CIT v. Shoorji Vallabhdas & Co.

46 ITR 144Supreme Court of India1962#114 most cited

What is CIT v. Shoorji Vallabhdas & Co. authority for?

Income tax is levied only on real income that actually materializes, not on hypothetical or notional income, even if accounting entries suggest otherwise. If no income results, there is no tax liability.

551

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2010 to 2026.

Also referred to as

CIT v. Shoorji Vallabhdas & Co. · 46 ITR 144 · real income theory · notional income · hypothetical income · income tax levy · accrual of income · receipt of income · Section 48 · Income Tax Act 1961

Sections most often in play

Section 143(3)Section 147Section 148Section 37(1)Section 115JBSection 153ASection 1961Section 14A

Issues it is cited on

real income theoryright to receivemercantile system of accountingsection 48section 45section 35section 28loose papersliable to taxsection 145capital expendituresection 37(1)

Judgments citing CIT v. Shoorji Vallabhdas & Co.

M/S Navada Educational Trust, Agra vs. ITO 4(3), Agra

In the result, the assessee’s appeal is treated as allowed for statistical

ITA 296/AGR/2016[2011-12]Status: DisposedITAT Agra21 Nov 2017AY 2011-12

Bench: Shri A. D. Jain & Dr. Mitha Lal Meena

Section 12A

…ical terms and income which can be assessed under the Act should be real income which has been received by or accrued to the assessee or deemed to have been received by or accrued to the assessee. The CIT(A) relied on ‘CIT vs. Shoorji Vallabhdas’, reported as 46 ITR 144 (SC), wherein it was held that: "Income-tax is levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book- k…

DCIT, Ghaziabad vs. M/S. Supreme Ceremics Ltd., Ghaziabad

Appeal of the Revenue is dismissed and that of assessee is partly allowed

ITA 431/DEL/2016[2011-12]Status: DisposedITAT Delhi21 Nov 2017AY 2011-12

Bench: Shri B.P. Jain & Shri Sudhanshu Srivastava[Assessment Year: 2011-12] The D.C.I.T Vs. M/S Supreme Ceramics Ltd Circle 2 C – 154, B.S. Road, Ghaziabad Bulandshahar Road, Industrial Area Ghaziabad Pan : Aaccs 6095 C [Assessment Year: 2011-12] M/S Supreme Ceramics Ltd Vs. The D.C.I.T C – 154, B.S. Road, Circle 2 Bulandshahar Road, Ghaziabad Industrial Area Ghaziabad Pan : Aaccs 6095 C [Appellant] [Respondent] Date Of Hearing : 06.11.2017 Date Of Pronouncement : 21.11.2017 Assessee By : Shri Ashwani Tanena, Adv Shri Acrhit Rehan, Adv

For Appellant: Shri Ashwani Tanena, AdvFor Respondent: Shri S.K. Jain, Sr. DR
Section 2

…463-464 referred to various judgments on the expression "accrues", and then held: "First of all, it is now well settled that income tax cannot be levied on hypothetical income”. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) "... Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even…

M/S. Supreme Ceramics Ltd., New Delhi vs. DCIT, Ghaziabad

Appeal of the Revenue is dismissed and that of assessee is partly allowed

ITA 414/DEL/2016[2011-12]Status: DisposedITAT Delhi21 Nov 2017AY 2011-12

Bench: Shri B.P. Jain & Shri Sudhanshu Srivastava[Assessment Year: 2011-12] The D.C.I.T Vs. M/S Supreme Ceramics Ltd Circle 2 C – 154, B.S. Road, Ghaziabad Bulandshahar Road, Industrial Area Ghaziabad Pan : Aaccs 6095 C [Assessment Year: 2011-12] M/S Supreme Ceramics Ltd Vs. The D.C.I.T C – 154, B.S. Road, Circle 2 Bulandshahar Road, Ghaziabad Industrial Area Ghaziabad Pan : Aaccs 6095 C [Appellant] [Respondent] Date Of Hearing : 06.11.2017 Date Of Pronouncement : 21.11.2017 Assessee By : Shri Ashwani Tanena, Adv Shri Acrhit Rehan, Adv

For Appellant: Shri Ashwani Tanena, AdvFor Respondent: Shri S.K. Jain, Sr. DR
Section 2

…463-464 referred to various judgments on the expression "accrues", and then held: "First of all, it is now well settled that income tax cannot be levied on hypothetical income”. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) "... Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even…

ITO, WD-12(1), Kolkata vs. M/S White Cliff Properties (P) Ltd., Kolkata

In the result, the appeal of the Revenue is dismissed

ITA 1511/KOL/2015[2006-07]Status: DisposedITAT Kolkata10 Nov 2017AY 2006-07

Bench: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi

Section 143(3)Section 251

…63-464 referred to various judgments on the expression "accrues", and then held: "14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. ln CIT v. Shoorji Vallabhdas and Co. [ClT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)l it was held as follows: (ITR p. 148) "...Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even th…

ITO 20(3)(3), Mumbai vs. Shehab Sultan Bohra, Mumbai

Appeal stands partly allowed for statistical purposes

ITA 3692/MUM/2015[2010-11]Status: DisposedITAT Mumbai08 Nov 2017AY 2010-11

Bench: Shri Saktijit Dey, Jm & Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./I.T.A. No.3171/Mum/2015 (िनधा"रण वष" / Assessment Year: 2010-11) Shehab S.Bohra Income Tax Officer 20(3)(3) Flat No. 1202, 12Th Floor Piramal Chamber बनाम/ Yash Height Chsl Parel Nesbit Road Mumbai – 400 012 Vs. Near Union Bank Of India Mazgaon, Mumbai-400 010 (अपीलाथ" /Appellant) (""थ" / Respondent) :

For Appellant: Chetan Karia,Ld. ARFor Respondent: Pooja Swaroop, Ld. DR
Section 143(3)Section 50C

…63-464 referred to various judgments on the expression “accrues”, and then held: “14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) “… Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even tho…

Shehab S Bohra, Mumbai vs. ITO 20(3)(3), Mumbai

Appeal stands partly allowed for statistical purposes

ITA 3171/MUM/2015[2010-11]Status: DisposedITAT Mumbai08 Nov 2017AY 2010-11

Bench: Shri Saktijit Dey, Jm & Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./I.T.A. No.3171/Mum/2015 (िनधा"रण वष" / Assessment Year: 2010-11) Shehab S.Bohra Income Tax Officer 20(3)(3) Flat No. 1202, 12Th Floor Piramal Chamber बनाम/ Yash Height Chsl Parel Nesbit Road Mumbai – 400 012 Vs. Near Union Bank Of India Mazgaon, Mumbai-400 010 (अपीलाथ" /Appellant) (""थ" / Respondent) :

For Appellant: Chetan Karia,Ld. ARFor Respondent: Pooja Swaroop, Ld. DR
Section 143(3)Section 50C

…63-464 referred to various judgments on the expression “accrues”, and then held: “14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) “… Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even tho…

Late Shri Gordhandas S. Garodia, Mumbai vs. DCIT 22(1), Mumbai

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

ITA 5097/MUM/2015[2010-11]Status: DisposedITAT Mumbai01 Nov 2017AY 2010-11

Bench: Shri Saktijit Dey & Shri Rajesh Kumar

For Appellant: Dr. K. Shivram a/sFor Respondent: Shri Abhijit Patankar

…to the respondent-assessee. The Tribunal in the impugned order has correctly held that what has to be taxed is the amount received or accrued and not any notional or hypothetical income. As observed by the Apex Court in CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 "Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which liability to tax is attracted, viz., the accrual of its income or its receipt; but the substance of 17 Late Shri Gordhandas S. Garodia the matter is income, if income does not result, there cannot be a tax, even though in book-keeping an en…

ACIT, New Delhi vs. M/S. Satyam Properties & Finance Ltd., New Delhi

In the result the appeal of the revenue is dismissed

ITA 6691/DEL/2014[2010-11]Status: DisposedITAT Delhi25 Oct 2017AY 2010-11

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: Ms. Rama Jain, AdvocateFor Respondent: Shri Kaushlendra Tiwari, Sr. DR
Section 143(3)Section 40Section 40A(2)(b)Section 92

…rson by somebody. Till then it cannot be said that he has acquired a right to receive the income or that income has accrued to him. In support reliance was placed on the judgment of Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas and Co. (1962)46 ITR 144 (SC) and Godhra Electricity Co. Ltd. vs. CIT 225 ITR 746 (SC). Secondly, it was submitted that ICD was actually a risk free and the same was given to the 100% holding company and hence the risk factor was very low and the rate of interest was higher than the 2 ACIT vs. M/s. Satyam Properties & Finance Ltd. prevailing rate of interest offered by…

Rajat Makan, Delhi vs. ITO, New Delhi

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

ITA 958/DEL/2017[2012-13]Status: DisposedITAT Delhi16 Oct 2017AY 2012-13

Bench: Shri B.P. Jain

For Appellant: Shri Kapil Goel, AdvFor Respondent: Shri T. Vasanthan Sr. DR
Section 143Section 40

…3-464 referred to various judgments on the expression “accrues”, and then held: “14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) “… Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even th…

Smt.Uma Narendra, Bangalore vs. Income-Tax Officer, Bangalore

In the result, the appeal of the assessee is allowed

ITA 2305/BANG/2016[2007-08]Status: DisposedITAT Bangalore13 Oct 2017AY 2007-08

Bench: Shri Sunil Kumar Yadav & Shri Jason P. Boazassessment Year : 2007-08

For Appellant: Smt. Sheetal, AdvocateFor Respondent: Smt. Padmameenakshi, Jt.CIT(DR)(ITAT), Bengaluru
Section 143(1)Section 143(3)Section 147Section 148Section 2(47)(v)Section 53A

…to various judgments on the expression “accrues”, and then held: Page 12 of 14 “14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) “… Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even tho…

Sri. Narayanaswamy, Bangalore vs. ITO, Bangalore

In the result, both the appeals of the assessees are allowed

ITA 648/BANG/2015[2007-08]Status: DisposedITAT Bangalore13 Oct 2017AY 2007-08

Bench: Shri Sunil Kumar Yadav & Shri A.K. Garodia

For Appellant: Smt. Sheetal, AdvocateFor Respondent: Smt. H.L. Sowmya Achar, Addl. CIT(DR)
Section 2(47)Section 53A

…63-464 referred to various judgments on the expression “accrues”, and then held: “14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) “… Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even tho…

Sri. Tejas, Bangalore vs. ITO, Bangalore

In the result, both the appeals of the assessees are allowed

ITA 647/BANG/2015[2007-08]Status: DisposedITAT Bangalore13 Oct 2017AY 2007-08

Bench: Shri Sunil Kumar Yadav & Shri A.K. Garodia

For Appellant: Smt. Sheetal, AdvocateFor Respondent: Smt. H.L. Sowmya Achar, Addl. CIT(DR)
Section 2(47)Section 53A

…63-464 referred to various judgments on the expression “accrues”, and then held: “14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) “… Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even tho…

M/S. K. Chimanlal & Co., (R.F.), Ahmedabad vs. The Jt.CIT, Range-2, Ahmedabad

In the result, the appeal of the assessee is dismissed

ITA 1281/AHD/2015[2011-12]Status: DisposedITAT Ahmedabad11 Oct 2017AY 2011-12
For Appellant: Shri S.N. Divetia, A.RFor Respondent: Prajna Madam, Sr. D.R
Section 143(2)Section 143(3)Section 234BSection 234DSection 250

…(SC). - Highway construction Co. Pvt. Ltd. vs. CIT 199 ITR 702 (Guj.). - CIT vs. Motor Credit Co. Pvt. Ltd. 127 ITR 572. -H. M. Kashi Parekh & Co. vs. CIT 39 ITR 706. - Pune Electric Supply Co. Ltd. vs. CIT 57 ITR 521, 529. - CIT vs. Shoorji Vallabhdas & Co. 46 ITR 144. Decision. The rival submissions have been considered. It is a fact that the appellant -33 advanced interest free loans of Rs.60,85,704/-. The appellant was not able to give convincing reply as to why it did not charge interest on these loans. Further, the appellant submitted during appeal proceedings that unsecured loans of Rs.54,16,046/-are outs…

ACIT, New Delhi vs. M/S. Vaish Co-Operative Adarsh Bank Ltd, New Delhi

Appeal is dismissed

ITA 3428/DEL/2014[2010-11]Status: DisposedITAT Delhi09 Oct 2017AY 2010-11

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

Section 143(3)Section 36(1)(vii)

…ooks of account on the basis of the RBI Guidelines and no interest would be accrued to the assessee in respect of the non performing assets and there is a series of case law on this aspect including the decisions reported in CIT vs. Shoorji Vallabhdas & Co., 46 ITR 144 (SC) (1962), UCO Bank vs. CIT 237 ITR 889 (SC) (1999), CIT vs. Vasisth Chay Vyapar Limited 330 ITR 440 (Del) (2011), CIT vs. Elgi Finance Limited 293 ITR 357 (Madras), CIT vs. Motor Credit Co. Pvt. Ltd. 127 ITR 572 (Madras) (1981) and CIT vs. Nainital Bank Limited 309 ITR 335 (Uttarakhan). He further submitted that in respect of the AY 2009-1…

Commissioner of Income Tax vs. Balbir Singh Maini

The appeals are dismissed with no order as to

C.A. No.-015619-015619 - 2017Supreme Court04 Oct 2017

Bench: HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN

…4 referred to various judgments on the expression “accrues”, and then held: “14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) “… Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot…

Canara Bank, Bangalore vs. JCIT, Bangalore

In the result, the appeal filed by the revenue is dismissed

ITA 931/BANG/2016[2011-12]Status: DisposedITAT Bangalore15 Sept 2017AY 2011-12

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Rao

For Appellant: Shri G.Sarangan, Senior Advocate and Shri S.Ananthan, CAFor Respondent: Shri G.R. Reddy, CIT(DR)
Section 143(3)Section 36(1)(vii)

…principle that income-tax is not leviable on hypothetical income. No income can be taxed unless otherwise accrued and realized. Reliance in this regard can be placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas & Co. (46 ITR 144)(SC) and Godhra Electricity Co. Ltd vs. CIT (225 ITR 746)(SC). This issue was settled by the Hon’ble Madras High Court in the case of Indian Overseas Bank vs. CIT (183 ITR 200). In the light of these judgments, we hold that no income can be taxed on notional basis unless and otherwise income accrued to the assessee. 29. In the result, the appeal…

Canara Bank, Bangalore vs. JCIT, Bangalore

In the result, the appeal filed by the revenue is dismissed

ITA 1493/BANG/2014[2010-11]Status: DisposedITAT Bangalore15 Sept 2017AY 2010-11

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Rao

For Appellant: Shri G.Sarangan, Senior Advocate and Shri S.Ananthan, CAFor Respondent: Shri G.R. Reddy, CIT(DR)
Section 143(3)Section 36(1)(vii)

…principle that income-tax is not leviable on hypothetical income. No income can be taxed unless otherwise accrued and realized. Reliance in this regard can be placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas & Co. (46 ITR 144)(SC) and Godhra Electricity Co. Ltd vs. CIT (225 ITR 746)(SC). This issue was settled by the Hon’ble Madras High Court in the case of Indian Overseas Bank vs. CIT (183 ITR 200). In the light of these judgments, we hold that no income can be taxed on notional basis unless and otherwise income accrued to the assessee. 29. In the result, the appeal…

Joint Commissioner of Income Tax, Bangalore vs. M/S Canara Bank, Bangalore

In the result, the appeal filed by the revenue is dismissed

ITA 1440/BANG/2014[2010-11]Status: DisposedITAT Bangalore15 Sept 2017AY 2010-11

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Rao

For Appellant: Shri G.Sarangan, Senior Advocate and Shri S.Ananthan, CAFor Respondent: Shri G.R. Reddy, CIT(DR)
Section 143(3)Section 36(1)(vii)

…principle that income-tax is not leviable on hypothetical income. No income can be taxed unless otherwise accrued and realized. Reliance in this regard can be placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas & Co. (46 ITR 144)(SC) and Godhra Electricity Co. Ltd vs. CIT (225 ITR 746)(SC). This issue was settled by the Hon’ble Madras High Court in the case of Indian Overseas Bank vs. CIT (183 ITR 200). In the light of these judgments, we hold that no income can be taxed on notional basis unless and otherwise income accrued to the assessee. 29. In the result, the appeal…

Canara Bank vs. Addl.C.I, .T

In the result, the appeal filed by the revenue is dismissed

ITA 979/BANG/2013[2009-10]Status: DisposedITAT Bangalore15 Sept 2017AY 2009-10

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Rao

For Appellant: Shri G.Sarangan, Senior Advocate and Shri S.Ananthan, CAFor Respondent: Shri G.R. Reddy, CIT(DR)
Section 143(3)Section 36(1)(vii)

…principle that income-tax is not leviable on hypothetical income. No income can be taxed unless otherwise accrued and realized. Reliance in this regard can be placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas & Co. (46 ITR 144)(SC) and Godhra Electricity Co. Ltd vs. CIT (225 ITR 746)(SC). This issue was settled by the Hon’ble Madras High Court in the case of Indian Overseas Bank vs. CIT (183 ITR 200). In the light of these judgments, we hold that no income can be taxed on notional basis unless and otherwise income accrued to the assessee. 29. In the result, the appeal…

J.C.I.T vs. M/S Canara Bank

In the result, the appeal filed by the revenue is dismissed

ITA 1035/BANG/2013[2009-10]Status: DisposedITAT Bangalore15 Sept 2017AY 2009-10

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Rao

For Appellant: Shri G.Sarangan, Senior Advocate and Shri S.Ananthan, CAFor Respondent: Shri G.R. Reddy, CIT(DR)
Section 143(3)Section 36(1)(vii)

…principle that income-tax is not leviable on hypothetical income. No income can be taxed unless otherwise accrued and realized. Reliance in this regard can be placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas & Co. (46 ITR 144)(SC) and Godhra Electricity Co. Ltd vs. CIT (225 ITR 746)(SC). This issue was settled by the Hon’ble Madras High Court in the case of Indian Overseas Bank vs. CIT (183 ITR 200). In the light of these judgments, we hold that no income can be taxed on notional basis unless and otherwise income accrued to the assessee. 29. In the result, the appeal…