Assessee, a stock broker, claimed deduction for out-of-court...

Assessee, a stock broker, claimed deduction for out-of-court settlement amount and legal fees paid for defending a criminal complaint filed by a client. AO disallowed the claim under Explanation 1 to section 37(1). CIT(A) upheld AO's order. On appeal, ITAT observed assessee failed to establish with supporting evidence that the expenditure was civil in nature and allowable. ITAT provided assessee another opportunity to substantiate claim with details. ITAT set aside CIT(A)'s order and restored the issue to AO for fresh adjudication after providing adequate opportunity of hearing to assessee and examining evidence. ITAT allowed assessee's grounds of appeal for statistical purposes.