CWT v. Arvind Narottam

173 ITR 479Supreme Court of India1988#7710 most cited

What is CWT v. Arvind Narottam authority for?

A transaction is not taxable if it is a normal business activity and lacks any element of tax evasion or artificiality, even if it reduces tax liability. The commercial expediency of a decision should be assessed from the businessman's perspective, not based on suspicion by the tax department.

14

judgments rely on this decision, according to BharatTax’s citation analysis of 366,315 Indian tax judgments — from 2016 to 2023.

Also referred to as

CWT v. Arvind Narottam · tax avoidance · tax evasion · commercial expediency · business purpose · normal business activity · section 24 · trust deeds · wealth tax

Judgments citing CWT v. Arvind Narottam

ITO3(1), Indore vs. K. K. Patel Finance Ltd., Morena

ITA 988/IND/2019[2009-10]Status: DisposedITAT Indore28 Apr 2023AY 2009-10

Bench: Ms. Suchitra Kamble & Shri B.M. Biyani(Conducted Through Virtual Court) Assessment Year: 2009-10 Ito-3(1) K.K. Patel Finance Ltd. Indore 44, Jiwaji Ganj, बनाम/ Gandhi Aushdhalaya Road, Vs. Morena (Appellant / Assessee) (Respondent / Revenue) Pan: Aabck 4282 G Revenue By Shri P.K. Mishra, Cit-Dr Respondent By None Date Of Hearing 15.12.2022 / 16.03.2023 Date Of Pronouncement 28.04.2023

Section 143(3)Section 68

…er artificial and accordingly the assessee cannot escape from the application of Mc Dowel & Co. doctrine. Such transactions have no financial or economic propriety either. In the result, the Apex Court judgments in the cases of CWT v Arvind Narottamdas (1988) 173 ITR 479 (SC) and Union of India v Playworld Electronics Pvt Ltd (1990) 184 ITR 308 (SC) do not help Page 7 of 19 K.K. Patel Finance Ltd. Assessment year 2009-10 the assessee's case as it has no propriety except tax-evasion. Further, all the three companies have not given the schedules of Balance Sheets, therefore it is not clear whether these amounts…

Brace Iron & Steel P.Ltd, New Delhi vs. Addl.CIT, Special Range-2, New Delhi

In the result, appeal of Assessee is allowed

ITA 8617/DEL/2019[2015-16]Status: DisposedITAT Delhi03 Aug 2021AY 2015-16

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Shri Lakshya Budhira, C.AFor Respondent: Shri Satpal Gulati, CIT-DR

…hat the Assessee is seeking to rely upon is w.r.t. the following ratio decendi propounded by the Hon’ble ITAT: a. The settled position of law that has been reiterated by the Hon’ble ITAT by relying of the decision of the Hon’ble S.C. in Arvid Norattam (1988) 173 ITR 479 (SC) which is that commercial expediency has to be adjudged from the POV of the businessperson, where the Department cannot hold a grudge against the assessee in order to question his/her decision making process, solely on suspicion, surmises and conjectures. See Para 23. 110 ITA.No.8617/Del./2019 M/s. Brace Iron & Steel Pvt. Ltd., New Delhi. b.…

Sowraj Investments Pvt Ltd, Chennai vs. DCIT, Corp Circle-6(2), Chennai

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

ITA 3175/CHNY/2018[2013-14]Status: DisposedITAT Chennai08 Aug 2019AY 2013-14

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy]

For Appellant: Mr.M.Viswanathan,C.A +For Respondent: Mr.R.Clement Ramesh Kumar
Section 143(3)Section 14A

…categorized as tax avoidance measure. This is a normal business activity. The assessee relied on the following judgements. DCIT Vs. BPL Sanyo Finance Ltd. (2009) 312 ITR 63(Kar) C.I.T Vs. Chand Ratan Bagri (2010) 230 CTR 258(Delhi) CWT Vs. Arvind Narotam 173 ITR 479(SC) Azad Bachao Andaolan 263 ITR 706(SC) Vodafone International Holdings Vs. UOI (1999) 8 SCC 667 which water downs the McDowell case. 3. The brief facts of the case are that the Appellant namely, M/s.Sowraj Investments Pvt Ltd., is a company incorporated under the provisions of the Company Act, 1956. It is engaged in the business of investme…

The Dy. DIT (Exemption), Circle-1, Ahmedabad vs. Friends of Wwb India, Ahmedabad

In the result, the appeal of the revenue and cross objection of the assesseee both are dismissed

ITA 1608/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad05 Mar 2019AY 2012-13
For Appellant: Shri Sanjay R. Shah, A.RFor Respondent: Shri S.K. Dev, Sr. D.R
Section 11Section 12ASection 143(3)Section 2(15)

…ramework of law, unless the same fall in the category of colourable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity." This accords with our own view of the matter. In CWT v. Arvind Narottam [1988] 173 ITR 479 (SC), a case under the Wealth-tax Act, three trust deeds for the benefit of the assessee, his wife and children in identical terms were prepared under section 21(2) of the Wealth-tax Act. The Revenue placed reliance on McDowell's case [1985] 154 ITR 148 (SC). Both the learned judges of the Bench of this court gave separate opinions. Chief Justic…

Smt. Annapurna Maheshwari, Indore vs. The ITO-4(1), Indore

In the result I.T.A.No.315/Ind/2012& I

ITA 252/IND/2016[2010-11]Status: DisposedITAT Indore30 Oct 2018AY 2010-11

Bench: Shri Kul Bharat & Shri Manish Borad

Section 10(38)Section 143(3)Section 68

…tax. In the result, the AO's action is fully supported by the Apex Court’s judgment In the case of McDowell v. CTO [1985] 154 ITR 148 (SC) and the appellant's case can not derived any benefit from the series of judgments like Arvind Narottamdas v. CWT (1988) 173 ITR 479 (SC)] and Union of India v Playworld Electronics P. Ltd. (1990) 184 ITR 1308(SC) in view of detailed discussion below. So far as the rule in McDowell & Co. Ltd v Commercial Tax Officer (1985) 154 ITR 148 (SC) is concerned, it still holds the field and hits tax planning's and devices with the clear intent of evasion of tax. In CWT v Arvind Narotta…

Shri Pradeep Maheshwari HUF, Indore vs. The ACIT 3(1), Indore

In the result I.T.A.No.315/Ind/2012& I

ITA 53/IND/2014[2008-09]Status: DisposedITAT Indore30 Oct 2018AY 2008-09

Bench: Shri Kul Bharat & Shri Manish Borad

Section 10(38)Section 143(3)Section 68

…tax. In the result, the AO's action is fully supported by the Apex Court’s judgment In the case of McDowell v. CTO [1985] 154 ITR 148 (SC) and the appellant's case can not derived any benefit from the series of judgments like Arvind Narottamdas v. CWT (1988) 173 ITR 479 (SC)] and Union of India v Playworld Electronics P. Ltd. (1990) 184 ITR 1308(SC) in view of detailed discussion below. So far as the rule in McDowell & Co. Ltd v Commercial Tax Officer (1985) 154 ITR 148 (SC) is concerned, it still holds the field and hits tax planning's and devices with the clear intent of evasion of tax. In CWT v Arvind Narotta…

Smt. Annapurna Maheshwari, Indore vs. The ACIT, 4(1), Indore

In the result I.T.A.No.315/Ind/2012& I

ITA 315/IND/2012[2008-09]Status: DisposedITAT Indore30 Oct 2018AY 2008-09

Bench: Shri Kul Bharat & Shri Manish Borad

Section 10(38)Section 143(3)Section 68

…tax. In the result, the AO's action is fully supported by the Apex Court’s judgment In the case of McDowell v. CTO [1985] 154 ITR 148 (SC) and the appellant's case can not derived any benefit from the series of judgments like Arvind Narottamdas v. CWT (1988) 173 ITR 479 (SC)] and Union of India v Playworld Electronics P. Ltd. (1990) 184 ITR 1308(SC) in view of detailed discussion below. So far as the rule in McDowell & Co. Ltd v Commercial Tax Officer (1985) 154 ITR 148 (SC) is concerned, it still holds the field and hits tax planning's and devices with the clear intent of evasion of tax. In CWT v Arvind Narotta…

Asst CIT 16(3), Mumbai vs. Nishith M. Desai, Mumbai

In the result, appeals of the Revenue are dismissed and appeal of the assessee is partly allowed

ITA 4852/MUM/2015[2005-06]Status: DisposedITAT Mumbai28 Apr 2017AY 2005-06

Bench: Shri D.T. Garasia & Shri Manoj Kumar Aggarwal

For Appellant: Shri Firoze B. Andhyarujina, A.RFor Respondent: Shri N.P. Singh, D.R
Section 143(3)Section 147Section 24Section 57

…g Society, the appellant would have been entitled to deduction of entire interest under section 24 of the Act. So both way the appellant could not have been denied deduction of interest. In this regard, I would like to cite the case of CWT vs Arvind Narottam, 173 ITR 479 (SC), where three trust deeds were executed by Narottam Lalbhai for the benefit of his son Arvind (a minor) in such a manner so as to reduce the wealth tax liability on the assessee (Arvind Narottam). Practically all properties in that case were kept outside the purview of wealth tax through trust deeds executed in a novel way. The matter which w…

ACIT 11(3), Mumbai vs. Nishith Desai, Mumbai

In the result, appeals of the Revenue are dismissed and appeal of the assessee is partly allowed

ITA 2562/MUM/2013[2009-10]Status: DisposedITAT Mumbai28 Apr 2017AY 2009-10

Bench: Shri D.T. Garasia & Shri Manoj Kumar Aggarwal

For Appellant: Shri Firoze B. Andhyarujina, A.RFor Respondent: Shri N.P. Singh, D.R
Section 143(3)Section 147Section 24Section 57

…g Society, the appellant would have been entitled to deduction of entire interest under section 24 of the Act. So both way the appellant could not have been denied deduction of interest. In this regard, I would like to cite the case of CWT vs Arvind Narottam, 173 ITR 479 (SC), where three trust deeds were executed by Narottam Lalbhai for the benefit of his son Arvind (a minor) in such a manner so as to reduce the wealth tax liability on the assessee (Arvind Narottam). Practically all properties in that case were kept outside the purview of wealth tax through trust deeds executed in a novel way. The matter which w…

Nishith M. Desai, Mumbai vs. Addl CIT RG 11(3), Mumbai

In the result, appeals of the Revenue are dismissed and appeal of the assessee is partly allowed

ITA 2439/MUM/2013[2009-10]Status: DisposedITAT Mumbai28 Apr 2017AY 2009-10

Bench: Shri D.T. Garasia & Shri Manoj Kumar Aggarwal

For Appellant: Shri Firoze B. Andhyarujina, A.RFor Respondent: Shri N.P. Singh, D.R
Section 143(3)Section 147Section 24Section 57

…g Society, the appellant would have been entitled to deduction of entire interest under section 24 of the Act. So both way the appellant could not have been denied deduction of interest. In this regard, I would like to cite the case of CWT vs Arvind Narottam, 173 ITR 479 (SC), where three trust deeds were executed by Narottam Lalbhai for the benefit of his son Arvind (a minor) in such a manner so as to reduce the wealth tax liability on the assessee (Arvind Narottam). Practically all properties in that case were kept outside the purview of wealth tax through trust deeds executed in a novel way. The matter which w…

DCIT Cen Cir 8(1), Mumbai vs. Bhuta Investment P.Ltd, Mumbai

ITA 1291/MUM/2015[2008-09]Status: DisposedITAT Mumbai16 Mar 2017AY 2008-09

Bench: Shri Mahavir Singh & Shri Ashwani Tanejaassessment Year: 2008-09

Section 143(3)Section 153A

…e other cases has no relevance to the issue at hand. The decision of Hon'ble Supreme Court in McDwell’s case is not universally applicable, as has been held in the following cases Union of India Vs. Azadi Bachao Andolan 263 ITR 706(SC) CWT Vs Arvind Narottarn 173 ITR 479 (SC). Banyan & Berry Vs. CIT 222 ITR 831 (Guj). Mathuram Agarwal Vs. State of Madhya pradesh 8 SCC 667. We also found that the documents filed by the assessee along with case laws were forwarded by CIT(A) for remand report to the AO vide letter dated 16-12-2013 and vide letter dated 31-12-2013, the AO sent his remand report. Copy of which was giv…

DCIT Cen Cir 8(1), Mumbai vs. Indra Gaggar, Mumbai

In the result, all the appeals of the Revenue are dismissed

ITA 808/MUM/2015[2006-07]Status: DisposedITAT Mumbai30 Nov 2016AY 2006-07

Bench: Shri Rajendra & Shri C.N. Prasadआयकर अपील सं./Ita Nos.808, 1295, 1294, 1296 & 809/M/2015 आयकर अपील सं आयकर अपील सं आयकर अपील सं (िनधा"रण वष" िनधा"रण वष" / Assessment Years: 2006-07, 2007-08, 2008-09, 2009-10 & 2011-12) िनधा"रण वष" िनधा"रण वष" Dcit Cen Cir 8(1), Smt. Indra Gaggar, R.No.656, 6Th Floor, 41-42, 4Th Floor, Aayakar Bhavan, Gaurav Extension, M.K. Road, Film City Road., बनाम/Vs. बनाम बनाम बनाम Mumbai – 400 020 Gokuldham, Goregaon (East), Mumbai – 400 063 Pan: Afxpg3889B (अपीलाथ% अपीलाथ%/Appellant) ("&यथ% "&यथ%/Respondent) अपीलाथ% अपीलाथ% "&यथ% "&यथ% Present For: Assessee By : Shri Anuj Kisnadwala, A.R. Revenue By : Shri P. Ghosh, D.R. सुनवाई क' तारीख/Date Of Hearing : 15.11.2016 सुनवाई क' तारीख सुनवाई क' तारीख सुनवाई क' तारीख घोषणा क' तारीख /Date Of Pronouncement : 30.11.2016 घोषणा क' तारीख घोषणा क' तारीख घोषणा क' तारीख आदेश / O R D E R Per Bench:

For Appellant: Shri Anuj Kisnadwala, A.RFor Respondent: Shri P. Ghosh, D.R
Section 132Section 139(1)Section 143(3)Section 153ASection 27Section 31Section 68

…es has no relevance to the issue at hand. The decision of Hon’ble Supreme Court in McDwell's case is not universally applicable, as has been held in the following cases :- i) Union of India Vs. Azadi Bachao Andolan 263 ITR 706(SC) ii) CWT Vs. Arvind Narottam 173 ITR 479 (SC) iii) Banyan & Berry Vs. CIT 222 ITR 831 (Guj) iv) Mathuram Agarwal Vs. State of Madhyapradesh 8 SCC 667 We also found that the documents filed by the assessee along with case laws were forwarded by CIT(A) for remand report to the AO vide letter dated 16-12-2013 and vide letter dated 31-12-2013, the AO sent his remand report. Copy of which w…

Pr. Commissioner of Income Tax-06 vs. Nitrex Chemicals India Ltd

ITA/248/2016HC Delhi23 Aug 2016

Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MS. JUSTICE DEEPA SHARMA

…o maintain status quo on the basis of an undertaking given by the Trust which is still in operation, the objection raised by the Trust and HUDCO about the locus standi of SGS Constructions is untenable. Placing reliance upon CWT v. Arvind Narottam; (1998) 173 ITR 479 SC, it is also contended that the contractual option and payment of consideration constituted an interest in favour of SGS Constructions and created a right to seek completion of sale and perfection of its title. 38. With regard to order dated 25.06.2013 of DRAT, it is contended that since SGS Constructions was not a party to the said ord…

Pr. CIT Central-3 vs. M/S Seagram Distilleries Pvt.Ltd

ITA/225/2016HC Delhi06 Apr 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

…o maintain status quo on the basis of an undertaking given by the Trust which is still in operation, the objection raised by the Trust and HUDCO about the locus standi of SGS Constructions is untenable. Placing reliance upon CWT v. Arvind Narottam; (1998) 173 ITR 479 SC, it is also contended that the contractual option and payment of consideration constituted an interest in favour of SGS Constructions and created a right to seek completion of sale and perfection of its title. 38. With regard to order dated 25.06.2013 of DRAT, it is contended that since SGS Constructions was not a party to the said ord…