section 37(1)

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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Deductibility of Cess paid on Income Tax

Income Tax - In this article, an effort has been made to contend that the cesses payable are a deductible expense under section 37(1) r.w. section 40(a)(ii) of the Income tax Act, 1961 (hereinafter referred to as the ‘Act’). It is well settled that the cess levied on indirect taxes is an allowable expenses and thereby the sole focus of the article...

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

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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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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Claim of deduction of Loss Due to Dacoity, Theft, Embezzlement, etc., as Business Loss

Income Tax - The losses occurring to an assessee due to dacoity, theft or embezzlement, etc., may be claimed as deductible while making the income chargeable to income-tax under the head profits and gains of business or profession under section 28. The loss by theft is not covered by section 10(2) (xv) of the Income Tax Act, 1922...

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Compounding Fee paid to Legal Metrology Dept is allowable expense

Ocean Agro Vs DCIT (ITAT Ahmedabad) - Ocean Agro (India) Ltd. Vs DCIT (ITAT Ahmedabad) A short issue before us is, whether compounding fees expended by the assessee is compensatory in nature, and allowable expenditure under section 37(1) or not. We find that Explanation 1 appended to section 37(1) of the Income Tax Act prohibits allowa...

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Loan sourcing fees paid is allowable as revenue expenditure

Dy. CIT Vs Citicorp Maruti Finance Ltd. (ITAT Mumbai) - Brief facts are, the assessee a non–banking finance company (NBFC) is engaged in hire, purchase, finance and loan business. For the assessment year under dispute, the assessee filed its return of income on 31-10-2007, declaring loss of Rs. 12,06,02,070. ...

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Expenditure on issue of FCCB allowable as revenue expense

Dy. CIT Vs Reliance Natural Resources Ltd. (ITAT Mumbai) - FCCB is akin to borrowings made by issuing debentures and both of them are different types of debt instruments only. Accordingly it was held in the case of Prime Focus Ltd. (supra), that the expenses incurred in connection with FCCB are revenue in nature. ...

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Compounding fee for permissible deviation of building plan is allowable

Keerthi Estates (P) Ltd. Vs. Dy. CIT (ITAT Hyderabad) - Keerthi Estates (P) Ltd. Vs. DCIT (ITAT Hyderabad) The assessee has paid compounding fine to regularize the building plan. The payment of such compounding fine is penalty in the nature of an offence or which is prohibited by law. We have noticed that the decision on this count is divided among the v...

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Compensation paid for loss to clients due to negligence of employees of assessee is allowable expense

Ashwani Financial Services (P.) Ltd. Vs. JCIT (ITAT Amritsar) - Circular No. 35 issued by Board clearly states the losses arising due to negligence of employees has to be allowed as expense if the loss took place in the normal course of the business and the amount involved was necessarily kept for the purpose of business. In the present case, the losses were nec...

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Recent Posts in "section 37(1)"

NO TDS Deduction on Reimbursement to Foreign Entity

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....

Read More
Posted Under: Income Tax |

Deductibility of Cess paid on Income Tax

In this article, an effort has been made to contend that the cesses payable are a deductible expense under section 37(1) r.w. section 40(a)(ii) of the Income tax Act, 1961 (hereinafter referred to as the ‘Act’). It is well settled that the cess levied on indirect taxes is an allowable expenses and thereby the sole focus of the article...

Read More
Posted Under: Income Tax |

Compounding Fee paid to Legal Metrology Dept is allowable expense

Ocean Agro Vs DCIT (ITAT Ahmedabad)

Ocean Agro (India) Ltd. Vs DCIT (ITAT Ahmedabad) A short issue before us is, whether compounding fees expended by the assessee is compensatory in nature, and allowable expenditure under section 37(1) or not. We find that Explanation 1 appended to section 37(1) of the Income Tax Act prohibits allowance of any expenditure, if it was incurr...

Read More

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,...

Read More
Posted Under: Income Tax |

Loan sourcing fees paid is allowable as revenue expenditure

Dy. CIT Vs Citicorp Maruti Finance Ltd. (ITAT Mumbai)

Brief facts are, the assessee a non–banking finance company (NBFC) is engaged in hire, purchase, finance and loan business. For the assessment year under dispute, the assessee filed its return of income on 31-10-2007, declaring loss of Rs. 12,06,02,070. ...

Read More

Expenditure on issue of FCCB allowable as revenue expense

Dy. CIT Vs Reliance Natural Resources Ltd. (ITAT Mumbai)

FCCB is akin to borrowings made by issuing debentures and both of them are different types of debt instruments only. Accordingly it was held in the case of Prime Focus Ltd. (supra), that the expenses incurred in connection with FCCB are revenue in nature. ...

Read More

Compounding fee for permissible deviation of building plan is allowable

Keerthi Estates (P) Ltd. Vs. Dy. CIT (ITAT Hyderabad)

Keerthi Estates (P) Ltd. Vs. DCIT (ITAT Hyderabad) The assessee has paid compounding fine to regularize the building plan. The payment of such compounding fine is penalty in the nature of an offence or which is prohibited by law. We have noticed that the decision on this count is divided among the various courts. The […]...

Read More

Compensation paid for loss to clients due to negligence of employees of assessee is allowable expense

Ashwani Financial Services (P.) Ltd. Vs. JCIT (ITAT Amritsar)

Circular No. 35 issued by Board clearly states the losses arising due to negligence of employees has to be allowed as expense if the loss took place in the normal course of the business and the amount involved was necessarily kept for the purpose of business. In the present case, the losses were necessarily incurred in the normal course o...

Read More

Whether Inaugural Expenses Deductible Under Section 37 (1)

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)....

Read More
Posted Under: Income Tax |

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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