CIT v. Rajeeva Lochan Kanoria

208 ITR 616High Court1994#2625 most cited

What is CIT v. Rajeeva Lochan Kanoria authority for?

The activity of controlling, managing, administering, and financing companies, including purchasing shares for acquiring controlling interest and not just for dividends, constitutes a business or vocational activity. Therefore, income derived from such activities is considered business income.

44

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2012 to 2025.

Also referred to as

CIT v. Rajeeva Lochan Kanoria · business activity · vocational activity · controlling interest · managing companies · financing companies · business income · section 36(1)(iii) · section 37(1)

Issues it is cited on

strategic investmentdisallowance of interest expendituresection 36(1)(iii)interest under section 234acommercial expediencydisallowance under section 14arevenue expendituresection 36(1)section 36section 37(1)section 234asection 37

Judgments citing CIT v. Rajeeva Lochan Kanoria

DCIT, Cir-12(1), Kolkata vs. M/S Bengal Ambuja Housing Development Ltd., Kolkata

Appeal is partly allowed in above terms

ITA 1298/KOL/2016[2012-2013]Status: DisposedITAT Kolkata20 Nov 2019AY 2012-2013

Bench: Shri S.S.Godara & Dr. A.L. Sainiassessment Year :2012-13

Section 143(3)Section 22Section 27

…nani Industries Ltd (supra) & ITAT, Mumbai Benches in the cases of Garware Wall Ropes Limited (540S/Mum/2012), ATE Enterprises Limited (102 ITD 110) and Shristi Securities Pvt. Ltd (148 Taxman 49). The Calcutta High Court in the case of Rajeev Lochan Kanoria (208 ITR 616) has similarly held that where an assessee acquires shares of other companies with a view to acquire controlling interest then use of borrowed funds for acquiring shares amounts to business purpose and therefore interest is to be allowed u/s 36(1)(iii) of the Act. If the ratio laid down in these decisions is applied to the assessee's case then I…

Sagar Realtors Private Limited, Delhi vs. ACIT Central Circle 19, New Delhi

In the result, appeal of the Assessee allowed

ITA 956/DEL/2019[2015-16]Status: DisposedITAT Delhi15 Nov 2019AY 2015-16

Bench: Shri Bhavnesh Saini

For Appellant: Shri M.P. Rastogi, AdvocateFor Respondent: Shri Pradeep Singh Gautam
Section 36(1)(iii)

…se of business (iii) the assessee must have paid interest on the said amount and claim it as deduction. 9 ITA.No.956/Del./2019 M/s. Saga Realtors Pvt. Ltd., New Delhi. 8.1. The Hon’ble Calcutta High Court in the case of CIT vs., Rajeeva Lochan Kanoria [1994] 208 ITR 616 (Cal.) in which it was held as under : “Held, that directorship is nothing but a vocation. The assessee was admittedly a director of several controlled companies. The activity of controlling, managing, administering and financing companies is nothing but a business/professional/vocational activity. A businessman, like the assessee in this case,…

DCIT, Circle - 11(1), Kolkata vs. M/S. Orbis Power Venture Pvt. Ltd., (Since Merged With India Power Corporation Ltd., Kolkata

In the result, the appeal of the Revenue is dismissed

ITA 1037/KOL/2018[2010-11]Status: DisposedITAT Kolkata10 Jul 2019AY 2010-11
For Appellant: Shri A.K. Nayak, DRFor Respondent: Ms. Ruchira Lakhatia, ACA
Section 143(2)

…the CIT(A). Further it is observed that the Memorandum of Association is appears to have been filed before the CIT(A). The assessee placed reliance in the judgment of (i) Hon’ble High Court of Calcutta in the case of CIT vs. Rajeeva Lochan Kanoria reported in 208 ITR 616 (Calcutta), (ii) ITO vs. M/s. First American Securities Pvt. Ltd. ITA No.4768/Del/2012 of Delhi ITAT and (iii) Tetron Commercial Ltd. vs. CIT of Hon’ble High Court of Calcutta reported in 261 ITR 422 (Calcutta). Having considered the submissions and the case laws, the CIT(A) is of the opinion that the I.T.A No.1037/Kol/2018 M/s Orbis Power Ventur…

State Bank of India, Mumbai vs. ACIT Cir 2(2)

In the result, appeal of the revenue is dismissed

ITA 4736/MUM/2010[1999-2000]Status: DisposedITAT Mumbai31 Jan 2018AY 1999-2000

Bench: Shri G.S. Pannu & Shri Pawan Singhstate Bank Of India Acit Circle (2)(2), Financial Reporting, Compliance & Mumbai. Taxation Department, 19Th Floor, Vs. Corporate Centre, Madam Cama Road, Mumbai-400021. Pan: Aaacs8577K (Appellant) (Respondent) Acit Circle (2)(2), State Bank Of India Mumbai. Financial Reporting, Compliance & Taxation Department, 19Th Floor, Vs. Corporate Centre, Madam Cama Road, Mumbai-400021. Pan: Aaacs8577K (Appellant) (Respondent)

For Respondent: Shri R.P. Meena (CIT-DR)
Section 14ASection 195Section 253Section 254(1)Section 36(1)(viia)Section 40Section 43D

…as submitted that the assessee made investment in subsidiary and investment is strategic investment in support of his submission, the ld. AR relied upon the ITA No. 4736 & 4598/M/2010- State Bank of India decisions of CIT vs. Rajeeva Lochan Kanoria (1994] (208 ITR 616) Calcutta High Court, Garware Wall Repes Ltd. vs. ACIT [2014] taxmann.com 18) Mumbai Tribunal, JM Financial Limited (ITA No. 4521/Mum/2012) (Mumbai Tribunal), Interglobe Enterprises Ltd. Vs. DCIT (ITA No. 1362 & 1032/Del/2013) (Delhi Tribunal, EIH Associated Hotels Ltd. vs. DCIT (ITA No. 1503/Mds/2012) (Chennai Tribunal), CIT vs. Oriental S…

ACIT Cir 2(2), Mumbai vs. State Bank of India, Mumbai

In the result, appeal of the revenue is dismissed

ITA 4598/MUM/2010[1999-00]Status: DisposedITAT Mumbai31 Jan 2018AY 1999-00

Bench: Shri G.S. Pannu & Shri Pawan Singhstate Bank Of India Acit Circle (2)(2), Financial Reporting, Compliance & Mumbai. Taxation Department, 19Th Floor, Vs. Corporate Centre, Madam Cama Road, Mumbai-400021. Pan: Aaacs8577K (Appellant) (Respondent) Acit Circle (2)(2), State Bank Of India Mumbai. Financial Reporting, Compliance & Taxation Department, 19Th Floor, Vs. Corporate Centre, Madam Cama Road, Mumbai-400021. Pan: Aaacs8577K (Appellant) (Respondent)

For Respondent: Shri R.P. Meena (CIT-DR)
Section 14ASection 195Section 253Section 254(1)Section 36(1)(viia)Section 40Section 43D

…as submitted that the assessee made investment in subsidiary and investment is strategic investment in support of his submission, the ld. AR relied upon the ITA No. 4736 & 4598/M/2010- State Bank of India decisions of CIT vs. Rajeeva Lochan Kanoria (1994] (208 ITR 616) Calcutta High Court, Garware Wall Repes Ltd. vs. ACIT [2014] taxmann.com 18) Mumbai Tribunal, JM Financial Limited (ITA No. 4521/Mum/2012) (Mumbai Tribunal), Interglobe Enterprises Ltd. Vs. DCIT (ITA No. 1362 & 1032/Del/2013) (Delhi Tribunal, EIH Associated Hotels Ltd. vs. DCIT (ITA No. 1503/Mds/2012) (Chennai Tribunal), CIT vs. Oriental S…

DCIT, New Delhi vs. M/S. Bharti Ventures Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 6503/DEL/2013[2008-09]Status: DisposedITAT Delhi16 Nov 2017AY 2008-09

Bench: Shri G.D. Agrawal, Hon’Ble & Shri K. Narsimha Chary

Section 143(3)

…SC), Hero Cycles (P) Ltd. – 379 ITR 347 (SC), Srishti Securities P. Ltd. – 321 ITR 498 (Bom.) (501), Phil Corporation Ltd. – 244 CTR 226 (Bom.), Jardine Henderson Ltd. – 210 ITR 981 (Cal.), 5 Distributors Baroda – 83 ITR 377 (SC), Rajeeva Lochan Kanoria - 208 ITR 616 (Cal.), Laxmi Agents – 125 ITR 227 (Guj.) and Premier Poly Sacks (P) Ltd. – 321 ITR 450 (Mad.). The decisions relied upon by the assessee are to the affect that the acquisition of controlling interest in a company is in furtherance of the business purpose of the assessee. In the case on hand the investment was done in the companies which are i…

The ITO, Ward-6(2), Ahmedabad vs. Smt. Mrudulaben Harshadbhai Patel, Ahmedabad

In the result, the appeal of the revenue is dismissed

ITA 3532/AHD/2015[2007-08]Status: DisposedITAT Ahmedabad09 Oct 2017AY 2007-08
For Appellant: Shri Sunil Talati, A.RFor Respondent: Shri V.K. Singh, Sr. D.R
Section 143(2)Section 143(3)Section 36(1)(iii)

…as been utilized for purchase of capital asset. The relevant part of the above judicial pronouncement is reproduced as under:- “8. We may also gainfully refer to the judgment of the Calcutta High Court in Commissioner of Income Tax Vs. Rajeeva Lochan Kanoria, 208 ITR 616. The learned Court was considering section 36(i)(iii) and was pleased to observe as under : "The only enquiry that is to be made is whether the payment of interest was in respect of capital borrowed for the purpose of the assessee's business or profession. (-10-) There is no dispute that the capital was borrowed in the instant case and interest w…

Vineet Mohan Gupta, Bhubaneswar vs. DCIT, CC-Xix, Kolkata

In the result, the appeal of the assessee is dismissed

ITA 374/KOL/2014[2011-12]Status: DisposedITAT Kolkata06 Feb 2017AY 2011-12

Bench: : Shri Partha Sarathi Chaudhury & Shri Dr. Arjun Lal Saini

For Appellant: Shri Akkal Dudhuewala, ld.ARFor Respondent: Md. Ghyas Uddin, JCIT, ld.DR
Section 143(2)

…further aggrieved, the assessee has preferred this appeal before us. 8. At the time of hearing before us the ld. AR of the assessee argued by relying on the decision of the Hon’ble Calcutta High Court in the case of CIT Vs. Rajeev Lochan Kanoria reported in 208 ITR 616 (Cal HC), wherein the ratio laid out that where the assessee has advanced interest free loans and/ or made investments in controlled companies or concerns which he manages, administers & finance for business/professional purposes, then any interest corresponding to such loans/investments is allowable as being incurred for business purposes. The l…

Bhagirath Chandulal Arya, Mumbai vs. Pr CIT 18, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 931/MUM/2016[2011-12]Status: DisposedITAT Mumbai11 Jan 2017AY 2011-12

Bench: Shri D. Karunakara Rao & Shri Ravish Sood

For Appellant: Dr. K. Shivaram, Sr. AdvocateFor Respondent: Shri N.P. Singh, CIT-DR
Section 10Section 143(3)Section 263

…n and Managing Director of M/s. JBF and such activity constitutes „vocation‟, which falls in the meaning of „business activity‟. For this proposition, he relied on the judgment of the Hon‟ble Calcutta High Court in the case of CIT vs. Rajeeva Lochana Kanoria (208 ITR 616) (Cal.) and judgment of the Hon‟ble Guwahati High Court in the case of Nabadwip Chandra Roy vs. CIT [1962] 44 ITR 591. Since, the management and control of interest in the company is a „vocation‟ / business activity, the sale transactions involving 40 lakh shares to the assessee‟s daughter constitutes a „business transaction‟. 5.1. Therefore, as…

M/S Divakar Solar System Ltd., Kolkata vs. DCIT, Cir-10, Kolkata

In the result, the appeal of the assessee is allowed

ITA 1301/KOL/2015[2012-2013]Status: DisposedITAT Kolkata16 Dec 2016AY 2012-2013

Bench: Shri M. Balaganesh, Am & Shri S. S. Viswanethra Ravi, Jm]

For Appellant: Shri S. K. Tulsiyan, AdvocateFor Respondent: Shri Sallong Yaden, Addl. CIT
Section 143(3)Section 40A(2)

…Divakar Solar System Ltd., AY 2012-13 can be held to be a profession within the meaning of section 2(36) of the Act. Reliance in this regard was placed on the decision of the Hon’ble Calcutta High Court in the case of CIT vs Rajeeva Lochan Kanoria reported in 208 ITR 616 (Cal) . In the light of all these submissions together with the various case laws relied upon, the assessee pleaded that the interest paid to the tune of Rs. 5,34,24,658/- is squarely allowable as deduction. The ld CIT(A) however did not appreciate these contentions and upheld the action of the ld AO. Aggrieved, the assessee is in appeal before u…

Mr Bharat Jain, Kolkata vs. ITO, WD-8(1), Kolkata

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 1019/KOL/2016[2008-09]Status: DisposedITAT Kolkata09 Dec 2016AY 2008-09

Bench: Shri M. Balaganesh, Am & Shri S. S. Viswanethra Ravi, Jm]

For Appellant: Shri Soumitra Choudhury, AdvocateFor Respondent: Shri H. R. Singh, JCIT
Section 143(3)Section 36(1)(iii)

…he interest of the assessee’s business, interest paid on such borrowed funds is deductible u/s 36(1)(iii) of the Act. Reliance in this regard was placed on the decision of the Hon’ble Calcutta High Court in the case of CIT vs Rajeev Lochan Kanoria reported in 208 ITR 616 (Cal). The assessee is the director of eleven companies and earned Directors Remuneration of 3 Bharat Jain, AY 2008-09 Rs.17,40,000/- during the year under review. The directorship is also a vocation and for gaining control of other companies, the borrowed money had been utilized. It was also submitted that the ld AO had ignored the factum of rec…

D.C.I.T. Cir-12, Kolkata vs. Usha Martin Telematics Limited, Kolkata

In the result, the appeal filed by the assessee on this ground is dismissed

ITA 838/KOL/2009[2004-05]Status: DisposedITAT Kolkata21 Sept 2016AY 2004-05

Bench: Shri N.V.Vasudevan, J.M. &Dr.A.L.Saini, A.M.)

For Appellant: Shri Nageswar Rao, AdvocateFor Respondent: G. Mallikarjuna, CIT-DR
Section 115JSection 143(1)Section 143(3)

…pplicable to the income tax matters; vi. The expenditure incurred for the purpose of obtaining loan was considered to be a revenue expenditure in view of the following judicial decisions: a.Ambika Prasad Sonar V. CIT 168 ITR 444 b.CIT Vs. RajeevaLochan (1994) 208 ITR 616 ( Kolkata H.C) c.CITVs.Jardine Henderson Ltd. (1994) 210 ITR 981 (Cal) d.SA Builders Ltd. Vs. CIT 289 ITR 261 e. CIT Vs. Dalmic Cement Bharati Ltd (2002) 254 ITR 377 However, the ld CIT (A) rejected the stand taken by the assessee and held that interest expenditure incurred is on account of capital investment and accordingly the interest expendi…

DCIT 10(2)(2), Mumbai vs. Aditya Birla Minacs Worldwide Ltd, Mumbai

In the result, appeal of the assessee is allowed on this ground

ITA 4790/MUM/2015[2009-10]Status: DisposedITAT Mumbai25 Aug 2016AY 2009-10

Bench: Shri R.C. Sharma & Shri Amit Shukla

For Appellant: Shri Rajan VoraFor Respondent: Rupinder Bror CIT (DR)
Section 143Section 143(3)Section 154Section 92C

…o relied on the following judgments wherein it has been held that interest paid on borrowed funds for the purpose of acquiring controlling interest in the company is allowable expenditure: 1. Shrishti Securities 321 ITR 498 ( H.C.Bom) 2. Rajeev Lochan Kanoria 208 ITR 616 ( Cal. H.C) Therefore, based on the above cited facts and circumstances and position in case law, the interest expenditure incurred by the assessee is out of commercial exigency of the business and hence should be allowed as business expenditure under section 36 (1) (iii) of the Act, and we accordingly direct the Ld. CIT (A) / AO to delete the ad…

Minacs P. Ltd, Mumbai vs. DCIT 10(1)(1), Mumbai

In the result, appeal of the assessee is allowed on this ground

ITA 4276/MUM/2015[2009-10]Status: DisposedITAT Mumbai25 Aug 2016AY 2009-10

Bench: Shri R.C. Sharma & Shri Amit Shukla

For Appellant: Shri Rajan VoraFor Respondent: Rupinder Bror CIT (DR)
Section 143Section 143(3)Section 154Section 92C

…o relied on the following judgments wherein it has been held that interest paid on borrowed funds for the purpose of acquiring controlling interest in the company is allowable expenditure: 1. Shrishti Securities 321 ITR 498 ( H.C.Bom) 2. Rajeev Lochan Kanoria 208 ITR 616 ( Cal. H.C) Therefore, based on the above cited facts and circumstances and position in case law, the interest expenditure incurred by the assessee is out of commercial exigency of the business and hence should be allowed as business expenditure under section 36 (1) (iii) of the Act, and we accordingly direct the Ld. CIT (A) / AO to delete the ad…

Aditya Birla Minacs Worldwide Ltd, Mumbai vs. Jt CIT OSD 8(1), Mumbai

In the result, appeal of the assessee is allowed on this ground

ITA 620/MUM/2013[2008-09]Status: DisposedITAT Mumbai25 Aug 2016AY 2008-09

Bench: Shri R.C. Sharma & Shri Amit Shukla

For Appellant: Shri Rajan VoraFor Respondent: Rupinder Bror CIT (DR)
Section 143Section 143(3)Section 154Section 92C

…o relied on the following judgments wherein it has been held that interest paid on borrowed funds for the purpose of acquiring controlling interest in the company is allowable expenditure: 1. Shrishti Securities 321 ITR 498 ( H.C.Bom) 2. Rajeev Lochan Kanoria 208 ITR 616 ( Cal. H.C) Therefore, based on the above cited facts and circumstances and position in case law, the interest expenditure incurred by the assessee is out of commercial exigency of the business and hence should be allowed as business expenditure under section 36 (1) (iii) of the Act, and we accordingly direct the Ld. CIT (A) / AO to delete the ad…

JCIT (OSD) 8(1), Mumbai vs. Aditya Birla Minacs Worldwide Ltd ( Formelry Known As Transworks Information Services Ltd), Mumbai

In the result, appeal of the assessee is allowed on this ground

ITA 610/MUM/2013[2008-09]Status: DisposedITAT Mumbai25 Aug 2016AY 2008-09

Bench: Shri R.C. Sharma & Shri Amit Shukla

For Appellant: Shri Rajan VoraFor Respondent: Rupinder Bror CIT (DR)
Section 143Section 143(3)Section 154Section 92C

…o relied on the following judgments wherein it has been held that interest paid on borrowed funds for the purpose of acquiring controlling interest in the company is allowable expenditure: 1. Shrishti Securities 321 ITR 498 ( H.C.Bom) 2. Rajeev Lochan Kanoria 208 ITR 616 ( Cal. H.C) Therefore, based on the above cited facts and circumstances and position in case law, the interest expenditure incurred by the assessee is out of commercial exigency of the business and hence should be allowed as business expenditure under section 36 (1) (iii) of the Act, and we accordingly direct the Ld. CIT (A) / AO to delete the ad…

ITO, Ward-32(2), Kolkata vs. M/S. Raghunath Exporters, Kolkata

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

ITA 2166/KOL/2014[2010-2011]Status: DisposedITAT Kolkata10 Aug 2016AY 2010-2011

Bench: Shri P.M. Jagtap

Section 143(3)

…ee, even if it was out of borrowed funds, were for the purpose of controlling interest of the assessee, the interest was allowable u/s 36(1 )(iii) of the Act. Similar view has been decided by the Calcutta High Court in the case of CIT vs. Rajiv Lochan Kanoria 208 ITR 616 (Cal.)”. 12. I have heard the arguments of both the sides and also perused the relevant material available on record. Besides reiterating the arguments raised on behalf of the assessee before the authorities below showing the commercial expediency of the advances in question given to the sister concerns, the ld. counsel for the assessee has invi…

M/S. Tata Industries Ltd, Mumbai vs. The ITO 2(3)(3), Mumbai

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

ITA 4894/MUM/2008[2004-2005]Status: DisposedITAT Mumbai20 Jul 2016AY 2004-2005

Bench: Shri G. S. Pannu, Accoutant Member & Shri Sanjay Gargtata Industries Ltd., Vs. The Income Tax Officer, Ward- Bombay House,24,Homi 2 (3) (3), Room No.555, Mody Street, Fort, Mumbai Aayakar Bhavan, Maharshi 400 001 Karve Road, Mumbai 400 020 Pan: Aaact 4058 L Appellant .. Respondent Appellant By Shri Dinesh Vyas, Ar Respondent By Shri Alok Johri, Dr Date Of Hearing 22-06-2016 Date Of Pronouncement 20-07-2016

Section 10ASection 115JSection 14ASection 36

…es borrowed for the purchase of shares in Group Companies for the purpose of holding controlling interest which was deductible u/s. 36(1) (iii) of the Income Tax Act. The assessee in this respect relied on the Calcutta High Court case of Rajeev Lochan Kanoria 208 ITR 616, Indian Bank Ltd. 56 ITR 77 (SC), Rajasthan State Warehousing Corporation- 242 ITR 450(SC) and Taj Trade and Investment Ltd. of Hon’ble ITAT, Mumbai ‘A’ Bench ITA No.3374/M/1994. In view of assessee’s reply about its activity of investment in group companies share for the purpose of controlling interest and allowability of interest u/s. 36(1)(iii…

DCIT Cir 3(3), Mumbai vs. Videocon Industries Ltd, Mumbai

In the result, the Revenue’s appeal for A

ITA 5715/MUM/2013[2008-09]Status: DisposedITAT Mumbai31 May 2016AY 2008-09

Bench: Shri Jason P. Boaz & Shri Sandeep Gosaindcit, Circle 3(3) Ms/ Videocon Industires Ltd. Room No. 609, 6Th Floor 171-C, Mittal Court Vs. Àayakar Bhavan, M.K. Road Nariman Point Mumbai 400020 Mumbai 400021 Pan - Aabcv4012H Appellant Respondent

For Appellant: Shri G.M. DossFor Respondent: Shri Shailesh S. Shaw
Section 143(3)Section 147Section 148Section 154Section 36(1)(iii)

…purpose of its business. This view is also in accordance with the decision of the Bombay High Court in the case of CIT v. Reliance Communication Infrastructure Ltd. 207 Taxman 219 (Bom.), Calcutta High Court in the case of CIT v. Rajeeva Lochan Kanoria [1994] 208 ITR 616 (CAL) and the decision of the Karnataka High Court in the case of CIT v. Anand Technology Resource Park (P.) Ltd. 202 Taxman 654 (KAR). (vi) The share application being advanced by the appellant company for the purpose of business and commercial expediency, the interest expenditure on loan taken for the said purpose is allowable as per the decisi…

A.C.I.T., Cir-II, Kolkata vs. M/S. Philips Electronics India Ltd., Kolkata

In the result, both the appeals of the assessee as well as the revenue are partly allowed

ITA 1928/KOL/2008[1999-2000]Status: DisposedITAT Kolkata03 Feb 2016AY 1999-2000

Bench: : Shri M. Balaganesh

For Appellant: Shri K.R Vasudevan, Advocate, ld.ARFor Respondent: Shri S. Srivastava, CIT/ ld.DR
Section 115JSection 143(3)Section 147

…erged with the assessee company. The dividend income earned thereon was only incidental income derived by the assessee. He placed reliance on the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs Rajeeva Lachan Kanoria reported in (1994) 208 ITR 616 (Cal) in this regard. These facts argued by the Learned AR are not controverted by the revenue before us. The next argument advanced by the Learned AR is that the said disallowance u/s 14A of the Act amounting to Rs. 17,71,201/- was not debited by the assessee in its profit and loss account, hence the provisions of Clause (f) of Explanation to Se…