Income Tax - payment of advance-tax and self-assessment tax is not an expenditure incurred for purpose of business. This is an item of appropriation of income – penalty on Microsoft sustained: ITAT
THE assessee had taken loan of about Rs. 13.13 crore from Microsoft Corporation, U.S.A. . Due to fluctuation in rate of the foreign exchange, a loss of Rs. 39.90 lakh was incurred in this year on account of the restatement of the liability on the closing day of the previous year. This amount was claimed as a revenue loss. The AO considered the facts and the submissions. It was mentioned that it is the assessee who claimed revenue loss occurring on account of change in rate of foreign exchange. Therefore, the onus of proving that the loss was a revenue loss is on the assessee. This onus has not been discharged. Therefore, the loss was disallowed. Penalty was also imposed.
The assessee also utilized a portion of the loan for payment of advance-tax. The general proposition canvassed before the Tribunal about the issue being debatable is not applicable at all in respect of this payment because payment of advance-tax and self-assessment tax is not an expenditure incurred for the purpose of business. This is an item of appropriation of income. Therefore, there could be no dispute in regard to the loss pertaining to the payment of advance-tax.