DEPUTY COMMNR., INCOME TAX, BARODA vs GUJARAT ALKALIES & CHEMICALS LTD.

The Supreme Court held that 'commitment charges' can be deducted under Section 37 of the Income-tax Act, 1961, as established in prior cases such as Addl. Commr. of Income-tax v. Akkamamba Textiles Ltd. and Commr. of Income-tax v. Sivakami Mills Ltd. The Court clarified that these charges are not deductible under Section 36(1)(iii) but are considered revenue expenditure. Additionally, finance charges paid to COFACE were equated with interest and deemed deductible, leading to the dismissal of the Department's civil appeals.