CIT v. Karnal Co-operative Sugar Mills Ltd.

243 ITR 2Supreme Court of India2000#822 most cited

What is CIT v. Karnal Co-operative Sugar Mills Ltd. authority for?

Income earned from deposits or investments directly and inextricably linked to the acquisition of assets or the setting up of a business project during its construction period is incidental to the asset acquisition, reducing the project cost, or constitutes business receipts eligible for relevant deductions, rather than 'income from other sources'.

125

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2007 to 2026.

Also referred to as

Karnal Co-operative Sugar Mills · 243 ITR 2 · income during construction · project cost reduction · funds linked to asset acquisition · business income · section 28(1) · section 80IA · section 80IAB · Tuticorin Alkali Chemicals distinguished

Sections most often in play

Section 143(3)Section 234BSection 234CSection 250Section 271(1)(c)Section 28(1)Section 80-IABSection 80IA(4)(iii)

Issues it is cited on

section 112section 111section 114section 57(iii)furnishing inaccurate particulars of incomefurnishing inaccurate particularssection 57section 22section 56income from other sourcessection 271(1)section 37(1)

Judgments citing CIT v. Karnal Co-operative Sugar Mills Ltd.

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

…ee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction.” [Underlining is ours] 15. In this context, we may refer with profit to Commissioner of Income- tax v. Karnal Co-operative Sugar Mills Ltd., [2000] 243 ITR 2 (SC) wherein the assessee had deposited money to open a letter of credit for the purchase of the machinery required for setting up its plant in terms of the assessee's ITA 357/2010 Page 12 of 18 agreement with the su…

C.I.T vs. Pench Power Ltd

In the result the appeals are dismissed

ITA - 275 / 2008HC Delhi15 Jan 2009
Section 57

…e arrived at; that an incorrect conclusion is not invariably perverse unless it is palpably deliberate or mala fide. In any event, the matter stands firmly concluded by the Judgment of the Supreme Court in CIT -vs- Karnal Cooperative Sugar Mills Ltd., (2000) 243 ITR 2 which is in these words:- Leave granted. In the present case, the assessee had deposited money to open a letter of credit for the purchase of the machinery required for setting up its plant in terms of ![](_page_5_Picture_1.jpeg) ![](_page_6_Picture_1.jpeg) and exclusively for the said purpose and hence, the deduction under Section 57(iii) of…

C.I.T vs. Pench Power Ltd

In the result the appeals are dismissed

ITA - 257 / 2008HC Delhi15 Jan 2009
Section 57

…e arrived at; that an incorrect conclusion is not invariably perverse unless it is palpably deliberate or mala fide. In any event, the matter stands firmly concluded by the Judgment of the Supreme Court in CIT -vs- Karnal Cooperative Sugar Mills Ltd., (2000) 243 ITR 2 which is in these words:- Leave granted. In the present case, the assessee had deposited money to open a letter of credit for the purchase of the machinery required for setting up its plant in terms of 3 2 ![](_page_5_Picture_1.jpeg) ![](_page_5_Picture_2.jpeg) the assessee's agreement with the supplier. It was on the money so deposited that…

Commissioner of Income Tax-V N vs. Damanjit Singh

ITA/166/2000HC Delhi12 Jan 2007

…gh Court followed the judgment of the Hon’ble Supreme Court in Gopinathan, Auto Kast Ltd., Tuticorin Alkali Chemicals and CIT v. Bokaro Steel Ltd (1999) 236 ITR 315. The decision of the Hon’ble Supreme Court in CIT v. Karnal Cooperative Sugar Mills (2000) 243 ITR 2 was in the context of determining the nature of income earned by way of interest on the amounts deposited for opening a letter of credit for the purchase of machinery required for setting up a plant. It was held that the interest earned was a capital receipt since the deposit was incidental to the acquisition of assets. The decision of the Mad…