CIT v. B.M. Kharwar

72 ITR 603Supreme Court of India1969#4375 most cited

What is CIT v. B.M. Kharwar authority for?

Taxing authorities must respect the legal character of a transaction, even if it appears to be a device to reduce tax, unless the transaction is a sham or conceals the true legal relationship.

27

judgments rely on this decision, according to BharatTax’s citation analysis of 366,005 Indian tax judgments — from 2010 to 2024.

Also referred to as

CIT v. B.M. Kharwar · 72 ITR 603 · SC 1969 · substance over form · legal character of transaction · taxing authority · unravel device · true legal relationship · legal eff

Sections most often in play

Section 1872: Section 62Section 1963: Rule 29Section 101Section 102Section 124(3)Section 132Section 132ASection 139(1)
Read the full judgment

Issues it is cited on

substance over formdate of transferrule of consistencysection 2(24)interest under section 234badmission of additional evidencesection 56(2)share application moneyfair market valuesection 56addition u/s 68first appeal

Judgments citing CIT v. B.M. Kharwar

Haresh H. Melwani, Mumbai vs. ITO WD 12(1)(1), Mumbai

In the result, the assessee’s appeals are allowed on the afore-said terms

ITA 1757/MUM/2012[2007-08]Status: DisposedITAT Mumbai29 Feb 2016AY 2007-08
For Appellant: Shri Molti B. TotlaniFor Respondent: Shri Randhir Gupta
Section 143(3)Section 45Section 48

…ld have been realised by the two companies, and not the two assessees holding shares therein. Other benefits by way of saving on stamp duty, registration charges, etc. also ensue. However, as clarified by the Hon’ble Apex Court in CIT vs. B. M. Kharwar [1969] 72 ITR 603 (SC), the legal form of the transaction has but to be given regard to, and cannot be ignored on the basis of what is called the substance of the transaction. To quote: ‘It is now well-settled that the taxing authorities are not entitled, in determining whether a receipt is liable to be taxed, to ignore the legal character of the transaction which…

Navni9Ta H. Melwani, Mumbai vs. ITO WD 12(3)(3), Mumbai

In the result, the assessee’s appeals are allowed on the afore-said terms

ITA 1756/MUM/2012[2007-08]Status: DisposedITAT Mumbai29 Feb 2016AY 2007-08
For Appellant: Shri Molti B. TotlaniFor Respondent: Shri Randhir Gupta
Section 143(3)Section 45Section 48

…ld have been realised by the two companies, and not the two assessees holding shares therein. Other benefits by way of saving on stamp duty, registration charges, etc. also ensue. However, as clarified by the Hon’ble Apex Court in CIT vs. B. M. Kharwar [1969] 72 ITR 603 (SC), the legal form of the transaction has but to be given regard to, and cannot be ignored on the basis of what is called the substance of the transaction. To quote: ‘It is now well-settled that the taxing authorities are not entitled, in determining whether a receipt is liable to be taxed, to ignore the legal character of the transaction which…

Rhw Hotel Management Services Ltd., Gurgaon vs. DCIT, New Delhi

In the result the assessee’s appeal stands allowed

ITA 540/DEL/2013[2009-10]Status: DisposedITAT Delhi23 Feb 2016AY 2009-10

Bench: Shri N.K. Saini & Smt. Beena Pillaiita No. 540/Del/20013 Asstt. Year : 2009-10 Rhw Hotel Management Vs Deputy Commissioner Of Services Ltd. (Presently Income Tax, Circle-1(1), C.R. Known As Carlson Hotels Building, (South Asia P. Ltd.), 336, New Delhi Phase-Iv, Udyog Vihar, Gurgaon-122006 (Appellant) (Respondent) Pan No. Aabcr1707K Assessee By : Sh. Pradeep Dinodia Ca & Sh. R.K. Kapoor, Ca Revenue By : Sh. V. R. Sonbhadra, Sr. Dr Date Of Hearing : Date Of Pronouncement : 14.12.2015 23.02.2016

For Appellant: Sh. Pradeep Dinodia CA &For Respondent: Sh. V. R. Sonbhadra, Sr. DR
Section 194JSection 40

…lly incorrect. 4.11. From the substance of the transaction, it is seen, that share of M/s A.B. Hotels Ltd. were never the income of the assessee. Ld.AR placed is reliance on the decision of Hon’ble Supreme Court in the case of CIT VS B.M. Kharwar reported in 72 ITR 603 (SC), where it was held that, legal relation alone can determine the taxability of the receipts arising from the transaction. He contended that in the year under consideration all what had happened was under the MOU dated 27.03.2000, read with letter dated 23.10.2007, revenue was shared in respect of the joint venture between the assessee and M/s…

D.C.I.T. Cir - 8, Kolkata vs. M/S Fives Stein India Projects Pvt Ltd., Kolkata

In the result, the appeal of the revenue is dismissed

ITA 91/KOL/2013[2009-10 & 2010-11]Status: DisposedITAT Kolkata27 Nov 2015

Bench: : Shri M. Balaganesh

For Respondent: Shri Rajendra Prasad, JCIT, Sr.DR
Section 143(3)Section 36(1)(vii)Section 36(2)

…f his contentions:- a) TRF Ltd vs CIT reported in 323 ITR 397 (SC) b) Inland Revenue Commisisoner vs Weleyan General Assurance Society reported in 16 ITR (Suppl) 101 (HL) c) Mcdowell & Co Ltd vs CTO reported in 59 STC 277 (SC) d) CIT vs BM Kharwar reported in 72 ITR 603 (SC) ITA No.91/Kol/2011-C-AM 2 M/s. Fives Stein (I) Projects P.Ltd e) Sir Kikabhai Premchand case reported in 24 ITR 506 (SC) In response to this, the Learned DR vehemently supported the order of the Learned AO. 3.2. We have heard the rival submissions and perused the materials available on record. We are in agreement with the arguments of t…

Profile Gears & Engineering Private Limited, Chennai vs. ACIT, Chennai

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

ITA 286/CHNY/2014[2006-2007]Status: DisposedITAT Chennai08 Apr 2015AY 2006-2007

Bench: Shri Chandra Poojari & Shri Challa Nagendra Prasadआयकर अपील सं./ I.T.A. No.286/Mds/2014 ("नधा"रण वष" / Assessment Year : 2006-2007)

For Appellant: Shri. C. Srikanth, C.AFor Respondent: Dr. Nischal, JCI.T
Section 143(2)Section 143(3)Section 2Section 263Section 50B

…ur (1965) 57 ITR 299 (SC), and since the said case dealt with the provisions of section 10(2) (vii), proviso (ii), of the 1922 Act prior to amendment, the said circular had no application and that the matter was governed by the decision in B.M. Kharwar (1969) 72 ITR 603(SC). The view of the Tribunal was correct’’. 5. On the other hand, the Departmental Representative submitted that the Assessing Officer during the course of assessment I.T.A.No.286/Mds/2014. :- 8 -: proceedings requested M/s. SRP Tools Limited to furnish the details relating to purchase of land, building, plant and machinery and other asset…

Commissioner of Income Tax vs. Ece Industries Ltd

ITA/417/2007HC Delhi24 Dec 2010

Bench: HON'BLE MR. JUSTICE A.K.SIKRI,HON'BLE MR. JUSTICE SURESH KUMAR KAIT

Section 50Section 50(2)

…f sale consideration between tangible and intangible asset was possible and even if the sale was to be treated as slump sale, the gain would be taxable as laid out by the Supreme Court in the case of Commissioner of Income-tax, Gujarat II v. B.M. Kharwar [72 ITR 603] and in the case of Commissioner of Income-Tax, Bombay City v. Bipinchandra Maganlal & Co. Ltd. [41 ITR 290]. 4. Aggrieved by the order of the CIT (A), the assessee filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as „the Tribunal‟), who held that the transaction of sale of Sonepat Unit by the assessee was…

Commissioner of Income Tax vs. ECE Industries Limited

ITA-417/2007HC Delhi24 Dec 2010
Section 50Section 50(2)

…f sale consideration between tangible and intangible asset was possible and even if the sale was to be treated as slump sale, the gain would be taxable as laid out by the Supreme Court in the case of Commissioner of Income-tax, Gujarat II v. B.M. Kharwar [72 ITR 603] and in the case of Commissioner of Income-Tax, Bombay City v. Bipinchandra Maganlal & Co. Ltd. [41 ITR 290]. 4. Aggrieved by the order of the CIT (A), the assessee filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as „the Tribunal‟), who held that the transaction of sale of Sonepat Unit by the assessee was…