Birla Gwalior (P) Ltd. v. CIT

44 ITR 847High Court1962#7923 most cited

What is Birla Gwalior (P) Ltd. v. CIT authority for?

Income Tax authorities cannot disallow a portion of interest paid on borrowed capital if the borrowing transactions are not illusory or colourable and the capital is borrowed for business purposes. The determination of a reasonable interest rate lies with the assessee.

14

judgments rely on this decision, according to BharatTax’s citation analysis of 366,314 Indian tax judgments — from 2016 to 2025.

Also referred to as

Birla Gwalior (P) Ltd. v. CIT · section 36(1)(iii) · interest on borrowed capital · reasonableness of interest rate · commercial expediency · disallowance of interest

Sections most often in play

Section 36(1)(iii)Section 132Section 139Section 145(3)Section 147Section 250Section 36(1)(vii)Section 44AB

Issues it is cited on

section 40a(2)(a)section 40a(2)(b)section 40a(2)principal officersource of sourcecommercial expediencymercantile system of accountingsection 127childsection 40asearch assessmentunexplained expenditure

Judgments citing Birla Gwalior (P) Ltd. v. CIT

DCIT, Cen Cir 2(2), Chennai vs. Jayapriya Company, Chennai

In the result, both the appeals of the Revenue are dismissed and

ITA 1252/CHNY/2025[2022-23]Status: DisposedITAT Chennai12 Sept 2025AY 2022-23

Bench: Shri Aby T. Varkey & Shri Amitabh Shukla

For Appellant: Mr.G. Baskar, AdvocateFor Respondent: Mrs. Yamuna, CIT
Section 132Section 139Section 147Section 148Section 250

…on this loan ought not to be disallowed u/s 36(1)(iii) of the Act. In support, he relied on the following decisions:- ITA Nos.1251 & 1252/Chny/2025 & CO Nos.43 & 44/Chny/2025 (AYs 2021-22 & 2022-23) Jayapriya Company :: 46 :: − Birla Gwalior Pvt Ltd Vs CIT (44 ITR 847) (MP HC) − CIT Vs. Pudukottai Co. Pvt. Ltd. (84 ITR 788) (Mad HC) − Hindalco Industries Co. Vs. CIT (389 ITR 430) (All HC) − CIT Vs Williamson Magor & Co Ltd (232 taxman 533) (Cal HC) − CIT Vs Sahni Silk Mills (P) Ltd (253 ITR 294) (Del HC) 10.24 The undisputed facts, as noted above, are that, the assessee had incurred average cost of borrowing…

DCIT, CC2(2), Chennai vs. Jayapriya Company, Chennai

In the result, both the appeals of the Revenue are dismissed and

ITA 1251/CHNY/2025[2021-22]Status: DisposedITAT Chennai12 Sept 2025AY 2021-22

Bench: Shri Aby T. Varkey & Shri Amitabh Shukla

For Appellant: Mr.G. Baskar, AdvocateFor Respondent: Mrs. Yamuna, CIT
Section 132Section 139Section 147Section 148Section 250

…on this loan ought not to be disallowed u/s 36(1)(iii) of the Act. In support, he relied on the following decisions:- ITA Nos.1251 & 1252/Chny/2025 & CO Nos.43 & 44/Chny/2025 (AYs 2021-22 & 2022-23) Jayapriya Company :: 46 :: − Birla Gwalior Pvt Ltd Vs CIT (44 ITR 847) (MP HC) − CIT Vs. Pudukottai Co. Pvt. Ltd. (84 ITR 788) (Mad HC) − Hindalco Industries Co. Vs. CIT (389 ITR 430) (All HC) − CIT Vs Williamson Magor & Co Ltd (232 taxman 533) (Cal HC) − CIT Vs Sahni Silk Mills (P) Ltd (253 ITR 294) (Del HC) 10.24 The undisputed facts, as noted above, are that, the assessee had incurred average cost of borrowing…

M S Hostel, New Sama Savli Road vs. Deputy Commissioner of Income Tax, Circle 1(3), Vadodara, Aayakar Bhavan

In the result, appeal preferred by the assessee is allowed

ITA 614/AHD/2023[2015-16]Status: DisposedITAT Ahmedabad21 Mar 2024AY 2015-16

Bench: Smt. Annapurna Gupta & Ms. Madhumita Roy

For Respondent: Ms. Saumya Pandey Jain, Sr. DR
Section 143(3)Section 40A(2)(b)

…f the business, the Supreme Court laid down that the reasonableness of the expenditure has to be adjudged from the paint of view of the businessman and not of the Revenue. Hon'ble Madhya Pradesh High Court in the case of Birla Gwalior (P) Ltd. Vs. CIT- (1962) 44 ITR 847 has stated that, "it is for the assessee to judge as to what rate is reasonable. It is further stated that when the income tax authonties have found that the borrowing transactions are not illusory or colourable and the capital is borrowed by the assessee for purpose of business and the amount of interest is paid, they have no jurisdiction to dete…

ACIT Central-2, Indore vs. Sarthak Innovation (P) Ltd., Indore

ITA 230/IND/2021[2017-18]Status: DisposedITAT Indore30 Mar 2023AY 2017-18

Bench: Ms. Madhumita Roy & Shri Bhagirath Mal Biyani

For Appellant: 28.02.2023For Respondent: Shri P. K. Mishra, CIT.D.R
Section 127Section 142(1)Section 143(2)Section 143(3)Section 404(2)Section 40ASection 40A(2)Section 40A(2)(a)Section 40A(2)(b)

…businessman. 2.11 The appellant places reliance on the following judicialpronouncements which support the contention of the appellant company as under: a) Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of Birla Gwalior (P) Ltd. Vs. CIT-(1962) 44 ITR 847 has stated that "it is for the assessee to judge as to what rate is reasonable. It is further stated when the income tax authorities have found that the borrowing transactions are not illusory or colorable and the capital is borrowed by the assessee for purpose of business and the amount of interest is paid. They have no jurisdiction to determine…

ACIT Central-2, Indore vs. Sarthak Innovation (P) Ltd., Indore

ITA 229/IND/2021[2014-15]Status: DisposedITAT Indore30 Mar 2023AY 2014-15

Bench: Ms. Madhumita Roy & Shri Bhagirath Mal Biyani

For Appellant: 28.02.2023For Respondent: Shri P. K. Mishra, CIT.D.R
Section 127Section 142(1)Section 143(2)Section 143(3)Section 404(2)Section 40ASection 40A(2)Section 40A(2)(a)Section 40A(2)(b)

…businessman. 2.11 The appellant places reliance on the following judicialpronouncements which support the contention of the appellant company as under: a) Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of Birla Gwalior (P) Ltd. Vs. CIT-(1962) 44 ITR 847 has stated that "it is for the assessee to judge as to what rate is reasonable. It is further stated when the income tax authorities have found that the borrowing transactions are not illusory or colorable and the capital is borrowed by the assessee for purpose of business and the amount of interest is paid. They have no jurisdiction to determine…

DCIT Central-1, Indore vs. Sarthak Innovation (P) Ltd., Indore

ITA 228/IND/2021[2013-14]Status: DisposedITAT Indore30 Mar 2023AY 2013-14

Bench: Ms. Madhumita Roy & Shri Bhagirath Mal Biyani

For Appellant: 28.02.2023For Respondent: Shri P. K. Mishra, CIT.D.R
Section 127Section 142(1)Section 143(2)Section 143(3)Section 404(2)Section 40ASection 40A(2)Section 40A(2)(a)Section 40A(2)(b)

…businessman. 2.11 The appellant places reliance on the following judicialpronouncements which support the contention of the appellant company as under: a) Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of Birla Gwalior (P) Ltd. Vs. CIT-(1962) 44 ITR 847 has stated that "it is for the assessee to judge as to what rate is reasonable. It is further stated when the income tax authorities have found that the borrowing transactions are not illusory or colorable and the capital is borrowed by the assessee for purpose of business and the amount of interest is paid. They have no jurisdiction to determine…

Smt. Aabhadevi Agrawal, Burhanpur vs. ACIT Khandwa, Khandwa

Appeal are allowed

ITA 752/IND/2019[2009-10]Status: DisposedITAT Indore06 Mar 2020AY 2009-10

Bench: Shri Kul Bharatassessment Year: 2009-10

Section 143(3)

…that case, no disallowance can be made U/s 36(1)(iii) of the Income Tax Act. For this preposition we rely on the following direct decisions:- S. No. Name of Decision Citation 01. Ram Kishan Oil Mills V/s CIT 56 ITR 186 (MP) 02. Birla Gwalior P limited V/s CIT 44 ITR 847 (MP) 03. D & H Secheron Electrodes Limited 142 ITR 529 (MP) 04. Regal Theatre V/s CIT 225 ITR 205 ( Delhi) 05. Sarvodaya Kela Group V/s ITO 25 ITC 409 (Indore Bench) 1.7.2] That Hon'ble Bombay High Court in the case of CIT vs Reliance Utilities & Power Limited as reported in 313 ITR 340 has discussed the similar issue in detail and held that:- 10…

Triumph Hospitals P.Ltd, Mumbai vs. ITO 7(3)(2), Mumbai

The appeal of the assessee is dismissed

ITA 5735/MUM/2015[2010-11]Status: DisposedITAT Mumbai17 May 2018AY 2010-11

Bench: Shri Joginder Singh & Shri Manoj Kumar Aggarwalassessment Year: 2010-11 Triumph Hospitals Pvt. Ltd. Acit, 801 & 802, Raheja Central Circle-29, बनाम/ Empress, Veer Savarkar Aayakar Bhavan, Vs. Marg, Prabhadevi, M. K. Road, Mumbai-400025 Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No. Aabct4993K

Section 28Section 3Section 36(1)(iii)Section 9

…(2008) 167 taxman 206 (SC), CIT vs Monnet Industries ltd. (2012) 210 taxman 264 (SC), Vardhman Polytex Ltd. vs CIT 210 taxman 261 (SC), CIT vs Anand Technology Resources Park P. Ltd. (2011) 202 taxman 654. Hon’ble M.P. High Court in Birla Gwalior Pvt. Ltd. 44 ITR 847 (M.P.) holding that it is not necessary to show for the purposes of deduction under clause (iii) that the money borrowed was utilized for a particular branch of assessee’s business. Identical ratio was laid down by Hon’ble jurisdictional High Court in CIT vs Bombay Samachar Ltd 74 ITR 723 (Bom.) and Amma Bai Hajee Issa vs CIT 51 ITR 835 (Mad…

M/S. Chhaganlal Kishanlal & Co., Burhanpur vs. The ACIT, Khandwa

In the result, the appeal of the assessee stands allowed

ITA 646/IND/2015[2010-11]Status: DisposedITAT Indore28 Feb 2017AY 2010-11

Bench: Shri C.M. Garg & Shri O.P. Meena

…Co. vs. ACIT-Khandwa/ I.T.A. No.646/Ind/2015/A.Y.:10-11 Page 7 of 10 1.3.5. The Ld. A.R. further cited following judicial pronouncements in support of his contention as follows: Ram Kishan Oil Mills vs. CIT 56 ITR 186 (MP), Birla Gwalior Pvt. Ltd. vs. CIT 44 ITR 847(MP), D & H Secheron Electrodes Ltd. 142 ITR 529 (MP), Regal Theatre vs. CIT 225 ITR 205(Del), Sarvodya Kela Group vs. ITO 25 ITJ 409(Indore-Trib), and others as per his written submissions. 1.4. On the other hand, the Ld. D.R. relying on the orders of lower authorities submitted that the assessee is not able to substantiate that interest free…

M/S. Rahul Developers Pvt. Ltd., Burhanpur vs. The ACIT, Khandwa

In the result, the appeal of the assessee stands allowed

ITA 645/IND/2015[2010-11]Status: DisposedITAT Indore28 Feb 2017AY 2010-11

Bench: Shri C.M.Garg & Shri O.P. Meena

…td. vs. ACIT-Khandwa/ I.T.A. No.645/Ind/2015/A.Y.:10-11 Page 7 of 10 1.3.5. The Ld. A.R. further cited following judicial pronouncements in support of his contention as follows: Ram Kishan Oil Mills vs. CIT 56 ITR 186 (MP), Birla Gwalior Pvt. Ltd. vs. CIT 44 ITR 847(MP), D & H Secheron Electrodes Ltd. 142 ITR 529 (MP), Regal Theatre vs. CIT 225 ITR 205(Del), Sarvodya Kela Group vs. ITO 25 ITJ 409(Indore-Trib), and others as per his written submissions. 1.4. On the other hand, the Ld. D.R. relying on the orders of lower authorities submitted that the assessee is not able to substantiate that interest fre…

M/S. Narendra Industries, Burhanpur vs. The ACIT, Khandwa

In the result, the appeal of the assessee stands partly allowed

ITA 644/IND/2015[2010-11]Status: DisposedITAT Indore28 Feb 2017AY 2010-11

Bench: Shri C.M.Garg & Shri O.P. Meena

…The Ld. A.R. further cited following judicial pronouncements in support of his contention as follows: Ram Kishan Oil Mills vs. CIT 56 ITR 186 (MP), Birla Gwalior Pvt. Ltd. vs. M/s. Narenda Industries vs ACIT,Khandwa I.T.A.No. 644/Ind/2015 Page 7 of 10 CIT 44 ITR 847(MP), D & H Secheron Electrodes Ltd. 142 ITR 529 (MP), Regal Theatre vs. CIT 225 ITR 205(Del), Sarvodya Kela Group vs. ITO 25 ITJ 409(Indore-Trib), and others as per his written submissions. 1.4. On the other hand, the Ld. D.R. relying on the orders of lower authorities submitted that the assessee is not able to substantiate that interest fre…

M/S. C.K. Cotspin Pvt. Ltd., Burhanpur vs. The DCIT, Khandwa

In the result, the appeal of the assessee is allowed

ITA 816/IND/2014[2011-12]Status: DisposedITAT Indore28 Feb 2017AY 2011-12

Bench: Shri C.M. Garg & Shri O.P. Meena

…d justified the same , then no disallowance of interest can be made. 1.3.8. The Ld. A.R. further cited following judicial pronouncements in support of his contention as follows: Ram Kishan Oil Mills vs. CIT 56 ITR 186 (MP), Birla Gwalior Pvt. Ltd. vs. CIT 44 ITR 847(MP), D & H Secheron Electrodes Ltd. 142 ITR 529 (MP), Regal Theatre vs. CIT 225 ITR 205(Del), Sarvodya Kela Group vs. ITO 25 ITJ M/s. C. K. Cotspin Pvt. Ltd. vs. DCIT-Khandwa/ I.T.A. No.816/Ind/2014/A.Y.:11-12 Page 13 of 23 409(Indore-Trib), and others as per his written submissions. 1.4. On the other hand, the Ld. D.R. relying on the orders…

Bhansali Bright Baras P.Ltd, Mumbai vs. ACIT 5(1), Mumbai

The appeal of the assessee is allowed

ITA 3976/MUM/2012[2009-10]Status: DisposedITAT Mumbai11 Jan 2017AY 2009-10

Bench: Shri Joginder Singh & Shri Ashwani Tanejaassessment Year: 2009-10 M/S Bhansali Bright Bars Pvt. Acit-5(1), Ltd. Mumbai बनाम/ 150, Madhav Bhavan, Vs. Nanubhai Desai Road, Mumbai-400004 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aabcb1544N "नधा"रती क" ओर से / Assessee By Shri Darshak Shah Shri Suman Kumar-Dr राज"व क" ओर से / Revenue By 11/01/2017 सुनवाई क" तार"ख / Date Of Hearing : 11/01/2017 आदेश क" तार"ख /Date Of Order:

Section 28Section 36Section 36(1)(iii)

…nnet Industries 8 M/s Bhansali Bright Baras Pvt. Ltd. ltd. (2012) 210 taxman 264 (SC), Vardhman Polytex Ltd. vs CIT 210 taxman 261 (Sc), CIT vs Anand Technology Resources Park P. Ltd. (2011) 202 taxman 654. Hon’ble M.P. High Court in Birla Gwalior Pvt. Ltd. 44 ITR 847 (M.P.) holding that it is not necessary to show for the purposes of deduction under clause (iii) that the money borrowed was utilized for a particular branch of assessee’s business. Identical ratio was laid down by Hon’ble jurisdictional High Court in CIT vs Bombay Samachar Ltd 74 ITR 723 (Bom.) and Amma Bai Hajee Issa vs CIT 51 ITR 835 (Mad.) 2.6…

Rajendra H Salot, Mumbai vs. ITO 15(1)(4), Mumbai

The appeal of the assessee is partly allowed

ITA 4050/MUM/2013[2009-10]Status: DisposedITAT Mumbai05 Jul 2016AY 2009-10

Bench: Shri Joginder Singh & Shri Ashwani Tanejaassessment Year: 2009-10 Mr. Rajendra H. Salot, Ito-15(1)(4), 18, Maheswar Prakash, Mumbai बनाम/ Building No.1, Jain Derasar Vs. Lane, Santacruz (West), Mumbai-400054 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No. Aalps6170L

Section 36(1)(iii)Section 37(1)Section 40

…d. (2008) 167 taxman 206 (SC), CIT vs Monnet Industries ltd. (2012) 210 taxman 264 (SC), Vardhman Polytex Ltd. vs CIT 210 taxman 261 (Sc), CIT vs Anand Technology Resources Park P. Ltd. (2011) 202 taxman 654. Hon’ble M.P. High Court in Birla Gwalior Pvt. Ltd. 44 ITR 847 (M.P.) held that it is not necessary to show for the purposes of deduction under clause (iii) that the money borrowed was utilized for a particular branch of assessee’s business. Identical ratio was laid down by Hon’ble jurisdictional High Court in CIT vs Bombay Samachar Lted 74 ITR 723 (Bom.) and Amma Bai Hajee Issa vs CIT 51 ITR 835 (Mad.) 3.2.…

Birla Gwalior (P) Ltd. v. CIT (44 ITR 847) — Cited in 14 Judgments | BharatTax