Question

List the general principles for allowability of deduction from business income

Answer 1

The admissibility of an item of expenditure is governed by the following general principles. These are

1.   Any expenditure incurred in consideration of commercial expediency and on the basis of the principles of ordinary commercial trading is allowed as deduction.

2.   Commercial expediency simply means the expenditure made by prudent man for the purpose of his business, in the best interest of his business or any other expenditure incurred totally, and exclusively for the purpose of the business.