CIT v. Maharashtra Electrosmelt Ltd.

214 ITR 489High Court1995#8295 most cited

What is CIT v. Maharashtra Electrosmelt Ltd. authority for?

Interest earned from temporary utilization of borrowed funds, even if used for reducing liabilities, is considered income. This applies even if the primary purpose of borrowing was for business.

13

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2018 to 2025.

Also referred to as

CIT v. Maharashtra Electrosmelt Ltd. · section 57 · section 56 · income from other sources · borrowed funds · interest income · temporary utilization · business purpose

Issues it is cited on

section 57section 56income from other sourcescompanyindiatotal incomebusinessinterest

Judgments citing CIT v. Maharashtra Electrosmelt Ltd.

M/S Rpj Minerals Pvt. Ltd, Maihar vs. Income Tax Officer, Ward -1, Satna

ITA 86/JAB/2022[2017-18]Status: DisposedITAT Jabalpur19 Sept 2025AY 2017-18

Bench: Sh. Kul Bharat & Sh. Nikhil Choudhary

For Appellant: NoneFor Respondent: Sh. Shrawan Kumar Meena, CIT DR
Section 143(3)Section 234ASection 43B

…aw. The Hon'ble Supreme Court specifically referred to judgments of the Hon'ble Andhra Pradesh High Court in the case of CIT vs. Nagarjuna Steels Ltd., (1988) 171 ITR 663 and the Hon'ble Bombay High Court in the case of CIT vs. Maharashtra Electrosmelt (1995) 214 ITR 489 and held that the reasonings followed in those judgments, that the background of raising the fund by borrowing and temporary utilization of a portion of that fund by keeping the same in deposit with the bank, was to show that the interest was earned for the purpose of reducing the liability of the assessee, but the Hon'ble Supreme Court held that…

Income Tax Officer Ward-1 vs. M/S Rpj Minerals Private Ltd., Satna

ITA 154/JAB/2016[2012-13]Status: DisposedITAT Jabalpur19 Sept 2025AY 2012-13

Bench: Sh. Kul Bharat & Sh. Nikhil Choudhary

For Appellant: NoneFor Respondent: Sh. Shrawan Kumar Meena, CIT DR
Section 143(3)Section 234ASection 43B

…aw. The Hon'ble Supreme Court specifically referred to judgments of the Hon'ble Andhra Pradesh High Court in the case of CIT vs. Nagarjuna Steels Ltd., (1988) 171 ITR 663 and the Hon'ble Bombay High Court in the case of CIT vs. Maharashtra Electrosmelt (1995) 214 ITR 489 and held that the reasonings followed in those judgments, that the background of raising the fund by borrowing and temporary utilization of a portion of that fund by keeping the same in deposit with the bank, was to show that the interest was earned for the purpose of reducing the liability of the assessee, but the Hon'ble Supreme Court held that…

M/S. Rmz Hotels Private Limited, Bangalore vs. National E-Assessment Centre, Delhi

In the result, the appeal of the assessee is allowed

ITA 954/BANG/2022[2018-19]Status: DisposedITAT Bangalore22 Feb 2023AY 2018-19

Bench: Shri Chandra Poojariassessment Year: 2018-19

For Appellant: Shri V. Srinivasan, A.RFor Respondent: Shri Ganesh R. Ghale, Standing Counsel for Department
Section 234Section 255Section 255(3)Section 36

…ed; CIT vs. NaQdriuna Steels Ltd. (1988) 71 CTR (AP) 118 : (1988) 171 ITR 663 (AP) : TC 41R.551, CIT vs. Electrochem Orissa Ltd. (1995) 123 CTR (On) 162 : (1995) 211 ITR 552 (Ori) and CIT vs. Maharashtra Electrosmelt ,v Ltg\. (1995) 124 CTR (Bom) 117 : (1995) 214 ITR 489 (Bom) : TC 41R.557 / disapproved; CIT vs. Shaw Wallace & Co. (1932) 59 IA 206~(PC) and Pondicherry -Railway Company Ltd. vs. CIT AIR 1931 PC 165 relied on. (Paras 10 & 12)” M/s. RMZ Hotels Private Limited, Bangalore Page 46 of 79 (iii) Decision of the Chandigarh Tribunal in the case of M/s. C.R. Auluck & Sons Pvt. Ltd. in ITA No.915/Chd/2008 da…

Mellona Developers Pvt. Ltd., Mumbai vs. ITO, Ward- 3 (2)(2), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 1408/MUM/2020[2015-16]Status: DisposedITAT Mumbai08 Aug 2022AY 2015-16

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Mellona Developers Pvt. Ltd., V. Income Tax Officer – Ward – 3(2)(2) Room No. 673A, Aayakar Bhavan 514, Dalamal Towers, 211 M.K. Road, Mumbai - 400020 F.P.J. Marg, Nariman Point Mumbai - 400021 Pan: Aafcm3780K (Appellant) (Respondent) Assessee By : Shri K. Gopal Department By : Shri Mahita Nair

For Appellant: Shri K. GopalFor Respondent: Shri Mahita Nair
Section 115JSection 142(1)Section 143(2)

…d Deposit has been reduced from project work in Progress. In this respect we rely on following case laws : (i). Commissioner of Income Tax vs Bokaro Steel Limited 236 ITR 315 (Supreme Court) (ii). Commissioner of Income Tax vs Maharashtra Electrosmelt Limited 214 ITR 489 (Bombay High Court) (iii). Commissioner of Income Tax vs A.P. Forest Development Corporation 171 ITR 663 (Andhra Pradesh High Court) (iv). Snam Progetti S.P.A vs Additional Commissioner of Income Tax, New Delhi -II, and others 132 ITR 70 (Delhi High Court) (v). Gamma Constructions Pvt Ltd vs ITO 3(3)(4), Mumbai ITA No. 530/Mum/2012, Mumbai Tribun…

DCIT Corporate Circle 1(2), Chennai vs. Chennai Metro Rail Limited, Chennai

In the result, both the appeals filed by the Revenue are dismissed

ITA 2181/CHNY/2018[2014-15]Status: DisposedITAT Chennai24 Jun 2022AY 2014-15

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./I.T.A. Nos.2180 & 2181/Chny/2018 िनधा"रण वष"/Assessment Years: 2013-14 & 2014-15 The Deputy Commissioner Of Vs. M/S. Chennai Metro Rail Limited, Income Tax, Administrative Building, Chennai Metro Corporate Circle 1(2), Rail Depot, P.H. Road, Opp. To Daniel Chennai 600 034. Thomas School, Koyambedu, Chennai 600 107. [Pan: Aadcc2233K] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri M. Rajan, Cit ""थ" की ओर से/Respondent By : Shri G. Baskar, Advocate सुनवाई की तारीख/ Date Of Hearing : 10.05.2022 घोषणा की तारीख /Date Of Pronouncement : 24.06.2022 आदेश /O R D E R Per V. Durga Rao: Both The Appeals Filed By The Revenue Are Directed Against The Common Order Of The Ld. Commissioner Of Income Tax (Appeals) 4, Chennai Dated 14.05.2018 Relevant To The Assessment Years 2013-14 & 2014-15. Since Common Ground Involved, Both The Appeals Were Heard & Being Disposed Of By This Common Order For The Sake Of Convenience. The Only Common Ground Raised In Both The Appeals Relates To Deletion Of Addition Made Towards Interest Income.

For Appellant: Shri M. Rajan, CITFor Respondent: Shri G. Baskar, Advocate
Section 14Section 4

…81/Chny/18 levied at the point of 'accrual or arise' and the application of money do not in any affect the taxability of an income. In this regard reliance is placed on the Bombay High court decision in the case of CIT v. Maharashtra Electro smelt Ltd [1995] 214 ITR 489, wherein the court has recorded a finding that, "The interest earned by the assessee could have been used for many other purposes. If the assessee purchased a house or distributed dividend or paid salary of its employees with the money received as interest, will the interest amount be treated as not his income? This is not a case of diversion of…

DCIT Corporate Circle 1(2), Chennai vs. Chennai Metro Rail Limited, Chennai

In the result, both the appeals filed by the Revenue are dismissed

ITA 2180/CHNY/2018[2013-14]Status: DisposedITAT Chennai24 Jun 2022AY 2013-14

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./I.T.A. Nos.2180 & 2181/Chny/2018 िनधा"रण वष"/Assessment Years: 2013-14 & 2014-15 The Deputy Commissioner Of Vs. M/S. Chennai Metro Rail Limited, Income Tax, Administrative Building, Chennai Metro Corporate Circle 1(2), Rail Depot, P.H. Road, Opp. To Daniel Chennai 600 034. Thomas School, Koyambedu, Chennai 600 107. [Pan: Aadcc2233K] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri M. Rajan, Cit ""थ" की ओर से/Respondent By : Shri G. Baskar, Advocate सुनवाई की तारीख/ Date Of Hearing : 10.05.2022 घोषणा की तारीख /Date Of Pronouncement : 24.06.2022 आदेश /O R D E R Per V. Durga Rao: Both The Appeals Filed By The Revenue Are Directed Against The Common Order Of The Ld. Commissioner Of Income Tax (Appeals) 4, Chennai Dated 14.05.2018 Relevant To The Assessment Years 2013-14 & 2014-15. Since Common Ground Involved, Both The Appeals Were Heard & Being Disposed Of By This Common Order For The Sake Of Convenience. The Only Common Ground Raised In Both The Appeals Relates To Deletion Of Addition Made Towards Interest Income.

For Appellant: Shri M. Rajan, CITFor Respondent: Shri G. Baskar, Advocate
Section 14Section 4

…81/Chny/18 levied at the point of 'accrual or arise' and the application of money do not in any affect the taxability of an income. In this regard reliance is placed on the Bombay High court decision in the case of CIT v. Maharashtra Electro smelt Ltd [1995] 214 ITR 489, wherein the court has recorded a finding that, "The interest earned by the assessee could have been used for many other purposes. If the assessee purchased a house or distributed dividend or paid salary of its employees with the money received as interest, will the interest amount be treated as not his income? This is not a case of diversion of…

M/S Cmdc Icpl Coal Limited, Raipur (Cg) vs. The Income Tax Officer, 3(1), Raipur (Cg)

In the result, appeal of the assessee in ITA No

ITA 350/BIL/2016[2012-13]Status: DisposedITAT Raipur09 May 2022AY 2012-13

Bench: Shri Ravish Sood & Shri Jamlappa D Battullआयकर अपील सं. / Ita Nos. 348, 349 & 350/Rpr/2016 "नधा"रण वष" / Assessment Years : 2009-10, 2010-11 & 2012-13 Cmdc Icpl Coal Limited House No.382, Sunder Nagar, Raipur-492 013 (C.G.) Pan : Aadcc4374P .......अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer 3(1), Raipur (C.G.) ……""यथ" / Respondent Assessee By : Shri R.B Doshi, Ca Revenue By : Shri G.N Singh, Dr

For Appellant: Shri R.B Doshi, CAFor Respondent: Shri G.N Singh, DR
Section 139Section 143(3)Section 147Section 148

…ons. In that case, the Hon’ble Supreme Court ruled in the favour of Revenue.Disregarding with the view taken by Bombay High Court, the Apex Court observed:- “25. The other case is a decision of Bombay High Court in CIT Vs. Maharashtra Electrosmelt Ltd. [19950 214 ITR 489. In that case, the assessee before commercial production had started had realized a sum of Rs.3,14,356/- as interest on short term deposit, At the same time, the assesse had paid a sum of Rs.58,51,505/- as interest on funds borrowed by it for the purpose of its business. The assesse after deducting the receipt of interest from the amount of inter…

M/S Cmdc Icpl Coal Limited, Raipur (Cg) vs. The Income Tax Officer, 3(1), Raipur (Cg)

In the result, appeal of the assessee in ITA No

ITA 349/BIL/2016[2010-11]Status: DisposedITAT Raipur09 May 2022AY 2010-11

Bench: Shri Ravish Sood & Shri Jamlappa D Battullआयकर अपील सं. / Ita Nos. 348, 349 & 350/Rpr/2016 "नधा"रण वष" / Assessment Years : 2009-10, 2010-11 & 2012-13 Cmdc Icpl Coal Limited House No.382, Sunder Nagar, Raipur-492 013 (C.G.) Pan : Aadcc4374P .......अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer 3(1), Raipur (C.G.) ……""यथ" / Respondent Assessee By : Shri R.B Doshi, Ca Revenue By : Shri G.N Singh, Dr

For Appellant: Shri R.B Doshi, CAFor Respondent: Shri G.N Singh, DR
Section 139Section 143(3)Section 147Section 148

…ons. In that case, the Hon’ble Supreme Court ruled in the favour of Revenue.Disregarding with the view taken by Bombay High Court, the Apex Court observed:- “25. The other case is a decision of Bombay High Court in CIT Vs. Maharashtra Electrosmelt Ltd. [19950 214 ITR 489. In that case, the assessee before commercial production had started had realized a sum of Rs.3,14,356/- as interest on short term deposit, At the same time, the assesse had paid a sum of Rs.58,51,505/- as interest on funds borrowed by it for the purpose of its business. The assesse after deducting the receipt of interest from the amount of inter…

M/S Cmdc Icpl Coal Limited, Raipur (Cg) vs. The Income Tax Officer, 3(1), Raipur (Cg)

In the result, appeal of the assessee in ITA No

ITA 348/BIL/2016[2009-10]Status: DisposedITAT Raipur09 May 2022AY 2009-10

Bench: Shri Ravish Sood & Shri Jamlappa D Battullआयकर अपील सं. / Ita Nos. 348, 349 & 350/Rpr/2016 "नधा"रण वष" / Assessment Years : 2009-10, 2010-11 & 2012-13 Cmdc Icpl Coal Limited House No.382, Sunder Nagar, Raipur-492 013 (C.G.) Pan : Aadcc4374P .......अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer 3(1), Raipur (C.G.) ……""यथ" / Respondent Assessee By : Shri R.B Doshi, Ca Revenue By : Shri G.N Singh, Dr

For Appellant: Shri R.B Doshi, CAFor Respondent: Shri G.N Singh, DR
Section 139Section 143(3)Section 147Section 148

…ons. In that case, the Hon’ble Supreme Court ruled in the favour of Revenue.Disregarding with the view taken by Bombay High Court, the Apex Court observed:- “25. The other case is a decision of Bombay High Court in CIT Vs. Maharashtra Electrosmelt Ltd. [19950 214 ITR 489. In that case, the assessee before commercial production had started had realized a sum of Rs.3,14,356/- as interest on short term deposit, At the same time, the assesse had paid a sum of Rs.58,51,505/- as interest on funds borrowed by it for the purpose of its business. The assesse after deducting the receipt of interest from the amount of inter…

Meja Urja Nigam (P) Ltd., Allahabad vs. Income Tax Office Ward-2 (2), Allahabad

In the result, both the appeals of the assessee for ay: 2015-16 and 2016-17

ITA 54/ALLD/2020[2015-16]Status: DisposedITAT Allahabad03 Mar 2021AY 2015-16

Bench: Shri.Vijay Pal Rao & Shri Ramit Kochar

For Appellant: Ms.Namita S. Pandey, CIT DRFor Respondent: Shri Parv Agrawal, CA
Section 143(3)

…e receipt and will have to be taxed accordingly. Any set off or deduction of any expenditure can only be made in accordance with the provisions of the Act. 25. The other case is a decision of the Bombay High Court in CIT v. Maharashtra Electrosmelt Ltd [1995] 214 ITR 489 . In that case, the assessee, before commercial production had started, had realised a sum of Rs. 3,14,356 as interest on short-term deposit. At the same time, the assessee had paid a sum of Rs. 58,51,505 as interest on funds borrowed by it for the purpose of its business. The assessee after deducting the receipt of interest from the amount of in…

Loop Telecom Ltd, Mumbai vs. DCIT RG 6(3), Mumbai

Appeal stands dismissed whereas the assessee’s appeal stand allowed for statistical purposes

ITA 3188/MUM/2016[2011-12]Status: DisposedITAT Mumbai05 Feb 2020AY 2011-12

Bench: Hon’Ble Shri C.N. Prasad, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri Ganesh Raj Gopalan- Ld. ARFor Respondent: Shri S. Michel Jerald- Ld. DR
Section 143(3)Section 35ASection 36

…M/s. Loop Telecom Ltd. A.Y: 2011-12 आयकर अपीलीय अिधकरण “ए” "ायपीठ मुंबई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI माननीय "ी सी. एन. "साद, "ाियक सद" एवं माननीय "ी मनोज कुमार अ"वाल, लेखा सद" के सम"। BEFORE HON’BLE SHRI C.N. PRASAD, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ I.T.A. No. 2978/Mum/2016 (िनधा"रण वष" / Assessment Year:2011-12) ACIT-Circle 7(1)(2) M/s. Loop Telecom Ltd. Room No. 130, 1st Floor बनाम/ 127 Manmala Tank Road Aaykar Bhavan, M.K. Road Taikalwadi, Mahim Vs. Mumbai-400 020 Mumbai-400 016 "थायीलेखासं./जीआइआरसं./PAN/GIR No. AAGCS-0351-R (अपीलाथ"/Appellant) (""थ" /…

India Metal One Steel Plate Processing Private Ltd., Chennai vs. DCIT, Chennai

In the result, the assessee’s appeal is dismissed

ITA 3497/CHNY/2016[2012-13]Status: DisposedITAT Chennai27 Nov 2018AY 2012-13

Bench: Shri George Mathan & Shri S. Jayaramanआयकर अपील सं/.I.T.A. No. 3497/Chny/2016 "नधा"रण वष"/Assessment Year : 2012-13 M/S. India Metal One Steel Plate The Deputy Commissioner Of Income Processing Pvt. Ltd., Vs. Tax, Prestige Palladium Bayan, Corporate Circle – 2(2), 6Th Floor, Door No. 129 To 140 121, Mahatma Gandhi Road, Greams Road, Chennai – 600 006. Nungambakkam, Chennai – 600 034. [Pan: Aacci 5959F] (अपीलाथ"/Appellant) (%&यथ'/Respondent)

For Appellant: Shri. R. Vijayaraghavan, Advocate

…Seshasayee Paper and Boards Ltd. [1985] 156 ITR 542. The contrary views expressed in the cases of CIT v. Nagarjuna Steels Ltd. [1988] 171 ITR 663 (AP); CIT v. Electrochem Orissa Ltd. [1995] 211 ITR 552 (Orissa) and CIT v. Maharashtra Electrosmelt Ltd. [1995] 214 ITR 489 (Bom) are erroneous.” Thus, the Apex court very clearly confirmed that the interest earned by an assessee on the investment of share capital in call deposits before the commencement of its production could be assessed separately under the head “Other sources”. Further, the relevant portion of the order of the Supreme Court in the case of CIT…

DCIT Cen Cir 1(2), Mumbai vs. Sears Construction P.Ltd, Mumbai

The appeal of the Revenue is dismissed

ITA 6975/MUM/2016[2012-13]Status: DisposedITAT Mumbai25 Jul 2018AY 2012-13

Bench: Shri Joginder Singh & Shri N.K. Pradhanassessment Year: 2012-13 Dcit, M/S. Sears Construction Central Circle-1(2), बनाम/ Pvt. Ltd. Room No.906, Pratishtha 514, Dalamal Towers, Vs. Bhavan, 10Th Floor, Old 211, Nariman Point, Cgo Building Annexe, Mumbai-400020 Mumbai-400020 (राज"व /Revenue) ("नधा"रती /Assessee) P.A. No. Aaacs5289E

…आयकर अपील"य अ"धकरण, मुंबई "यायपीठ, जे, मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “J”, MUMBAI "ी जो"ग"दर "संह, "या"यक सद"य एवं "ी एन. के. "धान, लेखा सद"य, के सम" Before Shri Joginder Singh, Judicial Member, and Shri N.K. Pradhan, Accountant Member Assessment Year: 2012-13 DCIT, M/s. Sears Construction Central Circle-1(2), बनाम/ Pvt. Ltd. Room No.906, Pratishtha 514, Dalamal Towers, Vs. Bhavan, 10th Floor, Old 211, Nariman Point, CGO Building Annexe, Mumbai-400020 Mumbai-400020 (राज"व /Revenue) ("नधा"रती /Assessee) P.A. No. AAACS5289E राज"व क" ओर से / Revenue by Shri C.S. Gulati CIT-DR "नधा"रती…