https://www.taxtmi.com/caselaws?id=6229 A liability arising from failure to deduct tax at source on payments to a non-resident technical collaborator is neither a bad debt nor allowable business expenditure. A bad debt must be a trading debt arising directly from business operations, and a statutory liability created by non-compliance with tax deduction obligations does not satisfy that test. The same payment is also not expenditure wholly and exclusively laid out for business purposes, because it discharges a statutory default rather than a business outlay incurred for commercial operations. The assessee therefore cannot claim deduction of the sum on either basis. en-us Tue, 12 Jan 1971 00:00:00 +0530 Wed, 03 Dec 2008 00:00:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=6229 A liability arising from failure to deduct tax at source on payments to a non-resident technical collaborator is neither a bad debt nor allowable business expenditure. A bad debt must be a trading debt arising directly from business operations, and a statutory liability created by non-compliance with tax deduction obligations does not satisfy that test. The same payment is also not expenditure wholly and exclusively laid out for business purposes, because it discharges a statutory default rather than a business outlay incurred for commercial operations. The assessee therefore cannot claim deduction of the sum on either basis. Case-Laws Income Tax Tue, 12 Jan 1971 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=6229