Section 37(1) of the Income Tax Act

The decision most relied on for Section 37(1) is CIT v. Reliance Utilities & Power Ltd. (313 ITR 340), cited in 2,118 of the 6,995 judgments on BharatTax that turn on this section.

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.

Radhasoami Satsang v. CIT
193 ITR 321 · 1992 · Supreme Court
1,695
citing judgments

The principle of consistency applies in tax matters, meaning a fundamental aspect found to be true in one assessment year should not be changed in a subsequent year if the order was not challenged.

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.

CIT v. Excel Industries Ltd.
358 ITR 295 · 2013 · Supreme Court
935
citing judgments

When an income or expenditure is revenue neutral across different assessment years, where any benefit derived is offset by a corresponding liability or reversal, no additional tax liability arises, particularly concerning income recognition under the mercantile system of accounting.

Judgments on Section 37(1)

Rishabh Birla, New Delhi vs. ACIT, New Delhi

In the result appeal filed by assessee stands allowed

ITA 5021/DEL/2015[2008-09]Status: DisposedITAT Delhi16 Nov 2018AY 2008-09

Bench: Shri N.K. Saini, Hon’Ble & Smt. Beena A Pillaiay: 2008-09 Rishabh Birla Vs. Acit Legal Heirs Of Lt. Sh. Anurag Birla, Circle 24(1) C-37, Basement, Hauz Khaz, New Delhi. New Delhi. Aadpb3556B (Appellant) (Respondent) Assessee By : Sh. Sandeep Sapra, Adv. Department By : Sh. Sridhar Dora, Sr. Dr Date Of Hearing : 13/11/2018 Date Of Pronouncement: 16/11/2018 Order Per Beena A Pillaipresent Penalty Appeal Has Been Filed By Assessee Against Order Dated 12/06/15 Passed By Ld. Cit (A)-13, New Delhi For Assessment Year 2008-09 On Following Grounds Of Appeal: 1. “That Having Regard To The Facts & Circumstances Of The Case, Ld. Cit(A) Has Erred In Law & On Facts In Not Deleting The Penalty Amounting To Rs. 3,53,079/- Fully As Imposed By Ld. Ao U/S 271(1)(C) On Account Of Interest Expenses & Electricity & Water Expense Being Disallowed U/S 36(1)(Iii) & U/S 37(1) Of The Income Tax Act, 1961 During The Assessment Proceedings U/S 143(3), The Impugned Penalty Has Been Imposed Without Appreciating The Facts & Circumstances Of The Case & By Recording Incorrect Facts & Findings. 2. That Having Regards To The Facts & Circumstances Of The Case Ld. Cit(A) Has Erred In Law & On Facts By Confirming The Penalty Initiated By Ld. Ao On Account Of

For Appellant: Sh. Sandeep Sapra, AdvFor Respondent: Sh. Sridhar Dora, Sr. DR
Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 271(1)(c)Section 36(1)(iii)Section 37(1)

M/S. Dewan Realtors Pvt. Ltd., Thane vs. Income Tax Officer, Ward-4(1), Thane

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

ITA 2064/MUM/2018[2012-13]Status: DisposedITAT Mumbai01 Nov 2018AY 2012-13

Bench: Sri Mahavir Singhaayakr Apila Sam./ Ita No. 2064/Mum/2018 (Inaqa-Arna Baya- / Assessment Year 2012-13) Dewan Realtors Pvt. Ltd. Income Tax Officer, Ward- M/S Thar & Co., 203, Capri, 4(1),Room No. 3, 6 Th Floor, Opposite Hdil Towers, Anant A Wing, Ashar I.T. Park, Vs. Kanekar Marg, Bandra-East, Road No. 16-Z, Wagle Indl Mumbai-400 051 Estte, Thane-400 604 .. (Apilaaqai- / Appellant) (P`%Yaqaai- / Respondent) स्थायी लेखा िं./Pan No. Aaacd2364H अपीलाथी की ओर े / Appellant By : Shri Nimesh Thar, Ar प्रत्यथी की ओर े / Respondent By : Shri B.S. Bist, Dr ुनवाई की तारीख / Date Of Hearing: 01.11.2018 घोषणा की तारीख / Date Of Pronouncement : 01.11.2018 Aadosa / O R D E R महावीर स िंह, न्याययक दस्य/ Per Mahavir Singh, Jm: This Appeal By The Assessee Is Arising Out Of The Order Of Commissioner Of Income Tax (Appeals)-3, Mumbai [In Short Cit(A)], In Appeal No. 237-Thn/15-16 Vide Dated 05.12.2017. The Assessment Was Framed By The Income Tax Officer, Ward-4(1) Mumbai (In Short ‘Ito/ Ao’) For The A.Y. 2012-13 Vide Dated 30.03.2015 Under Section 143(3) Of The Income Tax Act, 1961 (Hereinafter ‘The Act’). 2. At The Outset, The Learned Counsel For The Assessee Drew My Attention To The Order Of Cit(A) Dated 05.12.2017 & Stated That There Is 2 No Discussion On Merits & Hence, The Order Is Bad In Law. I Have Gone Through The Grounds Raised Which Reads As Under: -

For Appellant: Shri Nimesh Thar, ARFor Respondent: Shri B.S. Bist, DR
Section 143(3)Section 37(1)

ACIT Ncc 7(1), Chennai vs. Ms. Prema Hariharan, Chennai

In the result, the appeal filed by the Revenue is allowed for statistical purposes

ITA 1815/CHNY/2018[2014-15]Status: DisposedITAT Chennai31 Oct 2018AY 2014-15

Bench: Shri Abraham P. George & Shri Duvvuru Rl Reddyआयकर अपील सं./I T.A. No. 1815/Chny/2018 िनधा"रण वष"/Assessment Year:2014-15 The Assistant Commissioner Of Ms. Prema Hariharan, Al-73, 4Th Street, 11Th Main Road, Income Tax, Non Corporate Circle 7(1), Vs. 121, M.G. Road, Chennai – 34. Anna Nagar, Chennai 600 040. [Pan:Aeipp1153M] (Appellant) (Respondent) अपीलाथ" की ओर से / Appellant By : Shri Ar.V. Sreenivasan, Jcit ""थ" की ओर से/Respondent By : Shri N. Devanathan, Advocate सुनवाई की तारीख/ Date Of Hearing : 22.10.2018 घोषणा की तारीख /Date Of Pronouncement : 31.10.2018 आदेश /O R D E R Per Duvvuru Rl Reddy: This Appeal Filed By The Revenue Is Directed Against The Order Of The Commissioner Of Income Tax (Appeals) 7, Chennai Dated 27.02.2018 Relevant To The Assessment Year 2014-15. The Only Effective Ground Raised In The Appeal Of The Revenue Is That The Ld. Cit(A) Has Erred In Deleting The Addition Mad On Account Of Increased Capital As Unexplained Credit For ₹.1,13,29,089/- & ₹.15,08,119/- As Disallowance Under Section 37(1) Of The Income Tax Act, 1961 [“Act” In Short] Without Relying On Any Corroborative Evidence.

For Appellant: Shri AR.V. Sreenivasan, JCITFor Respondent: Shri N. Devanathan, Advocate
Section 143(3)Section 37(1)