Professional and consultancy charges incurred during acquisition of companies cannot be treated as revenue expenses

Last updated: 26 July 2021

Save Share

Quick Summary

The Income Tax Appellate Tribunal (ITAT) has ruled that professional and consultancy charges incurred during the acquisition of companies cannot be treated as revenue expenses. In the case of M/s. Steer Engineering Pvt. Ltd., the tribunal upheld the disallowance of these costs as revenue expenditure, classifying them as capital in nature. This decision aligns with previous Supreme Court rulings, reinforcing that such expenses are integral to acquiring a capital asset.

Court :
ITAT Bengaluru

Brief :
In M/s. Steer Engineering Pvt. Ltd. v. The Addl. Commissioner of Income Tax [ITA No. 2070/Bang/2018 decided on July 22, 2021], M/s. Steer Engineering Pvt. Ltd. ('the Appellant') acquired the business of two companies namely Concord United Products Pvt. Ltd., and M/s. Aditya Precision Deposition Moulding Pvt. Ltd. and incurred Rs.1,20,820/- as professional fees for drafting business transfer agreements and legal opinions. The Appellant claimed it as revenue expenditure.

Citation :
ITA No. 2070/Bang/2018 decided on July 22, 2021

Daily Limit Reached

You have reached your daily limit of 2 Free Judgements

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?

No Ads
WhatsApp Community
Daily E-Newsletter
Unlimited Judgements Access
Profile Visitors
Link Social Profiles
Featured Job Posts
Pro Badge
Expert GST Guidance
Unlimited Forum Replies
Download Content in PDF

1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

View all CCI PRO benefits

Already a PRO member? Login here for an ad-free experience. 07941056694

247 Views Comment Share Income Tax Report

Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

View Judgements

Comments