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

Shri. Rafeeq Ismailsab Bairakdar, Mudhol vs. Income Tax Officer, Ward-1, Tps, Bagalkote

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

ITA 612/BANG/2024[2018-19]Status: DisposedITAT Bangalore08 Jul 2024AY 2018-19

Bench: Shri Chandra Poojari & Shri Keshav Dubeyrafeeq Ismailsab Bairakdar The Income Tax Officer Cts Yadawad Cross Ward 1 & Tps Lokapur Mudhol Vs. Aayakar Bhavan Mudhol 587313 Sector No. 24, Navanagar Pan – Ayspb5817A Bagalkot 587102 (Appellant) (Respondent) Assessee By: Shri Saidappa B. Gadadi, Ca Revenue By: Shri Guru Kumar S., Addl Cit-Dr Date Of Hearing: 28.05.2024 Date Of Pronouncement: 08.06.2024 O R D E R Per: Keshav Dubey, J.M. This Appeal At The Instance Of The Assessee Is Directed Against Din & Order No. Itba/Nfac/S/250/2023-24/1060531591(1) Of The National Faceless Appeal Centre, Delhi (Cit(A)) Dated 06.02.2024 Under Section 250 Of The Income Tax Act, 1961 (The Act) For Assessment Year (Ay) 2018-19. 2. The Assessee Has Raised The Following Grounds Of Appeal: - “1. The Hon'Ble Cit (Appeals) Being A Quasi-Judicial Authority Has Failed Verify The Loan Taken From Shri Aslam I Bairkadar As In The Appellate Order The Learned Cit(A) Has Reiterated The Name Of Appellant Only It Shows That Order Has Been Passed In Hurry Burry Manner Without Going Into Detailed Verification & Simply Stated Assessee Has Submitted Only Icici Bank Account. 2. The Hon'Ble Cit(Appeals) Has Erred In Not Giving Reasonable Opportunity Of Being Heard While Confirming The Additions As Every Time The Learned Cit(A) Has Asked "In Support Of Your

For Appellant: Shri Saidappa B. Gadadi, CAFor Respondent: Shri Guru Kumar S., Addl CIT-DR
Section 133(6)Section 250Section 37Section 44ASection 68

Hbc Lifesciences Private Limited, Gandhinagar vs. The Pr. CIT-3, Ahmedabad

In the result, appeal preferred by the assessee is allowed

ITA 328/AHD/2023[2018-19]Status: DisposedITAT Ahmedabad05 Jul 2024AY 2018-19

Bench: Ms. Suchitra Raghunath Kamble, Judical Member & Shri Narendra Prasad Sinhaआयकर अपील सं./I.T.A. No. 328/Ahd/2023 (िनधा"रण वष" िनधा"रण वष" िनधा"रण वष" / Assessment Year : 2018-19) िनधा"रण वष" Hbc Lifesciences Private Principal Commissioner बनाम बनाम/ बनाम बनाम Limited Of Income Tax-3 Vs. B-218, Mayur House, Ahmedabad G.I.D.C., Electronic Estate Sector-25, Gandhinagar, Gujarat, 382016 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aacch1407M (Appellant) .. (Respondent) Shri S. N. Soparkar, Sr. Advocate & अपीलाथ" ओर से /Appellant By : Shri Parin Shah, A.R. ""यथ" क" ओर से/Respondent By : Dr. Darsi Suman Ratnam, Cit. Dr 20/06/2024 Date Of Hearing Date Of Pronouncement 05/07/2024 O R D E R Per Shri Narendra Prasad Sinha, Am: This Appeal Is Filed By The Assessee Against The Order Of The Principal Commissioner Of Income Tax-3, Ahmedabad, (In Short The ‘Pcit’) Dated 25.03.2023 In Exercise Of The Revisionary Powers Under Section 263 Of The Income-Tax Act, 1961 [Hereinafter Referred To As “The Act” In Short], For The Assessment Year 2018-19. 2. The Brief Facts Of The Case Are That The Return Of Income For A.Y. 2018-19 Was Filed By The Assessee On 30.10.2018 Declaring

For Appellant: Shri Parin Shah, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT. DR
Section 143(3)Section 263Section 37Section 37(1)

Yogesh Patel, Usa vs. DCIT Circle Int Taxation 2(2)(2), New Delhi

In the result, the appeal filed by the assessee is allowed for statistical purposes with consequences to follow as directed above

ITA 2065/DEL/2023[2020-21]Status: DisposedITAT Delhi05 Jul 2024AY 2020-21

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2020-21 Yogesh Patel, Vs Dcit, 37319, Fowler Street New Ark Circle Int. Taxation 2(2)(2), California, New Delhi. Usa 94560. Pan: Arppp4747H (Appellant) (Respondent) Assessee By : Shri Bhupendra Shah, Ca Revenue By : Shri Vizay B. Vasanta, Cit-Dr Date Of Hearing : 23.04.2024 Date Of Pronouncement : 05.07.2024 Order Per Anubhav Sharma, Jm: This Appeal Is Preferred By The Assessee Against The Final Assessment Order Dated 23.06.2023 Passed U/S 143(3) R.W.S. 144C(13) Of The Income Tax Act, 1961 (Hereinafter Referred As ‘The Act’), By The Dcit, Circle International Taxation 2(2)(2), New Delhi (Hereinafter Referred To As The Ld. Ao), For Assessment Year 2020-21. 2. The Applicant Is Non-Resident Indian Settled In Usa & Is Us Tax Resident. During The Previous Year Relevant To The Assessment Year Under Reference, The Applicant Sold Ancestral Land Bearing S No14 Hissa, No 7 Pt, Village Goregaon, Tal Borivli, Mumbai Suburban Dist On December 11, 2019 & Disclosed Long Term Capital Gains Computed As Under:- Amt In Rs Sale Consideration - 18,56,87,500 Less: Deduction U/S 48 - 13,56,87,500 Net Sale Consideration (I) 5,00,00,000 Acquisition Cost Fair Market Value On 01-04-2001 Rs 10,400/- X 3647.80 Sq M 3,79,37,120 Less: 60% Reduction In Fmv Due To Encroachment 2,27,62,272 1,51,74,848 Indexed Cost 1,51,74,848 X [289/100] 4,38,55,311 Cost Of Acquisition (Ii) 4,38,55,311 Long Term Capital Gains: (I) - (Ii) 61,44,689

For Appellant: Shri Bhupendra Shah, CAFor Respondent: Shri Vizay B. Vasanta, CIT-DR
Section 143(3)Section 48