522/Bang/2019
Assessment Year : 2013-14

Ashwathnarayana Singh and
Co.
Mine Owners, No.54,
Beside
Shakthi Nursing Home,
3rd Cross, Parvathi Nagar,
Bellary-583 103.
Karnataka
PAN – AACFA 3735A
APPELLANT

Vs.

The Asst. Commissioner of
Income-tax,
Circle-1,
Bellary.
RESPONDENT

Appellant by : Shri Laxminiwas Sharma, C.A
Respondent by : Smt. Muzaffar Hussain, CIT (DR)

Date of Hearing : 18-01-2021
Date of Pronouncement : 01-02-2021

O R D E R

PER BEENA PILLAI, JUDICIAL MEMBER:

Present appeal is filed by the assessee against order passed by Ld.CIT(A), Gulbarga dated 24.01.2019 on following grounds of appeal:

2. Assessee is a partnership firm and is into the business of extraction of iron ore processing and iron ore trading . For year under consideration assessee filed its return of income on 30/09/2013 declaring total loss of Rs.7,60,04,425/-. The case of assessee was selected for scrutiny and notices under section 143(2) and 142(1) were issued to assessee. In response to the statutory notices, representatives of assessee appeared before Ld.AO and filed details called for.

To know more in details find the attachment file