"FOR THE PURPOSES OF BUSINESS"

GST Department, especially Audit Teams, denies ITC Credit on few expenses treating them not needed for business whereas the Assesee is of the view that these are for the purposes of business.

Let's examine this in the light of few judgments.

1. Supreme Court

1.1 Malayalam Plantation Ltd. AIR 1964 SC 1722 The expression 'for the purpose of the business' may include not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery.

It may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile titles.

1.2 Sree Meenakshi Mills Ltd., Madurai AIR 1967 SC 444 Expenditure incurred in litigation was expenditure laid out wholly and exclusively for purpose of business in that the company was seeking to obtain order from Court enabling business to be carried on without interruption.

1.3 M/s. Kalyanji Mavji and Co AIR 1980 SC 640 Repairs to buildings and machinery not falling under "current repairs" - Deduction as business expenditure- Not barred.

1.4 Ciba of India Ltd. (1968) 2 SCR 696 : (1968) 69 ITR 692 Scientific Research carried on by Foreign Company communicated to the Assessee. Expenditure on such Scientific Research is wholly and exclusively for the purposes of Assesse's business.

2 Allahabad High Court

2.1 J. K. Cotton Spg. and Wvg. Mills Co. Ltd AIR 1967 ALLAHABAD 513 Expenses of litigation: "Wholly and exclusively for purposes of business." Expenditure must be reasonably necessary or incidental to or flow naturally from the carrying on of the business

and must be incurred in the character of assessee as business concern.

Hope you will find this useful.

Thanks And Regards

Abhishek Raja Ram"