Section 37 - Page 4

Lease rent cannot be classified as Capital merely for Lumpsum Payment for multiple years

ACIT Vs Balmer Lawrie & Co. Ltd. (ITAT Kolkata)

The issue under consideration is whether the Lease payment in advance for the period varied from 15 to 99 years considered as Capital Expenditure or Revenue Expenditure?...

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Bad debts are allowable expenses and it is not necessary for the assessee to establish that debt has become irrecoverable

Bad debts are allowable expenses and it is not necessary for the assessee to establish that the debt has become irrecoverable Gone are the days when the the Assessing Officer would disallow the sum debited in the P&L account as non-recoverable sums written off as bad debts.  The Assessing Officer cannot disallow the sum in […]...

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Posted Under: Income Tax |

Is expense incurred for Issue of redeemable preference shares is deductible

Issue Involved/Facts – Whether expenditure incurred for preparing prospectus, payment of underwriting commission and brokerage for issue of redeemable preference shares is deductible as Revenue Expenditure? Arguments in against – 1) Hindustan Gas & Industries Ltd. v. CIT [1979] 1 Taxman 546 (Cal.): Facts of the case: The assessee-...

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Posted Under: Income Tax |

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

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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Posted Under: Income Tax |

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...

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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...

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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 ...

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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 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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September 2021