Settlement of Arbitration Award on Corporate Guarantee Deductible Under Section 37(1)

Escorts Limited Vs ACIT (ITAT Delhi) The appeal concerns disallowance of ₹47.64 crore claimed as business expenditure under section 37(1) of the Income Tax Act, 1961, arising from settlement of a corporate guarantee invoked against the assessee. The Assessing Officer disallowed the claim on the ground that the assessee failed to establish that the expenditure was incurred wholly and exclusively for business purposes. The Commissioner (Appeals) upheld this disallowance, leading to the present appeal. The assessee, engaged in manufacturing and sale of tractors and farm equipment, had a step-do...