CIT v. B.C. Srinivasa Setty

128 ITR 294Supreme Court of India1981#92 most cited

What is CIT v. B.C. Srinivasa Setty authority for?

When the cost of acquisition of a capital asset cannot be determined, the computation mechanism for capital gains fails, and thus no capital gains can be charged. This establishes a broader principle that a charging section cannot operate in the absence of specific machinery provisions for computation.

628

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2005 to 2026.

Also referred to as

CIT v. B.C. Srinivasa Setty · 128 ITR 294 · Section 45 · Section 48 · Section 55(2) · cost of acquisition · capital gains computation · machinery provision · unascertainable cost · intangible assets · taxability of goodwill · no tax without machinery

Also reported as

5 Taxmann 1

Sections most often in play

Section 143(3)Section 115JBSection 92BSection 234BSection 45Section 55(2)Section 143(2)Section 144

Issues it is cited on

section 211section 55section 32(1)(ii)section 21section 92bsection 32(1)intangible assetssection 48section 45book profitsfair market valuesection 115j

Judgments citing CIT v. B.C. Srinivasa Setty

DCIT, Circle-1(1), Hyderabad vs. Prakash Nimmagadda, Hyderabad, Secunderabad

In the result, appeal filed by the Revenue is dismissed

ITA 974/HYD/2017[2008-09]Status: DisposedITAT Hyderabad16 Dec 2024AY 2008-09

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita No.974/Hyd/2017 (िनधा"रण वष"/Assessment Year: 2008-09) Dy.Cit Vs. Shri Prakash Nimmagadda Circle 1(1) Hyderabad Hyderabad Pan:Acbpn4246R (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri K.C. Devdas, Ca राज" व "ारा/Revenue By:: Dr. Meghnath Chowhan, Cit(Dr) सुनवाई की तारीख/Date Of Hearing: 06/11/2024 घोषणा की तारीख/Pronouncement: 16/12/2024 आदेश/Order Per Vijay Pal Raothis Appeal Filed By The Revenue Is Directed Against The Order, Dated 20/03/2017 Of The Learned Cit (A)-9, Hyderabad, Relating To A.Y.2008-09. 2. The Revenue Has Raised The Following Grounds:

For Appellant: Shri K.C. Devdas, CAFor Respondent: : Dr. Meghnath Chowhan, CIT(DR)
Section 17(2)(c)Section 28

…ed in the case of Softner Traders & Consultants Pvt Ltd of the Bombay Bench of the Tribunal. 16. The learned AR of the assessee further relied upon the following judgments: i) CIT vs. Excel Industries Ltd (358 ITR 2956)(S.C) ii) CIT vs. B.C Srinivasa Setty (128 ITR 294) iii) Income Tax Officer vs. Undavalli Constructions (191 ITD 749) iv) CIT vs. Infosys Technologies Ltd (Civil Appeal No.3725 of 2007) Page 16 of 43 ITA No 974 of 2017 Prakash Nimmagadda v) Add. CIT vs Bharat V. Patel (civil appeal No.24888 of 2015) (S.C) vi) ITO vs. Shreyans Investments Pvt. Ltd, 31 Taxmann.com 71 (Kol). 17. Relying upon the…

Assistant Commissioner of Income Tax, Indore vs. Commander Industries Private Limited, Indore

ITA 24/IND/2024[2020-21]Status: DisposedITAT Indore25 Oct 2024AY 2020-21
Section 139(1)Section 142(1)Section 143(2)Section 32(1)Section 43(1)Section 43(6)(c)Section 47

…ssion on the concept of Goodwill would be necessary to develop a proper perspective. The term 'goodwill' has not been defined in the Act. Gainful reference can be taken from the decision Hon'ble Supreme Court in the case of CIT vs. B.C. Srinivasa Setty [1981] 128 ITR 294/5 Taxman 1 (SC) to understand what goodwill is. In CIT v. B.C. Srinivasa Setty (supra), the Supreme Court:- "Goodwill denotes the benefit arising from connection and reputation. The original definition by Lord Eldon in Cruttwell v. Lye [1810] 17 Ves 335 that goodwill was nothing more than the probability that the old customers would resort to the…

Canara Bank (Erstwhile Syndicate Bank), Bengaluru vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore, Bengaluru

ITA 938/BANG/2024[2014-15]Status: DisposedITAT Bangalore16 Oct 2024AY 2014-15

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Respondent: Ms. Brinda Rameswaran, A.R
Section 115JSection 143(3)Section 14ASection 250

…at machinery provision provided in sub- section (2) of section 115JB of the Act, would be rendered wholly unworkable in such a situation. In a well known judgment the Supreme Court in case of Commissioner of Income-Tax, Bangalore vs B.C. Shrinivasa Setty, Vo. 128 ITR 294 = 2002-TIOL-587-SC-IT-LB, had observed that in the Income Tax Act, a charging section and the computing provisions together constitute an integrated code. In a case where the computation provision cannot apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm f…

Canara Bank (Erstwhile Syndicate Bank), Bengaluru vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore, Bengaluru

In the result, appeal of the assessee is partly allowed

ITA 937/BANG/2024[2013-14]Status: DisposedITAT Bangalore16 Oct 2024AY 2013-14

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Ms. Brinda Rameswaran, A.RFor Respondent: Ms. Neera Malhotra, D.R
Section 115JSection 143(3)Section 14ASection 250

…at machinery provision provided in sub- section (2) of section 115JB of the Act, would be rendered wholly unworkable in such a situation. In a well known judgment the Supreme Court in case of Commissioner of Income-Tax, Bangalore vs B.C. Shrinivasa Setty, Vo. 128 ITR 294 = 2002-TIOL-587-SC-IT-LB, had observed that in the Income Tax Act, a charging section and the computing provisions together constitute an integrated code. In a case where the computation provision cannot apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm f…

Deputy Commissioner of Income Tax Circle-2(1)(1), Bengaluru vs. Canara Bank, Bengaluru

In the result, appeal of the revenue is partly allowed for statistical purposes

ITA 1102/BANG/2024[2014-15]Status: DisposedITAT Bangalore16 Oct 2024AY 2014-15

Bench: Shri Laxmi Prasad Sahu & Shri Keshav Dubeyassessmentyear:2014-15

For Appellant: Shri S. Ananthan, A.R. &For Respondent: Sri Subramanian S., D.R
Section 115JSection 142(1)Section 211Section 211(2)Section 37Section 37(1)Section 5

…b- section (2) of section 115JB of the Act, would be rendered wholly unworkable in such a situation. In a Canara Bank, Bangalore Page 14 of 17 well known judgment the Supreme Court in case of Commissioner of Income-Tax, Bangalore vs B.C. Shrinivasa Setty, Vo. 128 ITR 294 = 2002-TIOL-587-SC-IT-LB, had observed that in the Income Tax Act, a charging section and the computing provisions together constitute an integrated code. In a case where the computation provision cannot apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm f…

Mega Engineers & Builders, Port Blair vs. DCIT, Cir. 3(2), Port Blair

In the result, the appeal of assessee is allowed

ITA 312/KOL/2024[2017-18]Status: DisposedITAT Kolkata09 Oct 2024AY 2017-18

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 194C

…king company, would convince us that machinery provision provided in sub-section (2) of section l15JB of the Act, would be rendered wholly unworkable in such a situation. In a well known judgment the Supreme court in case of CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294/5 Taxman 1 had observed that in the Income Tax Act, a charing section and the computing provisions together constitute an integrated code. In a case where the computation provision can not apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm for transfer of…

The Chaplah Co-Operative Agricultural Service Society Ltd, Vpo Chouli vs. Ld. DCIT, CPC, Bengaluru

In the result, appeal of the Assessee is allowed

ITA 47/CHANDI/2024[2018-19]Status: DisposedITAT Chandigarh04 Oct 2024AY 2018-19

Bench: The Tribunal Against The Order Dt 25.04.2023 Of Ld. Commissioner Of Income Tax(Appeals), National Faceless Appeal Centre (Nfac), Delhi.

For Appellant: Shri T C Verma, Advocate and Shri Aditya Sood, AdvocateFor Respondent: Dr. Ranjeet Kaur, Sr.DR
Section 139(4)Section 143(1)Section 249Section 250Section 253Section 3Section 5Section 80P

…Court, the amendment carried out in Section 143(1)(a) by the Finance Act 2021 was neither argued nor referred to for consideration of the Hon'ble Court. 14.5 It is further seen that the decision of the Apex Court in the case of CIT Vs B.C. Srinivasa Shetty 128 ITR 294 fully supports the view taken. The Court therein at page 299 has held as under : " …………..The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code . When there is a case to which the computation provisi…

Rajani Prakash Kashid, Kolhapur vs. ITO, Ward 1(4), Kolhapur

In the result, the appeal of assessee is allowed

ITA 608/PUN/2024[2011-12]Status: DisposedITAT Pune01 Oct 2024AY 2011-12

Bench: Shri R.K. Panda & Ms. Astha Chandra

For Appellant: Shri Nikhil PathakFor Respondent: Shri A.D. Kulkarni
Section 142(1)Section 148Section 2

…Y 2011-12 capital gain tax as property in question is a Inam/Inami land which was received by the ancestors of the assessee and has no cost of acquisition. Relying on the decision of Hon’ble Supreme Court in the case of CIT Vs. B. C. Shrinavasa Shetty (1981) 128 ITR 294 (SC), the assessee contended that no capital gain tax liability would arise in the hands of the assessee. The Ld. AO disregarded the above submission of the assessee holding that the said decision of the Hon’ble Supreme Court is not applicable to the facts of the present case as the same was rendered in the context of goodwill. The Ld. AO therefo…

Deputy Commissioner of Income Tax, Mumbai vs. Utv Software Communications Pvt Limited, Mumbai

In the result, the appeal filed by the Revenue Department stands dismissed

ITA 2944/MUM/2024[2011-12]Status: DisposedITAT Mumbai20 Sept 2024AY 2011-12

Bench: Shri Narender Kumar Choudhry & Shri Omkareshwar Chidaraassessment Year: 2011-12

For Appellant: Shri Ajit Kumar Jain, A.RFor Respondent: Shri Nehaar Ranjan Pandey, D.R
Section 250Section 92Section 92(1)Section 92C

…he machinery Section of the Act cannot be read de-hors charging Section. The Act has to be read as an integrated whole. On the aforesaid submission also, there can be no dispute. However, as observed by the Supreme Court in CIT v. B.C. Srinivasa Shetti [1981] 128 ITR 294/5 taxmann. com 1, "there is a qualitative difference between the charging provisions and computation provisions and ordinarily the operation of the charging provisions cannot be affected by the construction of computation provisions." In the present case, there is no charging provision to tax capital account transaction in respect of issue of sha…

M/S. Mahindra Residential Developers Ltd., Kanchipuram vs. ITO, Corporate Ward - 4 (1), Chennai

In the result, the appeals of the assessee for AYs 2012-13, 2013-14

ITA 338/CHNY/2020[2013-14]Status: DisposedITAT Chennai06 Sept 2024AY 2013-14

Bench: Shri Aby T. Varkey & Shri Jagadishआयकर अपील सं./Ita No.870/Chny/2017 िनधा"रणवष"/Assessment Year: 2012-13 & आयकर अपील सं./Ita Nos.338 & 339/Chny/2020 िनधा"रणवष"/Assessment Years: 2013-14 & 2014-15

For Appellant: Mr.Raghavan-For Respondent: Shri A. Sasikumar, CIT
Section 10ASection 143(2)Section 143(3)Section 80

…anted under the lease cannot be determined the computation provisions under the Act cannot apply at all and as such sec- tion 45 of the Act is not attracted. Reliance for this contention is placed on the judgment of this Court in C.I.T.v.B.C. Srinivas Shetty, 128 ITR 294. As regards the first contention, section 2(14) of the Act defines "capital asset" as "property of any kind held by an assessee". What is parted with under the terms of the lease-deed is the right to exploit the land by extracting clay which fight directly flows from the ownership of the land. The said right evaluated in terms of money forms part…

Union Bank of India, Mumbai vs. DCIT Ltu (2), Mumbai

ITA 424/MUM/2020[2015-16]Status: HeardITAT Mumbai06 Sept 2024AY 2015-16
Section 115JSection 211

…the jurisdictional High Court in assessee's own case that the machinery provision would fail. In the absence of fulfillment of the said condition, principle laid down in the judgment of the Hon'ble Apex Court in the case of CIT v. B. C. Srinivasa Setty (1981) 128 ITR 294 (SC) is applicable, wherein it has been held that a charging provision and a computation provision together constitute an integrated code. If the computation provision cannot apply it would be evident that such a case was not intended to fall within the charging section. Thus, he submitted that, in so far as application of clause (a) of section 1…

Central Bank of India, Mumbai vs. ACIT - 2(1)(2), Mumbai

ITA 3740/MUM/2018[2013-14]Status: HeardITAT Mumbai06 Sept 2024AY 2013-14
Section 115JSection 211

…the jurisdictional High Court in assessee's own case that the machinery provision would fail. In the absence of fulfillment of the said condition, principle laid down in the judgment of the Hon'ble Apex Court in the case of CIT v. B. C. Srinivasa Setty (1981) 128 ITR 294 (SC) is applicable, wherein it has been held that a charging provision and a computation provision together constitute an integrated code. If the computation provision cannot apply it would be evident that such a case was not intended to fall within the charging section. Thus, he submitted that, in so far as application of clause (a) of section 1…

Mr. Amar Rahman, Bangalore vs. ACIT, Corporate Circle-1(1), Chennai

ITA 1352/CHNY/2023[2016-17]Status: DisposedITAT Chennai04 Sept 2024AY 2016-17

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manu Kumar Giri, Jm आयकरअपील सं./ Ita No.1352/Chny/2023 (िनधा9रणवष9 / Assessment Year: 2016-17) Shri Amar Rahman Acit बनाम/ 547, Ideal Home Township Corporate Circle-1(1) 12Th Cross, Rajarajeswari Nagar Vs. Chennai. Mysore Road, Bengaluru-560 098. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aadpr-7258-N (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ" कीओरसे/ Appellant By : Mr. Quadir Hoseyn (Advocate) & Dr.L.Natarajan (Ca)- Ld.Ars " थ"कीओरसे/Respondent By : Shri Nilay Baran Som (Cit) - Ld. Dr

For Appellant: Mr. Quadir Hoseyn (Advocate) &For Respondent: Shri Nilay Baran Som (CIT) - Ld. DR
Section 143(3)

…her submitted that for a charge under the head capital gains, the capital asset must have cost which must be conceivable. In case of inconceivable cost, no gains could be computed as per the decision of Hon’ble Apex Court in the case of B.C. Srinivasa Shetty (128 ITR 294). 5.2 However, Ld. AO rejected the aforesaid claim on the ground that no agricultural activities were carried out on the said land. The land was situated close to urban conglomerate of Bangalore wherein industrial and real estate boom had been at extraordinary rapid pace. The adjacent land was converted into industrial lands. The land was held as…

DCIT (Ltu), New Delhi vs. M/S. Mawana Sugar Ltd., New Delhi

In the result, the appeal filed by the assessee being ITA

ITA 3498/DEL/2013[2001-02]Status: DisposedITAT Delhi30 Aug 2024AY 2001-02

Bench: him in the Memorandum of Appeal. 4.1 That on facts and in law the AO erred in ado tin the figure of Taxable Capital Gains at Rs.6,98,80,603/- instead of Rs.6,90,79,603/-.

For Appellant: Shri Tarandeep Singh, AdvocateFor Respondent: Shri Subhra Jyoti Chakraborty, CIT DR
Section 43B

…tation of Income with the explanation that in the computation of taxable income, the said amount being a capital receipt has not been considered as taxable income and relied on the decision of Hon’ble Supreme Court in the case of CIT v. B. C. Srinivasa Setty, 128 ITR 294. Similar note was also given at Schedule 12 to Notes of Accounts to the Balance Sheet. Before AO, assessee also submitted a note on non-taxability of Rs.11 crores received on sale of trademark along with copy of agreement with ITC vide letter dated 03.03.2004. The same is reproduced by the AO at page 20, 21 & 22 of his order. After considering th…

Mawana Sugars Limited., New Delhi vs. DCIT, New Delhi

In the result, the appeal filed by the assessee being ITA

ITA 4519/DEL/2009[2001-02]Status: DisposedITAT Delhi30 Aug 2024AY 2001-02

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI VIMAL KUMAR (Judicial Member)

For Appellant: Shri Tarandeep Singh, AdvocateFor Respondent: Shri Subhra Jyoti Chakraborty, CIT DR
Section 43B

…tation of Income with the explanation that in the computation of taxable income, the said amount being a capital receipt has not been considered as taxable income and relied on the decision of Hon’ble Supreme Court in the case of CIT v. B. C. Srinivasa Setty, 128 ITR 294. Similar note was also given at Schedule 12 to Notes of Accounts to the Balance Sheet. Before AO, assessee also submitted a note on non-taxability of Rs.11 crores received on sale of trademark along with copy of agreement with ITC vide letter dated 03.03.2004. The same is reproduced by the AO at page 20, 21 & 22 of his order. After considering th…

M/S Syndicate Bank, Manipal vs. Deputy Commissioner of Income Tax, Circle - 1, Udupi

In the result, appeal of the revenue in ITA No

ITA 1219/BANG/2019[2015-16]Status: DisposedITAT Bangalore08 Aug 2024AY 2015-16

Bench: Shri Chandra Poojari & Shri Keshav Dubeyassessment Year: 2015-16

For Appellant: Shri S. Ananthan, A.RFor Respondent: Ms. Neera Malhotra, D.R
Section 115JSection 36(1)(vii)Section 36(1)(viia)

…at machinery provision provided in sub- section (2) of section 115JB of the Act, would be rendered wholly unworkable in such a situation. In a well known judgment the Supreme Court in case of Commissioner of Income-Tax, Bangalore vs B.C. Shrinivasa Setty, Vo. 128 ITR 294 = 2002-TIOL-587- SC-IT-LB, had observed that in the Income Tax Act, a charging section and the computing provisions together constitute an integrated code. In a case where the computation provision cannot apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm…

Laxmikant H Renuke, Mumbai vs. Income Tax Officer 23(2)(1), Mumbai

ITA 2762/MUM/2024[2009-10]Status: DisposedITAT Mumbai31 Jul 2024AY 2009-10

Bench: Shri Narender Kumar Choudhry & Shri Gagan Goyal

Section 143(2)Section 148Section 250

…ction 55. The conclusion of the Tribunal in imminently possible and in the given facts. That is also possible in the light of the legal position as noted by language of section 55(2) and the judgment of the Supreme Court in CIT v. B.C. Srinivasa Shetty [1981] 128 ITR 294/5 Taxman 1, which is in the field. [Para 11]" 12. Further, with regard to the compensation received by the assessee, he submitted that the compensation is only towards hardship compensation, in this regard he relied on the decision of the Coordinate Bench in the case of Ajay Parasmal Kothari v ITO in ITA.No. 2823/Mum/2022 dated 03.04.2023. 13. Co…

The Surarwan Gagwan Co-Operative Agriculture Service Society Limited, Surarwan vs. Ld. DCIT, CPC, Bengaluru

In the result, the appeal of the Assessee is allowed

ITA 46/CHANDI/2024[2018-19]Status: DisposedITAT Chandigarh29 Jul 2024AY 2018-19

Bench: Dr Krinwant Sahay & Shri Paresh M. Joshiआयकर अपील सं./ Ita No. 46/Chd/2024 "नधा"रण वष" / Assessment Year : 2017-18 The Surarwan Gagwan Co- Vs. The Ito, Operative Agriculture Service बनाम Ward, Society Limited, Nurpur (Palampur ) Surarwan Indora H.P. "थायी लेखा सं./Pan No: Aaact8925A अपीलाथ"/ Appellant ""यथ"/ Repsondent (Virtual Hearing) "नधा"रती क" ओर से/Assessee By : Sh. Vishan Mohan, Sr. Advocate With Sh Aditya Sood, Adv. राज"व क" ओर से/ Revenue By : Shri Dharam Vir, Jcit, Sr. Dr सुनवाई क" तार"ख/Date Of Hearing : 25.07.2024 उदघोषणा क" तार"ख/Date Of Pronouncement : 29.07.2024

For Appellant: Sh. Vishan Mohan, Sr. AdvocateFor Respondent: Shri Dharam Vir, JCIT, Sr. DR
Section 139(1)Section 143(1)Section 143(1)(a)Section 80ASection 80P

…gh Court, the amendment carried out in Section 143(1)(a) by the Finance Act 2021 was neither argued nor referred to for consideration of the Hon'ble Court. 14.5 It is further seen that the decision of the Apex Court in the case of CIT Vs B.C. Srinivasa Shetty 128 ITR 294 fully supports the view taken. The Court therein at page 299 has held as under : " …………..The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisio…

Deputy Commissioner of Income Tax Circle-2(1)(1), Bengaluru vs. Canara Bank, Bengaluru

In the result, revenue’s appeal in ITA No

ITA 716/BANG/2024[2015-16]Status: DisposedITAT Bangalore10 Jun 2024AY 2015-16

Bench: Shri Chandra Poojari & Shri Keshav Dubeyassessment Year: 2015-16

For Appellant: Sri S. Ananthan, A.RFor Respondent: Ms. Neera Malhotra, D.R
Section 14Section 147Section 14ASection 154

…at machinery provision provided in sub- section (2) of section 115JB of the Act, would be rendered wholly unworkable in such a situation. In a well known judgment the Supreme Court in case of Commissioner of Income-Tax, Bangalore vs B.C. Shrinivasa Setty, Vo. 128 ITR 294 = 2002-TIOL-587- SC-IT-LB, had observed that in the Income Tax Act, a charging section and the computing provisions together constitute an integrated code. In a case where the computation provision cannot apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm…

Canara Bank, Bengaluru vs. The Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore, Bengaluru

In the result, revenue’s appeal in ITA No

ITA 111/BANG/2024[2015-16]Status: DisposedITAT Bangalore10 Jun 2024AY 2015-16

Bench: Shri Chandra Poojari & Shri Keshav Dubeyassessment Year: 2015-16

For Appellant: Sri S. Ananthan, A.RFor Respondent: Ms. Neera Malhotra, D.R
Section 14Section 147Section 14ASection 154

…at machinery provision provided in sub- section (2) of section 115JB of the Act, would be rendered wholly unworkable in such a situation. In a well known judgment the Supreme Court in case of Commissioner of Income-Tax, Bangalore vs B.C. Shrinivasa Setty, Vo. 128 ITR 294 = 2002-TIOL-587- SC-IT-LB, had observed that in the Income Tax Act, a charging section and the computing provisions together constitute an integrated code. In a case where the computation provision cannot apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm…