East India Pharmaceutical Works Ltd. v. CIT

224 ITR 627Supreme Court of India1997#694 most cited

What is East India Pharmaceutical Works Ltd. v. CIT authority for?

Where an assessee has mixed funds (both interest-bearing and interest-free funds) and makes an interest-free advance or investment, it is presumed that the interest-free funds were utilized first if they are sufficient to cover such advances or investments. This prevents disallowance of interest on borrowed funds under Section 36(1)(iii).

146

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2015 to 2026.

Also referred to as

East India Pharmaceutical Works Ltd v CIT · 224 ITR 627 · Section 36(1)(iii) · interest disallowance · mixed fund theory · interest free advances · borrowed funds · commercial expediency · presumption of utilization · interest on borrowed capital

Also reported as

91 Taxmann 185

Sections most often in play

Section 143(1)Section 143(3)Section 1961Section 36(1)(iii)Section 144C(1)Section 144C(5)Section 194JSection 195
Read the full judgment

Issues it is cited on

interest free advancessection 36(1)(iii)advance taxcommercial expediencysection 32section 36(1)section 36section 40(a)capital expendituresection 37(1)section 40section 37

Judgments citing East India Pharmaceutical Works Ltd. v. CIT

Sharekhan Ltd, Mumbai vs. ACIT CC 3(3), Mumbai

ITA 468/MUM/2017[2012-13]Status: DisposedITAT Mumbai03 Jul 2018AY 2012-13

Bench: Shri Joginder Singh & Shri N.K. Pradhan

Section 14ASection 36(1)(iii)

…both by the Commissioner (Appeals) and the Tribunal. The interest was deductible. 2.2. We note that the Hon'ble High Court, while coming to the aforesaid conclusion, relied upon the decisions in the case of EAST INDIA PHARMACEUTICAL WORKS LTD. v. CIT [1997] 224 ITR 627 (SC) and WOOLCOMBERS OF INDIA LTD. v. CIT [1982] 134 ITR 219 (Cal) and also considered the cases in S. A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1 (SC) (para 3) and Woolcombers of India Ltd. v. CIT [1982] 134 ITR 219 (Cal). 2.3. (2014) 366 ITR 505(Bom.), the Hon'ble High Court held as under:- Held, dismissing the appeal, (i) that the…

Hero Motocorp Ltd., New Delhi vs. Addl.CIT, Range-11, New Delhi

In the result ground No

ITA 6990/DEL/2017[2013-14]Status: DisposedITAT Delhi20 Jun 2018AY 2013-14

Bench: Shri R. K. Panda & Ms Suchitra Kamblei.T.A. No. 6990/Del/2017 (A.Y 2013-14)

Section 143(3)Section 144C

…uring the year. In such circumstances, it is to be presumed that only interest free funds have been utilized for making investments during the year. Reference, in this regard, is made to the following decisions:  East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627 (SC)  Woolcombers of India Ltd. v. CIT: 134 ITR 219 (Cal.)  Indian Explosives Ltd. V. CIT: 147 ITR 392 (Cal.)  Alkali & Chemicals Corp of India Ltd. v CIT: 161 ITR 820 (Cal)  -CIT v Radico Khaitan Ltd : 274 ITR 354 (All)  CIT v Dhampur Sugar Mills Ltd : 274 ITR 370 (All)  CIT v. United Collieries Ltd. : 49 Taxman 227 (Cal)  CIT v. Enamour…

DCIT 1(1)(1), Mumbai vs. Bennet Coleman & Company Ltd, Mumbai

In the result, both the appeals of Revenue are dismissed

ITA 1952/MUM/2016[2011-12]Status: DisposedITAT Mumbai15 Jun 2018AY 2011-12

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

Section 143(3)Section 14A

…sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. [1982] 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft…

DCIT, Cir-6, Kolkata vs. M/S Cesc Ltd., Kolkata

In the result, the appeal of revenue is dismissed and appeal of assessee is partly allowed for statistical purposes

ITA 1304/KOL/2014[2010-2011]Status: DisposedITAT Kolkata13 Jun 2018AY 2010-2011

Bench: "ी ऐ. ट". वक", "यायीक सद"य एवं/And "ी एम .बालागणेश, लेखा सद"य) [Before Shri A. T. Varkey, Jm & Shri M. Balaganesh, Am] I.T.A. No. 1304/Kol/2014 Assessment Year: 2010-11

Section 119Section 139Section 194CSection 40Section 40(1)(ia)

…ld be out of the interest free funds available with the assessee. Similar views were expressed in the following decisions:- Woolcombers of India Ltd. –vs.- CIT reported in 134 ITR 219 (Cal.) East India Pharmaceuticals Works Ltd. –vs.- CIT reported in (1997) 224 ITR 627 (SC). We find that though the decision in the case of Reliance Utilities power Ltd. was rendered in the context of allowability of interest u/s 36(1)(iii) of the Act, the analogy drawn thereon would apply with equal force for adjudicating the issue of disallowance u/s 14A of the Act. We also find that the Hon’ble Bombay High Court in the case of…

Cesc Limited, Kolkata vs. The DCIT RG-6, Kolkata

In the result, the appeal of revenue is dismissed and appeal of assessee is partly allowed for statistical purposes

ITA 1187/KOL/2014[2010-2011]Status: DisposedITAT Kolkata13 Jun 2018AY 2010-2011

Bench: "ी ऐ. ट". वक", "यायीक सद"य एवं/And "ी एम .बालागणेश, लेखा सद"य) [Before Shri A. T. Varkey, Jm & Shri M. Balaganesh, Am] I.T.A. No. 1304/Kol/2014 Assessment Year: 2010-11

Section 119Section 139Section 194CSection 40Section 40(1)(ia)

…ld be out of the interest free funds available with the assessee. Similar views were expressed in the following decisions:- Woolcombers of India Ltd. –vs.- CIT reported in 134 ITR 219 (Cal.) East India Pharmaceuticals Works Ltd. –vs.- CIT reported in (1997) 224 ITR 627 (SC). We find that though the decision in the case of Reliance Utilities power Ltd. was rendered in the context of allowability of interest u/s 36(1)(iii) of the Act, the analogy drawn thereon would apply with equal force for adjudicating the issue of disallowance u/s 14A of the Act. We also find that the Hon’ble Bombay High Court in the case of…

Hero Motocorp Ltd., New Delhi vs. DCIT, New Delhi

In the result appeal No. 2424/Del/ 2015 filed by the revenue in assessment year 2010-11 is partly allowed

ITA 1616/DEL/2017[2012-13]Status: DisposedITAT Delhi13 Jun 2018AY 2012-13

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

Section 143(3)Section 144CSection 92C

…uring the year. In such circumstances, it is to be presumed that only interest free funds have been utilized for making investments during the year. Reference, in this regard, is made to the following decisions: • East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627 (SC) • Woolcombers of India Ltd. v. CIT: 134 ITR 219 (Cal.) • Indian Explosives Ltd. V. CIT: 147 ITR 392 (Cal.) • Alkali & Chemicals Corp of India Ltd. v CIT: 161 ITR 820 (Cal) • -CIT v Radico Khaitan Ltd : 274 ITR 354 (All) • CIT v Dhampur Sugar Mills Ltd : 274 ITR 370 (All) • CIT v. United Collieries Ltd. : 49 Taxman 227 (Cal) • CIT v. Enamour…

ACIT, Central Circle-4(1), Kolkata vs. M/S Jay Shree Tea & Industries Ltd., Kolkata

In the result, the appeal of revenue is partly allowed for statistical purposes

ITA 37/KOL/2017[2013-14]Status: DisposedITAT Kolkata08 Jun 2018AY 2013-14

Bench: Shri A. T. Varkey, Jm & Dr. A. L. Saini, Am] I.T.A. No. 37/Kol/2017 Assessment Year: 2013-14

Section 14A

…out of the interest free funds available with the assessee. 6.1. Similar views were expressed in the following decisions:- Woolcombers of India Ltd. –vs.- CIT reported in 134 ITR 219 (Cal.) East India Pharmaceuticals Works Ltd. –vs.- CIT reported in (1997) 224 ITR 627 (SC). 6.2. We find that though the decision in the case of Reliance Utilities power Ltd. was rendered in the context of allowability of interest u/s 36(1)(iii) of the Act, the analogy drawn thereon would apply with equal force for adjudicating the issue of disallowance u/s 14A of the Act. We also find that the Hon’ble Bombay High Court in the c…

DCIT, New Delhi vs. M/S. Vipul Ltd., New Delhi

In the result, the appeal of the Revenue and the cross objection of the

ITA 5115/DEL/2015[2006-07]Status: DisposedITAT Delhi31 May 2018AY 2006-07

Bench: Shri R.S. Syal & Smt. Beena A. Pillaiassessment Year : 2006-07 Dcit, Vs. Vipul Ltd., 9-A, 3Rd Floor, Vasant Square Mall, Circle-26(2), Cr Building, Sector-B, Pocket-5, New Delhi. Vasant Kunj, New Delhi. Pan: Aaaca5396C

For Appellant: Shri Rajesh Arora, CAFor Respondent: Shri S.L. Anuragi, Sr. DR
Section 143(3)Section 147Section 148Section 36(1)(iii)

…d at the same time the assessee had raised a loan, it can be presumed that the investments were from the interest free funds available”. Thereafter, the judgment of the Hon’ble Supreme Court in the case of East India Pharmaceutical Works Ltd. Vs. CIT (1997) 224 ITR 627 (SC) and also the judgment of the Hon’ble Calcutta High Court in Woolcombers of India Ltd. Vs. CIT (1981) 134 ITR 219 (Cal) were considered. It was finally concluded that: “The principle, therefore, would be that if there are funds available both interest free and overdraft and/or loans taken, then a 6 CO No.185/Del/2017 presumption would aris…

JCIT, (OSD), Cir-4(1), Kolkata vs. M/S Jay Shree Tea & Industries Ltd., Kolkata

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

ITA 737/KOL/2016[2012-2013]Status: DisposedITAT Kolkata23 May 2018AY 2012-2013

Bench: Shri A. T. Varkey, Jm & Dr. A. L. Saini, Am आयकरअपीलसं./Ita Nos.736 & 737/Kol/2016 ("नधा"रणवष" / Assessment Years: 2009-10 & 2012-13) Jcit (Osd), Cir-4(1), Kolkata Vs. M/S. Jay Shree Tea & Industries Ltd. P-7, Chowringhee Square, 10, Camac Street, Industry House, 15Th Floor, Kolkata – Kolkata – 700 069. 700 017. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Aaacj 7788 D (Appellant) .. (Respondent)

For Appellant: Shri G. Mallikarjuna, CIT-DRFor Respondent: Shri B. K. Chaturvedi, AR
Section 143Section 143(3)Section 147Section 148Section 14A

…be out of the interest free funds available with the assessee. 6.1. Similar views were expressed in the following decisions:- Woolcombers of India Ltd. -vs.- CIT reported in 134 ITR 219 (Cal.) East India Pharmaceuticals Works Ltd. -vs.- CIT reported in (1997) 224 ITR 627 (SC). 6.2. We find that though the decision in the case of Reliance Utilities power Ltd. was rendered in the context of allowability of interest u/s 36(1)(iii) of the Act, the analogy drawn thereon would apply with equal force for adjudicating the issue of disallowance u/s 14A of the Act. We also find that the Hon'ble Bombay High Court in the cas…

JCIT, (OSD), Cir-4(1), Kolkata vs. M/S Jay Shree Tea & Industries Ltd., Kolkata

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

ITA 736/KOL/2016[2009-2010]Status: DisposedITAT Kolkata23 May 2018AY 2009-2010

Bench: Shri A. T. Varkey, Jm & Dr. A. L. Saini, Am आयकरअपीलसं./Ita Nos.736 & 737/Kol/2016 ("नधा"रणवष" / Assessment Years: 2009-10 & 2012-13) Jcit (Osd), Cir-4(1), Kolkata Vs. M/S. Jay Shree Tea & Industries Ltd. P-7, Chowringhee Square, 10, Camac Street, Industry House, 15Th Floor, Kolkata – Kolkata – 700 069. 700 017. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Aaacj 7788 D (Appellant) .. (Respondent)

For Appellant: Shri G. Mallikarjuna, CIT-DRFor Respondent: Shri B. K. Chaturvedi, AR
Section 143Section 143(3)Section 147Section 148Section 14A

…be out of the interest free funds available with the assessee. 6.1. Similar views were expressed in the following decisions:- Woolcombers of India Ltd. -vs.- CIT reported in 134 ITR 219 (Cal.) East India Pharmaceuticals Works Ltd. -vs.- CIT reported in (1997) 224 ITR 627 (SC). 6.2. We find that though the decision in the case of Reliance Utilities power Ltd. was rendered in the context of allowability of interest u/s 36(1)(iii) of the Act, the analogy drawn thereon would apply with equal force for adjudicating the issue of disallowance u/s 14A of the Act. We also find that the Hon'ble Bombay High Court in the cas…

Dnv Gl As (Formerly Known As Det Norske Veritas As), Mumbai vs. DCIT(It)2(1)(1), Mumbai

In the result, appeal of the assessee stands partly allowed

ITA 3067/MUM/2016[2011-12]Status: DisposedITAT Mumbai02 May 2018AY 2011-12

Bench: Shri Shamim Yahya & Shri Amarjit Singhअयकर ऄपऩल सं./I.T.A. No.3067/Mum/2016 (ननधधारण वषा / Assessment Year : 2011-12) Dnv Gl As बनधम/ The Dcit (Intl. Taxn.), (Formerly Known As Det Norske Veritas 2(1)(1) Air India Building, Vs. 17Th Floor, Nariman Point, As) Equinor Business Park Mumbai-400 021. Tower 3, 6Th Floor Off Bandra-Kurla Complex, Lbs Marg, Kurla (West), Mumbai-400 070. स्थधयऩ लेखध सं./Pan :Aabcd 9812 F (ऄपऩलधथी /Appellant) (प्रत्यथी / Respondent) ..

For Appellant: Shri Virendra SinghFor Respondent: Shri H.N. Singh-CIT-DR

…, the assessee was using Government money for its own purpose and hence, interest on late payment of TDS cannot be held to be an allowable expense. Similar view was also expressed in the case of East India Pharmaceuticals Works Ltd. by the Hon'ble Apex Court (224 ITR 627). 3.3. In the background of aforesaid discussion and precedents we donot find any infirmity in order of the authorities below on this issue. Accordingly, we confirm the same. In the result, appeal of the assessee stands partly allowed. ननधधाररतऩ द्वधरध दधनखल की गई ऄपऩल ऄंशतः मंजफर की जधतऩ है । Order pronounced in the open court on 2/5/2018. अदे…

DCIT 1(1)(1), Mumbai vs. Bennet Coleman & Company Ltd, Mumbai

In the result, this appeal by the Revenue stands dismissed

ITA 1951/MUM/2016[2010-11]Status: DisposedITAT Mumbai09 Mar 2018AY 2010-11

Bench: Shri Shamim Yahya, Am & Shri Amarjit Singh, Jm आयकर अपील सं./I.T.A. No. 1951/Mum/2016 ("नधा"रण वष" / Assessment Year: 2010-11) Dy. Cit-1(1)(1), M/S. Bennet Coleman & Company Ltd. बनाम/ 579, Aayakar Bhawan, Times Of India Bldg., M. K. Road, Mumbai-400 020 Dr. D. N. Road, Fort, Vs. Mumbai-400 001 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaacb 4373 Q (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri S. Venkatraman ""यथ" क" ओर से/Respondent By : Shri R. P. Meena

For Appellant: Shri S. VenkatramanFor Respondent: Shri R. P. Meena
Section 14ASection 14A(1)Section 2(33)

…sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd, v. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. [1982] 134 ITR 219 where a similar issued had arisen ........................................ The principle, therefore, would be that if there are funds available both interest-free and over draft and/or loans taken, then a presumption would arise th…

ACIT 14(2)(1), Mumbai vs. L & T Infrastructure Finance Co.Lt, Mumbai

ITA 4331/MUM/2015[2011-12]Status: DisposedITAT Mumbai14 Feb 2018AY 2011-12

Bench: Shri R.C. Sharma, Am & Shri Ravish Sood, Jm Ita Nos. 4331/Mum/2015 (निर्धारण वषा / Assessment Years:2011-12) Asstt. Commissioner Of M/S L & T Infrastructure Income Tax-14(2)(1), Finance Co. Ltd. 3-B, Laxmi बिधम/ Aayakar Bhawan, Mumbai- Towers, 2Nd Floor, Bandra Vs. 400 020 Kurla Complex, Bandra East, Mumbai-400 051. स्थामी रेखा सं./ जीआइआय सं./ Pan No. Aabcl2283L (अऩीराथी /Revenue) (प्रत्मथी / Assessee) :

For Appellant: NoneFor Respondent: Ms. Amrita Ranjan, D.R
Section 143(1)Section 143(2)Section 143(3)(ii)Section 14A

…ee had raised a loan it can be presumed that the investments were from the interest- free funds available. In our opinion, the Supreme Court in East India P a g e | 10 ACIT Vs. M/S L & T Infrastructure Finance Co. Ltd. Pharmaceutical Works Ltd. v. CIT (1997) 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft…

Addl CIT 1(1), Mumbai vs. Bennett Coleman & Co Ltd, Mumbai

Appeal of the Revenue is dismissed as above

ITA 3537/MUM/2012[2008-09]Status: DisposedITAT Mumbai08 Jan 2018AY 2008-09

Bench: Shri D.T. Garasia & Shri Rajesh Kumarassessment Year: 2008-09 M/S. Bennett Coleman & Addl. Commissioner Of Co. Ltd., Income Tax, The Time Of India Bldg., Range – 1(1), Vs. Dr. D.N. Road, Room No.538, Mumbai – 400 001 Aayakar Bhavan, Pan: Aaacb4373Q M.K. Marg, Mumbai – 400 020 (Appellant) (Respondent) Assessment Year: 2008-09

For Appellant: Shri S. Venkataraman, A.RFor Respondent: Shri Purushottam Kumar, D.R
Section 10(34)Section 14A

…sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. [1982] 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft…

Bennett Coleman & Co. Ltd, Mumbai vs. Asst CIT RG 1(1), Mumbai

Appeal of the Revenue is dismissed as above

ITA 3298/MUM/2012[2008-09]Status: DisposedITAT Mumbai08 Jan 2018AY 2008-09

Bench: Shri D.T. Garasia & Shri Rajesh Kumarassessment Year: 2008-09 M/S. Bennett Coleman & Addl. Commissioner Of Co. Ltd., Income Tax, The Time Of India Bldg., Range – 1(1), Vs. Dr. D.N. Road, Room No.538, Mumbai – 400 001 Aayakar Bhavan, Pan: Aaacb4373Q M.K. Marg, Mumbai – 400 020 (Appellant) (Respondent) Assessment Year: 2008-09

For Appellant: Shri S. Venkataraman, A.RFor Respondent: Shri Purushottam Kumar, D.R
Section 10(34)Section 14A

…sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. [1982] 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft…

Anand Rathi Capital Advisors P.Ltd, Mumbai vs. DCIT Cen Cir 5(1), Mumbai

The appeal of the revenue is dismissed

ITA 7543/MUM/2016[2009-10]Status: DisposedITAT Mumbai03 Jan 2018AY 2009-10

Bench: Shri Rajendra, Am & Shri Ravish Sood, Jm Ita Nos. 7543, 7544, 7515 & 7546/Mum/2016 (निर्धारण वषा / Assessment Years:2009-10, 2011-12, 2013-14 & 2014-15) M/S Anand Rathi Capital Dcit, Central Circle-5(1) Advisors P. Ltd, 47A, 3Rd R. No. 1928, 19Th Floor, बिधम/ Floor, Plot No. 308 Air India Building, Vs. Hanuman Bldg, Perin Nariman Point, Nariman Street, Fort, Mumbai-400 021 Mumbai – 400 001. स्थामी रेखा सं./ जीआइआय सं./ Pan No. Aaacr2791N (अऩीराथी /Assessee) (प्रत्मथी / Revenue) :

For Appellant: Shri Anuj Kisnadwala, A.RFor Respondent: Shri Abhijit Patankar, D.R
Section 132(1)Section 143(3)Section 14ASection 153A

…sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT (1997) 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft…

Anand Rathi Global Finance Ltd, Mumbai vs. DCIT Cen Cir 5(1), Mumbai

The appeal of the revenue is dismissed

ITA 7527/MUM/2016[2012-13]Status: DisposedITAT Mumbai03 Jan 2018AY 2012-13

Bench: Shri Rajendra, Am & Shri Ravish Sood, Jm Ita Nos. 7527 & 7526/Mum/2016 (निर्धारण वषा / Assessment Years:2012-13 & 2014-15) M/S Anand Rathi Global Dcit, Central Circle-5(1) Finance Ltd., 4Th Floor, R. No. 1928, 19Th Floor, बिधम/ Silver Metropolis Bldg., Air India Building, Vs. Western Express Highway, Nariman Point, Goregaon (E), Mumbai-400 021 Mumbai-400 063 स्थायी लेखा सं./जीआइआर सं./ Pan No. Aabcr1136N (अऩीराथी /Assessee) (प्रत्मथी / Revenue) :

For Appellant: Shri Anuj Kisnadwala, A.RFor Respondent: Shri Abhijit Patankar, D.R
Section 132(1)Section 143(3)Section 14ASection 14A(1)Section 153A

…sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT (1997) 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft…

Shilpa Memani, New Delhi vs. ACIT, Circle-24(1), New Delhi

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

ITA 5244/DEL/2017[2011-12]Status: DisposedITAT Delhi18 Dec 2017AY 2011-12

Bench: Shri R.S. Syalassessment Year : 2011-12

For Appellant: Ms Charu Goyal, CA
Section 14ASection 36(1)(iii)

…nd at the same time the assessee had raised a loan, it can be presumed that the investments were from the interest free funds available”. Thereafter, the judgment of the Hon’ble Supreme Court in the case of East India Pharmaceutical Works Ltd. Vs. CIT (1997) 224 ITR 627 (SC) and also the judgment of the Hon’ble Calcutta High Court in Woolcombers of India Ltd. Vs. CIT (1981) 134 ITR 219 (Cal) were considered. It was finally concluded that: “The principle, therefore, would be that if there are funds available 6 both interest free and overdraft and/or loans taken, then a presumption would arise that the investme…

Maruti Suzuki India Ltd., New Delhi vs. Addl. CIT, New Delhi

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

ITA 6021/DEL/2012[2008-09]Status: DisposedITAT Delhi09 Nov 2017AY 2008-09

Bench: Shri N.K. Saini & Shri K.N. Charry

Section 143(3)Section 144CSection 144C(5)Section 14ASection 35DSection 43BSection 92C

…6.9. Ld. AR submitted that in case of mixed pool of funds, the correct method to establish source of investment would be to consider the macro fund/ cash flow position during the year and basing on the decisions in East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627 (SC), Indian Explosives Ltd. V. CIT: 147 ITR 392 (Cal.), Woolcombers of India Ltd. v. CIT: 134 ITR 219 (Cal.) - approved by Supreme Court in the case of East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627, Alkali & Chemical Corp. of India v. CIT: (1986) 161 ITR 820 (Cal.), CIT v. Reliance Utilities and Power Ltd.: 313 ITR 340 (Bom.), CIT vs.…

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

…tax there is presumption that advance tax was paid out of profits and not out of overdraft account disallowance of interest on overdraft as being relatable to payment of advance tax is not justified. 3.3 In East India Pharmaceutical Works Ld. v/s CIT (1997) 224 ITR 627 (SC), provided a guideline in such case in these words “(ii) ..........., the question whether a presumption could be drawn that the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business, would essentially depend upon whether the entire profits had been pumped into the overdra…