LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Vigneswaran (Lawyer)     21 September 2009

Tax exemption

Hi i am a final year law student from a chennai and a doubt has been eatin me alive for long. The thing is "If a man has been wrongfully accused of a crime and later acquitted the amount paid by him as legal fees and expenses, can it be deuducted when filing his IT returns since its the state who has wrongfully accused and it should bear the loss?" any comments



 10 Replies

Sivadas Chettur (Chartered accountant)     24 September 2009

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

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     26 September 2009

Agreed with Sivdas

Vigneswaran (Lawyer)     27 September 2009

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.

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     27 September 2009

Hope for the best and be prepared for the worst.

Vineet (Director)     03 October 2009

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 But for a poor employee even the standard deduction of Rs 30,000 has been withdrawn.

Vigneswaran (Lawyer)     05 October 2009

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

Vineet (Director)     13 October 2009

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.

Darshan Sharma (Lawyer-cum-detective)     03 November 2009

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

Vineet (Director)     03 November 2009

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.

Vigneswaran (Lawyer)     04 November 2009

 Ur right Mr. vineet

Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register