A full-time professor at California State University, Dr. Irene Adler, teaches c

Question

A full-time professor at California State University, Dr. Irene Adler, teaches courses on production, both for small and big-screen. In her 3,000-square foot home she has a room that is solely used for business purposes where she and her students watch and analyze student-created films as part of the university’s graduate program requirements. Though Dr. Adler has on-campus office space, that office is equipped only with office chairs and a small television, whereas her home office has a very large flat screen and much more comfortable seating.

Question: What impact, if any, might this room at home have on Dr. Adler’s personal income tax situation? Discuss any possible allowed or disallowed deduction(s).

Explanation / Answer

Generally, any expenditure of personal nature is disallowed under income tax. But where the assessee proves that the expenditure incurred is 1. Related to business 2. of revenue nature & 3. not Illegal exxpenditure , then that expenditure will be allowed in calculating income of the assessee.

Here as per section 37 of income tax Act, 1961, it will be allowed.

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