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 366,470 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

The DCIT, Visakhapatnam vs. Sri Varalakshmi Jute Mills Pvt Ltd, Srikakulam

In the result, appeals filed by the Revenue in ITA

ITA 340/VIZ/2016[2012-2013]Status: DisposedITAT Visakhapatnam09 Feb 2018AY 2012-2013

Bench: Shri V. Durga Rao, Hon’Ble & Shri D.S. Sunder Singh, Hon’Bledcit, Circle-4(1), Vs. M/S. Sri Varalakshmi Jute Visakhapatnam. Twine Mills Pvt. Ltd., Bobbili Road, Rajam (Po), Srikakulam District. Pan No. Aadcs 1167 L Sri Varalakshmi Jute Twine Vs. Ito, Ward-3, Mills Pvt. Ltd., Bobbili Road, Srikakulam. Rajam (Po), Srikakulam Dist. Pan No. Aadcs 1167 L Acit, Circle-4(1), Vs. M/S. Sri Varalakshmi Jute Visakhapatnam. Twine Mills Pvt. Ltd., Bobbili Road, Rajam (Po), Srikakulam District. Pan No. Aadcs 1167 L Sri Varalakshmi Jute Twine Vs. Dcit, Circle-4(1), Mills Pvt. Ltd., Bobbili Road, Visakhapatnam. Rajam (Po), Srikakulam Dist. Pan No. Aadcs 1167 L (Appellants) (Respondents)

For Appellant: Shri Yogesh A. Thar &For Respondent: Shri T. Satyanandam – Sr.DR
Section 143(1)Section 143(3)

…oyees of the company. 16. So far as business expediency is concerned, the ld. CIT(A) by relying on the decisions of the Apex Court in the case of CIT vs. ITA Nos. 458 & 404/VIZ/2017 (M/s. Sri Varalakshmi Jute Twine Mills Pvt. Ltd.) Chandulal Keshavalal & Co. (38 ITR 601); CIT vs. Tata Sons Ltd. (111 ITR 290) and also Gordon Woodroffe Leather Manufacturing Co. (44 ITR 551) observed that assessee-company has leased out the two mills which effectively mean that the lessee would be in possession of the factory premises and also operate and manage the mills. As per the lease agreement, the lessee is required to refer…

M/S. Volvo India Pvt. Ltd., Bangalore vs. DCIT, Bangalore

In the result, the appeal filed by the assessee is partly allowed

ITA 1353/BANG/2010[2006-07]Status: DisposedITAT Bangalore11 Dec 2017AY 2006-07

Bench: Shri Inturi Rama Rao & Shri Lalit Kumarm/S.Volvo India Private Limited, Yalachahally Village, Tavarakere Post, Hoskote, Bangalore – 562 122. Pan: Aaacv 6747N … Appellant Vs. The Deputy Commissioner Of Income Tax, Ltu, … Respondent

For Appellant: Shri Neeraj Jain, CAFor Respondent: Ms. Neera Malhotra, CIT(DR)
Section 10ASection 143(3)Section 234CSection 234DSection 92C

…that the TPO cannot determine ALP at nil by holding that there was no need to incur such expenditure. While coming to this conclusion, the Hon'ble High Court has referred to the judgment of the Apex Court in the case of Eastern Investments Ltd. v. CIT [1957] 20 ITR 1 (SC) and CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC). It has been held by the Hon'ble High Court that: 'It has been held by our courts that it is not for the revenue authorities to dictate 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 ma…

DCIT, New Delhi vs. M/S. Tractabel Engineering Pvt. Ltd., New Delhi

In the result, appeal of the assessee is allowed partly for statistical purposes whereas the appeal of the Revenue is dismissed

ITA 456/DEL/2014[2009-10]Status: DisposedITAT Delhi23 Nov 2017AY 2009-10

Bench: Sh. H.S. Sidhu & Sh. O.P. Kantassessment Year: 2009-10 Vs. Dcit, Circle-16(1), New Delhi M/S. Tractebel Engineering Pvt. Ltd., 10-A, Shivaji Marg, New Delhi Pan : Aabct1757B (Appellant) (Respondent) & Assessment Year: 2009-10 Vs. M/S. Tractebel Engineering Pvt. Dcit, Circle-16(1), New Delhi Ltd., 10-A, Shivaji Marg, New Delhi Pan : Aabct1757B (Appellant) (Respondent)

Section 92C

…ognized in India’s tax jurisprudence. It is well settled that the revenue cannot dictate 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 (Eastern Investment Ltd 20 ITR 1 (SC), Walchand & Co 65 ITR 381 (SC) followed). Even Rule 10B(1)(a) does not authorise disallowance of expenditure on the ground that it was not necessary or prudent for the assessee to have incurred the same.” 8.10 In the instant case, the assessee has failed to establish with documentary evidence as to what amount any independent party would assess…

M/S. Tractebel Engineering Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, appeal of the assessee is allowed partly for statistical purposes whereas the appeal of the Revenue is dismissed

ITA 1078/DEL/2014[2009-10]Status: DisposedITAT Delhi23 Nov 2017AY 2009-10

Bench: Sh. H.S. Sidhu & Sh. O.P. Kantassessment Year: 2009-10 Vs. Dcit, Circle-16(1), New Delhi M/S. Tractebel Engineering Pvt. Ltd., 10-A, Shivaji Marg, New Delhi Pan : Aabct1757B (Appellant) (Respondent) & Assessment Year: 2009-10 Vs. M/S. Tractebel Engineering Pvt. Dcit, Circle-16(1), New Delhi Ltd., 10-A, Shivaji Marg, New Delhi Pan : Aabct1757B (Appellant) (Respondent)

Section 92C

…ognized in India’s tax jurisprudence. It is well settled that the revenue cannot dictate 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 (Eastern Investment Ltd 20 ITR 1 (SC), Walchand & Co 65 ITR 381 (SC) followed). Even Rule 10B(1)(a) does not authorise disallowance of expenditure on the ground that it was not necessary or prudent for the assessee to have incurred the same.” 8.10 In the instant case, the assessee has failed to establish with documentary evidence as to what amount any independent party would assess…

ITO, Bangalore vs. M/S Safran Engineering Services India Private Limited, Bangalore

In the result, the appeal filed by the revenue is partly allowed

ITA 451/BANG/2015[2010-11]Status: DisposedITAT Bangalore20 Nov 2017AY 2010-11

Bench: Shri Sunil Kumar Yadav & Shri Inturi Rama Raoit(Tp)A No.451/Bang/2015 (Assessment Year: 2010-11)

For Appellant: Ms.Neera Malhaotra, CIT(DR)For Respondent: Shri K.R.Vasudevan, Advocate
Section 10ASection 143(3)Section 92C

…at nil by holding that there was no need to incur such expenditure. While coming to this conclusion, the Hon’ble High Court has referred to the judgment of the Apex Court in the case of Eastern IT(TP)A No.451/Bang/2015 Page 15 of 23 Investments Ltd. vs. CIT (20 ITR 1)(SC) and CIT vs. Rajendra Prasad Moody (115 ITR 519)(SC). It has been held by the Hon’ble High Court that : “It has been held by our courts that it is not for the revenue authorities to dictate 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 re…

J. Thomas & Co. Pvt. Ltd., Kolkata vs. DCIT, Circle-4, Kolkata

In the result, the appeal of the assessee in I

ITA 2071/KOL/2014[2010-2011]Status: DisposedITAT Kolkata01 Nov 2017AY 2010-2011

Bench: Hon’Ble Shri Aby.T.Varkey, Jm & Shri M.Balaganesh, Am ] I.T.A Nos. 2066 /Kol/2014 Assessment Year : 2010-11 Dcit, Circle-4, Kolkata -Vs- M/S J.Thomas & Co. Pvt. Ltd.. [Pan: Aabcj 2851 Q] (Appellant) (Respondent) I.T.A Nos. 2071/Kol/2014 Assessment Year : 2010-11 M/S J.Thomas & Co. Pvt. Ltd. -Vs- Dcit, Circle-4, Kolkata [Pan: Aabcj 2851 Q] (Appellant) (Respondent)

For Appellant: Shri David Z. Chowngthu, Addl. CIT(DR)For Respondent: Shri Anup Sinha, ACA
Section 143(3)Section 36(1)(vii)

…funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits.” We also find that the Hon’ble Apex Court in the case of Eastern Investment Ltd. vs. CIT reported in 20 ITR 1 (SC) had laid down the following principles for allowing business expenses: “(a) though the question must be decided on the facts of each case, the final conclusion is one of law. 14 M/s J.Thomas & Co. Pvt. Ltd. A.Yr.2010-11 (b) it is not necessary to show that the expenditure was a profitable one or that in fact any profit was earned. (c) It is en…

DCIT, Circle-4, Kolkata vs. M/S. J. Thomas & Co. Pvt. Ltd., Kolkata

In the result, the appeal of the assessee in I

ITA 2066/KOL/2014[2010-2011]Status: DisposedITAT Kolkata01 Nov 2017AY 2010-2011

Bench: Hon’Ble Shri Aby.T.Varkey, Jm & Shri M.Balaganesh, Am ] I.T.A Nos. 2066 /Kol/2014 Assessment Year : 2010-11 Dcit, Circle-4, Kolkata -Vs- M/S J.Thomas & Co. Pvt. Ltd.. [Pan: Aabcj 2851 Q] (Appellant) (Respondent) I.T.A Nos. 2071/Kol/2014 Assessment Year : 2010-11 M/S J.Thomas & Co. Pvt. Ltd. -Vs- Dcit, Circle-4, Kolkata [Pan: Aabcj 2851 Q] (Appellant) (Respondent)

For Appellant: Shri David Z. Chowngthu, Addl. CIT(DR)For Respondent: Shri Anup Sinha, ACA
Section 143(3)Section 36(1)(vii)

…funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits.” We also find that the Hon’ble Apex Court in the case of Eastern Investment Ltd. vs. CIT reported in 20 ITR 1 (SC) had laid down the following principles for allowing business expenses: “(a) though the question must be decided on the facts of each case, the final conclusion is one of law. 14 M/s J.Thomas & Co. Pvt. Ltd. A.Yr.2010-11 (b) it is not necessary to show that the expenditure was a profitable one or that in fact any profit was earned. (c) It is en…

ITO, New Delhi vs. M/S. Delhi Press Samachar Patra Pvt. Ltd., New Delhi

In the result ground No. 1 of the appeal of the Revenue is dismissed

ITA 1433/DEL/2013[2008-09]Status: DisposedITAT Delhi12 Oct 2017AY 2008-09

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishi

For Appellant: Shri Manish Kumar, AdvFor Respondent: Shri Anshu Prakash, Sr. DR
Section 143(2)Section 40A(2)Section 40A(2)(b)

…ITO, Ward 10 (1) , New Delhi Vs Delhi Pres samachar Patra Private Limited ITA NO 1433 , 1061/ Del/2013 & 5001 & 6515/ Del/2014 A.Y. 2008-09 to 2011-12 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No.1061/Del/2013 (Assessment Year: 2009-10) ITA No.6515/Del/2014 (Assessment Year: 2011-12) ITO, Vs. Delhi Press Samachar Patra Pvt. Ltd, Ward-10(1), Room No. 199, C/o. Shri Harvinder Singh Sahota, CR Building, New Delhi KG, 3/6, Vikaspuri, New Delhi PAN:AAACD2084L (Appellant) (Respondent) Revenue by : Shri Anshu…

DCIT, Chennai vs. Sical Logistics Ltd., Chennai

ITA 1697/CHNY/2014[2010-11]Status: DisposedITAT Chennai18 Aug 2017AY 2010-11

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri Milind Madhukar, JCIT &For Respondent: Shri S. Sridhar, Advocate
Section 10Section 14A

…cilitate the carrying on the business. The above test 20 - - ITA 1695 to 1697 & CO 84/Mds/14 has been approved by the Supreme Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC), CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), SA Builders Ltd. v. CIT ( 288 ITR 1(SC) ), Hero Cylces Pvt Ltd. Vs. CIT (379 ITR 347)(SC) etc. 7.8 In our opinion, the A.O should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the A.O should have enquired as to whether the interest-free loan was given to the sister c…

DCIT, Chennai vs. Sical Logistics Ltd., Chennai

ITA 1696/CHNY/2014[2009-10]Status: DisposedITAT Chennai18 Aug 2017AY 2009-10

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri Milind Madhukar, JCIT &For Respondent: Shri S. Sridhar, Advocate
Section 10Section 14A

…cilitate the carrying on the business. The above test 20 - - ITA 1695 to 1697 & CO 84/Mds/14 has been approved by the Supreme Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC), CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), SA Builders Ltd. v. CIT ( 288 ITR 1(SC) ), Hero Cylces Pvt Ltd. Vs. CIT (379 ITR 347)(SC) etc. 7.8 In our opinion, the A.O should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the A.O should have enquired as to whether the interest-free loan was given to the sister c…

DCIT, Chennai vs. Sical Logistics Ltd., Chennai

ITA 1695/CHNY/2014[2008-09]Status: DisposedITAT Chennai18 Aug 2017AY 2008-09

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri Milind Madhukar, JCIT &For Respondent: Shri S. Sridhar, Advocate
Section 10Section 14A

…cilitate the carrying on the business. The above test 20 - - ITA 1695 to 1697 & CO 84/Mds/14 has been approved by the Supreme Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC), CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), SA Builders Ltd. v. CIT ( 288 ITR 1(SC) ), Hero Cylces Pvt Ltd. Vs. CIT (379 ITR 347)(SC) etc. 7.8 In our opinion, the A.O should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the A.O should have enquired as to whether the interest-free loan was given to the sister c…

ACIT, Chennai vs. Trimex Sands Pvt Ltd., Chennai

In the result, both the appeals of the assessee for assessment years 2011-12 & 2012-13 are partly allowed and both the appeals filed by the Revenue for assessment years

ITA 419/CHNY/2017[2012-13]Status: DisposedITAT Chennai26 Jul 2017AY 2012-13

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri B.S.Purushotham, CAFor Respondent: Shri N. Madhavan, JCIT
Section 11Section 14A

…facilitate the carrying on the business. The above test - - 8 ITA 383, 384, 418 419/Mds/2017 has been approved by the Supreme Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC), CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), SA Builders Ltd. v. CIT ( 288 ITR 1(SC) ), Hero Cylces Pvt Ltd. Vs. CIT (379 ITR 347)(SC) etc. 7.5 In our opinion, the A.O should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the A.O should have enquired as to whether the interest-free loan was given to the sister c…

ACIT, Chennai vs. Trimex Sands Pvt Ltd., Chennai

In the result, both the appeals of the assessee for assessment years 2011-12 & 2012-13 are partly allowed and both the appeals filed by the Revenue for assessment years

ITA 418/CHNY/2017[2011-12]Status: DisposedITAT Chennai26 Jul 2017AY 2011-12

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri B.S.Purushotham, CAFor Respondent: Shri N. Madhavan, JCIT
Section 11Section 14A

…facilitate the carrying on the business. The above test - - 8 ITA 383, 384, 418 419/Mds/2017 has been approved by the Supreme Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC), CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), SA Builders Ltd. v. CIT ( 288 ITR 1(SC) ), Hero Cylces Pvt Ltd. Vs. CIT (379 ITR 347)(SC) etc. 7.5 In our opinion, the A.O should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the A.O should have enquired as to whether the interest-free loan was given to the sister c…

Trimex Sands Private Limited, Chennai vs. ACIT, Chennai

In the result, both the appeals of the assessee for assessment years 2011-12 & 2012-13 are partly allowed and both the appeals filed by the Revenue for assessment years

ITA 384/CHNY/2017[2012-13]Status: DisposedITAT Chennai26 Jul 2017AY 2012-13

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri B.S.Purushotham, CAFor Respondent: Shri N. Madhavan, JCIT
Section 11Section 14A

…facilitate the carrying on the business. The above test - - 8 ITA 383, 384, 418 419/Mds/2017 has been approved by the Supreme Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC), CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), SA Builders Ltd. v. CIT ( 288 ITR 1(SC) ), Hero Cylces Pvt Ltd. Vs. CIT (379 ITR 347)(SC) etc. 7.5 In our opinion, the A.O should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the A.O should have enquired as to whether the interest-free loan was given to the sister c…

Trimex Sands Private Limited, Chennai vs. JCIT, Chennai

In the result, both the appeals of the assessee for assessment years 2011-12 & 2012-13 are partly allowed and both the appeals filed by the Revenue for assessment years

ITA 383/CHNY/2017[2011-12]Status: DisposedITAT Chennai26 Jul 2017AY 2011-12

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri B.S.Purushotham, CAFor Respondent: Shri N. Madhavan, JCIT
Section 11Section 14A

…facilitate the carrying on the business. The above test - - 8 ITA 383, 384, 418 419/Mds/2017 has been approved by the Supreme Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC), CIT vs. Chandulal Keshavlal & Co. (1960) 38 ITR 601 (SC), SA Builders Ltd. v. CIT ( 288 ITR 1(SC) ), Hero Cylces Pvt Ltd. Vs. CIT (379 ITR 347)(SC) etc. 7.5 In our opinion, the A.O should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the A.O should have enquired as to whether the interest-free loan was given to the sister c…

M/S. Taegu Tec India Pvt. Ltd., Bangalore vs. DCIT, Bangalore

In the result appeal filed by the assessee is dismissed

ITA 1337/BANG/2010[2006-07]Status: DisposedITAT Bangalore24 May 2017AY 2006-07

Bench: Shri. Vijay Pal Rao & Shri. Inturi Rama Rao

For Appellant: Shri. Dhanesh Bafna, CAFor Respondent: Ms. Neera Malhotra, CIT(DR)
Section 143Section 143(1)Section 143(2)Section 143(3)

…of Hon’ble Delhi High Court in the case of Delhi High Court in the case of EKL Appliances Ltd., 345 ITR 241. The Hon’ble Delhi High Court has reiterated the position laid down by the Hon’ble Supreme Court in the case of Eastern Investment Ltd. v. CIT [1951] 20 ITR 1 (SC) and Sassoon J. David & Co. (P.) Ltd. v. CIT [1979] 118 ITR 261. The decision of Hon’ble Delhi High Court in the case of EKL Appliances was followed by Page 8 of 11 several coordinate benches of this Tribunal, few of them are as follows: 8. Therefore what follows from the above decision is that the ALP of the management services fee cannot be…

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

…struction of the language of s. 57(iii) irresistibly leads to the conclusion that to bring a case have been earned as a result of the expenditure. It may be pointed out that an identical views was taken by this Court in Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC): TC41R.491, where interpreting the corresponding provision in s.12(2) of the Indian IT 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 t…

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

…struction of the language of s. 57(iii) irresistibly leads to the conclusion that to bring a case have been earned as a result of the expenditure. It may be pointed out that an identical views was taken by this Court in Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC): TC41R.491, where interpreting the corresponding provision in s.12(2) of the Indian IT 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 t…

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

…struction of the language of s. 57(iii) irresistibly leads to the conclusion that to bring a case have been earned as a result of the expenditure. It may be pointed out that an identical views was taken by this Court in Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC): TC41R.491, where interpreting the corresponding provision in s.12(2) of the Indian IT 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 t…

DCIT 19(3), Mumbai vs. Wadhwa Constructions, Mumbai

The appeal of the Revenue is dismissed

ITA 4470/MUM/2013[2008-09]Status: DisposedITAT Mumbai05 Apr 2017AY 2008-09
Section 2Section 271(1)(c)

…our attention was invited to page 16 of the paper book. It was explained that the surrendered was free 3 Wadhwa Constructions of cost. Reliance was placed upon the decision in Hughes (Inspector of Taxes) vs Bank of New Zealand 6 ITR 636 (House of Lords) and 38 ITR 601. The cases relied upon by the Ld. DR were argued to be on different fact. The learned counsel further explained the provision of Explanation I to section 271(1)(c) of the Act. Reliance was placed upon the decision in DCIT vs M/ s. Nepa Limited, ITA No. 683/Ind/2013, ITA No. 1457/Del/2010. It was asserted that the claim made by the assessee was mer…