Calcutta Co. Ltd. v. CIT

37 ITR 1Supreme Court of India1959#224 most cited

What is Calcutta Co. Ltd. v. CIT authority for?

When following the mercantile system of accounting, provisions for liabilities made on a scientific and rational basis are allowable as deductions, even if their actual quantification and discharge are deferred to a future date.

341

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2000 to 2026.

Also referred to as

Calcutta Co. Ltd. v. CIT · mercantile system of accounting · Section 37 · allowable deductions · provision for liabilities · unascertained liabilities · deferred payment

Sections most often in play

Section 37(1)Section 143(3)Section 14A Section 115JB Section 147 Section 148 Section 36(1)(vii)Section 36(1)(viia)

Read the full judgment

Issues it is cited on

mercantile system of accounting section 37 section 37(1)section 36(1)section 36 section 40 salary previous year india company transfer business

Judgments citing Calcutta Co. Ltd. v. CIT

CIT vs. Jagdish Prasad Gupta

ITA/933/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

…might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter.” 40. This was in line with the earlier decision in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1 (SC) where the Supreme Court explained that an Assessee following the mercantile system of accounting could claim a deduction of an estimated expenditure towards development of plots purchased by it even before actually incurring the expenditure. This was not a statutory liability but a contractual one. The Assessee in that case was a develope…

CIT vs. Jagdish Prasad Gupta

ITA/935/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

…might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter.” 40. This was in line with the earlier decision in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1 (SC) where the Supreme Court explained that an Assessee following the mercantile system of accounting could claim a deduction of an estimated expenditure towards development of plots purchased by it even before actually incurring the expenditure. This was not a statutory liability but a contractual one. The Assessee in that case was a develope…

Pr. Commissioner of Income Tax-10 vs. Jagdish Prashad Gupta

ITA/424/2016HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

…might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter.” 40. This was in line with the earlier decision in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1 (SC) where the Supreme Court explained that an Assessee following the mercantile system of accounting could claim a deduction of an estimated expenditure towards development of plots purchased by it even before actually incurring the expenditure. This was not a statutory liability but a contractual one. The Assessee in that case was a develope…

CIT vs. Jagdish Prasad Gupta

ITA/787/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

…might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter.” 40. This was in line with the earlier decision in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1 (SC) where the Supreme Court explained that an Assessee following the mercantile system of accounting could claim a deduction of an estimated expenditure towards development of plots purchased by it even before actually incurring the expenditure. This was not a statutory liability but a contractual one. The Assessee in that case was a develope…

CIT vs. Jagdish Prasad Gupta

ITA/1535/2010HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

…might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter.” 40. This was in line with the earlier decision in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1 (SC) where the Supreme Court explained that an Assessee following the mercantile system of accounting could claim a deduction of an estimated expenditure towards development of plots purchased by it even before actually incurring the expenditure. This was not a statutory liability but a contractual one. The Assessee in that case was a develope…

CIT vs. Jagdish Prasad Gupta

ITA/711/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

…might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter.” 40. This was in line with the earlier decision in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1 (SC) where the Supreme Court explained that an Assessee following the mercantile system of accounting could claim a deduction of an estimated expenditure towards development of plots purchased by it even before actually incurring the expenditure. This was not a statutory liability but a contractual one. The Assessee in that case was a develope…

Jagdish Prasad Gupta

ITA/695/2010HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

…might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter.” 40. This was in line with the earlier decision in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1 (SC) where the Supreme Court explained that an Assessee following the mercantile system of accounting could claim a deduction of an estimated expenditure towards development of plots purchased by it even before actually incurring the expenditure. This was not a statutory liability but a contractual one. The Assessee in that case was a develope…

DCIT, New Delhi vs. M/S. Ajay Enterprises Pvt. Ltd., New Delhi

In the result, the appeals of the assessee for A

ITA 1348/DEL/2013[2008-09]Status: DisposedITAT Delhi31 Jul 2017AY 2008-09

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: A.Y. 2008-09For Respondent: A.Y. 2008-09

…nted for and are legally allowable, following judgments are relied upon: 1. Supreme Court in the case of Bharat Earth Movers (2004) 245 ITR 428 (SC). 2. Metal Box Company of India Ltd. V. Their Workmen (1969) 73 ITR 53 (SC). 3. Calcutta Co. Ltd. V. CIT (1959) 37 ITR 1 (SC). 4. CIT V. Insilco Ltd. 179 Taxman 5 (Delhi) Thereafter, the Assessing Officer required the assessee to explain the basis of computation of loss which was furnished. Similarly, other details as required by the AO in respect of total salable area, total area actually sold and agreed sales realization in respect of area sold, total unsold area an…

Ajay Enterprises Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeals of the assessee for A

ITA 898/DEL/2013[2008-09]Status: DisposedITAT Delhi31 Jul 2017AY 2008-09

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: A.Y. 2008-09For Respondent: A.Y. 2008-09

…nted for and are legally allowable, following judgments are relied upon: 1. Supreme Court in the case of Bharat Earth Movers (2004) 245 ITR 428 (SC). 2. Metal Box Company of India Ltd. V. Their Workmen (1969) 73 ITR 53 (SC). 3. Calcutta Co. Ltd. V. CIT (1959) 37 ITR 1 (SC). 4. CIT V. Insilco Ltd. 179 Taxman 5 (Delhi) Thereafter, the Assessing Officer required the assessee to explain the basis of computation of loss which was furnished. Similarly, other details as required by the AO in respect of total salable area, total area actually sold and agreed sales realization in respect of area sold, total unsold area an…

ACIT, Jaipur vs. Mayura Infrastructure Development Company, Kishangarh

In the result, both the appeals of the revenue are dismissed

ITA 873/JPR/2016[2011-12]Status: DisposedITAT Jaipur25 Apr 2017AY 2011-12

For Appellant: Shri Nikhlesh Kataria (CA)For Respondent: Shri Mukesh Verma (CIT) fu/kZkfjrh dh vksj ls@

Section 132(1)Section 139(1)Section 153A

…and circumstances, we are in agreement with the order of the ld. CIT(A). For holding so, we also get support from the following case laws:- 1. Bharat Earth Movers v/s Commissioner of Income Tax (2000) 245 ITR 428 (SC). 2. Calcutta Co. Limited v CIT (1959)( 37 ITR 1)(SC). 3. CIT v Triveni Engineering & Industries Limited ITA NO 56 OF 2009 in the High Court of Delhi, New Delhi. 4. EXL Service.com (India) Pvt. Ltd. V/s Asst. CIT (Del ‘I’)156. 5. Asstt. CIT vs Ashoka Buildcon Ltd. (Pune ‘B’)(UO)19 ITA 873 & 874/JP/2016 8 6. The Commissioner of Income Tax, Jaipur v/s Om Metals and Minerals (P) Ltd., Kota(DB inc…

ITO, Jaipur vs. Ranka Colonizers Pvt. Ltd., Jaipur

In the result, the appeal of the Revenue is allowed for statistical purposes in terms of the above direction

ITA 787/JPR/2016[2012-13]Status: DisposedITAT Jaipur24 Mar 2017AY 2012-13

For Appellant: Shri Vijay Goyal (CA)For Respondent: Shri R.A. Verma (Addl. CIT) fu/kZkfjrh dh vksj ls@

Section 28Section 37

…ome of the assessee by disallowing ‘Provision made for development expenses. The assessee’s contention is that the provisions for development expenses are allowable u/s 37 r.w.s. 28 of the Act and this claim is covered by following decisions: *Calcutta Co Ltd 37 ITR 1 (SC) * The Green Triveini Developer ITA No 291 /JP/2014 ITAT Jaipur * M/s Shree Salasar Overseas (Pvt) Ltd ITAT Jaipur * Ram Chandra Agrawal ITAT Jaipur Further, it is also submitted that AO has failed to appreciate the provisions of Income Tax Act because there is no bar in section 37(1) of Act to allow the provisions made against certain expenses/…

DCIT 9(2), Mumbai vs. Nesco Ltd, Mumbai

ITA 5611/MUM/2014[2008-09]Status: DisposedITAT Mumbai22 Mar 2017AY 2008-09

Bench: Shri Mahavir Singh & Shri Ashwani Tanejaassessment Year: 2008-09

Section 143(3)Section 147Section 148

…no amount is determined with certainty but could be genuinely estimated on the basis of reliable information. Such liability as mention hereinabove has been accrued, hence is allowable. Reference may be had of the case of Calcutta Company Ltd. vs. CIT (1959) 37 ITR 1 (SC). It is also a fact that if any liability is reduced and earlier claim was on higher side, appellant is to offer as income in the year of finality. This practice is visible 12 M/S. NESCO LTD. from the evidences on record, hence, the bonafide claim of the appellant is to be the year of claim and same cannot be deferred to be allowed year. Thus,…

Mc Nally Sayaji Engineering Limited, North 24 Parganas vs. D.C.I.T Cir - 1, Kolkata

In the result, the appeals of the assessee in ITA No

ITA 927/KOL/2013[2009-10]Status: DisposedITAT Kolkata10 Mar 2017AY 2009-10

Bench: Shri M. Balaganesh, Am & Shri Partha Sarathi Chaudhury, Jm]

For Appellant: Smt. Shreya Loyalka, CAFor Respondent: Md. Ghayas Uddin, JCIT, Sr. DR

Section 143(3)Section 14A

…the authorities below only from the angle of current repairs as provided in section 31(i) and not under section 37. As held, inter alia, by the Hon’ble Supreme Court in the cases of Badridas Daga –vs.- CIT [34 ITR 10] and Calcutta Company Limited –vs. – CIT [37 ITR 1], even if the expenditure made by the assessee cannot be described as current repairs, he is entitled to invoke the benefit of section 37. Even in the case of Modi Spinning & Weaving Mills Co. Limited (supra), Hon’ble Delhi High Court while holding that the amount spent for replacement of administrative block of the assessee, which was long overdue,…

DCIT, Circle - 1, Kolkata vs. M/S. Mcnally Sayaji Engineering Limited, Kolkata

In the result, the appeals of the assessee in ITA No

ITA 1575/KOL/2011[2008-09]Status: DisposedITAT Kolkata10 Mar 2017AY 2008-09

Bench: Shri M. Balaganesh, Am & Shri Partha Sarathi Chaudhury, Jm]

For Appellant: Smt. Shreya Loyalka, CAFor Respondent: Md. Ghayas Uddin, JCIT, Sr. DR

Section 143(3)Section 14A

…the authorities below only from the angle of current repairs as provided in section 31(i) and not under section 37. As held, inter alia, by the Hon’ble Supreme Court in the cases of Badridas Daga –vs.- CIT [34 ITR 10] and Calcutta Company Limited –vs. – CIT [37 ITR 1], even if the expenditure made by the assessee cannot be described as current repairs, he is entitled to invoke the benefit of section 37. Even in the case of Modi Spinning & Weaving Mills Co. Limited (supra), Hon’ble Delhi High Court while holding that the amount spent for replacement of administrative block of the assessee, which was long overdue,…

F Harley & Co. Pvt. Ltd., Kolkata vs. The CIT, 1, Kolkata

In the result, the appeal of the assessee is allowed

ITA 864/KOL/2016[2011-2012]Status: DisposedITAT Kolkata08 Mar 2017AY 2011-2012

Bench: Shri M. Balaganesh, Am & Shri S. S. Viswanethra Ravi, Jm]

For Appellant: Shri Miraj D. Shah, ARFor Respondent: Shri Avinash Mishra, CIT

Section 143(2)Section 143(3)Section 14ASection 263Section 36(1)(va)

…case, the assessee is following Mercantile System of Accounting. This Matching concept is very relevant to compute taxable income particularly in cases involving DRE. It has been recognised by numerous judgments. In the case of Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 (SC) the facts were as follows : The assessee bought lands and sold them in plots. When the plots were sold the purchasers paid only a portion of the purchase price and undertook to pay the balance in instalments. The assessee, in turn, agreed to develop the plots within six months. In the relevant Accounting Year, the assessee actually received onl…

ITO 16(2)(4), Mumbai vs. Surya Gems, Mumbai

The appeal of the Revenue is dismissed

ITA 292/MUM/2014[2009-10]Status: DisposedITAT Mumbai08 Mar 2017AY 2009-10

Bench: Shri Joginder Singh & Shri N.K. Pradhanassessment Year: 2009-10 Income Tax Officer-16(2)(4), M/S Surya Gems, बनाम/ 02Nd Floor, Matru Mandir, Flat No.4, 02Nd Floor, Tardeo Road, Bhaveshwar Sgar Patel Vs. Mumbai-400007 Compound 20 Napean Sea Road, Mumbai-400020 (याजस्व /Revenue) (यनधाारयती /Assessee) P.A. No. Aakfs6513Q याजस्व की ओर से / Revenue By Shri B.S. Bist-Dr यनधाारयती की ओर से / Assessee By None ुनवाई की तायीख / Date Of Hearing : 14/02/2017 आदेश की तायीख /Date Of Order: 08/03/2017

…ly the payments actually made to his employees but also the present value of any payments in respect of their services in that year to be made in a subsequent year if it can be satisfactorily estimated. So is the view taken in Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC) : TC 16R.197 wherein this Court has held that the liability on the assessee having been imported, the liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be discharged at a future date. There may be some difficulty in the estimation thereof but that would not convert the accru…

Priya Ltd., Mumbai vs. DCIT (OSD), Cir 2(3), Mumbai

The appeal of the assessee is disposed off in terms indicated hereinabove and the appeal of the Revenue is dismissed

ITA 3231/MUM/2015[2010-11]Status: DisposedITAT Mumbai21 Feb 2017AY 2010-11

Bench: Shri Joginder Singh & Shri N.K. Pradhanassessment Year: 2010-11 Priya Ltd. Dcit(Osd), Circle-2(3), 209-210, Kimatraj Building बनाम/ R. No. 552, 5Th Floor, 02 Floor, 77/79 Vs. Aayakar Bhavan, M.K.Road, M.K. Road, Mumbai-400020 Mumbai-400002 ("नधा"रती /Assessee) (राज"व /Revenue) P.A. No. Aaacp2210Q Assessment Year: 2010-11 Dcit(Osd), Priya Ltd. 209-210, Kimatraj Building Circle-2(3), बनाम/ 02 Floor, 77/79 R. No. 552, 5Th Floor, Vs. M.K. Road, Aayakar Bhavan, M.K.Road, Mumbai-400002 Mumbai-400020 (राज"व /Revenue) ("नधा"रती /Assessee) P.A. No. Aaacp2210Q

Section 10(33)Section 143(3)Section 14ASection 260A

…आयकर अपील"य अ"धकरण, मुंबई "यायपीठ, ई, मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “E”, MUMBAI "ी जो"ग"दर "संह, "या"यक सद"य एवं "ी एन. के. "धान, लेखा सद"य, के सम" Before Shri Joginder Singh, Judicial Member, and Shri N.K. Pradhan, Accountant Member Assessment Year: 2010-11 Priya Ltd. DCIT(OSD), Circle-2(3), 209-210, Kimatraj Building बनाम/ R. No. 552, 5th Floor, 02 Floor, 77/79 Vs. Aayakar Bhavan, M.K.Road, M.K. Road, Mumbai-400020 Mumbai-400002 ("नधा"रती /Assessee) (राज"व /Revenue) P.A. No. AAACP2210Q Assessment Year: 2010-11 DCIT(OSD), Priya Ltd. 209-210, Kimatraj Building Circle-2(3), बनाम/ 02…

DCIT, Port Blair vs. Aniidco

In the result, Revenue’s appeal stands dismissed

ITA 1124/KOL/2014[2009-2010]Status: DisposedITAT Kolkata08 Feb 2017AY 2009-2010

Bench: Shri Aby.T.Varkey & Shri Waseem Ahmedassessment Year :2009-10 Dcit, Port Blair M.B. V/S. Andaman Nicobar Island 210, Shadipur Port Integrated Development Blair, A & Ni -744 106 Corporation Ltd., Vikas Bhawan, Port Blair, 143/1/1, Cotton Street, Kolkata-700 007 [Pan No.Aacca 4070 B]

Section 143(2)Section 143(3)Section 37(1)Section 41

…the payments actually made to his employees but also the present value of any payments in respect of their services in that year to be made in a subsequent year if it can be satisfactorily estimated. 6. So is the view taken in Calcutta Co. Ltd. v. CIT [(1959) 37 ITR 1 : AIR 1959 SC 1165] wherein this Court has held that the liability on the assessee having been imported, the liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be discharged at a future date. There may be some difficulty in the estimation thereof but that would not convert the acc…

DCIT, Circle - 11, Kolkata vs. M/S. I M C Ltd, Kolkata

Appeal is dismissed

ITA 371/KOL/2012[2007-08]Status: DisposedITAT Kolkata18 Jan 2017AY 2007-08

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmed

Section 10(34)Section 115JSection 143(3)Section 14ASection 234B

…-71/K/12 A.Ys.05-06 to 07-08 M/s IMC Ltd. vs. DCIT, Cir-11, Ko. Page 32 the future date on which the liability shall have to be discharged is not certain.—Metal Box Co. of India Ltd. vs. Their Workmen (1969) 73 ITR 53 (SC) and Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC) : TC 16R.197 applied. Provision made by the appellant company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deducti…

M/S. Imc Ltd., Kolkata vs. DCIT, Circle - 11, Kolkata

Appeal is dismissed

ITA 813/KOL/2009[2005-06]Status: DisposedITAT Kolkata18 Jan 2017AY 2005-06

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmed

Section 10(34)Section 115JSection 143(3)Section 14ASection 234B

…-71/K/12 A.Ys.05-06 to 07-08 M/s IMC Ltd. vs. DCIT, Cir-11, Ko. Page 32 the future date on which the liability shall have to be discharged is not certain.—Metal Box Co. of India Ltd. vs. Their Workmen (1969) 73 ITR 53 (SC) and Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC) : TC 16R.197 applied. Provision made by the appellant company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deducti…