VLCC Health Care Ltd., a prominent wellness and healthcare company, contested disallowances of Rs. 15,79,287 deemed personal expenses of the directors by the Income Tax Department for the assessment year 2014-15. The appeal was addressed in the Income Tax Appellate Tribunal, Delhi Bench ‘F’ under the members Shri Kul Bharat, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member.
The disallowance initially made by the Assessing Officer and sustained by CIT(Appeals) was based on the allegations of personal expenses from a statement of an employee recorded during a survey. VLCC argued that these expenses were purely for business purposes and contested the findings as it impacted their declared income of Rs. 14,00,72,370 significantly.
During the proceedings, the Tribunal considered the substantial income declared by VLCC, alongside evidence presented that substantiated the business nature of the expenses. The Tribunal acknowledged that the expenditures related to staff uniforms and gifts were wrongly categorized as personal expenses. Consequently, they overturned the previous ruling, deleting the questioned disallowance and further allowed the claim on the depreciation of a BMW car, previously cut down by the authorities.
This ruling underscores the importance of accurate expense categorization and supports the necessity of proper documentation and justification in claiming business expenses. It also highlights the Tribunal’s role in providing relief against erroneous assessments, thereby promoting fair tax practices.
VLCC Health Care Ltd. Wins Appeal Against Personal Expense Disallowance for AY 2014-15
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform