Challapalli Sugars Ltd. v. CIT

98 ITR 167Supreme Court of India1975#514 most cited

What is Challapalli Sugars Ltd. v. CIT authority for?

Interest on borrowed capital utilized for acquiring a capital asset is capitalized until business commences. Once business is set up, this interest is deductible under section 36(1)(iii) even if the asset has not yet been put to use, accepting commercial accounting standards in the absence of contrary statutory provisions.

185

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2007 to 2026.

Also referred to as

Challapalli Sugars Ltd. v. CIT · 98 ITR 167 · Section 36(1)(iii) · Section 32 · capitalization of interest · actual cost · borrowed capital · commencement of business · asset put to use · deductibility of interest · accounting standards · mercantile system

Also reported as

3 SCC 572

Sections most often in play

Section 37(1)Section 115JBSection 234ASection 250Section 40A(2)(b)Section 43BSection 139(1)Section 143(3)

Issues it is cited on

section 10(5)section 32(1)(iia)section 32(1)demergeradditional depreciationright to receivesection 92bsection 32section 22section 57put to usemercantile system of accounting

Judgments citing Challapalli Sugars Ltd. v. CIT

Il & Fs Tamil Nadu Power Company Limited, Chennai vs. JCIT Corporate Circle-2(2), Chennai

ITA 1990/CHNY/2019[2013-14]Status: DisposedITAT Chennai03 Aug 2022AY 2013-14

Bench: Shri Mahavir Singhand Shri Manoj Kumar Aggarwalआयकर अपील सं./Ita No.:2018/Chny/2019 िनधा"रण वष" /Assessment Year: 2013-14 The Jcit (Osd), Il & Fs Tamilnadu Power Corporate Circle -2(2), Vs. Company Ltd., Chennai – 34. New No.2, (Old No.21), 4Th Floor, Kpr Tower, 1St Street, Subba Rao Avenue, College Road, Chennai – 600 006. Pan: Aabcf 1176A (अपीलाथ"/Appellant) (""यथ"/Respondent) & आयकर अपील सं./Ita Nos.:1989, 1990 & 3217/Chny/2019 िनधा"रण वष" /Assessment Years: 2012-13, 2013-14 & 2014-15 The Jcit (Osd), Il & Fs Tamilnadu Power Corporate Circle -2(2), Company Ltd., Vs. Chennai – 34. New No.2, (Old No.21), 4Th Floor, Kpr Tower, 1St Street, Subba Rao Avenue, College Road, Chennai – 600 006. Pan: Aabcf 1176A (अपीलाथ"/Appellant) (""यथ"/Respondent) "नधा"रती क" ओर से/Assessee By : Shri Raghunath, Ca राज" की ओर से /Revenue By : Shri Ar.V. Sreenivasan, Addl.Cit सुनवाई क" तार"ख/Date Of Hearing : 03.08.2022 घोषणा क" तार"ख/Date Of Pronouncement : 03.08.2022

For Appellant: Shri Raghunath, CAFor Respondent: Shri AR.V. Sreenivasan, Addl.CIT
Section 143(3)Section 14A

…cably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Ltd. v. Commissioner of Income-tax, A.P. ([1975] 98 ITR 167), this Court examined the question whether interest paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in Section 10(5) of the Indian Income-tax Act, 1922 and w…

Il & Fs Tamil Nadu Power Company Limited, Chennai vs. JCIT Corporate Circle-2(2), Chennai

ITA 1989/CHNY/2019[2012-13]Status: DisposedITAT Chennai03 Aug 2022AY 2012-13

Bench: Shri Mahavir Singhand Shri Manoj Kumar Aggarwalआयकर अपील सं./Ita No.:2018/Chny/2019 िनधा"रण वष" /Assessment Year: 2013-14 The Jcit (Osd), Il & Fs Tamilnadu Power Corporate Circle -2(2), Vs. Company Ltd., Chennai – 34. New No.2, (Old No.21), 4Th Floor, Kpr Tower, 1St Street, Subba Rao Avenue, College Road, Chennai – 600 006. Pan: Aabcf 1176A (अपीलाथ"/Appellant) (""यथ"/Respondent) & आयकर अपील सं./Ita Nos.:1989, 1990 & 3217/Chny/2019 िनधा"रण वष" /Assessment Years: 2012-13, 2013-14 & 2014-15 The Jcit (Osd), Il & Fs Tamilnadu Power Corporate Circle -2(2), Company Ltd., Vs. Chennai – 34. New No.2, (Old No.21), 4Th Floor, Kpr Tower, 1St Street, Subba Rao Avenue, College Road, Chennai – 600 006. Pan: Aabcf 1176A (अपीलाथ"/Appellant) (""यथ"/Respondent) "नधा"रती क" ओर से/Assessee By : Shri Raghunath, Ca राज" की ओर से /Revenue By : Shri Ar.V. Sreenivasan, Addl.Cit सुनवाई क" तार"ख/Date Of Hearing : 03.08.2022 घोषणा क" तार"ख/Date Of Pronouncement : 03.08.2022

For Appellant: Shri Raghunath, CAFor Respondent: Shri AR.V. Sreenivasan, Addl.CIT
Section 143(3)Section 14A

…cably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Ltd. v. Commissioner of Income-tax, A.P. ([1975] 98 ITR 167), this Court examined the question whether interest paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in Section 10(5) of the Indian Income-tax Act, 1922 and w…

Hablis Hotels, Chennai vs. ITO Non Corporate Ward 1(3), Chennai

In the result, the appeal of the Assessee in I

ITA 1690/CHNY/2019[2013-14]Status: DisposedITAT Chennai19 Jul 2022AY 2013-14

Bench: Shri Mahavir Singhand Shri Manoj Kumar Aggarwalआयकर अपील सं./I.T.A No.:1690/Chny/2019 िनधा"रण वष"/ Assessment Year 2013 - 2014

For Appellant: Mr. R. Sivaraman, AdvocateFor Respondent: Mr. Ravindra T. Mishra, JCIT
Section 143Section 143(3)Section 57

…xtricably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Limited v. Commissioner of Income Tax (1975] 98 ITR 167 = 2002-TIOL-593-SC- IT, this Court examined the question whether interest paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of :: 5 :: I.T.A No.:1690/CHNY/2019 the actual cost of the asset to the assessee in the within the meaning of that expr…

Vatika Hotels Pvt. Ltd., New Delhi vs. DCIT Circle-17(1), New Delhi

In the result, the appeal is partly allowed for statistical

ITA 3987/DEL/2019[2008-09]Status: DisposedITAT Delhi29 Jun 2022AY 2008-09

Bench: Saktijit Dey & Shri Pradip Kumar Kediaassessment Year: 2008-09

Section 147Section 32

…Vs. Dy. CIT [2014] 368 ITR 692 (Delhi); 8. Omniglobe Information Tech India (P.) Ltd. Vs. CIT [2014] 369 ITR 1 (Delhi); 9. Indian Railway Stations Development Corporations Ltd. Vs. Pr. CIT [2019] 107 taxmann.com 79 (Delhi) 10. Challapalli Sugars Ltd. Vs. CIT, 98 ITR 167 11. Chhabirani Agro Industrial Enterprises Ltd. Vs. CIT, 191 ITR 226 8. Learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 9. We have considered rival submissions in the light of the decisions relied upon and perused the materials on record. It is evident, certai…

Ascendas It Park (Pune) Private Limited, Pune vs. Deputy Commissioner of Income Tax, Pune

In the result, the appeal filed by the assessee stands dismissed

ITA 966/PUN/2017[2013-14]Status: DisposedITAT Pune27 Apr 2022AY 2013-14

Bench: Shri Inturi Rama Rao & Shri S. S. Viswanethra Raviआयकर अपील सं. / Ita No.966/Pun/2017 िनधा"रण वष" / Assessment Year: 2013-14 Ascendas It Park (Pune) Vs. Dcit, Circle- 1(1), Private Limited, Pune. Unit No.607 & 608, 6Th Floor, Amar Business Park, Survey No.105 (3), Baner, Pune- 411045. Pan : Aafca4840E Appellant Respondent Assessee By : Smt. Chandni Shah Revenue By : Shri M. G. Jasnani Date Of Hearing : 22.03.2022 Date Of Pronouncement : 27.04.2022 आदेश / Order Per Inturi Rama Rao, Am: This Is An Appeal Filed By The Assessee Directed Against The Order Of Ld. Commissioner Of Income Tax (Appeals)- 1, Pune [‘Cit(A)’ For Short] Dated 31.01.2017 For The Assessment Year 2013-14. 2. The Appellant Raised The Following Ground Of Appeal :- “Ground 1: Treating General Management Fees Paid By The Appellant To Be Capital In Nature On The Facts & Circumstances Of The Case & In Law, The Learned Commissioner Of Income Tax (Appeals) Erred In Confirming The Action

For Appellant: Smt. Chandni ShahFor Respondent: Shri M. G. Jasnani
Section 143(3)

…eal estate business. Therefore, it is a case where the assessee in the process of SEZ project and all the project expenditures have been directly related to the project, the decision of the Hon’ble Supreme Court in the case of Challapalli Sugars Ltd. vs. CIT, 98 ITR 167 (SC) is squarely applicable to the present case. In the said decision, the Hon’ble Supreme Court held that the revenue expenditure incurred till the business is set-up should only add to the capital cost of the project. The relevant part of the said judgment of the Hon’ble Supreme Court is as under :- “It would appear from the above that the accep…

Letiwind Shriram Manufacturing Limited, Chennai vs. DCIT, Chennai

In the result, appeal filed by the assessee for assessment

ITA 110/CHNY/2018[2014-15]Status: DisposedITAT Chennai09 Feb 2022AY 2014-15

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकरअपीलसं./I.T.A.Nos.109 & 110/Chny/2018 ("नधा"रणवष" / Assessment Years: 2013-14 & 2014-15) M/S. Leitwind Shriram Manufacturing Ltd. V Deputy Commissioner Of Income Sreedhar, Suresh & Rajagopalan, C.As., S Tax, 3-B, Green Heaven, New No.26 Corporate Circle-4(1) Third Main Road, Gandhi Nagar, Chennai-34. Adyar,Chennai-600 020. Pan: Aabcl 2825N (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Mr. Muralikumar, CITFor Respondent: 13.12.2021
Section 36(1)(iii)

…terior purposes, it is open to Assessing Officer to refuse to accept the price mentioned by the assessee and to ascertain what the actual cost was or to determine the allocation between the depreciable and non- depreciable assets. 2.Challapalli Sugars Vs CIT 98 ITR 167(SC) As the expression of ‘actual cost’ has not been defined, it should be construed in. the sense which no commercial man would misunderstand. For this purpose, it would be necessary to ascertain the connotation of the expression in accordance with the normal rules of accountancy prevailing in commerce and industry. The accepted accountancy role…

Letiwind Shriram Manufacturing Limited, Chennai vs. DCIT, Chennai

In the result, appeal filed by the assessee for assessment

ITA 109/CHNY/2018[2013-14]Status: DisposedITAT Chennai09 Feb 2022AY 2013-14

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकरअपीलसं./I.T.A.Nos.109 & 110/Chny/2018 ("नधा"रणवष" / Assessment Years: 2013-14 & 2014-15) M/S. Leitwind Shriram Manufacturing Ltd. V Deputy Commissioner Of Income Sreedhar, Suresh & Rajagopalan, C.As., S Tax, 3-B, Green Heaven, New No.26 Corporate Circle-4(1) Third Main Road, Gandhi Nagar, Chennai-34. Adyar,Chennai-600 020. Pan: Aabcl 2825N (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Mr. Muralikumar, CITFor Respondent: 13.12.2021
Section 36(1)(iii)

…terior purposes, it is open to Assessing Officer to refuse to accept the price mentioned by the assessee and to ascertain what the actual cost was or to determine the allocation between the depreciable and non- depreciable assets. 2.Challapalli Sugars Vs CIT 98 ITR 167(SC) As the expression of ‘actual cost’ has not been defined, it should be construed in. the sense which no commercial man would misunderstand. For this purpose, it would be necessary to ascertain the connotation of the expression in accordance with the normal rules of accountancy prevailing in commerce and industry. The accepted accountancy role…

Income Tax Officer, Ward-2(1), Hyderabad vs. Ksk Wind Power Sankonahatti Athni Private Limied, Hyderabad

In the result, all the four appeals of the Revenue are allowed

ITA 34/HYD/2019[2014-15]Status: DisposedITAT Hyderabad25 Jan 2022AY 2014-15

Bench: Shri A. Mohan Alankamony & Shri S.S. Godaraassessment Year: 2014-15 Income Tax Officer, Vs. Ksk Wind Energy Ward-2(1), Halagali Benchi Private Hyderabad. Limited, Hyderabad. Pan: Aaeck 1965 F (Appellant) (Respondent) Assessee By: Sri S. Rama Rao Revenue By: Sri Sunil Gowtham, Sr. Ar Assessment Year: 2014-15 Income Tax Officer, Vs. Ksk Wind Power Ward-2(1), Sankonahatti Athni Hyderabad. Private Limited, Hyderabad. Pan: Aaeck 1900 C (Appellant) (Respondent) Assessee By: Sri S. Rama Rao Revenue By: Sri Sunil Gowtham, Sr. Ar Assessment Year: 2014-15 Income Tax Officer, Vs. Ksk Wind Power Ward-2(1), Aminabhavi Chikodi Hyderabad. Private Limited, Hyderabad. Pan: Aaeck 1888 R (Appellant) (Respondent)

For Appellant: Sri S. Rama RaoFor Respondent: Sri Sunil Gowtham, Sr. AR
Section 143(3)Section 56

…e. These receipts are inextricably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Ltd. vs. CIT (1975) 98 ITR 167 (SC), this court examined the question whether interest paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in section 10(5) of the Indian Income Tax Act, 1922 a…

Income Tax Officer, Ward-2(1), Hyderabad vs. Ksk Wind Energy Halagali Benchi Private Limied, Hyderabad

In the result, all the four appeals of the Revenue are allowed

ITA 33/HYD/2019[2014-15]Status: DisposedITAT Hyderabad25 Jan 2022AY 2014-15

Bench: Shri A. Mohan Alankamony & Shri S.S. Godaraassessment Year: 2014-15 Income Tax Officer, Vs. Ksk Wind Energy Ward-2(1), Halagali Benchi Private Hyderabad. Limited, Hyderabad. Pan: Aaeck 1965 F (Appellant) (Respondent) Assessee By: Sri S. Rama Rao Revenue By: Sri Sunil Gowtham, Sr. Ar Assessment Year: 2014-15 Income Tax Officer, Vs. Ksk Wind Power Ward-2(1), Sankonahatti Athni Hyderabad. Private Limited, Hyderabad. Pan: Aaeck 1900 C (Appellant) (Respondent) Assessee By: Sri S. Rama Rao Revenue By: Sri Sunil Gowtham, Sr. Ar Assessment Year: 2014-15 Income Tax Officer, Vs. Ksk Wind Power Ward-2(1), Aminabhavi Chikodi Hyderabad. Private Limited, Hyderabad. Pan: Aaeck 1888 R (Appellant) (Respondent)

For Appellant: Sri S. Rama RaoFor Respondent: Sri Sunil Gowtham, Sr. AR
Section 143(3)Section 56

…e. These receipts are inextricably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Ltd. vs. CIT (1975) 98 ITR 167 (SC), this court examined the question whether interest paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in section 10(5) of the Indian Income Tax Act, 1922 a…

Dy. Commissioner of Income Tax, Circle-16(1), Hyderabad vs. L & T Metro Rail (Hyderabad) Limited, Hyderabad

In the result, appeal of the Revenue is allowed

ITA 1412/HYD/2019[2016-17]Status: DisposedITAT Hyderabad21 Jan 2022AY 2016-17

Bench: Shri A. Mohan Alankamony & Shri S.S. Godaraassessment Year: 2016-17 Dcit, Vs. L & T Metro Rail Circle-16(1), (Hyderabad) Limited, Hyderabad. Hyderabad. Pan: Aabcl 8521 D (Appellant) (Respondent) Assessee By: Shri Ashik Shah Revenue By: Sri B. Sunil Kumar, Dr Date Of Hearing: 25/10/2021 Date Of Pronouncement: 21/01/2022 Order Per A. Mohan Alankamony, Am.:

For Appellant: Shri Ashik ShahFor Respondent: Sri B. Sunil Kumar, DR
Section 143(3)Section 56

…e. These receipts are inextricably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Ltd. vs. CIT (1975) 98 ITR 167 (SC), this court examined the question whether interest paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in section 10(5) of the Indian Income Tax Act, 1922 a…

M/S.Waterline Hotels Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Bangalore

In the result ITA No. 1689/Bang/2016 is allowed

ITA 1689/BANG/2016[2012-13]Status: DisposedITAT Bangalore20 Sept 2021AY 2012-13
For Appellant: Shri. S. V. Ravishankar, AdvocateFor Respondent: Ms. Neera Malhotra, CIT, Shri. Sankar Ganesh K
Section 32

…comparing the facts of the case, it can be said that the expenses incurred on kitchenware and consumption of material during trial run are to be capitalised towards the cost of plant and machinery. 7. In the case of Challapalli Sugars Limited Vs. CIT (1975) 98 ITR 167 (Supreme Court), it has been held that interest of Rs. 2,38,614/- incurred on borrowed capital for purchase of plant and machinery, accruing to the date Page 5 of 7 of installation of the machinery is a capital expenditure, on which depreciation and development rebate are admissible. From this decision it can be said that if an expenditure which i…

M/S. Ganpati Global Private Ltd., Jaipur vs. ITO, Ward1(4), Jaipur

In the result, the appeal of the assessee is dismissed

ITA 302/JPR/2020[2013-14]Status: DisposedITAT Jaipur30 Jun 2021AY 2013-14
For Appellant: Shri Anoop Bhatia (CA)For Respondent: Smt. Monisha Choudhary (JCIT) a

…ee. These receipts are inextricably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC), this court examined the question whether interest paid before the commencement of production by a company on amounts borrowed 26 M/s Ganpati Global (P) Ltd. vs. ITO for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in section 10…

Income Tax Officer, Ward-17(2), Hyderabad vs. Elgen (India) Private Limited, Hyderabad

In the result, appeal of the revenue is allowed

ITA 244/HYD/2019[2015-16]Status: DisposedITAT Hyderabad30 Apr 2021AY 2015-16

Bench: Shri Satbeer Singh Godara & Shri Laxmi Prasad Sahuassessment Year: 2015-16 Income-Tax Officer, Vs. Elgen (India) Pvt Ltd., Ward - 17(2), Hyderabad. Hyderabad. Pan – Aaace 8520C (Appellant) (Respondent) Revenue By: Shri Rohit Mujumdar Assessee By: Shri M. Poorna Chander Rao Date Of Hearing: 15/03/2021 Date Of Pronouncement: 30/04/2021

For Appellant: Shri M. Poorna Chander RaoFor Respondent: Shri Rohit Mujumdar
Section 143(3)

…was the accountancy practice set by accountancy world and that such a practice deserved to be followed and applied for the purpose of income-tax and for this purpose support was taken from the Supreme Court's decision in Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 . 7. To establish the accountancy principle and practice, he referred to a pamphlet 'International Accounting Standard' in respect of 'Capitalisation of Borrowing Costs' issued by International, Accounting Standards Committee. London and another pamphlet of the Institute of Chartered Accountants of India, New Delhi by the name 'Guidance Note on Tr…

Meja Urja Nigam (P) Ltd., Allahabad vs. Income Tax Office Ward-2 (2), Allahabad

In the result, both the appeals of the assessee for ay: 2015-16 and 2016-17

ITA 54/ALLD/2020[2015-16]Status: DisposedITAT Allahabad03 Mar 2021AY 2015-16

Bench: Shri.Vijay Pal Rao & Shri Ramit Kochar

For Appellant: Ms.Namita S. Pandey, CIT DRFor Respondent: Shri Parv Agrawal, CA
Section 143(3)

…ny way. 27. The second reason given by the High Court was that the Institute of Chartered Accountants of India was a recognised authority on accounting principles. This fact has been recognised by this Court in the case of Challapalli Sugars Ltd v. CIT [1975] 98 ITR 167. Therefore, its view has to be respected. 28. It is true that this Court has very often referred to accounting practice for ascertainment of profit made by a company or value of the assets of a company. But when the question is whether a receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or no…

The Commissioner of Income Tax vs. M/S Bharat Fritz Werner Ltd

In the result, appeal is disposed of

ITA/266/2013HC Karnataka09 Feb 2021

Bench: ALOK ARADHE,R. NATARAJ

Section 260Section 43B

…1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF FEBRUARY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY I.T.A. NO.266 OF 2013 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX C.R. BUILDING, QUEENS ROAD BANGALORE. 2. THE JT. COMMISSIONER OF INCOME-TAX (OSD) CIRCLE-11(2), RASHTROTHANA BHAVAN NRUPATHUNGA ROAD, BANGALORE. ... APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,) AND: M/S. BHARAT FRITZ WERNER LTD., OFF: TUMUKUR ROAD YESHWANTHPUR P.O. BANGALORE-560022. ... RESPONDENT (BY SRI. T. SURYANARAYANA, ADV.) - - - THIS I.T.A. I…

Essar Capital Ltd, Mumbai vs. Pr CIT 6, Mumbai

In the result the appeal of the assessee is allowed

ITA 3759/MUM/2017[2012-13]Status: DisposedITAT Mumbai08 Jan 2021AY 2012-13

Bench: Shri Rajesh Kumar & Shri Ram Lal Negiassessment Year: 2012-13 M/S. Vajresh Consultants Prcit 6, Ltd. (Earlier Known As Aayakar Bhavan, Essar Capital Ltd.), Mumbai - 400020 Vs. 40-B, Ridge Road, Malabar Hill, Mumbai – 400 006 Pan: Aabce 7257R (Appellant) (Respondent) Present For: Assessee By : Shri Nishant Thakkar, A.R. & Shri Hiten Chande, A.R. Revenue By : Shri R. Manjunatha Swamy, D.R. Date Of Hearing : 23.10.2020 Date Of Pronouncement : 08.01.2021 O R D E R

For Appellant: Shri Nishant Thakkar, A.R. &For Respondent: Shri R. Manjunatha Swamy, D.R
Section 143(3)Section 263

…ained as understood in ordinary commercial parlance and in accordance 47 M/s. Vajresh Consultants Ltd. (Earlier known as Essar Capital Ltd.) with the principles of accountancy which is also supported by Apex court decision in the case Chellapalli Sugars Ltd.(98 ITR 167) 16.8 In view of the above, the cost incurred by ECL to acquire ISL shares (i.e. the consideration discharged to the public shareholders of ISL on amalgamation and the value of assets given up by ECL) has been considered for determining the cost of acquisition of VEL shares in the hands of the ECL 16.9 Thus this facet was also thoroughly examine…

Solarfield Energy Private Limited, Mumbai vs. Principal Commissioner of Income Tax, -2, Mumbai

ITA 292/MUM/2019[2013-14]Status: DisposedITAT Mumbai07 Jan 2021AY 2013-14

Bench: Shri Pramod Kumar & Shri Ravish Soodsolarfield Energy Private Pr. Commissioner Of Income Tax-2 Limited, Hinduja House, Room No. 344, Aayakar Bhavan, Vs. 171, Dr. Annie Besent Road, M.K. Road, Mumbai - 400020 Worli, Mumbai – 400018 Pan – Aaocs4380A (Appellant) (Respondent)

For Appellant: Shri Jehangir Mistri, Senior AdvocateFor Respondent: Shri Sandeep Raj, CIT D.R
Section 115JSection 143(1)Section 143(3)Section 263

…hat as per the settled position of law all expenditure incurred to bring an asset to use is to be capitalised. Analysing the term „actual cost‟ as defined in Sec. 43(1) of the Act, the Hon’ble Supreme Court in the case of Challapali Sugars Ltd. Vs. CIT (1975) 98 ITR 167 (SC), had held, that as per the accepted rule of accountancy all expenditure that is incurred to bring a fixed asset into existence and put it in a working condition shall be included for determining its cost. It was further observed, that in case money is borrowed by a newly started company which is in the process of constructing and erecting its…

Assistant Commissioner of Income Tax, Chhindwara vs. M/S. Central Madhya Pradesh Gramin Bank, Chhindwara

In the result, the Revenue’s appeal is dismissed

ITA 135/JAB/2018[2012-13]Status: DisposedITAT Jabalpur10 Dec 2020AY 2012-13
Section 147Section 43Section 43(1)

…tinue to be governed by the normal and accepted principles of commercial accounting, i.e., the price at which the asset is acquired. Reference in this regard may also profitably be made to the decision by the Apex Court in Challapali Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC), where the issue was the inclusion of interest incurred for the normative preoperative period on the capital borrowed for capital investment, which has now been specifically provided under Explanation 8 to s. 43(1) and proviso to s. 36(1)(iii). Continuing further, for the same reason, i.e., Explanation 10, the decision in CIT v. P.J. Chemical…

M/S. Brahmaputra Cracker & Polymer Ltd., Dibrugarh vs. Deputy Commissioner of Income Tax, Circle - 2, Dibrugarh

In the result, all the appeals of the revenue are dismissed and all the appeals of the assessee are allowed

ITA 200/GTY/2019[2015-16]Status: DisposedITAT Guwahati22 Oct 2020AY 2015-16

Bench: Shri A. T. Varkey, Jm & Dr. A. L. Saini, Am]

…commercial activity has started and only from February, 2016, the project has been set up and commenced operation only from AY 2016-17, so up to AY 2015-16 no P&L Account was prepared by the assessee. We note that in the case of Chellapali Sugars ltd. Vs. CIT 98 ITR 167 the Hon’ble Supreme Court examined the question whether interest paid before the commencement of production by a company on amount borrowed for the acquisition and installation of plant and machinery would form part of the actual cost of the asset to the assessee within the meaning of expression of section 10(5) of the Income Tax Act, 1922 and whe…

M/S. Brahmaputra Cracker & Polymer Ltd., Dibrugarh vs. Deputy Commissioner of Income Tax, Circle - 2, Dibrugarh

In the result, all the appeals of the revenue are dismissed and all the appeals of the assessee are allowed

ITA 94/GTY/2018[2011-12]Status: DisposedITAT Guwahati22 Oct 2020AY 2011-12

Bench: Shri A. T. Varkey, Jm & Dr. A. L. Saini, Am]

…commercial activity has started and only from February, 2016, the project has been set up and commenced operation only from AY 2016-17, so up to AY 2015-16 no P&L Account was prepared by the assessee. We note that in the case of Chellapali Sugars ltd. Vs. CIT 98 ITR 167 the Hon’ble Supreme Court examined the question whether interest paid before the commencement of production by a company on amount borrowed for the acquisition and installation of plant and machinery would form part of the actual cost of the asset to the assessee within the meaning of expression of section 10(5) of the Income Tax Act, 1922 and whe…