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)

DCIT, Cir-12(2), Kolkata vs. M/S. Strategic Marketing Solution & Research Centre Pvt. Ltd., Kolkata

In the result, the appeal of the revenue is dismissed

ITA 742/KOL/2017[2011-12]Status: DisposedITAT Kolkata26 Sept 2018AY 2011-12

Bench: Shri P.M. Jagtap, Am & Shri S.S. Godara, Jm] I.T.A. No. 742/Kol/2017 Assessment Year: 2011-12 Dcit Circle 12(2), Kolkata...............................………………………….........................Appellant Aayakar Bhawan, 6Th Floor, P-7, Chowringhee Square, Kolkata – 700 069. [Pan: Aancs 5110 K] M/S. Strategic Marketing Solution & Research Centre Pvt. Ltd...............Respondent 58/1, Ballygunge Circular Road, Kolkata – 700 019. Appearances By: Shri Robin Chowdhury, Addl. Cit Appearing On Behalf Of The Revenue. Shri Saral Kandoi, Ar Appearing On Behalf Of The Assessee. Date Of Concluding The Hearing : September 18, 2018 Date Of Pronouncing The Order : September 26, 2018 Order Per P.M. Jagtap, Am This Appeal Is Preferred By The Revenue Against The Order Of Ld. Cit(A) – 18, Kolkata Dated 31.01.2017 & The Solitary Ground Raised Therein Reads As Under: “That On The Facts & In The Circumstances Of The Case, The Ld. Cit(A) – 18, Kolkata Has Erred In Deleting The Disallowance Made By The Ao U/S 37(1) Of Rs. 70,61,774/- Regarding Printing Expenses Claimed By The Assessee Company In Which The Gift Of Writing Pads Given To The Medical Practitioners Was Treated By The Ao As ‘Freebies’ & Without Properly Considering The Fact That Circular No. 5 Of 2012 Is Of Clarificatory Nature & Disallowance Of Gift (Freebies) U/S 37(1) Should Be Treated To Be Applicable W.E.F. 10.12.2009 I.E. From The Date Of Prohibition Of Imposition By The Indian Medical Council To The Medical Practitioners.”

Section 194CSection 37Section 37(1)Section 40

Siti Cable Network Ltd, Mumbai vs. Asst CIT RG 11(1), Mumbai

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

ITA 6961/MUM/2014[2004-05]Status: DisposedITAT Mumbai26 Sept 2018AY 2004-05

Bench: Shri R.C. Sharma & Shri Sandeep Gosainm/S. Siti Cable Network Ltd. Acit, Range -11(1) (Partly Mrged With Dish Tv India Ltd.) Room No. 439, 4Th Floor 135,Continental Building Vs. Aayakar Bhavan, M.K. Road Dr. Annie Besant Road Mumbai 400020 Worli, Mumbai 400018 Pan – Aaaca5478M Appellant Respondent Appellant By: Shri Vijay Mehta Respondent By: Shri Ashish Kumar Date Of Hearing: 25.07.2018 Date Of Pronouncement: 26.09.2018 O R D E R Per Sandeep Gosain, Jm This Appeal Filed By Revenue Is Directed Against The Order Of The Cit(A)-3, Mumbai Dated 15.09.2014 & It Relates To A.Y. 2005-05. 2. The Brief Facts Of The Case Are That The Assessee Is Engaged In The Business Of Rendering Cable Network Services (Called Multi System Operator) To Cable Operators, Subscribers, Franchisee & Affiliates, Etc. The Original Return Of Income Was Filed By The Assessee On 31.10.2004 Showing Loss Of `83,73,94,340/-. The Assessment Was Completed Under Section 143(3) Vide Order Dated 22.12.2006 Assessing The Total Income At `249,53,53,900/- By Adding Subscription Income Of `356,32,58,864/- & Disallowing Write Off Of Loan & Advances Of `5,09,64,244/- & Write Of Off Inventories Of Band Width Charges Of `2,23,59,985/-. The Learned Cit(A), Vide Order Dated 23.03.2007 & His Order Under Section 154 Dated 15.06.2007 Deleted The Addition Of Subscription Income & Inventories

For Appellant: Shri Vijay MehtaFor Respondent: Shri Ashish Kumar
Section 143(3)Section 154Section 36(1)(vii)Section 9(1)(vi)

Rustomjee Knowledge City P.Ltd, Mumbai vs. Asst CIT 9(1), Mumbai

In the result, the appeal filed by the assessee is hereby ordered to be allowed

ITA 3317/MUM/2016[2010-11]Status: DisposedITAT Mumbai19 Sept 2018AY 2010-11

Bench: Shri Shamim Yahya, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.3317/Mum/2016 (निर्धारण वर्ा / Assessment Year: 2010-11) M/S. Rustomjee Knowledge बिधम/ The Asst. Cit-9(1), Aayakar City Pvt. Ltd. Rustomjee Bhavan, M.K. Road, Vs. Acres, J.S. Road. Off. Mumbai-400020. Rustom Irani Marg, Dahisar (W), Mumbai-400099. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aadca1923E (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Revenue By: Ms. N. Hemlatha Assessee By: Shri Satish Mody सुनवाई की तारीख / Date Of Hearing: 22.06.2018 घोषणा की तारीख /Date Of Pronouncement: 19.09.2018 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 04.04.2016 Passed By The Commissioner Of Income Tax (Appeals)-21 Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The Ay. 2010- 11. 2. The Assessee Has Raised The Following Grounds: - 1. The Learned Commissioner Of Income-Lax (Appeals) -21, Mumbai, Has Erred In Disallowing Interest Of Rs.16,13,25G/- On The Ground That The Funds Borrowed For Business Purposes Were Used Or Utilized For Giving Advances To One "Terraform Realty On Which No Interest Was Charged.

For Appellant: Shri Satish ModyFor Respondent: Ms. N. Hemlatha
Section 142(1)Section 143(1)Section 143(2)Section 36(1)(iii)Section 37(1)Section 40A