Aruna Mills Ltd. v. CIT

31 ITR 153High Court1957#3609 most cited

What is Aruna Mills Ltd. v. CIT authority for?

Interest payable under section 201(1A) of the Income-tax Act is not an allowable business expenditure under section 37(1). This is a well-settled position affirmed by multiple High Courts.

33

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2016 to 2026.

Also referred to as

Aruna Mills Ltd. v. CIT · section 201(1A) · section 37(1) · interest not deductible · business expenditure · Bombay High Court · non-deductible interest

Sections most often in play

Section 37(1)Section 143(3)Section 201(1A)Section 36(1)(viii)Section 90(3)Section 142(1)Section 144Section 14A

Issues it is cited on

section 41(2)section 215section 90(3)section 43(6)(c)section 256(1)section 36(1)(v)section 2(11)section 40(a)(ii)section 10(2)(xv)section 256approved gratuity fundsection 43(6)

Judgments citing Aruna Mills Ltd. v. CIT

Jt.CIT (OSD), Central Circle-18, New Delhi vs. Delhivery P.Ltd, New Delhi

In the result, ITA No.1734/Del/2023 is partly allowed and ITA

ITA 1734/DEL/2023[2015-16]Status: DisposedITAT Delhi16 Oct 2023AY 2015-16

Bench: Sh. N. K. Billaiya & Sh. C.N. Prasad

Section 263Section 37(1)

…siness expenditure. I find that interest u/s 201(1A)/206C(7) is not a business expenditure. In this regard, it is worthwhile to mention following judicial pronouncements. (SC)” - Bharat Commerce & Industries Ltd. vs. CIT (1988 -Aruna Mills Ltd. vs. CIT (1957) 31 ITR 153 (Bom) -CIT vs. Chennai Properties and Ors. (1999) 239 ITR 435 (Mad.) ) 230 ITR 733 26. In view of the facts narrated above, we find that the AO has failed to disallow above mentioned interest expenditure while passing the order u/s 143(3) and hence rendering the assessment erroneous and prejudicial to the interest of revenue. The order of the Id.…

Delhivery Pvt. Ltd., New Delhi vs. Pr, CIT-3, New Delhi

In the result, the appeal of the assessee is allowed

ITA 1036/DEL/2021[2015-16]Status: DisposedITAT Delhi16 Mar 2023AY 2015-16

Bench: Sh. C. N. Prasaddr. B. R. R. Kumarita No. 1036/Del/2021 : Asstt. Year : 2015-16 Delhivery Pvt. Ltd., Vs Pr. Cit-3, Plot No. 5, Sector-44, Central Revenue Building, Gurugram, Haryana-122002 New Delhi (Appellant) (Respondent) Pan No. Aapcs9575E Assessee By : Sh. K. M. Gupta, Adv. & Sh. Shruti Khimta, Ar Revenue By : Sh. M. Baranwal, Cit Dr Date Of Hearing: 05.01.2023 Date Of Pronouncement: 16.03.2023

For Appellant: Sh. K. M. Gupta, Adv. &For Respondent: Sh. M. Baranwal, CIT DR
Section 143(3)Section 14ASection 201Section 263Section 37Section 37(1)

…ture. I find that interest u/s 201(1A)/206C(7) is not a business expenditure. In this regard, it is worthwhile to mention following judicial pronouncements.  Bharat Commerce & Industries Ltd. vs. CIT (1988) 230 ITR 733 (SC)  Aruna Mills Ltd. vs. CIT (1957) 31 ITR 153 (Bom)  CIT vs. Chennai Properties and Ors. (1999) 239 ITR 435 (Mad.) 26. In view of the facts narrated above, we find that the AO has failed to disallow above mentioned interest expenditure while passing the order u/s 143(3) and hence rendering the assessment erroneous and prejudicial to the interest of revenue. The order of the ld. PCIT u/s 263…

M/S Bhopal Dugdh Sangh Sahakari My.Dairy Plant, Bhopal vs. DCIT -1 (1), Bhopal

In the result, the appeal of assessee is partly allowed for statistical purposes

ITA 128/IND/2020[2012-13]Status: DisposedITAT Indore28 Jun 2022AY 2012-13

Bench: Shri Mahavir Prasad & Shri B.M. Biyani

For Appellant: Shri Ashish Goyal & N.D. Patva, ARsFor Respondent: Shri Amit Soni, Sr. D.R
Section 143(3)

…el for the assessee.” (ii) Ferro Alloys Corporation Ltd. Vs. CIT(1992) 196 ITR 406 (Bombay High Court): The Hon’ble Court held thus: “3. The point stands concluded against the assessee by the consistent view of this court right from Aruna Mills Ltd. [1957] 31 ITR 153 to CIT v. Ghatkopar Estate and Finance Corporation A.Y. 2012-13 Page 14 of 15 (P) Ltd. [1989] 177 ITR 222 (Bom). The Delhi High Court in the case of Bharat Commerce Industries Ltd. v. CIT [1989] 180 ITR 37, have also taken the same view. Very fairly, Shri Bhide, learned counsel for the assessee, informs us that there is no decision which has take…

Subsea Pro Engineering Private Limited, Mumbai vs. ACIT Circle-16 (3), Mumbai

In the result, appeal is dismissed

ITA 5884/MUM/2019[2015-16]Status: DisposedITAT Mumbai31 Aug 2021AY 2015-16

Bench: Shri Saktijit Dey, Judcial Member & Shri S. Rifaur Rahmanassessment Year: 2015-16 Subsea Pro Engineering Private Assistant Commissioner Of Limited, Income Tax, 509 & 510, Techniplex Ii, Opp Circle 16 (3), Techniplex Complex, Jn. Veer Vs. Room No. 449, Aaykar Bhavan, Savarkar Flyover, Maharashi Karve Road, Goregaon (West), Churchgate- 400020 Mumbai - 400062 Pan: Aapcs6354R (Appellant) (Respondent) Assessee By : Shri Viswas Mehandale (Ar) Revenue By : Shri Vijay Kumar Menon (Dr) Date Of Hearing : 16/07/2021 Date Of Pronouncement: 31/08/2021

For Appellant: Shri Viswas Mehandale (AR)For Respondent: Shri Vijay Kumar Menon (DR)
Section 139Section 201Section 37Section 37(1)

…ility. Hence, in no way connected with preserving or promoting the business of the assessee. Thus, the Hon’ble Apex Court held that the interest paid would not be allowable as deduction under section 37(1) of the Act. In case of Aruna Mills Ltd. vs. CIT, 1957 31 ITR 153 relied upon by the departmental authorities, the Hon’ble jurisdictional High Court held that interest for default to pay advance tax cannot be allowed as deduction. In case of CIT vs. Chennai Properties & Investment Ltd. (supra), the Hon’ble Madras High Court while considering identical issue of deduction claimed for interest paid for delayed remi…

Muthoot Agri Development & Hospitalities Private Limited, Mumbai vs. DCIT 15(2)(2), Mumbai

In the result, the appeal of the assessee is hereby partly allowed

ITA 2237/MUM/2019[2014-15]Status: DisposedITAT Mumbai28 Oct 2020AY 2014-15
For Appellant: NoneFor Respondent: Shri O. P. Meena (Sr. AR)
Section 143(1)Section 143(2)

…aid claim as not allowable under section 37 and it is against the above basic undisputed background that the question has been referred. 3. The point stands concluded against the assessee by the consistent view of this court right from Aruna Mills Ltd. [1957] 31 ITR 153 to CIT v. Ghatkopar Estate and Finance Corporation (P) Ltd. [1989] 177 ITR 222 (Bom). The Delhi High Court in the case of Bharat Commerce Industries Ltd. v. CIT [1989] 180 ITR 37, have also taken the same view. Very fairly, Shri Bhide, learned counsel for the assessee, informs us that there is no decision which has taken a contrary view. 4. The re…

Vidyut Metallics P.Ltd, Mumbai vs. Assistant Commissioner of Income Tax Central Circle- 38(New Central Circle-6(3), Mumbai

The appeal stands partly allowed in terms of our above order

ITA 5243/MUM/2017[2010-11]Status: DisposedITAT Mumbai19 Mar 2019AY 2010-11

Bench: Hon’Ble Shri C.N. Prasad, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ I.T.A. No.5243/Mum/2017 (िनधा"रण वष" / Assessment Year: 2010-11) & आयकरअपील सं./ I.T.A. No.5244/Mum/2017 (िनधा"रण वष" / Assessment Year: 2011-12) M/S. Vidyut Metallics Pvt.Ltd. Acit-Cc 38 बनाम/ 4Th Floor, Malhotra House [New Central Circle-6(3) 19Th Floor, Air India Building Opp. Gpo, Fort Vs. Mumbai-400 001. Nariman Point, Mumbai-21. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aabcv-3305-R (अपीलाथ"/Appellant) (""थ" / Respondent) :

For Appellant: Shri Prateek Jha and Shri Dr. Prayag Jha- Ld. ARsFor Respondent: Shri Rajiv Gobgtra - Ld.DR
Section 143(3)Section 201(1)Section 40

…claim as not allowable under section 37 and it is against the above basic undisputed background that the question has been referred. The point stands concluded against the assessee by the consistent view of this court right from Aruna Mills Ltd. v. CIT [1957] 31 ITR 153 to CIT v. Ghatkopar Estate and Finance Corporation ( P) Ltd. [1989] 177 ITR 222 (Bom). The Delhi High Court in the case of Bharat Commerce Industries Ltd. v. CIT [1985] 153 ITR 275 and the Kerala High Court in the case of Federal Bank Ltd. v. CIT [1989] 180 ITR 37 , have also taken the same view. Very fairly, Shri Bhide, learned counsel for the as…

Allied Media Network P.Ltd, Mumbai vs. DCIT RG 7(1), Mumbai

In the result, the appeal is partly allowed

ITA 3545/MUM/2016[2011-12]Status: DisposedITAT Mumbai27 Jun 2018AY 2011-12

Bench: Shri C.N. Prasad () & Shri N.K. Pradhan () Assessment Year: 2011-12 Allied Media Network Pvt. Dcit, Range-7(1), Aayakar Ltd., P-2, Level 3, Percept Bhavan, M.K. Marg Vs. House, 22 Raghuvanshi Mumbai-400020 Estate, 11/12 Senapati Bapat Marg, Lower Parel, Mumbai-400013. Pan No. Aadcp9975H Appellant Respondent Assessee By : Mr. Pankaj Jain, Ar Revenue By : Ms. S. Padmaja, Cit(Dr) Date Of Hearing : 05/04/2018 Date Of Pronouncement: 27/06/2018

For Appellant: Mr. Pankaj Jain, ARFor Respondent: Ms. S. Padmaja, CIT(DR)
Section 143(3)Section 36(1)(iii)

…The ITO, the Commissioner in first appeal Allied Media Network Pvt. 8 and the Tribunal in second appeal, rejected the said claim as not allowable under section 37. On reference, the Hon’ble High Court, following the decision in Aruna Mills Ltd. v. CIT [1957] 31 ITR 153, CIT v. Ghatkopar Estate and Finance Corporation (P) Ltd. [1989] 177 ITR 222 (Bom), Bharat Commerce Industries Ltd. (supra) , Federal Bank Ltd. v. CIT [1989] 180 ITR 37 held that the claim for deduction of interest levied u/s 220(2), u/s 215 and u/s 201(1A) was rightly rejected as not allowable under section 37 of the Act. In Martin & Harris (P) L…

M/S Sheetu Educational Service Pvt Ltd., Indore vs. The DCIT 5(1), Indore

In the result, all the appeals of the assessee for assessment year 2005-06 to 2010-11 are partly allowed as per our

ITA 354/IND/2016[2010-11]Status: DisposedITAT Indore28 Feb 2017AY 2010-11

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 147Section 234BSection 27

…nditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged from the point of view of the business man and not of the revenue. The Hon'ble Bombay High Court's decision in the case of Aruna Mills (31 ITR 153) was also referred to wherein it was held as follows: "Now, we have had occasion to point out in several decisions that what the Income-tax purports to tax is business profits, and business profits are the true profits of a business as ascertained according to commercial principles. There may be an expenditure or there may be a loss which may not…

M/S Sheetu Educational Service Pvt Ltd., Indore vs. The DCIT 5(1), Indore

In the result, all the appeals of the assessee for assessment year 2005-06 to 2010-11 are partly allowed as per our

ITA 352/IND/2016[2008-09]Status: DisposedITAT Indore28 Feb 2017AY 2008-09

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 147Section 234BSection 27

…nditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged from the point of view of the business man and not of the revenue. The Hon'ble Bombay High Court's decision in the case of Aruna Mills (31 ITR 153) was also referred to wherein it was held as follows: "Now, we have had occasion to point out in several decisions that what the Income-tax purports to tax is business profits, and business profits are the true profits of a business as ascertained according to commercial principles. There may be an expenditure or there may be a loss which may not…

M/S. Sheetu Educational Services P. Ltd., Indore vs. The DCIT 5(1), Indore

In the result, all the appeals of the assessee for assessment year 2005-06 to 2010-11 are partly allowed as per our

ITA 26/IND/2015[2007-08]Status: DisposedITAT Indore28 Feb 2017AY 2007-08

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 147Section 234BSection 27

…nditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged from the point of view of the business man and not of the revenue. The Hon'ble Bombay High Court's decision in the case of Aruna Mills (31 ITR 153) was also referred to wherein it was held as follows: "Now, we have had occasion to point out in several decisions that what the Income-tax purports to tax is business profits, and business profits are the true profits of a business as ascertained according to commercial principles. There may be an expenditure or there may be a loss which may not…

M/S. Sheetu Educational Services P. Ltd., Indore vs. The DCIT 5(1), Indore

In the result, all the appeals of the assessee for assessment year 2005-06 to 2010-11 are partly allowed as per our

ITA 25/IND/2015[2006-07]Status: DisposedITAT Indore28 Feb 2017AY 2006-07

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 147Section 234BSection 27

…nditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged from the point of view of the business man and not of the revenue. The Hon'ble Bombay High Court's decision in the case of Aruna Mills (31 ITR 153) was also referred to wherein it was held as follows: "Now, we have had occasion to point out in several decisions that what the Income-tax purports to tax is business profits, and business profits are the true profits of a business as ascertained according to commercial principles. There may be an expenditure or there may be a loss which may not…

M/S. Sheetu Educational Services P Ltd., Indore vs. The DCIT 5(1) Range-5, Indore

In the result, all the appeals of the assessee for assessment year 2005-06 to 2010-11 are partly allowed as per our

ITA 24/IND/2015[2005-06]Status: DisposedITAT Indore28 Feb 2017AY 2005-06

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 147Section 234BSection 27

…nditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged from the point of view of the business man and not of the revenue. The Hon'ble Bombay High Court's decision in the case of Aruna Mills (31 ITR 153) was also referred to wherein it was held as follows: "Now, we have had occasion to point out in several decisions that what the Income-tax purports to tax is business profits, and business profits are the true profits of a business as ascertained according to commercial principles. There may be an expenditure or there may be a loss which may not…

Control Risks India Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is partly allowed for statistical purposes

ITA 979/DEL/2015[2010-11]Status: DisposedITAT Delhi27 Sept 2016AY 2010-11

Bench: Smt Diva Singh & Sh.Prashant Maharishi

Section 143(3)Section 144CSection 92C

…1 Taxman 185 / 224 ITR 627 (SC), it was held by the Hon'ble Supreme Court that interest that is paid by the taxpayer on any sum borrowed by him for payment of income -tax is not deductible from his net income. In the case of Aruna Mills Limited vs. CIT [1957] 31 ITR 153 (Bom), the Bombay High Court observed that it was difficult to understand how, when a business man commits default in discharging his statutory obligation, the consequences of that could constitute an expenditure exclusively incurred for the purposes of his business. The interest u/s 201(1A) has been levied holding the taxpayer to be in default an…