Empire Jute Co. Ltd. v. CIT

124 ITR 1Supreme Court of India1980#95 most cited

What is Empire Jute Co. Ltd. v. CIT authority for?

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

622

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2008 to 2026.

Also referred to as

Empire Jute Co. Ltd. v. CIT · Section 37(1) · Section 37 · revenue expenditure · capital expenditure · enduring benefit test · test of enduring benefit not conclusive · business necessity · commercial expediency · practical business point of view · facilitation of trading operations · business efficiency

Also reported as

3 Taxmann 69

Sections most often in play

Section 143(3)Section 37(1)Section 37Section 14ASection 271(1)(c)Section 234ASection 234BSection 115P

Issues it is cited on

test of enduring benefitenduring benefitrevenue expenditurecapital expenditurecomputer softwaresection 35commercial expediencysection 37section 37(1)section 80isection 40(a)disallowance u/s 14a

Judgments citing Empire Jute Co. Ltd. v. CIT

M/S. Honda Siel Power Products Ltd., Gautam Budh Nagar vs. DCIT, New Delhi

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

ITA 551/DEL/2014[2009-10]Status: DisposedITAT Delhi13 Apr 2016AY 2009-10

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: S/Sh. Neeraj Jain, AdvFor Respondent: Sh. Armendra Kumar, CIT/ DR
Section 143(3)Section 144CSection 2Section 92B

…decisions wherein has been held that if the outgoing or expenditure is related to the carrying on, or conduct of the business, it may be regarded as an integral part of the profit making process and therefore revenue in nature: • Empire Jute Co. Ltd. v. CIT: 124 ITR 1 (SC) • CIT v. Associated Cement Companies Ltd.: 172 ITR 257 (SC) • Alembic Chemical Works Co. Ltd. v. CIT: 177 ITR 377 (SC) • Arvind Mills Ltd v. CIT: 97 ITR 422 (SC) 51 ITA Nos.551/Del./2014 & 636/Del./2015 • ChandulalKeshavlal v. CIT: 38 ITR 601(SC) • Bombay Steam Navigation Co. (1953) (P.) Ltd. v. CIT: 56 ITR 52 (SC) • DevidasVithaldas& Co. v.…

Seagram Manufacturing (P) Ltd vs. Addl CIT Range-8

In the result, assessee’s appeals are partly allowed for statistical

ITA 4784/DEL/2007[2003-2004]Status: DisposedITAT Delhi12 Apr 2016AY 2003-2004

Bench: Shri S.V. Mehrotra : & Shri Sudhanshu Srivastava :

For Appellant: Shri Deepak Chopra AdvFor Respondent: Shri A.M. Govil CIT (DR)
Section 92C

…gible asset being goodwill, reputation and credibility. He, therefore, made a further disallowance of Rs. 3,11,81,808/- being 10% of such expenditure. 60. Ld. CIT(A) following the decision of Hon’ble Supreme Court in the case of Empire Jute Company Vs. CIT 124 ITR 1 held that the expenses were relatable to the carrying on or conduct of the business more profitable and were integral part of the profit earning process. He further observed that the memory of consumers is short and especially in a fast evolving liquor market, the consumers are required to be reminded on a regular basis the positioning of the pr…

Seagram Manufacturing (P) Ltd vs. Addl CIT Range-8

In the result, assessee’s appeals are partly allowed for statistical

ITA 4783/DEL/2007[2002-2003]Status: DisposedITAT Delhi12 Apr 2016AY 2002-2003

Bench: Shri S.V. Mehrotra : & Shri Sudhanshu Srivastava :

For Appellant: Shri Deepak Chopra AdvFor Respondent: Shri A.M. Govil CIT (DR)
Section 92C

…gible asset being goodwill, reputation and credibility. He, therefore, made a further disallowance of Rs. 3,11,81,808/- being 10% of such expenditure. 60. Ld. CIT(A) following the decision of Hon’ble Supreme Court in the case of Empire Jute Company Vs. CIT 124 ITR 1 held that the expenses were relatable to the carrying on or conduct of the business more profitable and were integral part of the profit earning process. He further observed that the memory of consumers is short and especially in a fast evolving liquor market, the consumers are required to be reminded on a regular basis the positioning of the pr…

DCIT Circle 8 (1) vs. Seagram Manufacturing (P) Ltd

In the result, assessee’s appeals are partly allowed for statistical

ITA 4780/DEL/2007[2003-2004]Status: DisposedITAT Delhi12 Apr 2016AY 2003-2004

Bench: Shri S.V. Mehrotra : & Shri Sudhanshu Srivastava :

For Appellant: Shri Deepak Chopra AdvFor Respondent: Shri A.M. Govil CIT (DR)
Section 92C

…gible asset being goodwill, reputation and credibility. He, therefore, made a further disallowance of Rs. 3,11,81,808/- being 10% of such expenditure. 60. Ld. CIT(A) following the decision of Hon’ble Supreme Court in the case of Empire Jute Company Vs. CIT 124 ITR 1 held that the expenses were relatable to the carrying on or conduct of the business more profitable and were integral part of the profit earning process. He further observed that the memory of consumers is short and especially in a fast evolving liquor market, the consumers are required to be reminded on a regular basis the positioning of the pr…

DCIT Circle 8 (1) vs. Seagram Manufacturing (P) Ltd

In the result, assessee’s appeals are partly allowed for statistical

ITA 4779/DEL/2007[2002-2003]Status: DisposedITAT Delhi12 Apr 2016AY 2002-2003

Bench: Shri S.V. Mehrotra : & Shri Sudhanshu Srivastava :

For Appellant: Shri Deepak Chopra AdvFor Respondent: Shri A.M. Govil CIT (DR)
Section 92C

…gible asset being goodwill, reputation and credibility. He, therefore, made a further disallowance of Rs. 3,11,81,808/- being 10% of such expenditure. 60. Ld. CIT(A) following the decision of Hon’ble Supreme Court in the case of Empire Jute Company Vs. CIT 124 ITR 1 held that the expenses were relatable to the carrying on or conduct of the business more profitable and were integral part of the profit earning process. He further observed that the memory of consumers is short and especially in a fast evolving liquor market, the consumers are required to be reminded on a regular basis the positioning of the pr…

The Commissioner of Income Tax vs. M.Venkata Krishna Mohan

ITTA/325/2005HC Telangana07 Apr 2016

Bench: RAMESH RANGANATHAN,M.SATYANARAYANA MURTHY

Merck Ltd, Mumbai vs. DCIT 7(2)(1), Mumbai

In the result, the appeal of the Assessing Officer for the assessment year

ITA 1222/MUM/2015[2009-10]Status: DisposedITAT Mumbai31 Mar 2016AY 2009-10
Section 133(6)Section 143(3)

…mployed, it cannot be said that the company had acquired benefit or advantage of enduring nature. 8. We may also mention at this stage that to the same effect is the judgment of the Supreme Court in Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC) wherein the following principle of law was enunciated : "In short, what has been held in this case is that if the expenditure is made once and for all with a view to bringing into existence an asset or an advantage for the enduring of a trade then there is good reason for treating such an expenditure as properly attributable not to revenue but…

DCIT Cir 7(2)(1), Mumbai vs. Merck Ltd, Mumbai

In the result, the appeal of the Assessing Officer for the assessment year

ITA 1172/MUM/2015[2010-11]Status: DisposedITAT Mumbai31 Mar 2016AY 2010-11
Section 133(6)Section 143(3)

…mployed, it cannot be said that the company had acquired benefit or advantage of enduring nature. 8. We may also mention at this stage that to the same effect is the judgment of the Supreme Court in Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC) wherein the following principle of law was enunciated : "In short, what has been held in this case is that if the expenditure is made once and for all with a view to bringing into existence an asset or an advantage for the enduring of a trade then there is good reason for treating such an expenditure as properly attributable not to revenue but…

Merck Ltd, Mumbai vs. DCIT RG 6(3), Mumbai

In the result, the appeal of the Assessing Officer for the assessment year

ITA 1946/MUM/2014[2009-10]Status: DisposedITAT Mumbai31 Mar 2016AY 2009-10
Section 133(6)Section 143(3)

…mployed, it cannot be said that the company had acquired benefit or advantage of enduring nature. 8. We may also mention at this stage that to the same effect is the judgment of the Supreme Court in Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC) wherein the following principle of law was enunciated : "In short, what has been held in this case is that if the expenditure is made once and for all with a view to bringing into existence an asset or an advantage for the enduring of a trade then there is good reason for treating such an expenditure as properly attributable not to revenue but…

Commissioner of Income Tax-III vs. M/S Subhash Kabini Power Corporation Limited

ITA/169/2015HC Karnataka29 Mar 2016

Bench: B.V.NAGARATHNA,JAYANT PATEL

Section 260Section 263Section 80I

…loom-hours can be termed as capital receipt and not income out of business. 5. Subsequently, in a later decision of the Apex Court, a question came up for consideration in the case of M/s. Empire Jute Co. Ltd. v. Commissioner of Income Tax [(1980) 4 SCC 25] the question which arose before the Apex Court was, if loom-hours are purchased by the manufacturing mills, whether it can be termed as capital expenditure or revenue expenditure. In the said decision, the earlier decision of the Apex Court in the case of Maheswari Devi Jute Mills (supra) was also relied upon by the Revenue and after consid…

DCIT, New Delhi vs. M/S. C.B. Richard Ellis South Asia Pvt. Ltd., New Delhi

In the result, both the appeals filed by the revenue are dismissed

ITA 775/DEL/2013[2008-09]Status: DisposedITAT Delhi07 Mar 2016AY 2008-09

Bench: Shri A.T. Varkey & Shri Prashant Maharishi

For Appellant: S/Shri Gautam Jain and Piyush Kumar Kamal, AdvocatesFor Respondent: Shri B.R.R. Kumar, Senior DR
Section 143(1)Section 143(3)Section 14ASection 32Section 36(1)(ii)

…ble under section 37 of the Act. The Tribunal also relied upon the judgment of the Supreme Court in the cases of Calcutta Company Ltd. v. CIT[1959] 37 ITR 1 (SC), CITv. Associated Cement Companies Ltd.[1988] 172 ITR 257 (SC), Empire Jute Co. Ltd. v. CIT[1980] 124 ITR 1 (SC) and the judgment of this court in CIT v. Salora International Ltd.[2009] 308 ITR 199 (Delhi).” 7.9 For the reasons stated above, disallowance made of Rs. 27,22,514/- out of total claim of expenditure of Rs. 34,03,142/- is deleted. Grounds raised by the appellant are allowed. 21 ITA No.709/Del./2012 ITA No.775/Del./2013 27. From the aforesaid…

ACIT, New Delhi vs. M/S. Cb Richard Ellis South Asia Pvt. Ltd., New Delhi

In the result, both the appeals filed by the revenue are dismissed

ITA 709/DEL/2012[2007-08]Status: DisposedITAT Delhi07 Mar 2016AY 2007-08

Bench: Shri A.T. Varkey & Shri Prashant Maharishi

For Appellant: S/Shri Gautam Jain and Piyush Kumar Kamal, AdvocatesFor Respondent: Shri B.R.R. Kumar, Senior DR
Section 143(1)Section 143(3)Section 14ASection 32Section 36(1)(ii)

…ble under section 37 of the Act. The Tribunal also relied upon the judgment of the Supreme Court in the cases of Calcutta Company Ltd. v. CIT[1959] 37 ITR 1 (SC), CITv. Associated Cement Companies Ltd.[1988] 172 ITR 257 (SC), Empire Jute Co. Ltd. v. CIT[1980] 124 ITR 1 (SC) and the judgment of this court in CIT v. Salora International Ltd.[2009] 308 ITR 199 (Delhi).” 7.9 For the reasons stated above, disallowance made of Rs. 27,22,514/- out of total claim of expenditure of Rs. 34,03,142/- is deleted. Grounds raised by the appellant are allowed. 21 ITA No.709/Del./2012 ITA No.775/Del./2013 27. From the aforesaid…

ACIT, Circle - 5, Kolkata vs. M/S. Essel Mining & Industries Ltd., Kolkata

In the result the appeal of the revenue is dismissed

ITA 56/KOL/2010[2006-07]Status: DisposedITAT Kolkata02 Mar 2016AY 2006-07

Bench: Hon’Ble Shri N.V.Vasudevan, Jm & Shri Waseem Ahmed, Am] Assessment Year : 2006-07

For Appellant: Shri. Snehotpal Datta, JCIT, Sr.DRFor Respondent: Shri D.S.Damle, FCA
Section 37(1)

…r obstruction or disability that has arisen in continuing of mining business. We are of the considered view that since it is a one-time payment, it could not be considered as capital in nature. Hon’ble Apex Court has held in Empire Ju9te Company Ltd. –vs-CIT [124 ITR 1] that there may be cases where expenditure, even if incurred for obtaining an advantage of any enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. Hon’ble Apex Court observed that if the advantage consisted of merely in facilitating the concerned assessee’s trading operations or enabling the ma…

ACIT, Circle - 5, Kolkata vs. M/S. Suman Industries Ltd., Kolkata

In the result, Revenue’s appeal is dismissed

ITA 1522/KOL/2009[2006-07]Status: DisposedITAT Kolkata29 Feb 2016AY 2006-07

Bench: Shri Mahavir Singh & Shri Waseem Ahmedassessment Year :2006-07

Section 143(3)Section 35D

…nds. Ltd. Page 5 held that the assessee did not acquire any capital asset by spending money on the construction of building & accordingly the expenditure was held to be revenue in nature. 7. The Supreme Court in the case of Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 observed as follows:- ‘There may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, my, nonetheless, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test.…

The Karnataka State Co-Operative Apex Bank Ltd, Bangalore vs. Deputy Commissioner of Income Tax, Bangalore

In the result, grounds of appeal Nos

ITA 1372/BANG/2014[2007-08]Status: DisposedITAT Bangalore29 Feb 2016AY 2007-08

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Raothe Karnataka State Co-Operative Apex Bank Ltd., ‘Uthunga’, No.1, Pmk Road, Chamarajpet, Bangalore-560018. … Appellant Pan:Aabat 0269 J Vs. Deputy Commissioner Of Income-Tax, Circle 3(1), Bangalore. … Respondent

For Appellant: Shri Bharath L, CAFor Respondent: Shri Sanjay Kumar, CIT(DR)
Section 143(1)Section 143(2)Section 143(3)Section 147Section 148Section 28

…Bank of India in giving subsidies to the State Bank of Saurashtra, the State Bank of Patiala, etc., under section 48(1) of the said Act of 1959, represented revenue expenditure. Lastly, we may mention that in the case of Empire Jute Company Ltd. v. CIT [1980] 124 ITR 1, it has been held by the Supreme Court that what may be a capital receipt in the hands of the payee, need not necessarily be capital expenditure in relation to a payer. In the circumstances, there is no merit in the argument of the Department that because the subsidy is not income in the hands of the payee, it cannot be revenue expenditure in relat…

DCIT, New Delhi vs. M/S. Sbi Cards Payments & Services Pvt. Ltd., New Delhi

In the result, the appeal of the revenue is dismissed

ITA 5804/DEL/2013[2008-09]Status: DisposedITAT Delhi01 Feb 2016AY 2008-09

Bench: Shri N.K. Saini & Shri A.T. Varkey

For Appellant: Shri Sanjay Sabharwal, Senior AdvocateFor Respondent: Shri Sujit Kumar, Senior DR

…e of the Revenue or the Assessing Officer that the database was ever sold to third parties. It certainly did not result in an advantage of enduring nature. Even, enduring benefit test as elucidated by the Supreme Court in Empire Jute Company versus CIT (1980) 124 ITR 1 (SC), is not applicable when the expenditure consists of merely facilitating trading or business operation or enables the management to conduct the business more efficiently as elucidated in detail in paragraphs below. The Commissioner of Income Tax (Appeals) rightly referred to and observed that the verification reports regarding creditworthiness…

DCIT, Bangalore vs. M/S Sjs Enterprises Pvt. Ltd., Bangalore

In the result, the Revenue’s appeal is dismissed

ITA 680/BANG/2014[2009-10]Status: DisposedITAT Bangalore28 Dec 2015AY 2009-10

Bench: Smt. Asha Vijayaraghavan & Shri Abraham P. Georgeassessment Year : 2009-10

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri Sunil Kumar Agarwala, Jt. CIT(DR)

…Biotech Ltd., Delhi HC judgment dated 17.1.2012 in ITA No.22 & 24/2012. CIT v. Toyota Kirloskar Motor P Ltd. 349 ITR 65 (Kar) CIT v. IBM India Ltd. 357 ITR 88 (Kar) 38. We have heard both the parties. The Hon’ble Supreme Court in Empire Jute Co. Ltd. v. CIT, 124 ITR 1 (SC) at page 10 held as follows:- “ …… There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid dow…

Sjs Enterprises Pvt. Ltd., Bangalore vs. DCIT, Bangalore

In the result, the Revenue’s appeal is dismissed

ITA 660/BANG/2014[2009-10]Status: DisposedITAT Bangalore28 Dec 2015AY 2009-10

Bench: Smt. Asha Vijayaraghavan & Shri Abraham P. Georgeassessment Year : 2009-10

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri Sunil Kumar Agarwala, Jt. CIT(DR)

…Biotech Ltd., Delhi HC judgment dated 17.1.2012 in ITA No.22 & 24/2012. CIT v. Toyota Kirloskar Motor P Ltd. 349 ITR 65 (Kar) CIT v. IBM India Ltd. 357 ITR 88 (Kar) 38. We have heard both the parties. The Hon’ble Supreme Court in Empire Jute Co. Ltd. v. CIT, 124 ITR 1 (SC) at page 10 held as follows:- “ …… There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid dow…

Moog Controls (India) Private Limited, Bangalore vs. CIT, Bangalore

In the result, the appeal by the assessee is partly allowed for statistical purposes

ITA 551/BANG/2015[2009-10]Status: DisposedITAT Bangalore27 Nov 2015AY 2009-10

Bench: Smt. Asha Vijayaraghavan & Shri Abraham P. George

For Appellant: Shri K.R. Vasudevan, AdvocateFor Respondent: Shri Sunil Kumar Agarwala, Jt. CIT(DR)
Section 92C

…essential condition to capitalize and claim depreciation under the Act. e. Further, every advantage of enduring nature acquired by an assessee may not bring a capital asset into existence. As held by the Hon’ble Supreme Court in the case of Empire Jute Ltd. (124 ITR 1), what is material to consider is the nature of the advantage in a commercial sense. If the advantage consists merely in facilitating the assessee’s business operations or enabling the management and conduct of the assessee’s business more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue…

J.P. Morgan Services India P. Ltd, Mumbai vs. ITO RG 8(2)(2), Mumbai

In the result, Cross Objection filed by the assessee is dismissed and Assessee’s appeal is partly allowed and Revenue’s appeal is dismissed

ITA 5301/MUM/2011[2003-04]Status: DisposedITAT Mumbai30 Oct 2015AY 2003-04

Bench: Shri Amit Shukla & Shri Ashwani Tanejaassessment Year: 2003-04 J.P. Morgan Services Ito Rg 8(2)(2) India P. Ltd. बनाम/ 707A, C-10 7Th Floor, 9Th Floor, B Wing, Prism Bandra Kurla Complex Vs. Towers Mindspace, Bandra (E) Malad (W) Mumbai-51 Mumba-40004 (Assessee) (Revenue) P.A. No.Aabcd0503B Assessment Year: 2003-04 Ito Rg 8(2)(2) J.P. Morgan Services India P. 707A, C-10 7Th Ltd. बनाम/ Floor, Bandra 9Th Floor, B Wing, Prism Towers Vs. Kurla Complex Mindspace, Malad (W) Bandra (E) Mumba-40004 Mumbai-51. (Revenue) (Respondent) P.A. No. Aabcd0503B

For Appellant: 2. It is noted that the cross objection has been filed by the assessee beyond th
Section 143(3)Section 250Section 32

…आयकर अपील"य अ"धकरण, मुंबई "यायपीठ,जे,मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “J”, MUMBAI "ी अ"मत शु"ला, "या"यक सद"य एवं "ी अ"वनी तनेजा, लेखा सद"य, के सम" Before Shri Amit Shukla, Judicial Member, and Shri Ashwani Taneja, Accountant Member Assessment Year: 2003-04 J.P. Morgan Services ITO RG 8(2)(2) India P. Ltd. बनाम/ 707A, C-10 7th Floor, 9th Floor, B Wing, Prism Bandra Kurla Complex Vs. Towers Mindspace, Bandra (E) Malad (W) Mumbai-51 Mumba-40004 (Assessee) (Revenue) P.A. No.AABCD0503B Assessment Year: 2003-04 ITO RG 8(2)(2) J.P. Morgan Services India P. 707A, C-10 7th Ltd. बनाम/ Floor, Ban…