“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

M/S. International Tractor Ltd., Delhi vs. DCIT, New Delhi

In the result, the Revenue’s Appeal No

ITA 2619/DEL/2015[2010-11]Status: DisposedITAT Delhi29 Aug 2025AY 2010-11

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

DCIT, New Delhi vs. M/S. International Tractor Ltd., Delhi

In the result, the Revenue’s Appeal No

ITA 2618/DEL/2015[2010-11]Status: DisposedITAT Delhi29 Aug 2025AY 2010-11

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

Dharmanandan Developers, Ahmedabad vs. The ITO, Ward-3(3)(1), Ahmedabad

In the result, the appeal of the assessee is allowed for statistical

ITA 97/AHD/2025[2019-20]Status: DisposedITAT Ahmedabad13 Aug 2025AY 2019-20

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri S. N. Divatia, ARFor Respondent: Shri B. P. Srivastava, Sr. DR

Section 115BSection 142(1)Section 144Section 144BSection 250Section 37(1)Section 68

sample invoices, and agreements, no evidence was submitted by the assessee. Since the assessee failed to substantiate that these expenses were incurred wholly and exclusively for business purposes, the Assessing Officer disallowed and added 20% of the total expenses, amounting to ₹55,78,330/- to the income of the assessee

Pharmacon, Kochi vs. DCIT, Non Corp, Circle 1(1), Kochi

In the result, the appeal filed by the assessee stands dismissed

ITA 229/COCH/2025[2017-18]Status: DisposedITAT Cochin05 Aug 2025AY 2017-18

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm Assessment Year: 2017-18 Pharmacon .......... Appellant 35/2977, B 5, First Floor, Shopping Complex Pallinada, Palarivattom, Kochi 682025 [Pan: Aalfp0115C] Vs. Dcit, Non Corporate Circle 1(1), Kochi .......... Respondent Assessee By: ------- None ------- Revenue By: Smt. Leena Lal, Sr. D.R. Date Of Hearing: 05.06.2025 Date Of Pronouncement: 05.08.2025

For Appellant: ------- None -------For Respondent: Smt. Leena Lal, Sr. D.R

Section 143(3)Section 37

disallowed the same for the failure of the appellant to substantiate that the commission payment was made wholly and exclusively for business purposes. Even before the CIT(A), no evidence was filed by the appellant to prove that the commission payment was incurred wholly and exclusively for business purposes. Even

Eris Lifesciences Limited, Ahmedabad vs. The PCIT, Ahmedabad-1, Ahmedabad

Accordingly, the appeal of the assessee is also allowed for A

ITA 1038/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad04 Aug 2025AY 2021-22

Bench: Shri Siddhartha Nautiyal & Shri Narendra Prasad Sinha

For Appellant: Shri Biren Shah, ARFor Respondent: Shri R P Rastogi, CIT-DR

Section 143Section 143(3)Section 144BSection 14ASection 263

contravention of the law and public policy. During the course of 263 proceedings, the assessee submitted that the “promotional expenditure” was incurred wholly and exclusively for business purposes, directed toward the company’s network of approximately 2,300 stockists and around 5 lakh retail medical stores across India, with

Eris Lifesciences Limited, Ahmedabad vs. The PCIT, Ahmedabad-1, Ahmedabad

Accordingly, the appeal of the assessee is also allowed for A

ITA 1037/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad04 Aug 2025AY 2020-21

Bench: Shri Siddhartha Nautiyal & Shri Narendra Prasad Sinha

For Appellant: Shri Biren Shah, ARFor Respondent: Shri R P Rastogi, CIT-DR

Section 143Section 143(3)Section 144BSection 14ASection 263

Continental Foundation Joint Venture, New Delhi vs. ACIT, New Delhi

In the result, the assessee’s appeal is allowed for statistical purposes

ITA 2678/DEL/2016[2011-12]Status: DisposedITAT Delhi04 Aug 2025AY 2011-12

Bench: Shri Yogesh Kumar U.S. & Shri Avdhesh Kumar Mishraassessment Year: 2011-12 Continental Foundation Joint Assistant Commissioner Of Venture, Income Tax, Circle-38(1), Continental House-28, Vs. Room No.2202, E-2, Nehru Place, New Delhi-19 Civic Centre, Minto Road, Pan: Aaaac0084D New Delhi (Appellant) (Respondent) Appellant By Sh. M. P. Rastogi, Advocate Sh. Shivam Malik, Advocate Respondent By Sh. Rajesh Kumar Dhanesta, Sr.Dr Date Of Hearing 06.05.2025 Date Of Pronouncement 04.08.2025 Order Per Avdhesh Kumar Mishra, Am The Appeal Of The Assessee For The Assessment Year (‘Ay’) 2011-12 Is Directed Against The Order Dated 31.03.2016 Of The Commissioner Of Income Tax (Appeals)-20, New Delhi [‘Cit(A)’]. 2. The Assessee Has Raised Following Grounds: “1. On The Facts & Circumstances Of The Case & In Law, Learned Assessing Officer Has Erred & Was Not Justified In Disallowing A Sum Of Rs 2.31,80,000/- On Account Of Reimbursement Of Legal & Professional Fee Paid To Members Of The Appellant, By Wrongly Invoking The Provisions Of Section 40Ba) Of The Act, Conveniently Ignoring Earlier Orders U/S 195(2) To The Effect That Impugned Amounts Were Not Covered U/S 40(Ba).

Section 195(2)Section 244ASection 40Section 40b

been filed before the Authorities below. We find part merit in arguments of both parties. In case these payments have been made wholly and exclusively for business purposes to the persons not falling under the JV Agreement, then the allowability of such expenditure has to be examined and considered

Procter & Gamble Hygiene and Health Care Limited, Mumbai vs. DCIT-2(3)(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 3518/MUM/2025[2015-16]Status: DisposedITAT Mumbai31 Jul 2025AY 2015-16

Bench: SHRI AMIT SHUKLA (Judicial Member), SMT RENU JAUHRI (Accountant Member)

Section 147Section 148Section 192Section 37(1)

expense is not contingent or notional but a real and revenue expenditure. 17. It was contended that such expenses are incurred wholly and exclusively for business purposes to incentivise, retain, and reward key personnel, and are squarely covered by the doctrine of commercial expediency. 18. Strong reliance was placed

Deputy Commissioner of Income Tax, Central Circle 6(3), Mumbai vs. Coimbatore Integrated Waste Management Company Private Ltd, Mumbai

In the result, the appeal filed by the revenue stands dismissed

ITA 1021/MUM/2025[2018]Status: DisposedITAT Mumbai24 Jul 2025

Bench: Hon’Ble Shri Sandeep Gosain & Shri Prabhash Shankardcit, Cc – 6(3) Vs. Coimbatore Integrated Room No. 450, 4Th Floor, Waste Management Kautilya Bhawan, Bkc Company Pvt Ltd Mumbai – 400051. Kansas Avenue, Trilok Apartments, Civil Aerodrome P., Coimbatore South Pan/Gir No. Adcc3184B (Applicant) (Respondent)

Section 250

liability calculated adopting systematic approach; b) Provision has been created following accounting principle of matching concept; c) The provision for expense is wholly and exclusively for business purpose of Appellant; d) The Appellant has followed consistent approach / basis for creating provision for Pit covering expenses year on year. The claim ... ascertained liability calculated adopting systematic approach; b) Provision has been created following accounting principle of matching concept; provision for expense is wholly and exclusively for business purpose of Appellant; d) The Appellant has followed consistent approach / basis for creating provision for Post closure expense year on year. The claim

Mahadhan Agritech Limited (Formerly Known As Smartchem Technologies Limited ), Mumbai vs. Deputy Commissioner of Income Tax, Central Circle -8(1), Mumbai

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 3937/MUM/2024[2019-20]Status: DisposedITAT Mumbai24 Jul 2025AY 2019-20

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

Section 115JSection 132Section 143(3)Section 153ASection 69A

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

DCIT Central Circle 8(1), Mumbai vs. Mahadhan Agritech Limited, Pune

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 3569/MUM/2024[2019-20]Status: DisposedITAT Mumbai24 Jul 2025AY 2019-20

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

Section 115JSection 132Section 143(3)Section 153ASection 69A

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

Mahadhan Agritech Limited (Formerly Known As Smartchem Technologies Ltd, Mumbai vs. Commissioner of Income Tax(Appeal)--50, Mumai

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 2229/MUM/2024[2018-19]Status: DisposedITAT Mumbai24 Jul 2025AY 2018-19

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

Section 115JSection 132Section 143(3)Section 153ASection 69A

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

Mahadhan Agritech Limited (Formerly Known As Smartech Technologies Ltd, Mumbai vs. Commissioner of Income Tax (Appeals)-Mumbai.50, Mumbai

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 2227/MUM/2024[2017-18]Status: DisposedITAT Mumbai24 Jul 2025AY 2017-18

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

Section 115JSection 132Section 143(3)Section 153ASection 69A

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

Devika Buildestate Private Limited, Jaipur vs. Income Tax Officer, Jaipur

In the result, the appeal of the assessee is allowed

ITA 525/JPR/2025[2012-13]Status: DisposedITAT Jaipur21 Jul 2025AY 2012-13

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. Vinod Kumar Gupta, CAFor Respondent: Sh. Gautam Singh Choudhary, Addl. CIT

Section 133(6)Section 142(1)Section 143(2)Section 143(3)Section 271(1)(c)

ensure their genuineness, but cannot question the business necessity or the rationale behind availing such services, as long as they are incurred wholly and exclusively for business purposes. All the necessary documents are already furnished to Ld. AO which gives the proof of incurrence of expense

The Asst. CIT., Circle-1(1), Baroda vs. Ambalal Sarabhai Enterprises Limited, Baroda

In the result, the appeal is allowed for statistical purposes

ITA 2033/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad08 Jul 2025AY 2012-13

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Bandish Soparkar, A.RFor Respondent: Shri Alpesh Parmar, CIT DR &

Section 115JSection 14ASection 50

certain expenses under the head "Miscellaneous Expenses," but could not provide detailed break-up or evidence to substantiate that these expenses were wholly and exclusively for business purposes. The AO specifically highlighted that some expenses, such as Diwali expenses, distribution of sweets, and boni, were of a personal ... otherwise enforceable. The Department has not brought on record any evidence to suggest that the liability is bogus, contingent, or not incurred wholly and exclusively for business. Lastly, we find merit in the assessee's submission that the Revenue cannot on the one hand tax the gross sales including

Ambalal Sarabhai Enterprises Limited, Baroda vs. The Dy.CIT., Circle-1(1), Baroda

In the result, the appeal is allowed for statistical purposes

ITA 1807/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad08 Jul 2025AY 2012-13

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Bandish Soparkar, A.RFor Respondent: Shri Alpesh Parmar, CIT DR &

Section 115JSection 14ASection 50

Ambalal Sarabhai Enterprises Ltd., Baroda vs. The Dy. Commissioner of Income Tax-1(1)(1), Baroda

In the result, the appeal is allowed for statistical purposes

ITA 954/AHD/2016[2011-12]Status: FixedITAT Ahmedabad08 Jul 2025AY 2011-12

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Respondent byFor Respondent: Shri Bandish Soparkar, A.R

Section 115JSection 144Section 50

account on the grounds that they were either non-business in nature or lacked sufficient evidence to establish that they were incurred wholly and exclusively for business purposes. ITA No. 954/Ahd/2016, 1315/Ahd/2016, 1807/Ahd/2017 & 2033/Ahd/2017 Ambalal Sarabhai Enterprises Ltd. vs. DCIT & DCIT/ACIT vs. Ambalal Sarabhai Enterprises Ltd. Asst. Years ... certain expenses under the head "Miscellaneous Expenses," but could not provide detailed break-up or evidence to substantiate that these expenses were wholly and exclusively for business purposes. The AO specifically highlighted that some expenses, such as Diwali expenses, distribution of sweets, and boni, were of a personal

The Dy.Commissioner of Income Tax, Circle-1(1)(1), Vadodara vs. Ambalal Sarabhi Enterprises Limited, Vadodara

In the result, the appeal is allowed for statistical purposes

ITA 1315/AHD/2016[2011-12]Status: DisposedITAT Ahmedabad08 Jul 2025AY 2011-12

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Bandish Soparkar, A.RFor Respondent: Shri Alpesh Parmar, CIT DR &

Section 115JSection 144Section 50

Gujarat Mineral Development Corporation Limited, Khanji Bhavan vs. Pr. Commissioner of Income Tax-1, Aayakar Bhawan(Vejalpur), Ahmedabad

In the result, the appeal filed by the assessee is allowed

ITA 651/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad04 Jul 2025AY 2020-21

Bench: S/Shri T.R. Senthil Kumar & Makarand V.Mahadeokarasstt.Year : 2020-21

For Appellant: Shri Rignesh Das, CIT-DR

Section 143(1)Section 143(3)Section 14ASection 263Section 80GSection 80I

noted that the nature and motive of CSR under the Companies Act is application of income, and such expenditure is not incurred wholly and exclusively for business purposes. Allowing deduction of such expenses, even in the form of donation under section 80G, would result in subsidising 4 CSR outlay through

Anita Lahu Ghadge, Mumbai vs. Circle41(1)(1), Mumbai

In the result, all the grounds of appeal preferred by the assessee fail and the appeal is dismissed

ITA 2623/MUM/2025[2013-14]Status: DisposedITAT Mumbai13 Jun 2025AY 2013-14

Bench: Shri Sandeep Gosain & Shri Prabhash Shankaranita Lahu Ghadge, V/S. Assistant Commissioner Of Swapnapurti, 33-D, Kamgar Income Tax, Circle – 26(1), बनाम Chs Ltd., S.G. Barve Marg, Kautilya Bhavan, Bandra Near Nandkeshwar Mandir, Kurla Complex, Bandra Kamgar Nagar, Kurla East, (East), Mumbai – 400051, Mumbai–400024, Maharashtra Maharashtra स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Afqpg3328A Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Shri Sanjay Nikam, ARFor Respondent: Shri Aditya Rai (Sr. DR)

Section 143(3)

logbook for business- related vehicle expenses. The appellant is engaged in business activities that require frequent travel, and the expenses incurred are wholly and exclusively for business purposes. The L.d. A.O. with due respect, did not fully appreciate the necessity of such expenses and made a disallowance without considering ... solely on the assumption that they might include a personal component. The appellant respectfully submits that all such expenses are incurred wholly and exclusively for business purposes, essential for the smooth functioning of business operations, and duly recorded in the books of accounts. 3. The Ld. A.O. disallowed the commission