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

Infres Methodex Private Limited, Delhi vs. Assistant Commissioner of Income Tax, Circle 12(1), Delhi

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

ITA 449/DEL/2025[2017-18]Status: DisposedITAT Delhi19 Nov 2025AY 2017-18

Bench: Shri Yogesh Kumar U.S & Shri Manish Agarwal[Assessment Year : 2017-18] Infres Methodex Pvt. Ltd. Vs Acit Block-B-1, Plot No.D-7, Circle-12(1) Mohan Co-Operative Delhi Industrial Estate, Mathura Road, New Delhi-110044 Pan-Aabci1964R Appellant Respondent Assessee By Shri Rahul Kant, Ca Revenue By Shri Rajesh Kumar Dhanesta, Sr.Dr Date Of Hearing 19.11.2025 Date Of Pronouncement 19.11.2025 Order Per Manish Agarwal, Am : The Present Appeal Is Filed By The Assessee Against The Order Dated 28.11.2024 By Ld. Commissioner Of Income Tax (A), National Faceless Appeal Centre (“Nfac”), Delhi [“Ld. Cit(A)”] In Appeal No. Cit(A), Delhi-4/10728/2019-20 Passed U/S 250 Of The Income Tax Act, 1961 [“The Act”] Arising Out Of The Assessment Order Dated 23.12.2019 Passed U/S 143(3) Of The Act Pertaining To Assessment Year 2017-18. 2. Brief Facts Of The Case Are That Assessee Filed Its Return Of Income On 29.10.2017, Declaring Total Income At Inr 22,86,60,530/-. The Assessee Is Engaged In The Business Of Manufacturing & Marketing Of Currency Counting Machines & Verifiers & Paper Shredders Etc. The Case Of The Assessee Was Selected For Scrutiny & The Ao Has Made The Disallowance Of Inr 22,91,385/- U/S 14A Of The Act. Besides This, The Disallowance Of Inr 14,82,901/- Is Made Out Of Payment Made To Clubs & Inr 31,57,057/- Were Disallowed Out Of Travelling & Conveyance Expenses. The Ao Also Made Addition Of Inr 2,02,76,999/- On Account Of Custom Duty Paid By Holding The Same As Unexplained Expenditure.

Section 143(3)Section 14ASection 250Section 37Section 69C

Sahara India Tourism Development Corpn. Ltd., Kolkata vs. ACIT, Circle - 8(2), Kolkata

ITA 357/KOL/2018[2014-15]Status: DisposedITAT Kolkata17 Nov 2025AY 2014-15

Bench: Shri George Mathan & Shri Sanjay Awasthiआयकर अपील सं/Ita No.357/Kol/2018 (निर्धारण वर्ा / Assessment Year : 2014-2015) Sahara India Tourism Vs Acit, Circle-8(2), Kolkata Development Corporation Ltd, Sahara India Sadan, 2A, Shakespeare Sarani, Kolkata Pan No. :Aaics 0060 P (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee By : None रधजस्व की ओर से /Revenue By : Shri Abhijit Adhikary, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 17/11/2025 घोषणा की तारीख/Date Of Pronouncement : 17/11/2025 आदेश / O R D E R Per George Mathan, Jm : This Is An Appeal Filed By The Assessee Against The Order Of The Ld. Cit(A)-3, Kolkata, Dated 29.12.2017 For The Assessment Year 2014-2015. 2. None Represented On Behalf Of The Assessee. Shri Abhijit Adhikary, Sr. Dr Appeared On Behalf Of The Revenue. 3. It Was Submitted By The Ld. Sr. Dr That The Appeal Has Been Filed By The Assessee & As Nobody Appeared On Behalf Of The Assessee, The Order Of The Ld. Cit(A) Is Liable To Be Confirmed. It Was The Further Submission That In Para 4 Of The Assessment Order, The Ld. Assessing Officer Has Disallowed The Expenses & The Same Have Also Been Confirmed By The Ld. Cit(A). In This Case, It Must Be Mentioned That This Appeal Is Of 2018 & Appeal Had Been Heard On Multiple Occasions & Had Been Released For Various Reasons. As Of Today & For The Last Past Few Postings/Hearings, None Represented On Behalf Of The Assessee. Therefore, Keeping This Fact Pending

For Appellant: NoneFor Respondent: Shri Abhijit Adhikary, Sr. DR