CIT v. Abhishek Industries Ltd.

286 ITR 1High Court2006#212 most cited

What is CIT v. Abhishek Industries Ltd. authority for?

For interest on borrowed capital to be deductible under Section 36(1)(iii), there must be a nexus between the use of the borrowed funds and the purpose of the business. This decision has been overruled by the Supreme Court in Munjal Sales Corporation v. CIT (2008).

359

judgments rely on this decision, according to BharatTax’s citation analysis of 366,314 Indian tax judgments — from 2008 to 2026.

Also referred to as

CIT v. Abhishek Industries Ltd. · 286 ITR 1 · Section 36(1)(iii) · interest on borrowed capital · disallowance · commercial expediency · use of borrowed funds for business · nexus of funds · interest-free advances · overruled by Munjal Sales Corporation

Also reported as

156 Taxmann 25756 Taxmann.com 391

Sections most often in play

Section 143(3)Section 36(1)(iii)Section 14ASection 37(1)Section 133(6)Section 147Section 132(4)Section 69A

Issues it is cited on

interest free advancessection 36(1)(iii)put to usecommercial expediencysection 36(1)book profitssection 36disallowance u/s 14adisallowance under section 14arevenue expendituresection 14acapital expenditure

Judgments citing CIT v. Abhishek Industries Ltd.

Lalamal Sangamlal Seth Construction Pvt. Ltd., New Delhi vs. ITO, Ward- 15(1), C R Building, New Delhi

In the result, ITA.No.6663/Del

ITA 4540/DEL/2017[2012-13]Status: DisposedITAT Delhi07 Jun 2018AY 2012-13

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

For Appellant: Ms. Nisha Rachh, C.A. &For Respondent: Shri Ravi Kant Gupta, Sr. D.R

…entire money in the business entity comes in a common kitty and assessee’s business is no different, therefore, disallowance of interest was confirmed, by relying upon decision of Hon’ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd., 286 ITR 1. This ground was accordingly dismissed. 9. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that this issue is same as have been considered in A.Y. 2012- 2013 and submitted that in the year under consideration, the Model Town Project was ready for sale and in fact, one flat out 18 ITA.…

Asstt.Commissioner of Income Tax, Ludhiana vs. M/S Mrs.Bectors Food Specilties Ltd, Ludhiana

ITA 559/CHANDI/2017[2013-14]Status: DisposedITAT Chandigarh21 May 2018AY 2013-14

Bench: Smt. Diva Singh & Dr. B.R.R. Kumar

For Appellant: Sh. Subhash AggarwalFor Respondent: Smt. Chandrakanta
Section 14ASection 36Section 80I

…1994. Reliance has been placed on judgment of the Hon'ble Supreme Court in Sahney Steel & Press Works Ltd. v. CLT (1997) 142 CTR (SO 261 : (1997) 228 ITR 253 (SO and judgment of this Court in CIT v. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H). The CIT(A) allowed the appeal of the assessee holding that the subsidy was for setting up of industrial unit in backward area of Haryana and same has to be treated as capital receipt. The Tribunal affirmed the said view as follows : "7. Having heard the parties and having perused the material on record, we find that the subsidy in question h…

Asstt.Commissioner of Income Tax, Ludhiana vs. M/S Mrs.Bectors Food Specilties Ltd, Ludhiana

ITA 558/CHANDI/2017[2012-13]Status: DisposedITAT Chandigarh21 May 2018AY 2012-13

Bench: Smt. Diva Singh & Dr. B.R.R. Kumar

For Appellant: Sh. Subhash AggarwalFor Respondent: Smt. Chandrakanta
Section 14ASection 36Section 80I

…1994. Reliance has been placed on judgment of the Hon'ble Supreme Court in Sahney Steel & Press Works Ltd. v. CLT (1997) 142 CTR (SO 261 : (1997) 228 ITR 253 (SO and judgment of this Court in CIT v. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H). The CIT(A) allowed the appeal of the assessee holding that the subsidy was for setting up of industrial unit in backward area of Haryana and same has to be treated as capital receipt. The Tribunal affirmed the said view as follows : "7. Having heard the parties and having perused the material on record, we find that the subsidy in question h…

Asstt.Commissioner of Income Tax, Ludhiana vs. M/S Mrs.Bectors Food Specilties Ltd, Ludhiana

ITA 557/CHANDI/2017[2011-12]Status: DisposedITAT Chandigarh21 May 2018AY 2011-12

Bench: Smt. Diva Singh & Dr. B.R.R. Kumar

For Appellant: Sh. Subhash AggarwalFor Respondent: Smt. Chandrakanta
Section 14ASection 36Section 80I

…1994. Reliance has been placed on judgment of the Hon'ble Supreme Court in Sahney Steel & Press Works Ltd. v. CLT (1997) 142 CTR (SO 261 : (1997) 228 ITR 253 (SO and judgment of this Court in CIT v. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H). The CIT(A) allowed the appeal of the assessee holding that the subsidy was for setting up of industrial unit in backward area of Haryana and same has to be treated as capital receipt. The Tribunal affirmed the said view as follows : "7. Having heard the parties and having perused the material on record, we find that the subsidy in question h…

Asstt.Commissioner of Income Tax, Ludhiana vs. M/S Mrs.Bectors Food Specilties Ltd, Ludhiana

ITA 556/CHANDI/2017[2010-11]Status: DisposedITAT Chandigarh21 May 2018AY 2010-11

Bench: Smt. Diva Singh & Dr. B.R.R. Kumar

For Appellant: Sh. Subhash AggarwalFor Respondent: Smt. Chandrakanta
Section 14ASection 36Section 80I

…1994. Reliance has been placed on judgment of the Hon'ble Supreme Court in Sahney Steel & Press Works Ltd. v. CLT (1997) 142 CTR (SO 261 : (1997) 228 ITR 253 (SO and judgment of this Court in CIT v. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H). The CIT(A) allowed the appeal of the assessee holding that the subsidy was for setting up of industrial unit in backward area of Haryana and same has to be treated as capital receipt. The Tribunal affirmed the said view as follows : "7. Having heard the parties and having perused the material on record, we find that the subsidy in question h…

Asstt.Commissioner of Income Tax, Ludhiana vs. M/S Mrs.Bectors Food Specilties Ltd, Ludhiana

ITA 555/CHANDI/2017[2007-08]Status: DisposedITAT Chandigarh21 May 2018AY 2007-08

Bench: Smt. Diva Singh & Dr. B.R.R. Kumar

For Appellant: Sh. Subhash AggarwalFor Respondent: Smt. Chandrakanta
Section 14ASection 36Section 80I

…1994. Reliance has been placed on judgment of the Hon'ble Supreme Court in Sahney Steel & Press Works Ltd. v. CLT (1997) 142 CTR (SO 261 : (1997) 228 ITR 253 (SO and judgment of this Court in CIT v. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H). The CIT(A) allowed the appeal of the assessee holding that the subsidy was for setting up of industrial unit in backward area of Haryana and same has to be treated as capital receipt. The Tribunal affirmed the said view as follows : "7. Having heard the parties and having perused the material on record, we find that the subsidy in question h…

ACIT, Ludhiana vs. M/S Mrs. Bectors Food Specialties Pvt. Ltd., Ludhiana

ITA 405/CHANDI/2017[2008-09]Status: DisposedITAT Chandigarh21 May 2018AY 2008-09

Bench: Smt. Diva Singh & Dr. B.R.R. Kumar

For Appellant: Sh. Subhash AggarwalFor Respondent: Smt. Chandrakanta
Section 14ASection 36Section 80I

…1994. Reliance has been placed on judgment of the Hon'ble Supreme Court in Sahney Steel & Press Works Ltd. v. CLT (1997) 142 CTR (SO 261 : (1997) 228 ITR 253 (SO and judgment of this Court in CIT v. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H). The CIT(A) allowed the appeal of the assessee holding that the subsidy was for setting up of industrial unit in backward area of Haryana and same has to be treated as capital receipt. The Tribunal affirmed the said view as follows : "7. Having heard the parties and having perused the material on record, we find that the subsidy in question h…

Anjani Portland Cement Limited, Hyderabad vs. Addl.CIT, Range-1, Hyderabad

In the result, appeal of the revenue in ITA No

ITA 1493/HYD/2014[2009-10]Status: DisposedITAT Hyderabad11 May 2018AY 2009-10

Bench: Smt P. Madhavi Devi & Shri S. Rifaur Rahman

For Appellant: Shri K.C. DevdasFor Respondent: Ms. Geetindar Mann
Section 14ASection 32(1)(ii)

…of Punjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under: "7. We do not find any merit in this submission. The judgement of this court in Abhishek Industries Ltd (2006) 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. The observations made therein have to be read in that context…

Dy.CIT, Circle-1(1), Hyderabad vs. M/S Anjani Portland Cement Ltd., Hyderabad

In the result, appeal of the revenue in ITA No

ITA 1305/HYD/2014[2008-09]Status: DisposedITAT Hyderabad11 May 2018AY 2008-09

Bench: Smt P. Madhavi Devi & Shri S. Rifaur Rahman

For Appellant: Shri K.C. DevdasFor Respondent: Ms. Geetindar Mann
Section 14ASection 32(1)(ii)

…of Punjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under: "7. We do not find any merit in this submission. The judgement of this court in Abhishek Industries Ltd (2006) 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. The observations made therein have to be read in that context…

Nihilent Technologies P.Ltd., Pune vs. ITO, Pune

In the result, the appeal of assessee is partly allowed in the terms aforesaid

ITA 2428/PUN/2012[2008-09]Status: DisposedITAT Pune10 May 2018AY 2008-09

Bench: Shri Anil Chaturvedi, Am & Shri Vikas Awasthy, Jm

For Appellant: Shri Nikhil PathakFor Respondent: Shri Rajeev Kumar
Section 115JSection 143(3)Section 92C

…of unabsorbed depreciation and not from the figure of brought forward loss. According to the A.O., the method adopted by the assessee is not correct and he has relied upon the decision of Authority for Advance Ruling in the case of Rastriya Ispat Nigam Ltd. [285 ITR 1]. The learned A.O. has stated that the assessee has no option to decide the manner of set off. Accordingly, he has stated that the amount which can be reduced is only Rs.44,79,000/- and not Rs.7,32,38,000/- as claimed by the assessee and hence, the book profit has been increased to that extent. The Id. DRP has also confirmed the view taken by the A…

M/S Innova Captab, Baddi vs. DCIT, Parwanoo

In the result, both the appeals of the assessee are

ITA 734/CHANDI/2017[2014-15]Status: DisposedITAT Chandigarh04 May 2018AY 2014-15

Bench: Shri Sanjay Garg & Ms. Annapurna Gupta & Innova Captab, Vs. The D.C.I.T., Plot No.81B, Epip, Circle Parwanoo. Phase 1, Jhamajri Pan: Aaffv6014N (Appellant) (Respondent)

For Appellant: Shri Tej Mohan Singh, AdvFor Respondent: Shri Gulshan Raj, CIT DR
Section 80I

…IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Innova Captab, Vs. The D.C.I.T., Plot No.81B, EPIP, Circle Parwanoo. Phase 1, Jhamajri PAN: AAFFV6014N (Appellant) (Respondent) Appellant by : Shri Tej Mohan Singh, Adv. Respondent by : Shri Gulshan Raj, CIT DR Date of hearing :19.04.2018 Date of Pronouncement :04.05.2018 ORDER PER ANNAPURNA GUPTA, A.M. : Both the above appeals have been preferred by the assessee against separate orders of Ld. Commissioner of Income Tax (Appeals), Shimla (hereinafter referre…

M/S Koeing Solutions Ltd., Chandigarh vs. DCIT, C-1(1), Chandigarh

In the result, the appeal of the assessee is allowed

ITA 1554/CHANDI/2017[2013-14]Status: DisposedITAT Chandigarh04 May 2018AY 2013-14

Bench: Ms.Diva Singh & Ms.Annapurna Guptam/S Koeing Solutions Ltd., Vs. The D.C.I.T., Plot No.22, Industrial Area, Circle 1(I), Phase-Ii, Chandigarh. Chandigarh. Pan: Aabck9007D (Appellant) (Respondent)

For Appellant: Shri Tej Mohan Singh, AdvFor Respondent: Smt.Chanderkanta, Addl.CIT
Section 143(3)Section 271Section 271(1)(c)Section 36Section 36(1)(iii)

…essing Officer further found that the assessee was incurring expenditure on interest payment of secured and unsecured loans. Therefore, applying the ratio laid down by the Hon'ble Jurisdictional High Court in the case of CIT Vs. Abhishek Industries Ltd., 286 ITR 1, the Assessing Officer held that since the business expediency for making the aforesaid loans and advances had not been established, it was clear that the assessee had diverted interest bearing funds for non-business purpose. He, therefore, proceeded to disallow proportionate interest of Rs.4,54,507/- on the said advances calculated @ 12% of th…

Innova Captab, Baddi vs. DCIT, Parwanoo

In the result, both the appeals of the assessee are

ITA 1184/CHANDI/2016[2013-14]Status: DisposedITAT Chandigarh04 May 2018AY 2013-14

Bench: Shri Sanjay Garg & Ms. Annapurna Gupta & Innova Captab, Vs. The D.C.I.T., Plot No.81B, Epip, Circle Parwanoo. Phase 1, Jhamajri Pan: Aaffv6014N (Appellant) (Respondent)

For Appellant: Shri Tej Mohan Singh, AdvFor Respondent: Shri Gulshan Raj, CIT DR
Section 80I

…IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Innova Captab, Vs. The D.C.I.T., Plot No.81B, EPIP, Circle Parwanoo. Phase 1, Jhamajri PAN: AAFFV6014N (Appellant) (Respondent) Appellant by : Shri Tej Mohan Singh, Adv. Respondent by : Shri Gulshan Raj, CIT DR Date of hearing :19.04.2018 Date of Pronouncement :04.05.2018 ORDER PER ANNAPURNA GUPTA, A.M. : Both the above appeals have been preferred by the assessee against separate orders of Ld. Commissioner of Income Tax (Appeals), Shimla (hereinafter referre…

ACIT, Ludhiana vs. M/S Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 575/CHANDI/2009[2005-06]Status: DisposedITAT Chandigarh04 May 2018AY 2005-06

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

…apital receipt should be exempted from tax. 6.1 In addition to the above written submissions of the assessee it was contended by the Ld. Counsel that the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd. 286 ITR 1, would not apply in the case of the assessee. It is submitted that in case of Abhishek Industries (supra), the assessee failed to establish on record that the subsidy given by the Punjab Govt, in the form of Sales-tax exemption was a capital receipt. It is further submitted that the SLP filed by that assessee against the above referred judgement by…

M/S Vardhman Textiles Ltd., Ludhiana vs. Addl. CIT, Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 528/CHANDI/2009[2005-06]Status: DisposedITAT Chandigarh04 May 2018AY 2005-06

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

…apital receipt should be exempted from tax. 6.1 In addition to the above written submissions of the assessee it was contended by the Ld. Counsel that the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd. 286 ITR 1, would not apply in the case of the assessee. It is submitted that in case of Abhishek Industries (supra), the assessee failed to establish on record that the subsidy given by the Punjab Govt, in the form of Sales-tax exemption was a capital receipt. It is further submitted that the SLP filed by that assessee against the above referred judgement by…

ACIT, Ludhiana vs. M/S Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 981/CHANDI/2008[2004-05]Status: DisposedITAT Chandigarh04 May 2018AY 2004-05

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

…apital receipt should be exempted from tax. 6.1 In addition to the above written submissions of the assessee it was contended by the Ld. Counsel that the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd. 286 ITR 1, would not apply in the case of the assessee. It is submitted that in case of Abhishek Industries (supra), the assessee failed to establish on record that the subsidy given by the Punjab Govt, in the form of Sales-tax exemption was a capital receipt. It is further submitted that the SLP filed by that assessee against the above referred judgement by…

Vardhman Textiles Ltd., Ludhiana vs. JCIT, Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 938/CHANDI/2008[2004-05]Status: DisposedITAT Chandigarh04 May 2018AY 2004-05

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

…apital receipt should be exempted from tax. 6.1 In addition to the above written submissions of the assessee it was contended by the Ld. Counsel that the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd. 286 ITR 1, would not apply in the case of the assessee. It is submitted that in case of Abhishek Industries (supra), the assessee failed to establish on record that the subsidy given by the Punjab Govt, in the form of Sales-tax exemption was a capital receipt. It is further submitted that the SLP filed by that assessee against the above referred judgement by…

ACIT, Ludhiana vs. M/S Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 530/CHANDI/2008[2003-04]Status: DisposedITAT Chandigarh04 May 2018AY 2003-04

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

…apital receipt should be exempted from tax. 6.1 In addition to the above written submissions of the assessee it was contended by the Ld. Counsel that the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd. 286 ITR 1, would not apply in the case of the assessee. It is submitted that in case of Abhishek Industries (supra), the assessee failed to establish on record that the subsidy given by the Punjab Govt, in the form of Sales-tax exemption was a capital receipt. It is further submitted that the SLP filed by that assessee against the above referred judgement by…

Vardhman Textile Ltd., Ludhiana vs. ACIT, Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 475/CHANDI/2008[2003-04]Status: DisposedITAT Chandigarh04 May 2018AY 2003-04

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

…apital receipt should be exempted from tax. 6.1 In addition to the above written submissions of the assessee it was contended by the Ld. Counsel that the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd. 286 ITR 1, would not apply in the case of the assessee. It is submitted that in case of Abhishek Industries (supra), the assessee failed to establish on record that the subsidy given by the Punjab Govt, in the form of Sales-tax exemption was a capital receipt. It is further submitted that the SLP filed by that assessee against the above referred judgement by…

ACIT, Ludhiana vs. Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 691/CHANDI/2007[2002-03]Status: DisposedITAT Chandigarh04 May 2018AY 2002-03

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

…apital receipt should be exempted from tax. 6.1 In addition to the above written submissions of the assessee it was contended by the Ld. Counsel that the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd. 286 ITR 1, would not apply in the case of the assessee. It is submitted that in case of Abhishek Industries (supra), the assessee failed to establish on record that the subsidy given by the Punjab Govt, in the form of Sales-tax exemption was a capital receipt. It is further submitted that the SLP filed by that assessee against the above referred judgement by…