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

Lewek Altair Shipping Private Limited, Kakinada vs. Deputy Commissioner of Income-Tax, Circle-1, Kakinada

In the result, the appeal of the assessee is dismissed

ITA 147/VIZ/2021[2013-14]Status: DisposedITAT Visakhapatnam23 Jan 2023AY 2013-14

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपील सं./I.T.A.No.146/Viz/2021 & 147/Viz/2021 (ननधधारण वर्ा / Assessment Year : 2012-13 & 2013-14) Lewek Altair Shipping Private Limited Vs. Dy.Commissioner Of Income Tax D.No.3-16-193/1, Sri Vidya Colony Circle-1 Suryarao Peta, Kakinada Kakinada [Pan : Aabcl9766C] अपीलधथी की ओर से/ Appellant By : Shri Jitendra Singh, Ar प्रत्यधथी की ओर से / Respondent By : Shri Mn Murthy Naik, Cit(Dr) सुनवधई की तधरीख / Date Of Hearing : 21.11.2022 घोर्णध की तधरीख/Date Of Pronouncement : 23.01.2023 O R D E R Per Shri S.Balakrishnan: These Appeals Are Filed By The Assessee Against The Orders Of The Ao/Tpo/Dispute Resolution Panel-1, Bengaluru(Drp In Short) U/S 143(3) R.W.S 144C Of The Income Tax Act For The Assessment Years 2012-13 & 2013-14 Respectively. Since The Facts Are Identical, Both The Appeals Are Clubbed, Heard Together & Disposed Off In A Common Order For The Sake Of Convenience & The Facts Are Extracted From I.T.A.No.146/Viz/2021 For The A.Y.2012-13. 2 Ita No.146/Viz/2021 & 147/Viz/2021, A.Y.2012-13 & 2013-14 Lewek Altair Shipping Private Ltd., Kakinada

For Appellant: Shri Jitendra Singh, ARFor Respondent: Shri MN Murthy Naik, CIT(DR)
Section 143(3)Section 92C

Lewek Altair Shipping Private Limited, Kakinada vs. Deputy Commssioner of Income Tax, Circle-1, Kakinada

In the result, the appeal of the assessee is dismissed

ITA 146/VIZ/2021[2012-13]Status: DisposedITAT Visakhapatnam23 Jan 2023AY 2012-13

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपील सं./I.T.A.No.146/Viz/2021 & 147/Viz/2021 (ननधधारण वर्ा / Assessment Year : 2012-13 & 2013-14) Lewek Altair Shipping Private Limited Vs. Dy.Commissioner Of Income Tax D.No.3-16-193/1, Sri Vidya Colony Circle-1 Suryarao Peta, Kakinada Kakinada [Pan : Aabcl9766C] अपीलधथी की ओर से/ Appellant By : Shri Jitendra Singh, Ar प्रत्यधथी की ओर से / Respondent By : Shri Mn Murthy Naik, Cit(Dr) सुनवधई की तधरीख / Date Of Hearing : 21.11.2022 घोर्णध की तधरीख/Date Of Pronouncement : 23.01.2023 O R D E R Per Shri S.Balakrishnan: These Appeals Are Filed By The Assessee Against The Orders Of The Ao/Tpo/Dispute Resolution Panel-1, Bengaluru(Drp In Short) U/S 143(3) R.W.S 144C Of The Income Tax Act For The Assessment Years 2012-13 & 2013-14 Respectively. Since The Facts Are Identical, Both The Appeals Are Clubbed, Heard Together & Disposed Off In A Common Order For The Sake Of Convenience & The Facts Are Extracted From I.T.A.No.146/Viz/2021 For The A.Y.2012-13. 2 Ita No.146/Viz/2021 & 147/Viz/2021, A.Y.2012-13 & 2013-14 Lewek Altair Shipping Private Ltd., Kakinada

For Appellant: Shri Jitendra Singh, ARFor Respondent: Shri MN Murthy Naik, CIT(DR)
Section 143(3)Section 92C

Hewlett Packard (India) Software Operation Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Circle-3(1)(1), Bangalore

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

ITTPA 961/BANG/2022[2018-19]Status: DisposedITAT Bangalore18 Jan 2023AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am It(Tp)A No.961/Bang/2022 : Asst.Year 2018-2019 M/S.Hewlett Packard (India) The Deputy Commissioner Of Software Operation Pvt.Ltd. Income-Tax, Circle 3(1)(1) V. Survey No.192, Whitefield Road Bangalore. Mahadevapura Post Bengaluru – 560 048. Pan : Aaach7164B. (Appellant) (Respondent) Appellant By : Sri.Padam Chand Khincha, Ca Respondent By : Ms.Neera Malhotra, Cit-Dr Date Of Pronouncement : 18.01.2023 Date Of Hearing : 17.01.2023 O R D E R Per George George K, Jm : This Appeal At The Instance Of The Assessee Is Directed Against Final Assessment Order Dated 30.07.2022 Passed U/S 143(3) R.W.S. 144C(13) Of The I.T.Act. The Relevant Assessment Year Is 2018-2019. 2. The Brief Facts Of The Case Are As Follows: The Assessee Is A Company Engaged In Providing Software Development Support Service To Its Group Entities. For The Assessment Year 2018-2019, The Return Of Income Was Filed On 30.11.2018 Declaring Total Income At Rs.488,64,37,720. The Assessment Was Selected For Scrutiny & Notice U/S 143(2) Of The I.T.Act Was Issued On 23.09.2019. During The Course Of Scrutiny Assessment, The Case Was Referred To The Transfer

For Appellant: Sri.Padam Chand Khincha, CAFor Respondent: Ms.Neera Malhotra, CIT-DR
Section 143(2)Section 143(3)Section 37Section 37(1)Section 92C

Essilor India Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

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

ITTPA 888/BANG/2022[2018-19]Status: DisposedITAT Bangalore12 Jan 2023AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am It(Tp)A No.888/Bang/2022 : Asst.Year 2018-2010 M/S.Essilor India Private Limited The Deputy Commissioner Of 10Th Floor, Prestige Trade Tower Income-Tax, Circle 2(1)(1) V. Bangalore. 46, Palace Road, High Grounds Sampangi Rama Nagar Bengaluru – 560 001. Pan : Aaace4623J. (Appellant) (Respondent) Appellant By : Sri.Chavali Narayan, Ca Respondent By : Ms.Neera Malhotra, Cit-Dr Date Of Pronouncement : 12.01.2023 Date Of Hearing : 11.01.2023 O R D E R Per George George K, Jm : This Appeal At The Instance Of The Assessee Is Directed Against Final Assessment Order Dated 28.07.2022 Passed U/S 143(3) R.W.S. 144C(13) Of The I.T.Act. The Relevant Assessment Year Is 2018-2019. 2. The Brief Facts Of The Case Are As Follows: The Assessee Is Engaged In The Trading Of Ophthalmic Lenses, Optical Meters & Processing Of Semi-Finished Ophthalmic Lenses. For The Assessment Year 2017-2018, The Return Of Income Was Filed On 30.11.2018 Declaring Loss Of Rs.50,15,147. The Assessment Was Selected For Scrutiny & Notice U/S 143(2) Of The I.T.Act Was Issued On 22.09.2019. During The Course Of Assessment Proceedings, The Assessing

For Appellant: Sri.Chavali Narayan, CAFor Respondent: Ms.Neera Malhotra, CIT-DR
Section 143(2)Section 143(3)Section 14ASection 32(1)(iia)Section 92C