In India, you can claim tax benefit on ransom paid to kidnappers?

  • Thread starter Thread starter Sushubh
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Oh i wasnt celebrating my B'day. I was busy doing the stuff to get employed.....getting thru the paper work & then replying to wishes from friends on FB!But i dont think this can be used to convert White to Black also.If u show u paid ransom, u will have to show the proofs as discussed earlier, that someone was actually kidnapped, an FIR was filed, and also where did that money come from - i dont think anyone wud dare to pay Black money & claim it as deduction.About the ruling, its pretty much valid, and logical. We have rulings, where smuggled goods were confiscated by Customs, and the loss of his stock that the Smuggler incurred, was allowed as a loss.This ruling is nothing in comparison to that!
 
The idea here is to show as much expense, so why wud someone accept something being done for free??! 😀

no need to pay for accommodation charges 😀
 
As weird as it may sound, this is perfectly legal from what I remember reading. I would not term it as a 'loophole' though
 
no need to pay for accommodation charges 😀

Can you claim HRA while you are kidnapped?
 

^ You can for days when you are on vacation or out of town, so you can in this case too 😀
 
LOL. Kidnappers will have to mention their PAN in the receipt and also sign across a revenue stamp if payment is by cash.
 
Heres the legal position of the case.....though i got this in the email, i wud have posted a similar thing!The assessee, engaged in manufacture and sale of bidis, sent its whole-time director to a forest area for purchase of tendu leaves. There, the director was kidnapped by dacoits and the assessee paid ransom of Rs. 5.50 lakhs to secure his release. The AO disallowed the claim for deduction of the said amount u/s 37(1) though the CIT (A) and Tribunal upheld the claim on the ground of commercial expediency. Before the High Court, the department relied on the Explanation to s. 37(1) and argued that expenditure incurred for any purpose which is an offence or which is prohibited by law is not allowable as a deduction. HELD dismissing the appeal: The Explanation of s. 37(1) provides that expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business.It has to be seen whether the expenditure is incurred for any purpose which is an offence or prohibited by law. While kidnapping for ransom is an offence u/s 364 A of the IPC, the payment of ransom to secure the release of a kidnapped person is not an offense. The payment of ransom is not prohibited by law. Accordingly, the Explanation of to s. 37 (1) is not applicable and the ransom is deductible as business expenditure.
 
I dont think theres any absurdity involved in this judgment! C'mon, by plain logic, protecting the life of one of ur Key Personnel is an expense for the business!
 

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