SECTION 37 GENERAL
Any expense that is laid out or expended solely for business or professional purposes (and is not of the kind described in sections 30 to 36, nor is it a personal expense of the assessee), shall be allowed as a deduction when determining the income chargeable under the head "Profits and Gains of Business or Profession."
Conditions for Allowance under Section 37(1):
Such expenses shouldn't fall under the relevant provisions, namely Sections 30 to 36.
Spending shouldn't be of the capital kind.
The cost ought to have been incurred in the prior year.
The cost shouldn't be private.
The expense ought to have been made entirely or only for the benefit of the trade or profession.
Examples of Expenses That May Be Deducted Under Section 37(1)
Payment to Employees:
Deductions are permitted for wages and benefits given to the assessee's employees. Salary paid to the firm owner, however, is an appropriation of profit and is not eligible for a deduction. It is also acceptable to pay compensation to employees who had their employment terminated for reasons of commercial expediency. Under specific restrictions and situations, a company may deduct the salary it pays its partners.
Payment of Penalty/Damages:
Because penalties are typically assessed for breaking the law, they are typically not deductible. However, sometimes a sum that is referred to as a penalty is just compensatory in nature. For instance, although they are referred to be penalties, damages, fines, or interest for late contract fulfilment are actually compensatory payments and can therefore be deducted. Penalties for breaking the law paid to customs authorities, sales-tax authorities, income-tax authorities, etc., are not permitted. The sales tax levy for late payment is partially compensatory and partially punitive; the compensatory portion is permitted and the penal portion is not.
Expense on Loan-Raising:
Expenses of all stripes incurred in connection with loan-raising for business-related reasons are deductible. Legal fees paid to secure loans from financial institutions, legal fees paid to draught various deeds, brokerage fees paid to raise loans, and stamp and registration fees are therefore all allowable deductions.
While Section 36(1)(iii) makes it clear that interest on money borrowed for business purposes may be deducted, other types of interest payments in relation to interest are not covered by that section. These payments may be permitted under Section 37 if they were made solely and exclusively for business purposes (1).
Some of them might include:
Interest on a delayed asset acquisition payment;
Interest on electricity bill payments that are late;
Interest in the cost of raw materials purchased;
Any sum paid "in lieu of interest" in settlement of a claim against a trade creditor.
 Indian Kanoon (Section 30 of Income Act Tax)- https://indiankanoon.org/doc/454306/  Indian Kanoon (Section 36 of Income Act Tax)- https://indiankanoon.org/doc/1427856/