Case Law Details
RELEVANT PARAGRAPH
20. Deduction which are allowed while computing business income have been laid down in section 30 to 36. section 37 is a residuary section extending the allowance of expenses to items of expenditure not covered by Section 30 to 36, the list of allowances enumerated in sections 30 to 36 being not exhaustive. An item of expenditure, which is wholly or exclusively for the purpose of business may be allowed to be deducted in computing the profits and gains according to the ordinary principles even if it does not fall under any of the above sections.
21. Section 37 start with negative conditions. After the negative conditions are satisfied, the section lays down a positive condition. It is only when both the negative and positive conditions are satisfied that an expenditure can be considered and allowed under this Section. The negative conditions are ;
(i) that the expenditure should not be of the nature described- (a) u/s 30 to Section 36;
(b) that the expenditure should not be in the nature of capital expenditure or personal expenditure of the assessee. If the expenditure satisfies these negative test, then it has to satisfy the positive test, namely, that it is laid out wholly and exclusively for the purpose of assessee’s business.
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