The tax authorities had excluded from the tax deductible expenses claimed by Ing. V. K. an amount for the construction work on the grounds that it had failed to prove that the expenses in question were incurred in accordance with the provisions of Article 24(1) of the Income Tax Act.
Ing. V. K. disagreed with the resulting assessment and lodged an appeal
Ing. V. K. submitted that the expenditure claimed by it has been proven formally by impeccable invoices issued by existing entities and that it was established beyond doubt in the previous proceedings that it carried out its contracts through subcontracting companies, the implementation of which incurred expenditure. It maintains that the expenditure for the invoiced works was made on behalf of B.6 v.o.s. and that Mr I.S., who issued the invoices on behalf of that company, was authorised to act on its behalf by a power of attorney.
According to Ing. V. K. neither the tax administrator nor the Regional Court accepted that fact on the ground that the invoices issued by B. were not entered in its accounts and the statutory body could not be contacted. Although the complainant proposed the taking of evidence to prove that Mr S. was the agent of B. at the time the contract was executed and that that company was the contact and business activity at that time, the administrative authorities of both instances and the Regional Court refused to take such evidence. However, the complainant considers that it fulfilled all the conditions laid down by law for the expenditure incurred to be recognised as expenditure within the meaning of Article 24(1) of the Income Tax Act. It further submits that it cannot be blamed for the fact that B. is not contactable and therefore requests the Supreme Administrative Court to set aside the contested judgment of the Regional Court and to refer the case back to it for further proceedings.
By decision of 26 July 2006, No 4265/110/2006, the appeal was dismissed.
An appeal was then filed by Ing. V. K. with the Supreme Administrative Court
Judgment of the Supreme Administrative Court
The Supreme Administrative Court did not find that any of the grounds of appeal raised were met, nor did it itself find any other defects referred to in Article 109(3) of the Code of Civil Procedure which it had to take into account of its own motion, and therefore dismissed the complaint as unfounded
Expenses will be tax deductible only if the taxable entity proves without any doubt both their actual expenditure and that they were incurred in order to achieve, secure or maintain its taxable income.
In the case of costs incurred for services, such costs may be considered tax deductible if the taxpayer is able to prove, in particular, the following:
– the taxpayer actually received the services;
– the services served the taxpayer to obtain, secure and maintain his taxable income;
– the costs are directly and directly related to the taxable (and expected) income;
– the costs are claimed in the tax year to which the services are temporally and materially related;
– the amount of the costs is proportionate to the benefit derived from the services.
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