#business expenditure

The ITAT Delhi ruled that disallowance of business expenditure under Section 37(1) is unlawful when the tax authority fails to verify a vendor at the correct address provided by the assessee and ignores supporting KYC, TDS, and payment records. This sets a critical precedent for taxpayers: documentary compliance must be evaluated on substance, not procedural missteps by revenue officials.

ITAT Jaipur holds that margin penalties levied by NCDEX for shortfalls in commodity trading are compensatory in nature and not prohibited under Section 37 of the Income Tax Act. The ruling deletes the 10% ad hoc disallowance under Section 36(1)(iii), setting a precedent for the tax treatment of such penalties in business expenditure claims.

ITAT Jodhpur rules that disallowance of business expenditures under Section 37(1) of the Income Tax Act must be backed by tangible evidence, not mere suspicion or perceived inadequacy of activity. The ruling reinforces compliance standards for tax assessments, impacting businesses and tax practitioners.

ITAT Delhi rules that disallowance under Section 40A(2)(b) cannot be sustained without concrete evidence of excess payment, even if detailed bills are absent. The ruling underscores that genuineness of business expenditure must be established before invoking tax disallowance, impacting corporate tax assessments involving related-party transactions.

Madras High Court rules that funds misappropriated by a related party (husband of a partner) cannot be deducted as business expenditure under Section 40A(2) of the Income Tax Act. The judgment underscores that such claims require strict documentary evidence and cannot be justified merely by internal allegations of misappropriation, reinforcing tax compliance rigor for related-party transactions.

Madras High Court holds that compensation for exchange rate losses qualifies as allowable business expenditure under Section 37 even if not expressly provided in contract.

ITAT Mumbai holds that interest on borrowings used to acquire controlling interest in a foreign subsidiary engaged in the same business is allowable under Section 36(1)(iii) as business expenditure.