This article reviews the Income Tax Appellate Tribunal (ITAT) decision in the case between Sanjay Kumar Bejwani and the Income Tax Officer, Ward-61(1), New Delhi, for the assessment year 2018-19. The appeal addresses the disallowance of Rs. 13,27,995 in expenses claimed by the appellant.
The appellant, Sanjay Kumar Bejwani, contested the order from the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, which upheld the disallowance made by the ITO during the assessment. The dispute centers around the appropriateness of the expenses claimed and their direct connection to income reported under the ‘Profits and Gains from Business and Profession’ head.
The primary issue in this appeal is whether the expenses incurred by Bejwani were necessary and exclusively for the purpose of business, and therefore deductible. Bejwani argued that these expenses were essential for maintaining his position and income within the partnership firm and were not reimbursable by the firm, which justified the deductions under section 37(1) of the Income Tax Act.
The ITAT’s decision focused on whether the expenditures were strictly business-related and whether the assessing officer had overstepped in disallowing these expenses. The tribunal examined the categorization of the expenses and their linkage to the income earned, both from the partnership and individually.
The ITAT ruled in favor of Bejwani, stating that the expenses in question were indeed for business purposes and were incorrectly disallowed. This decision highlights the tribunal’s approach to evaluating business expenses and their direct connection to income generation, providing significant insights for similar cases.
The ITAT’s ruling in Sanjay Kumar Bejwani vs. ITO marks a crucial precedent for understanding the deductibility of business expenses in partnership scenarios. It underscores the need for clear documentation and justification of expenses related to income generation.
Case Analysis: Sanjay Kumar Bejwani vs. ITO on Expense Disallowance for AY 2018-19
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