Merger expenses are deductible

Chat Room

 Yes. In the Commissioner of Income Tax vs Bombay Dyeing and Manufacturing Company Ltd case, (1996) 219 ITR 521, the Supreme Court said legal and professional expenses in respect of amalgamation were allowable as revenue expenditure.

 One unit of our company is engaged in forest operations, plantation of tea and rubber in the north-east. For testing and improving the quality of its products, it has set up a scientific research unit in Guwahati at a cost of Rs 8 lakh. The assessing officer is not allowing the claim for deduction terming it a capital expenditure. Is his view correct?

 No. The expenditure is admissible under Section 35 of the Income Tax Act, 1961. You can cite the Gauhati High Court order in the Commissioner of Income Tax vs Arunachal Pradesh Corporation Ltd, (2003) 177 Taxation 383 (Gauhati).

 For my business, I borrowed Rs 80,000 in cash from a relative, who withdrew the money from his bank account. The assessing officer says this is my own undisclosed money, which I have introduced in the name of my relative and it should be added to my total income. My request to summon the creditor under Section 131 of the Income Tax Act and examine him at my cost is not being accepted on the ground that the onus to prove the deposit is on me. What is the remedy available to me?

 The Calcutta High Court