← All Phrases

“commercial expediency”

Business ExpensesSection 37Section 371,685 judgments

The decision most relied on for commercial expediency is S.A. Builders Ltd. v. CIT (288 ITR 1), cited in 1,484 judgments on BharatTax.

Leading authorities on commercial expediency

S.A. Builders Ltd. v. CIT
288 ITR 1 · 2007 · Supreme Court
1,484
citing judgments

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

Empire Jute Co. Ltd. v. CIT
124 ITR 1 · 1980 · Supreme Court
622
citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

CIT v. Reliance Industries Ltd.
410 ITR 466 · 2019 · Supreme Court
501
citing judgments

When mixed funds are available, interest-free advances are presumed to be made from the assessee's own interest-free funds, preventing disallowance of interest expenditure under section 36(1)(iii). This principle also applies to section 14A disallowance, where interest expenditure is not disallowed if surplus funds are available and no direct nexus is established with borrowed funds for investments earning exempt income.

CIT v. Dalmia Cement (Bharat) Ltd.
254 ITR 377 · 2002 · High Court
417
citing judgments

When there is a nexus between an expenditure and the purpose of business, incurred on grounds of commercial expediency, the Revenue cannot question its reasonableness or assume the role of the businessman to compel profit maximization. This principle applies even if the business is not that of the assessee itself.

Hero Cycles Pvt. Ltd. v. CIT
379 ITR 347 · 2015 · Supreme Court
361
citing judgments

The Revenue cannot substitute its judgment for that of a businessman regarding the necessity or reasonableness of an expenditure. If an expense is incurred wholly and exclusively for business purposes, it is deductible, and the Revenue cannot question its commercial expediency.

CIT v. Abhishek Industries Ltd.
286 ITR 1 · 2006 · High Court
359
citing judgments

For interest on borrowed capital to be deductible under Section 36(1)(iii), there must be a nexus between the use of the borrowed funds and the purpose of the business. This decision has been overruled by the Supreme Court in Munjal Sales Corporation v. CIT (2008).

Eastern Investments Ltd. v. CIT
38 ITR 601 · 1960 · Supreme Court
346
citing judgments

Expenditure must be commercially expedient for carrying on the business, and it is not for revenue authorities to dictate how an assessee should conduct its business. The court will not question the business expediency of a transaction, even if a third party also benefits.

Sassoon J. David & Co. Pvt. Ltd. v. CIT
118 ITR 261 · 1979 · Supreme Court
323
citing judgments

An expense incurred by an assessee for its own business, such as advertising, marketing, and promotional (AMP) expenses, cannot be disallowed merely because it incidentally or indirectly benefits the assessee's sister concerns or associated enterprises.

Judgments citing commercial expediency

Techno Trexim (India) Private Limited, New Delhi vs. ACIT, Circle- 25(1), Delhi

In the result, appeal filed by the assessee is dismissed

ITA 468/DEL/2024[2016-17]Status: DisposedITAT Delhi29 Jan 2026AY 2016-17

Bench: Shris.Rifaur Rahman & Shri Yogesh Kumar Uss.

For Appellant: Shri I.P. Bansal, AdvocateFor Respondent: Shri Abhijeet Kumar, Sr.DR
Section 37

consistency, taking a contrary view this year on the ground of excess financial cost is unsustainable in law. The assessee has claimed that the commercial expediency need not be demonstrated in each year concerning a loan transaction which took place in earlier years, and has relied upon various decisions ... being excess interest as loan had been taken at a higher rate for the purpose of investment. The assessee had claimed that there was commercial expediency involved in taking fresh loans and making investment in shares of group companies and Ld. CIT(A) has deleted this disallowance made

DCIT Central Circle 8 2 Mumbai, Mumbai vs. Abhinand Ventures Private Limited, Mumbai

Accordingly all these appeals of revenue are to be treated, as dismissed

ITA 2172/MUM/2025[2019-20]Status: DisposedITAT Mumbai28 Jan 2026AY 2019-20

Bench: Shri Pawan Singh, Jm & Shri Arun Khodpia, Am

For Appellant: Shri Vijay Mehta, & Shri NarendraFor Respondent: C. O. No. 110/Mum/2025 in I.T.A. No. 2170/Mum/2025
Section 143(3)

expenditure and it has also been found that the expenditure was incurred for the purpose of the business of the appellant. Thus, commercial expediency is established. Under the circumstances, I hold that the AC was not justified in disallowing appellant's claim of deduction of this expenditure. 32. In view ... incurred for the purpose of business of the assessee and therefore the same was in Abhinand Ventures Pvt. Ltd. accordance with the principle of Commercial Expediency. We find substance in the submissions of ld. AR, the decision rendered by the ld. CIT(A) qua the aforesaid addition, thus

DCIT Central Circle 8 2 Mumbai, Mumbai vs. Abhinand Ventures Private Limited, Mumbai

Accordingly all these appeals of revenue are to be treated, as dismissed

ITA 2171/MUM/2025[2018-19]Status: DisposedITAT Mumbai28 Jan 2026AY 2018-19

Bench: Shri Pawan Singh, Jm & Shri Arun Khodpia, Am

For Appellant: Shri Vijay Mehta, & Shri NarendraFor Respondent: C. O. No. 110/Mum/2025 in I.T.A. No. 2170/Mum/2025
Section 143(3)

expenditure and it has also been found that the expenditure was incurred for the purpose of the business of the appellant. Thus, commercial expediency is established. Under the circumstances, I hold that the AC was not justified in disallowing appellant's claim of deduction of this expenditure. 32. In view ... incurred for the purpose of business of the assessee and therefore the same was in Abhinand Ventures Pvt. Ltd. accordance with the principle of Commercial Expediency. We find substance in the submissions of ld. AR, the decision rendered by the ld. CIT(A) qua the aforesaid addition, thus

DCIT Central Circle 8 2 Mumbai, Mumbai vs. Abhinand Ventures Private Limited, Mumbai

Accordingly all these appeals of revenue are to be treated, as dismissed

ITA 2170/MUM/2025[2016-17]Status: DisposedITAT Mumbai28 Jan 2026AY 2016-17

Bench: Shri Pawan Singh, Jm & Shri Arun Khodpia, Am

For Appellant: Shri Vijay Mehta, & Shri NarendraFor Respondent: C. O. No. 110/Mum/2025 in I.T.A. No. 2170/Mum/2025
Section 143(3)

expenditure and it has also been found that the expenditure was incurred for the purpose of the business of the appellant. Thus, commercial expediency is established. Under the circumstances, I hold that the AC was not justified in disallowing appellant's claim of deduction of this expenditure. 32. In view ... incurred for the purpose of business of the assessee and therefore the same was in Abhinand Ventures Pvt. Ltd. accordance with the principle of Commercial Expediency. We find substance in the submissions of ld. AR, the decision rendered by the ld. CIT(A) qua the aforesaid addition, thus

DCIT Central Circle 8 2 Mumbai, Mumbai vs. Abhinand Ventures Private Limited, Mumbai

Accordingly all these appeals of revenue are to be treated, as dismissed

ITA 2118/MUM/2025[2015-16]Status: DisposedITAT Mumbai28 Jan 2026AY 2015-16

Bench: Shri Pawan Singh, Jm & Shri Arun Khodpia, Am

For Appellant: Shri Vijay Mehta, & Shri NarendraFor Respondent: C. O. No. 110/Mum/2025 in I.T.A. No. 2170/Mum/2025
Section 143(3)

expenditure and it has also been found that the expenditure was incurred for the purpose of the business of the appellant. Thus, commercial expediency is established. Under the circumstances, I hold that the AC was not justified in disallowing appellant's claim of deduction of this expenditure. 32. In view ... incurred for the purpose of business of the assessee and therefore the same was in Abhinand Ventures Pvt. Ltd. accordance with the principle of Commercial Expediency. We find substance in the submissions of ld. AR, the decision rendered by the ld. CIT(A) qua the aforesaid addition, thus

DCIT, Mumbai vs. Abhinand Ventures Private Limited, Mumbai

Accordingly all these appeals of revenue are to be treated, as dismissed

ITA 2117/MUM/2025[2014-15]Status: DisposedITAT Mumbai28 Jan 2026AY 2014-15

Bench: Shri Pawan Singh, Jm & Shri Arun Khodpia, Am

For Appellant: Shri Vijay Mehta, & Shri NarendraFor Respondent: C. O. No. 110/Mum/2025 in I.T.A. No. 2170/Mum/2025
Section 143(3)

expenditure and it has also been found that the expenditure was incurred for the purpose of the business of the appellant. Thus, commercial expediency is established. Under the circumstances, I hold that the AC was not justified in disallowing appellant's claim of deduction of this expenditure. 32. In view ... incurred for the purpose of business of the assessee and therefore the same was in Abhinand Ventures Pvt. Ltd. accordance with the principle of Commercial Expediency. We find substance in the submissions of ld. AR, the decision rendered by the ld. CIT(A) qua the aforesaid addition, thus

Milan Theatres P Limited, Mumbai vs. DCIT Circle 12(3)(2), Mumbai

ITA 5072/MUM/2024[2017-18]Status: DisposedITAT Mumbai22 Jan 2026AY 2017-18
Section 143(3)Section 342Section 45(2)

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI ARUN KHODPIA, ACCOUNTANT MEMBER

Ruchi Jain, Panipat vs. Assessing Officer, Panipat

In the result, the appeal of the assessee is allowed

ITA 6278/DEL/2025[2012-2013]Status: DisposedITAT Delhi22 Jan 2026AY 2012-2013

Bench: Shri Mahavir Singh, Hon’Ble Vice- & Smt. Renu Jauhri, Hon’Ble

For Appellant: NoneFor Respondent: Shri Ajay Kumar Arora, Sr. DR
Section 143(3)Section 147Section 250Section 36(1)(iii)

Supreme Court decision in Munjal Sales Corporation was misplaced, as the assessee had duly demonstrated the availability of interest free funds and commercial expediency in maintaining the said balance. 7. That the order of the Learned CIT Appeal is contrary to facts and law and deserves to be set aside

Sri Rama Agri Genetics (India) Private Limited, Kurnool vs. DCIT., Circle-1, Kurnool

In the result, the appeal of the assessee is partly allowed

ITA 1179/HYD/2025[2015-16]Status: DisposedITAT Hyderabad21 Jan 2026AY 2015-16
Section 142(1)Section 143(3)Section 201Section 263Section 36(1)(iii)Section 36(1)(va)Section 41(1)Section 68

evidence was furnished to establish that the advances were for business purposes. The Ld. CIT(A) further observed that, the assessee failed to establish commercial expediency as required under Section 36(1)(iii) of the Act and accordingly upheld the disallowance of proportionate interest expenditure ... between the companies, the arguments of the assessee that the loans and advances have been given in the ordinary course of business out of commercial expediency cannot be accepted. The A.O. and the learned CIT(A), after considering the relevant facts, have rightly rejected the explanation of the assessee

Kakinada Infrastructure Holdings Private Limited, Hyderabad vs. DCIT., Circle-2(1), Hyderabad

In the result, appeal of the assessee is partly

ITA 1053/HYD/2025[2021-2022]Status: DisposedITAT Hyderabad21 Jan 2026AY 2021-2022

Bench: Shri Vijay Pal Rao & Shri Manjunatha G.

For Respondent: MS Reema Yadav, Sr. AR
Section 270A

have been voluntary, but it cannot be denied that it had been incurred for the benefit of the assessee an amounts expended for commercial expediency, which means and included everything that serves to promote commerce and includes every means suitable to such an end. Earlier, it had been noticed that ... advertisements in the souvenirs was done with a view to promote its business and, therefore, could be justified as having been expended for commercial expediency. We may also point out that though such advertisements may not have the result of enabling the assessee to earn income in that year

DCIT, Mumbai vs. Sahyadri Agencies Limited, Moothedath House Arikanniyur

ITA 4257/MUM/2025[2018-19]Status: DisposedITAT Mumbai21 Jan 2026AY 2018-19

Bench: Smt. Beena Pillai () & Shri Girish Agrawal ()

Section 143(2)Section 14ASection 36(1)(iii)

I.T.A. No. 4257/Mum/2025 IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) & SHRI GIRISH

Assistant Commissioner of Income Tax, Central Revenue Building vs. M/S Hindustan Thermal Projects Limited, Delhi, India

Appeal is dismissed

ITA 5336/DEL/2025[2015-16]Status: DisposedITAT Delhi21 Jan 2026AY 2015-16

Bench: Shri Satbeer Singh Godara & Shri Amitabh Shukla

Section 143(3)Section 28Section 36(1)(iii)Section 37

subsidiary) on interest free loan. The test, in our opinion, in such a case is really whether this was done as a measure of commercial expediency. 22. In our opinion, the decisions relating to section 37 of the Act will also be applicable to section 36(1)(iii) because ... been consistently held in decisions relating to section 37 that the expression "for the purpose of business" includes expenditure voluntarily incurred for commercial expediency, and it is immaterial if a third party also benefits thereby. 23. Thus in Atherton v. British Insulated & Helsby Cables

Rivet Health Club Pvt Ltd, Faridabad vs. ITO Ward - 2(2), Faridabad

In the result, the appeal of the assessee is allowed

ITA 6182/DEL/2019[2015-16]Status: DisposedITAT Delhi21 Jan 2026AY 2015-16

Bench: Sh. S. Rifaur Rahman & Sh. Sudhir Kumar

Section 142(1)Section 143(2)Section 143(3)Section 68

officer cannot examined or substitute its own value in place of the valuation arrived by the assessee either DCF Method or NAV Method, the commercial expediency 15 has to be seen from the point view of businessman. Further held that if law provides the assessee to get the valuation done ... that Income Tax Department cannot sit in the armchair of businessman to decide what is profitable and how the business should be carried out. Commercial expediency has to be seen from the point of view of businessman. Here in this case if the investment has made keeping assessee

Banganga Nagari Sahakari Pat Sanstha Maryadit Ojhar (Mig), Nashik vs. The Income Tax Officer, Ward -1(1), Nashik.

In the result, appeal of the assessee is allowed

ITA 1789/PUN/2025[2018-19]Status: DisposedITAT Pune20 Jan 2026AY 2018-19

Bench: Dr.Dipak P. Ripote & Shri Vinay Bhamoreआयकर अपऩल सं. / Ita Nos.1788 & 1789/Pun/2025 निर्धारण वषा / Assessment Year: 2022-23 & 2018-19 Banganga Nagari Sahakari V The Income Tax Officer, Patsanstha Maryadit, S Ward-1(1), Nashik. Ravsaheb, Bhagava, Nashik Chowk, Ojhar Niphad, Ozar Mig, Nashik – 422206. Pan: Aaajb0550G Appellant/ Assessee Respondent / Revenue Assessee By Shri Sanjeev Muttha – Virtual Revenue By Smt Neha Thakkar (Virtual) Date Of Hearing 19/01/2026 Date Of Pronouncement 20/01/2026 आदेश/ Order Per Bench : These Two Appeals Filed By The Assessee Against The Separate Orders Of Ld.Commissioner Of Income Tax(Appeal)[Nfac], Passed Under Section 250 Of The Income Tax Act, 1961 For A.Y.2022-23 Dated 22.05.2025 Emanating From The Assessment Order Dated 18.03.2024 Under Section 143(3) R.W.S. 144B Of The Income Tax Act, 1961 & Order Under Section 250 Of The Income Tax Act, 1961

Section 143Section 143(3)Section 250Section 80P(2)Section 80P(2)(a)Section 80P(2)(c)Section 80P(2)(d)

respect of interest earned on fixed deposit held with non-co-operative banks, when the said investment was was made out of commercial expediency. 2. The appellant craves for the addition to, deletion, alteration, modification of the above grounds of appeal.” 1.1 The Assessee for A.Y.2018-19 has raised the following ... Nos.1788 & 1789/PUN/2025 [A] interest earned on fixed deposits held with non- Co-operative banks, when the said investment was made out of commercial expediency. 2. Without prejudice to above Ground of Appeal, the Assessing Officer may be directed to grant deduction

Banganga Nagari Sahakari Patsanstha Mariyadit Ojhar (Mig), Nashik vs. The Income Tax Officer, Ward -1(1), Nashik

In the result, appeal of the assessee is allowed

ITA 1788/PUN/2025[2022-23]Status: DisposedITAT Pune20 Jan 2026AY 2022-23

Bench: Dr.Dipak P. Ripote & Shri Vinay Bhamoreआयकर अपऩल सं. / Ita Nos.1788 & 1789/Pun/2025 निर्धारण वषा / Assessment Year: 2022-23 & 2018-19 Banganga Nagari Sahakari V The Income Tax Officer, Patsanstha Maryadit, S Ward-1(1), Nashik. Ravsaheb, Bhagava, Nashik Chowk, Ojhar Niphad, Ozar Mig, Nashik – 422206. Pan: Aaajb0550G Appellant/ Assessee Respondent / Revenue Assessee By Shri Sanjeev Muttha – Virtual Revenue By Smt Neha Thakkar (Virtual) Date Of Hearing 19/01/2026 Date Of Pronouncement 20/01/2026 आदेश/ Order Per Bench : These Two Appeals Filed By The Assessee Against The Separate Orders Of Ld.Commissioner Of Income Tax(Appeal)[Nfac], Passed Under Section 250 Of The Income Tax Act, 1961 For A.Y.2022-23 Dated 22.05.2025 Emanating From The Assessment Order Dated 18.03.2024 Under Section 143(3) R.W.S. 144B Of The Income Tax Act, 1961 & Order Under Section 250 Of The Income Tax Act, 1961

Section 143Section 143(3)Section 250Section 80P(2)Section 80P(2)(a)Section 80P(2)(c)Section 80P(2)(d)

respect of interest earned on fixed deposit held with non-co-operative banks, when the said investment was was made out of commercial expediency. 2. The appellant craves for the addition to, deletion, alteration, modification of the above grounds of appeal.” 1.1 The Assessee for A.Y.2018-19 has raised the following ... Nos.1788 & 1789/PUN/2025 [A] interest earned on fixed deposits held with non- Co-operative banks, when the said investment was made out of commercial expediency. 2. Without prejudice to above Ground of Appeal, the Assessing Officer may be directed to grant deduction

M/S Coal India Ltd., Kolkata vs. DCIT, Cir-5(1), Kolkata

ITA 1407/KOL/2019[2014-15]Status: DisposedITAT Kolkata20 Jan 2026AY 2014-15

Bench: Shri Pradip Kumar Choubey & Shri Rakesh Mishra

Section 1Section 115JSection 250

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA Before SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SHRI RAKESH MISHRA

Dy. CIT, Income Tax Deptt vs. Nivaya Resources Pvt. Ltd., Gujrat

In the result, the appeal of the revenue is dismissed and the cross objection of the assessee is partly allowed

ITA 953/DEL/2024[2017]Status: DisposedITAT Delhi14 Jan 2026

Bench: Shri C.N. Prasad & Shri Naveen Chandra[Assessment Year: 2017] Dy. Cit, Aayakar Bhawan Vs. Nivaya Resources Pvt. Ltd. Haryana 211, World Trade Centre, Karnal Shamalkha Sayajigunj, Vadodra, Vadodra Gujarat 390020 Pan No.Aaica32981E Appellant Respondent Cross Objection No.75/Del/2025 (In Ita No.953/Del/2024) [Assessment Year: 2017] Nivaya Resources Pvt. Ltd. Vs. Dy. Cit, Aayakar Bhawan 211, World Trade Centre, Haryana Shamalkha Sayajigunj, Karnal Vadodra, Vadodra Gujarat 390020 Pan No.Aaica32981E Appellant Respondent

Section 143(3)Section 145(3)Section 14ASection 68

bank was debited. These entries were duly reflecting in books of account. The explanation cannot be rejected on the grounds of practicability or commercial expediency and such rejection cannot be made the basis for addition u/s 68 of the Income Tax Act, 1961. The provisions of section

Deputy Commissioner of Income Tax, Central Circle-1(4), Ahmedabad vs. S K Z Developers LLP, Ahmedabad

Accordingly, allowed, whereas, the appeal of the revenue for the year under consideration is hereby dismissed

ITA 1729/AHD/2024[2022-23]Status: DisposedITAT Ahmedabad09 Jan 2026AY 2022-23

Bench: Shri Sanjay Garg & Annapurna Gupta

For Appellant: Shri Vartik Chokshi, ARFor Respondent: Shri Alpesh Parmar, CIT-DR
Section 132Section 23(5)

above explanation, we are of the view that decision to sell a particular flat at a particular price was taken out of commercial expediency and on valid grounds and cannot be randomly doubted by Department in the absence of any tangible evidence to show that the same did not depict

Deputy Commissioner of Income Tax, Central Circle-1(4), Ahmedabad vs. S K Z Developers LLP, Ahmedabad

Accordingly, allowed, whereas, the appeal of the revenue for the year under consideration is hereby dismissed

ITA 1728/AHD/2024[2021-22]Status: DisposedITAT Ahmedabad09 Jan 2026AY 2021-22

Bench: Shri Sanjay Garg & Annapurna Gupta

For Appellant: Shri Vartik Chokshi, ARFor Respondent: Shri Alpesh Parmar, CIT-DR
Section 132Section 23(5)

above explanation, we are of the view that decision to sell a particular flat at a particular price was taken out of commercial expediency and on valid grounds and cannot be randomly doubted by Department in the absence of any tangible evidence to show that the same did not depict

Skz Developers LLP, Ahmedabad vs. The DCIT, Cent. Circle-1(4), Ahmedabad

Accordingly, allowed, whereas, the appeal of the revenue for the year under consideration is hereby dismissed

ITA 1678/AHD/2024[2022-23]Status: DisposedITAT Ahmedabad09 Jan 2026AY 2022-23

Bench: Shri Sanjay Garg & Annapurna Gupta

For Appellant: Shri Vartik Chokshi, ARFor Respondent: Shri Alpesh Parmar, CIT-DR
Section 132Section 23(5)

above explanation, we are of the view that decision to sell a particular flat at a particular price was taken out of commercial expediency and on valid grounds and cannot be randomly doubted by Department in the absence of any tangible evidence to show that the same did not depict