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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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....

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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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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 Explanati...

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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....

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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. ...

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Recent Posts in "Section 37"

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....

Read More

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...

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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. ...

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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....

Read More

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. ...

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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. ...

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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...

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Commitment charges paid towards foreclosure of business agreement are allowable u/s 37

D.C.I.T. Vs Autoline Industries Ltd (ITAT Pune)

In the case of D.C.I.T. vs Autoline Industries Ltd, Pune Tribunal held that foreign exchange cover taken by the assessee from DBS Bank was in order to prevent itself from future currency rate fluctuations. Later, it had to close its agreement with DBS Bank in view of the offer made by the principal lender i.e. Citi Bank....

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Discount on ESOP being in the nature of employee cost, allowed u/s 37 subject to adjustment for lapsed /unvested options

ACIT Vs People Interactive India Private Ltd. (ITAT Mumbai)

ITAT Mumbai held In the case of ACIT vs. People Interactive India Private Ltd. that the issue in hand is squarely covered by the decision of Hon’ble Special Bench-Bangalore Tribunal in (2013) 35 taxmann.com 335(SB) Biocon Limited v. DCIT (LTU) in favour of the assessee company whereby the Hon’ble Special Bench has held that the discou...

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

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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