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

Mjsj Coal Limited, Angul vs. ITO, Ward-1(3), Bhubaneswar

Appeals of the assessee are allowed

ITA 107/CTK/2018[2014-15]Status: DisposedITAT Cuttack31 Aug 2018AY 2014-15

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपील सं./Ita Nos.429/Ctk/2016, 68/Ctk/2017 & 107/Ctk/2018 ("नधा"रण वष" / A.Ys :2011-2012, 2013-2014 & 2014-2015) Mjsj Coal Limited, Vs. Ito, Ward-2, Dhenkanal / At/Po:Balanda, Talcher, Ito, Ward-1(3), Bhubaneswar Dist-Angul, Odisha-759116 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aagcm 1095 E (अपीलाथ" /Appellant) (""यथ" / Respondent) .. "नधा"रती क" ओर से /Assessee By : Shri K.K.Bal, Ar राज"व क" ओर से /Revenue By : Shri Subhendu Dutta, Citdr सुनवाई क" तार"ख / Date Of Hearing : 28/08/2018 घोषणा क" तार"ख/Date Of Pronouncement 31/08/2018 आदेश / O R D E R Per Shri Pavan Kumar Gadale, Jm: These Are The Appeals Filed By The Assessee Against The Separate Orders Of Cit(A)-1&3, Bhubaneswar, Dated 28.04.2016, 04.11.2016 & 04.12.2017 Passed In I.T.Appeal Nos.0120/2014-15, 0472/15-16 & 0254/16-17, For The Assessment Years 2011-2012, 2013-2014 & 2014- 2015. 2. Since Issues The Above Appeals Are Common, Therefore, They Are Heard Together & Disposed Off By This Consolidated Order. For The Sake Of Convenience We Shall Take Up Assessee’S Appeal I.E. Ita No.429/Ctk/2016 For Assessment Year 2011-2012 & The Grounds & Facts Mentioned Therein, Wherein The Assessee Has Raised The Following Grounds Of Appeal :- Ground Of Appeal • We Are Not Agreeing With The Computation Of Tax On Interest Earn By Company Made By Assessing Officer. • During The Assessment, The Cases We Submitted To Justify Our Claim (As Mentioned In Statement Of Facts) Has Not Been Paid Any Emphasis For Deciding The Case By The A.0 & Cit (Appeal- 3),Bhubaneswar. On The Other Hand The A.0 & Cit (Appeal-3) Finally Imposed His Decision Based On The Facts Of Alkali Tuticorin Chem. & Fertilizers Ltd. In Which It Has Earned Interest On The Funds, Were Borrowed Funds Only

For Appellant: Shri K.K.Bal, ARFor Respondent: Shri Subhendu Dutta, CITDR

…which is issued for a specific purpose to defray expenses for construction of any work 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. The Supreme Court went on to observe 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 sub-section (1) of that section provides that in case interest is paid on share capital issued for the purpose of raising money to def…

Mjsj Coal Limited, Angul vs. ITO, Ward-2, Dhenkanal

Appeals of the assessee are allowed

ITA 429/CTK/2016[2011-12]Status: DisposedITAT Cuttack31 Aug 2018AY 2011-12

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपील सं./Ita Nos.429/Ctk/2016, 68/Ctk/2017 & 107/Ctk/2018 ("नधा"रण वष" / A.Ys :2011-2012, 2013-2014 & 2014-2015) Mjsj Coal Limited, Vs. Ito, Ward-2, Dhenkanal / At/Po:Balanda, Talcher, Ito, Ward-1(3), Bhubaneswar Dist-Angul, Odisha-759116 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aagcm 1095 E (अपीलाथ" /Appellant) (""यथ" / Respondent) .. "नधा"रती क" ओर से /Assessee By : Shri K.K.Bal, Ar राज"व क" ओर से /Revenue By : Shri Subhendu Dutta, Citdr सुनवाई क" तार"ख / Date Of Hearing : 28/08/2018 घोषणा क" तार"ख/Date Of Pronouncement 31/08/2018 आदेश / O R D E R Per Shri Pavan Kumar Gadale, Jm: These Are The Appeals Filed By The Assessee Against The Separate Orders Of Cit(A)-1&3, Bhubaneswar, Dated 28.04.2016, 04.11.2016 & 04.12.2017 Passed In I.T.Appeal Nos.0120/2014-15, 0472/15-16 & 0254/16-17, For The Assessment Years 2011-2012, 2013-2014 & 2014- 2015. 2. Since Issues The Above Appeals Are Common, Therefore, They Are Heard Together & Disposed Off By This Consolidated Order. For The Sake Of Convenience We Shall Take Up Assessee’S Appeal I.E. Ita No.429/Ctk/2016 For Assessment Year 2011-2012 & The Grounds & Facts Mentioned Therein, Wherein The Assessee Has Raised The Following Grounds Of Appeal :- Ground Of Appeal • We Are Not Agreeing With The Computation Of Tax On Interest Earn By Company Made By Assessing Officer. • During The Assessment, The Cases We Submitted To Justify Our Claim (As Mentioned In Statement Of Facts) Has Not Been Paid Any Emphasis For Deciding The Case By The A.0 & Cit (Appeal- 3),Bhubaneswar. On The Other Hand The A.0 & Cit (Appeal-3) Finally Imposed His Decision Based On The Facts Of Alkali Tuticorin Chem. & Fertilizers Ltd. In Which It Has Earned Interest On The Funds, Were Borrowed Funds Only

For Appellant: Shri K.K.Bal, ARFor Respondent: Shri Subhendu Dutta, CITDR

…which is issued for a specific purpose to defray expenses for construction of any work 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. The Supreme Court went on to observe 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 sub-section (1) of that section provides that in case interest is paid on share capital issued for the purpose of raising money to def…

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

In the result, the appeal of the assessee is partly allowed and appeal of the Revenue is dismissed

ITA 168/KOL/2016[2004-05]Status: DisposedITAT Kolkata06 Jul 2018AY 2004-05

Bench: Hon’Ble Shri P.M.Jagtap, Am & Shri S.S.Viswanethra Ravi, Jm ] Assessment Year : 2004-05

For Appellant: Shri Harakamal Chakravorty, ARFor Respondent: Shr P.K.Srihari, CIT
Section 115J

…1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH ‘A’ KOLKATA [Before Hon’ble Shri P.M.Jagtap, AM & Shri S.S.Viswanethra Ravi, JM ] Assessment Year : 2004-05 Haldia Petrochemicals Ltd. -versus- A.C.I.T., Circle-8 Kolkata Kolkata (PAN : AAACH 7360 R) (Appellant) (Respondent) Assessment Year : 2004-05 D.C.I.T., Circle-11(1) -versus- Haldia Petrochemicals Ltd. Kolkata Kolkata (PAN: AAACH 7360 R) (Appellant) (Respondent) For the Assessee : Shri Harakamal Chakravorty, AR For the Respondent: Shr P.K.Srihari, CIT Date of Hearing : 09.05.2018. Date of Pronouncement : 06.07.2018. ORDER Per S.S.Viswanethra Ravi, JM Bot…

Haldia Petrochemicals Ltd., Kolkata vs. ACIT, Cir-8, Kolkata

In the result, the appeal of the assessee is partly allowed and appeal of the Revenue is dismissed

ITA 1533/KOL/2015[2003-2004]Status: DisposedITAT Kolkata06 Jul 2018AY 2003-2004

Bench: Hon’Ble Shri P.M.Jagtap, Am & Shri S.S.Viswanethra Ravi, Jm ] Assessment Year : 2004-05

For Appellant: Shri Harakamal Chakravorty, ARFor Respondent: Shr P.K.Srihari, CIT
Section 115J

…1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH ‘A’ KOLKATA [Before Hon’ble Shri P.M.Jagtap, AM & Shri S.S.Viswanethra Ravi, JM ] Assessment Year : 2004-05 Haldia Petrochemicals Ltd. -versus- A.C.I.T., Circle-8 Kolkata Kolkata (PAN : AAACH 7360 R) (Appellant) (Respondent) Assessment Year : 2004-05 D.C.I.T., Circle-11(1) -versus- Haldia Petrochemicals Ltd. Kolkata Kolkata (PAN: AAACH 7360 R) (Appellant) (Respondent) For the Assessee : Shri Harakamal Chakravorty, AR For the Respondent: Shr P.K.Srihari, CIT Date of Hearing : 09.05.2018. Date of Pronouncement : 06.07.2018. ORDER Per S.S.Viswanethra Ravi, JM Bot…

Mahindra World City Developers Ltd., Chennai vs. ACIT, Chennai

In the result, the corresponding grounds of the assessee are

ITA 2086/CHNY/2016[2012-13]Status: DisposedITAT Chennai27 Jun 2018AY 2012-13

Bench: Shri N.R.S. Ganesan & Shri S. Jayaramanआयकरअपीलसं/.I.T.A. Nos. 2084, 2085 & 2086/Chny/2016 "नधा"रणवष"/Assessment Years : 2010-11 To 2012-13

For Respondent: Mrs. Ruby George, CIT
Section 14A

…आयकर अपील"य अ"धकरण ,’बी’ "यायपीठ,चे"नई IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI "ी एन. आर. एस .गणेशन, "या"यक सद"य एवं "ी एस जयरामन, लेखा सद"यके सम# BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER आयकरअपीलसं/.I.T.A. Nos. 2084, 2085 & 2086/Chny/2016 "नधा"रणवष"/Assessment Years : 2010-11 to 2012-13 Shri Mahindra World City Developers Ltd., Assistant Commissioner of Income Mandindra Towers, Vs. Tax, Ground Floor, Company Circle IV(1), 17/18 Pattulous Road, Chennai – 600 034. Anna Salai, Chennai – 600 002. [PAN: AAACM 6904A] (अपीलाथ"/Appellant) (""यथ"/Respondent)…

Mahindra World City Developers Ltd., Chennai vs. ACIT, Chennai

In the result, the corresponding grounds of the assessee are

ITA 2085/CHNY/2016[2011-12]Status: DisposedITAT Chennai27 Jun 2018AY 2011-12

Bench: Shri N.R.S. Ganesan & Shri S. Jayaramanआयकरअपीलसं/.I.T.A. Nos. 2084, 2085 & 2086/Chny/2016 "नधा"रणवष"/Assessment Years : 2010-11 To 2012-13

For Respondent: Mrs. Ruby George, CIT
Section 14A

…आयकर अपील"य अ"धकरण ,’बी’ "यायपीठ,चे"नई IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI "ी एन. आर. एस .गणेशन, "या"यक सद"य एवं "ी एस जयरामन, लेखा सद"यके सम# BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER आयकरअपीलसं/.I.T.A. Nos. 2084, 2085 & 2086/Chny/2016 "नधा"रणवष"/Assessment Years : 2010-11 to 2012-13 Shri Mahindra World City Developers Ltd., Assistant Commissioner of Income Mandindra Towers, Vs. Tax, Ground Floor, Company Circle IV(1), 17/18 Pattulous Road, Chennai – 600 034. Anna Salai, Chennai – 600 002. [PAN: AAACM 6904A] (अपीलाथ"/Appellant) (""यथ"/Respondent)…

Mahindra World City Developers Ltd., Chennai vs. ACIT, Chennai

In the result, the corresponding grounds of the assessee are

ITA 2084/CHNY/2016[2010-11]Status: DisposedITAT Chennai27 Jun 2018AY 2010-11

Bench: Shri N.R.S. Ganesan & Shri S. Jayaramanआयकरअपीलसं/.I.T.A. Nos. 2084, 2085 & 2086/Chny/2016 "नधा"रणवष"/Assessment Years : 2010-11 To 2012-13

For Respondent: Mrs. Ruby George, CIT
Section 14A

…आयकर अपील"य अ"धकरण ,’बी’ "यायपीठ,चे"नई IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI "ी एन. आर. एस .गणेशन, "या"यक सद"य एवं "ी एस जयरामन, लेखा सद"यके सम# BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER आयकरअपीलसं/.I.T.A. Nos. 2084, 2085 & 2086/Chny/2016 "नधा"रणवष"/Assessment Years : 2010-11 to 2012-13 Shri Mahindra World City Developers Ltd., Assistant Commissioner of Income Mandindra Towers, Vs. Tax, Ground Floor, Company Circle IV(1), 17/18 Pattulous Road, Chennai – 600 034. Anna Salai, Chennai – 600 002. [PAN: AAACM 6904A] (अपीलाथ"/Appellant) (""यथ"/Respondent)…

Deputy Commissioner of Income-Tax vs. Shri Subhash Hastimal Lodha

In the result, the appeal of the Revenue is dismissed

ITA 1078/PUN/2016[2010-11]Status: DisposedITAT Pune20 Jun 2018AY 2010-11

Bench: "याियक सद"य के सम" Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर अपील सं आयकर अपील सं. / Ita No. 1078/Pun/2016 आयकर अपील सं आयकर अपील सं िनधा"रण वष" िनधा"रण वष" / Assessment Year : 2010-11 िनधा"रण वष" िनधा"रण वष"

For Appellant: Shri Nikhil PathakFor Respondent: Shri Achal Sharma
Section 143(1)Section 32(1)

…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 applicable in…

DCIT, New Delhi vs. Maharashtra Seamless Ltd., New Delhi

In the result the appeal of the revenue is dismissed

ITA 6458/DEL/2015[2009-10]Status: DisposedITAT Delhi13 Jun 2018AY 2009-10

Bench: Shri Sudhanshu Srivastava & Shri Prashant Maharishidcit, Vs. Maharashtra Seamless Ltd, Plot No. 5, 2Nd Floor, Pusa Circle-16(1), New Delhi Road, New Delhi Pan: Aaacm0511B (Appellant) (Respondent)

For Appellant: Shri Ved Jain, CAFor Respondent: Shri Sajnit Singh, CIT DR
Section 154Section 271(1)(c)

…4404 & 1883/Munt/2004 on identical issue. In Para 47 of the judgment the Hon'ble 1TAT has held as under :- "47. Now, we will consider the issue with reference to Accounting Standard -II (AS-11). The Hon‟ble Supreme Court in the case of Chellapali Sugar Mills, 98 ITR 167 and in the case of Woodward Governor of India P. Ltd (supra) observed that the accounting standards issued by the Institute of Chartered Accountants of India required that accounting policies must be governed by the principle of prudence. Accounting Standards are prepared by ICAI keeping in view of the principle of prudence and this principle has…

Hgp Community Private Limited Successor to Alpha Associates, Mumbai vs. Assistant Commissioner of Income Tax-12(3), Mumbai

In the result, the appeal is allowed for statistical purposes

ITA 5081/MUM/2017[2010-11]Status: DisposedITAT Mumbai26 Feb 2018AY 2010-11

Bench: Shri Saktijit Dey () & Shri N.K. Pradhan () Assessment Year: 2010-11 Hgp Community Pvt. Income Tax Officer, Ltd.,514, Dalamal Word 3(1)(4), Room No Vs. Towers, 211, F P J 666, Aayakar Bhavan Marg, Nariman Point, Mumbai. Mumbai-400021 Pan No. Aaafa4103H Appellant Respondent Assessee By : Mr. Chetan A. Karia, Ar Revenue By : Mr. M.C. Omi Ningshen, Dr Date Of Hearing : 29/11/2017 Date Of Pronouncement : 26/02/2018

For Appellant: Mr. Chetan A. Karia, ARFor Respondent: Mr. M.C. Omi Ningshen, DR
Section 143(3)Section 23Section 24

…ing assets - Period taken to complete the acquisition construction or production - Income from temporary investments of borrowings pending their expenditure on qualifying assets. 7.5 The Hon’ble Supreme Court in the case of Challapalli Sugars Ltd v CIT [1975] 98 ITR 167 (SC) has held that interest on amount borrowed for acquiring and installing machinery for the period prior to commencement of production, forms part of actual cost. It has also been held in CIT v Fort Gloster Industries Ltd [1971] 79 ITR 48 (Cal) that expenses on registration, stamp duty, insurance, guarantee commission necessary for acquisition o…

DCIT, Cir-2(1), Kolkata vs. M/S Kolkata Metro Rail Corporation Ltd., Kolkata

In the result, both the appeals filed by Revenue (ITA No

ITA 49/KOL/2016[2011-2012]Status: DisposedITAT Kolkata22 Dec 2017AY 2011-2012

Bench: Shri S.S. Viswanethra Ravi, Jm &Dr. A.L.Saini, Am आयकरअपीलसं./Ita No.1362/Kol/2015& 49/Kol/2016 (िनधा"रणवष" / Assessment Year: 2010-11& 2011-12) I.T.O Wd-2(3), Kolkata Vs. M/S Kolkata Metro Rail Corpn. Ltd. Aayakar Bhawan, P-7, Chowringhee Square, 7Th Floor, Hrbc Bhavan, 4Th& 5Th R/No.21, Kol – 69. Floor, Munshi Prem Chand Sarani, Kolkata – 700 021. "थायीलेखासं./जीआइआरसं./Pan/Gir No. :Aadck 5313 J (Appellant) .. (Assessee) Appellantby : Shriarindam Bhattacharjee, Addl. Cit Assesseeby :Shri Vikash Singhal. सुनवाईकीतारीख/ Date Of Hearing : 12/10/2017 घोषणाकीतारीख/Date Of Pronouncement : 22/12/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, Am: These Captioned Two Appeals Filed By The Revenue,Pertaining To Assessment Year 2010-11,Aredirected Against The Order Passed By The Ld Commissioner Of Income Tax (Appeals)-1,Kolkata,Which In Turn Arise Out Of Assessment Orders Passed By The Assessing Officer U/S 143(3)Of The Income Tax Act, 1961 (Hereinafter Referred To As The ‘Act’). 2.Since These Two Appeals Relate To The Same Assessee, Different Assessment Years, Identical Issues Are Involved, Therefore, These Have Been Clubbed & Heard Together & A Consolidated Order Is Being Passed For The Sake Of Convenience & Brevity.The Revenue’S Appeal In Ita No.1362/Kol/2015, A.Y 2010-11, Is Taken As The Lead Case. 4.The Grounds Of Appeal Raised By The Revenue (In Lead Case In Ita No.1362/Kol/2015, A.Y 2010-11) Are As Under:

For Appellant: ShriArindam Bhattacharjee, Addl. CIT
Section 143(1)Section 143(2)Section 143(3)Section 56

…was in the nature of a capital receipt, and was required to be set off against pre-operative expenses following the principles laid down by the Hon’ble Supreme Court in CIT V. Bokaro Steel Ltd. (1999) 236 ITR 315 (SC) and Challapalli Sugars Ltd. v. CIT (1975) 98 ITR 167(SC). The Hon'ble Apex Court in the case of Commissioner of Income vs. Bokaro Steel Ltd. 236 ITR 315 (SC), had considered the decision in the case of Challapalli Sugars Ltd vs. CIT (1975) 98 ITR 167 and examined the question of treatment of interest received before commencement of production by a company. It was observed, that the accepted accounta…

ITO, WD-2(3), Kolkata vs. M/S Kolkata Metro Rail Corporation Ltd., Kolkata

In the result, both the appeals filed by Revenue (ITA No

ITA 1362/KOL/2015[2010-2011]Status: DisposedITAT Kolkata22 Dec 2017AY 2010-2011

Bench: Shri S.S. Viswanethra Ravi, Jm &Dr. A.L.Saini, Am आयकरअपीलसं./Ita No.1362/Kol/2015& 49/Kol/2016 (िनधा"रणवष" / Assessment Year: 2010-11& 2011-12) I.T.O Wd-2(3), Kolkata Vs. M/S Kolkata Metro Rail Corpn. Ltd. Aayakar Bhawan, P-7, Chowringhee Square, 7Th Floor, Hrbc Bhavan, 4Th& 5Th R/No.21, Kol – 69. Floor, Munshi Prem Chand Sarani, Kolkata – 700 021. "थायीलेखासं./जीआइआरसं./Pan/Gir No. :Aadck 5313 J (Appellant) .. (Assessee) Appellantby : Shriarindam Bhattacharjee, Addl. Cit Assesseeby :Shri Vikash Singhal. सुनवाईकीतारीख/ Date Of Hearing : 12/10/2017 घोषणाकीतारीख/Date Of Pronouncement : 22/12/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, Am: These Captioned Two Appeals Filed By The Revenue,Pertaining To Assessment Year 2010-11,Aredirected Against The Order Passed By The Ld Commissioner Of Income Tax (Appeals)-1,Kolkata,Which In Turn Arise Out Of Assessment Orders Passed By The Assessing Officer U/S 143(3)Of The Income Tax Act, 1961 (Hereinafter Referred To As The ‘Act’). 2.Since These Two Appeals Relate To The Same Assessee, Different Assessment Years, Identical Issues Are Involved, Therefore, These Have Been Clubbed & Heard Together & A Consolidated Order Is Being Passed For The Sake Of Convenience & Brevity.The Revenue’S Appeal In Ita No.1362/Kol/2015, A.Y 2010-11, Is Taken As The Lead Case. 4.The Grounds Of Appeal Raised By The Revenue (In Lead Case In Ita No.1362/Kol/2015, A.Y 2010-11) Are As Under:

For Appellant: ShriArindam Bhattacharjee, Addl. CIT
Section 143(1)Section 143(2)Section 143(3)Section 56

…was in the nature of a capital receipt, and was required to be set off against pre-operative expenses following the principles laid down by the Hon’ble Supreme Court in CIT V. Bokaro Steel Ltd. (1999) 236 ITR 315 (SC) and Challapalli Sugars Ltd. v. CIT (1975) 98 ITR 167(SC). The Hon'ble Apex Court in the case of Commissioner of Income vs. Bokaro Steel Ltd. 236 ITR 315 (SC), had considered the decision in the case of Challapalli Sugars Ltd vs. CIT (1975) 98 ITR 167 and examined the question of treatment of interest received before commencement of production by a company. It was observed, that the accepted accounta…

M/S. Chennai Petroleum Corporation Ltd., Chennai vs. ACIT, Chennai

In the result, both the assessee’s and the Revenue’s appeals are partly allowed and partly allowed for statistical purposes

ITA 1858/CHNY/2011[2004-05]Status: DisposedITAT Chennai05 Dec 2017AY 2004-05

Bench: Shri Sanjay Arora & Shri George Mathanआयकर अपील सं./Ita No.1858/Mds/2011 "नधा"रण वष" / Assessment Year : 2004-05 Chennai Petroleum Corporation Ltd., Asst. Commissioner Of Income Refinery House, Manali, Vs. Tax, Chennai – 600 068 Company Circle-I(3), [Pan: Aaacm 4392C] Chennai – 600 034 (अपीलाथ" /Appellant) (""यथ"/Respondent)

For Appellant: AdvocateFor Respondent: 07.09.2017
Section 143(3)Section 2Section 28Section 36(1)(iii)

…run is thus a testing phase before which a plant can be declared as fit and ready for use, i.e., commissioned. No wonder, all the expenditure up to this stage stands to be capitalized as cost of the project (also refer: Challapalli Sugars Ltd. vs. CIT [1975] 98 ITR 167 20 ITA Nos. 1858 & 1980/Mds/2011 (AY 2004-05) Chennai Petroleum Corporation Ltd. (SC)). How, then, can a plant or machinery be regarded as being capable of being used, much less actually used, even if passively, prior thereto?’ [emphasis, supplied] In other words, there is without doubt a case for depreciation being allowed in case of passive…

ITO, Bangalore vs. M/S Bank Note Paper Mills India Pvt. Ltd., Bangalore

In the result, Revenue’s appeal for asst

ITA 1162/BANG/2016[2012-13]Status: DisposedITAT Bangalore10 Nov 2017AY 2012-13

Bench: Shri Sunil Kumar Yadav & Shri Jason P Boazthe Income-Tax Officer, Ward-1(1)(3), Bengaluru. . Appellant Vs. M/S Bank Note Paper Mill India Pvt. Ltd., 1St Floor, S.R Complex, No.2, Thavarekere Main Road, S.G Palya, Drc Post, Bengaluru. . Respondent Pan – Aaecb3245M Appellant By : Shri B.R Sunil Kumar Singh, Cit Respondent By : Smt. Prathiba, Advocate Date Of Hearing : 7-11-2017 Date Of Pronouncement : -11-2017 O R D E R

For Appellant: Shri B.R Sunil Kumar Singh, CITFor Respondent: Smt. Prathiba, Advocate
Section 143(3)

…. Bokaro Steel Ltd. (1999) 236 ITR 315 (SC) ITA No.1162/B/16 11 2. C.I.T. vs. Karnataka Power Corporation (2001) 247 ITR 268 (SC) 3. Bongaigaon Refinery and Petro Chemical Ltd. vs. C.I.T. (2001) 251 ITR 329 (SC) 4. Challapalli Sugars Ltd. vs. C.I.T. (1975) 98 ITR 167 (SC) 5. C.I.T. vs. VGR Foundations (2008) 298 ITR 132 (Mad.) 6. Indian Oil Panipat Power Consortium Limited vs. ITO (2009) 315 ITR 255 (Delhi) On perusal of the above case laws Hon'ble Delhi Tribunal held: "It is amply clear that in matters as that of assessee interest earned in pre- commencement- periodshould be treated as inextricably linked wit…

M/S Khoday India Limited, Bangalore vs. DCIT, Bangalore

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

ITA 1056/BANG/2016[2012-13]Status: DisposedITAT Bangalore24 Oct 2017AY 2012-13

Bench: Shri Vijay Pal Rao & Shri Jason P Boaz

For Appellant: Shri S. Sukumar,AdvocateFor Respondent: Shri M.K. Biju, JCIT (DR) (ITAT)-3, Bengaluru
Section 14A

…not examine further as to whether the asset purchased from borrowed capital has been in fact used by the assessee.—Calico& Dyeing and Printing Works vs. CIT (1958) 34 ITR 265 (Bom) : TC15R.907 followed; Challapali Sugar Ltd. vs. CIT 1974 CTR (SC) 309 : (1975) 98 ITR 167 (SC) distinguished.” (iv) Yet another judgment, the Hon’ble jurisdictional High Court in C.T.Desai v. CIT (1979) 120 ITR 240 (Kar) ruled that – “12. Sec. 36(1)(iii) of the Act is analogous to s. 5(e) of the Madras Act and s. 10(2)(iii) and (iv) of the Indian IT Act, 1922. Hence, the above principle equally applies to the present case. There can…

Titan Laboratories P.Ltd, Mumbai vs. ITO WD 10(2)(4), Mumbai

In the result, the appeal is dismissed

ITA 156/MUM/2014[2009-10]Status: DisposedITAT Mumbai27 Sept 2017AY 2009-10

Bench: Shri Mahavir Singh () & Shri N.K. Pradhan () Assessment Year: 2009-10 M/S Titan Laboratories Pvt. Ito-10(2)(4) Ltd.102, Titan House, M.P. Room No. 431, Aaykar Vs. Vaidya Marg, Ghatkopar (E) Bhavan, M.K. Road Mumbai-400077. Mumbai-400020. Pan No. Aacct0509Q Appellant Respondent Assessee By : Shri Jimit R. Shah, Ar Revenue By : Shri Ram Tiwari, Dr Date Of Hearing : 11/07/2017 Date Of Pronouncement : 27/09/2017

For Appellant: Shri Jimit R. Shah, ARFor Respondent: Shri Ram Tiwari, DR
Section 143(3)Section 211Section 28Section 43A

…IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) Assessment Year: 2009-10 M/s Titan Laboratories Pvt. ITO-10(2)(4) Ltd.102, Titan House, M.P. Room No. 431, Aaykar Vs. Vaidya Marg, Ghatkopar (E) Bhavan, M.K. Road Mumbai-400077. Mumbai-400020. PAN No. AACCT0509Q Appellant Respondent Assessee by : Shri Jimit R. Shah, AR Revenue by : Shri Ram Tiwari, DR Date of Hearing : 11/07/2017 Date of pronouncement : 27/09/2017 ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is…

Bgr Investment Holdings Company Limited, Chennai vs. DCIT, Chennai

In the result, the assessee’s appeal is allowed for statistical purposes; the Revenue’s appeal is dismissed; and the assessee’s CO is dismissed as infructuous

ITA 476/CHNY/2017[2013-2014]Status: DisposedITAT Chennai08 Sept 2017AY 2013-2014

Bench: Shri Sanjay Arora & Shri George Mathan

For Appellant: Ms. Vijayaprabha, Jt. CITFor Respondent: 31.08.2017
Section 143(3)Section 195Section 37(1)Section 40

…s in respect of capital issue and preoperative expenses. The same are clearly capital in nature, and for which reference may be made to the decisions in the case of Brooke Bond India Ltd. v. CIT [1997] 225 ITR 798 (SC) and Challapalli Sugar Ltd. v. CIT [1975] 98 ITR 167 (SC), being in relation to capital issue and preoperative expenses respectively. Whether the new unit is being set up as a part of the existing business or new business, is wholly irrelevant. Why, new additions to assets, viz. by way of plant and machinery, etc. for the existing busines keep taking place all the time, and does not cease to be the…

Olympus Elevator Private Limited, Chennai vs. ACIT, Chennai

In the result, the assessee’s appeal (in ITA No

ITA 149/CHNY/2015[2009-2010]Status: DisposedITAT Chennai15 Jun 2017AY 2009-2010

Bench: Shri Sanjay Arora & Shri Duvvuru Rl Reddy

For Appellant: Shri Sanath Kumar Raha, Jt. CITFor Respondent: 15.05.2017
Section 143(3)Section 28Section 36(1)(vii)Section 37(1)

…unts higher than the actual cost incurred in acquiring the same, resulting in additional charge of depreciation. This is against all principles/norms of accountancy, to which the law gives due credence (refer, inter alia, Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167); Accounting Standard (AS) 10 issued by ICAI (which also has primacy u/s. 211 of the Companies Act), as well as the clear provisions of s. 32 and s. 43(1) of the Act. The reversal of the provision has to be accordingly adjusted proportionately against the cost of the relevant assets. The concomitant would be a revision in the charge of depreciatio…

Olympus Elevator Private Limited, Chennai vs. ACIT, Chennai

In the result, the assessee’s appeal (in ITA No

ITA 148/CHNY/2015[2009-2010]Status: DisposedITAT Chennai15 Jun 2017AY 2009-2010

Bench: Shri Sanjay Arora & Shri Duvvuru Rl Reddy

For Appellant: Shri Sanath Kumar Raha, Jt. CITFor Respondent: 15.05.2017
Section 143(3)Section 28Section 36(1)(vii)Section 37(1)

…unts higher than the actual cost incurred in acquiring the same, resulting in additional charge of depreciation. This is against all principles/norms of accountancy, to which the law gives due credence (refer, inter alia, Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167); Accounting Standard (AS) 10 issued by ICAI (which also has primacy u/s. 211 of the Companies Act), as well as the clear provisions of s. 32 and s. 43(1) of the Act. The reversal of the provision has to be accordingly adjusted proportionately against the cost of the relevant assets. The concomitant would be a revision in the charge of depreciatio…

R.Ravishankar, Chennai vs. DCIT, Chennai

In the result, the appeal of the assessee is dismissed

ITA 2204/CHNY/2015[2010-11]Status: DisposedITAT Chennai26 May 2017AY 2010-11

Bench: Shri N.R.S. Ganesan & Shri D.S.Sunder Singh

For Respondent: 08.03.2017

…ndition, is not acceptable. 5.4. The appellant has placed reliance on the definition of ‘actual cost’ as per Section 43(1) of the IT Act. In this context, the appellant has cited the Apex court’s decision in the case of Challapalli Sugars Ltd. Vs. CIT (1975) 98 ITR 167(SC), It is seen that vide this decision, the Hon’ble Supreme Court has held that the interest paid before commencement of production on amount borrowed for acquisition and installation of plant and machinery can be considered to be part of the actual cost of the assets to the assessee, for the purpose of deduction on account of depreciation and de…