Tax exemption

Much turns on the facts and circumstances of the case. If the criminal complaint was related to his pure personal affairs he is not entitled to get any deduction. His possibility of deduction is confined to the heads "profits and gains" and "income from other sources". The principles stted are clear that if defending the proceedings were necessary to his carrying on the business then perhaps you have a right to claim, otherwise not.

Sivadas Chettoor. B.COM FCA LL.M

Agreed with Sivdas

Thanks alot sir, but  i think the Government should make provisions regarding these types of deductions under the "Other sources" since it was a failure on the part of the Govt for wrongly accusing an innocent person.

Hope for the best and be prepared for the worst.

Tax legislation is never based on principal of equity or logic sir. Otherwise how would you explain deduction being allowed fto a businessman for everything from telephone, car, travelling, hotel, entertainment etc. But for a poor employee even the standard deduction of Rs 30,000 has been withdrawn.

Does it not violate the constitution how can a law be in force which ultra vires the constitution.

Nothing ultra vires here sir. What we consider is perceptional inequality between two different classes of assessees. The Income Tax treats all assessees in a particular class or classes as equal. As far as expenses related to defending criminal case is concerned I fully agree with Mr Sivdas. Section 37 of the Act is very clear on allowability of all genuine and legal expenses related to business as deduction.

It cannot be deuducted when filing IT returns but can be claimed through Consumer Court

No Mr Sharma, Consumer Courts do not have jurisdiction over Income Tax matters. In fact barring some prosecution matters, No court below the respective High Court  enjoys any jurisdiction over Income Tax Appeals.

Barring some special circumstances, a deduction which has not been claimed in return of Income, cannot be claimed at a later date.

 Ur right Mr. vineet