CIT v. Sutlej Cotton Mills Supply Agency Ltd.

100 ITR 706Supreme Court of India1975#1783 most cited

What is CIT v. Sutlej Cotton Mills Supply Agency Ltd. authority for?

An investment retains its capital nature even if its resale was foreseen and contemplated when made, and the possibility of enhanced values motivated the investment. The classification as a capital asset or stock-in-trade depends on factors like the assessee's intention, frequency of transactions, and acquisition funding.

63

judgments rely on this decision, according to BharatTax’s citation analysis of 366,314 Indian tax judgments — from 2010 to 2025.

Also referred to as

CIT v. Sutlej Cotton Mills Supply Agency Ltd. · 100 ITR 706 · capital asset vs stock-in-trade · capital gains · business income · intention of assessee · foreseeability of resale · enhanced values · frequency of transactions · Section 112(1)

Sections most often in play

Section 143(3)Section 143(2)Section 112(1)Section 115BBESection 115JAASection 133(6)Section 133ASection 139(1)
Read the full judgment

Issues it is cited on

dividend distribution taxshort term capital gainsenduring benefitshort term capital gaincommercial expediencydisallowance under section 14afair market valueliable to taxnon-residentsection 28double taxationsection 115

Judgments citing CIT v. Sutlej Cotton Mills Supply Agency Ltd.

Nowrosjee Wadia and Sons Ltd, Mumbai vs. ITO 2(2)(3), Mumbai

Appeal is partly allowed for statistical purposes

ITA 4133/MUM/2015[2010-11]Status: DisposedITAT Mumbai09 Sept 2019AY 2010-11

Bench: Shri Mahavir Singh () & Shri N.K. Pradhan () Assessment Year: 2010-11

For Appellant: Mr. Ronak Doshi, ARFor Respondent: Ms. Jothi Lakshmi Nayak, DR
Section 143(3)Section 234B

…ubmits that accounting is not decisive for determining the allowability of expenditure. In this regard, reliance is place by him on the decision in CIT v. Sutlej 7 Nowrosjee Wadia and Sons ITA Nos. 4133, 4705 & 5284/Mum/2015 Cotton Mills Supply Agency Ltd. (100 ITR 706) (SC), Kedarnath Jute Mfg. Co. Ltd. CIT (82 ITR 363) (SC). On the other hand the Ld. DR relies on the order of the AO. 6. We have heard the rival submissions and perused the relevant materials on record. The issue relates to other payment of Rs. 78,40,391/- . We are of the considered view that the relevant documents/evidence on it would resolve…

The Addl.CIT, Range-1, Baroda vs. Gujarat Fluorochemeicals Ltd, Baroda

Appeals of the Revenue are dismissed, whereas appeals of the assessee are partly allowed for statistical purpose

ITA 548/AHD/2016[2010-11]Status: DisposedITAT Ahmedabad28 Jun 2019AY 2010-11

Bench: Shri Rajpal Yadav & Shri Pradip Kumar Kediasr. No.

For Appellant: Shri S.N. Soparkar, and Shri Parin Shah, ARFor Respondent: Shri Subhas Bains, CIT-DR and Shri Vinod Tanwani, Sr.DR

…shares began and, therefore, finding of assessing authorities that trading activity of assessee in shares began in 1943 and profits on sale of shares computed on basis of said find was justified - Held, yes 3) CIT Vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (Supreme Court)] Section 2(13) of the Income-tax Act, 961 - Business - Adventure in nature of trade - Assessment year 1956-57 - Assessee company purchased shares and sold part of it -Assessee claimed that shares were purchased by way of investment and profit amount to capital gains - Tribunal found as of fact that assessee purchased shares out o…

Gujarat Flurochemicals Limited, Baroda vs. The Dy.CIT, Circle-1(1), Baroda

Appeals of the Revenue are dismissed, whereas appeals of the assessee are partly allowed for statistical purpose

ITA 117/AHD/2016[2011-12]Status: DisposedITAT Ahmedabad28 Jun 2019AY 2011-12

Bench: Shri Rajpal Yadav & Shri Pradip Kumar Kediasr. No.

For Appellant: Shri S.N. Soparkar, and Shri Parin Shah, ARFor Respondent: Shri Subhas Bains, CIT-DR and Shri Vinod Tanwani, Sr.DR

…shares began and, therefore, finding of assessing authorities that trading activity of assessee in shares began in 1943 and profits on sale of shares computed on basis of said find was justified - Held, yes 3) CIT Vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (Supreme Court)] Section 2(13) of the Income-tax Act, 961 - Business - Adventure in nature of trade - Assessment year 1956-57 - Assessee company purchased shares and sold part of it -Assessee claimed that shares were purchased by way of investment and profit amount to capital gains - Tribunal found as of fact that assessee purchased shares out o…

Gujarat Flurochemicals Limited, Baroda vs. The Addl. CIT, Range-1, Baroda

Appeals of the Revenue are dismissed, whereas appeals of the assessee are partly allowed for statistical purpose

ITA 116/AHD/2016[2010-11]Status: DisposedITAT Ahmedabad28 Jun 2019AY 2010-11

Bench: Shri Rajpal Yadav & Shri Pradip Kumar Kediasr. No.

For Appellant: Shri S.N. Soparkar, and Shri Parin Shah, ARFor Respondent: Shri Subhas Bains, CIT-DR and Shri Vinod Tanwani, Sr.DR

…shares began and, therefore, finding of assessing authorities that trading activity of assessee in shares began in 1943 and profits on sale of shares computed on basis of said find was justified - Held, yes 3) CIT Vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (Supreme Court)] Section 2(13) of the Income-tax Act, 961 - Business - Adventure in nature of trade - Assessment year 1956-57 - Assessee company purchased shares and sold part of it -Assessee claimed that shares were purchased by way of investment and profit amount to capital gains - Tribunal found as of fact that assessee purchased shares out o…

Tha Addl. CIT, Range-1, Baroda vs. M/S. Gujarat Flurochemicals Limited., Baroda

Appeals of the Revenue are dismissed, whereas appeals of the assessee are partly allowed for statistical purpose

ITA 106/AHD/2016[2010-11]Status: DisposedITAT Ahmedabad28 Jun 2019AY 2010-11

Bench: Shri Rajpal Yadav & Shri Pradip Kumar Kediasr. No.

For Appellant: Shri S.N. Soparkar, and Shri Parin Shah, ARFor Respondent: Shri Subhas Bains, CIT-DR and Shri Vinod Tanwani, Sr.DR

…shares began and, therefore, finding of assessing authorities that trading activity of assessee in shares began in 1943 and profits on sale of shares computed on basis of said find was justified - Held, yes 3) CIT Vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (Supreme Court)] Section 2(13) of the Income-tax Act, 961 - Business - Adventure in nature of trade - Assessment year 1956-57 - Assessee company purchased shares and sold part of it -Assessee claimed that shares were purchased by way of investment and profit amount to capital gains - Tribunal found as of fact that assessee purchased shares out o…

Gujarat Fluorochemeicals Ltd, Baroda vs. The Dy.CIT., Circle-1(1)(1), Baroda

Appeals of the Revenue are dismissed, whereas appeals of the assessee are partly allowed for statistical purpose

ITA 135/AHD/2015[2008-09]Status: DisposedITAT Ahmedabad28 Jun 2019AY 2008-09

Bench: Shri Rajpal Yadav & Shri Pradip Kumar Kediasr. No.

For Appellant: Shri S.N. Soparkar, and Shri Parin Shah, ARFor Respondent: Shri Subhas Bains, CIT-DR and Shri Vinod Tanwani, Sr.DR

…shares began and, therefore, finding of assessing authorities that trading activity of assessee in shares began in 1943 and profits on sale of shares computed on basis of said find was justified - Held, yes 3) CIT Vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (Supreme Court)] Section 2(13) of the Income-tax Act, 961 - Business - Adventure in nature of trade - Assessment year 1956-57 - Assessee company purchased shares and sold part of it -Assessee claimed that shares were purchased by way of investment and profit amount to capital gains - Tribunal found as of fact that assessee purchased shares out o…

The DCIT, Circle-1(1), Baroda vs. Gujarat Flurochemicals Ltd., Baroda

Appeals of the Revenue are dismissed, whereas appeals of the assessee are partly allowed for statistical purpose

ITA 2546/AHD/2012[2009-10]Status: DisposedITAT Ahmedabad28 Jun 2019AY 2009-10

Bench: Shri Rajpal Yadav & Shri Pradip Kumar Kediasr. No.

For Appellant: Shri S.N. Soparkar, and Shri Parin Shah, ARFor Respondent: Shri Subhas Bains, CIT-DR and Shri Vinod Tanwani, Sr.DR

…shares began and, therefore, finding of assessing authorities that trading activity of assessee in shares began in 1943 and profits on sale of shares computed on basis of said find was justified - Held, yes 3) CIT Vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (Supreme Court)] Section 2(13) of the Income-tax Act, 961 - Business - Adventure in nature of trade - Assessment year 1956-57 - Assessee company purchased shares and sold part of it -Assessee claimed that shares were purchased by way of investment and profit amount to capital gains - Tribunal found as of fact that assessee purchased shares out o…

Gujarat Flurochemicals Ltd., Baroda vs. The Dy.CIT., Circle-1(1), Baroda

Appeals of the Revenue are dismissed, whereas appeals of the assessee are partly allowed for statistical purpose

ITA 2365/AHD/2012[2009-10]Status: DisposedITAT Ahmedabad28 Jun 2019AY 2009-10

Bench: Shri Rajpal Yadav & Shri Pradip Kumar Kediasr. No.

For Appellant: Shri S.N. Soparkar, and Shri Parin Shah, ARFor Respondent: Shri Subhas Bains, CIT-DR and Shri Vinod Tanwani, Sr.DR

…shares began and, therefore, finding of assessing authorities that trading activity of assessee in shares began in 1943 and profits on sale of shares computed on basis of said find was justified - Held, yes 3) CIT Vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (Supreme Court)] Section 2(13) of the Income-tax Act, 961 - Business - Adventure in nature of trade - Assessment year 1956-57 - Assessee company purchased shares and sold part of it -Assessee claimed that shares were purchased by way of investment and profit amount to capital gains - Tribunal found as of fact that assessee purchased shares out o…

Smt. Shanta Singhvi, Sojat City, Pali vs. ITO, Ward-3, Pali

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

ITA 293/JODH/2018[2012-13]Status: DisposedITAT Jodhpur03 May 2019AY 2012-13

Bench: Shri N.K.Saini & Shri N.K. Choudhryita Nos. 293 & 294/Jodh/2018 (Assessment Year -2012-13

Section 271ASection 271BSection 44A

…n such activities other than business activities. Considering the facts and circumstances of the instant case, and also relying on the ratio in the cases of Raja Bahadur Kamakhya Narain Singh v CIT (77 ITR 253) & CIT Vs. Sutlej Cotton Mills Supply Agency Ltd (100 ITR 706), I find that the Assessing Officer is perfectly correct in imposing penalty of Rs. 25,000/- under section 271A of the Act in this case for not maintaining the books of accounts during the year under consideration, therefore, the same is hereby, sustained. The appellant fails on this issue. The ground Nos. 1 to 5 raised by the appellant regarding…

The Income Tax Officer, Amritsar vs. Sh. Shiv Raj Singh Bawa, Amritsar

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

ITA 407/ASR/2016[2012-13]Status: DisposedITAT Amritsar30 Jan 2019AY 2012-13

Bench: Sh. Sanjay Arora & Sh. N. K. Choudhryi.T.A. No. 407/Asr/2016 Assessment Year: 2012-13

For Appellant: Sh. Charan Dass (D.R.)For Respondent: Sh. Tarun Bansal (Adv.)
Section 143(3)Section 40A(3)

…IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 407/Asr/2016 Assessment Year: 2012-13 vs. Shiv Raj Singh Bawa, Income Tax Officer, c/o Bawa Steel, Ward-4(5), Amritsar G.T. Road, Amritsar [PAN: AGLPB 1944K] (Appellant) (Respondent) Cross Objection No. 11/Asr/2017 (arising out of ITA No. 407/Asr/2016) Assessment Year: 2012-13 Shiv Raj Singh Bawa, vs. Income Tax Officer, c/o Bawa Steel, G.T. Road, Ward-4(5), Amritsar Amritsar [PAN: AGLPB 1944K] (Cross Objector) (Respondent) Appellant by : Sh.…

The DCIT, Circle-3(3), Ahmedabad vs. Shri Vijay Aasumal Keshwani, Ahmedabad

In the result, we set aside the order of the CIT(A) and affirm the action of the AO

ITA 1946/AHD/2016[2013-14]Status: DisposedITAT Ahmedabad29 Jan 2019AY 2013-14

Bench: Shri Pradip Kumar Kedia & Shri Mahavir Prasadआयकर अपील सं./I.T.A. No. 1946/Ahd/2016 ("नधा"रण वष" / Assessment Year : 2013-14)

For Appellant: Shri S. K. Dev, Sr. D.R

…inciple or formula but must depend upon the total impression effect of all the relevant facts and circumstances established in the particular case. 16. In the case of the Commissioner of Income Tax, Nagpur v. M/s Sutlej Cotton Mills Supply Agency Ltd., (1975) 100 ITR 706, the Supreme Court has held that a capital investment and resale do not lose their capital nature merely because the resale was foreseen and contemplated when the investment was made and the possibility of enhanced values motivated the investment. The appellant has also relied upon another decision of Hon'ble ITAT, Mumbai in the case of ITO Vs. D…

Assistant Commissioner of Income-Tax vs. Shri Ranjit Hanmantrao Mohite, Pune

In the result, the appeal of Revenue is dismissed

ITA 1253/PUN/2015[2011-12]Status: DisposedITAT Pune26 Oct 2018AY 2011-12

Bench: Ms. Sushma Chowla, Jm & Shri Anil Chaturvedi, Am

For Appellant: Shri Gaurav BathamFor Respondent: Shri Sanket Joshi
Section 143(3)

…rest of around Rs.15,58,000/- which also goes to proves that the activity of purchase and sale of shares by assessee was a business activity. He also relied on the decision of Hon’ble Supreme Court in the case of CIT Vs. Sutlej Cotton Mills reported in 1975 100 ITR 706, decision of Bangalore Tribunal in the case of C. Niranjan and another Vs. ITO reported in (1994) 49 TTJ (Bang) 1. He further submitted that entries in the books of accounts are not determinative and for this proposition, he relied on the decision of Hon’ble Apex Court in the case of Kedarnath Jute Manufacturing & Co., Vs. CIT reported in (197…

Karimkhan Shahnoorkhan Patel, Aurangabad vs. Income-Tax Officer

In the result, the appeal of assessee is partly allowed

ITA 2272/PUN/2014[2009-10]Status: DisposedITAT Pune08 Oct 2018AY 2009-10

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm

For Appellant: Shri Pramod ShingteFor Respondent: Dr. Vivek Aggarwal
Section 50C

…e transaction of sale-purchase of land can also constitute business transaction if the intention of the assessee right from the stage of purchasing the land was to hold the same for trade [Commissioner of Income Tax Vs. Sutlej Cotton Mills Supply Agency Ltd., 100 ITR 706 (SC)]. In the present case the sequence of events are as under : Events Date Purchase of land by assessee 25-06-2008 Registered Sale deed executed 02-07-2008 Joint Venture Agreement with the co-owners of adjoining 04-07-2008 land Sale of land 26-08-2008 8 ITA No. 2272/PUN/2014, A.Y. 2009-10 9. The intention of the assessee to purchase the land…

Manaz Retail P.Ltd, Mumbai vs. DCIT RG 8(2), Mumbai

In the result, the appeals filed by the assessee and the revenue are partly allowed

ITA 7636/MUM/2016[2006-07]Status: DisposedITAT Mumbai25 Sept 2018AY 2006-07

Bench: Shri Joginder Singh () & Shri N.K. Pradhan () Assessment Year: 2006-07 Manz Retail P. Ltd. Dy. Cit, Range-8(2) Knowledge House, Shyam Aayakarbhavan, M.K. Vs. Nagar, Off. Jogeshwari – Road, Mumbai-400020 Vikhroli Link Road, Jogeshwari (E), Mumbai- 400060. Pan No. Aaacm1978J Respondent Appellant Assessment Year: 2006-07 Dcit-10(2)(2), R. No. Manz Retail P. Ltd. 209, 2Nd Floor, Knowledge House, Shyam Vs. Aayakarbhavan, M.K. Nagar, Off. Jogeshwari – Road, Mumbai-400020 Vikhroli Link Road, Jogeshwari (E), Mumbai- 400060. Pan No. Aaacm1978J Appellant Respondent Assessee By : Mr.Vipul Joshi,Ar Revenue By : Mr. Neil Philip, Dr Date Of Hearing : 10/09/2018 Date Of Pronouncement: 25/09/2018

For Appellant: Mr.Vipul Joshi,ARFor Respondent: Mr. Neil Philip, DR
Section 131Section 143(3)Section 14ASection 68

…onsider the relevant fact, it would be appropriate to examine the legal principles which govern the issue. The Hon’ble Supreme Court, after referring to various other authorities has summarized the principles in CIT v. Sutlej Cotton Mills Supplies Ltd. (1975) 100 ITR 706, thus: “In the absence of any evidence of trading activity in cases of purchase and resale of shares, it has been held that profit arising from the resale is an accretion to the capital. If a transaction is in the assessee's ordinary line of business there can be no difficulty in holding that it is in the nature of trade. But the difficulty arise…

Shri Krishna Shriram, New Delhi vs. ACIT, New Delhi

In the result, both the appeals of the assessee and Revenue are dismissed

ITA 866/DEL/2013[2006-07]Status: DisposedITAT Delhi13 Sept 2018AY 2006-07

Bench: : Shri Amit Shukla & Shri L.P. Sahuassessment Year: 2006-07

Section 143(3)Section 234BSection 263Section 56Section 69

…s 263 the magnitude is also a determining factor to determine the true nature of transactions and not just the frequency. 5. Reliance is also placed on following decisions apart from decisions relied upon by the AO : 180 ITR 208 (Calcutta) - JAIPUR1A BROS LTD 100 ITR 706(SC) - Sutlej Cotton Mills Supply Agency Ltd 33 CCH 650 (1TAT-DEL)- SAT SAHIB SECURITIES LTD In the above case, it is humbly submitted that the following decisions may kindly be considered: 1 Manoj Kumar Samdaria Vs CIT (f2014l 45 taxmann.com 394 (Delhi)/r2014] 223 Taxman 245 (Delhi)(MAG) (Copy Enclosed) where Hon’ble Delhi High Court held that w…

DCIT, New Delhi vs. Sh. Krishna Shriram, New Delhi

In the result, both the appeals of the assessee and Revenue are dismissed

ITA 1417/DEL/2013[2006-07]Status: DisposedITAT Delhi13 Sept 2018AY 2006-07

Bench: : Shri Amit Shukla & Shri L.P. Sahuassessment Year: 2006-07

Section 143(3)Section 234BSection 263Section 56Section 69

…s 263 the magnitude is also a determining factor to determine the true nature of transactions and not just the frequency. 5. Reliance is also placed on following decisions apart from decisions relied upon by the AO : 180 ITR 208 (Calcutta) - JAIPUR1A BROS LTD 100 ITR 706(SC) - Sutlej Cotton Mills Supply Agency Ltd 33 CCH 650 (1TAT-DEL)- SAT SAHIB SECURITIES LTD In the above case, it is humbly submitted that the following decisions may kindly be considered: 1 Manoj Kumar Samdaria Vs CIT (f2014l 45 taxmann.com 394 (Delhi)/r2014] 223 Taxman 245 (Delhi)(MAG) (Copy Enclosed) where Hon’ble Delhi High Court held that w…

Shri Sharad Agrawal, Indore vs. The JCIT Range-4, Indore

In the result, all these three appeals of the Assessees are partly allowed

ITA 153/IND/2013[2009-10]Status: DisposedITAT Indore31 May 2018AY 2009-10

Bench: Shri Kul Bharat & Shri Manish Boradassessment Year : 2009-10

Section 111ASection 143(3)Section 147Section 148

…sale of mutual funds and these been held for very short period. Ld. DR placed reliance on the judgment of Hon'ble Apex court in the case of Raja Bahadur Visheshwara Singh (Deceased) & Ors. Vs. CIT 41 ITR 685 and CIT vs. Sutlej Cotton Mills Supply Agency Ltd. 100 ITR 706. 12. We have heard the rival contention and perused the record placed before us. The common issue before us is that whether from purchase and sale of mutual funds earned by the assessee are to be taxed as short term capital gain or business income. We find that the assessee has been regularly carrying on business of trading of computer items and…

Anita Kumaran, Chennai vs. ACIT Non Corporate Circle 15(1), Chennai

In the result, the appeal of the assessee is allowed pro-

ITA 3163/CHNY/2017[2013-14]Status: DisposedITAT Chennai03 May 2018AY 2013-14

Bench: Shri Abraham P. George & Shri Duvvuru Rl Reddy]

For Respondent: Ms. Vijaya Prabha, IRS, JCIT
Section 14Section 14A

…f the assessee was to maximize the profit on sale of shares and the activity had all attributes of an adventure in the nature of business. Reliance was placed on the judgment of Hon’ble Apex Court in the case of CIT vs. Sutlej Cotton Mills Supply Agency Ltd, 100 ITR 706, Dalhousie Investment Trust Co. Ltd. vs. CIT, 68 ITR 486 and Sardar Indra Singh & Sons Ltd vs. CIT, 24 ITR 415. Now before us, ld. Authorised Representative strongly 6. assailing the orders of the lower authorities submitted that assessee had invested in the equity shares of various companies about five to six years back. According to him, the…

Sanat M. Dalal Securities P.Ltd, Mumbai vs. ITO 4(2)(2), Mumbai

In the result, appeals of assessee are allowed in part in terms indicated hereinabove

ITA 6461/MUM/2012[2009-10]Status: DisposedITAT Mumbai20 Mar 2018AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Ram Lal Negi, Jm

Section 143(3)Section 14ASection 73

…e are of trading in shares. We have also gone through various case laws mentioned in the written submissions and found that directly or indirectly they support the case of the assessee. 13.1 The decision in the case of Sutlej Cotton Mills Supply Agency Ltd in 100 ITR 706 also supports the case of the assessee. In that case the assessee purchased shares in a sister concern and after about, four years sold a portion of the stocks at a profit. The Tribunal held that the transaction was in the nature of a business adventure and that profits were liable to be taxed. While holding so various reasons were ascertained th…

Ramesh G Porwal, Pune vs. Assistant Commissioner of Income-Tax

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

ITA 1727/PUN/2014[2005-06]Status: DisposedITAT Pune16 Mar 2018AY 2005-06

Bench: Ms. Sushma Chowla, Jm & Shri Anil Chaturvedi, Am

For Appellant: Shri R.G. NaharFor Respondent: Shri Dr. Vivek Aggarwal
Section 143(3)Section 14A

…ex court, as under, has neither been disputed nor is disputable: (a) Raja Bahadur Visheshwara Singh V. CIT (1961) 41 ITR 685(SC); (b) Dalhousie Investment Trust Co. Ltd. v. CIT [1968] 68 ITR 486 (SC); (c) CIT v. Sutlej Cotton Mills Supply Agency Ltd. [1975] 100 ITR 706 (SC); (d) A.V. Thomas & Co. Ltd. v. CIT [1963] 48 ITR 67 (SC); (e) CIT v. P.K.N. Co. Ltd. [1966] 60 ITR 65 (SC); and (f) CIT v. Associated Industrial Development Co. (P.) Ltd.[1971] 82 ITR 586 (SC). 5.2.1.1. The Assessing Officer examined the details of the transactions which totaled 198 for the whole year, including multiple transactions that h…