Business expenditure on settled occupation charges was allowed under section 37(1), with the section 43B objection rejected.

Occupation charges and related interest, settled in the relevant assessment year, were treated as business expenditure allowable under section 37(1) of the Income-tax Act, 1961. The record showed that the demand was finally resolved in that year and the interest component was not ultimately pressed by the creditor, so the claim was regarded as incurred for business purposes. The objection based on section 43B did not dislodge the finding that the deduction was otherwise allowable. The disallowance was therefore deleted and the assessee's claim sustained.

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Issues: Whether the disallowance of occupation charges and related interest was rightly deleted and the deduction was allowable under section 37(1) of the Income-tax Act, 1961.

Analysis: The liability towards occupation charges, together with the associated interest, was settled in the relevant assessment year. The record showed that the demand was finally resolved in that year, and the interest component was not ultimately pressed by the creditor. On these facts, the expenditure was treated as incurred for business purposes and not as a disallowable item. The objection based on section 43B was not accepted as a ground to disturb the finding that the claim was allowable under section 37(1).

Conclusion: The deletion of the disallowance was upheld and the claim was held allowable under section 37(1) of the Income-tax Act, 1961, in favour of the assessee.

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