“Section 36(1)(13)”
The decision most relied on for Section 36(1)(13) is Indian Molasses Co. Pvt. Ltd. v. CIT (37 ITR 66), cited in 206 judgments on BharatTax.
Leading authorities on Section 36(1)(13)
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.
Investments made by a holding company in its subsidiary can be considered a business activity, allowing related business expenditures to be deducted and not disallowed.
Expenditure incurred on a business project that fails to materialize or is abandoned due to reasons not attributable to the assessee is treated as revenue expenditure and is deductible.
Expenditure incurred by a holding company for making investments in a subsidiary can be treated as business expenditure and is not disallowable, as such investment activity can itself constitute a business.
Interest paid on capital borrowed for business purposes, including the acquisition of shares to gain controlling interest in another company, is allowable as a deduction under Section 36(1)(iii) of the Income-tax Act, 1961.
Expenditure incurred by a holding company in making investments in its subsidiaries can be treated as a business activity and thus, the expenditure is allowable as a business deduction.
A disallowance under Section 14A of the Income Tax Act cannot be made in the absence of exempt income.
A mistake apparent from the record, for the purpose of rectification, includes a point covered by a decision of the Supreme Court or the concerned High Court, whether rendered prior or subsequent to the order being rectified. Subsequent decisions of the jurisdictional High Court declare the law as it always was.
