CIT v. Prem Heavy Engineering Works P. Ltd.

285 ITR 554High Court2006#5740 most cited

What is CIT v. Prem Heavy Engineering Works P. Ltd. authority for?

Interest paid on funds borrowed for business purposes is deductible. Borrowed funds used for business purposes are not subject to disallowance of interest.

20

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2016 to 2022.

Also referred to as

CIT v. Prem Heavy Engineering Works P. Ltd. · interest deduction · business expenditure · borrowed funds · commercial expediency · Section 37 · disallowance of interest

Judgments citing CIT v. Prem Heavy Engineering Works P. Ltd.

Allen Career Institute, Jaipur vs. JCIT, Kota

In the result, the appeal of the assessee is partly allowed

ITA 620/JPR/2016[2011-12]Status: DisposedITAT Jaipur04 Aug 2022AY 2011-12
For Appellant: Shri Mahendra Gargieya, Advocate &For Respondent: Shri A.S. Nehra, Addl. CIT
Section 143(3)Section 36Section 36(1)(iii)Section 37(1)

…eated as promoted by commercial expediency, The Supreme Court upheld the argument of the assessee and interest was not disallowed in the case of S.A. Builders Ltd. Vs. CIT (Appeal) (2007) 288 ITR 1 (SC) Also see CIT Vs. Prem Heavy Engg. Works Pvt. Ltd. (2006) 285 ITR 554 (All), CIT Vs. Radico Khaitan Ltd. (2005) 142 Taxman 681 (All.). The copy of case of is enclosed. Reliance is also placed on the decision of the Hon’ble Bombay high court in the case od CIT v. Reliance Utilities and Power Ltd. 313 ITR 340 and Hon’ble Delhi High Court in the case of CIT v. Bharti Televenture Ltd. We are also enclosing herwith the…

M/S. Chambal Fertilizers and Chemicals Limited, Kota vs. Assistant Commissioner of Income Tax, Circle-2, Kota

In the result, appeal of the revenue is dismissed

ITA 744/JPR/2018[2014-15]Status: DisposedITAT Jaipur13 May 2022AY 2014-15
For Appellant: Shri Percy PardiwallaFor Respondent: Shri Sanjay Dhariwal (CIT)
Section 40A(2)(b)

…Reserves are certainly assessee's own interest funds. This proportion is fortified by the decision of ITAT in the case of Torrent Financers V. ACIT, 73 TTJ 624 (Ahd), judgment of Allahabad High Court in the case of CIT V. Prem Heavy Engineering Works P. Ltd., 285 ITR 554 (All.), and the judgment of Hon'ble Supreme Court in the case of Munjal Sales Corporation V. CIT, 298 ITR 298 (SC).” a. As regards the disallowance made under section 14A of the Act, the appellant submits that there was no tax-free income earned by the appellant during the year as no dividend income has been received from both the Indian subsid…

Chambal Fertilisers and Chemicals Limited, Kota vs. ACIT, Kota

In the result, appeal of the revenue is dismissed

ITA 291/JPR/2017[2013-14]Status: DisposedITAT Jaipur13 May 2022AY 2013-14
For Appellant: Shri Percy PardiwallaFor Respondent: Shri Sanjay Dhariwal (CIT)
Section 40A(2)(b)

…Reserves are certainly assessee's own interest funds. This proportion is fortified by the decision of ITAT in the case of Torrent Financers V. ACIT, 73 TTJ 624 (Ahd), judgment of Allahabad High Court in the case of CIT V. Prem Heavy Engineering Works P. Ltd., 285 ITR 554 (All.), and the judgment of Hon'ble Supreme Court in the case of Munjal Sales Corporation V. CIT, 298 ITR 298 (SC).” a. As regards the disallowance made under section 14A of the Act, the appellant submits that there was no tax-free income earned by the appellant during the year as no dividend income has been received from both the Indian subsid…

Chambal Fertilisers and Chemicals Limited, Kota vs. DCIT, Kota

In the result, appeal of the revenue is dismissed

ITA 201/JPR/2017[2012-13]Status: DisposedITAT Jaipur13 May 2022AY 2012-13
For Appellant: Shri Percy PardiwallaFor Respondent: Shri Sanjay Dhariwal (CIT)
Section 40A(2)(b)

…Reserves are certainly assessee's own interest funds. This proportion is fortified by the decision of ITAT in the case of Torrent Financers V. ACIT, 73 TTJ 624 (Ahd), judgment of Allahabad High Court in the case of CIT V. Prem Heavy Engineering Works P. Ltd., 285 ITR 554 (All.), and the judgment of Hon'ble Supreme Court in the case of Munjal Sales Corporation V. CIT, 298 ITR 298 (SC).” a. As regards the disallowance made under section 14A of the Act, the appellant submits that there was no tax-free income earned by the appellant during the year as no dividend income has been received from both the Indian subsid…

ACIT, Moradabad vs. M/S. Jubilant Organosyes Ltd., Uttar Pradesh

The appeal is dismissed

ITA 4975/DEL/2012[2008-09]Status: DisposedITAT Delhi12 Mar 2019AY 2008-09

Bench: Smt Beena A. Pillai & Shri Prashant Maharishi

For Appellant: Shri R.M. Gupta, AdvFor Respondent: Shri J. K. Mishra, CIT DR
Section 115JSection 43(1)

…INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”: NEW DELHI BEFORE SMT BEENA A. PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Assessment Year ITA No of AO ITA NO of Assessee 2000-01 NA 4410/Del/2003 2001-02 3426/Del/2003 NA 2002-03 1308/Del/2006 1271/Del/2006 2003-04 NA 2815/Del/2008 2004-05 3104/del/2008 3242/Del/2008 2005-06 3920/Del/2009 3724/ Del/2009 2006-07 3314/Del/2010 3393/Del/2010 2007-08 2479/Del/2011 2596/Del/2011 2008-09 4975/del/2012 4793/Del/2012 The Addl. Commissioner of Jubilant Life sciences Vs. Income Tax Limited & Formerly known as The Assistant Commissioner of M/s.…

ACIT, Moradabad vs. M/S Jubliant Organosys Ltd., Uttar Pradesh

The appeal is dismissed

ITA 2596/DEL/2011[2007-08]Status: DisposedITAT Delhi12 Mar 2019AY 2007-08

Bench: Smt Beena A. Pillai & Shri Prashant Maharishi

For Appellant: Shri R.M. Gupta, AdvFor Respondent: Shri J. K. Mishra, CIT DR
Section 115JSection 43(1)

…INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”: NEW DELHI BEFORE SMT BEENA A. PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Assessment Year ITA No of AO ITA NO of Assessee 2000-01 NA 4410/Del/2003 2001-02 3426/Del/2003 NA 2002-03 1308/Del/2006 1271/Del/2006 2003-04 NA 2815/Del/2008 2004-05 3104/del/2008 3242/Del/2008 2005-06 3920/Del/2009 3724/ Del/2009 2006-07 3314/Del/2010 3393/Del/2010 2007-08 2479/Del/2011 2596/Del/2011 2008-09 4975/del/2012 4793/Del/2012 The Addl. Commissioner of Jubilant Life sciences Vs. Income Tax Limited & Formerly known as The Assistant Commissioner of M/s.…

Jubilant Organosys Ltd., Noida vs. Addl. CIT, Moradabad

The appeal is dismissed

ITA 2497/DEL/2011[2007-08]Status: DisposedITAT Delhi12 Mar 2019AY 2007-08

Bench: Smt Beena A. Pillai & Shri Prashant Maharishi

For Appellant: Shri R.M. Gupta, AdvFor Respondent: Shri J. K. Mishra, CIT DR
Section 115JSection 43(1)

…INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”: NEW DELHI BEFORE SMT BEENA A. PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Assessment Year ITA No of AO ITA NO of Assessee 2000-01 NA 4410/Del/2003 2001-02 3426/Del/2003 NA 2002-03 1308/Del/2006 1271/Del/2006 2003-04 NA 2815/Del/2008 2004-05 3104/del/2008 3242/Del/2008 2005-06 3724/ Del/2009 3920/Del/2009 2006-07 3314/Del/2010 3393/Del/2010 2007-08 2497/Del/2011 2596/Del/2011 2008-09 4975/del/2012 4793/Del/2012 The Addl. Commissioner of Jubilant Life sciences Vs. Income Tax Limited & Formerly known as The Assistant Commissioner of M/s.…

Assistant Commissioner of Income Tax vs. Prasanna Purple Mobility Solutions Pvt.Ltd, Pune

In the result, appeal of the Revenue is dismissed

ITA 158/PUN/2017[2012-13]Status: DisposedITAT Pune23 Jan 2019AY 2012-13

Bench: Shri R.S. Syal, Vp & Shri Partha Sarathi Chaudhury, Jm

For Respondent: Shri Pankaj Garg
Section 143(1)Section 143(3)Section 36(1)(iii)Section 37

…rib.) In these cases , the Hon'ble Courts held that where amount borrowed was utilized to make interest free advance and where the transaction was genuine and for business purposes interest was allowable. 5) CIT Vs. Prem Heavy Engineering Works P. Ltd. [2006] 285 ITR 554 (All) 6) D & H Sechron Electrodes Pvt. Ltd. Vs. CIT [1983] 142 ITR 528 (MP) 7) CIT Vs. Reliance Utilities and Power Ltd. [2009] 313 ITR 340 (Bom.) In these cases, it was held that where the assessee had adequate interest free funds by way of proprietary capital or by way of interest free deposit for customers, there is an inference that borrowed…

M/S. Liberty Marketers, Ernakulam vs. The ACIT, Cochin

In the result, the appeals of the assessee are dismissed

ITA 86/COCH/2016[2011-12]Status: DisposedITAT Cochin30 Mar 2018AY 2011-12

Bench: S/Shri Chandra Poojari , Am & George George K., Jm

Section 36(1)(iii)

…ied on the judgments of the Supreme Court to contravene the disallowance: 1) S.A. Builders vs. CIT (288 ITR 1) (SC) 2) CIT vs. Hotel Savera (239 ITR 795) (Mad.) 3) Chanchal Katyal vs. CIT (298 ITR 182) (All) 4) CIT vs. Prem heavy Engineering Works (P) Ltd. (285 ITR 554) (All) 5) ONGC vs. DCIT (262 ITR 648) (Uttaranchal) 6) CIT vs. Raghuvir Sythetics Ltd. (36 Taxman.com 275) (Guj) 7) CIT vs. Reliance Utilities & Power Ltd. (178 Taxman 135) (Bom) I.T.A. Nos. 409/C/2014 & 85&86/Coch/2016 Therefore, by applying the ratios of the above mentioned judgments, it was submitted that since the assessee had common funds…

M/S. Liberty Marketers, Ernakulam vs. The ACIT, Cochin

In the result, the appeals of the assessee are dismissed

ITA 85/COCH/2016[2010-11]Status: DisposedITAT Cochin30 Mar 2018AY 2010-11

Bench: S/Shri Chandra Poojari , Am & George George K., Jm

Section 36(1)(iii)

…ied on the judgments of the Supreme Court to contravene the disallowance: 1) S.A. Builders vs. CIT (288 ITR 1) (SC) 2) CIT vs. Hotel Savera (239 ITR 795) (Mad.) 3) Chanchal Katyal vs. CIT (298 ITR 182) (All) 4) CIT vs. Prem heavy Engineering Works (P) Ltd. (285 ITR 554) (All) 5) ONGC vs. DCIT (262 ITR 648) (Uttaranchal) 6) CIT vs. Raghuvir Sythetics Ltd. (36 Taxman.com 275) (Guj) 7) CIT vs. Reliance Utilities & Power Ltd. (178 Taxman 135) (Bom) I.T.A. Nos. 409/C/2014 & 85&86/Coch/2016 Therefore, by applying the ratios of the above mentioned judgments, it was submitted that since the assessee had common funds…

M/S.Liberty Marketers, Ernakulam vs. The ACIT, Cochin

In the result, the appeals of the assessee are dismissed

ITA 409/COCH/2014[2009-10]Status: DisposedITAT Cochin30 Mar 2018AY 2009-10

Bench: S/Shri Chandra Poojari , Am & George George K., Jm

Section 36(1)(iii)

…ied on the judgments of the Supreme Court to contravene the disallowance: 1) S.A. Builders vs. CIT (288 ITR 1) (SC) 2) CIT vs. Hotel Savera (239 ITR 795) (Mad.) 3) Chanchal Katyal vs. CIT (298 ITR 182) (All) 4) CIT vs. Prem heavy Engineering Works (P) Ltd. (285 ITR 554) (All) 5) ONGC vs. DCIT (262 ITR 648) (Uttaranchal) 6) CIT vs. Raghuvir Sythetics Ltd. (36 Taxman.com 275) (Guj) 7) CIT vs. Reliance Utilities & Power Ltd. (178 Taxman 135) (Bom) I.T.A. Nos. 409/C/2014 & 85&86/Coch/2016 Therefore, by applying the ratios of the above mentioned judgments, it was submitted that since the assessee had common funds…

DCIT, Cir-2(2), Kolkata vs. M/S Prs Metaliks Ltd., Kolkata

In the result, the appeal of the Revenue ITA No

ITA 450/KOL/2016[2012-2013]Status: DisposedITAT Kolkata10 Jan 2018AY 2012-2013

Bench: : Shri S.S.Viswanethra Ravi & Shri Dr. Arjun Lal Sainia.Y 2012-13

For Appellant: Shri David Z.Chawngthu, Addl.CIT, ld. Sr.DRFor Respondent: Shri Dilip Loyalka, FCA, ld.AR
Section 143(2)Section 143(3)Section 32Section 32(1)Section 43B

…lowing case laws:- CIT Vs. Kajal Export (2014) 362 ITR 328 (Guj.) CIT Vs. Vijaywada Bottling Co. Ltd 356 ITR 625(AP) CIT Vs. Raghuvir Synthetics Ltd 354 ITR 222(Guj) CIT Vs. Reliance Utilities & Power Ltd 313 ITR 340(Bom) CIT Vs. Prem Heavy Engnrs Works P.Ltd 285 ITR 554(All) D & H Secheron Electrodies P.Ltd 142 ITR 528(MP) CIT Vs. Gopikrishna Murlidhar 47 ITR 469 (AP) Regal Theatre Vs. CIT 225 ITR 205(Del) 247 ITR 510(Gau) 16. After considering the above the CIT-A held that the ratio of the cited case laws are found to be squarely applicable to the facts of the present case. He also held that the finding of th…

Neeraj Purohit, Jaipur vs. ACIT, Jaipur

In the result, appeal of the assessee is partly allowed for statistical purpose

ITA 1037/JPR/2016[2013-14]Status: DisposedITAT Jaipur08 Nov 2017AY 2013-14
For Appellant: Shri Manish Agarwal (CA)For Respondent: Shri R.A. Verma (Addl.CIT)
Section 143(3)Section 36(1)(vii)Section 37Section 37(1)(vii)Section 40A(3)

…dvance of amount by assessee without interest- Assessee entitled to full allowance of amount of interest paid when assessee has sufficient funds other than borrowed money- Income Tax Act,1961,s.36(1)(iii). CIT v. Prem Heavy Engineering Works (P). Ltd. [2006] 285 ITR 554 (All.) 8 ITA No. 1037/JP/2016. Shir Neeraj Purohit, Jaipur. Business Expenditure- Interest on borrowed capital- Advances made by assessee to sister concerns interest free sufficient funds available with assessee in form of interest free-advances from customers, share capital surplus and reserve to make advances- Interest on borrowings not to be…

Allen Career Institute, Jaipur vs. JCIT, Kota

In the result, the ground no

ITA 10/JPR/2013[2009-10]Status: DisposedITAT Jaipur27 Sept 2017AY 2009-10
For Appellant: Shri Mahendra Gargieya (Adv) &For Respondent: Shri R.A. Verma (Addl.CIT)
Section 143(3)Section 14ASection 234ASection 244A

…nterest on borrowed money should be made. 9. In support, the assessee relied upon the decision of CIT vs. Dalmia Cement (Bharat) Ltd.(2002) 254 ITR 377 (Del), S.A. Builders ltd. vs. CIT(Appeal) (2007) 288 ITR 1 (SC) , CIT Vs. Prem Heavy Engg. Works Pvt. Ltd. 285 ITR 554 (All) and CIT Vs. Radico Khaitan Ltd. (2005) 142 Taxman 681 (All). 10. Alternatively, the assessee submitted that had the investment in mutual fund was made not from the overdraft account, then FDR would be break for investment in mutual fund and total interest income on that much of amount would be lesser. The assessee is having overdraft facil…

DCIT, Circle - 10, Kolkata vs. M/S. Stadmed Private Ltd., Kolkata

In the result, Revenue’s appeal stands dismissed

ITA 200/KOL/2010[2005-06]Status: DisposedITAT Kolkata18 Jan 2017AY 2005-06

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmed

Section 143(2)Section 143(3)

…own interest free funds. This proportion has been fortified by the following decisions : 1) Hon’ble ITAT in the case of Torrent Financers V. ACIT, 73 TTJ 624 (Ahd.), 2) Hon’ble Allahabad High Court in the case of CIT V. Prem Heavy Engineering Works P. Ltd., 285 ITR 554 (All.), 3) Hon'ble Supreme Court in the case of Munjal Sales Corporation V. CIT, 298 ITR 298 (SC). If we apply the formula laid down in the case of ACIT vs Gopikrishna Murlidhar, (Supra) we find that the assessee has submitted that it has its own funds of Rs. 5,22,90,200.00 as on 31.3.2005. Therefore it is clearly established that the assessee w…

Stadmed Private Limited, Kolkata vs. DCIT, Circle - 10, Kolkata

In the result, Revenue’s appeal stands dismissed

ITA 136/KOL/2010[2005-06]Status: DisposedITAT Kolkata18 Jan 2017AY 2005-06

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmed

Section 143(2)Section 143(3)

…own interest free funds. This proportion has been fortified by the following decisions : 1) Hon’ble ITAT in the case of Torrent Financers V. ACIT, 73 TTJ 624 (Ahd.), 2) Hon’ble Allahabad High Court in the case of CIT V. Prem Heavy Engineering Works P. Ltd., 285 ITR 554 (All.), 3) Hon'ble Supreme Court in the case of Munjal Sales Corporation V. CIT, 298 ITR 298 (SC). If we apply the formula laid down in the case of ACIT vs Gopikrishna Murlidhar, (Supra) we find that the assessee has submitted that it has its own funds of Rs. 5,22,90,200.00 as on 31.3.2005. Therefore it is clearly established that the assessee w…

M/S Jupiter Entertainment Ventures (P) Ltd vs. ACIT

In the result, the appeal of the revenue is dismissed

ITA 792/BANG/2013[2009-10]Status: DisposedITAT Bangalore03 Nov 2016AY 2009-10

Bench: Shri A.K. Garodia & Smt. Asha Vijayaraghavanassessment Year : 2009-10

For Appellant: Smt. Sheetal Borkar, AdvocateFor Respondent: Ms. Neera Malhotra, CIT(DR)

…IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER Assessment year : 2009-10 M/s. Jupiter Entertainment Vs. The Assistant Commissioner of Ventures (P) Ltd., Income Tax, No.54, Richmond Road, Circle 11(5), Bangalore – 560 025. Bangalore. PAN: AABCJ 7071Q APPELLANT RESPONDENT Assessment year : 2009-10 The Deputy Commissioner of Vs. M/s. Jupiter Entertainment Income Tax, Ventures (P) Ltd., Circle 11(5), No.54, Richmond Road, Bangalore. Bangalore – 560 025. PAN: AABCJ 7071Q APPELLANT RESPONDENT Assessee by : Smt. She…

D.C.I.T Cir - 4, Kolkata vs. M/S Tata Tea Limited, Kolkata

In the result, the appeals in ITA No

ITA 2006/KOL/2013[2006-07]Status: DisposedITAT Kolkata21 Oct 2016AY 2006-07

Bench: Shri M.Balaganesh & Shri S.S. Viswanethra Ravi

Section 43(6)

…CIT 134 ITR 219 (Cal) • CIT Vs. 8ritannia Industries Ltd [2006} 280 ITR 525 (Cal) • CIT Vs. ITC Ltd [2008} 299 ITR (AT) 341 (Kolkata) (SB) • CIT Vs. Rockman Cycle Industries Ltd [2009} 176 Taxman 21(P & H) • CIT Vs. Prem Heavy Engineering Works Pvt.Ltd [2006} 285 ITR 554 (All) 2) Without prejudice to the above, it is humbly submitted that the loans as existed in FY 1989-90 to FY 1993-94 being the FYs in which such advances were made were squared up and were no more existing in FY 2005-06 relevant to AY 2006- 07 being the year in which the disallowance has been inflicted by the Assessing Officer. The interest clai…

M/S Kbd Sugars & Distilleries Ltd, Bangalore vs. Asst. Commissioner of Income-Tax, Bangalore

In the result, the appeal of assessee is partly allowed and the revenue’s appeal is dismissed

ITA 1062/BANG/2014[2011-12]Status: DisposedITAT Bangalore29 Apr 2016AY 2011-12

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Rao

For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Shri Sanjay Kumar,CIT-III (D.R)
Section 14A

…ustomersJ there is an inference that borrowed funds are not diverted for non-business purpose. In such circumstancesJ there can be no disallowance. This is the ratio laid down by the Hon 'ble High Court of Allahabad in the case of Prem Engineering Pvt. Ltd. [285 ITR 554]. A similar view has been expressed interest-free funds generated or available with the company if the interest- free funds were sufficient to meet their investments. In the present case, the interst-free funds available with the appellant are Rs.158.47 crores and whereas the interest-free advances were only Rs.155.51Crores. Thus there cannot be…

M/S Kbd Sugars & Distilleries Ltd vs. ACIT

In the result, the appeals of the assessee for the Assessment Years 2008-

ITA 933/BANG/2013[2008-09]Status: DisposedITAT Bangalore05 Feb 2016AY 2008-09
For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Mrs. Neera Malhotra,CIT (D.R)
Section 143(3)Section 14ASection 36(1)(iii)

…ustomersJ there is an inference that borrowed funds are not diverted for non-business purpose. In such circumstancesJ there can be no disallowance. This is the ratio laid down by the Hon 'ble High Court of Allahabad in the case of Prem Engineering Pvt. Ltd. [285 ITR 554]. A similar view has been expressed interest-free funds generated or available with the company if the interest- free funds were sufficient to meet their investments. In the present case, the interst-free funds available with the appellant are Rs.158.47 crores and whereas the interest-free advances were only Rs.155.51Crores. Thus there cannot be…

CIT v. Prem Heavy Engineering Works P. Ltd. (285 ITR 554) — Cited in 20 Judgments | BharatTax