Section 37 of the Income Tax Act, 1967 is residuary. All expenses in the nature of Business and Profession not claimed under sections 30 to 36 can be claimed under section 37.
Conditions for availing deduction under section 37
· The expenditure should not be covered by any specific section from 30 to 36 of the Act
· It should not be Capital or Personal Expenditure.
· It should not be Illegal in nature
· It should be incurred wholly and purposefully for the business and Profession.
· It should have been paid or incurred in the previous year.
Expenses not allowed under section 37:-
· Expenses that are Offensive and Illegal in nature prohibited by law shall not be considered as expenses related to Business and Profession and no deduction is not allowed for such expenditure.
· Expenses incurred on corporate social responsibility as per section 135 of the Income Tax Act, 1961 shall not be considered as expenses related to Business and Profession, and hence no deduction shall be allowed.
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