Section 37

Section 37: Fees paid for enhancement of authorized capital; revenue or capital expenditure?

Income Tax - This article is about one of the most important things which came out in terms that how to treat fees paid for enhancement of authorized capital to Registrar of Companies. Will it be a revenue expenditure or capital expenditure? Before starting it up and finding the answer let's just start it with what is Section 37 of the Income Tax Act,...

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Allow deduction of Interest Paid to Government under Income Tax Act – ICAI

Income Tax - Allowability of Interest paid under Incometax Act, 1961: Presently, interest paid by the Government to an assessee is chargeable to tax. However, interest paid by the assessee to the Government under various sections is not allowed as deduction while computing the total income. Interest paid by the assessee is for the use of money by [&he...

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Penalty levied by IRDA for non-compliance of Regulation is allowable

Microsec Insurance Brokers Ltd. Vs ITO Ward (ITAT Kolkata) - This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) – 18, Kolkata dated 15.04.2016 and the solitary issue involved therein relates to the disallowance of Rs. 5,00,000/- made by the A.O. and confirmed by the Ld. CIT(A) on account of penalty charges paid to Insurance...

Consultancy charges Incurred for making investment are allowable

Pr. CIT Vs. Sintex Industries Ltd. (Gujarat High Court) - Where dis allowance was made by revenue under section 14A in respect of interest and administrative expenses, it was made clear that where assessee had its own surplus fund, then no question of any estimation of expenditure under rule 8D would arise. Thus, revenue was not justified in disallowing in...

Sales Tax Penalty not allowable as business expense to the extent it is not compensatory

M/s. Bokaro Power Supply Co. Ltd. Vs. DCIT (ITAT Delhi) - M/s. Bokaro Power Supply Co. Ltd. Vs. DCIT (ITAT Delhi) In the case of Swadeshi Cotton Mills Vs. CIT Ltd. (supra) the Hon’ble Supreme Court has held that, ‘where the amount paid is partly penal and partly compensatory, the amount to the extent that it is compensatory could be allowed as deductio...

Expenses not allowable on Failure to prove that it was incurred for business purpose

Kanhaiyalal Dudheria Vs Jt. CIT (ITAT Bangalore) - These are appeals filed by the assessee-firm directed against the common order of the Commissioner (Appeals), Gulbarga, dated 29-1-2016 for the assessment years 2011-12 and 2012-13. Since common issue is involved in both the appeals, we proceed to dispose of the same by this common order....

Irrecoverable Bad debt in the course of business allowable as trading loss

DCIT Vs M/s Linde India Ltd. (ITAT Kolkata) - It has been held that ‘even though the expenditure is not admissible for the computation of the total income either as a bad debt or as an expenditure wholly incurred for the purpose of business, still, it can be allowed as an expenditure as a trading loss if it arises directly from carrying on th...

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Recent Posts in "Section 37" | Total 48 Posts

Penalty levied by IRDA for non-compliance of Regulation is allowable

Microsec Insurance Brokers Ltd. Vs ITO Ward (ITAT Kolkata) -

This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) – 18, Kolkata dated 15.04.2016 and the solitary issue involved therein relates to the disallowance of Rs. 5,00,000/- made by the A.O. and confirmed by the Ld. CIT(A) on account of penalty charges paid to Insurance Regularly and Development Authority (IR...

Consultancy charges Incurred for making investment are allowable

Pr. CIT Vs. Sintex Industries Ltd. (Gujarat High Court) -

Where dis allowance was made by revenue under section 14A in respect of interest and administrative expenses, it was made clear that where assessee had its own surplus fund, then no question of any estimation of expenditure under rule 8D would arise. Thus, revenue was not justified in disallowing interest and administrative expenses, when...

Posted Under: Income Tax | Judiciary | All High Courts, Gujarat High Court

Sales Tax Penalty not allowable as business expense to the extent it is not compensatory

M/s. Bokaro Power Supply Co. Ltd. Vs. DCIT (ITAT Delhi) -

M/s. Bokaro Power Supply Co. Ltd. Vs. DCIT (ITAT Delhi) In the case of Swadeshi Cotton Mills Vs. CIT Ltd. (supra) the Hon’ble Supreme Court has held that, ‘where the amount paid is partly penal and partly compensatory, the amount to the extent that it is compensatory could be allowed as deduction’. Further, Hon’ble Jurisdictional ...

Posted Under: Income Tax | Judiciary | All ITAT, ITAT Delhi

Expenses not allowable on Failure to prove that it was incurred for business purpose

Kanhaiyalal Dudheria Vs Jt. CIT (ITAT Bangalore) -

These are appeals filed by the assessee-firm directed against the common order of the Commissioner (Appeals), Gulbarga, dated 29-1-2016 for the assessment years 2011-12 and 2012-13. Since common issue is involved in both the appeals, we proceed to dispose of the same by this common order....

Posted Under: Income Tax | Judiciary | All ITAT, ITAT Bangalore

Irrecoverable Bad debt in the course of business allowable as trading loss

DCIT Vs M/s Linde India Ltd. (ITAT Kolkata) -

It has been held that ‘even though the expenditure is not admissible for the computation of the total income either as a bad debt or as an expenditure wholly incurred for the purpose of business, still, it can be allowed as an expenditure as a trading loss if it arises directly from carrying on the business and is incidental to the busi...

Posted Under: Income Tax | Judiciary | All ITAT, ITAT Kolkata

Penalty / Fine for Traffic Violation not allowable

Aparna Agency Ltd. v. Income-tax Officer (ITAT Kolkata) -

It is clear from the statutory provisions of the MV Act as well as the law laid down in judicial pronouncements that payments made for any purpose which is an offence or which is prohibited by law and which are not compensatory in nature cannot be allowed as a deduction u/s.37(1) read with Explanation thereto. ...

Posted Under: Income Tax | Judiciary | All ITAT, ITAT Kolkata

Cost incurred in abandoned projects should be allowed : ITAT Mumbai

Red Chillies Entertainment Pvt. Ltd. Vs Asstt. Commissioner of Income Tax (ITAT Mumbai) -

In CBDT circular no.16 of 6th October 2015, the Board has clearly stated that cost incurred in abandoned projects should be allowed as revenue expenditure under section 37 of the Act....

Posted Under: Income Tax | Judiciary | All ITAT, ITAT Mumbai

Advertisement expense post Flilm certification by Censor Board allowable

Red Chillies Entertainment Pvt. Ltd. Vs Asstt. Commissioner of Income Tax (ITAT Mumbai) -

Advertisement expenditure incurred after certification by Board of Film Censors cannot be included as part of cost of production, hence, provisions of rule 9A, will not apply. It was held, the expenditure incurred in regular course of business has to be allowed under section 37. ...

Posted Under: Income Tax | Judiciary | All ITAT, ITAT Mumbai

Allowability of Interest / Service Charges on Funds raised to Subscribe Debentures for acquiring controlling interest

Commissioner of Income Tax vi Vs m/s Virat Investment & Mercantile co. (Delhi High Court) -

In this case, the expenditure clearly is not towards acquisition of the capital nor is it an integral part of it, it is only the service alone. It is of a similar kind that would otherwise have been permitted under Section 37 of the Income Tax Act. ...

Posted Under: Income Tax | Judiciary | All High Courts, Delhi High Court

Compensation paid for damage to environment is allowable

Shyam SEL Ltd. vs. DCIT (Kolkata High Court) -

The compensation was paid because the assessee had failed to install the pollution control device within the time prescribed. Therefore, payment of the sum of Rs.12,50,000/- is not hit by Explanation-1 to Section 37 of the Act. The Hon’ble judges of the Kolkata High Court by setting aside the orders of ITAT held that payment was und...

Posted Under: Income Tax | Judiciary | All High Courts, Kolkata High Court