The Madras High Court held that the business Expenditure in form of Postage, Courier and Stationery Charges could not be disallowed.
The assessee, M/s.Share Aids Private Ltd. stated that it incurred expenditure on account of postage, stationery, courier charges, etc., the cost of which are recovered from the various clients.
The assessee stated that as per the SEBI directions, change of address was to be communicated to the individual investors both by advertisement in prominent newspapers and also by individual communications.
The assessee also stated that due to closure of the business in 2000, efforts were made to recover all the expenses and fee payable before the handing over the records. However, it could not recover the expenses incurred and that the assessee’s claim represented the amount spent by it but could not be recovered.
The issue involved was in respect of recovery of the expenditure like Postage, Courier Charges etc., from the clients of the Assessee Company, the total expenditure incurred by the Assessee during the year in question was more and recovery from the clients was less and thus, the net ‘Unrecovered’ amount to the extent of Rs.3,56,949 was claimed as expenditure under the head “Recovery”.
The division bench consisting of Justice Vineet Kothari and Justice M.S. Ramesh opined that the Business Expenditure incurred by the Assessee in the form of Postage, Courier and Stationery Charges could not be disallowed by the Assessing Authority and the Tribunal.
The course stated that merely because theAssessee could not recover the whole or part of the said expenditure incurred in the course of business, particularly to comply with the guidelines laid down by SEBI and claim such unrecovered expenditure as deduction from its income, the same could not have been disallowed by the Authorities below.
Subscribe Taxscan Premium to view the Judgment
