CIT v. Amalgamation Pvt. Ltd.

226 ITR 188Supreme Court of India1997#3354 most cited

What is CIT v. Amalgamation Pvt. Ltd. authority for?

Expenditure incurred under a guarantee for the purpose of business is considered a business expenditure, and its write-off is treated as a business loss deductible from income. The expense incurred to recoup business losses in a subsidiary company is also allowable as a deduction.

35

judgments rely on this decision, according to BharatTax’s citation analysis of 366,314 Indian tax judgments — from 2011 to 2024.

Also referred to as

CIT v. Amalgamation Pvt. Ltd. · 226 ITR 188 · business expenditure · business loss · write off · guarantee · irrecoverable expenditure · compensation · subsidiaries

Sections most often in play

Section 28Section 37(1)
Read the full judgment

Judgments citing CIT v. Amalgamation Pvt. Ltd.

Siddhayu Aaurvedic Research Foundation Pvt. Ltd, Mumbai vs. Addl/Jt/ACIT/ITO/NFAC/// the ACIT Circle 34(3) (2), Delhi

In the result this appeal is dismissed with costs

ITA 745/MUM/2022[2017-18]Status: DisposedITAT Mumbai24 Sept 2024AY 2017-18

Bench: Shri Anikesh Banerjee & Shri Gagan Goyalsiddhayu Aayurvedic Research Foundation Pvt. Ltd., C/704, Pramukh Plaza, Cardinal Gracious Road, Chakala, Andheri East, Mumbai-400 069. Pan No. Aaacs8335F ..... Appellant Vs. Acit Circle 4(3) (2) Aaykar Bhavan, M. K. Road, Mumbai-400 020. ..... Respondent

For Appellant: Shri Satyaprakash Singh, Ld. ARFor Respondent: Shri K. C. Selvamani, Ld. DR
Section 143(2)Section 143(3)Section 144CSection 234BSection 270ASection 271ASection 28Section 37(1)

…authority disputed the bona fides of the assessee in writing off the amounts in the year under consideration." 13. In arriving at the above conclusion, the ITAT relied on the decisions of the Supreme Court in CIT v. Amalgamation (P.) Ltd. [1997] 92 Taxman 132/226 ITR 188 and Essen (P.) Ltd. v. CIT [1967] 65 ITR 625 (SC) and of the Calcutta High Court in CIT v. Gillanders Arbuthnot & Co. Ltd. [1982] 9 Taxman 76/138 ITR 763. 14. In the present case, while the nomenclature used for the expenditure incurred may have been different during AYs 1989-90 and 1990-91 where it was 'loans and advances' which were subsequentl…

Southern Petrochemical Industries Corporation Limited, Chennai vs. ACIT Corporate Circle 6(2), Chennai

The appeal stands partly allowed in terms of our above order

ITA 2635/CHNY/2019[2016-17]Status: DisposedITAT Chennai10 Jan 2024AY 2016-17

Bench: Hon’Ble Shri Mahavir Singh, Vp & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ Ita No.2635/Chny/2019 (िनधा)रण वष) / Assessment Year: 2016-17) M/S. Southern Petrochemical Acit बनाम Industries Corporation Limited Corporate Circle -6(2) 88, Spic House, Mount Road, Guindy, Chennai-600 034. / Vs. Chennai-600 032. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaacs-4668-K (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri R. Vijayaraghavan & Shri Saroj Kumar Parida (Advocates)-Ld. Ars " थ"कीओरसे/Respondent By : Shri Nilay Baran Som (Cit) & Shri Ar V Sreenivasan (Addl. Cit)-Ld. Drs सुनवाईकीतारीख/Date Of Hearing : 16-10-2023 घोषणाकीतारीख /Date Of Pronouncement : 10-01-2024 आदेश / O R D E R

For Appellant: Shri R. Vijayaraghavan & Shri Saroj KumarFor Respondent: Shri Nilay Baran Som (CIT) &
Section 143(3)

…ss amounted to business expenditure and write off of the same amounted to business loss and is an allowable as deduction in the assessment for 2016-17. 3.6 The Appellant relies on the Decision of the Supreme Court in CIT vs Amalgamation Pvt. Ltd. 140 CTR 313/ 226 ITR 188 (SC) and the decisions in (a) ACIT vs M/s Peirce Leslie India Ltd I.T.A. No. 1244/Mds/2011 (b) W.S. Industries (India) Limited 128 ITD 98 As is evident, the additions / disallowance which forms the subject matter of this appeal are i.e., (i) Disallowance of bad debts written-off; (ii) Disallowance of settlement expenditure. 2. The Ld. AR advanc…

Refex Industries Ltd., Chennai vs. DCIT Corporate Circle 5(3), Chennai

The appeal stands partly allowed

ITA 2939/CHNY/2017[2013-14]Status: DisposedITAT Chennai07 Feb 2022AY 2013-14

Bench: Hon’Ble Shri V. Durga Rao & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri T. Banusekar (CA) – Ld ARFor Respondent: Shri S. Palani Kumar, Ld. CIT - DR
Section 143(3)Section 32

…oan in its carrying on of business and the loss was admissible deduction. For the same, the Tribunal had followed the decision of Hon’ble High Court of Madras in CIT Vs Amalgamations P. Ltd (108 ITR 895) which was affirmed by Hon’ble Supreme Court reported at 226 ITR 188. Further, the decision of Hon’ble Supreme Court in the case of S.A. Builders (288 ITR 1) was also applicable wherein it was held that expenditure incurred on commercial expediency in trying to retrieve its investments in subsidiary would be allowable deduction. 4.2 Regarding depreciation on cylinders, it was submitted that the cylinders were earl…

Refex Industries Ltd., Chennai vs. DCIT Corporate Circle 5(3), Chennai

The appeal stands partly allowed

ITA 2938/CHNY/2017[2011-12]Status: DisposedITAT Chennai07 Feb 2022AY 2011-12

Bench: Hon’Ble Shri V. Durga Rao & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri T. Banusekar (CA) – Ld ARFor Respondent: Shri S. Palani Kumar, Ld. CIT - DR
Section 143(3)Section 32

…oan in its carrying on of business and the loss was admissible deduction. For the same, the Tribunal had followed the decision of Hon’ble High Court of Madras in CIT Vs Amalgamations P. Ltd (108 ITR 895) which was affirmed by Hon’ble Supreme Court reported at 226 ITR 188. Further, the decision of Hon’ble Supreme Court in the case of S.A. Builders (288 ITR 1) was also applicable wherein it was held that expenditure incurred on commercial expediency in trying to retrieve its investments in subsidiary would be allowable deduction. 4.2 Regarding depreciation on cylinders, it was submitted that the cylinders were earl…

Parrot Grove P Ltd, Chennai vs. DCIT Corporate Cicle-5(1), Chennai

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 2022/CHNY/2019[2015-16]Status: DisposedITAT Chennai19 Mar 2021AY 2015-16

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./Ita No.: 2022/Chny/2019 िनधा"रण वष" / Assessment Year: 2015-16

For Appellant: Shri B.S. Purushottam, CAFor Respondent: Shri Johnson, Addl.CIT
Section 37(1)

…is no revenue from operations. The ld.CIT(A) after considering the relevant submissions of the assessee and also by relying upon certain judicial precedents including the decision of Hon’ble Supreme Court in the case of CIT vs. Amalgamations Pvt. Ltd., (1997) 226 ITR 188 held that nexus between expenditure and business is essential for allowing deduction u/s.37(1) of the Act. He further observed that the burden is on the assessee to prove the expenditure claimed satisfies all the ingredients of section 37(1) of the Act. Further, mere payment by itself would not entitle an assessee to claim deduction of a particul…

The DCIT, Circle-4, Ahmedabad vs. Ghcl Limited, Ahmedabad

ITA 976/AHD/2014[2009-10]Status: DisposedITAT Ahmedabad05 Mar 2021AY 2009-10
For Appellant: Shri S. N. Soparkar, Sr. A.R. &For Respondent: Shri Mohd. Usman, CIR-D.R. &
Section 143(2)Section 144C(2)(b)Section 144C(5)Section 14ASection 37(1)Section 92C

…mpany was in the nature of business loss. The ld. counsel has also referred compilation of orders paper book no. IV. In this paper book, the ld. counsel has placed reliance on the judgment of Hon’ble Supreme Court in the case of CIT vs. Amalgamation Pvt. Ltd. 226 ITR 188, judgment of Hon’ble Supreme Court in the case Essen Pvt. Ltd. vs. CIT 65 ITR 625. The ld. counsel has also placed reliance on the decision of Co- ordinate Bench of the ITAT Chennai in the case of ACIT Chennai VS. W.S. Industries (I) Ltd. and decision of Hon’ble Gujarat High Court in the case of Pure Beverages Ltd. 209 ITR 131 and decision of Hon…

Ghcl Limited, Ahmedabad vs. The Dy.CIT., Circle-4, Ahmedabad

ITA 1042/AHD/2014[2009-10]Status: DisposedITAT Ahmedabad05 Mar 2021AY 2009-10
For Appellant: Shri S. N. Soparkar, Sr. A.R. &For Respondent: Shri Mohd. Usman, CIR-D.R. &
Section 143(2)Section 144C(2)(b)Section 144C(5)Section 14ASection 37(1)Section 92C

…mpany was in the nature of business loss. The ld. counsel has also referred compilation of orders paper book no. IV. In this paper book, the ld. counsel has placed reliance on the judgment of Hon’ble Supreme Court in the case of CIT vs. Amalgamation Pvt. Ltd. 226 ITR 188, judgment of Hon’ble Supreme Court in the case Essen Pvt. Ltd. vs. CIT 65 ITR 625. The ld. counsel has also placed reliance on the decision of Co- ordinate Bench of the ITAT Chennai in the case of ACIT Chennai VS. W.S. Industries (I) Ltd. and decision of Hon’ble Gujarat High Court in the case of Pure Beverages Ltd. 209 ITR 131 and decision of Hon…

M/S Eastern Coalfiels Ltd., Burdwan vs. DCIT, Cir-2, Asansol

In the result, all the appeals of the assessee as well as the revenue is partly allowed for statistical purposes

ITA 986/KOL/2019[2012-13]Status: DisposedITAT Kolkata24 Sept 2020AY 2012-13

Bench: Hon’Ble Shri J.Sudhakar Reddy, Am & Hon’Ble Shri A. T. Varkey, Jm

Section 32(1)(iia)

…s confirmed the disallowance made by the Assessing Officer on this count for lack of nexus between the said expenditure and the business of the assessee, relying heavily on the decision of the Supreme Court in the case of CIT vs. Amalgamations (P) Ltd. [1997] 226 ITR 188. A perusal of the said judgement, however, reveals that the expenditure in that case was incurred by the assessee- company on payment of managerial remuneration to the directors of the subsidiary companies and considering that the assessee-company was entitled only to the dividend from the subsidiary company as and when declared even without incu…

M/S Eastern Coalfiels Ltd., Burdwan vs. DCIT, Cir-2, Asansol

In the result, all the appeals of the assessee as well as the revenue is partly allowed for statistical purposes

ITA 985/KOL/2019[2009-10]Status: DisposedITAT Kolkata24 Sept 2020AY 2009-10

Bench: Hon’Ble Shri J.Sudhakar Reddy, Am & Hon’Ble Shri A. T. Varkey, Jm

Section 32(1)(iia)

…s confirmed the disallowance made by the Assessing Officer on this count for lack of nexus between the said expenditure and the business of the assessee, relying heavily on the decision of the Supreme Court in the case of CIT vs. Amalgamations (P) Ltd. [1997] 226 ITR 188. A perusal of the said judgement, however, reveals that the expenditure in that case was incurred by the assessee- company on payment of managerial remuneration to the directors of the subsidiary companies and considering that the assessee-company was entitled only to the dividend from the subsidiary company as and when declared even without incu…

ACIT, Circle-2, Asansol vs. Eastern Coalfilelds Ltd., Burdwan

In the result, all the appeals of the assessee as well as the revenue is partly allowed for statistical purposes

ITA 891/KOL/2019[2012-13]Status: DisposedITAT Kolkata24 Sept 2020AY 2012-13

Bench: Hon’Ble Shri J.Sudhakar Reddy, Am & Hon’Ble Shri A. T. Varkey, Jm

Section 32(1)(iia)

…s confirmed the disallowance made by the Assessing Officer on this count for lack of nexus between the said expenditure and the business of the assessee, relying heavily on the decision of the Supreme Court in the case of CIT vs. Amalgamations (P) Ltd. [1997] 226 ITR 188. A perusal of the said judgement, however, reveals that the expenditure in that case was incurred by the assessee- company on payment of managerial remuneration to the directors of the subsidiary companies and considering that the assessee-company was entitled only to the dividend from the subsidiary company as and when declared even without incu…

ACIT, Circle - 2, Asansol vs. M/S. Eastern Coalfields Limited, Burdwan

In the result, all the appeals of the assessee as well as the revenue is partly allowed for statistical purposes

ITA 890/KOL/2019[2009-10]Status: DisposedITAT Kolkata24 Sept 2020AY 2009-10

Bench: Hon’Ble Shri J.Sudhakar Reddy, Am & Hon’Ble Shri A. T. Varkey, Jm

Section 32(1)(iia)

…s confirmed the disallowance made by the Assessing Officer on this count for lack of nexus between the said expenditure and the business of the assessee, relying heavily on the decision of the Supreme Court in the case of CIT vs. Amalgamations (P) Ltd. [1997] 226 ITR 188. A perusal of the said judgement, however, reveals that the expenditure in that case was incurred by the assessee- company on payment of managerial remuneration to the directors of the subsidiary companies and considering that the assessee-company was entitled only to the dividend from the subsidiary company as and when declared even without incu…

Harshit Finlease & Investments P.Ltd, Mumbai vs. ITO 1(1)(4), Mumbai

In the result, this appeal is partly allowed

ITA 4991/MUM/2011[2006-07]Status: DisposedITAT Mumbai03 Dec 2019AY 2006-07

Bench: Shri Shamim Yahya & Shri Pawan Singh: A.Y : 2006-07

For Appellant: Shri J.D. Mistry, Shri Harsh Kothari &For Respondent: Shri M. Rajan
Section 115JSection 143(3)Section 14ASection 154Section 234BSection 54E

…sel of the assessee submitted that the amount is not at all taxable in the hands of the assessee. The learned counsel of the assessee further relied upon several case laws in support of his position, including the following. i) CIT vs Amalgamation (P.) Ltd., 226 ITR 188 (SC) ii) CIT vs Distributors (Baroda) (P.) Ltd., 83 ITR 377 (SC) iii) CIT vs Shiv Raj Gupta, 372 ITR 337 (Delhi) iv) CIT vs Govindlal C. Mandhana (HUF), ITA Nos. 1221 & 1222 of 2012 dated 14.11.2014 (Bombay High Court) v) ACIT vs Savita N. Mandhana, ITA No. 3900/Mum/2010 dated 07.10.2011 vi) Shuklendu A. Baji vs DCIT, ITA No. 5209/Mum/2017 dated…

Harshit Finlease & Investments P.Ltd, Mumbai vs. Addl CIT 1(1), Mumbai

In the result, this appeal is partly allowed

ITA 4989/MUM/2011[2006-07]Status: DisposedITAT Mumbai03 Dec 2019AY 2006-07

Bench: Shri Shamim Yahya & Shri Pawan Singh: A.Y : 2006-07

For Appellant: Shri J.D. Mistry, Shri Harsh Kothari &For Respondent: Shri M. Rajan
Section 115JSection 143(3)Section 14ASection 154Section 234BSection 54E

…sel of the assessee submitted that the amount is not at all taxable in the hands of the assessee. The learned counsel of the assessee further relied upon several case laws in support of his position, including the following. i) CIT vs Amalgamation (P.) Ltd., 226 ITR 188 (SC) ii) CIT vs Distributors (Baroda) (P.) Ltd., 83 ITR 377 (SC) iii) CIT vs Shiv Raj Gupta, 372 ITR 337 (Delhi) iv) CIT vs Govindlal C. Mandhana (HUF), ITA Nos. 1221 & 1222 of 2012 dated 14.11.2014 (Bombay High Court) v) ACIT vs Savita N. Mandhana, ITA No. 3900/Mum/2010 dated 07.10.2011 vi) Shuklendu A. Baji vs DCIT, ITA No. 5209/Mum/2017 dated…

DCIT, New Delhi vs. M/S. Boston Scientific India Pvt. Ltd., New Delhi

In the result, the appeal is dismissed

ITA 6241/DEL/2014[2010-11]Status: DisposedITAT Delhi31 May 2018AY 2010-11

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

…ot continued its business and therefore, expenditure is not allowable, is not based on correct appreciation of law. In coming to above conclusion, I carry strength from the judgement of the Apex Court in the case of CIT vs. Amalgamations Pvt. Ltd. reported in 226 ITR 188, wherein at page 208 has held as underlie High Court, in our opinion, has rightly pointed out that the business of the assessee-company is the holding of investments and if with reference to the business of holding investments, any expenditure had been incurred that could have been allowed as deduction. The expenditure incurred in payment of mana…

M.Pallonji & Co. Pvt. Ltd., Mumbai vs. ACIT, RG.2(2)(2), Mumbai

In the result, assessee’s appeal is allowed for statistical purposes

ITA 3739/MUM/2015[2008-09]Status: DisposedITAT Mumbai28 Feb 2018AY 2008-09

Bench: Shri Saktijit Dey & Shri Rajesh Kumar

For Appellant: Shri J.D. Mistry, Sr. Counsel a/wFor Respondent: Ms. Pooja Swaroop
Section 14A

…a direct nexus to such investment, however, he submitted that making investment in other companies is also one of the objects of the assessee company. In support of such contentions, he relied upon the following decisions:– i) CIT v/s Amalgamation Pvt. Ltd. 226 ITR 188; and ii) CIT v/s Distributors (Baroda) Pvt. Ltd., 83 ITR 377. 29. The learned Departmental Representative strongly relying upon the findings of the Assessing Officer and the first appellate authority submitted that nothing has been brought on record to prove that the main object of the assessee is to do business in investment in other companies.…

ACIT, Chennai vs. Kasturi & Sons Limited, Chennai

In the result, all the Revenue’s appeals are allowed for statistical purposes

ITA 2252/CHNY/2015[2011-12]Status: DisposedITAT Chennai18 Aug 2017AY 2011-12

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Sh. Vikram Vijayaraghavan, AdvocateFor Respondent: Shri R. Jeyakumar, CIT
Section 143(1)Section 148

…s equity shares of 2,40,00,000 at the rate of `10/- each share. Thereafter the assessee sold 90% of shares to the extent of `2,43,00,000/- to M/s Chenan Enterprises Pvt. Ltd. Referring to the judgment of Supreme Court in CIT v. Amalgamation Pvt. Ltd. (1997) 226 ITR 188, the Ld.counsel pointed out that the loss suffered by the assessee on account of bank guarantee which was later on converted into equity, would amount to business loss, therefore, it has to be allowed as business loss under Section 37(1) of the Act. 15. On the contrary, Shri R. Jeyakumar, the Ld. Departmental Representative, submitted that the…

Kasturi and Sons Ltd., Chennai vs. DCIT, Chennai

In the result, all the Revenue’s appeals are allowed for statistical purposes

ITA 2106/CHNY/2015[2011-12]Status: DisposedITAT Chennai18 Aug 2017AY 2011-12

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Sh. Vikram Vijayaraghavan, AdvocateFor Respondent: Shri R. Jeyakumar, CIT
Section 143(1)Section 148

…s equity shares of 2,40,00,000 at the rate of `10/- each share. Thereafter the assessee sold 90% of shares to the extent of `2,43,00,000/- to M/s Chenan Enterprises Pvt. Ltd. Referring to the judgment of Supreme Court in CIT v. Amalgamation Pvt. Ltd. (1997) 226 ITR 188, the Ld.counsel pointed out that the loss suffered by the assessee on account of bank guarantee which was later on converted into equity, would amount to business loss, therefore, it has to be allowed as business loss under Section 37(1) of the Act. 15. On the contrary, Shri R. Jeyakumar, the Ld. Departmental Representative, submitted that the…

DCIT, Chennai vs. Kasturi and Sons Ltd., Chennai

In the result, all the Revenue’s appeals are allowed for statistical purposes

ITA 2015/CHNY/2014[2010-11]Status: DisposedITAT Chennai18 Aug 2017AY 2010-11

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Sh. Vikram Vijayaraghavan, AdvocateFor Respondent: Shri R. Jeyakumar, CIT
Section 143(1)Section 148

…s equity shares of 2,40,00,000 at the rate of `10/- each share. Thereafter the assessee sold 90% of shares to the extent of `2,43,00,000/- to M/s Chenan Enterprises Pvt. Ltd. Referring to the judgment of Supreme Court in CIT v. Amalgamation Pvt. Ltd. (1997) 226 ITR 188, the Ld.counsel pointed out that the loss suffered by the assessee on account of bank guarantee which was later on converted into equity, would amount to business loss, therefore, it has to be allowed as business loss under Section 37(1) of the Act. 15. On the contrary, Shri R. Jeyakumar, the Ld. Departmental Representative, submitted that the…

DCIT, Chennai vs. Kasturi and Sons Ltd., Chennai

In the result, all the Revenue’s appeals are allowed for statistical purposes

ITA 2014/CHNY/2014[2009-10]Status: DisposedITAT Chennai18 Aug 2017AY 2009-10

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Sh. Vikram Vijayaraghavan, AdvocateFor Respondent: Shri R. Jeyakumar, CIT
Section 143(1)Section 148

…s equity shares of 2,40,00,000 at the rate of `10/- each share. Thereafter the assessee sold 90% of shares to the extent of `2,43,00,000/- to M/s Chenan Enterprises Pvt. Ltd. Referring to the judgment of Supreme Court in CIT v. Amalgamation Pvt. Ltd. (1997) 226 ITR 188, the Ld.counsel pointed out that the loss suffered by the assessee on account of bank guarantee which was later on converted into equity, would amount to business loss, therefore, it has to be allowed as business loss under Section 37(1) of the Act. 15. On the contrary, Shri R. Jeyakumar, the Ld. Departmental Representative, submitted that the…

DCIT, Chennai vs. Kasturi and Sons Ltd., Chennai

In the result, all the Revenue’s appeals are allowed for statistical purposes

ITA 2013/CHNY/2014[2008-09]Status: DisposedITAT Chennai18 Aug 2017AY 2008-09

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Sh. Vikram Vijayaraghavan, AdvocateFor Respondent: Shri R. Jeyakumar, CIT
Section 143(1)Section 148

…s equity shares of 2,40,00,000 at the rate of `10/- each share. Thereafter the assessee sold 90% of shares to the extent of `2,43,00,000/- to M/s Chenan Enterprises Pvt. Ltd. Referring to the judgment of Supreme Court in CIT v. Amalgamation Pvt. Ltd. (1997) 226 ITR 188, the Ld.counsel pointed out that the loss suffered by the assessee on account of bank guarantee which was later on converted into equity, would amount to business loss, therefore, it has to be allowed as business loss under Section 37(1) of the Act. 15. On the contrary, Shri R. Jeyakumar, the Ld. Departmental Representative, submitted that the…

CIT v. Amalgamation Pvt. Ltd. (226 ITR 188) — Cited in 35 Judgments | BharatTax