#cost allocation

Madhya Pradesh High Court rules that police protection for a court-appointed commissioner during land demarcation constitutes a sovereign function, shifting financial burden from litigants to the State. The judgment reinforces that costs incidental to judicial proceedings cannot be imposed on private parties when state machinery is involved.

ITAT Mumbai rules that inter-company cost allocations under Section 37(1) of the Income Tax Act are deductible if backed by a contractual agreement and a rational allocation method. The ruling clarifies that group companies can claim such expenses without disallowance if they demonstrate a clear business nexus and avoid markup, offering relief to corporate taxpayers.