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 367,154 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

Solarfield Energy Pvt. Ltd., Mumbai vs. ITO Ward 2(3)(3), Mumbai

In the result, appeal filed by the assessee is allowed

ITA 5189/MUM/2016[2012-13]Status: DisposedITAT Mumbai16 Jul 2019AY 2012-13

Bench: Shri Pawan Singh & Shri M Balaganesh

Section 143(3)Section 154

…1 ITA 5189/Mum/2016 IN THE INCOME TAX APPELLATE TRIBUNALMUMBAI BENCH “G”, MUMBAI Before Shri Pawan Singh Judicial Member and Shri M Balaganesh Accountant Member ITA No. 5189/Mum/2016 for (Assessment year : 2012-13) ITA No. 5190/Mum/2016 for (Assessment year : 2012-13) Solarfield Energy Pvt Ltd Vs ITO, Wd-2(3)(3), Mumbai 21, 3rd Floor, Sethi Mansion, Kumtha Street, Ballard Estate Mumbai-400 038 PAN : AAOCS4380A APPELLANT RESPONDEDNT Appellant by Shri J.D. Mistry Sr Advocate with Niraj Sheth Advocate & Dhrumil Shah CA Respondent by Shri Satish Rajore Sr DR Date of hearing 12-06-2019 Date of pronouncement 16-…

Assistant Commissioner of Income Tax, Circle 6(2)(2), Mumbai vs. Essar Power Transmission Company Limited, Mumbai

In the result, Ground No.1 of the Revenue’s appeal is dismissed

ITA 398/MUM/2018[2013-14]Status: DisposedITAT Mumbai06 Jun 2019AY 2013-14

Bench: Shri Pradip Kumar Kedia & Shri Sandeep Gosainआयकर अपील सं./I.T.A. No. 397/Mum/2018 ("नधा"रण वष" / Assessment Year : 2013-14)

For Respondent: Shri Anuj Kisnadwala, A.R

…cture 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] ITA Nos. 397 to 399/Mum/18 [ACIT vs. M/s. Essar Power Gujarat Ltd. & Anr.] - 7 - 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 wh…

Assistant Commissioner of Income Tax, Circle 6(2)(2), Mumbai vs. Essar Power Gujarat Limited, Mumbai

In the result, Ground No.1 of the Revenue’s appeal is dismissed

ITA 397/MUM/2018[2013-14]Status: DisposedITAT Mumbai06 Jun 2019AY 2013-14

Bench: Shri Pradip Kumar Kedia & Shri Sandeep Gosainआयकर अपील सं./I.T.A. No. 397/Mum/2018 ("नधा"रण वष" / Assessment Year : 2013-14)

For Respondent: Shri Anuj Kisnadwala, A.R

…cture 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] ITA Nos. 397 to 399/Mum/18 [ACIT vs. M/s. Essar Power Gujarat Ltd. & Anr.] - 7 - 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 wh…

Longulf Trading (India) P.Ltd, Mumbai vs. DCIT 8(2), Mumbai

In the result, appeal filed by the assessee for assessment year 2008-2009

ITA 592/MUM/2013[2008-09]Status: DisposedITAT Mumbai01 May 2019AY 2008-09

Bench: Shri G.S. Pannu (Vp) & Shri Ram Lal Negi (Jm) Assessment Year: 2008-09 M/S Longulf Trading (India) The Dcit 8 (2), Private Limited, Mumbai A-Wing, 5Th Floor, Unit 1B, Time Square, Vs. Andheri Kurla Road, Marol, Andheri (East), Mumbai - 400059 Pan: Aaacl1075D (Appellant) (Respondent) Assessee By : Shri Sanjay R. Parikh (Ar) Revenue By : Shri Rajesh Kumar Yadav & Jothi Lakshmi Nayak (Drs) Date Of Hearing: 08/02/2019 Date Of Pronouncement: 01/05/2019 O R D E R Per Ram Lal Negi, Jm This Appeal Has Been Filed By The Assessee Against Order Dated 31/10/2012 Passed By The Ld. Commissioner Of Income Tax (Appeals)-17, Mumbai, For The Assessment Year 2008-09, Whereby The Ld. Cit (A) Has Dismissed The Appeal Filed By The Assessee Against Assessment Order Passed U/S 143 (3) Of The Income Tax Act, 1961 (For Short ‘The Act’) & Further Directed The Ao To Disallow The Net Provision For Loss Of Rs. 51,515/-. 2. Brief Facts Of The Case Are That The Assessee An Exporter Engaged In The Business Of Supply Of Agriculture Commodities Industrial Chemical & Food Additives, Textiles & Engineering Goods Etc., Filed Its Return Of Income For The Assessment Year Under Consideration Declaring The Total Income Of Rs. 5,34,39,100/-. Since, The Case Was Selected For Scrutiny, The Ao Issued Notice U/S 143 (2) & 142 (1) Of The Act. In Response Thereof The Finance Manager Of 2 Assessment Year: 2008-09

For Appellant: Shri Sanjay R. Parikh (AR)For Respondent: Shri Rajesh Kumar Yadav &
Section 143

…ed by Central Government vides notification 69 (E) dated 25/01/1996. 3. In the facts and circumstances of the case and in law, the learned CIT (A) erred in ignoring the ratio of the decision of the Supreme Court in the case of Challapally Sugars Ltd. Vs. CIT, 98 ITR 167 where the Hon’ble Supreme Court has laid down that the rule of accountancy laid down by ICAI should be adopted in the absence of any statutory or other indication to the contrary. 4. Without prejudice to above, the learned CIT (A) erred on facts and in law that the forward contracts are akin to/in the nature of stock-in-trade and just as the loss…

Smt. Amita Narang, Delhi vs. The Dy Commissioner of Income Tax, Jammu

In the result, the assessee’s appeal is dismissed

ITA 385/ASR/2016[2007-08]Status: DisposedITAT Amritsar25 Mar 2019AY 2007-08

Bench: Sh. Sanjay Arorai.T.A. No. 385/Asr/2016 Assessment Year: 2007-08

For Appellant: Sh. K. R. Jain (Adv.)For Respondent: Sh. Charan Dass (D.R.)
Section 143(3)Section 45Section 48

…utation for his purposes, was reiterated, again in the context of computation of capital gain/loss, by the Apex Court in Dhun Dadabhoy Kapadia v. CIT [1967] 63 ITR 651 (SC). What, therefore, is to be seen, as clarified in Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC), is whether the cost incurred is necessary to bring the relevant asset into existence and to put it in working condition. The said decision, though rendered in the context of cost for the purpose of claim of depreciation, the principle involved is the same, i.e., what could, or could not, under the given facts and circumstances, be regarded a…

Ongc Mangalore Petrochemicals Ltd, Mangalore vs. Assistant Commissioner of Income Tax, Circle-1(1), Mangalore

In the result, the assessee’s appeal for Assessment Year 2008-09 is allowed

ITA 1522/BANG/2017[2008-09]Status: DisposedITAT Bangalore15 Mar 2019AY 2008-09

Bench: Shri N. V. Vasudevanand Shri Jason P. Boazassessment Year : 2008-09 M/S. Ongc Mangalore Vs. Assistant Commissioner Of Petrochemicals Ltd., Income-Tax, Mangalore Special Economic Circle-1(1), Zone, Mangalore. Permude Village, Mangalore – 574 509. Pan : Aafcm 0322 D Appellant Respondent Assessee By : Shri. B. R. Kamath, Ca Revenue By : Shri. R. N. Siddappaji, Addl.Cit Date Of Hearing : 10.01.2019 Date Of Pronouncement : 15.03.2019 O R D E R

For Appellant: Shri. B. R. Kamath, CAFor Respondent: Shri. R. N. Siddappaji, Addl.CIT
Section 143(1)Section 143(2)Section 143(3)Section 154

…onstruction of any work and which cannot be made profitable for a long period subject to certain restrictions contained in sub-section (2) to (7) of section 208. This section was specifically noted by the Supreme Court in Challapalli Sugars Ltd. v. CIT (1975) 98 ITR 167. The Supreme Court went on to observe at page 175 as follows: "We have already referred to section 208 of the Companies Act which makes provision for payment of interest on share capital in certain contingencies. Clause (b) of subsection (1) of that section provides that in case interest is paid on share capital issued for the purpose of raising m…

The Income Tax Officer, Amritsar vs. Sh. Shiv Raj Singh Bawa, Amritsar

In the result, the Revenue’s appeal is allowed and the assessee’s CO, dismissed

ITA 407/ASR/2016[2012-13]Status: DisposedITAT Amritsar30 Jan 2019AY 2012-13

Bench: Sh. Sanjay Arora & Sh. N. K. Choudhryi.T.A. No. 407/Asr/2016 Assessment Year: 2012-13

For Appellant: Sh. Charan Dass (D.R.)For Respondent: Sh. Tarun Bansal (Adv.)
Section 143(3)Section 40A(3)

…ation of which is governed by well accepted accounting principles. It is well settled that the profit and loss of an enterprise is to be determined following the accepted norms of commercial accounting (refer, inter alia, Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC), Attar Singh Gurmukh Singh (supra)). The same have in fact over the years been more sharply defined through the accounting standards, made mandatory u/s. 145(2) of the Act as well as the Companies Act. The actual cost would therefore imply the actual cost incurred by the assessee; the valuation of closing stock being not, as explained by the…

The ITO, Ward-1(1), Ahmedabad vs. M/S. Adani Power Rajasthan Ltd., Ahmedabad

In the result, cross objection of the assessee on this score stands allowed

ITA 1430/AHD/2015[2011-12]Status: DisposedITAT Ahmedabad18 Jan 2019AY 2011-12

Bench: Shri Pradip Kumar Kedia & Shri Mahavir Prasad, Judicial Memebr आयकर अपील सं./I.T.A. No. 1430/Ahd/2015 With Cross Objection No. 114/Ahd/2015 ("नधा"रण वष" / Assessment Year : 2011-12)

For Appellant: Parin Shah, A.RFor Respondent: Shri Mudit Nagpal, Sr. D.R
Section 56

…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, 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 apart 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 whe…

M/S.Combined Foods P. Ltd, Cochin vs. The ACIT, Cochin

In the result, all the appeals filed by the revenue stand dismissed

ITA 155/COCH/2017[2012-13]Status: DisposedITAT Cochin27 Dec 2018AY 2012-13

Bench: S/Shri Chandra Poojari, Am & George George K., Jm Assessment Year : 2012-13 M/S. Combined Foods Private The Principal Commissioner Of Limited, Income-Tax, Kochi-1. 28/3030, Elamkulam, Cheruparambath Road, Kadavanthara, Kochi-682 020. [Pan:Aaacc 9366N] Assessee-Appellant Revenue-Respondent

Section 143(3)Section 14ASection 263Section 36(1)(iii)Section 43(1)

…ning thereby that it will be capitalized to be added to the cost of the asset. Explanation 8 to section 43(1) of the Act was added with retrospective effect from 1/4/1974. We find that Supreme Court in the case of Challapalli Sugars Ltd. vs. CIT reported in 98 ITR 167 observed that the expression actual cost under the Income-tax Act, 1922 was under consideration, which had not been defined therein. An identical issue therein was as to whether interest paid before commencement of production on the amount borrowed for the acquisition and installation of plant and machinery has to be considered as part of the a…

M/S. Jaipur Tax Weaving Park Ltd., Jaipur vs. Income Tax Officer, Jaipur

In the result, appeal filed by the assessee is allowed

ITA 31/JPR/2018[2009-10]Status: DisposedITAT Jaipur13 Dec 2018AY 2009-10

Bench: Her.”

For Appellant: Shri Mukesh Khandelwal (CA)For Respondent: Shri J. C. Kulhari (JCIT)
Section 139(1)Section 143(3)Section 148

…nstruction of any work and which cannot be made profitable for a long period subject to certain restrictions contained in sub-sections (2) to (7) of section 208. This section was specifically noted by the Supreme Court in Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167. 6.1 In our view the situation in the instant case is quite similar except here instead of paying interest on funds brought in for specific purpose interest is earned on funds brought in by way of share capital for a specific purpose. Could it be said that in the former situation interest could have been capitalized and in the later situation it c…

DCIT, Cir-11(1), Kolkata vs. M/S Haldia Petrochemicals Ltd., Kolkata

In the result, this appeal of the revenue is dismissed

ITA 1976/KOL/2016[2003-04]Status: DisposedITAT Kolkata30 Oct 2018AY 2003-04

Bench: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi) Assessment Year: 2003-04 Deputy Commissioner Of Income Tax, Circle-11(1), Kolkata.……......………..…..................Appellant Vs. M/S. Haldia Petrochemicals.....……………...........…………..……………………...……..….…….......Respondent Bengal Eco Intelligent Park (Techno) Tower-1, Block-Em Plot No. 3 Salt Lake City Sector-V, 3Rd Floor Kolkata -91 [Pan : Aaach 7360 R]

Section 250

…tice, the assessee has been amortizing the said preliminary cost over five years. The assessee also relied on the decision of the Supreme Court in CIT vs up State Industrial Investment Corporation (1997) 225 ITR 703 and Challapalli Sugar Limited vs CIT (1975) 98 ITR 167.The assessee also submitted that these deferred revenue expenditure pertains to the assessment years starting from AY 1985-86 to 2001-02. However, the AO has disregarded the claim of the assessee by considering that the amount of amortized expenses and its allowability needs to be determined as per the provisions of the Act. There is no provision…

I.T.O. Ward -1(1), Raipur (Cg) vs. M/S Cmdc Icpl Coal Ltd, Raipur (Cg)

In the result, the appeal of the assessee is allowed

ITA 271/BIL/2014[2011-12]Status: DisposedITAT Raipur12 Oct 2018AY 2011-12

Bench: Shri R. K. Panda & Ms. Suchitra Kambleassessment Year : 2011-12 Ito, Ward- 1(1), Cmdc Icpl Coal Ltd., Raipur (Cg). Rajbandha Maidan, G. E. Road, Vs. Raipur (Cg).

For Appellant: Shri R. B. Doshi, CAFor Respondent: Shri Ajit Kumar Laskar, DR

…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, 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…

Deputy Commissioner of Income-Tax vs. Serum Institute of India Ltd., Pune

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

ITA 934/PUN/2016[2012-13]Status: DisposedITAT Pune12 Oct 2018AY 2012-13

Bench: Shri D.Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं. / Ita Nos.549 & 550/Pun/2016 अपील िनधा"रण िनधा"रण वष" िनधा"रण िनधा"रण वष" वष" / Assessment Years : 2011-12 & 2012-13 वष"

For Appellant: Shri Rajshekhar S. AbhyankarFor Respondent: Shri Rajeev Kumar
Section 132Section 143(3)Section 14ASection 153ASection 35

…in the case of Kutti Spinners (P) Ltd. In view of the foregoing discussion and respectfully following the decisions of Bombay High Court in the case of CIT Vs. Great Eastern Shipping Co. Ltd. reported at 118 ITR 772 (Born) and Challapalli Sugars Ltd. Vs. CIT 98 ITR 167 (SC) and decision of Pune ITAT in the case of Mayura Steels Pvt. Ltd. Vs. ACIT (Supra), in the case of Dr. Santosh Kalmesh Prabhu Vs. ACIT (Supra) and in the case of ACIT Vs. Suma Shilipa Limited (Supra), I am of the considered view that higher depreciation is applicable in wind mill and also expenses incurred on civil structures are 26 Serum Inst…

Deputy Commissioner of Income-Tax vs. Serum Institute of India Ltd., Pune

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

ITA 607/PUN/2016[2011-12]Status: DisposedITAT Pune12 Oct 2018AY 2011-12

Bench: Shri D.Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं. / Ita Nos.549 & 550/Pun/2016 अपील िनधा"रण िनधा"रण वष" िनधा"रण िनधा"रण वष" वष" / Assessment Years : 2011-12 & 2012-13 वष"

For Appellant: Shri Rajshekhar S. AbhyankarFor Respondent: Shri Rajeev Kumar
Section 132Section 143(3)Section 14ASection 153ASection 35

…in the case of Kutti Spinners (P) Ltd. In view of the foregoing discussion and respectfully following the decisions of Bombay High Court in the case of CIT Vs. Great Eastern Shipping Co. Ltd. reported at 118 ITR 772 (Born) and Challapalli Sugars Ltd. Vs. CIT 98 ITR 167 (SC) and decision of Pune ITAT in the case of Mayura Steels Pvt. Ltd. Vs. ACIT (Supra), in the case of Dr. Santosh Kalmesh Prabhu Vs. ACIT (Supra) and in the case of ACIT Vs. Suma Shilipa Limited (Supra), I am of the considered view that higher depreciation is applicable in wind mill and also expenses incurred on civil structures are 26 Serum Inst…

Serum Institute of India Ltd., Pune vs. Deputy Commissioner of Income-Tax

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

ITA 550/PUN/2016[2012-13]Status: DisposedITAT Pune12 Oct 2018AY 2012-13

Bench: Shri D.Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं. / Ita Nos.549 & 550/Pun/2016 अपील िनधा"रण िनधा"रण वष" िनधा"रण िनधा"रण वष" वष" / Assessment Years : 2011-12 & 2012-13 वष"

For Appellant: Shri Rajshekhar S. AbhyankarFor Respondent: Shri Rajeev Kumar
Section 132Section 143(3)Section 14ASection 153ASection 35

…in the case of Kutti Spinners (P) Ltd. In view of the foregoing discussion and respectfully following the decisions of Bombay High Court in the case of CIT Vs. Great Eastern Shipping Co. Ltd. reported at 118 ITR 772 (Born) and Challapalli Sugars Ltd. Vs. CIT 98 ITR 167 (SC) and decision of Pune ITAT in the case of Mayura Steels Pvt. Ltd. Vs. ACIT (Supra), in the case of Dr. Santosh Kalmesh Prabhu Vs. ACIT (Supra) and in the case of ACIT Vs. Suma Shilipa Limited (Supra), I am of the considered view that higher depreciation is applicable in wind mill and also expenses incurred on civil structures are 26 Serum Inst…

Serum Institute of India Ltd., Pune vs. Deputy Commissioner of Income-Tax

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

ITA 549/PUN/2016[2011-12]Status: DisposedITAT Pune12 Oct 2018AY 2011-12

Bench: Shri D.Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं. / Ita Nos.549 & 550/Pun/2016 अपील िनधा"रण िनधा"रण वष" िनधा"रण िनधा"रण वष" वष" / Assessment Years : 2011-12 & 2012-13 वष"

For Appellant: Shri Rajshekhar S. AbhyankarFor Respondent: Shri Rajeev Kumar
Section 132Section 143(3)Section 14ASection 153ASection 35

…in the case of Kutti Spinners (P) Ltd. In view of the foregoing discussion and respectfully following the decisions of Bombay High Court in the case of CIT Vs. Great Eastern Shipping Co. Ltd. reported at 118 ITR 772 (Born) and Challapalli Sugars Ltd. Vs. CIT 98 ITR 167 (SC) and decision of Pune ITAT in the case of Mayura Steels Pvt. Ltd. Vs. ACIT (Supra), in the case of Dr. Santosh Kalmesh Prabhu Vs. ACIT (Supra) and in the case of ACIT Vs. Suma Shilipa Limited (Supra), I am of the considered view that higher depreciation is applicable in wind mill and also expenses incurred on civil structures are 26 Serum Inst…

Assistant Commissioner of Income-Tax vs. M/S. Parakh Agro Industries Ltd., Pune

In the result, both the appeals by Revenue are dismissed

ITA 1254/PUN/2016[2010-11]Status: DisposedITAT Pune12 Oct 2018AY 2010-11

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm

For Appellant: Shri Nikhil PathakFor Respondent: Shri Rajesh Gawli
Section 32(1)(iia)

…l settled law that pre-operative expenses, erection and fabrication expenses etc. are to be capitalized and are subsumed in the cost of asset. The Hon’ble Supreme Court of India in the case of Challapalli Sugars Ltd. Vs. Commissioner of Income Tax reported as 98 ITR 167 has held that the cost of fixed assets include all expenditure necessary to bring such asset into existence and to put them in working condition. Thus, exclusion of erection and fabrication expenditure, pre-operative expenses, labour charges for installation etc. by Assessing Officer is wrong. Further, the exclusion of packaging machinery, printin…

Assistant Commissioner of Income-Tax vs. M/S. Parakh Agro Industries Ltd., Pune

In the result, both the appeals by Revenue are dismissed

ITA 1253/PUN/2016[2007-08]Status: DisposedITAT Pune12 Oct 2018AY 2007-08

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm

For Appellant: Shri Nikhil PathakFor Respondent: Shri Rajesh Gawli
Section 32(1)(iia)

…l settled law that pre-operative expenses, erection and fabrication expenses etc. are to be capitalized and are subsumed in the cost of asset. The Hon’ble Supreme Court of India in the case of Challapalli Sugars Ltd. Vs. Commissioner of Income Tax reported as 98 ITR 167 has held that the cost of fixed assets include all expenditure necessary to bring such asset into existence and to put them in working condition. Thus, exclusion of erection and fabrication expenditure, pre-operative expenses, labour charges for installation etc. by Assessing Officer is wrong. Further, the exclusion of packaging machinery, printin…

DCIT, Cir-11(2), Kolkata vs. M/S Mccpta India Corp. Pvt. Ltd., Kolkata

In the result, the appeal of the Revenue is dismissed and the Cross objection filed by the assessee is also dismissed

ITA 1108/KOL/2015[2001-02]Status: DisposedITAT Kolkata10 Oct 2018AY 2001-02

Bench: Shri A.T.Varkey, Jm & Dr. A.L.Saini, Am D.C.I.T., Circle- 11(2) Kolkata Vs. M/S Mcc Pta India Corp. P-7, Chowringhee Square, Pvt. Ltd. Kolkata-700069. Techno Building, Bengal Eco & Intelligent Park, Tower-1, 3Rd Floor, Block-Em, Plot No.3, Salt Lake City, Sector- V, Kolkata-700091. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacm 9169 K (अपीलाथ" /Apelant) (""यथ" / Respondent) .. C.O.No.49/Kol/2015 (A/O Ita No.1108/Kol/2015) (A.Y: 2001-02) M/S Mcc Pta India Corp. Pvt. Ltd. Vs. D.C.I.T., Circle- 11(2) Techno Building, Bengal Eco & Kolkata Intelligent Park, Tower-1, 3Rd Floor, P-7, Chowringhee Square, Block-Em, Plot No.3, Salt Lake City, Kolkata-700069. Sector-V, Kolkata-700091. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacm 9169 K (अपीलाथ" /Apelant) (""यथ" / Respondent) ..

For Appellant: Shri Nageswar Rao, Advocate & Shri Amit Sharma, FCAFor Respondent: Shri P.K.Srihari, CIT,DR
Section 254

…ded to the respective cost of the asset and this is consequential depreciation being on the entire asset, thus it automatically covered for depreciation. For this we rely on the judgment of the Hon’ble Supreme Court in the case of Challapali Sugars Ltd vs CIT 98 ITR 167 (SC), wherein it was held that all expenditure necessary to bring into existence the fixed assets and put them in working condition must be capitalized. In the light of the accepted principles of accountancy, this expenditure be allowed to be capitalized as cost of such assets and therefore depreciation must be allowable on such cost. Therefore, c…

Jorabat Shillong Expressway Ltd, Mumbai vs. ITO 14(2)(1), Mumbai

In the result, the appeal filed by the assessee is hereby ordered to be partly allowed

ITA 3667/MUM/2016[2011-12]Status: DisposedITAT Mumbai12 Sept 2018AY 2011-12

Bench: Shri B. R. Baskaran, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.3667/Mum/2016 (निर्धारण वर्ा / Assessment Year: 2011-12) बिधम/ Jorabat Shillong Expressway Ito 14(2)(1) Ltd. (Erstwhile Income Tax Vs. The Il&Fs Financial Center, Officer-10(1)(4) Mumbai Room No. 457, 4Th Floor, Plot No. C-22, G Block, Bandra-Kurla Complex, Aaykar Bhavan, Maharshi Bandra(E), Mumbai-400051. Karve Road, Marine Lines, Mumbai-400020. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaccj3827H (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee By: Shri Dilip V. Lakhani (Ar) Revenue By: Shri Suman Kumar (Dr) सुनवाई की तारीख / Date Of Hearing: 20.06.2018 घोषणा की तारीख /Date Of Pronouncement: 12.09.2018 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 09.02.2016 Passed By The Commissioner Of Income Tax (Appeals)-22, Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y. 2011-12. 2. The Assessee Has Raised The Following Grounds: - 1. On The Facts & Circumstances Of The Case The Learned Commissioner Of Income Tax (Appeals) Has Erred In Confirming That The Interest Income Of Rs.31,13,010/- The Appellant Prays That The Interest Income Earned By The Appellant Amounting To

For Appellant: Shri Dilip V. Lakhani (AR)For Respondent: Shri Suman Kumar (DR)
Section 234B

…onstruction of any work and which cannot be made profitable for a long period subject to certain restrictions contained in subsections (2) to (7) of section 208. This section was specifically noted by the Supreme Court in Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167. 6.1 In our view the situation in the instant case is quite similar except here instead of paying interest on funds brought in for specific purpose interest is earned on funds brought in by way of share capital for a specific purpose. Could it be said that in the former situation interest could have been capitalized and in the later situation it c…