Thursday, August 14, 2014

Section 37(1), read with section 28(i), of the Income-tax Act, 1961 - Business expenditure - Allowability of (Corporate guarantee)

In the ITAT Mumbai Bench 'B' it was held that where assessee furnished guarantees to different banks against extension of credit facilities to its JV company, in view of fact that JV did not perform well and said guarantee came to devolve on assessee which was settled at a discount by way of one time settlement (OTS) entered into with creditors, amount so paid under OTS could not be allowed as business expenditure or business loss

Note :- The decision would be different if guarantee commission charged

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