The Mumbai bench of the Income Tax Appellate Tribunal ruled that businesses can deduct expenses paid via a spouse's credit card if the business purpose is proven and the funds were reimbursed.
Reader brief
Through the Reader lens: The Income Tax Appellate Tribunal in Mumbai has clarified that business owners can claim tax deductions for legitimate business expenses even if they were initially charged to a spouse's credit card. The ruling addresses cases where individuals use a spouse's card for convenience, such as during overseas travel, provided that the full amount is reimbursed to the spouse. Taxpayers must maintain detailed documentation, including invoices and credit card statements, to verify the business purpose and ensure the reimbursement does not qualify as a taxable service payment.
What to watch next
- Future scrutiny on the adequacy of audit trails for spouse-reimbursed expenses.
- Potential shift in how taxpayers document personal and business financial overlaps.
Sources1
- [1]The Times of India — MumbaineutralCannot disallow business expenses paid through spouse’s credit card if reimbursed: ITAT