“Section 36(1)(xviii)”
The decision most relied on for Section 36(1)(xviii) is Apex Laboratories Pvt. Ltd. v. CIT (135 Taxmann.com 286), cited in 148 judgments on BharatTax.
Leading authorities on Section 36(1)(xviii)
Expenditure incurred by pharmaceutical companies on freebies provided to medical practitioners is not deductible under Explanation 1 to Section 37(1) of the Income-tax Act, as such gifting is prohibited by the Medical Council Regulations, 2002. The court also held that what is directly prohibited by law cannot be indirectly evaded through contrivance.
A fiscal statute must be interpreted strictly based on its plain language, without substituting judicial impressions for legislative intent. Exemptions and exclusions within such statutes must also be construed strictly and cannot be extended through interpretation.
Income tax law intends to avoid double taxation, and where an item is brought to tax in one form, appropriate relief or adjustment should be provided to prevent its taxation again in another form. This principle is applicable when considering government grants or subsidies included in income and their impact on the actual cost of assets for depreciation.
When interpreting fiscal legislation, courts must adhere strictly to the plain and unambiguous language of the statute, without introducing intendment, equity, or words not present in the text, irrespective of perceived hardship. The legislative intent must be gathered solely from what has been said and not said in the statutory language.
Payments made to meet any portion of the actual cost, as contemplated under Explanation 10 to Section 43(1) of the Income Tax Act, are eligible for consideration.
The computation provisions for long-term capital gains, including the benefit of indexation under sections 45, 48, and 112, are applicable when determining book profits under section 115JB(5) for Minimum Alternate Tax, unless explicitly overridden, ensuring the 'real income' is taxed.
Subsidy is not deductible from the 'actual cost' under section 43(1) for calculating depreciation, as it's an incentive to encourage industrial establishment, not a payment towards actual cost.
A trust substantially satisfying the conditions for exemption under Section 11 cannot be denied that exemption solely due to a procedural delay in furnishing the audit report in Form No. 10, as the submission of the form is considered a procedural rather than a mandatory condition.
