Legal Updates 30 July 2026
No Tax Deduction for Secret Commission
The Karnataka High Court has upheld the disallowance of business promotion expenditure claimed as secret commission paid to private executives without proving genuineness of expenditure, in a recent judgement the court has said that no income tax deduction will be allowed for such payments, the court has also stated that the onus of proving the genuineness of the expenditure lies on the taxpayer, if the taxpayer fails to do so the expenditure will be disallowed
The Karnataka High Court has made a significant ruling regarding secret commissions paid to private executives.
To qualify as a deductible business expense, the payment must be genuine and have a clear business purpose.
- The court has upheld the disallowance of business promotion expenditure claimed as secret commission paid to private executives without proving genuineness of expenditure
- The onus of proving the genuineness of the expenditure lies on the taxpayer
- If the taxpayer fails to prove the genuineness of the expenditure, it will be disallowed
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