TaxTMI 
TaxTMI 
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
Amount paid to Consulting firm for sourcing a strategic investor
28 Jul 2024 
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Capital vs revenue classification: consultancy fees for sourcing investors treated as capital, therefore not deductible under tax law.
Consultancy fees paid as a success fee for sourcing a strategic investor are contested as revenue deductions; auditors and a tribunal applying the Brooke Bond principle treat expenses incurred to increase share capital as capital in nature. Accordingly, fees paid to identify investors are regarded as capital raising costs and are not allowable as revenue deductions, despite invoice coding and withholding under professional fees. (AI Summary)
Consultancy fees paid as a success fee for sourcing a strategic investor are contested as revenue deductions; auditors and a tribunal applying the Brooke Bond principle treat expenses incurred to increase share capital as capital in nature. Accordingly, fees paid to identify investors are regarded as capital raising costs and are not allowable as revenue deductions, despite invoice coding and withholding under professional fees. (AI Summary)