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

Shri Rampriya Developers Private Limited, Hyderabad vs. Deputy Commissioner of Incometax, Circle-3(1), Hyderabad

In the result, appeal filed by the assessee is dismissed

ITA 1946/HYD/2017[1999-2000]Status: DisposedITAT Hyderabad14 Aug 2024AY 1999-2000

Bench: Shri Laliet Kumar & Shri Manjunatha, G.आ.अपी.सं /Ita No.1946/Hyd/2017 (िनधा"रण वष"/Assessment Year: 1999-2000) Shri Rampriya Developers Vs. Dy. C. I. T. (P) Ltd Circle 3(1) Hyderabad Hyderabad Pan:Aajcs6629P (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri A.V. Raghuram, Advocate राज" व "ारा/Revenue By:: Shri Shakeer Ahmed, Dr सुनवाई की तारीख/Date Of Hearing: 09/07/2024 घोषणा की तारीख/Pronouncement: 14/08/2024 आदेश/Order

For Appellant: Shri A.V. Raghuram, AdvocateFor Respondent: : Shri Shakeer Ahmed, DR
Section 143(3)Section 14A

…was not in accordance with commercial expediency. Therefore, the judgment of Madras High Court in the case of CIT vs. Raman & Raman 7 ITR 345 (Mad) also rather helps to the Revenue. Similarly, the other Judgments in the case of Eastern Investment Ltd. vs. CIT 20 ITR 1 (SC), Newtone Studios Ltd. vs. CIT 28 ITR 378 (Mad), Calcutta Landing & Shipping Co. Ltd. vs. CIT 65 ITR 1 (Cal.) and the judgment of Guwahati High Court in the case of Narasivsdas Surajmal Properties (P) Ltd. vs. CIT 127, ITR 221.'The other judgments cited by the A.R. are decided by the Courts considering the facts of the respective cases. Thus, th…

Shiv Nadar and Sanjay Kalra Associates LLP, Bengaluru vs. Assistant Commissioner of Income-Tax, Circle 1(2)(2), Bangalore, Bengaluru

In the result, we don to find any merit in this appeal, the same fails and is hereby dismissed

ITA 890/BANG/2024[2017-18]Status: DisposedITAT Bangalore30 Jul 2024AY 2017-18

Bench: Shri Laxmi Prasad Sahu & Shri Prakash Chand Yadavassessment Year : 2017-18

For Appellant: Shri Ravishankar S., AdvocateFor Respondent: Shri V. Parithivel, Jt.CIT(DR)(ITAT), Bengaluru
Section 143(3)Section 14ASection 234ASection 234BSection 234CSection 37(1)

…healthcare technology company and subsequent income therefrom and assessee was requested to show cause why the disallowance should not be made. The assessee furnished reply and relied on CIT v. Kalyanji Mavji & Co. 122 ITR 49, Eastern Investments Ltd. v. CIT, 20 ITR 1, Radhasoami Satsang v. CIT [1992] 193 ITR 321 submitted that same accounting principles were followed in the previous year and were allowed in 143(3) assessment order. The AO has incorporated the same in para 4.5 of his order and relying on submission of the assessee was examined by the AO and not accepted and he observed that the case laws relied b…

Principal Commissioner of Income Tax 7 Delhi vs. Uniparts India Ltd

Appeal are allowed

ITA/664/2023HC Delhi02 Feb 2024

Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA

Section 36(1)(iii)

…$~3 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 664/2023 PRINCIPAL COMMISSIONER OF INCOME TAX 7 DELHI ..... Appellant Through: Mr. Sunil Agarwal, Sr. SC with Mr. Shivansh B. Pandya, SC and Mr. Utkarsh Tiwari, Adv. Versus UNIPARTS INDIA LTD. ..... Respondent Through: Mr. Mayank Nagi and Mr. Tarun Singh, Advs. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV O R D E R % 02.02.2024 CM APPL. 61111/2023 (Ex.) 1. Al…

M/S. United Breweries Limited, Bangalore vs. Deputy Commissioner of Income-Tax, Circle-7(1)(1), Bengaluru

In the result, both the appeals filed by the assessee stands partly allowed for statistical purposes

ITA 1020/BANG/2023[2020-21]Status: DisposedITAT Bangalore31 Jan 2024AY 2020-21

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Respondent: Shri K R Vasudevan &
Section 143(3)Section 147Section 148

…IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA Nos. 1019 & 1020/Bang/2023 Assessment Years : 2012-13 & 2020-21 M/s. United Breweries Ltd., The Deputy Level 3, UB Tower, Commissioner of UB City, Income Tax, Bangalore North, Circle 7(1)(1), Bangalore – 560 001. Bangalore. Vs. PAN: AAACU6053C APPELLANT RESPONDENT : Shri K R Vasudevan & Assessee by Shri Ankur Pai, Advocates Revenue by : Shri D.K. Mishra, CIT DR Date of Hearing : 22-01-2024 Date of Pronouncement : 31-01-2024 ORDER PER BEENA PILLAI, JUDICIAL MEMBER P…

Navayuga Infra Projects Private Limited, Hyderabad vs. Asst. Commissioner of Income Tax, Circle-16(1), Hyderabad

In the result, appeal in ITA No

ITA 106/HYD/2020[2016-17]Status: DisposedITAT Hyderabad29 Dec 2023AY 2016-17

Bench: Shri Rama Kanta Panda & Shri K. Narasimha Chary

For Appellant: Shri Mohd. Afzal, ARFor Respondent: Ms. TH. Vijaya Lakshmi, CIT-DR
Section 12(2)Section 57

…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 Page 2 of 6 this case that "it is no…

Navayuga Infra Projects Private Limited, Hyderabad vs. Asst. Commissioner of Income Tax, Circle-16(1), Hyderabad

In the result, appeal in ITA No

ITA 1724/HYD/2018[2014-15]Status: DisposedITAT Hyderabad29 Dec 2023AY 2014-15

Bench: Shri Rama Kanta Panda & Shri K. Narasimha Chary

For Appellant: Shri K.C. Devdas, ARFor Respondent: Ms. TH. Vijaya Lakshmi, CIT-DR
Section 37

…He placed reliance on the decision of the Hon’ble Gujarat High Court in the case of PCIT vs. Tudor India (P.) Ltd. [2019] 111 taxmann.com 450 (Gujarat) which in turn was rendered in the light of the decisions reported in Eastern Investment Ltd. v. CIT, [1951] 20 ITR 1, CIT v. Walchand & Co. etc., [1967] 65 ITR 381 and Hughes v. Bank of New Zealand, [1938] 6 ITR 636, wherein it is held that earning profit in any particular year is not a sine qua non for allowance of any expenditure. 6. We have gone through the record in the light of the submissions made on either side. According to the Memorandum and Articles of…

Navayuga Road Projects Private Limited, Hyderabad vs. Asst. Commissioner of Income Tax, Circle-16(1), Hyderabad

In the result, appeal in ITA No

ITA 1723/HYD/2018[2014-15]Status: DisposedITAT Hyderabad29 Dec 2023AY 2014-15

Bench: Shri Rama Kanta Panda & Shri K. Narasimha Chary

For Appellant: Shri K.C. Devdas, ARFor Respondent: Ms. TH. Vijaya Lakshmi, CIT-DR
Section 37

…He placed reliance on the decision of the Hon’ble Gujarat High Court in the case of PCIT vs. Tudor India (P.) Ltd. [2019] 111 taxmann.com 450 (Gujarat) which in turn was rendered in the light of the decisions reported in Eastern Investment Ltd. v. CIT, [1951] 20 ITR 1, CIT v. Walchand & Co. etc., [1967] 65 ITR 381 and Hughes v. Bank of New Zealand, [1938] 6 ITR 636, wherein it is held that earning profit in any particular year is not a sine qua non for allowance of any expenditure. 6. We have gone through the record in the light of the submissions made on either side. According to the Memorandum and Articles of…

J.P Tobaco Producta Pvt. Ltd., Damoh vs. Assistant Commissioner of Income Tax Circle - Sagar, Sagasr

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

ITA 128/JAB/2018[2014-15]Status: DisposedITAT Jabalpur21 Nov 2023AY 2014-15

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar U.S.

Section 37(1)Section 40

…d in order to indirectly to facilitate the carrying on the business. The above test in Atherton's case (supra) has been approved by this Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1, CIT us. Chandulal Keshavlal & Co. (1960) 38 ITR 601 etc. 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 the sister company (whic…

J.P Tobacco Product Pvt. Ltd., Damoh vs. Income Tax Officer Ward-3, Sagar

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

ITA 127/JAB/2018[2013-14]Status: DisposedITAT Jabalpur21 Nov 2023AY 2013-14

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar U.S.

Section 37(1)Section 40

…d in order to indirectly to facilitate the carrying on the business. The above test in Atherton's case (supra) has been approved by this Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1, CIT us. Chandulal Keshavlal & Co. (1960) 38 ITR 601 etc. 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 the sister company (whic…

J.P Tobacco Product Pvt. Ltd vs. Deputy Commissioner of Income Tax

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

ITA 263/JAB/2016[2012-13]Status: DisposedITAT Jabalpur21 Nov 2023AY 2012-13

Bench: Dr. B.R.R. Kumar & Shri Yogesh Kumar U.S.

Section 37(1)Section 40

…d in order to indirectly to facilitate the carrying on the business. The above test in Atherton's case (supra) has been approved by this Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1, CIT us. Chandulal Keshavlal & Co. (1960) 38 ITR 601 etc. 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 the sister company (whic…

Herbalife International India Private Limited, Bangalore vs. Deputy Commissioner of Income-Tax, Circle-11(4), Bangalore

In the result, appeals of the assessee are partly allowed for statistical purposes

ITA 924/BANG/2012[2007-08]Status: DisposedITAT Bangalore08 Nov 2023AY 2007-08

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Percy Pardiwala, Sr. A.RFor Respondent: Shri D.K. Mishra, D.R
Section 28

…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. 13. In light of the aforesaid decisions, it was submitted that the approach of the TPO is not proper and the same should be held as not valid…

M/S. Herbalife International India Pvt Ltd., Bangalore vs. Assistant Commissioner of Income-Tax, Circle-11(4), Bangalore

In the result, appeals of the assessee are partly allowed for statistical purposes

ITA 1406/BANG/2010[2006-07]Status: DisposedITAT Bangalore08 Nov 2023AY 2006-07

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Percy Pardiwala, Sr. A.RFor Respondent: Shri D.K. Mishra, D.R
Section 28

…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. 13. In light of the aforesaid decisions, it was submitted that the approach of the TPO is not proper and the same should be held as not valid…

Shree Narmada Khand Udyog Sahkari Mandali Ltd., Narmada vs. Income Tax Officer, Ward - 2(1), Bharuch

In the result, the grounds of appeal raised by the assesse are allowed

ITA 104/SRT/2023[2014-15]Status: DisposedITAT Surat31 Oct 2023AY 2014-15

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

Section 234ASection 254(1)Section 271(1)(c)Section 28Section 37Section 37(1)

…the view point of assessee and not the revenue. To support such view, the ld. AR of the assessee relied upon the decisions of Hon’ble Supreme Court in the case of S.A. Builders 288 ITR 1 (SC), Easter Investment Ltd. 20 ITR 1 (SC) and Chandulal Keshavlal & Co. 38 ITR 601 (SC). The ld. ld. Senior Counsel for the assessee submits that his case is squarely covered by the decision of Hon’ble Jurisdictional High Court in the case of Mehsana District Co-operative Milk Producers Union Ltd. (2005) 147 Taxman 355 wherein the Hon’ble High Court was considered similar controversy i.e. payment on incremental price made by ass…

Shree Narmada Khand Udyog Sahkari Mandali Ltd., Narmada vs. Income Tax Officer, Ward - 2(1), Bharuch

In the result, the grounds of appeal raised by the assesse are allowed

ITA 103/SRT/2023[2013-14]Status: DisposedITAT Surat31 Oct 2023AY 2013-14

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

Section 234ASection 254(1)Section 271(1)(c)Section 28Section 37Section 37(1)

…the view point of assessee and not the revenue. To support such view, the ld. AR of the assessee relied upon the decisions of Hon’ble Supreme Court in the case of S.A. Builders 288 ITR 1 (SC), Easter Investment Ltd. 20 ITR 1 (SC) and Chandulal Keshavlal & Co. 38 ITR 601 (SC). The ld. ld. Senior Counsel for the assessee submits that his case is squarely covered by the decision of Hon’ble Jurisdictional High Court in the case of Mehsana District Co-operative Milk Producers Union Ltd. (2005) 147 Taxman 355 wherein the Hon’ble High Court was considered similar controversy i.e. payment on incremental price made by ass…

Shree Narmada Khand Udyog Sahkari Mandali Ltd., Narmada vs. Income Tax Officer, Ward - 2(1), Bharuch

In the result, the grounds of appeal raised by the assesse are allowed

ITA 102/SRT/2023[2012-13]Status: DisposedITAT Surat31 Oct 2023AY 2012-13

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

Section 234ASection 254(1)Section 271(1)(c)Section 28Section 37Section 37(1)

…the view point of assessee and not the revenue. To support such view, the ld. AR of the assessee relied upon the decisions of Hon’ble Supreme Court in the case of S.A. Builders 288 ITR 1 (SC), Easter Investment Ltd. 20 ITR 1 (SC) and Chandulal Keshavlal & Co. 38 ITR 601 (SC). The ld. ld. Senior Counsel for the assessee submits that his case is squarely covered by the decision of Hon’ble Jurisdictional High Court in the case of Mehsana District Co-operative Milk Producers Union Ltd. (2005) 147 Taxman 355 wherein the Hon’ble High Court was considered similar controversy i.e. payment on incremental price made by ass…

Assistant Commissioner of Income Tax, Circle Katni, Katni vs. J.P Tobacco Products Pvt. Ltd, Damoh

In the result, both appeals of the Revenue are dismissed

ITA 94/JAB/2023[2017-18]Status: DisposedITAT Jabalpur22 Sept 2023AY 2017-18

Bench: Shri Om Prakash Kantshri Pavan Kumar Gadale

Section 143(3)Section 37(1)Section 40

…d in order to indirectly to facilitate the carrying on the business. The above test in Atherton's case (supra) has been approved by this Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1, CIT us. Chandulal Keshavlal & Co. (1960) 38 ITR 601 etc. 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 the sister company (whic…

Assistant Commissioner of Income Tax Circle-Katni, Katni vs. J.P. Tobacco Products Pvt. Ltd, Damoh

In the result, both appeals of the Revenue are dismissed

ITA 93/JAB/2023[2016-17]Status: DisposedITAT Jabalpur22 Sept 2023AY 2016-17

Bench: Shri Om Prakash Kantshri Pavan Kumar Gadale

Section 143(3)Section 37(1)Section 40

…d in order to indirectly to facilitate the carrying on the business. The above test in Atherton's case (supra) has been approved by this Court in several decisions e.g. Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1, CIT us. Chandulal Keshavlal & Co. (1960) 38 ITR 601 etc. 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 the sister company (whic…

M/S. United Breweries Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle 7(1)(1), Bangalore

In the result, the appeals of the assessee are partly allowed for statistical purposes

ITA 308/BANG/2023[2017-18]Status: DisposedITAT Bangalore29 Aug 2023AY 2017-18

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Ankur Pai, A.R. a/wFor Respondent: Shri Saravanan B., DR
Section 143(3)Section 144BSection 144C(13)Section 14ASection 250Section 92C

…person or entity cannot be a bar for allowance of expenditure under section 37 of the Act, as per the settled position of law. Reference in this regard was made to the decisions of the Hon'ble Supreme Court of India in CIT vs. Chandulal Keshavlal & Co. [1960] 38 ITR 601 (SC), Sasson J. David and Co. P. Ltd vs. CIT 118 ITR 261(SC) and SA Builders Ltd. vs. CIT 288 ITR 1(SC). He further submitted that the Revenue cannot step into the shoes of an assessee to determine the commercial expediency of an expenditure incurred by it. 90. On the other hand, the learned DR relied upon the order of the AO and the DRP in suppor…

United Breweries Limited, Bangalore vs. Joint Commissioner of Income Tax, Special Range- 7, Bangalore

In the result, the appeals of the assessee are partly allowed for statistical purposes

ITA 345/BANG/2021[2016-17]Status: DisposedITAT Bangalore29 Aug 2023AY 2016-17

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Ankur Pai, A.R. a/wFor Respondent: Shri Saravanan B., DR
Section 143(3)Section 144BSection 144C(13)Section 14ASection 250Section 92C

…person or entity cannot be a bar for allowance of expenditure under section 37 of the Act, as per the settled position of law. Reference in this regard was made to the decisions of the Hon'ble Supreme Court of India in CIT vs. Chandulal Keshavlal & Co. [1960] 38 ITR 601 (SC), Sasson J. David and Co. P. Ltd vs. CIT 118 ITR 261(SC) and SA Builders Ltd. vs. CIT 288 ITR 1(SC). He further submitted that the Revenue cannot step into the shoes of an assessee to determine the commercial expediency of an expenditure incurred by it. 90. On the other hand, the learned DR relied upon the order of the AO and the DRP in suppor…

Ahlstrom Fiber Composites (I) P. Ltd., Mundra (Kutch) vs. The Asstt. Commr. of Income Tax, Gandhidham Circle, Gandhidham

In the result, the appeals of the assessee are allowed for statistical purposes

ITA 85/RJT/2017[2012-13]Status: DisposedITAT Rajkot04 Aug 2023AY 2012-13

Bench: Smt.Annapurna Gupta & Shri Siddhartha Nautiyalit(Tp)A No.85& 287/Rjt/2017 Assessment Year :2012-13 & 2013-14

For Appellant: Shri S.N. Soparkar, ld.ARFor Respondent: Shri Shramdeep Sinha, ld.CIT-DR
Section 143(3)Section 144C(13)Section 92C

…RJT/2016 and 2 Others 17 required or not is a matter of business prudence. In this regard, he drew our attention to the following decisions: i) Atherton Vs. British Insulated & Helsby Cables Ltd., (1925) 10 TC 155; ii) Eastern Investments Ltd. Vs. CIT (1951) 20 ITR 1 (SC) iii) CIT Vs. Microsoft Corporation of India P.Ltd., (2008) 220 CTR 410 (Delhi); iv) Ravi Marketing P.Ltd. Vs. CIT (2006) 280 ITR 519 (Cal); v) Sassoon J. David & Co. P.Ltd. Vs. CIT (1979) 1 taxman 485 (SC); vi) Jamna Auto industries Vs. CIT, (2008) 167 TAXMAN 192 (P&H HC) Finally, he contended that the TPO had categorically held that no advers…