CIT v. Bokaro Steel Ltd.

236 ITR 315Supreme Court of India1999#200 most cited

What is CIT v. Bokaro Steel Ltd. authority for?

Interest earned during the pre-commencement period of a project, on advances made to contractors or on unutilized borrowed funds, if inextricably linked to the setting up of the plant, constitutes a capital receipt. Such interest is not taxable as income but can be reduced from the capital work-in-progress.

370

judgments rely on this decision, according to BharatTax’s citation analysis of 367,518 Indian tax judgments — from 2007 to 2026.

Also referred to as

CIT v. Bokaro Steel Ltd. · 236 ITR 315 · pre-commencement interest · capital receipt · income from other sources · unutilized borrowed funds · advances to contractors · capital work-in-progress · Section 56 · Section 28 · setting up of plant

Also reported as

102 Taxmann 94

Sections most often in play

Section 37(1)Section 143(3)Section 199Section 250Section 142(1)Section 143(2)Section 32Section 194A

Issues it is cited on

section 32(1)section 22section 57section 56section 32profits and gains of business or professionadvance taxsection 37(1)revenue expenditureincome from other sourcessection 28section 37

Judgments citing CIT v. Bokaro Steel Ltd.

ACIT 19(3), Mumbai vs. Petroleum India International, Mumbai

In the result, all appeals of revenue are allowed in part, in terms indicated hereinabove

ITA 4439/MUM/2009[2003-04]Status: DisposedITAT Mumbai20 Nov 2015AY 2003-04

Bench: Shri R.C.Sharma, Am & Shri Amarjit Singh, Jm आमकय अऩीर सं./Ita Nos.4439,4657&4658/Mum/2009

For Appellant: Shri Niraj SethFor Respondent: Shri Deepkant Prasad
Section 143(3)Section 40Section 91Section 91(1)

…iew of the matter the ratio laid down by this court in Tuticorin Alkali Chemicals and Fertilizers Limited v CIT [1997] 227 ITR 172, will not be attracted. The more appropriate decision in the factual situation in the present case is in Bokaro Steel Ltd [1999] 236 ITR 315 (SC). (emphasis supplied) In view of the abovementioned categorical observations of the Supreme Court, I consider that the appellant deserves the benefit of the ratio of the abovementioned Supreme Court decision in 243 ITR 2 in which Tuticorin Alkali case 227 ITR 172 has been referred and correctly distinguished. The Supreme Court has also observ…

Mahagun Hotels Pvt. Ltd., Delhi vs. DCIT, New Delhi

In the result, both the appeals of the assessee are partly allowed

ITA 4419/DEL/2013[2009-10]Status: DisposedITAT Delhi06 Nov 2015AY 2009-10

Bench: Sh. I.C.Sudhir, Jm & Sh. Prashant Maharishi, Am

For Appellant: Sh. Saubhagya Aggarwal, Adv. Suman Jain, CAFor Respondent: Sh. R.R. Singh, CIT, DR
Section 153A

…us money but it was use of the money for the purpose of the business, which has resulted into interest income. Before us, Ld. AR has submitted decisions of various authorities including decision of Hon’ble Supreme Court in case of CIT vs. Bokaro Steel Limited 236 ITR 315. Hon’ble Delhi High Court in case of Indian Oil Panipat Power Consortium Ltd. vs. ITO has considered the issue of taxability of interest income arising on activity, which is inextricable linked with the business of the assesee. Honourable Delhi high court in Indian oil Panipat power consortium Limited V ITO in appeal no 1156 & 1157 /2007 dated 26…

Mahagun Hotels Pvt. Ltd., Delhi vs. DCIT, New Delhi

In the result, both the appeals of the assessee are partly allowed

ITA 4418/DEL/2013[2008-09]Status: DisposedITAT Delhi06 Nov 2015AY 2008-09

Bench: Sh. I.C.Sudhir, Jm & Sh. Prashant Maharishi, Am

For Appellant: Sh. Saubhagya Aggarwal, Adv. Suman Jain, CAFor Respondent: Sh. R.R. Singh, CIT, DR
Section 153A

…us money but it was use of the money for the purpose of the business, which has resulted into interest income. Before us, Ld. AR has submitted decisions of various authorities including decision of Hon’ble Supreme Court in case of CIT vs. Bokaro Steel Limited 236 ITR 315. Hon’ble Delhi High Court in case of Indian Oil Panipat Power Consortium Ltd. vs. ITO has considered the issue of taxability of interest income arising on activity, which is inextricable linked with the business of the assesee. Honourable Delhi high court in Indian oil Panipat power consortium Limited V ITO in appeal no 1156 & 1157 /2007 dated 26…

Kayagee Loparex India P.Ltd, Mumbai vs. ACIT (OSD) 8(1), Mumbai

ITA 7745/MUM/2012[2008-09]Status: DisposedITAT Mumbai28 Oct 2015AY 2008-09

Bench: S/Sh. Rajendra & Amit Shuklaआयकर आयकर अपील अपील संसंसंसं/.Ita No.7745 & 7746//Mum/2012,िनधा"रण िनधा"रण वष" वष"/Assessment Years-2008-09 & 2009-10 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" Kaygee Loparex India Pvt. Ltd. Acit(Osd) 8(1), B-28 Veera Ind. Estate,Bhukhanvala Vs Mumbai Chambers,Off Link Road, Andheri (W),Mumbai – 400 053 Pan: Aaack3962A (अपीलाथ" /Assessee) (""यथ" / Respondent) िनधा"रती िनधा"रती िनधा"रती ओर िनधा"रती ओर ओर सेसेसेसे/Assessee By ओर : Shri N. Jayendra राज"व क" ओर से/ Revenue By : Shri R.A. Dhyani सुनवाई सुनवाई सुनवाई क" सुनवाई क" क" तारीख क" तारीख तारीख / Date Of Hearing :20-10-2015 तारीख घोषणा क" तारीख / Date Of Pronouncement : 28-10-2015 आयकर आयकर अिधिनयम अिधिनयम,1961 1961 क" धारा क" धारा 254 254(1)के अ"तग"त आदेश के अ"तग"त आदेश आयकर आयकर अिधिनयम अिधिनयम क" धारा क" धारा के अ"तग"त आदेश के अ"तग"त आदेश 1961 1961 254 254 Order U/S.254(1)Of The Income-Tax Act,1961(Act) लेखा सद"य राजे"" के अनुसार लेखा सद"य राजे"" के अनुसार Per Rajendra, Am- लेखा सद"य राजे"" के अनुसार लेखा सद"य राजे"" के अनुसार Challenging The Orders Dtd.23.10.2012And 29.10.2012 Of The Cit(A)-17,Mumbai,The Assessee Has Filed Appeals For The Abovementioned Two Assessment Years (Ays).During The Course Of Hearing Before Us The Authorised Representative(Ar)Fairly Conceded That Ground No.2 & 3 Are Covered Against The Assessee By The Decisions Of The Hon’Ble Supreme Court. Hence, Both The Grounds Stand Dismissed.

For Respondent: Shri R.A. Dhyani
Section 143(3)Section 254(1)

…inextricably linked to the expansion project,that after netting the balance amount was capitalised,that the facts of the case of Tuticorin (supra),were different and not applicable to the facts under consideration.It relied upon the case of Bokaro Steel Ltd.(236 ITR 315) and Indian Oil Panipat Power Consortium Ltd.(315ITR255),Karnal Co-operative Sugar Ltd.(234ITR2). After considering the submissions of the assessee and the assessment order,the FAA held that in the case of Lovesh Jain(5Taxman26),the Tribunal had held that if the funds for the business were parked for safe keeping the interest resulting there from…

M/S. Matrix Infrastructure, New Delhi vs. ITO, New Delhi

In the result the appeal of the assessee is partly allowed and the appeal of the revenue is dismissed

ITA 5428/DEL/2010[2007-08]Status: DisposedITAT Delhi30 Sept 2015AY 2007-08

Bench: Sh. A. T. Varkey, Jm & Sh. O.P.Kant, Am

For Appellant: Dr. Rakesh Gupta, AdvFor Respondent: Sh. P. Dam Kanunjna, Sr. DR
Section 143(3)Section 40

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. A. T. Varkey, JM AND Sh. O.P.Kant, AM ITA No.5428/Del./2010 Asstt. Year : 2007-08 Matrix Infrastructure, Vs. ITO, C-2/398, Janakpuri, Ward-26(2), New Delhi Delhi PAN:AAFM1157B (APPELLANT) (RESPONDENT) ITA No.5548/Del./2010 Asstt. Year : 2007-08 ITO, Vs. Matrix Infrastructure, Ward-26(2), Room No.304-C, D-99, Tagore Garden, D- Block, Vikash Bhawan, New Delhi New Delhi PAN:AAFM1157B (APPELLANT) (RESPONDENT) Appellant by :Dr. Rakesh Gupta, Adv Sh. Jomil Aggarwal, CA Respondent by : Sh. P. Dam Kanunjna, Sr. DR Date of Hearing : 02.09.2015…

ACIT, New Delhi vs. Sh. Anil Kumar Sharma, New Delhi

In the result, the appeals of the Revenue as well as Cross

ITA 6204/DEL/2013[2010-11]Status: DisposedITAT Delhi23 Sept 2015AY 2010-11

Bench: Shri Chandra Mohan Garg & Shri L.P. Sahu

Section 127Section 132Section 139Section 143(3)Section 153ASection 2(24)(iv)

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH:‘A’ NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A .No. 6204/Del/2013 (ASSESSMENT YEAR-2010-11) ACIT, vs Anil Kumar Sharma, Central Circle-7, B3, AGCR Enclave, New Delhi. New Karkardooma, New Delhi. AUTPS1076K & Cross Objection No. 230/Del/2015 (ASSESSMENT YEAR-2010-11) Anil Kumar Sharma, vs ACIT, B3, AGCR Enclave, Central Circle-7, New Karkardooma, New Delhi. New Delhi. AUTPS1076K Appellant by Shri Amrit Goel, CA Respondent by Shri Ravi Jain, CIT (DR) Date of Hearing 27.08.2015 Date of Pronouncement 23.09.…

CIT vs. Maithon Power Ltd

The appeal is dismissed but with no order as to costs

ITA/5/2015HC Delhi21 Jul 2015

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 260ASection 28Section 5

…owed by a newly started company which was in the process of constructing and erecting its plant “can be capitalised and added to the cost of the fixed assets which have been created as a result of such expenditure”. 10. In CIT v. Bokaro Steel Ltd [1999] 236 ITR 315, the Supreme Court was considering the nature of the amounts received by the Assessee from its contractors, engaged for the construction of its steel plant, under three heads: (i) as rent for housing the workers and staff, (ii) hire charges for plant and machinery made available to the contractors and (iii) interest from advances made to the…

Commissionerofincometax-I vs. Accession Buildwell (P) Ltd

ITA/153/2014HC Delhi27 Apr 2015

Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE R.K.GAUBA

Section 22Section 260Section 56

…may also, as in that case, keep the surplus funds in short-term deposits in order to earn interest. Such interest will be chargeable under section 56 of the Income-tax Act". The Supreme Court, subsequently, in Commissioner of Income Tax v. Bokaro Steel 236 ITR 315, held that: ITA 153/2014 Page 4 “However, while interest earned by investing borrowed capital in short-term deposits is an independent source of income not connected with the construction activities or business activities of the assessee, the same cannot be said in the present case where the utilisation of various assets of the compa…

Ingersoll - Rand (India) Limited, Bangalore vs. ACIT, Bangalore

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

ITA 1529/BANG/2010[2006-07]Status: DisposedITAT Bangalore24 Apr 2015AY 2006-07

Bench: Shri N.V. Vasudevan & Shri Jason P. Boazi.T.(T.P) A. No.1529/Bang/2010 (Assessment Year : 2006-07) M/S. Ingersoll-Rand (India) Limited, Vs. Asst. Commissioner Of Income Tax, Plot No.35, Kiadb Indl. Area, Circle 11(4), Banglaore. Bidadi, Bangalore-562 109 Appellant Respondent.

For Appellant: Shri K.R. Vasudevan, AdvocateFor Respondent: Shri C.H.Sundar Rao, CIT-I (D.R)
Section 143(3)Section 144C(5)Section 154Section 92C

…er propose to impute interest on such advances, which the assessee has 7 IT (T.P) A No.1529/Bang/2010 never earned, it would result in a hypothetical income and not real income. The supreme court in the case of Commissioner of Income Tax Vs. Bokaro Steel Ltd. 236 ITR 315 1999 SC has held that only real income can be brought to tax and not hypothetical income. Error in levying interest under the provisions of Section 234C: The Honourable DRP and the learned AO have grossly erred in levying a sum of `642,471 as interest under the provisions of Section 234C of the Act. The appellant craves leave to add to, alter, va…

The Commissioner of Income Tax-IV vs. Indian Vaccines Corporation Ltd

ITA/572/2013HC Delhi05 Mar 2014
Section 260A

…s appeal to the CIT (Appeals) was unsuccessful. In the further appeal before the Tribunal, the Tribunal held in its impugned order that the case of the assessee is covered by the ruling of the Supreme Court in the case of CIT vs. Bokaro Steel Ltd., (1999) 236 ITR 315 (SC) and, therefore, the interest cannot be separately brought to tax, but has to be adjusted against the pre-operative expenses relating to the project. 3. Aggrieved by the aforesaid order of the Tribunal passed on 01.03.2013, the revenue is in appeal under Section 260A of the Income Tax Act, 1961. 2014:DHC:1206-DB ITA No.572/2013…

The Commissioner of Income-Tax vs. Sri M.D. Yashodharan

In the result, the appeal fails

RP/196/2013HC Karnataka24 Sept 2013

Bench: B.MANOHAR,DILIP B.BHOSALE

Section 143(3)Section 260Section 260ASection 263

…176 (SC). It is also urged that hypothetical income cannot be brought to tax as income and only real income can be taxed. In this connection, reference has been made on decision of the Supreme Court in 'COMMISSIONER OF INCOME TAX VS. BOKARO STEEL LTD.', 263 ITR 315 (SC). It is also argued that decision relied upon by learned counsel for the revenue do not apply to the fact situation of the case as Accounting Standard-9 was not in existence at the time 11 when the decisions were rendered. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. Adm…

Commissioner of Income Tax - II vs. M/s. Healthware Private Limited

ITTA/204/2013HC Telangana04 Jul 2013

Commissioner of Income Tax (TDS) vs. M/s. Yashoda Super Speciality Hospital

ITTA/196/2013HC Telangana04 Jul 2013

Ntpc Sail Power Company Pvt. Ltd

ITA/1238/2011HC Delhi17 Jul 2012

…l into serious error in holding that interest income earned out of borrowed funds, temporarily placed in fixed deposits was “income” and not capital receipt. It was urged that the decision of the Supreme Court in Commissioner of Income Tax v. Bokaro Steel 236 ITR 315, where the character of such receipts was held to be capital in nature as long as the borrowed funds (which constitute the principal) are inextricably connected with the construction activity. It was argued that the reasoning of the Tribunal that the change brought about by the amendment to the Income Tax Act with effect from 1-4-2004, by w…

CIT vs. Sasan Power Ltd

The appeal is dismissed

ITA/10/2012HC Delhi06 Jan 2012

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE R.V.EASWAR

Section 260ASection 57

…The factual findings recorded by the CIT(Appeals) and tribunal are not under challenge. The CIT(Appeals) and the tribunal have held that in view of the factual position quoted above the decision of the Supreme Court in CIT Vs. Bokaro Steel Ltd., (1999) 236 ITR 315 (SC) was applicable as the Commitment Advance, which had been paid to PFC. This is not a case of surplus funds, which were available and investment were made in fixed deposits to earn interest. The interest paid to the power procurement utilities on commitment advances was capitalized. Interest paid and interest received were inextricably…

CIT vs. Sasan Power Ltd

The appeal is dismissed

ITA - 10 / 2012HC Delhi06 Jan 2012
Section 260ASection 57

…The factual findings recorded by the CIT(Appeals) and tribunal are not under challenge. The CIT(Appeals) and the tribunal have held that in view of the factual position quoted above the decision of the Supreme Court in CIT Vs. Bokaro Steel Ltd., (1999) 236 ITR 315 (SC) was applicable as the Commitment Advance, which had been paid to PFC. This is not a case of surplus funds, which were available and investment were made in fixed deposits to earn interest. The interest paid to the power procurement utilities on commitment advances was capitalized. Interest paid and interest received were inextricably…

CIT vs. Energy Infrastructure India Ltd

The appeals are hereby dismissed

ITA - 815 / 2011HC Delhi07 Jul 2011

…est thereupon could not be treated as income from other sources and it was permissible for the Assessee to reduce the same from pre-operative expenses. The CITA and the ITAT have referred to the decision of the Supreme Court in CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315(SC), CIT v. Karnal Cooperative Sugar Mills Ltd. [2000] 243 ITR 2(SC) as well as various decisions of the different High Courts. ln view of the aforesaid factual background, we do not find any infirmity in the orders passed by CIT (A). No question of law arises in these appeals. The appeals are hereby dismissed. { J] JULY 07, ?OLL rd te,* lA.K. sl…

Commissioner of Income Tax vs. M/S K.Venkateswara Rao

ITTA/188/2003HC Telangana21 Jun 2011

Bench: V.V.S.RAO,RAMESH RANGANATHAN

Commissioner of Income Tax vs. Jaypee Dsc Ventures Ltd

Accordingly, the same stands dismissed

ITA/357/2010HC Delhi11 Mar 2011

Bench: CASES PERTAINING TO SPL.DIVISION BENCHES

Section 143(3)Section 260A

…tter the ratio laid down by this court in Tuticorin Alkali Chemicals and Fertilizers Limited v. CIT [1997] 227 ITR 172, will not be attracted. The more appropriate decision in the factual situation in the present case is in CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC).” 16. In Bongaigaon Refinary And Petrochemicals Ltd. v. Commissioner of Income-Tax, [2001] 251 ITR 329 (SC), the question that arose for consideration was whether the tribunal was justified in holding that the items of income derived by the assessee during the formation period for the main business were not taxable income but were t…

CIT vs. Petronet Lng Ltd

ITA/290/2011HC Delhi17 Feb 2011

Bench: HON'BLE MR. JUSTICE A.K.SIKRI,HON'BLE MR. JUSTICE M.L. MEHTA

…head “income from other sources”. ITA Nos.290 of 2011 & 292 of 2011 Page 5 of 6 6. While coming to this conclusion the Court has specifically referred to the judgment of Supreme Court in the case of Bokaro Steel Ltd., 236 ITR 315 wherein the Court laid down the aforesaid test in the following manner:- “The test, therefore, to our mind is whether the activity which is taken up for setting up of the business and the funds which are garnered are inextricably connected to the setting up of the plant. The clue is perhaps available in Section 3 of the Act which states t…