“Section 37(1)”

Section References (mined)Section 37Section 37(1)4,308 judgments

The decision most relied on for Section 37(1) is CIT v. Reliance Utilities & Power Ltd. (313 ITR 340), cited in 2,118 judgments on BharatTax.

Leading authorities on Section 37(1)

CIT v. Reliance Utilities & Power Ltd.

313 ITR 340 · 2009 · High Court

2,118

citing judgments

Where an assessee claims that investments were made out of own funds, interest disallowance under Section 14A read with Rule 8D may not apply if the assessee demonstrates the availability of sufficient interest-free funds to cover such investments.

Goetze (India) Ltd. v. CIT

284 ITR 323 · 2006 · Supreme Court

1,842

citing judgments

An assessee cannot raise a new claim or a claim not made in the original or revised return of income for the first time directly before the Assessing Officer during assessment proceedings.

Maxopp Investment Ltd. v. CIT

402 ITR 640 · 2018 · Supreme Court

1,596

citing judgments

Disallowance under Section 14A is not automatic and requires the Assessing Officer to record satisfaction before applying Rule 8D. Only investments yielding exempt income are considered for disallowance, irrespective of their strategic nature.

Cheminvest Ltd. v. CIT

378 ITR 33 · 2015 · High Court

1,569

citing judgments

A disallowance under Section 14A of the Income-tax Act, 1961, for expenditure incurred in relation to exempt income cannot be made if the assessee has not earned any exempt income during the relevant previous year.

Checkmate Services Pvt. Ltd. v. CIT

143 Taxmann.com 178 · 2022 · Supreme Court

1,392

citing judgments

Employee contributions to provident fund and ESI deposited by an employer beyond the due dates prescribed under the respective special Acts are not allowable as a deduction under section 36(1)(va) of the Income-tax Act, 1961. Such disallowance can be made during processing under section 143(1).

CIT v. HDFC Bank Ltd.

366 ITR 505 · 2014 · High Court

1,261

citing judgments

When an assessee possesses interest-free funds sufficient to cover investments yielding tax-free income, it is presumed that such investments were made from these interest-free funds, precluding disallowance of interest expenditure under Section 14A.

Godrej & Boyce Mfg. Co. Ltd. v. DCIT

328 ITR 81 · 2010 · High Court

1,183

citing judgments

Rule 8D, for computing disallowance under Section 14A for expenses related to exempt income, applies from Assessment Year 2008-09 onwards; for prior years, a reasonable disallowance must be made. The disallowance under Section 14A cannot exceed the actual exempt income earned.

CIT v. Woodward Governor India Pvt. Ltd.

312 ITR 254 · 2009 · Supreme Court

968

citing judgments

Foreign exchange fluctuations, whether gains or losses, are inextricably linked to the underlying business transaction and must be accounted for under the mercantile system. The Supreme Court also affirmed the standard accounting principle of valuing stock at cost or net realisable value, whichever is lower.

Judgments citing Section 37(1)

Ahlstrom Fibercomposites India Pvt. Ltd., Mundra (Kutch) vs. The Dy. Commr. of Income Tax, Gandhidham Circle, Gandhidham

In the result, the appeals of the assessee are allowed for statistical purposes

ITA 97/RJT/2016[2011-12]Status: DisposedITAT Rajkot04 Aug 2023AY 2011-12

Bench: Smt.Annapurna Gupta & Shri Siddhartha Nautiyalit(Tp)A No.85& 287/Rjt/2017 Assessment Year :2012-13 & 2013-14

For Appellant: Shri S.N. Soparkar, ld.ARFor Respondent: Shri Shramdeep Sinha, ld.CIT-DR

Section 143(3)Section 144C(13)Section 92C

issue are that expenditure amounting in all to Rs.1,60,83,722/- incurred on account of the following were disallowed under section 37(1) of the Act: i) Management fees : Rs.40,25,611/- ii) SAP & Opti-mill service fee : Rs.13,82,629/- iii) Business Area Service : Rs.97,41,600- Total ... incurred and benefit thereto was not proved, therefore, the expenses were liable to be disallowed under ITA (TP)No.97/RJT/2016 and 2 Others 13 section 37(1) of the Act. He pointed out that the DRP had relied on various case laws in support of his finding as above

Ultratech Cement Limited, Mumbai vs. ACIT- CC -1(4), Mumbai

ITA 221/MUM/2022[2012-13]Status: DisposedITAT Mumbai03 Aug 2023AY 2012-13

Bench: Shri Kuldip Singh & Shri S Rifaur Rahmanassessment Year: 2012-13

For Appellant: Shri. Nitesh Joshi, A.R. &For Respondent: Shri. Alok Kumar, CIT DR

Section 132Section 143(3)Section 153CSection 35D

ownership of assets in favour of the assessee Company, the same has been claimed as revenue expenditure as per the provisions of section 37(1) of the Income Tax Act ('IT Act').” 12. In annexure A the assessee has duly given the details of assets not owned by the assessee

Chhattisgarh State Beverage Corporation Ltd., Raipur vs. Deputy Commissioner of Income Tax, Circle-3(1), Raipur

In the result, appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations

ITA 198/RPR/2022[2013-14]Status: DisposedITAT Raipur03 Aug 2023AY 2013-14

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita No. 198/Rpr/2022 "नधा"रण वष" / Assessment Year : 2013-14 Chhattisgarh State Beverages Corporation Limited Aabkari Bhavan, Chokra Nala, Labhandi, Raipur-492 001 (C.G.) Pan : Aaccc3163B .......अपीलाथ" / Appellant बनाम / V/S. The Deputy Commissioner Of Income Tax, Circle-3(1), Raipur. ……""यथ" / Respondent

For Appellant: Shri Praveen Jain, CAFor Respondent: Dr. Simran Bhullar, CIT-DR

Section 143(1)Section 143(2)Section 143(3)Section 147Section 148Section 37

section 23A of Excise Act, 1968, was merely an application of income and, thus, it could not be allowed as business expenditure under section 37(1). Therefore, I have reason to believe that the income to the tune of Rs. 40,00,00,000/- chargeable to tax has escaped assessment

Fdc Limited, Mumbai vs. PCIT, Cir-1, Mumbai

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

ITA 1031/MUM/2023[2018-19]Status: DisposedITAT Mumbai02 Aug 2023AY 2018-19

Bench: Shri B.R. Baskaran (Am) & Shri Rahul Chaudhary (Jm)

Section 143(3)Section 144BSection 263Section 35Section 35(1)Section 35(1)(i)Section 37(1)Section 80G

claim has been made by the assessee in respect of the expenses incurred on Corporate Social Responsibility, which is disallowable under section 37(1) of the Act and hence deduction under section 80G should not have been allowed. After hearing the assessee on the above said three issues, the learned ... said claim has been made by the assessee in respect of the expenses incurred on Corporate Social Responsibility (CSR), which is disallowable under section 37(1) of the Act and hence deduction under section 80G should not have been allowed. We notice that, in the following cases, it has been

Vijubha Jitubha Jadeja, Rajkot vs. The Principal Commissioner of Income Tax - 1, Rajkot

The appeal of the assessee is partly allowed as above

ITA 105/RJT/2022[2017-18]Status: DisposedITAT Rajkot02 Aug 2023AY 2017-18

Bench: Ms. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

For Appellant: Shri Vimal Desai, Ld. A.RFor Respondent: Shri Shramdeep Sinha, Ld. CIT-D.R

Section 115BSection 144Section 147Section 263Section 28Section 37(1)Section 41(1)Section 68Section 69C

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH VIRTUAL COURT] Before: Ms. Annapurna Gupta, Accountant Member And

Nagpur Power & Industries Ltd, Mumbai vs. A.C.I.T.-3(2)(2), Mumbai

In the result, appeal filed by the assessee is allowed

ITA 505/MUM/2023[2009-2010]Status: DisposedITAT Mumbai01 Aug 2023AY 2009-2010

Bench: Shri S. Rifaur Rahman, Hon'Ble & Ms Kavitha Rajagopal, Hon'Blem/S. Nagpur Power & Industries Ltd V. Acit – 3(2)(2) 20Th Floor, Nirmal Aayakar Bhavan, M.K. Road Nariman Point, Mumbai – 400021 Mumbai - 400020 Pan: Aaacn5438N (Appellant) (Respondent) Assessee Represented By : Shri Surinder Mehra Department Represented By : Dr. Mahesh Akhade & Shri Chetan Kacha

Section 143(1)Section 143(2)Section 143(3)Section 148Section 14ASection 37(1)

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND

ACIT-1(1)(1), Mumbai vs. M/S Alok Kumar Agrawal, Irp of M/S. Cox and Kings Ltd, Mumbai

ITA 571/MUM/2023[2011-12]Status: DisposedITAT Mumbai31 Jul 2023AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm M/S Alok Kumar Agrawal, Insolvency Resolution Acit-(1)(1)(1) Professional Of M/S Cox & 533/ 579A, Kings Aaykar Bhavan, Mk Road, Vs. 605, Suncity Business Tower, Mumbai-400 020 Gold Course Road, Sector-54, Gurugram, Haryana-400 020 (Appellant) (Respondent) Pan No. Aaacc1921B Assessee By : None Revenue By : Shri Dhiraj Kumar, Dr Date Of Hearing: 19.07.2023 Date Of Pronouncement : 31.07.2023

For Appellant: NoneFor Respondent: Shri Dhiraj Kumar, DR

Section 143(3)Section 144C(13)Section 37

assessee to the share premium account. However while filing the return of income, the assessee claimed as a deductible expenditure under section 37 (1) of the act. The learned dispute resolution panel directed the learned assessing officer treating that the disallowance should be restricted only to the extent of nonconvertible ... expenditure incurred by the assessee for issue of NCD and despite debited to the share premium account should be allowed as deduction under Section 37(1) of the Act is the funds raised by the assessee by issue of nonconvertible debentures is used for the working capital and therefore takes

Leariningmate Solutions Private Limited, Mumbai vs. Ld Principle Commissioner of Income Tax-2, Mumbai

ITA 1696/MUM/2023[2018-2019]Status: DisposedITAT Mumbai31 Jul 2023AY 2018-2019

For Appellant: Shri Karthik NatarajanFor Respondent: MS N. V. Nadkarni

Section 143Section 143(1)Section 143(3)Section 263Section 263(1)Section 37(1)

examination of the Assessment records, the PCIT formed a view that the aforesaid expenses were not allowable as deduction under Section 37(1) of the Act. According to the PCIT the Assessing Officer failed to conduct proper inquiry/verification into this aspect, and therefore, the Assessment Order was rendered erroneous ... Bangalore: 2013] 35 taxmann.com 335 (Bangalore - Trib.) (SB)/[2013] 25 ITR(T) 602 (Bangalore - Trib.) (SB) while holding that the deduction under Section 37(1) of the Act is allowable for ESOP expenses. The relevant extract of the decision of Special Bench of the Tribunal reads as under

DCIT-14(1)(1), Mumbai vs. M/S. Mirae Asset Global Investments (I) Pvt Ltd., Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 1156/MUM/2023[2015-16]Status: DisposedITAT Mumbai31 Jul 2023AY 2015-16

Bench: Shri Amit Shukla & Shri Amarjit Singhdcit, Circle 14(1)(1) Vs. M/S Mirae Asset Global Room No. 432, 4 Th Floor, Investment Pvt. Ltd. Aayakar Bhavan Unit No. 606, 6 Th Floor, M.K. Road, Windsor, Off Cst Road, Mumbai – 400 020 Kalina, Santacruz (East) Mumbai – 400 098 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaecm8387K Appellant .. Respondent [ Appellant By : Mahita Nair Respondent By : Tanzil Padvekar Date Of Hearing 25.07.2023 Date Of Pronouncement 31.07.2023 आदेश / O R D E R Per Amarjit Singh (Am): This Appeal Filed By The Revenue Is Directed Against The Order Passed By The Ld. Cit(A) Nfac, Dated 09.02.2023 For A.Y. 2015-16. The Revenue Has Raised The Following Grounds Before Us: “1. On The Facts & In The Circumstances Of The Case, The Ld. Cit(A) Erred In Allowing Scheme Expenses Exceeding The Limit Specified In Sebi Regulation, Whereas The Expenses Not Being The Liability Of The Assessee, Was Rightly Disallowed Under Income Tax Provisions. 2. The Appellant Prays That The Order Of The Cit(A) On The Above Grounds Be Set Aside & That Of The Assessing Officer Be Restored. 3. The Appellant Craves Leave To Amend, Or Alter Any Grounds Or Add A New Ground, Which May Be Necessary.”

For Appellant: Mahita NairFor Respondent: Tanzil Padvekar

Section 143(3)

SEBI Regulation shall be borne by AMC and therefore were accordingly debited to the P&L account and is allowable expenses under section 37(1) of the Act. The Ld. A.R. also submitted that the case of the assessee is squarely covered by the decision of Hon’ble Bombay High ... incurred over and above the limit specified as put by the SEBI shall be borne by AMC and are covered by provision of section 37(1) of the Act. The Ld. A.R. submitted that in view of the said decision and the facts on record, the order

DCIT-5(2)(1), Mumbai vs. Jsw Investments Pvt Ltd., Mumbai

In the result, the appeals of the assessee and appeal of the revenue are partly allowed for statistical purposes

ITA 1088/MUM/2023[2014-15]Status: DisposedITAT Mumbai31 Jul 2023AY 2014-15

Bench: Shri Amit Shukla & Shri Amarjit Singhita Nos.1085 & 1086/Mum/2023 (A.Ys. 2013-14 & 2014-15) Jsw Investment Pvt. Ltd. Vs. Dy. Cit-5(2)(1) Jsw Centre, Bandra 21, 3Rd Floor, Mittal Kurla Complex, Court, 22, Bandra (East), Nariman Point, Mumbai – 400 051 Mumbai – 400 020 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aajcs2498G Appellant .. Respondent

For Appellant: Hiro RaiFor Respondent: Lieder Panicker

Section 10(34)Section 115JSection 143(3)Section 14A

P a g e | 1 ITA Nos. 1085 to 1088/Mum/2023 JSW Investment Pvt. Ltd. Vs. DCIT-5(2)(1) IN

DCIT-5(2)(1), Mumbai vs. Jsw Investments Pvt Ltd., Mumbai

In the result, the appeals of the assessee and appeal of the revenue are partly allowed for statistical purposes

ITA 1087/MUM/2023[2013-14]Status: DisposedITAT Mumbai31 Jul 2023AY 2013-14

For Appellant: Hiro RaiFor Respondent: Lieder Panicker

Section 10(34)Section 115JSection 143(3)Section 14A

P a g e | 1 ITA Nos. 1085 to 1088/Mum/2023 JSW Investment Pvt. Ltd. Vs. DCIT-5(2)(1) IN

Jsw Investments Pvt Ltd., Mumbai vs. CIT (A)-10, Mumbai

In the result, the appeals of the assessee and appeal of the revenue are partly allowed for statistical purposes

ITA 1086/MUM/2023[2014-15]Status: DisposedITAT Mumbai31 Jul 2023AY 2014-15

For Appellant: Hiro RaiFor Respondent: Lieder Panicker

Section 10(34)Section 115JSection 143(3)Section 14A

P a g e | 1 ITA Nos. 1085 to 1088/Mum/2023 JSW Investment Pvt. Ltd. Vs. DCIT-5(2)(1) IN

Jsw Investments Pvt Ltd., Mumbai vs. CIT, (A)-10, Mumbai

In the result, the appeals of the assessee and appeal of the revenue are partly allowed for statistical purposes

ITA 1085/MUM/2023[2013-14]Status: DisposedITAT Mumbai31 Jul 2023AY 2013-14

For Appellant: Hiro RaiFor Respondent: Lieder Panicker

Section 10(34)Section 115JSection 143(3)Section 14A

P a g e | 1 ITA Nos. 1085 to 1088/Mum/2023 JSW Investment Pvt. Ltd. Vs. DCIT-5(2)(1) IN

DCIT Central Circle-2(4), Mumbai vs. Rustomjee Evershine Joint Venture, Mumbai

In the result, the appeals filed by the revenue for AY 2013-14 &

ITA 1825/MUM/2022[2014-15]Status: DisposedITAT Mumbai31 Jul 2023AY 2014-15

Bench: Shri Aby T. Varkey, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.1349/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2013-14) Dcit, Central Circle-2(4) बिधम/ Rustomjee Evershine Room No. 802, 8Th Floor, Joint Venture Vs. Prathishtha Bhavan, M. K. Global City, Narangi Road, Churchgate, Mumbai- Bypass Road, Close To 400020. Viva College, Virar (W), Virar-401303. Cross Objection No. 27/Mum/2023 Arising Out Of I.T.A. No.1349/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2013-14) Rustomjee Evershine Joint बिधम/ Dcit, Central Circle-2(4) Room No. 802, 8Th Floor, Venture Vs. Global City, Narangi Prathishtha Bhavan, M. K. Bypass Road, Close To Viva Road, Churchgate, College, Virar (W), Virar- Mumbai-400020. 401303. आयकर अपील सं/ I.T.A. Nos.1824 & 1825/Mum/2022 (निर्धारण वर्ा / Assessment Years: 2016-17 & 2014-15) Dcit, Central Circle-2(4) बिधम/ Rustomjee Evershine Room No. 802, 8Th Floor, Joint Venture Vs. Prathishtha Bhavan, M. K. Global City, Narangi Road, Churchgate, Mumbai- Bypass Road, Close To 400020. Viva College, Virar (W), Virar-401303. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaaar7687M (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Naresh Kumar Revenue By: Shri P. D. Chougule (Addl. Cit) सुनवाई की तारीख / Date Of Hearing: 25/05/2023 घोषणा की तारीख /Date Of Pronouncement: 31/07/2023

For Appellant: Shri Naresh KumarFor Respondent: Shri P. D. Chougule (Addl. CIT)

been incurred wholly and exclusively for the purposes of business. Further, there is no restriction other than those specified in the Section 37(1) of the Income Tax Act, 1961 regarding the claim of the expenses in relation to income offered in that particular year. Therefore from this angle

DCIT Central Circle-2(4), Mumbai vs. Rustomjee Evershine Joint Venture, Mumbai

In the result, the appeals filed by the revenue for AY 2013-14 &

ITA 1824/MUM/2022[2016-17]Status: DisposedITAT Mumbai31 Jul 2023AY 2016-17

For Appellant: Shri Naresh KumarFor Respondent: Shri P. D. Chougule (Addl. CIT)

DCIT Central Circel-2(4), Mumbai vs. Rustomji Evershine Joint Venture, Mumbai

In the result, the appeals filed by the revenue for AY 2013-14 &

ITA 1349/MUM/2022[2013-2014]Status: DisposedITAT Mumbai31 Jul 2023AY 2013-2014

For Appellant: Shri Naresh KumarFor Respondent: Shri P. D. Chougule (Addl. CIT)

Shakuntala Ashok Vyas, Mumbai vs. ITO - 19(3)(3), Mumbai

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

ITA 1898/MUM/2020[2012-13``]Status: DisposedITAT Mumbai31 Jul 2023

Bench: Shri Om Prakash Kant () & Ms. Kavitha Rajagopal () Assessment Year: 2012-13 Shakuntala Ashok Vyas, Ito-19(3)(3), 17, Ground Floor, Labh Matru Mandir Vs. Niwas, 33, Khetwadi 4Th Lane, Mumbai-400007. Mumbai-400004. Pan No. Acapv 6232 B Appellant Respondent

For Appellant: Mr. Sumit MantriFor Respondent: Mr. P.D. Chogule (Addl. CIT)

Section 250

facts of the case of the appellant. The head- note of the decision reads as under: note of the decision reads as under: ..Section 37(1) of the I ..Section 37(1) of the Income-tax Act, 1961 - - Business expenditure expenditure - Allowability of - Assessment year 2004 Assessment year

ITO, Ward- 3(3), New Delhi vs. Asb Developers Pvt. Ltd., New Delhi

ITA 5542/DEL/2017[2013-14]Status: DisposedITAT Delhi31 Jul 2023AY 2013-14

Bench: Sh. M. Balaganesh & Sh.Anubhav Sharma

Section 143(3)

High Court in the case of CIT v. S.A. Builders [2008] 299 ITR 88 (P&H), which held as follows: “Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Forfeiture of assessee's security deposits by way of compensation for not completing contract work within stipulated

Asstt. Commissioner of Income Tax Central Circle-2(2), Nagpur vs. M/S. R.B.Seth Shreeram Narsingdas, Nagpur

In the result, the appeal filed by the Revenue in ITA

ITA 36/NAG/2018[2014-2015]Status: DisposedITAT Nagpur31 Jul 2023AY 2014-2015

Bench: Shri Inturi Rama Rao & Shri S. S. Viswanethra Raviआयकर अपील सं. / Ita No.36/Nag/2018 िनधा"रण वष" / Assessment Year : 2014-15 Acit, Central Circle-2(2), Vs. M/S. R.B. Seth Shreeram Nagpur. Narsingdas, Flat No.C-2, Yogeshwar Ganga Apartment, Ramdaspeth, Nagpur- 440025. Pan : Aacfr0227N Appellant Respondent C.O. No.05/Nag/2018 (Arising Out Of Ita No.36/Nag/2018) िनधा"रण वष" / Assessment Year : 2014-15 M/S. R.B. Seth Shreeram Vs. Acit, Central Circle- Narsingdas, 2(2), Nagpur. Flat No.C-2, Yogeshwar Ganga Apartment, Ramdaspeth, Nagpur- 440025. Pan : Aacr0227N Revenue By : Smt. Rashmi Mathur Assessee By : Shri Sudesh Bandhia Date Of Hearing : 20.07.2023 Date Of Pronouncement : 31.07.2023 आदेश / Order Per Inturi Rama Rao, Am: This Is An Appeal Filed By The Revenue Directed Against The Order Of Ld. Commissioner Of Income Tax (Appeals)-3, Nagpur [‘The 2 C.O. No.05/Nag/2018 Cit(A)’] Dated 28.12.2017 For The Assessment Year 2014-15. The Cross Objection Filed By The Assessee Against The Appeal Of The Revenue.

For Appellant: Shri Sudesh BandhiaFor Respondent: Smt. Rashmi Mathur

Section 143(3)Section 37Section 37(1)

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI

DCIT 3(2), Mumbai vs. Idea Cellular Ltd, Mumbai

In the result, the appeal filed by the assessee is partly allowed for statistical purposes and the appeal filed by the revenue is dismissed

ITA 3674/MUM/2014[2009-10]Status: DisposedITAT Mumbai27 Jul 2023AY 2009-10

Bench: Shri Vikas Awasthy & Shri Gagan Goyal

For Appellant: Shri J. D. Mistry /Manish PadhiarFor Respondent: Shri T. Shankar, CIT-DR

Section 194Section 250Section 40

taxmann.com 351. The relevant operative portion of the judgement of the Hon’ble Karnataka High Court are reproduced hereunder:- “10. From perusal of section 37(1), which has been referred to supra, it is evident that an assessee is entitled to claim deduction under the aforesaid provision if the expenditure ... price at which it is issued and the market value of the shares would also be expenditure incurred for the purposes of section 37(1) of the Act. The primary object of the aforesaid exercise is not to waste capital but to earn profits by securing consistent services