section 37(1)

General Deductions of Expenditure Under Section 37(1)

Income Tax - We know that there are five heads of income, in which income of any assessee has been taxed. There may be different types of income an assessee earned during previous year such as income from salary, House Property, Profit and gain from business or profession, Capital Gain and Income from other sources.  Section 28 is […]...

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S. 37 Allowability of Business Expenditure & case laws

Income Tax - Condition for allowance under section 37 - Such expenditure should not be covered under the specific section i.e. sections 30 to 36. Expenditure should not be of capital nature. The expenditure should be incurred during the previous year. The expenditure should not be of personal nature. The expenditure should have been incurred wholly ...

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Overview of Revenue and Capital Expenditure

Income Tax - In actual practice there is a good deal of difference of opinion as to whether a particular payment is capital or revenue expenditure. Sometimes, the distinction between capital and revenue creates a considerable litigation. In many cases borderline between the two is very thin. However it is essential to distinguish revenue expenditure a...

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Whether Inaugural Expenses Deductible Under Section 37 (1)

Income Tax - Many times reference has been sought regarding the question whether inaugural expenses incurred by a person are deductible under section 37(1) or not while computing the profits & gains from business or profession (of that person)....

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NO TDS Deduction on Reimbursement to Foreign Entity

Income Tax - A pure reimbursement doesn't constitute a reward or compensation paid for a service rendered. Hence, a mere reimbursement of expenses cannot be construed as ‘royalty’ or ‘payments for services rendered’ since what is achieved by a reimbursement is a mere repayment of what has been already spent....

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Staff Recruitment Expenses exclusively for the business are allowable

DCIT Vs EIH Associated Hotels Ltd. (ITAT Kolkata) - DCIT Vs EIH Associated Hotels Ltd. (ITAT Kolkata) It is noted that the staff recruitment expenses were incurred only exclusive for the purpose of business and hence allowable expenditure. We note that the expenses on account of employees’ relation expenses to the tune of Rs. 3,78,242/- was incurre...

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Medical Insurance Premium for Family Members of Employees allowable

Loesche India Pvt. Ltd Vs ACIT (ITAT Delhi) - Loesche India Pvt. Ltd Vs ACIT (ITAT Delhi) The record reveals that the assessee had paid the insurance premiums of the employees’ family members in terms of employment Rules framed by the assessee-company there for. Therefore, it can hardly be said that the impugned expenditure were not incurred ...

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Deduction from sale proceeds by monetary committee from e-auction sale of mineral stock is allowable U/s. 37(1)

M/s. M. Hanumantha Rao Vs ACIT (ITAT Bangalore) - Addition of amount representing 15% of sale proceeds deducted by the Monetary committee from e-auction sale of mineral stock belonging to assessee and which was contributed to Special Purpose Vehicle, as per the direction given by Hon’ble Supreme Court was justified as the same constituted trading...

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Input Tax Credit Written off In Books of Accounts is allowable U/s. 37(1)

FIH India Private Limited Vs DCIT (ITAT Chennai) - FIH India Private Limited Vs DCIT (ITAT Chennai) There is no dispute with regard to the fact that the assessee has written off input Service Tax during the impugned financial year relevant to assessment year 2010-11. But, the dispute is with regard to deductibility of input service tax. The AO has d...

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ITAT explains CSR expenditure Allowability under section 37

Add. CIT Vs Rites Limited (ITAT Delhi) -  Addl. CIT Vs Rites Limited (ITAT Delhi) AO has disallowed claim of the assessee company qua CSR expenditure by misinterpreting the provisions contained under section 37(1) of the Act by observing that since CSR expenditure is not incurred for the purpose of carrying on the business, such expenditu...

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Recent Posts in "section 37(1)"

Staff Recruitment Expenses exclusively for the business are allowable

DCIT Vs EIH Associated Hotels Ltd. (ITAT Kolkata)

DCIT Vs EIH Associated Hotels Ltd. (ITAT Kolkata) It is noted that the staff recruitment expenses were incurred only exclusive for the purpose of business and hence allowable expenditure. We note that the expenses on account of employees’ relation expenses to the tune of Rs. 3,78,242/- was incurred for efficient functioning of the busin...

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Medical Insurance Premium for Family Members of Employees allowable

Loesche India Pvt. Ltd Vs ACIT (ITAT Delhi)

Loesche India Pvt. Ltd Vs ACIT (ITAT Delhi) The record reveals that the assessee had paid the insurance premiums of the employees’ family members in terms of employment Rules framed by the assessee-company there for. Therefore, it can hardly be said that the impugned expenditure were not incurred wholly and exclusively for the purpose o...

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Deduction from sale proceeds by monetary committee from e-auction sale of mineral stock is allowable U/s. 37(1)

M/s. M. Hanumantha Rao Vs ACIT (ITAT Bangalore)

Addition of amount representing 15% of sale proceeds deducted by the Monetary committee from e-auction sale of mineral stock belonging to assessee and which was contributed to Special Purpose Vehicle, as per the direction given by Hon’ble Supreme Court was justified as the same constituted trading receipts in the hands of assessee, but ...

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Input Tax Credit Written off In Books of Accounts is allowable U/s. 37(1)

FIH India Private Limited Vs DCIT (ITAT Chennai)

FIH India Private Limited Vs DCIT (ITAT Chennai) There is no dispute with regard to the fact that the assessee has written off input Service Tax during the impugned financial year relevant to assessment year 2010-11. But, the dispute is with regard to deductibility of input service tax. The AO has disputed deduction claimed by […]...

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ITAT explains CSR expenditure Allowability under section 37

Add. CIT Vs Rites Limited (ITAT Delhi)

 Addl. CIT Vs Rites Limited (ITAT Delhi) AO has disallowed claim of the assessee company qua CSR expenditure by misinterpreting the provisions contained under section 37(1) of the Act by observing that since CSR expenditure is not incurred for the purpose of carrying on the business, such expenditure cannot be allowed under the existing ...

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Education cess paid on Income Tax & surcharge eligible for section 37(1) deduction

Nirpan Securities Pvt. Ltd. Vs ACIT (ITAT Mumbai)

Nirpan Securities Pvt. Ltd. Vs ACIT (ITAT Mumbai) We find that the issue in dispute herein is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of Sesa Goa Ltd., vs. JCIT reported in 117 Taxmann.com 96 wherein the Hon’ble High Court had categorically held that education cess paid on […]...

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CSR expense allowable till assessment year 2014-15

Hindustan Tin Works Ltd. Vs DCIT (ITAT Delhi)

Hindustan Tin Works Ltd. Vs DCIT (ITAT Delhi) The Explanation -2 has been inserted below the section 37 (1) of the Act with effect from 01/04/2015 i.e. assessment year 2015-16. According to the said Explanation, corporate social responsibility expenditure incurred shall not be deemed to be incurred wholly and exclusively for the purpose o...

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Interest on delayed payment of TDS not allowable as business expenditure

Govindam Clearing Agencies Pvt. Ltd Vs DCIT (ITAT Jaipur)

Govindam Clearing Agencies Pvt. Ltd Vs DCIT (ITAT Jaipur) AO had disallowed the interest and made an addition of Rs. 18,315/- on account of late deposit of TDS by the assessee. We find that the facts are undisputed that the assessee has claimed interest as expense incurred for delayed payment of TDS. We find that […]...

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Secondary & higher education cess deductible as business expenditure

Aptean India Pvt. Ltd. Vs DCIT (ITAT Bangalore)

Aptean India Pvt. Ltd. Vs DCIT (ITAT Bangalore) Assessee submitted that’s education says and secondary and higher education cess has been duly discharged by assessee while computing tax liability under normal provisions of income tax act. Placing reliance on following decisions Ld.AR submitted that ‘cess’ is deductible as business e...

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Foreign Exchange Fluctuations allowable as Revenue Expense- Section 37

DCIT Vs. Coffee Day Global Ltd. (ITAT Bangalore)

DCIT Vs. Coffee Day Global Ltd. (ITAT Bangalore) The issue under consideration is whether foreign exchange fluctuations are allowed as revenue expense u/s 37 of Income Tax Act? ITAT states that, the Supreme Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. (2009) 312 ITR 254 had already held that the actual […]...

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