Main Objects of Construction Company
Main Objects of Construction Company / Contractor

What are the conditions to be satisfied for the allowability of expenditure under Section 37 of the Income Tax Act 1961?

Such expenditure should not be covered under the specific section i.e. sections 30 to 36.
( deductions for computing profits & gains of business & profession )
Expenditure should not be of capital nature.
Expenditure should be incurred during the previous year
Expenditure should not be of personal nature
Expenditure should have been incurred wholly or exclusively for the purpose of business or profession the business must be commenced.
Which expenditure is allowed to be deducted under section 37?

List of expenditure allowable as a deduction under 37(1) from business income

 Litigation expenses in protecting the trade or business.
Expenditure incurred for preservation or protection of asset or for saving such asset from destruction.
Litigation expenses incurred in order to defend or maintain an existing title to the business asset.
Legal charges for obtaining loan from financial institution.
Consultancy charges paid for maintenance of software.
Commission paid to selling agents.
 

Which expenditure is not allowed to be deducted under section 37?

List of expenditure not allowable as deduction under 37(1) from business income

Litigation expenses for registration of shares
Fees paid for increase of authorized capital
Penalty and damages paid in connection with infringement of law
Payments made for acquisition of goodwill
Expenditure on shifting of registered office.
Drafted by

Bonnita & Yogita Sirvi

INCOME TAX TREATMENT OF GRATUITY
Gratuity benefit calculation, Eligible for gratuity, Tax on Gratuity