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)

Dy. Commissioner of Income Tax Circle-3(3)(1), Mumbai vs. Small Industries Development Bank of India, Mumbai

In the result, the ground No

ITA 870/MUM/2026[2012-13]Status: DisposedITAT Mumbai07 Sept 2026AY 2012-13

Bench: Shri Pawan Singh & Shri Manoj Kumar Aggarwal(Physicalhearing) Small Industries Development Bank Dcit, Central Circle – 3(3)(2), Of India, Swavalamban Bhawan, Vs Mumbai, Aayakar Bhawan, C-11, G Block, Bandra Kurla M.K. Marg, New Marine Lines, Complex, Bandra East, Mumbai – 400020. Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Assessee Respondent / Revenue Dcit, Central Circle – 3(3)(1), Small Industries Development Bank Of Mumbai Vs India, Swavalamban Bhawan, C-11, 522, 5Th Floor, Aayakar Bhavan, G Block, Bandra Kurla Complex, Bandra M.K. Road, Mumbai – 400020. East, Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Revenue Respondent / Assessee Assessee By Shri Rakesh Joshi, Ar Revenue By Shri Sajit V Nair, Sr. Dr Date Of Institution 26.12.2025 Date Of Hearing 17.06.2026 Date Of Pronouncement 07.09.2026 Order Under Section 254(1) Of Income Tax Act Per Pawan Singh; 1. This Appeal By Assessee Is Directed Against The Order Of Ld. Cit(A)/Nfacdated 13.11.2025 For Assessment Year (Ay) 2012-13. The Assessee Has Raised Following Grounds Of Appeal: “1. On The Facts & Circumstances Of The Case As Well As In Law, The Learned Cit(A) Has Erred In Confirming The Action Of The Learned Assessing Officer In Disallowing Claim Of Rs.60,79,783/-, Being Proportionate Amortised Amount Of Lease Premium Paid To Mumbai Metropolitan Regional Development Authority In Respect Of Leasehold Land & The Reasons Assigned For Doing So Are Wrong & Contrary To The Facts & Circumstances Of The Case, Provisions Of Income Tax Act, 1961 & Rules Made Thereunder.

Section 115JSection 158ASection 254(1)Section 36(1)(vii)Section 36(1)(viia)Section 37(1)

Small Industries Development Bank of India, Mumbai vs. Deputy Commissioner of Income Tax, Central Circle 3(3)2, Mumbai

In the result, the ground No

ITA 9170/MUM/2025[2012-13]Status: DisposedITAT Mumbai07 Sept 2026AY 2012-13

Bench: Shri Pawan Singh & Shri Manoj Kumar Aggarwal(Physicalhearing) Small Industries Development Bank Dcit, Central Circle – 3(3)(2), Of India, Swavalamban Bhawan, Vs Mumbai, Aayakar Bhawan, C-11, G Block, Bandra Kurla M.K. Marg, New Marine Lines, Complex, Bandra East, Mumbai – 400020. Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Assessee Respondent / Revenue Dcit, Central Circle – 3(3)(1), Small Industries Development Bank Of Mumbai Vs India, Swavalamban Bhawan, C-11, 522, 5Th Floor, Aayakar Bhavan, G Block, Bandra Kurla Complex, Bandra M.K. Road, Mumbai – 400020. East, Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Revenue Respondent / Assessee Assessee By Shri Rakesh Joshi, Ar Revenue By Shri Sajit V Nair, Sr. Dr Date Of Institution 26.12.2025 Date Of Hearing 17.06.2026 Date Of Pronouncement 07.09.2026 Order Under Section 254(1) Of Income Tax Act Per Pawan Singh; 1. This Appeal By Assessee Is Directed Against The Order Of Ld. Cit(A)/Nfacdated 13.11.2025 For Assessment Year (Ay) 2012-13. The Assessee Has Raised Following Grounds Of Appeal: “1. On The Facts & Circumstances Of The Case As Well As In Law, The Learned Cit(A) Has Erred In Confirming The Action Of The Learned Assessing Officer In Disallowing Claim Of Rs.60,79,783/-, Being Proportionate Amortised Amount Of Lease Premium Paid To Mumbai Metropolitan Regional Development Authority In Respect Of Leasehold Land & The Reasons Assigned For Doing So Are Wrong & Contrary To The Facts & Circumstances Of The Case, Provisions Of Income Tax Act, 1961 & Rules Made Thereunder.

Section 115JSection 158ASection 254(1)Section 36(1)(vii)Section 36(1)(viia)Section 37(1)