Topic
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 interest-free advances to wholly owned subsidiaries are justified under commercial expediency, rejecting Revenue's notional interest addition. The tribunal also deleted ad-hoc disallowances, emphasizing documentary evidence over presumptive additions, reinforcing tax treatment of intra-group transactions.
ITAT Delhi deleted a Rs. 10.15 crore deemed interest addition on interest-free advances acquired through a slump sale, holding that the Revenue’s long-standing acceptance of such advances in prior years precludes retrospective disallowance. This reinforces commercial expediency and consistency as binding limits on tax authorities, protecting businesses that structure group financing through asset acquisitions.
ITAT Mumbai overturns Rs.6.75 crore disallowance, ruling that professional fees paid to facilitate payments to OFAC-sanctioned entities qualify as deductible business expenditure under Section 37(1) IT Act. The tribunal emphasizes that commercial expediency, not revenue assumptions, determines allowability of such expenses.
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.