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General Deductions – Section 37

U.C Date : 25 Feb 2015

Any expenditure not covered by section 30 to 36 is deductible under section 37, subject to the following conditions

  • It should not be a capital expenditure
  • It should not be personal expenses of the assesse
  • It should be incurred wholly and exclusively for the purpose of business or profession
  • It should not be incurred for a purpose which is an offence or which is prohibited by law

Expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party is not allowed as deduction. [Section 37(2B)]

Any expenditure incurred by an assessee on the activities relating to corporate
social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. [Explanation 1 to Sec 37(1) ]

Bare Act for Sec 37

Bare Act for Sec 37

(1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”.

Explanation 1.—For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.

Explanation 2.—For the removal of doubts, it is hereby declared that for the purposes of
sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate
social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession.

(2) (B) Notwithstanding anything contained in sub-section (1), no allowance shall be made in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party.

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