CIT v. Excel Industries Ltd.

358 ITR 295Supreme Court of India2013#49 most cited

What is CIT v. Excel Industries Ltd. authority for?

When an income or expenditure is revenue neutral across different assessment years, where any benefit derived is offset by a corresponding liability or reversal, no additional tax liability arises, particularly concerning income recognition under the mercantile system of accounting.

935

judgments rely on this decision, according to BharatTax’s citation analysis of 366,005 Indian tax judgments — from 2011 to 2026.

Also referred to as

CIT v. Excel Industries Ltd. · Excel Industries Ltd SC 2013 · Revenue Neutral principle · mercantile system of accounting · right to receive income · taxability of revenue neutral transactions · Section 147 Income Tax Act · reassessment · Section 148 Income Tax Act · profits and gains of business or profession · no tax liability revenue neutral · income accrual reversal

Also reported as

38 Taxmann.com 100219 Taxmann 379

Sections most often in play

Section 143(3)Section 37(1)Section 147Section 14ASection 132Section 153ASection 1961Section 148
Read the full judgment

Issues it is cited on

right to receivemercantile system of accountingrule of consistencysection 35profits and gains of business or professionrevenue expenditureliable to taxsection 80isection 37(1)section 28section 32capital expenditure

Judgments citing CIT v. Excel Industries Ltd.

DCIT, Circle-6, Kolkata vs. M/S. Integrated Coal Mining Ltd, Kolkata

In the result, the appeal of the revenue is dismissed

ITA 1138/KOL/2012[2008-2009]Status: DisposedITAT Kolkata13 Nov 2015AY 2008-2009

Bench: : Shri M. Balaganesh

For Appellant: Shri J.P Khaitan, ld.ARFor Respondent: Shri G.Mallikarjuna, CIT, ld.DR
Section 143(3)Section 14A

….1146, 1138/Kol/2012-C-AM 19 ITA Nos..1146, 1138/Kol/2012-C-AM 20 5.3.2. We hold that the reliance placed by the Learned AR on the decision of the Hon’ble Apex Court in the case of CIT vs Excel Industries Ltd and CIT vs Mafatlal Industries P Ltd reported in 358 ITR 295 (SC) wherein their Lordships had held as follows:- “Secondly as noted by the tribunal, a consistent view has been taken in favour of the assesssee on the questions raised, starting with the assessment year 1992-93 , that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assess…

ADIT (I.T)-3(2), Mumbai vs. M/S. Bechtel International Inc., Mumbai

In the result, appeal of the revenue is dismissed, whereas appeal of the assessee is allowed in part, in terms indicated hereinabove

ITA 650/MUM/2007[2002-2003]Status: DisposedITAT Mumbai30 Oct 2015AY 2002-2003

Bench: Shri R.C.Sharma, Am & Shri Sanjay Garg, Jm आमकय अऩीर सं./Ita No.39/Mum/2007 (नििाारण वषा / Assessment Year :2002-2003) Bechtel International Inc., C/O Vs. The Ddit, International Kpmg, 1St Floor, Apollo Mills Taxation-3(2), Mumbai Compound, N.M.Joshi Marg, Mahalaxmi, Mumbai-400011 स्थममी रेखम सं./ जीआइआय सं./ Pan/Gir No. : Aaacb 6149 A (अऩीरमथी /Appellant) (प्रत्मथी / Respondent) .. आमकय अऩीर सं./Ita No.650/Mum/2007 (नििाारण वषा / Assessment Year :2002-2003) The Adit, International Vs. Bechtel International Inc., C/O Kpmg, 1St Floor, Apollo Mills Taxation-3(2), Mumbai Compound, N.M.Joshi Marg, Mahalaxmi, Mumbai-400011 स्थममी रेखम सं./ जीआइआय सं./ Pan/Gir No. : Aaacb 6149 A (अऩीरमथी /Appellant) (प्रत्मथी / Respondent) .. Cross Objection No.122/Mum/2007 (Arising Out Of Ita No.650/Mum/2007) (नििाारण वषा / Assessment Year :2002-2003) Bechtel International Inc., C/O Vs. The Acit, International Kpmg, 1St Floor, Apollo Mills Taxation-3(2), Mumbai Compound, N.M.Joshi Marg, Mahalaxmi, Mumbai-400011 स्थममी रेखम सं./ जीआइआय सं./ Pan/Gir No. : Aaacb 6149 A (अऩीरमथी /Appellant) (प्रत्मथी / Respondent) .. यनधमवरयती की ओर से /Assessee By : Shri Sunil M. Lala & Sh. Varun Sankhesara यमजस्र् की ओर से /Revenue By : Ms. Vandana Sagar

For Appellant: Shri Sunil M. LalaFor Respondent: Ms. Vandana Sagar

…and business realities of the case, for e.g. precarious financial condition, suits/disputes between parties. No real income can be said to have accrued during the pendency of suit/dispute. 10. Hon’ble Supreme Court in the case of CIT Vs. Excel industries Ltd. 358 ITR 295, had laid down three tests to determine when income can be said to have accrued. : (a) Whether the income is real or hypothetical; (b) Whether there is a corresponding liability of the other party to pay the amount to the assessee; (c) the probability or improbability of realisation of the income by the assessee has to be considered from a realis…

M/S. Bechtel International Inc., Usa, Mumbai vs. DDIT (I.T) - 3(2), Mumbai

In the result, appeal of the revenue is dismissed, whereas appeal of the assessee is allowed in part, in terms indicated hereinabove

ITA 39/MUM/2007[2002-2003]Status: DisposedITAT Mumbai30 Oct 2015AY 2002-2003

Bench: Shri R.C.Sharma, Am & Shri Sanjay Garg, Jm आमकय अऩीर सं./Ita No.39/Mum/2007 (नििाारण वषा / Assessment Year :2002-2003) Bechtel International Inc., C/O Vs. The Ddit, International Kpmg, 1St Floor, Apollo Mills Taxation-3(2), Mumbai Compound, N.M.Joshi Marg, Mahalaxmi, Mumbai-400011 स्थममी रेखम सं./ जीआइआय सं./ Pan/Gir No. : Aaacb 6149 A (अऩीरमथी /Appellant) (प्रत्मथी / Respondent) .. आमकय अऩीर सं./Ita No.650/Mum/2007 (नििाारण वषा / Assessment Year :2002-2003) The Adit, International Vs. Bechtel International Inc., C/O Kpmg, 1St Floor, Apollo Mills Taxation-3(2), Mumbai Compound, N.M.Joshi Marg, Mahalaxmi, Mumbai-400011 स्थममी रेखम सं./ जीआइआय सं./ Pan/Gir No. : Aaacb 6149 A (अऩीरमथी /Appellant) (प्रत्मथी / Respondent) .. Cross Objection No.122/Mum/2007 (Arising Out Of Ita No.650/Mum/2007) (नििाारण वषा / Assessment Year :2002-2003) Bechtel International Inc., C/O Vs. The Acit, International Kpmg, 1St Floor, Apollo Mills Taxation-3(2), Mumbai Compound, N.M.Joshi Marg, Mahalaxmi, Mumbai-400011 स्थममी रेखम सं./ जीआइआय सं./ Pan/Gir No. : Aaacb 6149 A (अऩीरमथी /Appellant) (प्रत्मथी / Respondent) .. यनधमवरयती की ओर से /Assessee By : Shri Sunil M. Lala & Sh. Varun Sankhesara यमजस्र् की ओर से /Revenue By : Ms. Vandana Sagar

For Appellant: Shri Sunil M. LalaFor Respondent: Ms. Vandana Sagar

…and business realities of the case, for e.g. precarious financial condition, suits/disputes between parties. No real income can be said to have accrued during the pendency of suit/dispute. 10. Hon’ble Supreme Court in the case of CIT Vs. Excel industries Ltd. 358 ITR 295, had laid down three tests to determine when income can be said to have accrued. : (a) Whether the income is real or hypothetical; (b) Whether there is a corresponding liability of the other party to pay the amount to the assessee; (c) the probability or improbability of realisation of the income by the assessee has to be considered from a realis…

Mahindra & Mahindra Employees Stock Option Trust, Mumbai vs. Addl CIT RG 12(2), Mumbai

In the result, ground no.4 is allowed for statistical purposes

ITA 2389/MUM/2015[2011-12]Status: DisposedITAT Mumbai21 Oct 2015AY 2011-12

Bench: Shri Joginder Singh, Jm & Shri R.C.Sharma, Am आमकय अऩीर सिं./Ita No.2389/Mum/2015 (नििाारण वषा / Assessment Year :2010-2011) Mahindra & Mahindra Adcit, Range-12(2), Employees‟ Stock Option Mumbai-20 Trust, Gateway Building, Apollo Bunder, Mumbai- 400001 स्थामी रेखा सिं./ जीआइआय सिं./ Pan/Gir No. : Aahfm 9583 B (अऩीराथी /Appellant) (प्रत्मथी / Respondent) .. यनधावरयती की ओर से /Assessee By : Shri H.P.Mahajani याजस्र् की ओर से /Revenue By : Shri N.P.Singh सुनर्ाई की तायीख / Date Of Hearing : 04/08/2015 घोषणा की तायीख/Date Of Pronouncement 21/10/2015 आदेश / O R D E R Per R.C.Sharma, Am The Present Appeal Is Filed Against The Order Of Cit(A) -28, Mumbai, Dated 26-3-2015 For A.Y.2011-12. 2. During The Course Of Hearing The Assessee Has Filed Concise Grounds Of Appeal. These Have Been Considered By Us For The Adjudication Of This Appeal & Are Reproduced Hereunder :-

For Appellant: Shri H.P.MahajaniFor Respondent: Shri N.P.Singh
Section 143(3)Section 250

…d manner, it may lead to chaos in compliance of fiscal constitute and there will be uncertainties, all around. The finality of litigation would become extinct. Our view is supported by the judgment of Hon‟ble Supreme Court in the case of Excel Industries Ltd. 358 ITR 295. 5.17. Further we raised a pointed query to Ld DR, at the time of hearing, that whether any such action has been taken by the department against any other such ESOS trust whereby similar gain from issue of shares by the ESOS trust have been treated as income from business. In response, Ld. DR showed its inability to provide any such information.…

(Now Pernod Ricard India Pvt.Ltd.)

The appeals are dismissed but in the circumstances with no order as to

ITA/900/2009HC Delhi06 Oct 2015
Section 260A

…eakages should also be allowed particularly since the provision was reversed on the opening day of the following year. Thereby, there was no loss to the Revenue. He placed reliance on the decision of the Commissioner of Income Tax v. Excel Industries Ltd. 358 ITR 295 (SC). 8. Mr. Chopra referred to the ledger accounts of transit breakages and transit stocks pertaining to the AYs in question. He pointed out that it was not as if 2015:DHC:8374-DB ITA Nos. 898, 899, 900 & 901 of 2009 & 237 of 2015 Page 8 of 17 the estimate of breakages made by the Assessees was totally off…

(Now Pernod Ricard India Pvt.Ltd.)

The appeals are dismissed but in the circumstances with no order as to

ITA/901/2009HC Delhi06 Oct 2015
Section 260A

…eakages should also be allowed particularly since the provision was reversed on the opening day of the following year. Thereby, there was no loss to the Revenue. He placed reliance on the decision of the Commissioner of Income Tax v. Excel Industries Ltd. 358 ITR 295 (SC). 8. Mr. Chopra referred to the ledger accounts of transit breakages and transit stocks pertaining to the AYs in question. He pointed out that it was not as if 2015:DHC:8374-DB ITA Nos. 898, 899, 900 & 901 of 2009 & 237 of 2015 Page 8 of 17 the estimate of breakages made by the Assessees was totally off…

(Now Pernod Ricard India Pvt.Ltd.)

The appeals are dismissed but in the circumstances with no order as to

ITA/899/2009HC Delhi06 Oct 2015
Section 260A

…eakages should also be allowed particularly since the provision was reversed on the opening day of the following year. Thereby, there was no loss to the Revenue. He placed reliance on the decision of the Commissioner of Income Tax v. Excel Industries Ltd. 358 ITR 295 (SC). 8. Mr. Chopra referred to the ledger accounts of transit breakages and transit stocks pertaining to the AYs in question. He pointed out that it was not as if 2015:DHC:8374-DB ITA Nos. 898, 899, 900 & 901 of 2009 & 237 of 2015 Page 8 of 17 the estimate of breakages made by the Assessees was totally off…

(Now Pernod Ricard India Pvt.Ltd.)

The appeals are dismissed but in the circumstances with no order as to

ITA/898/2009HC Delhi06 Oct 2015
Section 260A

…eakages should also be allowed particularly since the provision was reversed on the opening day of the following year. Thereby, there was no loss to the Revenue. He placed reliance on the decision of the Commissioner of Income Tax v. Excel Industries Ltd. 358 ITR 295 (SC). 8. Mr. Chopra referred to the ledger accounts of transit breakages and transit stocks pertaining to the AYs in question. He pointed out that it was not as if 2015:DHC:8374-DB ITA Nos. 898, 899, 900 & 901 of 2009 & 237 of 2015 Page 8 of 17 the estimate of breakages made by the Assessees was totally off…

(Now Pernod Ricard India Pvt.Ltd.)

The appeals are dismissed but in the circumstances with no order as to

ITA/237/2015HC Delhi06 Oct 2015
Section 260A

…eakages should also be allowed particularly since the provision was reversed on the opening day of the following year. Thereby, there was no loss to the Revenue. He placed reliance on the decision of the Commissioner of Income Tax v. Excel Industries Ltd. 358 ITR 295 (SC). 8. Mr. Chopra referred to the ledger accounts of transit breakages and transit stocks pertaining to the AYs in question. He pointed out that it was not as if 2015:DHC:8374-DB ITA Nos. 898, 899, 900 & 901 of 2009 & 237 of 2015 Page 8 of 17 the estimate of breakages made by the Assessees was totally off…

Bses Rajdhani Power Ltd., New Delhi vs. ACIT, New Delhi

The appeal is partly allowed

ITA 3688/DEL/2011[2005-06]Status: DisposedITAT Delhi05 Oct 2015AY 2005-06

Bench: Shri I.C. Sudhir & Shri Inturi Rama Rao Assessment Year : 2005-06 Bses Rajdhani Power Ltd., Vs. Assistant Cit, Bses Bhawan, Nehru Place, Circle-3(1), New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent) Assessment Year: 2005-06 Deputy Cit, Vs. Bses Rajdhani Power Ltd., Circle 3(1), Bses Bhavan, Nehru Place, New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent) Assessment Year : 2006-07 Bses Rajdhani Power Ltd., Vs. Assistant Cit, Bses Bhawan, Nehru Place, Circle-3(1), New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent) Assessment Year: 2006-07 Deputy Cit, Vs. Bses Rajdhani Power Ltd., Circle 3(1), Bses Bhavan, Nehru Place, New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent)

Section 154

…said method, having been consistently accepted by the Revenue in the subsequent years, there is no warrant to disturb the same in the year under appeal. 19.22 Reliance in this regard has been placed on the following decisions: - CIT v. Excel Industries Ltd.: 358 ITR 295 (SC) - CIT v. Realest Builders and Services: 307 ITR 202 (SC) 20. Having gone through the orders of the authorities below, we find that the relevant facts are that in the assessment year under consideration, the assessee-company has consistently followed the method of valuation of stock comprising of stores and spares at cost or net realizable v…

Mool Chand Khairati Ram Trust vs. Director of Income Tax (Exemptions)

The appeal is disposed of

ITA/141/2013HC Delhi27 Jul 2015
For Appellant: Mr C.S. Aggarwal, Senior Advocate withFor Respondent: Mr. Raghvendra Singh, Junior Standing Counsel
Section 11Section 11(1)(a)Section 12ASection 2(15)Section 260A

…ITA 141/2013 Page 1 of 35 THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 27.07.2015 + ITA 141/2013 MOOL CHAND KHAIRATI RAM TRUST .....Appellant versus DIRECTOR OF INCOME TAX (EXEMPTIONS) ..... Respondent Advocates who appeared in this case: For the Appellant :Mr C.S. Aggarwal, Senior Advocate with Mr Prakash Kumar and Mr Gautam Jain. For the Respondent :Mr. Raghvendra Singh, Junior Standing Counsel. CORAM: HON'BLE DR. JUSTICE S.MURALIDHAR HON'BLE MR. JUSTICE VIBHU BAKHRU JUDGMENT VIBHU BAKHRU, J 1. The Appellant, a Charitable Trus…

The Liquidator Polymerland India P.Ltd vs. The Deputy Commissioner of Income Tax

ITA - 268 / 2008HC Delhi19 May 2015

…ts in time, learned counsel highlighted that logically the revenue was justified in brining to tax such amounts on the basis that they had accrued. 4. The judgment Shoorji Vallabhdas & Co. (supra) has been recently follows in CIT V. Excel Industries Ltd. 358 ITR 295 where it was reiterated that income tax is levied on real income and not hypothetical income. Therefore, entries inspired by realistic prospects of their realisation cannot per se constitute the basis of a valid levy. This view finds support in the Division Bench ruling of this Court in CIT V. Goyal M G Gases (2008) 303 2015:DHC:4485-DB…

The Liquidator Polymerland India P.Ltd vs. The Deputy Commissioner of Income Tax

ITA/268/2008HC Delhi19 May 2015

…ts in time, learned counsel highlighted that logically the revenue was justified in brining to tax such amounts on the basis that they had accrued. 4. The judgment Shoorji Vallabhdas & Co. (supra) has been recently follows in CIT V. Excel Industries Ltd. 358 ITR 295 where it was reiterated that income tax is levied on real income and not hypothetical income. Therefore, entries inspired by realistic prospects of their realisation cannot per se constitute the basis of a valid levy. This view finds support in the Division Bench ruling of this Court in CIT V. Goyal M G Gases (2008) 303 2015:DHC:4485-DB…

Rajni Constuction vs. Commissioner of Income Tax-III

The appeal is dismissed

ITA - 459 / 2013HC Delhi30 Oct 2013

…IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 459/2013 . RAJNI CONSTUCTION ..... Appellant . Through Mr. S. Krishnan, Advocate. . . . versus . . . COMMISSIONER OF INCOME TAX-III ..... Respondent . Through Ms. Anshul Sharma, Advocate. . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE SANJEEV SACHDEVA . O R D E R . 30.10.2013 . . . CM No.15140/2013 (delay in re-filing) . For the reasons stated in the application, the delay of 44 days in re-filing of the appeal is condoned and the application…

Commissioner of Income Tax vs. M/s. Kokivenkateswara Reddy AND others

ITTA/210/2003HC Telangana21 Jun 2011

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