Section 10(2)(xv) of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10(2)(xv) falls under section 10 of the Income-tax Act, 1961, which corresponds to section 11 (Incomes not included in total income) of the Income-tax Act, 2025.
Read section 11 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 10(2)(xv) is Dalmia Jain & Co. Ltd. v. CIT (81 ITR 754), cited in 46 of the 90 judgments on BharatTax that turn on this section.
Leading authorities on Section 10(2)(xv)
Expenditure incurred for business exigency is allowable as a deduction under Section 37 of the Income Tax Act. Litigation expenses incurred to protect business are revenue expenditure.
Expenditure that is incurred for the protection of a running business without generating a new asset is deductible as a business expense. Such expenditure does not result in an enduring benefit of a capital nature.
When assessing expenses under Section 40A(2), tax authorities must consider the entire position judiciously from the viewpoint of a prudent businessman, not arbitrarily or capriciously. The revenue must demonstrate tax evasion and cannot disallow expenses if the recipient is taxed at the same or higher rate.
Trademark expenditure incurred to facilitate business operations is considered revenue expenditure, as it does not create an enduring benefit. Product registration expenditure is also revenue in nature as it enables the sale of products.
Commission paid to agents for services rendered is not deductible if the assessee fails to provide evidence that the agents actually procured sale orders or rendered services justifying the commission.
Where a co-ordinate bench of the Tribunal has decided an issue in favour of the assessee in its own case for other assessment years, the same principle applies to the current assessment year.
Expenditure is deductible if it is incurred for the purpose of the assessee's trade and meets the tests of commercial expediency and ordinary commercial trading, unless it is for fostering another's business, a distribution of profits, wholly gratuitous, or for an improper purpose outside the course of business.
