https://www.taxtmi.com/caselaws?id=766216 A contractual sharing of service tax borne by an assessee as part of commission-linked insurance auxiliary services was held allowable as business expenditure under section 37 of the Income-tax Act, 1961. The payment was made to secure and retain business, and the statutory service tax liability lay on the recipient under reverse charge, not on the assessee. Explanation 1 did not apply because there was no legal prohibition on the contractual arrangement itself. The recipient's failure to deposit the tax with the Government did not alter the character of the assessee's expenditure, as any default was attributable to the recipient. en-us Fri, 14 Feb 2025 00:00:00 +0530 Wed, 19 Feb 2025 12:26:37 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=766216 A contractual sharing of service tax borne by an assessee as part of commission-linked insurance auxiliary services was held allowable as business expenditure under section 37 of the Income-tax Act, 1961. The payment was made to secure and retain business, and the statutory service tax liability lay on the recipient under reverse charge, not on the assessee. Explanation 1 did not apply because there was no legal prohibition on the contractual arrangement itself. The recipient's failure to deposit the tax with the Government did not alter the character of the assessee's expenditure, as any default was attributable to the recipient. Case-Laws Income Tax Fri, 14 Feb 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=766216