Section 37 of the Income Tax Act

The decision most relied on for Section 37 is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 of the 4,334 judgments on BharatTax that turn on this section.

Leading authorities on Section 37

Empire Jute Co. Ltd. v. CIT
124 ITR 1 · 1980 · Supreme Court
622
citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT
374 ITR 118 · 2015 · High Court
499
citing judgments

The existence of an international transaction for Advertising and Marketing Promotion (AMP) expenditure requires the revenue to discharge the burden of proof. An explanation inserted under Section 92B does not automatically make AMP expenditure an international transaction.

CIT v. Dalmia Cement (Bharat) Ltd.
254 ITR 377 · 2002 · High Court
417
citing judgments

When there is a nexus between an expenditure and the purpose of business, incurred on grounds of commercial expediency, the Revenue cannot question its reasonableness or assume the role of the businessman to compel profit maximization. This principle applies even if the business is not that of the assessee itself.

Eastern Investments Ltd. v. CIT
38 ITR 601 · 1960 · Supreme Court
346
citing judgments

Expenditure must be commercially expedient for carrying on the business, and it is not for revenue authorities to dictate how an assessee should conduct its business. The court will not question the business expediency of a transaction, even if a third party also benefits.

Sassoon J. David & Co. Pvt. Ltd. v. CIT
118 ITR 261 · 1979 · Supreme Court
323
citing judgments

An expense incurred by an assessee for its own business, such as advertising, marketing, and promotional (AMP) expenses, cannot be disallowed merely because it incidentally or indirectly benefits the assessee's sister concerns or associated enterprises.

Biocon Ltd. v. DCIT
35 Taxmann.com 335 · 2013 · ITAT
322
citing judgments

The discount arising from the grant of Employee Stock Option Plans (ESOPs) is an allowable business expenditure under Section 37(1) of the Income-tax Act, 1961, as it is an ascertained liability, not a contingent one, and constitutes a revenue expense rather than a capital expense.

Skycell Communications Ltd. v. DCIT
251 ITR 53 · 2001 · High Court
253
citing judgments

Technical services involve human intervention and expertise, not just routine or machine-based operations. Routine customer support and standard facility provision through technology do not constitute technical services under the Act.

India Cements Ltd. v. CIT
60 ITR 52 · 1966 · Supreme Court
247
citing judgments

Expenses incurred for obtaining a loan for the purpose of the assessee's business, such as debenture discount, bank guarantee charges, and stamp duty, are considered revenue expenditure. These liabilities, though potentially spread over time, are deductible as revenue expenses.

CIT v. Madras Auto Service (P) Ltd.
233 ITR 468 · 1998 · Supreme Court
246
citing judgments

Expenditure providing an enduring advantage, such as upfront lease rent for land, is revenue expenditure if no capital asset is acquired or generated, allowing for deduction under Section 37, even when capitalized in the books of account.

Tata Consultancy Services v. State of Andhra Pradesh
271 ITR 401 · 2004 · Supreme Court
231
citing judgments

The sale of 'canned software' in physical form is the sale of a copyrighted article and constitutes 'goods,' distinct from the underlying copyright. This case provides foundational principles for distinguishing copyrighted works from copyrighted articles and for what qualifies as 'production or manufacturing of goods or articles' under tax laws.

Judgments on Section 37

C.Kamaraj, Chennai vs. JCIT, Trichy

In the result, the Revenue’s appeal is partly allowed for statistical purposes and the assessee’s appeal is dismissed

ITA 2989/CHNY/2014[2010-11]Status: DisposedITAT Chennai13 Nov 2019AY 2010-11

Bench: Shri George Mathan & Shri S.Jayaramanआयकर अपील सं./I.T.A.No.1867/Chny/2014 "नधा"रण वष" /Assessment Year : 2010-11 The Deputy Commissioner Of Vs. Shri C. Kamaraj Income Tax, Circle – Iv, Prop. Rajashree Mines & No.44, Williams Road, Minerals & Rajashree Cantonment, Trichy – 620 001 Transports, Nataraja Medicals Upstairs, V. Kaikatti, Thellur Post, Ariyalur – 621 707. [Pan Ajwpk 6009L ] (अपीलाथ"/Appellant) (""यथ"/Respondent) आयकर अपील सं./I.T.A.No.2989/Chny/2014 "नधा"रण वष" /Assessment Year : 2010-11 Shri C. Kamaraj Vs. The Deputy Commissioner Of Prop. Rajashree Mines & Income Tax, Minerals & Rajashree Circle – Iv, Transports, No.44, Williams Road, Nataraja Medicals Upstairs, Cantonment, Trichy – 620 001 V. Kaikatti, Thellur Post, Ariyalur – 621 707 [Pan Ajwpk 6009L ] (अपीलाथ"/Appellant) (""यथ"/Respondent) Department By : Mr. Pavitran Kumar,Jcit Assessee By : Mr. A.S. Sriraman, Advocate सुनवाई क" तार"ख/Date Of Hearing : 18.09.2019 घोषणा क" तार"ख /Date Of Pronouncement : 13.11.2019

For Appellant: Mr. A.S. Sriraman, AdvocateFor Respondent: Mr. Pavitran Kumar,JCIT
Section 194Section 37Section 40Section 40A(3)

DCIT, Trichy vs. C.Kamaraj, Ariyalur

In the result, the Revenue’s appeal is partly allowed for statistical purposes and the assessee’s appeal is dismissed

ITA 1867/CHNY/2014[2010-11]Status: DisposedITAT Chennai13 Nov 2019AY 2010-11

Bench: Shri George Mathan & Shri S.Jayaramanआयकर अपील सं./I.T.A.No.1867/Chny/2014 "नधा"रण वष" /Assessment Year : 2010-11 The Deputy Commissioner Of Vs. Shri C. Kamaraj Income Tax, Circle – Iv, Prop. Rajashree Mines & No.44, Williams Road, Minerals & Rajashree Cantonment, Trichy – 620 001 Transports, Nataraja Medicals Upstairs, V. Kaikatti, Thellur Post, Ariyalur – 621 707. [Pan Ajwpk 6009L ] (अपीलाथ"/Appellant) (""यथ"/Respondent) आयकर अपील सं./I.T.A.No.2989/Chny/2014 "नधा"रण वष" /Assessment Year : 2010-11 Shri C. Kamaraj Vs. The Deputy Commissioner Of Prop. Rajashree Mines & Income Tax, Minerals & Rajashree Circle – Iv, Transports, No.44, Williams Road, Nataraja Medicals Upstairs, Cantonment, Trichy – 620 001 V. Kaikatti, Thellur Post, Ariyalur – 621 707 [Pan Ajwpk 6009L ] (अपीलाथ"/Appellant) (""यथ"/Respondent) Department By : Mr. Pavitran Kumar,Jcit Assessee By : Mr. A.S. Sriraman, Advocate सुनवाई क" तार"ख/Date Of Hearing : 18.09.2019 घोषणा क" तार"ख /Date Of Pronouncement : 13.11.2019

For Appellant: Mr. A.S. Sriraman, AdvocateFor Respondent: Mr. Pavitran Kumar,JCIT
Section 194Section 37Section 40Section 40A(3)

Assistant Commissioner of Income Tax 16 (1), Mumbai vs. United Home Entertainment Private Limited, Mumbai

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

ITA 4321/MUM/2018[2014-15]Status: DisposedITAT Mumbai06 Nov 2019AY 2014-15

Bench: Shri Rajesh Kumar (Am) & Shri Ram Lal Negi (Jm) Assessment Year: 2014-2015 The Acit-16(1), M/S United Home Entertainment Room No. 439, Aayakar Bhavan, Pvt. Ltd., M.K. Marg, 4Th Floor, Peninsula Tower 1, Mumbai - 20 Vs. Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400013 Pan: Aaacu6668D (Appellant) (Respondent) Assessment Year: 2014-2015 M/S United Home Entertainment The Asst.Cit-16(1), Pvt. Ltd., Aaykar Bhavan, 3Rd Floor, Bldg. No. 14, Solitaire, Mumbai - 400020 Corporate Park, Vs. Guru Hargovindji Marg, Chakala, Andheri (E), Mumbai - 400093 Pan: Aaacu6668D (Appellant) (Respondent) Revenue By : Shri Rajeev Gubgotra (Dr) Assessee By : Shri Naresh Kumar/Jimit Kothari (Ars) Date Of Hearing: 08/08/2019 Date Of Pronouncement: 06/11/2019 O R D E R Per Ram Lal Negi, Jm These Are The Cross Appeals Filed By The Revenue & The Assessee Respectively, Against The Order Dated 12.04.2018 Passed By The Ld. Commissioner Of Income Tax (Appeals)-4, Mumbai (For Short ‘The Cit (A)’), Pertaining To The Assessment Year 2014-15, Whereby The Ld. Cit (A) Has Partly Assessment Year: 2014-15

For Appellant: Shri Naresh Kumar/Jimit Kothari (ARs)For Respondent: Shri Rajeev Gubgotra (DR)
Section 115JSection 143Section 37Section 40

United Home Entertainment Private Limited, Mumbai vs. Assistant Commissioner of Income Tax 16 (1), Mumbai

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

ITA 4287/MUM/2018[2014-15]Status: DisposedITAT Mumbai06 Nov 2019AY 2014-15

Bench: Shri Rajesh Kumar (Am) & Shri Ram Lal Negi (Jm) Assessment Year: 2014-2015 The Acit-16(1), M/S United Home Entertainment Room No. 439, Aayakar Bhavan, Pvt. Ltd., M.K. Marg, 4Th Floor, Peninsula Tower 1, Mumbai - 20 Vs. Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400013 Pan: Aaacu6668D (Appellant) (Respondent) Assessment Year: 2014-2015 M/S United Home Entertainment The Asst.Cit-16(1), Pvt. Ltd., Aaykar Bhavan, 3Rd Floor, Bldg. No. 14, Solitaire, Mumbai - 400020 Corporate Park, Vs. Guru Hargovindji Marg, Chakala, Andheri (E), Mumbai - 400093 Pan: Aaacu6668D (Appellant) (Respondent) Revenue By : Shri Rajeev Gubgotra (Dr) Assessee By : Shri Naresh Kumar/Jimit Kothari (Ars) Date Of Hearing: 08/08/2019 Date Of Pronouncement: 06/11/2019 O R D E R Per Ram Lal Negi, Jm These Are The Cross Appeals Filed By The Revenue & The Assessee Respectively, Against The Order Dated 12.04.2018 Passed By The Ld. Commissioner Of Income Tax (Appeals)-4, Mumbai (For Short ‘The Cit (A)’), Pertaining To The Assessment Year 2014-15, Whereby The Ld. Cit (A) Has Partly Assessment Year: 2014-15

For Appellant: Shri Naresh Kumar/Jimit Kothari (ARs)For Respondent: Shri Rajeev Gubgotra (DR)
Section 115JSection 143Section 37Section 40