Eastern Investments Ltd. v. CIT

38 ITR 601Supreme Court of India1960#222 most cited

What is Eastern Investments Ltd. v. CIT authority for?

Expenditure must be commercially expedient for carrying on the business, and it is not for revenue authorities to dictate how an assessee should conduct its business. The court will not question the business expediency of a transaction, even if a third party also benefits.

346

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2006 to 2026.

Also referred to as

Eastern Investments Ltd. v. CIT · 38 ITR 601 · commercial expediency · business expediency · related party transaction · enduring benefit · business expenditure · prudent businessman · disallowance of interest expenditure

Sections most often in play

Section 143(3)Section 147Section 148Section 14ASection 37Section 234BSection 40A(2)(b)Section 37(1)

Issues it is cited on

interest on interestaccumulated profitssection 40a(2)(b)commercial expediencyrelated party transactionbusiness expediencysection 194jenduring benefitsection 40a(2)section 14a(2)disallowance of interest expendituresection 36(1)(vii)

Judgments citing Eastern Investments Ltd. v. CIT

M/S. Nicholas Piramal India Ltd., Mumbai vs. ACIT Cir. - 7(1), Mumbai

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

ITA 3927/MUM/2006[2002-2003]Status: DisposedITAT Mumbai20 Feb 2020AY 2002-2003

Bench: Shri Mahavir Singh, Jm & Shri M.Balaganesh, Am M/S. Piramal Enterprises Ltd. Vs. Addl. Commissioner Of Income Tax (Formerly Known As Piramal Circle 7(1), Aayakar Bhavan Healthcare Ltd.,) Mumbai - 400020 (Before Known As Nicholas Piramal India Ltd.,) Piramal Tower, Ganpatrao Kadam Marg Lower Parel, Mumbai-400013 Pan/Gir No.Aaacn4538P (Appellant) .. (Respondent) Addl. Commissioner Of Vs. M/S. Piramal Enterprises Ltd. Income Tax (Formerly Known As Piramal Healthcare Circle 7(1), Aayakar Ltd.,) Bhavan (Before Known As Nicholas Piramal India Mumbai - 400020 Ltd.,) Piramal Tower, Ganpatrao Kadam Marg Lower Parel, Mumbai-400013 Pan/Gir No.Aaacn4538P (Appellant) .. (Respondent) Assessee By Shri Ronak Joshi Revenue By Shri Kumar Padmapani Bora Date Of Hearing 29/11/2019 Date Of Pronouncement 20/02 /2020 आदेश / O R D E R Per M. Balaganesh (A.M): These Cross Appeals In Ita Nos.3927/Mum/2006 & 4066/Mum/2006 For A.Y.2002-03 Arises Out Of The Order By The Ld. Commissioner Of Income Tax (Appeals)-Xix, Mumbai In Appeal No.Cit(A)Xix/It-104/05-06 Dated 31/03/2006 (Ld. Cit(A) In Short) Against The Order Of Assessment Passed U/S.143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As Act) Dated 31/03/2005 By The Ld. Addl. Commissioner Of Income Tax, Range 7(1), Mumbai (Hereinafter Referred To As Ld. Ao). M/S. Piramal Enterprises Ltd.

Section 143(3)

…grounds of commercial expediency and in order to indirectly to facilitate the carrying on the business. The above test in Atherton's case [1925] 10 TC 155 (HL) has been approved by this court in several decisions, e.g. Eastern Investments Ltd. Vs. CIT [1951] 20 ITR 1, CIT Vs. Chandulal Keshavlal and Co. [1960] 38 ITR 2 601 etc. 26. The expression "Commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation but yet it is M/s. Piramal Enterprises Ltd., allowab…

Indus Mobile Distribution P Ltd., Chennai vs. ACIT Central Circle 1(1), Chennai

In the result, the appeals filed by the assessee in ITA Nos

ITA 969/CHNY/2019[2015-16]Status: DisposedITAT Chennai18 Feb 2020AY 2015-16

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Mr. S.Bharath, CITFor Respondent: 20.11.2019
Section 139(1)

…of incurring an expenditure and he cannot step into the shoes of the assessee as how to conduct the business of the assessee. In this connection, reliance can be placed on the decision of Hon’ble Supreme Court in the case of Eastern Investments Ltd. vs. CIT, 20 ITR 1. Recently the Hon’ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd, 345 ITR 241 after referring the above said judgment of Supreme Court, wherein it was held as follows: “19. There is no reason why the OECD guidelines should not be taken as a valid input in the present case in judging the action of the Transfer Pricing Officer. In fac…

Indus Mobile Distribution P Ltd., Chennai vs. ACIT Central Circle 1(1), Chennai

In the result, the appeals filed by the assessee in ITA Nos

ITA 968/CHNY/2019[2008-09]Status: DisposedITAT Chennai18 Feb 2020AY 2008-09

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Mr. S.Bharath, CITFor Respondent: 20.11.2019
Section 139(1)

…of incurring an expenditure and he cannot step into the shoes of the assessee as how to conduct the business of the assessee. In this connection, reliance can be placed on the decision of Hon’ble Supreme Court in the case of Eastern Investments Ltd. vs. CIT, 20 ITR 1. Recently the Hon’ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd, 345 ITR 241 after referring the above said judgment of Supreme Court, wherein it was held as follows: “19. There is no reason why the OECD guidelines should not be taken as a valid input in the present case in judging the action of the Transfer Pricing Officer. In fac…

Indus Mobile Distribution P Ltd., Chennai vs. ACIT Central Circle 1(1), Chennai

In the result, the appeals filed by the assessee in ITA Nos

ITA 967/CHNY/2019[2007-08]Status: DisposedITAT Chennai18 Feb 2020AY 2007-08

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Mr. S.Bharath, CITFor Respondent: 20.11.2019
Section 139(1)

…of incurring an expenditure and he cannot step into the shoes of the assessee as how to conduct the business of the assessee. In this connection, reliance can be placed on the decision of Hon’ble Supreme Court in the case of Eastern Investments Ltd. vs. CIT, 20 ITR 1. Recently the Hon’ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd, 345 ITR 241 after referring the above said judgment of Supreme Court, wherein it was held as follows: “19. There is no reason why the OECD guidelines should not be taken as a valid input in the present case in judging the action of the Transfer Pricing Officer. In fac…

Gbt India Private Limited, Delhi vs. ACIT, Circle-10(1), New Delhi

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

ITA 8965/DEL/2019[2015-16]Status: DisposedITAT Delhi31 Jan 2020AY 2015-16

Bench: Shri N.K. Billaiya & Shri N.K. Choudhary[Assessment Year: 2015-16]

For Appellant: Shri Himanshu S. Sinha, AdvFor Respondent: Shri Surendra Pal, CIT- DR
Section 143(3)

…te to the assessee as to how he should conduct his business and it is not for them to tell the assessee as to what expenditure the assessee can incur. We may refer to a few of these authorities to elucidate the point. In Eastern Investment Ltd. v. CIT, (1951) 20 ITR 1, it was held by the Supreme Court that "there are usually many ways in which a given thing can be brought about in business circles but it is not for the Court to decide which of them should have been employed when the Court is deciding a question under Section 12(2) of the Income Tax Act". It was further held in this case that "it is not necessary…

DCIT, Circle - 10(1), Kolkata vs. M/S. Jayshree Chemicals Ltd., Kolkata

Appeal is dismissed

ITA 1588/KOL/2018[2011-12]Status: DisposedITAT Kolkata13 Dec 2019AY 2011-12

Bench: Shri J.Sudhakar Reddy & Shri S.S.Godaraassessment Year: 2011-12

Section 143(3)

…आयकर अपील"य अधीकरण, "यायपीठ – “"व” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “B” KOLKATA Before Shri J.Sudhakar Reddy, Accountant Member and Shri S.S.Godara, Judicial Member Assessment Year: 2011-12 DCIT, Circle-10(1), M/s Jayshree Chemicals बनाम Aayakar Bhawan, P-7, Ltd., at 31, Chowringhee / Chowringhee Square, 3rd V/s. Road, Kolkata-700 016 Floor, Kolkata-69 [PAN No.AAACJ 6736 B] .. अपीलाथ" /Appellant ""यथ" /Respondent Smt. Ranu Biswas, Addl. CIT-DR अपीलाथ" क" ओर से/By Appellant Shri Arvinid Agarwal, Advocate ""यथ" क" ओर से/By Respondent 18-09-2019 सुनवाई क" तार"ख/Date of Hearing 13-12-20…

The ITO, Ward-2(2)(1), Ahmedabad vs. Shri Jagdishchandra B. Patel, Ahmedabad

In the result, the appeal of the Revenue is dismissed

ITA 2166/AHD/2016[2010-11]Status: DisposedITAT Ahmedabad27 Nov 2019AY 2010-11

Bench: Shri Mahavir Prasad & Shri Waseem Ahmedआयकर अपील सं./Ita No. 2166/Ahd/2016 With C.O.159/Ahd/2016 "नधा"रण वष"/Asstt. Year: 2010-2011 I.T.O, Shri Jagdishchandra B. Patel, Ward-2(2)(1), Vs. 4A, Ketan Society, Ahmedabad. Nr. Sardar Patel Colony, Navjivan Post, Ahmedabad. Pan: Afupp4222L

For Appellant: Shri Dhiren Shah &
Section 48

…er indirectly to facilitate the carrying on the business, may yet be expended wholly and exclusively for the purposes of the trade." The above test was quoted with approval and applied by the Supreme Court in the case of Eastern Investments Ltd. v. CIT [1951] 20 ITR 1.” 12.8 It is also pertinent to note that the assessee by cancelling the agreement with ABPL was able to generate more income and consequently paid more taxes to the government exchequer. As such, there was no loss to the revenue as alleged by the AO in his order. Had the assessee sold the impugned land to ABPL instead of BRL, he could not have earn…

Shri Mahendra Singh Meel, Jaipur vs. Income Tax Officer, Jaipur

In the result, the appeal of the assessee is allowed

ITA 55/JPR/2018[2014-15]Status: DisposedITAT Jaipur29 Oct 2019AY 2014-15

Bench: The Appeal Hearing.”

For Appellant: Shri S.L. Jain (Advocate)For Respondent: Smt. Poonam Rai (DCIT)
Section 57

…clusion that to bring a case within the section, it is not necessary that any income should in fact have been earned as a result of the expenditure. It may be pointed out that an identical view was taken by this court in Eastern Investments Ltd. v. CIT [1951] 20 ITR 1 , 4 (SC), where interpreting the corresponding provision in s. 12(2) of the Indian I.T. Act, 1922, which was ipsissima verba in the same terms as s. 57(iii), Bose J., speaking on behalf of the court, observed: "It is not necessary to show that the expenditure was a profitable one or that in fact any profit was earned." It is indeed difficult to see…

Nalwa Steel Power Limited, New Delhi vs. DCIT, Circle- 17(2), New Delhi

Appeal of the assessee is partly allowed for statistical purpose

ITA 451/DEL/2019[2014-15]Status: DisposedITAT Delhi10 Oct 2019AY 2014-15

Bench: Shri N.K. Billaiya & Shri Suchitra Kambleassessment Year: 2014-15

Section 144CSection 92BSection 92C

…from a passage from the judgment of House of Lords in the case of Atherton vs. British Insulated & Helsbey Cables Ltd. (1925) 10 Tax Cases 155 (HL), referred to with approval by the Hon’ble Supreme Court in the case of CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), which reads as follows: "It was made clear in the above cited cases of Usher’s Wilshire Brewery vs. Bruce (supra) and Smith vs. Incorporated Council of Law Reporting (1914) 5 Tax Cases 477 that a sum of money expended not with a necessity and with a view to direct and immediate benefit to the trade, but voluntarily and on the grounds of comm…

Third Eye Estate (I) Pvt. Ltd., Mumbai vs. ACIT Cir. 15(3)(2), Mumbai

The appeal of the assessee is allowed in terms of our aforesaid observations

ITA 6434/MUM/2016[2012-13]Status: DisposedITAT Mumbai30 Sept 2019AY 2012-13

Bench: Shri M. Balaganesh & Shri Ravish Soodm/S Third Eye Estate (I) Pvt. Ltd. Acit Circle -15(3)(2) B-3301-3302, Oberoi Springs, 4Th Floor, 451 Aayakar Bhavan, Off Link Road, M.K. Road, Vs. Andheri (West), Mumbai – 400021 Mumbai – 400 053

For Appellant: Shri Dharan Gandhi, A.RFor Respondent: Shri Amit Pratap Singh, D.R
Section 143(2)Section 143(3)Section 32Section 45

…ee cannot come in the way of allowability of the said expenditure, if it otherwise satisfies the test of commercial expediency. Our aforesaid view is fortified by the following judicial pronouncements: Sr. No. Particulars 1. CIT Vs. Chandulal Keshavlal & Co. 38 ITR 601 (SC) 2. CIT Vs. Khambhatta Family Trust 215 Taxman 602 (Gujarat) Apart there from, the view taken by the A.O that the personal expenses pertaining to the aforesaid motor car cannot be ruled out, we are afraid cannot be accepted. As the case before us is that of a company, therefore, in our considered view there can be no question of any personal e…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2283/CHNY/2018[2014-15]Status: DisposedITAT Chennai25 Sept 2019AY 2014-15

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…or the Assessing Officer to dictate the assessee as to how the assessee should conduct his business and it is not for him to tell the assessee on what expenditure assessee can incur. The Hon'ble Supreme Court in the case of Eastern Investments Ltd vs. CIT, 20 ITR 1 held that it is not necessary to show expenditure was profitable or in fact any profit was earned. The relevant para is as under:- ITA Nos.2280-83 /2018 :- 67 -: ‘(4) that the transaction was more in the interest of the shareholder Scott than that of the company. The decision of this appeal rests on the true construction of Section 12(2). In ou…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2282/CHNY/2018[2013-14]Status: DisposedITAT Chennai25 Sept 2019AY 2013-14

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…or the Assessing Officer to dictate the assessee as to how the assessee should conduct his business and it is not for him to tell the assessee on what expenditure assessee can incur. The Hon'ble Supreme Court in the case of Eastern Investments Ltd vs. CIT, 20 ITR 1 held that it is not necessary to show expenditure was profitable or in fact any profit was earned. The relevant para is as under:- ITA Nos.2280-83 /2018 :- 67 -: ‘(4) that the transaction was more in the interest of the shareholder Scott than that of the company. The decision of this appeal rests on the true construction of Section 12(2). In ou…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2281/CHNY/2018[2012-13]Status: DisposedITAT Chennai25 Sept 2019AY 2012-13

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…or the Assessing Officer to dictate the assessee as to how the assessee should conduct his business and it is not for him to tell the assessee on what expenditure assessee can incur. The Hon'ble Supreme Court in the case of Eastern Investments Ltd vs. CIT, 20 ITR 1 held that it is not necessary to show expenditure was profitable or in fact any profit was earned. The relevant para is as under:- ITA Nos.2280-83 /2018 :- 67 -: ‘(4) that the transaction was more in the interest of the shareholder Scott than that of the company. The decision of this appeal rests on the true construction of Section 12(2). In ou…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2280/CHNY/2018[2011-12]Status: DisposedITAT Chennai25 Sept 2019AY 2011-12

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…or the Assessing Officer to dictate the assessee as to how the assessee should conduct his business and it is not for him to tell the assessee on what expenditure assessee can incur. The Hon'ble Supreme Court in the case of Eastern Investments Ltd vs. CIT, 20 ITR 1 held that it is not necessary to show expenditure was profitable or in fact any profit was earned. The relevant para is as under:- ITA Nos.2280-83 /2018 :- 67 -: ‘(4) that the transaction was more in the interest of the shareholder Scott than that of the company. The decision of this appeal rests on the true construction of Section 12(2). In ou…

Sabarmati River Front Development Corpn.Ltd., Ahmedabad vs. The Dy.CIT, Circle-8, Ahmedabad

In the result, both the appeals of the assessee are partly allowed in terms and stated above therein

ITA 1394/AHD/2015[2011-12]Status: DisposedITAT Ahmedabad11 Jul 2019AY 2011-12

Bench: Shri Pradip Kumar Kedia & Shri Mahavir Prasad)

For Appellant: Smt. Arti N. Shah, ARFor Respondent: Shri Lalit P. Jain, Sr. D.R
Section 40Section 57

…ITR 546, wherein Hon'ble Court had given eight positive and thirteen negative tests for allowablity/disallowability of the expenditure u/s. 37 of the IT Act, is squarely applicable. The Hon'ble Supreme Court in case of CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601, held that "if the expense is incurred for fostering the business of another only or is made by way of distribution of profits or is wholly gratuitous or for some improper or oblique purpose outside the course of business, then expenses is not deductable." Thus, we have considered view that the expenditure claimed by the appellant under the head "…

M.S Vibhutigudda Mines Private Limited, Bellary vs. The Assistant Commissioner of Income Tax Circle-1, Bellary

In the result, the assessee’s appeal for Assessment Year 2012-13 is allowed

ITA 2843/BANG/2018[2012-13]Status: DisposedITAT Bangalore03 Jul 2019AY 2012-13

Bench: Shri N. V. Vasudevan & Shri Jason P Boazassessment Year : 2012-13 M/S. Vibhutigudda Mines Pvt. Ltd., Vs. The Assistant Commissioner No.60/356-A, “Modi Bhavan” Of Income Tax, Hospet Road, Allipur, Circle – 1, ‘Aaykar Bhavan’ Bellary – 583 105. Staff Road, Fort, Pan : Aaacv 5851 D Bellary – 583 103. Appellant Respondent Assessee By : Shri. B. S. Balachandran, Advocate Revenue By : Shri. A. Ramesh Kumar, Jcit Date Of Hearing : 07.05.2019 Date Of Pronouncement : 03.07.2019

For Appellant: Shri. B. S. Balachandran, AdvocateFor Respondent: Shri. A. Ramesh Kumar, JCIT
Section 143(1)Section 143(3)Section 14ASection 37(1)

…ot accept the submissions of the assessee on the ground that the assessee failed to establish that expenditure was incurred wholly and exclusively for the purpose of business. Inter alia, the AO relied upon decision in CIT Vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC) and distinguished the decision relied upon by the assessee in CIT Vs. Kamal and Co. 203 ITR 1038(Raj.). On appeal, the Id. CIT(A) upheld the disallowance, holding as 14. under:- "6.1 I have carefully considered the assessment order and the submission made by the learned AR. The payments of '5.0 lacs is towards the building fund of FIMI i.e. F…

Shri Sucha Singh Rai, Raipur (Cg) vs. The Assistant Commissioner of Income Tax, Raipur (Cg)

In the result, appeal of the assessee is allowed

ITA 239/BIL/2016[2012-13]Status: DisposedITAT Raipur27 Jun 2019AY 2012-13

Bench: Shri Partha Sarathi Chaudhury & Dr. Mitha Lal Meenaआयकर अपीऱ सं. / Ita No. 239/Rpr/2016 नििाारण वषा / Assessment Year : 2012-13

For Appellant: Shri Praveen Jain, CAFor Respondent: Shri A.K. Laskar, JCIT
Section 37

…ent heads in which 8 A.Y.2012-13 advertisement expenses are undertaken which is for commercial expediency of his business. This view has been upheld by the Hon'ble Apex Court in the case of Commissioner of Income Tax Vs. Chandulal Keshavlal & Co. reported as 38 ITR 601 (SC). 10. Further, we find in the case of Commissioner Of Income Tax Vs Delhi Safe Deposit Co. Ltd reported in 133 ITR 756 (SC), it has been opined by the Hon'ble Apex Court that considering as to what would be the true test of expenditure laid out wholly and exclusively for the purposes of trade or business is that it is incurred by the assessee…

DCIT 1(2)(1), Mumbai vs. Lic Nomura Mutual Fund Asset Management Co. Ltd, Mumbai

ITA 3823/MUM/2017[2011-12]Status: DisposedITAT Mumbai12 Jun 2019AY 2011-12

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am

For Appellant: Mrs. Nilu Jaggi, DRFor Respondent: Shri Vijay Mehta, AR
Section 143(3)

…e of Sassoon J David & Co. Pvt. Ltd. vs. CIT (118 ITR 261), Karnataka High Court decision in CIT vs. Canara Bank Ltd. (ITA No. 1397 of 2006), Supreme Court decision in the case of CIT v. Delhi Safe Deposit Co. Ltd. (133 ITR 756) and Chandulal Keshavlal & Co. (38 ITR 601; I am of the considered opinion that expenditure was incurred by company in order to preserve the income generating machinery since about90% of income derives from mutual fund by the appellant company being the asset manager and to instill confidence among the investors of the scheme and hence, this expenditure could be allowed as revenue expendit…

DCIT, Cir-2(1), Kolkata vs. M/S Chloride Power Systems & Solutions Ltd., Kolkata

In the result, the appeal of Revenue is dismissed

ITA 1326/KOL/2015[2010-2011]Status: DisposedITAT Kolkata10 Apr 2019AY 2010-2011

Bench: Shri S. S. Godara, J.M. & Dr.A.L.Saini, A.M.) Asstt. Year : 2010-11 Dcit, Cir-2(1), Kolkata Vs M/S. Chloride Power Systems & Solutions Ltd. Pan: Aabcc1825B Deptt (Respondent)

For Respondent: Shri Anup Sinha, FCA, ld.AR
Section 133(6)Section 143(1)Section 143(2)Section 143(3)

…what expenditure an assessee should incur and in what circumstances he should incur the expenditure. Every business man knows his interest best." The Hon'ble Supreme Court in the decision rendered in the case of Eastern Investments Limited vs. CIT reported in 20 ITR 1 (SC) has opined that the aspect of prudency of entering into a transaction and making an expenditure in connection therewith will have to be judged from the point of view of the businessman and not of the Department. The ratio of the said decision clearly emanates the view that one should not be concerned with the legality or propriety of a transact…

Dlf Hotel Holdings Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is allowed

ITA 1425/DEL/2016[2011-12]Status: DisposedITAT Delhi28 Feb 2019AY 2011-12

Bench: Sh. Bhavnesh Saini & Sh. N. S. Sainiita No. 1425/Del/2016 : Asstt. Year : 2011-12 Dlf Hotel Holdings Ltd., Vs Dy. Commissioner Of Income 9Th Floor, Dlf Centre, Sansad Tax, Circle-7(1), Marg, New Delhi-110001 New Delhi-110002 (Appellant) (Respondent) Pan No. Aaccd5033D Assessee By : Sh. R. S. Singhvi, Ca & Sh. Satyajeet Goel, Ca Revenue By : Sh. Sanjay I. Bara, Cit Dr Date Of Hearing : 27.02.2019 Date Of Pronouncement : 28.02.2019 Order Per N. S. Saini:

For Appellant: Sh. R. S. Singhvi, CA &For Respondent: Sh. Sanjay I. Bara, CIT DR
Section 143(3)Section 36(1)(iii)

…f the business. The above test in Atherton case[(1925) 10 TC 155: 1 KB 421 : 132 LT 288 (CA)] has been approved by this Court in several decisions e.g. Eastern Investments Ltd. v. CIT[(1951) 20 ITR 1 : AIR 1951 SC 278], CIT v. Chandulal Keshavlal & Co.[(1960) 38 ITR 601 : AIR 1960 SC 738] , etc. 26. In our opinion, the High Court as well as the Tribunal and other Income Tax Authorities should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the High Court and other authorities should have enquired as to whether the interest-free loan was given to…