CIT v. A. Gajapathy Naidu

53 ITR 114Supreme Court of India1964#1555 most cited

What is CIT v. A. Gajapathy Naidu authority for?

An Income Tax Officer assessing income must determine the assessee's system of accountancy and, for the mercantile system, ascertain when the right to receive the income legally accrued.

73

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2008 to 2025.

Also referred to as

CIT v. A. Gajapathy Naidu · 53 ITR 114 · income accrual · year of taxability · mercantile system of accounting · right to receive income · assessment procedure · system of accountancy · Section 145 · ITO powers

Sections most often in play

Section 32(1)(iia)Section 32ACSection 37Section 40A(9)Section 10B(8)Section 194Section 194ASection 32AD
Read the full judgment

Issues it is cited on

section 139(3)section 10(2)(xv)section 32asection 170section 40a(9)section 276section 145a(b)section 32(1)(iia)section 73resulting companysection 42section 47

Judgments citing CIT v. A. Gajapathy Naidu

Commissioner of Income Tax vs. M/S. Medi Assist (India)

In the result, the third

ITA/593/2013HC Karnataka21 Oct 2020

Bench: ALOK ARADHE,H.T. NARENDRA PRASAD

Section 143(1)Section 143(2)Section 145(2)Section 260Section 260A

…uires a right to receive the same. In support of aforesaid submissions, reliance has been placed in decision of the Supreme Court in 'MORVI INDUSTRIES LTD. VS. COMMISSIONER OF INCOME-TAX', 82 ITR 835 and 'COMMISSIONER OF INCOME-TAX VS. GAJAPATHY NAIDU', 53 ITR 114. It is also urged that Accounting Standard -9 excludes insurance company and therefore, the Assessing Officer has rightly rejected the contentions of the assessee and has followed the decision of this court wherein this court has held that 'business of third party agent is business of insurance'. It is also argued that the tribunal as well a…

The Commissioner of Income-Tax vs. Karnataka Power Transmission

In the result, the appeal fails

ITA/196/2013HC Karnataka21 Oct 2020

Bench: ALOK ARADHE,H.T. NARENDRA PRASAD

Section 143(3)Section 260Section 260ASection 263

…1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF OCTOBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.196 OF 2013 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX C.R.BUILDING QUEENS ROAD BANGALORE. 2. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE - 11 (5) RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE. ... APPELLANTS (BY Mr.K.V.ARAVIND, ADV.,) AND: KARNATAKA POWER TRANSMISSION CORPORATION LTD., 7TH FLOOR, KAVERI BHAVAN K.G.ROAD BANGALORE - 560 009 ... RESPONDENT (BY Mr.K.K.CHYTHANYA, ADV.) - - -…

DCIT, Circle - 35, Kolkata vs. M/S. Kolkata Port Trust, Kolkata

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

ITA 453/KOL/2018[2014-15]Status: DisposedITAT Kolkata21 Feb 2020AY 2014-15

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

Section 271(1)(c)Section 274

…आयकर अपील"य अधीकरण, "यायपीठ – “C” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA (सम" "ी ए.ट". वक", "या"यक सद"य एवं डॉ ए.एल. सैनी, लेखा सद"य) [Before Shri A. T. Varkey, JM & Dr. A.L. Saini, AM] I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Deputy Commissioner of Income-tax, Vs. Kolkata Port Trust Circle-35, Kolkata. (PAN: AAAJK0361L) Appellant Respondent & C.O. No.23/Kol/2019 In I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Kolkata Port Trust Vs. Deputy Commissioner of Income-tax, Circle-35, Kolkata. Appellant Respondent & I.T.A. No. 452/Kol/2018 Assessment Year: 2014-15 Deputy Commis…

DCIT, Circle - 35, Kolkata vs. M/S. Kolkata Port Trust, Kolkata

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

ITA 452/KOL/2018[2014-15]Status: DisposedITAT Kolkata21 Feb 2020AY 2014-15

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

Section 271(1)(c)Section 274

…आयकर अपील"य अधीकरण, "यायपीठ – “C” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA (सम" "ी ए.ट". वक", "या"यक सद"य एवं डॉ ए.एल. सैनी, लेखा सद"य) [Before Shri A. T. Varkey, JM & Dr. A.L. Saini, AM] I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Deputy Commissioner of Income-tax, Vs. Kolkata Port Trust Circle-35, Kolkata. (PAN: AAAJK0361L) Appellant Respondent & C.O. No.23/Kol/2019 In I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Kolkata Port Trust Vs. Deputy Commissioner of Income-tax, Circle-35, Kolkata. Appellant Respondent & I.T.A. No. 452/Kol/2018 Assessment Year: 2014-15 Deputy Commis…

Kolkata Port Trust, Kolkata vs. ACIT, Circle - 35, Kolkata

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

ITA 369/KOL/2018[2014-15]Status: DisposedITAT Kolkata21 Feb 2020AY 2014-15

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

Section 271(1)(c)Section 274

…आयकर अपील"य अधीकरण, "यायपीठ – “C” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA (सम" "ी ए.ट". वक", "या"यक सद"य एवं डॉ ए.एल. सैनी, लेखा सद"य) [Before Shri A. T. Varkey, JM & Dr. A.L. Saini, AM] I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Deputy Commissioner of Income-tax, Vs. Kolkata Port Trust Circle-35, Kolkata. (PAN: AAAJK0361L) Appellant Respondent & C.O. No.23/Kol/2019 In I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Kolkata Port Trust Vs. Deputy Commissioner of Income-tax, Circle-35, Kolkata. Appellant Respondent & I.T.A. No. 452/Kol/2018 Assessment Year: 2014-15 Deputy Commis…

Kolkata Port Trust, Kolkata vs. ACIT, Circle - 35, Kolkata

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

ITA 368/KOL/2018[2013-14]Status: DisposedITAT Kolkata21 Feb 2020AY 2013-14

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

Section 271(1)(c)Section 274

…आयकर अपील"य अधीकरण, "यायपीठ – “C” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA (सम" "ी ए.ट". वक", "या"यक सद"य एवं डॉ ए.एल. सैनी, लेखा सद"य) [Before Shri A. T. Varkey, JM & Dr. A.L. Saini, AM] I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Deputy Commissioner of Income-tax, Vs. Kolkata Port Trust Circle-35, Kolkata. (PAN: AAAJK0361L) Appellant Respondent & C.O. No.23/Kol/2019 In I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Kolkata Port Trust Vs. Deputy Commissioner of Income-tax, Circle-35, Kolkata. Appellant Respondent & I.T.A. No. 452/Kol/2018 Assessment Year: 2014-15 Deputy Commis…

Kolkata Port Trust, Kolkata vs. JCIT, Range - 35, Kolkata

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

ITA 367/KOL/2018[2012-13]Status: DisposedITAT Kolkata21 Feb 2020AY 2012-13

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

Section 271(1)(c)Section 274

…आयकर अपील"य अधीकरण, "यायपीठ – “C” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA (सम" "ी ए.ट". वक", "या"यक सद"य एवं डॉ ए.एल. सैनी, लेखा सद"य) [Before Shri A. T. Varkey, JM & Dr. A.L. Saini, AM] I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Deputy Commissioner of Income-tax, Vs. Kolkata Port Trust Circle-35, Kolkata. (PAN: AAAJK0361L) Appellant Respondent & C.O. No.23/Kol/2019 In I.T.A. No. 453/Kol/2018 Assessment Year: 2014-15 Kolkata Port Trust Vs. Deputy Commissioner of Income-tax, Circle-35, Kolkata. Appellant Respondent & I.T.A. No. 452/Kol/2018 Assessment Year: 2014-15 Deputy Commis…

Assistant Commissioner of Income Tax 25(3), Mumbai vs. S. S. Enterprises, Mumbai

In the result, the appeal is allowed

ITA 2649/MUM/2018[2014-15]Status: DisposedITAT Mumbai28 Oct 2019AY 2014-15

Bench: Shri Saktijit Dey () & Shri N.K. Pradhan () Assessment Year: 2014-15

For Appellant: Mr. Vijay Mehta & Mr. Govind Javeri, ARFor Respondent: Mr. Chaudhary Arun Kumar Singh, DR
Section 143(3)

…sistance in resolving issues which may pose difficulty. Guidance Notes are recommendatory in nature. 7.2 The assessee has consistently followed the mercantile system of accounting as well as percentage completion method. In CIT v. A. Gajapathy Naidu, (1964) 53 ITR 114 (SC), it is held by the Hon’ble Supreme Court that income is taxable when it accrues or is earned, if the assessee’s accounts are maintained on the mercantile basis. A profit can be said to have accrued or a liability or loss can be said to have been incurred only when the profit is either actually due or M/s S.S. Enterprises 15 the liability beco…

National Aviation Co of India Ltd ( Air India Ltd), Mumbai vs. DCIT 5(2)

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

ITA 2182/MUM/2012[2008-09]Status: DisposedITAT Mumbai19 Jul 2019AY 2008-09

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am Aayakr Apila Sam./ Ita No. 2182/Mum/2012 (Inaqa-Arna Baya- / Assessment Year 2008-09) Air India Ltd., Dy. Commissioner Of (Formerly Known As National Income Tax-5(2), Mumbai Aviation Co. Of India Ltd.,) Vs. Director Finance, Old Airport, Kalina, Santacruz (East), Mumbai .. (Apilaaqai- / Appellant) (P`%Yaqaai- / Respondent) स्थायी लेखा िं./Pan No. Aaccn6194P

For Appellant: S/shri Shri D.J. Shukla &For Respondent: Shri M. Dayasagar, CIT DR
Section 143(3)Section 37

…e the matter has been crystalised in October, 2008, accounting action could not be taken in FY.2007-08 relevant to AY.2008-09. For this, assessee’s Counsel placed reliance on the decision of Hon'ble Supreme Court in the case of CIT Vs. Gajapathy Naidu (1964) [53 ITR 114] (SC). The assessee before us now claimed that the authorities have rejected the entire invoice value for overhaul of engine to the extent of ₹105.90 Million and settled such invoices towards ferry cost only partly to the extent of ₹4.53 Million for the FY.2008-09, relevant to AY.2009-10. It was also explained that on settlement of claim in Octobe…

DCIT 5(2), Mumbai vs. National Aviation Company of India Ltd ( Formelry Known As Air India Ltd), Mumbai

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

ITA 1423/MUM/2012[2008-09]Status: DisposedITAT Mumbai19 Jul 2019AY 2008-09

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am Aayakr Apila Sam./ Ita No. 2182/Mum/2012 (Inaqa-Arna Baya- / Assessment Year 2008-09) Air India Ltd., Dy. Commissioner Of (Formerly Known As National Income Tax-5(2), Mumbai Aviation Co. Of India Ltd.,) Vs. Director Finance, Old Airport, Kalina, Santacruz (East), Mumbai .. (Apilaaqai- / Appellant) (P`%Yaqaai- / Respondent) स्थायी लेखा िं./Pan No. Aaccn6194P

For Appellant: S/shri Shri D.J. Shukla &For Respondent: Shri M. Dayasagar, CIT DR
Section 143(3)Section 37

…e the matter has been crystalised in October, 2008, accounting action could not be taken in FY.2007-08 relevant to AY.2008-09. For this, assessee’s Counsel placed reliance on the decision of Hon'ble Supreme Court in the case of CIT Vs. Gajapathy Naidu (1964) [53 ITR 114] (SC). The assessee before us now claimed that the authorities have rejected the entire invoice value for overhaul of engine to the extent of ₹105.90 Million and settled such invoices towards ferry cost only partly to the extent of ₹4.53 Million for the FY.2008-09, relevant to AY.2009-10. It was also explained that on settlement of claim in Octobe…

DCIT, New Delhi vs. M/S Apex Strategic Consulting Services Pvt. Ltd., New Delhi

In the result, appeal of the revenue is dismissed

ITA 173/DEL/2016[2012-13]Status: DisposedITAT Delhi29 Jan 2019AY 2012-13

Bench: Shri R.K. Panda & Shri K. Narasimha Chary

For Appellant: Shri R.K. Sharma, AdvocateFor Respondent: Ms Ashima Neb, Sr. DR
Section 143(3)Section 37

…reliance on the Accounting Standard 4 is untenable because as per Income-tax Act, such a provision is not an allowable expenditure. She justified the order passed by the learned AO by placing reliance on the decision reported in CIT vs. Gajapathy Naidu (1964) 53 ITR 114. 5. Per contra, it is the submission on behalf of the assessee that in the case of Gajapathy Naidu (supra), the Hon’ble Supreme Court held that a contingent liability cannot be taken cognizance of but in so far as the present case is concerned, the liability was crystallized during the financial year itself but the payment was made subsequent ther…

Pyramid Realtors Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 2057/DEL/2017[2010-11]Status: DisposedITAT Delhi08 Oct 2018AY 2010-11

Bench: Shri Bhavnesh Saini & Shri L.P. Sahu

For Appellant: Shri M.P. Rastogi, AdvocateFor Respondent: Shri Pradeep Singh Gautam
Section 143(1)Section 143(3)Section 2(22)(e)

…ent rights in land and receipt of consideration would not give rise to accrual or arising of income within the meaning of Section 5 of the Income Tax Act. The assessee relied upon decision of Hon’ble Supreme Court in the case of CIT vs. A. Gajapathy Naidu, 53 ITR 114 (SC) in which the Hon’ble Supreme Court held that “When the ITO proceeds to include a particular income in the assessment, he should ask himself inter alia, two questions namely (i) What is the system of accounting adopted by the assessee and (ii) if it is mercantile system of accounting, subject to the deemed provision, when 11 ITA.Nos.2053,…

Saga Developers Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 2056/DEL/2017[2010-11]Status: DisposedITAT Delhi08 Oct 2018AY 2010-11

Bench: Shri Bhavnesh Saini & Shri L.P. Sahu

For Appellant: Shri M.P. Rastogi, AdvocateFor Respondent: Shri Pradeep Singh Gautam
Section 143(1)Section 143(3)Section 2(22)(e)

…ent rights in land and receipt of consideration would not give rise to accrual or arising of income within the meaning of Section 5 of the Income Tax Act. The assessee relied upon decision of Hon’ble Supreme Court in the case of CIT vs. A. Gajapathy Naidu, 53 ITR 114 (SC) in which the Hon’ble Supreme Court held that “When the ITO proceeds to include a particular income in the assessment, he should ask himself inter alia, two questions namely (i) What is the system of accounting adopted by the assessee and (ii) if it is mercantile system of accounting, subject to the deemed provision, when 11 ITA.Nos.2053,…

Saamag Construction Ltd., New Delhi vs. ACIT, New Delhi

ITA 2054/DEL/2017[2010-11]Status: DisposedITAT Delhi08 Oct 2018AY 2010-11

Bench: Shri Bhavnesh Saini & Shri L.P. Sahu

For Appellant: Shri M.P. Rastogi, AdvocateFor Respondent: Shri Pradeep Singh Gautam
Section 143(1)Section 143(3)Section 2(22)(e)

…ent rights in land and receipt of consideration would not give rise to accrual or arising of income within the meaning of Section 5 of the Income Tax Act. The assessee relied upon decision of Hon’ble Supreme Court in the case of CIT vs. A. Gajapathy Naidu, 53 ITR 114 (SC) in which the Hon’ble Supreme Court held that “When the ITO proceeds to include a particular income in the assessment, he should ask himself inter alia, two questions namely (i) What is the system of accounting adopted by the assessee and (ii) if it is mercantile system of accounting, subject to the deemed provision, when 11 ITA.Nos.2053,…

Saamag Developers Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 2053/DEL/2017[2010-11]Status: DisposedITAT Delhi08 Oct 2018AY 2010-11

Bench: Shri Bhavnesh Saini & Shri L.P. Sahu

For Appellant: Shri M.P. Rastogi, AdvocateFor Respondent: Shri Pradeep Singh Gautam
Section 143(1)Section 143(3)Section 2(22)(e)

…ent rights in land and receipt of consideration would not give rise to accrual or arising of income within the meaning of Section 5 of the Income Tax Act. The assessee relied upon decision of Hon’ble Supreme Court in the case of CIT vs. A. Gajapathy Naidu, 53 ITR 114 (SC) in which the Hon’ble Supreme Court held that “When the ITO proceeds to include a particular income in the assessment, he should ask himself inter alia, two questions namely (i) What is the system of accounting adopted by the assessee and (ii) if it is mercantile system of accounting, subject to the deemed provision, when 11 ITA.Nos.2053,…

DCIT, Cir-11(1), Kolkata vs. M/S. at & S India Pvt. Ltd., Mysore

In the result, all three appeals filed by the Revenue are dismissed

ITA 975/KOL/2017[2010-11]Status: DisposedITAT Kolkata05 Oct 2018AY 2010-11

Bench: Sh. J.Sudhakar Reddy & Sh. A.T.Varkey

…s in the USA and OECD guidelines/reports/commentaries. In this connection, the appellant placed reliance on the decision of the Hon'ble Supreme Court in the matter of Hon'ble Supreme Court of India in the matter of CIT v. A. Gajapathy Naidu reported in [1964] 53 ITR 114 wherein the Court interalia held that the provisions of the Indian Income-tax Act shall be construed on their own terms without drawing any analogy from English statutes whose terms may superficially appear to be similar but on a deeper scrutiny may reveal differences not only in the wording but also in the meaning a particular expression has acqu…

DCIT, Cir-11(1), Kolkata vs. M/S at & S Pvt. Ltd., Karnataka

In the result, all three appeals filed by the Revenue are dismissed

ITA 515/KOL/2016[2011-2012]Status: DisposedITAT Kolkata05 Oct 2018AY 2011-2012

Bench: Sh. J.Sudhakar Reddy & Sh. A.T.Varkey

…s in the USA and OECD guidelines/reports/commentaries. In this connection, the appellant placed reliance on the decision of the Hon'ble Supreme Court in the matter of Hon'ble Supreme Court of India in the matter of CIT v. A. Gajapathy Naidu reported in [1964] 53 ITR 114 wherein the Court interalia held that the provisions of the Indian Income-tax Act shall be construed on their own terms without drawing any analogy from English statutes whose terms may superficially appear to be similar but on a deeper scrutiny may reveal differences not only in the wording but also in the meaning a particular expression has acqu…

Gopaldas Visram & Co. Ltd, Mumbai vs. ACIT 4(2)(2), Mumbai

ITA 3519/MUM/2016[2009-10]Status: DisposedITAT Mumbai31 May 2018AY 2009-10

Bench: Shri R. C. Sharma, Am & Shri Amarjit Singh, Jm

For Appellant: Rajeev KhandelwalFor Respondent: Shri V. Vidyadhar (DR)
Section 142(1)Section 143(1)Section 143(2)Section 14A

…h Court in case of Binani Cement Limited 60 Taxmann.com 384 in support of the proposition that loss on abandoned project was liable to be allowed as business loss. Reliance was also placed on the decision of Hon’ble Supreme Court in case of A. Gajapathi Naidu 53 ITR 114 and Swadesh Cotton and Flour Mills 53 ITR 134. 6. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities in their ITA. No.3519/M/2016 A.Y.2009-10 respective orders as well as cited by learned AR and DR before us, in…

M/S Karnataka Vidyuth Kharkane Ltd vs. DCIT

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

ITA 1581/BANG/2013[2010-11]Status: DisposedITAT Bangalore11 Apr 2018AY 2010-11

Bench: Shri N.V. Vasudevan & Shri Arun Kumar Garodiaassessment Year :2010-11

For Appellant: Smt. Sheetal Borkar, AdvocateFor Respondent: Shri B.R. Ramesh, JCIT (DR)
Section 234BSection 37

…s. Thus, there was no justification for the claim of deduction of Rs. 3,40,000, being a provision made for future interest. viii CIT Vs Ashok Iron & Steel Rolling mill (1993), 199 ITR 815 (A11) The supreme Court in the case of CIT V. A. Gajapathy Naidu [1964} 53 ITR 114 has held that in mercantile system deduction can be made only in the year in which the liability to pay accrues and it accrues only when the liability crystallizes or becomes ascertained. Applying the dictum of the supreme Court in the present case it was apparent that it was only when the Assistant Labour Commissioner passed an order on 31-12-197…

ITO, WD-12(1), Kolkata vs. M/S White Cliff Properties (P) Ltd., Kolkata

In the result, the appeal of the Revenue is dismissed

ITA 1511/KOL/2015[2006-07]Status: DisposedITAT Kolkata10 Nov 2017AY 2006-07

Bench: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi

Section 143(3)Section 251

…the probability or improbability of realization in a realistic manner. Whether income has really materialized to the assessee has to be considered with reference to commercial and business realities of the situation. In the case of CIT vs. A. Gajapathy Naidu, 53 ITR 114, decided by the Hon’ble Supreme Court , the assessee who supplied bread to a Government hospital. Under a representation to the Government after the close of the year that he had incurred loss, the Government directed payment of the sum of Rs. 12,447 to the assessee by way of compensation i.e. the loss sustained in respect of the supply of bread.…