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Section 37(1) general deduction allows expenditure that is:
AReasonable per AO (per relevant Section) (per relevant Section)
BNot capital, not personal, wholly and exclusively for business
CApproved by Board
DBelow Rs. 5 lakhs
Answer & Solution
Correct answer: B. Not capital, not personal, wholly and exclusively for business
1. Section 37(1) is residuary deduction for expenditure not covered by Sections 30-36 and not capital or personal.
2. Must be wholly and exclusively for business or profession.
3. Explanation 1 disallows expenditure for any offence or purpose prohibited by law.
_Source: ICAI BoS CA Final Paper 7, Ch 3 "Profits and Gains of Business or Profession"_
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