CIT v. Hotel Savera

239 ITR 795High Court1999#888 most cited

What is CIT v. Hotel Savera authority for?

When an assessee has sufficient interest-free own funds available to make interest-free advances or investments, it is presumed that such advances or investments are made from these interest-free funds, thereby preventing the disallowance of interest expenditure under Section 36(1)(iii).

119

judgments rely on this decision, according to BharatTax’s citation analysis of 367,368 Indian tax judgments — from 2013 to 2025.

Also referred to as

CIT v. Hotel Savera · Hotel Savera · Section 36(1)(iii) · disallowance of interest expenditure · interest-free advances · own funds · mixed fund theory · commercial expediency · presumption of funds utilization · sufficiency of interest-free funds

Also reported as

102 Taxmann 247

Sections most often in play

Section 36(1)(iii)Section 143(3)Section 143(1)Section 147Section 148Section 127Section 132Section 132A

Issues it is cited on

section 36(1)(ii)section 36(1)(iii)interest free advancessection 28(iv)weighted deductioncommercial expediencysection 35(2ab)business connectiondisallowance of interest expenditureicdssection 9(1)(vii)section 36(1)

Judgments citing CIT v. Hotel Savera

DCIT, Circle - 8, Kolkata vs. M/S. Eih Limited, Kolkata

In the result, the appeal of the assessee in ITA No

ITA 348/KOL/2011[2006-07]Status: DisposedITAT Kolkata01 Jun 2016AY 2006-07

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Respondent: Shri Vijay Shankar, CIT, DR
Section 143(3)Section 195Section 40Section 9(1)(vii)

…7.4.3. We draw our support from the following decisions in support of our findings :- a) CIT vs Gopalakrishna Muralidhar reported in (1963) 47 ITR 469 (AP) b) Woolcombers of India Ltd vs CIT reported in 134 ITR 219 (CAL) c) CIT vs Hotel Savera reported in 239 ITR 795 (MAD) d) CIT vs Britannia Industries Ltd reported in 280 ITR 525 (CAL) e) S A Builders Ltd vs CIT reported in 288 ITR 1 (SC) f) Addl. CIT vs Tulip Star Hotels Ltd in CC No. 7138-7140 / 2012 dated 30.4.2012 by the Supreme Court , wherein it was held as below:- In our view, S.A.Builders Ltd vs CIT reported in 288 ITR 1, needs reconsideration.…

Eih Limited, Kolkata vs. DCIT, Circle - 8, Kolkata

In the result, the appeal of the assessee in ITA No

ITA 314/KOL/2011[2006-07]Status: DisposedITAT Kolkata01 Jun 2016AY 2006-07

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Respondent: Shri Vijay Shankar, CIT, DR
Section 143(3)Section 195Section 40Section 9(1)(vii)

…7.4.3. We draw our support from the following decisions in support of our findings :- a) CIT vs Gopalakrishna Muralidhar reported in (1963) 47 ITR 469 (AP) b) Woolcombers of India Ltd vs CIT reported in 134 ITR 219 (CAL) c) CIT vs Hotel Savera reported in 239 ITR 795 (MAD) d) CIT vs Britannia Industries Ltd reported in 280 ITR 525 (CAL) e) S A Builders Ltd vs CIT reported in 288 ITR 1 (SC) f) Addl. CIT vs Tulip Star Hotels Ltd in CC No. 7138-7140 / 2012 dated 30.4.2012 by the Supreme Court , wherein it was held as below:- In our view, S.A.Builders Ltd vs CIT reported in 288 ITR 1, needs reconsideration.…

ACIT, New Delhi vs. Shri Atul Kumar Mittal, New Delhi

In the result, the appeal of the revenue is dismissed

ITA 5619/DEL/2013[2008-09]Status: DisposedITAT Delhi04 Mar 2016AY 2008-09

Bench: Shri J.S. Reddy & Shri A.T. Varkey

For Appellant: Shri Ved Jain, AdvocateFor Respondent: Shri Anil Jain, CIT DR
Section 143Section 2(22)(e)

…submitted that the aforesaid principle has been reiterated by the Hon’ble jurisdictional High Court in the case of Tin Box Company reported in 260 ITR 637 as well as Hon’ble Madras High Court in the case of 6 ITA No.5619/Del./2013 Hotel Savera reported in 239 ITR 795 and Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. – 318 ITR 333 (Bom.). Ld. AR reiterated that it is not a case where the assessee has borrowed money from Mr. Abhinav Kumar Mittal who in turn has borrowed money from MIs AK. Services Pvt. Ltd. It is a case where the assessee has received back the amount. It was further…

M/S. International Clearing & Shipping Agency, Chennai vs. Additional CIT, Chennai

In the result, the appeal of the Department and Assessee are partly allowed for statistical purpose

ITA 2209/CHNY/2010[2007-08]Status: DisposedITAT Chennai11 Feb 2016AY 2007-08

Bench: Shri Chandra Poojari & Shri G. Pavan Kumarआयकर अपील सं./I.T.A. No.2209/Mds/2010 "नधा"रण वष" /Assessment Year : 2007-2008. M/S. International Clearing Vs. The Additional Commissioner Of Shipping Agency, Income Tax, Old No.158, New No.325, Business Range-Viii, Linghi Chetty Street, Parrys, Chennai Chennai 600 001. [Pan Aaafi 0178B ]

For Appellant: Shri. R. Vijayarghavan, AdvocateFor Respondent: Dr. Nischal, IRS, JCIT
Section 143(2)Section 143(3)Section 37

…ision of Apex Court in the case of S.A. Builders vs. CIT 288 ITR 1, where it is held that the interest on borrowed funds advanced in the course of business cannot be disallowed and also supported with High Court decision in the case of Hotel Savera vs. CIT 239 ITR 795 (Mad) and CIT vs. Reliance Utilities Industries & Powers Ltd. 313 ITR 340 (Bom) where it is held that if there is sufficient balance available in current or capital account to cover the advances no disallowance could be made and accordingly Commissioner of Income Tax (Appeals) deleted the addition. ITA Nos.2209/10 & 93/11 :- 14 -: 8.3 Before…

E-City Investments & Holdings Co. Pvt. Ltd., Mumbai vs. D.C.I.T. RG. 8(1) (OSD), Mumbai

The appeal of the assessee is allowed

ITA 8382/MUM/2011[2008-09]Status: DisposedITAT Mumbai03 Feb 2016AY 2008-09

Bench: Shri Joginder Singh & Shri Ashwani Tanejaassessment Year: 2008-09 E-City Investments & Holdings Dcit, Company Private Limited, Range-8(1)(Osd), बनाम/ 844/4, Shah Industrial Estate, Aayakar Bhavan, Vs. Off. New Link Road, Opp. M.K. Road, Laxmi Industrial Estate, Mumbai-400020 Andheri (West), Mumbai-400053 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaace8030F "नधा"रती क" ओर से / Assessee By Shri Vijay Mehta राज"व क" ओर से / Revenue By Mr.J. Saravanan -Dr

Section 143(3)Section 36(1)(iii)

…d Printing Works vs CIT (34 ITR 265)(Bom.) 2.8. For making a disallowance u/s 36(1)(iii) of the Act essentially, there has to be a finding that the borrowed money were utilized for non-business purposes. As was held in CIT vs Hotel Savera 148 CTR (Mad.) 585 ; 239 ITR 795 (Mad.). In this context, the fact that the assessee had ample funds or resources at his disposal and need not have borrowed funds is not a relevant matter for consideration. All that is germane is whether the borrowing was, or was not, for the purposes of business. In City Motor Service Ltd. vs CIT (1966) 61 ITR 426 (Mad. ) The assessee used the…

DCIT, New Delhi vs. M/S. Sindhu Realtors Pvt. Ltd., New Delhi

In the result, the appeal of the assessee is allowed

ITA 2768/DEL/2012[2008-09]Status: DisposedITAT Delhi11 Dec 2015AY 2008-09

Bench: Shri G.D. Agrawal & Shri A.T. Varkey

For Appellant: S/Shri Salil Kapoor & Sanat Kapoor, AdvocatesFor Respondent: Shri B.R.R. Kumar, Senior DR
Section 142(1)Section 143Section 2(22)Section 2(22)(e)

…er companies. Reply to the allegation: The shareholder fund position as furnished above evidence the fact that Appellant Company was available with more than sufficient free funds for use at its own discretion. Reliance is placed on CIT vs Hotel Savera (1999) 239 ITR 795 (Mad), wherein the Hon'ble Madras High Court has held that once it is established that the Assessee Company is having sufficient free funds, presumption would always be made that advances to third parties have been made out of own free funds. Further Assessee Company submitted that where there are both borrowed funds as also interest free funds,…

M/S. Sindhu Realtors Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is allowed

ITA 2706/DEL/2012[2008-09]Status: DisposedITAT Delhi11 Dec 2015AY 2008-09

Bench: Shri G.D. Agrawal & Shri A.T. Varkey

For Appellant: S/Shri Salil Kapoor & Sanat Kapoor, AdvocatesFor Respondent: Shri B.R.R. Kumar, Senior DR
Section 142(1)Section 143Section 2(22)Section 2(22)(e)

…er companies. Reply to the allegation: The shareholder fund position as furnished above evidence the fact that Appellant Company was available with more than sufficient free funds for use at its own discretion. Reliance is placed on CIT vs Hotel Savera (1999) 239 ITR 795 (Mad), wherein the Hon'ble Madras High Court has held that once it is established that the Assessee Company is having sufficient free funds, presumption would always be made that advances to third parties have been made out of own free funds. Further Assessee Company submitted that where there are both borrowed funds as also interest free funds,…

DCIT, Circle - 8, Kolkata vs. M/S. E.I.H. Ltd., Kolkata

In the result, the appeal of the revenue in ITA NO

ITA 2182/KOL/2006[2003-04]Status: DisposedITAT Kolkata09 Dec 2015AY 2003-04

Bench: : Shri M. Balaganesh

For Appellant: Shri R.N Bajoria, Sr.Advocate &For Respondent: Shri Rajat Subhra Biswas, ld.CIT/DR
Section 143(3)Section 195Section 40Section 9(1)(vii)

…7.4.3. We draw our support from the following decisions in support of our findings :- a) CIT vs Gopalakrishna Muralidhar reported in (1963) 47 ITR 469 (AP) b) Woolcombers of India Ltd vs CIT reported in 134 ITR 219 (CAL) c) CIT vs Hotel Savera reported in 239 ITR 795 (MAD) d) CIT vs Britannia Industries Ltd reported in 280 ITR 525 (CAL) e) S A Builders Ltd vs CIT reported in 288 ITR 1 (SC) f) Addl. CIT vs Tulip Star Hotels Ltd in CC No. 7138-7140 / 2012 dated 30.4.2012 by the Supreme Court , wherein it was held as below:- In our view, S.A.Builders Ltd vs CIT reported in 288 ITR 1, needs reconsideration.…

DCIT, Bangalore vs. M/S Grameen Financial Services Pvt. Ltd., Bangalore

In the result, the appeal by the Revenue is dismissed

ITA 949/BANG/2015[2011-12]Status: DisposedITAT Bangalore06 Nov 2015AY 2011-12

Bench: Smt. Asha Vijayaraghavan & Shri Jason P. Boazassessment Year : 2011-12

For Appellant: Ms. Neera Malhotra, CIT(DR)For Respondent: Shri Shesadri, CA
Section 143(3)Section 14A

…essing Officer, the assessee preferred appeal before the CIT(Appeals). 4. In the submissions before the CIT(Appeals), the assessee relied on the decision of the Hon’ble Delhi High Court in the case of CIT v. Tin Box Co. (260 ITR 637) and CIT v. Hotel Savera (239 ITR 795, 796). 5. The brief facts are that the AO noted that a loan of Rs.2,26,07,88,659 has been taken from various concerns, out of which Rs.68,35,95,390 has been diverted for other than business purpose. The AO stated that Rs.31,55,47,240 has been invested in mutual funds and Rs.36,80,48,150 has been deposited in various FDs in banks. According to th…

Commissioner of Income Tax (C) - III vs. M/S Dd Industries Ltd

ITA - 518 / 2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) -III vs. M/S Dd Industries Ltd

ITA - 516 / 2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) - III vs. M/S Dd Industries Ltd

ITA - 512 / 2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) -III vs. M/s Dd Industries Ltd

ITA/518/2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) -III vs. M/s Dd Industries Ltd

ITA/516/2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) -III vs. M/s Dd Industries Ltd

ITA/519/2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) -III vs. M/s Dd Industries Ltd

ITA/526/2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) -III vs. M/s Dd Industries Ltd

ITA/517/2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

Commissioner of Income Tax (C) -III vs. M/s Dd Industries Ltd

ITA/512/2013HC Delhi13 Mar 2015
Section 36

…ourt here also notices that several decisions were relied upon by 2015:DHC:2476-DB ITA Nos.512/2013, 516/2013, 517/2013, 518/2013, 519/2013 & 526/2013 Page 12 the ITAT (Reliance Utility and Power Ltd. v. CIT, 313 ITR 340 (Bom.), CIT v. Hotel Savera, 239 ITR 795 (Mad), CIT v. Tin Box Company, 260 ITR 637 (Del.)) in support of the conclusion that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. 11. The next aspect is as regards the question whether the purpose for which…

The Commissioner of Income Tax - Central vs. M/s. Himagiri Biotech Pvt. Ltd

ITTA/526/2013HC Telangana30 Oct 2013