Amount paid to Consulting firm for sourcing a strategic investor

[Raam Srinivasan Swaminathan Kalpathi]

One of my clients have paid around Rs. 250 lakhs, lumpsum, to a consulting firm for sourcing a strategic investor for his business. The project was a success and the company has settled the bill of the consulting firm. The consulting firm invoice only states 'Project - success fees' with HSN/ SAC 998311. TDS was applied at 10% u/s.194J. My query to the learned panelists are: Can I claim this sum as a deduction for Income-tax purposes u/s.37? Thanks

AI Summary

Consulting Fees for Investor Sourcing: Deductible Under Section 37 or Capital Expenditure? A client paid Rs. 250 lakhs to a consulting firm for sourcing a strategic investor, with the invoice labeled as 'Project - success fees' and TDS applied at 10% under section 194J. The client queries if this can be claimed as a deduction under section 37 for income tax purposes. A response suggests no restriction on claiming this deduction, but auditors argue it is capital expenditure, referencing a legal precedent where such expenses were deemed capital in nature, not deductible as revenue expenditure. The discussion concludes with acknowledgment of the provided insights.