CIT v. Dalmia Cement (Bharat) Ltd.

254 ITR 377High Court2002#174 most cited

What is CIT v. Dalmia Cement (Bharat) Ltd. authority for?

When there is a nexus between an expenditure and the purpose of business, incurred on grounds of commercial expediency, the Revenue cannot question its reasonableness or assume the role of the businessman to compel profit maximization. This principle applies even if the business is not that of the assessee itself.

417

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2006 to 2026.

Also referred to as

CIT v. Dalmia Cement (Bharat) Ltd. · section 36(1)(iii) · section 37(1) · commercial expediency · business expenditure · nexus with business · Assessing Officer's powers · reasonableness of expenditure · interest free advances · disallowance of interest · SA Builders

Also reported as

183 Taxmann 422

Sections most often in play

Section 36(1)(iii)Section 143(3)Section 40(a)(ia)Section 14ASection 37Section 37(1)Section 35DSection 40A(2)(b)

Issues it is cited on

interest free advancescommercial expediencysection 36(1)(iii)business expediencysection 36(1)section 36disallowance under section 14asection 37section 28revenue expendituresection 40(a)(ia)section 37(1)

Judgments citing CIT v. Dalmia Cement (Bharat) Ltd.

Principal Commissioner of Income Tax 7 Delhi vs. Uniparts India Ltd

Appeal are allowed

ITA/664/2023HC Delhi02 Feb 2024

Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA

Section 36(1)(iii)

…ve been incurred under any legal obligation, but yet it is allowable as a business expenditure, if it was incurred on grounds of commercial expediency. 34. We agree with the view taken by the Delhi High Court in CIT v. Dalmia Cement (Bharat) Ltd. [2002] 254 ITR 377 2 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the hoard of directors anil assume the role to decide how…

DCIT Circle 13(2)(2), Mumbai vs. Nandanbala Commercials Private Limited, Mumbai

In the result, the appeal filed by the revenue is dismissed and cross objection filed by the assesse is also dismissed

ITA 1134/MUM/2023[2016-17]Status: DisposedITAT Mumbai29 Jan 2024AY 2016-17

Bench: Shri Aby T Varkey & Shri Amarjit Singhdy. Commissioner Of Vs. Nandanbala Commercials Income Tax Circle 13(2)(2) Private Limited Room No. 452, 4 Th Floor, (Formerly Known As Sanjay Infraspace Limited) Aayakar Bhavan, 1401-A, Wing One Bkc, M.K. Road, Plot No. C-66, G-Block, Mumbai – 400020 Bkc, Bandra-East Mumbai -400 092 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aavcs1575L Appellant .. Respondent

For Appellant: Madhur AgarwalFor Respondent: HM Bhatt
Section 143(2)Section 36(1)(ii)

…rial if a third party benefits by said expenditure. The Revenue can not assume the role and occupy the arm chair of a businessman to decide whether the expenditure was reasonable, f) The Hon'ble Delhi High Court in CIT vs Dalmia Cement (Bharat) Ltd. (2002) in 254 ITR 377 held that once it is established that there is a nexus between the expenditure and purpose of business (which need not be business of the assessee itself), the Revenue cannot justifiably claim to put itself in the armchair of businessman or in the position of Board of Directors DAR and assume the role fox decide how much is reasonable expenditure…

ACIT Central-2 Bhopal, Bhopal vs. M/S M Ahuja Project ( India) P Ltd, Raipur

In the result, the appeals of the assessee are allowed and appeals of revenue are dismissed

ITA 69/IND/2022[2015-16]Status: DisposedITAT Indore20 Dec 2023AY 2015-16

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 36(1)(iii)

…S.A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1/158 Taxman 74 (SC); (b), Munjal Sales Corpn. v. CIT [2008] 298 ITR 298/168 Taxman 43 (SC); (c), CIT V. Radico Khaitan Ltd. [2005] 274 ITR 354/142 Taxman 681 (All); (d), CIT v. Dalmia Cement (P.) Ltd. [2002] 254 ITR 377/121 Taxman 706 (Delhi); (e), CIT V. Britannia Industries Ltd. [2006] 280 ITR 525/ [2005] 148 Taxman 654 (Cal.) and (f) CIT v. Motor Sales Ltd. [2008] 304 ITR 123 (All.), held as under:- "16. In view of the authoritative pronouncement of the Apex Court and other judgments referred supra, in our view, the assessee admittedly had its own funds, as…

The ACIT, (Central)-II, Bhopal vs. M/S. M. Ahuja Project (India) Pvt. Ltd., Raipur

In the result, the appeals of the assessee are allowed and appeals of revenue are dismissed

ITA 68/IND/2022[20214-15]Status: DisposedITAT Indore20 Dec 2023

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 36(1)(iii)

…S.A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1/158 Taxman 74 (SC); (b), Munjal Sales Corpn. v. CIT [2008] 298 ITR 298/168 Taxman 43 (SC); (c), CIT V. Radico Khaitan Ltd. [2005] 274 ITR 354/142 Taxman 681 (All); (d), CIT v. Dalmia Cement (P.) Ltd. [2002] 254 ITR 377/121 Taxman 706 (Delhi); (e), CIT V. Britannia Industries Ltd. [2006] 280 ITR 525/ [2005] 148 Taxman 654 (Cal.) and (f) CIT v. Motor Sales Ltd. [2008] 304 ITR 123 (All.), held as under:- "16. In view of the authoritative pronouncement of the Apex Court and other judgments referred supra, in our view, the assessee admittedly had its own funds, as…

M/S. M. Ahuja Project (India) Pvt. Ltd., Raipur vs. The ACIT, (Central)-II, Bhopal

In the result, the appeals of the assessee are allowed and appeals of revenue are dismissed

ITA 49/IND/2022[2015-16]Status: DisposedITAT Indore20 Dec 2023AY 2015-16

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 36(1)(iii)

…S.A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1/158 Taxman 74 (SC); (b), Munjal Sales Corpn. v. CIT [2008] 298 ITR 298/168 Taxman 43 (SC); (c), CIT V. Radico Khaitan Ltd. [2005] 274 ITR 354/142 Taxman 681 (All); (d), CIT v. Dalmia Cement (P.) Ltd. [2002] 254 ITR 377/121 Taxman 706 (Delhi); (e), CIT V. Britannia Industries Ltd. [2006] 280 ITR 525/ [2005] 148 Taxman 654 (Cal.) and (f) CIT v. Motor Sales Ltd. [2008] 304 ITR 123 (All.), held as under:- "16. In view of the authoritative pronouncement of the Apex Court and other judgments referred supra, in our view, the assessee admittedly had its own funds, as…

M/S. M. Ahuja Project (India) Pvt. Ltd., Raipur vs. The ACIT, (Central)-II, Bhopal

In the result, the appeals of the assessee are allowed and appeals of revenue are dismissed

ITA 48/IND/2022[2014-15]Status: DisposedITAT Indore20 Dec 2023AY 2014-15

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 36(1)(iii)

…S.A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1/158 Taxman 74 (SC); (b), Munjal Sales Corpn. v. CIT [2008] 298 ITR 298/168 Taxman 43 (SC); (c), CIT V. Radico Khaitan Ltd. [2005] 274 ITR 354/142 Taxman 681 (All); (d), CIT v. Dalmia Cement (P.) Ltd. [2002] 254 ITR 377/121 Taxman 706 (Delhi); (e), CIT V. Britannia Industries Ltd. [2006] 280 ITR 525/ [2005] 148 Taxman 654 (Cal.) and (f) CIT v. Motor Sales Ltd. [2008] 304 ITR 123 (All.), held as under:- "16. In view of the authoritative pronouncement of the Apex Court and other judgments referred supra, in our view, the assessee admittedly had its own funds, as…

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 799/DEL/2017[2011-12]Status: DisposedITAT Delhi30 Nov 2023AY 2011-12

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 147

…mize his profit. The A.O. cannot put himself in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377(Del). Given the long-standing business relationship between the parties, there could be any commercial expediency (including an inability of the appellant to sell the plots to an outside party at the price of Rs.9,250/- p. sqyd. at that point of time, or any other market condition) for the appellant agreeing to not insist on the higher rate agree…

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 798/DEL/2017[2010-11]Status: DisposedITAT Delhi30 Nov 2023AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 147

…mize his profit. The A.O. cannot put himself in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377(Del). Given the long-standing business relationship between the parties, there could be any commercial expediency (including an inability of the appellant to sell the plots to an outside party at the price of Rs.9,250/- p. sqyd. at that point of time, or any other market condition) for the appellant agreeing to not insist on the higher rate agree…

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 797/DEL/2017[2009-10]Status: DisposedITAT Delhi30 Nov 2023AY 2009-10

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 147

…mize his profit. The A.O. cannot put himself in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377(Del). Given the long-standing business relationship between the parties, there could be any commercial expediency (including an inability of the appellant to sell the plots to an outside party at the price of Rs.9,250/- p. sqyd. at that point of time, or any other market condition) for the appellant agreeing to not insist on the higher rate agree…

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 796/DEL/2017[2008-09]Status: DisposedITAT Delhi30 Nov 2023AY 2008-09

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 147

…mize his profit. The A.O. cannot put himself in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377(Del). Given the long-standing business relationship between the parties, there could be any commercial expediency (including an inability of the appellant to sell the plots to an outside party at the price of Rs.9,250/- p. sqyd. at that point of time, or any other market condition) for the appellant agreeing to not insist on the higher rate agree…

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 795/DEL/2017[2007-08]Status: DisposedITAT Delhi30 Nov 2023AY 2007-08

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 147

…mize his profit. The A.O. cannot put himself in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377(Del). Given the long-standing business relationship between the parties, there could be any commercial expediency (including an inability of the appellant to sell the plots to an outside party at the price of Rs.9,250/- p. sqyd. at that point of time, or any other market condition) for the appellant agreeing to not insist on the higher rate agree…

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 794/DEL/2017[2006-07]Status: DisposedITAT Delhi30 Nov 2023AY 2006-07

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 147

…mize his profit. The A.O. cannot put himself in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377(Del). Given the long-standing business relationship between the parties, there could be any commercial expediency (including an inability of the appellant to sell the plots to an outside party at the price of Rs.9,250/- p. sqyd. at that point of time, or any other market condition) for the appellant agreeing to not insist on the higher rate agree…

Deputy Commissioner of Income Tax(Central), Jabalpur vs. Anand Mining Corporation, Jabalpur

In the result, the Cross Objection of the assessee is partly allowed

ITA 104/JAB/2018[2014-15]Status: DisposedITAT Jabalpur24 Nov 2023AY 2014-15

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar U.S.

Section 143(2)Section 143(3)Section 40Section 40A(3)

…it note of Rs. 2,50,00,000/- was issued by Shree Rupandham Steel Pvt Ltd on 25.04.2013. The assessee has paid this compensation amount of Rs. 2,50,00,000/- in the month of March 2014 through banking channel. (iv) In the case of CIT v Dalmia Cement Ltd [ 2002] 254 ITR 377 the hon'ble Delhi High Court has held that an allow ability and reasonableness of an expenses has to be looked from the angle of prudent businessman. This observation of the Delhi High Court has been approved by the hon'ble Supreme Court in the case of SA Builders v CIT 288 ITR 1 . Further in the case of CIT v Rajkumar Mills Ltd [1982] 135 ITR 81…

J.P Tobaco Producta Pvt. Ltd., Damoh vs. Assistant Commissioner of Income Tax Circle - Sagar, Sagasr

In the result, both the appeals of the Revenue are dismissed

ITA 128/JAB/2018[2014-15]Status: DisposedITAT Jabalpur21 Nov 2023AY 2014-15

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar U.S.

Section 37(1)Section 40

…ilarly, the view taken by the Bombay High Court in Phaltan Sugar Works Ltd. vs. Commissioner of Wealth-Tax (1995) 215 ITR 582 also does not appear to be correct. We agree with the view taken by the Delhi High Court in CIT vs. Dalmia Cement (Bhart) Ltd. (2002) 254 ITR 377 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm- chair of the businessman or in the position of the board of directors and assume the role to decide how much is…

J.P Tobacco Product Pvt. Ltd., Damoh vs. Income Tax Officer Ward-3, Sagar

In the result, both the appeals of the Revenue are dismissed

ITA 127/JAB/2018[2013-14]Status: DisposedITAT Jabalpur21 Nov 2023AY 2013-14

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar U.S.

Section 37(1)Section 40

…ilarly, the view taken by the Bombay High Court in Phaltan Sugar Works Ltd. vs. Commissioner of Wealth-Tax (1995) 215 ITR 582 also does not appear to be correct. We agree with the view taken by the Delhi High Court in CIT vs. Dalmia Cement (Bhart) Ltd. (2002) 254 ITR 377 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm- chair of the businessman or in the position of the board of directors and assume the role to decide how much is…

J.P Tobacco Product Pvt. Ltd vs. Deputy Commissioner of Income Tax

In the result, both the appeals of the Revenue are dismissed

ITA 263/JAB/2016[2012-13]Status: DisposedITAT Jabalpur21 Nov 2023AY 2012-13

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar U.S.

Section 37(1)Section 40

…ilarly, the view taken by the Bombay High Court in Phaltan Sugar Works Ltd. vs. Commissioner of Wealth-Tax (1995) 215 ITR 582 also does not appear to be correct. We agree with the view taken by the Delhi High Court in CIT vs. Dalmia Cement (Bhart) Ltd. (2002) 254 ITR 377 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm- chair of the businessman or in the position of the board of directors and assume the role to decide how much is…

Deputy Commissioner of Income Tax (Central), Jabalpur vs. M/S. Jabalpur Hospital & Research Center, Jabalpur

In the result, the appeal filed by the revenue is dismissed and the Cross objections filed by the assessee are partly allowed

ITA 19/JAB/2019[2016-17]Status: DisposedITAT Jabalpur20 Nov 2023AY 2016-17

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadaledcit, Vs. Jabalpur Hospital & Central Circle, Researchcentre,Pvtltd Ramnath Russel Crossing, Building,Napier Town, Napier Town, Jabalpur-482001, Jabalpur-482001 Madhya Pradesh. Madhya Pradesh Pan/Gir No. : Aabcj1959K Appellant .. Respondent Co.No.04/Jab/2019 (A.Y. 2016-17) (In Ita No.19/Jab/2019) Jabalpur Hospital & Vs. Dcit, Research Centre Pvt Ltd, Central Circle, Russel Crossing, Ramnath Napier Town, Building,Napier Town, Jabalpur-482001. Jabalpur-482001. Madhya Pradesh. Madhya Pradesh. Pan/Gir No. : Aabcj1959K Appellant .. Respondent

For Appellant: Shri Dhiraj Ghai.CA.ARFor Respondent: Shri Saad Kidwai. CIT-DR
Section 142(1)

…ourt in the case of Dalmia Cement (B) Ltd:- ITA No. 19/JAB/2019 & CO. 04/JAB/2019 M/s Jabalpur Hospital & Research Centre, Jabalpur. "We agree with the view taken by the Delhi High Court in CIT vs. Dalmia Cement (Bharat) Ltd. (2002) 174 CTR (Del) 188: (2002) 254 ITR 377 (Del) that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of the board of directors and assume the role to decide how muc…

Shree Narmada Khand Udyog Sahkari Mandali Ltd., Narmada vs. Income Tax Officer, Ward - 2(1), Bharuch

In the result, the grounds of appeal raised by the assesse are allowed

ITA 104/SRT/2023[2014-15]Status: DisposedITAT Surat31 Oct 2023AY 2014-15

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

Section 234ASection 254(1)Section 271(1)(c)Section 28Section 37Section 37(1)

…it is allowable as a business Shree Narmada Khan Udyog Sahkari Mandali Ltd. Vs ITO expenditure, if it was incurred on grounds of commercial expediency. The Apex Court also refereed the decision of Delhi High Court in CIT v. Dalmia Cement (Bharat) Ltd. [2002] 254 ITR 377, wherein it was held that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role t…

Shree Narmada Khand Udyog Sahkari Mandali Ltd., Narmada vs. Income Tax Officer, Ward - 2(1), Bharuch

In the result, the grounds of appeal raised by the assesse are allowed

ITA 103/SRT/2023[2013-14]Status: DisposedITAT Surat31 Oct 2023AY 2013-14

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

Section 234ASection 254(1)Section 271(1)(c)Section 28Section 37Section 37(1)

…it is allowable as a business Shree Narmada Khan Udyog Sahkari Mandali Ltd. Vs ITO expenditure, if it was incurred on grounds of commercial expediency. The Apex Court also refereed the decision of Delhi High Court in CIT v. Dalmia Cement (Bharat) Ltd. [2002] 254 ITR 377, wherein it was held that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role t…

Shree Narmada Khand Udyog Sahkari Mandali Ltd., Narmada vs. Income Tax Officer, Ward - 2(1), Bharuch

In the result, the grounds of appeal raised by the assesse are allowed

ITA 102/SRT/2023[2012-13]Status: DisposedITAT Surat31 Oct 2023AY 2012-13

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

Section 234ASection 254(1)Section 271(1)(c)Section 28Section 37Section 37(1)

…it is allowable as a business Shree Narmada Khan Udyog Sahkari Mandali Ltd. Vs ITO expenditure, if it was incurred on grounds of commercial expediency. The Apex Court also refereed the decision of Delhi High Court in CIT v. Dalmia Cement (Bharat) Ltd. [2002] 254 ITR 377, wherein it was held that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role t…