“wholly and exclusively for business”

Business ExpensesSection 37Section 37265 judgments

The decision most relied on for wholly and exclusively for business is Hero Cycles Pvt. Ltd. v. CIT (379 ITR 347), cited in 361 judgments on BharatTax.

Leading authorities on wholly and exclusively for business

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.

Indian Molasses Co. Pvt. Ltd. v. CIT

37 ITR 66 · 1959 · Supreme Court

206

citing judgments

Expenditure is defined as money paid out or away, which is gone irretrievably. To be deductible under Section 37(1), expenditure must be wholly and exclusively for business, not capital or personal, and not fall under specific provisions of Sections 30 to 36, often justifiable on grounds of commercial expediency.

CIT v. Dhanrajgirji Raja Narasingirji

91 ITR 544 · 1973 · Supreme Court

154

citing judgments

The revenue cannot question the commercial expediency or wisdom of an expenditure incurred by a businessman, as the businessman is the best judge of their own business interests. The department's role is limited to verifying if the expenditure was genuinely incurred and was wholly and exclusively for business purposes.

Sree Meenakshi Mills Ltd. v. Commissioner of Income Tax

31 ITR 28 · 1957 · Supreme Court

137

citing judgments

Expenditure incurred for commercial expediency, even without a direct or immediate benefit but indirectly facilitating business, is deductible as laid out wholly and exclusively for trade. The scope of reference jurisdiction under Section 66 is limited to questions of law, allowing challenges to Tribunal findings of fact only if they are perverse, unreasonable, or lack evidence.

Prakash Cotton Mills Pvt. Ltd. v. CIT

201 ITR 684 · 1993 · Supreme Court

133

citing judgments

Compensatory interest or damages paid for a breach of contract, arising in the normal course of business, are allowable as a deduction under section 37(1) as wholly and exclusively incurred for business purposes. This principle extends to indirect taxes paid in the course of business, which are admissible as business expenditure.

CIT v. Nestle India Ltd.

14 Taxmann 99 · 1983 · High Court

125

citing judgments

Club entrance fees, if incurred wholly and exclusively for business purposes, are allowable as revenue expenditure under Section 37(1). Furthermore, an order holding a deductor liable for TDS defaults under Section 201 must be preceded by an inquiry into the deductee's actual tax payment.

Lachminarayan Madan Lal v. CIT

86 ITR 439 · 1972 · Supreme Court

citing judgments

Even with an existing agreement, the deductibility of an amount claimed as an expenditure, such as commission, must be decided based on the specific facts and circumstances of each case, to ascertain if it was laid out wholly and exclusively for business purposes.

Haji Aziz & Abdul Shakoor Bros. v. CIT

41 ITR 350 · 1961 · Supreme Court

citing judgments

Penalties paid for a breach of law or contravention of statutory provisions are not allowable deductions as business expenditure because they cannot be considered wholly and exclusively laid out for the purpose of the business. This principle is now enshrined in Explanation 1 to Section 37(1) of the Income-tax Act, 1961.

Judgments citing wholly and exclusively for business

Robust Resorts & Hospitality LLP, Delhi vs. DCIT, Central Circle-14, New Delhi

ITA 4312/DEL/2024[2016-17]Status: DisposedITAT Delhi12 Nov 2025AY 2016-17

Bench: Shri S. Rifaur Rahman & Shri Anubhav Sharmaassessment Year : 2016-17 Robust Resorts & Hospitality Llp, Vs. Dcit, J-290, Second Floor, Saket, Central Circle-14, New Delhi – 110 017. New Delhi. Pan: Aarfr7213D

For Appellant: Shri Yudhisthir Mehtani, CAFor Respondent: Shri Ajay Kumar Arora, Sr.DR

Section 147Section 148Section 56(2)(x)Section 69C

income. The section 37 of the Act is a specific provision that disallows business expenses when it is found not to be wholly and exclusively for business. Where purchases 4 and source of expense are not doubted and only doubt was regarding genuineness of expense, disallowance may be made under

Income-Tax Officer, Ward-4(1)(1), Ahmedabad vs. Shri Govindam Agro Foods Private Limited, Ahmedabad

In the result, appeal filed by the Revenue is dismissed

ITA 1117/AHD/2025[2018-19]Status: DisposedITAT Ahmedabad07 Nov 2025AY 2018-19

Bench: SMT. ANNAPURNA GUPTA (Accountant Member), SHRI SIDDHARTHA NAUTIYAL (Judicial Member)

For Appellant: Smt. Mamta Singh, Sr.DRFor Respondent: Shri Bhupendra Singh Rajput, AR

Section 250Section 41(1)

failed to furnish corroborative evidences like vouchers, bills, payments proofs or third party confirmation to establish that the expenditure was incurred wholly and exclusively for business purpose.” 8. The issue involved in the above ground relates to disallowance of expenses made by the AO u/s.37

Gmm Pfaulder Ltd., Ahmedabad vs. The Pr.CIT, Ahmedabad-1, Ahmedabad

In the result, the appeal of the assessee is allowed

ITA 839/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad28 Oct 2025AY 2020-21

Bench: Shri Siddhartha Nautiyal & Shri Narendra Prasad Sinhaआयकर अपील सं /Ita No.839/Ahd/2025 िनधा"रण वष" /Assessment Year : 2020-21 Gmm Pfaulder Ltd. The Pr.Cit बनाम/ 3Rd Floor, B-Jadav Chambers Ahmedabad-1 V/S. Navrangpura H.O. Ahmedabad – 380 015 Ashram Road Ahmedabad – 380 009 "थायी लेखा सं./Pan: Aabcg 0563 A (अपीलाथ"/ Appellant) ("" यथ"/ Respondent) Assessee By : Shri S.N. Soparkar, Sr. Advocate Revenue By : Shri Sher Singh, Cit-Dr सुनवाई की तारीख/Date Of Hearing : 09/09/2025 घोषणा की तारीख /Date Of Pronouncement: 28 /10/2025 आदेश/O R D E R Per Siddhartha Nautiyal, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Of Learned Principal Commissioner Of Income-Tax, Ahmedabad-1 [Hereinafter Referred To As “Ld. Pr. Cit” For Short] Dated 07/03/2025 Passed In Exercise Of His Revisionary Jurisdiction Under Section 263 Of The Income-Tax Act, 1961 [Hereinafter Referred To As "The Act" For Short] For Assessment Year (Ay) 2020- 21. 2. The Assessee Has Raised The Following Grounds Of Appeal: Gmm Pfaulder Ltd. Vs. Pcit Asst. Year : 2020-21 2

For Appellant: Shri S.N. Soparkar, Sr. AdvocateFor Respondent: Shri Sher Singh, CIT-DR

Section 135Section 143(3)Section 144BSection 263Section 32Section 80G

Companies Act as well as the Income-tax Act, since CSR outlays represent application of income rather than expenditure incurred wholly and exclusively for business purposes. The Pr.CIT thus held that the Assessing Officer erred in allowing deduction under section 80G in respect of CSR expenditure. Relying on the judgment

Govindam Brj Infra Projects Private Limited, Jaipur vs. ACIT/DCIT Cir-6, Jpr, Jaipur

The appeals of the assessee are allowed

ITA 1114/JPR/2025[2017-18]Status: DisposedITAT Jaipur15 Oct 2025AY 2017-18

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI GAGAN GOYAL (Accountant Member)

For Appellant: Shri Deepak Somani, C.AFor Respondent: Shri Gaurav Awasthi, JCIT

Section 143(3)Section 145(3)Section 234ASection 234BSection 250Section 270A(1)Section 271Section 44A

held that “ in applying the test of commercial expediency for determining whether an expenditure was wholly and exclusively for business, the expenditure has to be adjudged from the point of view of the businessman and not of revenue. Thus, we find that Assessing Officer has made the disallowance purely

Tupperware India Private Limited, Connaught Place New Delhi vs. National Faceless Assessment Centre Through Deputy Commissioner of Income Tax, Ip Estate New Delhi

The appeal is allowed partly

ITA 4475/DEL/2024[2020-21]Status: DisposedITAT Delhi15 Oct 2025AY 2020-21

Bench: Shri Anubhav Sharma & Shri Manish Agarwalassessment Year : 2020-21

Section 143(3)Section 37Section 92BSection 92C

being remedied by payment of compensation or appropriate action by the Company; or ……” 15. Now to examine if these expenses were incurred wholly and exclusively for business purposes and not to be considered as capital expenditures, we find that as there was loss of business by direct selling model assesse

Anupam Sharma, Jaipur vs. ITO Ward 1(3), Jaipur

In the result, the appeal of the assessee is dismissed

ITA 765/JPR/2025[2016-17]Status: DisposedITAT Jaipur13 Oct 2025AY 2016-17

Bench: Dr. S. Seethalakshmi & Shri Gagan Goyalanupam Sharma, Flat No. 1-994 Block No. B-24, Rangoli Garden Near Vaishali Nagar, Jaipur 302 021 Pan No.: Awpps 0767D ...... Appellant

For Appellant: Mr. Ashish Khandelwal, CA, Ld. ARFor Respondent: Mr. Dharam Singh Meena, JCIT- Ld. DR

Section 143(3)Section 250Section 5

evidence such as bills, vouchers, invoices, ledger accounts, bank statements, confirmations, or any supporting material to prove that such expenses were incurred wholly and exclusively for business purposes. In absence of evidence, the AO held that the expenses were unsubstantiated and unverifiable and therefore disallowed the entire amount ... assessee claimed deduction of Rs. 9, 23,400/- against derivative income. However: • The burden of proof to establish that an expense is wholly and exclusively for business lies entirely on the assessee as per Section 37(1) of the Act. • The assessee failed to discharge this burden at all three

Deputy Commissioner of Income Tax, Jaipur vs. Samarth Lifestyle Retailing Pvt. Ltd., Jaipur

ITA 1196/JPR/2025[2018-19]Status: DisposedITAT Jaipur13 Oct 2025AY 2018-19

For Appellant: Shri P. C. Parwal, Learned C.AFor Respondent: Shri Rajesh Ojha, Learned CIT

Section 142(1)Section 143(2)Section 250Section 40(2)(b)

documentary evidences. 3.4 In absence of documentary evidences, the expenses as mentioned above difficult to verify, whether it is genuine business expenses, wholly and exclusively for business only, in absence of identity of the person it is difficult to ascertain whether payment made to genuine person. 3.5 As mentioned ... this issue is accepted. 3.6 As mentioned in final notice and as discussed above the assessee has failed to explain above mentioned, wholly and exclusively for business, the assessee has failed to prove identity to whom payments were made, failed to submit supporting vouchers for payments made, failed to submit

Balajee Infratech & Constructions Private Limited, Mumbai vs. DCIT Circle 4(1)(1), Mumbai

In the result, the appeal of the assessee stands allowed

ITA 2261/MUM/2025[2012-13]Status: DisposedITAT Mumbai13 Oct 2025AY 2012-13

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 133(6)Section 133ASection 143(3)Section 147Section 37(1)

ground that the transaction itself was not legally valid, and consequently, the expenditure could not be said to have been laid out wholly and exclusively for business purposes. The assessee’s grounds challenging the reopening under section 147 were also dismissed. 10. We have carefully heard the submissions of both

DCIT, Central Circle-3(2), Mumbai vs. M/S Viraj Profiles Private Limited, Mumbai

In the result, all the appeals filed by the Revenue are dismissed

ITA 890/MUM/2025[2018-19]Status: DisposedITAT Mumbai29 Sept 2025AY 2018-19

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI PRABHASH SHANKAR (Accountant Member)

Section 143(3)Section 153ASection 271(1)(c)Section 69A

substantiate the business expediency and necessity of such payments. He held that the expenditure was either capital in nature or not incurred wholly and exclusively for business purposes, thereby warranting disallowance. 24. The assessee carried the matter before the CIT(A). The first appellate authority, after examining the nature

DCIT, Central Circle-3(2), Mumbai vs. M/S Viraj Profiles Private Limited, Mumbai

In the result, all the appeals filed by the Revenue are dismissed

ITA 888/MUM/2025[2011-12]Status: DisposedITAT Mumbai29 Sept 2025AY 2011-12

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI PRABHASH SHANKAR (Accountant Member)

Section 143(3)Section 153ASection 271(1)(c)Section 69A

DCIT, Central Circle-3(2), Mumbai vs. Viraj Profiles Private Limited, Mumbai

In the result, all the appeals filed by the Revenue are dismissed

ITA 871/MUM/2025[2015-16]Status: DisposedITAT Mumbai29 Sept 2025AY 2015-16

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI PRABHASH SHANKAR (Accountant Member)

Section 143(3)Section 153ASection 271(1)(c)Section 69A

Ishvatham, Kolkata vs. I.T.O., Ward - 28(1), Kolkata

In the result, appeal of the assessee is partly allowed

ITA 1120/KOL/2025[2013-2014]Status: DisposedITAT Kolkata12 Sept 2025AY 2013-2014

Bench: Shri Rajesh Kumarassessment Year : 2013-14 Ishvatham, 21A, Ground Floor, Vs Ito, Ward 28(1), Kolkata Charu Chandra Avenue, Tollygunge, West Bengal Pan/Gir No.Aacfi 6997 E (Appellant) .. ( Respondent) Assessee By : Shri Miraj D Shah, Ar Revenue By : Shri Shankar Naskar, Sr Dr Date Of Hearing : 11 /09/2025 Date Of Pronouncement : 12/09 /2025

For Appellant: Shri Miraj D Shah, ARFor Respondent: Shri Shankar Naskar, Sr DR

related parties or for which proper documentation is lacking. The onus is on the taxpayer to prove that the expenses were incurred wholly and exclusively for business purposes. In the assessment order, the Assessing Officer is of the view that the assessee has failed to produce any evidential documents

Rotomag Motors & Controls (P) Ltd., Anand vs. The Dy.CIT, Anand Circle, Anand

Appeal is allowed

ITA 796/AHD/2025[2014-15]Status: DisposedITAT Ahmedabad09 Sept 2025AY 2014-15

Bench: S/Shri T.R. Senthil Kumar & Makarand V.Mahadeokar

For Appellant: Shri Tushar Hemani, Sr.Advocate, &For Respondent: Shri Abhijit, Sr.DR

Section 143(3)Section 14ASection 195Section 271(1)(c)Section 36(1)(va)Section 37(1)Section 40

medical expenses to the managing director, duly authorized by a bona fide Board Resolution, is allowable u/s 37(1) as expenditure wholly and exclusively for business purposes. 6.3.4 We have carefully considered the rival submissions, perused the orders of the authorities below, and examined the material placed on record including ... reimbursement of medical expenses of a managing director, when duly authorized by Board resolution, is allowable u/s 37(1) as expenditure incurred wholly and exclusively for business purposes. ITA No.796/Ahd/2025 9 6.3.5 In light of these binding precedents and the factual position of authorisation by the Board Resolution

Arvind Kumar, Panipat vs. PCIT, Rohtak

In the result, appeal of assessee in ITA No

ITA 2178/DEL/2025[2018-19]Status: DisposedITAT Delhi09 Sept 2025AY 2018-19

Bench: Shri Satbeer Singh Godara & Shri Naveen Chandra

For Appellant: Shri Dhruv Goel, CAFor Respondent: Shri Jitender Singh, CIT-DR

Section 115BSection 147Section 148Section 263Section 37Section 69C

considered view that Section 37 of the Act is specific provision which disallows business expense when it is found to be not wholly and exclusively for business. In contrast, section 69C applies where the explanation of assessee regarding nature and source of expense was not satisfactory to Assessing Officer

Dy Commissioner of Income Tax Central Circle-1(4), Kolkata vs. Adarsh Heights Pvt Ltd, Kolkata

Appeal of the Revenue is dismissed

ITA 1867/KOL/2024[2018-19]Status: DisposedITAT Kolkata03 Sept 2025AY 2018-19

Bench: This Hon'Ble Itat, Kolkata Under Section 253 Of The It Act 1961. 2. The Appellant/Petitioner States That The Impugned Order Passed By The Ld. Cit(A)-20, Kolkata On 17.05.2024 Was Received By The Office Of The Pr Commissioner Of Income Tax Central-1, Kolkata On 17.05.2024. Your Petition States That According To The Income Tax Department, The Last Date Of Filing The Appeal Expired On 17.07.2024 3. Your Petitioner States That There Are Sufficient Reasons/Causes For Condonation The Delay In Filing The Appeal Under Section 253 Of The Income Tax Act 1961 Which Are As Follows:-

Section 250Section 253

Adarsh Heights Pvt. Ltd. loans taken from banks that is relatable to the loans channelized toward purposes not proved as wholly and exclusively for business purposes or allowable u/s 36 or not matched by relatable revenue, the investment being in an LLP. Assessee has a balance of term loans from

ACIT (Ltu), Circle-2, New Delhi vs. International Tractor Ltd., Delhi

In the result, the Revenue’s Appeal No

ITA 8975/DEL/2019[2012-13]Status: DisposedITAT Delhi29 Aug 2025AY 2012-13

Bench: Shri Anubhav Sharma & Shri Krinwant Sahay, Accoutant Member

For Appellant: Sh. Shankey Agrawal, Adv., Nikky Jhamtani, CA, ShFor Respondent: Ms. Harpreet Kaur Hansra, Sr. DR

Section 115JSection 143(1)Section 143(2)Section 143(3)Section 35Section 37Section 80J

allowed under section 37(1) of the Act. It was also submitted that the expenditure incurred on research and development are wholly and exclusively for business purposes and hence, are allowable as business expenditure in the current year. In this behalf he relied upon the decision