Godhra Electricity Co. Ltd. v. CIT

225 ITR 746Supreme Court of India1997#130 most cited

What is Godhra Electricity Co. Ltd. v. CIT authority for?

Income is not taxable until it actually accrues or is received; hypothetical income, based on a mere claim not yet settled, is not chargeable to tax.

514

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2009 to 2026.

Also referred to as

Godhra Electricity Co. Ltd. v. CIT · income accrual · hypothetical income · actual receipt · unconfirmed claims · income tax

Sections most often in play

Section 143(3)Section 147Section 148Section 14ASection 40A(3)Section 37(1)Section 142(2A)Section 153A

Issues it is cited on

section 10(31a)section 100section 76undisclosed foreign income and assetssection 142(2c)section 149(1)(c)section 4(2)section 153b(1)(b)section 201(3)section 158basection 153b(1)rectification under section 154

Judgments citing Godhra Electricity Co. Ltd. v. CIT

ACIT, New Delhi vs. Sh. Sandeep Bindra, New Delhi

In the result these grounds of appeal of the revenue are dismissed

ITA 2783/DEL/2011[2003-04]Status: DisposedITAT Delhi28 May 2018AY 2003-04

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi

For Appellant: Shri Rajiv Saxena, AdvFor Respondent: Shri SS Rana, CIT DR
Section 145(3)Section 43B

…ceipt or the substance of the matter is the income. If the income does not result at all there cannot be a tax, even though in book keeping , an entry is made about a hypothetical income which does not materialise .  Godhra Electricity Co. Ltd vs. CIT (1997) 225 ITR 746 (SC) Held that “the question whether there was real accrual of income to the assessee company in respect of enhanced charges for the supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. “ “The High Court held that in the mercantile system of accounting it is real income , as d…

ACIT, New Delhi vs. Sh. Sandeep Bindra, New Delhi

In the result these grounds of appeal of the revenue are dismissed

ITA 2782/DEL/2011[2002-03]Status: DisposedITAT Delhi28 May 2018AY 2002-03

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi

For Appellant: Shri Rajiv Saxena, AdvFor Respondent: Shri SS Rana, CIT DR
Section 145(3)Section 43B

…ceipt or the substance of the matter is the income. If the income does not result at all there cannot be a tax, even though in book keeping , an entry is made about a hypothetical income which does not materialise .  Godhra Electricity Co. Ltd vs. CIT (1997) 225 ITR 746 (SC) Held that “the question whether there was real accrual of income to the assessee company in respect of enhanced charges for the supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. “ “The High Court held that in the mercantile system of accounting it is real income , as d…

Shri Sandeep Bindra, New Delhi vs. ACIT, New Delhi

In the result these grounds of appeal of the revenue are dismissed

ITA 2651/DEL/2011[2006-07]Status: DisposedITAT Delhi28 May 2018AY 2006-07

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi

For Appellant: Shri Rajiv Saxena, AdvFor Respondent: Shri SS Rana, CIT DR
Section 145(3)Section 43B

…ceipt or the substance of the matter is the income. If the income does not result at all there cannot be a tax, even though in book keeping , an entry is made about a hypothetical income which does not materialise .  Godhra Electricity Co. Ltd vs. CIT (1997) 225 ITR 746 (SC) Held that “the question whether there was real accrual of income to the assessee company in respect of enhanced charges for the supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. “ “The High Court held that in the mercantile system of accounting it is real income , as d…

Shri Sandeep Bindra, New Delhi vs. ACIT, New Delhi

In the result these grounds of appeal of the revenue are dismissed

ITA 2650/DEL/2011[2005-06]Status: DisposedITAT Delhi28 May 2018AY 2005-06

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi

For Appellant: Shri Rajiv Saxena, AdvFor Respondent: Shri SS Rana, CIT DR
Section 145(3)Section 43B

…ceipt or the substance of the matter is the income. If the income does not result at all there cannot be a tax, even though in book keeping , an entry is made about a hypothetical income which does not materialise .  Godhra Electricity Co. Ltd vs. CIT (1997) 225 ITR 746 (SC) Held that “the question whether there was real accrual of income to the assessee company in respect of enhanced charges for the supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. “ “The High Court held that in the mercantile system of accounting it is real income , as d…

Shri Sandeep Bindra, New Delhi vs. ACIT, New Delhi

In the result these grounds of appeal of the revenue are dismissed

ITA 2649/DEL/2011[2004-05]Status: DisposedITAT Delhi28 May 2018AY 2004-05

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi

For Appellant: Shri Rajiv Saxena, AdvFor Respondent: Shri SS Rana, CIT DR
Section 145(3)Section 43B

…ceipt or the substance of the matter is the income. If the income does not result at all there cannot be a tax, even though in book keeping , an entry is made about a hypothetical income which does not materialise .  Godhra Electricity Co. Ltd vs. CIT (1997) 225 ITR 746 (SC) Held that “the question whether there was real accrual of income to the assessee company in respect of enhanced charges for the supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. “ “The High Court held that in the mercantile system of accounting it is real income , as d…

Shri Sandeep Bindra, New Delhi vs. ACIT, New Delhi

In the result these grounds of appeal of the revenue are dismissed

ITA 2648/DEL/2011[2003-04]Status: DisposedITAT Delhi28 May 2018AY 2003-04

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi

For Appellant: Shri Rajiv Saxena, AdvFor Respondent: Shri SS Rana, CIT DR
Section 145(3)Section 43B

…ceipt or the substance of the matter is the income. If the income does not result at all there cannot be a tax, even though in book keeping , an entry is made about a hypothetical income which does not materialise .  Godhra Electricity Co. Ltd vs. CIT (1997) 225 ITR 746 (SC) Held that “the question whether there was real accrual of income to the assessee company in respect of enhanced charges for the supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. “ “The High Court held that in the mercantile system of accounting it is real income , as d…

Matoshree Realtors, Mumbai vs. ACIT RG 18(3), Mumbai

In the result, the appeal filed by the assessee is hereby ordered to be allowed for statistical purpose

ITA 1532/MUM/2016[2011-12]Status: DisposedITAT Mumbai23 May 2018AY 2011-12

Bench: Shri Shamim Yahya, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.1532/Mum/2016 (निर्धारण वर्ा / Assessment Year: 2011-12) M/S. Matoshree Realtors बिधम/ Acit, Range 21(2), Piramal B/202, Matoshree Tower, Chambers, Lal Baugh, Parel Vs. Padmabai Thakkar Marg, Mumbai-400012 Mahim, Mumbai-400016 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. :Aamfm5625M (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Assessee By: Shri Dr. K. Shivaram Neelam C. Jadhav Revenue By: Shri Ram Tiwari ( Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 18.05.2018 घोषणा की तारीख /Date Of Pronouncement: 23.05.2018 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 02.02.2016 Passed By The Commissioner Of Income Tax (Appeals)-33, Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y.2011- 12. 2. The Assessee Has Raised The Following Grounds: - “1. On The Facts & In The Circumstances Of The Case & In Law The Ld. Cit(A) Erred In Sustaining The Addition Of Rs.1,78,06,159/- Made Y The Ao On Account Of Undisclosed Interest Income.

For Appellant: Shri Dr. K. Shivaram Neelam CFor Respondent: Shri Ram Tiwari ( Sr. AR)

…oan amount was adjusted against the said term deposits and nothing was received at that time. The Ld. Representative of the assessee has argued that his case is fully covered in view of the law settled in the case of Godhra Electricity Co. Ltd. Vs. CIT (1997) 225 ITR 746 (SC) and CIT Vs. Excel Industries Ltd. (2013) 358 ITR 295 (SC). The copy of letter of the bank concerned dated 05.03.2014 is on record which lies at page no. 14 of the paper book in which on 01.04.2010, the term deposit has been shown to the tune of Rs.11,78,06,159/-including accrued interest to the tune of Rs.1,78,06,159/- on 31.03.2011. The loa…

A.C.I.T Cir - 46, Kolkata vs. The Bantra Co - Operative Bank Ltd, Howrah

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

ITA 2153/KOL/2013[2008-09]Status: DisposedITAT Kolkata28 Mar 2018AY 2008-09

Bench: Hon’Ble Shri M.Balaganesh, Am & Hon’Ble Shri S.S.Viswanethra Ravi, Jm] I.T.A No. 1936 /Kol/2013 Assessment Year : 2008-09 The Bantra Co-Operative Bank Ltd. -Vs- Ito, Ward-46(4), Kolkata. [Pan: Aabct 2605 G] (Appellant) (Respondent) I.T.A No. 2153 /Kol/2013 Assessment Year : 2008-09 Ito, Ward-46(4), Kolkata. -Vs- The Bantra Co-Operative Bank Ltd. [Pan: Aabct 2605 G] (Appellant) (Respondent)

For Appellant: Shri D. S. Damle, FCAFor Respondent: Shri S. Dasgupta, Addl. CIT(DR)
Section 143(3)Section 28

…t be any tax and that if an income has not materialized, then merely an entry made about of hypothetical income by following Book-keeping method, the liability to tax cannot be attracted. This view has been upheld in the case of CIT vs. Godhra Electricity Co. 225 ITR 746 (S C). Therefore, it is held that this amount cannot be considered as income in the current year merely because such an entry had been made in the Account. The taxability of such an amount is determined by its basic nature which is to be seen and not how the amount has been treated in the Accounts. It is clear from the facts that the amount was o…

The Bantra Co - Operative Bank Ltd, Howrah vs. I.T.O WD - 46(4), Kolkata

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

ITA 1936/KOL/2013[2008-09]Status: DisposedITAT Kolkata28 Mar 2018AY 2008-09

Bench: Hon’Ble Shri M.Balaganesh, Am & Hon’Ble Shri S.S.Viswanethra Ravi, Jm] I.T.A No. 1936 /Kol/2013 Assessment Year : 2008-09 The Bantra Co-Operative Bank Ltd. -Vs- Ito, Ward-46(4), Kolkata. [Pan: Aabct 2605 G] (Appellant) (Respondent) I.T.A No. 2153 /Kol/2013 Assessment Year : 2008-09 Ito, Ward-46(4), Kolkata. -Vs- The Bantra Co-Operative Bank Ltd. [Pan: Aabct 2605 G] (Appellant) (Respondent)

For Appellant: Shri D. S. Damle, FCAFor Respondent: Shri S. Dasgupta, Addl. CIT(DR)
Section 143(3)Section 28

…t be any tax and that if an income has not materialized, then merely an entry made about of hypothetical income by following Book-keeping method, the liability to tax cannot be attracted. This view has been upheld in the case of CIT vs. Godhra Electricity Co. 225 ITR 746 (S C). Therefore, it is held that this amount cannot be considered as income in the current year merely because such an entry had been made in the Account. The taxability of such an amount is determined by its basic nature which is to be seen and not how the amount has been treated in the Accounts. It is clear from the facts that the amount was o…

Dy.Commissioner of Income Tax, Circle-16(2), Hyderabad vs. Maruti Securities Limited, Secundrabad

In the result, appeal filed by the Revenue is allowed for statistical purposes

ITA 1651/HYD/2017[2013-14]Status: DisposedITAT Hyderabad23 Mar 2018AY 2013-14

Bench: Smt. P.Madhavi Devi & Shri D.S. Sunder Singh

For Appellant: Shri K. Sai PrasadFor Respondent: Smt. N. Swapna, DR

…osition that the income cannot be taxed on hypothetical basis, and it is only the real income that is to be brought to tax. In this behalf, we also rely, giving below summary of the ratio laid down, on the following decisions a) CIT vs. Godhra Electricity Co. 225 ITR 746 (SC), The view expressed was that if income does not result at all, there cannot be any tax and that if an income has not materialized, then merely an entry made about a hypothetical income by following book keeping methods, the liability to tax cannot be attracted. b) Andhra bank(225 ITR 447)(SC): It was held, that there cannot be a tax if no i…

Canara Bank, Bangalore vs. Joint Commissioner of Income Tax Ltu, Bangalore

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

ITA 865/BANG/2017[2012-13]Status: DisposedITAT Bangalore23 Mar 2018AY 2012-13

Bench: Shri Sunil Kumar Yadav & Shri Inturi Rama Raom/S.Canara Bank, Bsca Section, Head Office, J C Road, Bengaluru-560 002. Pan: Aaacc 6106 G … Appellant Vs. Joint Commissioner Of Income-Tax, Ltu, Bengaluru. … Respondent

For Appellant: Shri S.Ananathan, CAFor Respondent: Shri Sanjay Kumar, CIT(DR)
Section 115JSection 143(3)Section 36(1)(viia)Section 40

…l income. No income can be taxed unless otherwise accrued and realized. Reliance in this regard can be placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas & Co. (46 ITR 144)(SC) and Godhra Electricity Co. Ltd vs. CIT (225 ITR 746)(SC). This issue was settled by the Hon’ble Madras High Court in the case of Indian Overseas Bank vs. CIT (183 ITR 200). In the light of these judgments, we hold that no income can be taxed on notional basis unless and otherwise income accrued to the assessee.” Respectfully following the decision of the co-ordinate bench in the assessee’s own cas…

ITO 9(1)(3), Mumbai vs. Anchor Residency P.Ltd, Mumbai

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

ITA 4407/MUM/2015[2011-12]Status: DisposedITAT Mumbai14 Mar 2018AY 2011-12

Bench: Shri Joginder Singh () & Shri G Manjunatha ()

Section 143(2)Section 36(1)(iii)

…idered from the point of view of real income taking the probability or improbability of realisation in a realistic manner and dovetailing of these factors..." CIT v/s, Bokaro Steel Ltd. - [(1999) 236 ITR 315 (SC)] Godhra Electricity Co. Ltd. v/s. CIT- [(1997) 225 ITR 746 (SC)] Accrual must be judged from the real income theory by taking the probability or improbability of realisation in a realistic manner. 4. CIT v/s. VTC Leasing & Finance Ltd. - [(2006) 215 CTR (Raj) 51] [In the context of interest income] Realities of life have to be considered while arriving at taxable income. IV. ACCRUAL CONCERNING INTEREST I…

DCIT 1(2), Mumbai vs. Maharashtra State Elctricity Board, Mumbai

ITA 3559/MUM/2013[2006-07]Status: DisposedITAT Mumbai07 Mar 2018AY 2006-07

Bench: Shri G. S. Pannu, Am & Shri Sandeep Gosain, Jm आयकरअपीलसं./ I.T.A. No. 3559/Mum/2013 (निर्धारणवर्ा / Assessment Year:2006-07)

For Appellant: Shri H. N. Sinha, DRFor Respondent: Shri Niraj Sheth, AR
Section 143(3)Section 251(1)(a)

…vs. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC), CIT vs. Modi Rubber Ltd. (1998) 148 CTR (Del) 448: (1998) 230 ITR 817 (Del), UCO Bank vs. CIT (1999) 154 CTR (SC) 88: (1999) 237 ITR 889 (SC), Godhra Electricity Co. vs. CIT (1997) 139 CTR (SC) 564: (1997) 225 ITR 746 (SC) and Poona Electricity Supply Co. Ltd. vs. CIT (1965) 57 ITR 521 (SC) relied on. (Paras 5, 5.2, 5.3, 5.9 & 5.12)" I am of the view that the impugned income is a hypothetical income until the dispute is settled. Respectfully following the above decisions, I hold that these receipts are not chargeable to Income- tax in this assessment year. I…

Dhanraj Mills P.Ltd, Palghar vs. ACIT (OSD-II) Cr 7, Thane

In the result, the ground raised by the assessee in all the assessment years challenging additions made by the AO towards interest receivable from CIFCO group of companies, Excel & Co, VKSA

ITA 1255/MUM/2017[1993-94]Status: DisposedITAT Mumbai19 Jan 2018AY 1993-94

Bench: Shri Saktijit Dey () & Shri G Manjunatha ()

Section 143(3)Section 234ASection 271

…1 Dhanraj Mills Pvt Ltd IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI Before Shri Saktijit Dey (JUDICIAL MEMBER) AND Shri G Manjunatha (ACCOUNTANT MEMBER) I.T.A Nos.1679 to 1682/Mum/2015 (Assessment years: 1993-94 to 1996-97) AND I.T.A Nos.1255 to 1258/Mum/2017 (Assessment years: 1993-94 to 1996-97) Dhanraj Mills Pvt Ltd vs ACIT(OSD-II), CR-7, Mumbai A-604, 6th Floor, Pranik Chambers, Saki Vihar Road, Sakinaka, Andheri (E), Mumbai-72 PAN : AAACD5580D APPELLANT RESPONDEDNT Appellant by Shri Deepak P Tikekar Respondent by Dr P Daniel Date of hearing 01-11 -2017 Date of pronouncement 19-01-2018…

Dhanraj Mills P.Ltd, Mumbai vs. ACIT (OSD-II) Cr-7, Mumbai

In the result, the ground raised by the assessee in all the assessment years challenging additions made by the AO towards interest receivable from CIFCO group of companies, Excel & Co, VKSA

ITA 1679/MUM/2015[1993-94]Status: DisposedITAT Mumbai19 Jan 2018AY 1993-94

Bench: Shri Saktijit Dey () & Shri G Manjunatha ()

Section 143(3)Section 234ASection 271

…1 Dhanraj Mills Pvt Ltd IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI Before Shri Saktijit Dey (JUDICIAL MEMBER) AND Shri G Manjunatha (ACCOUNTANT MEMBER) I.T.A Nos.1679 to 1682/Mum/2015 (Assessment years: 1993-94 to 1996-97) AND I.T.A Nos.1255 to 1258/Mum/2017 (Assessment years: 1993-94 to 1996-97) Dhanraj Mills Pvt Ltd vs ACIT(OSD-II), CR-7, Mumbai A-604, 6th Floor, Pranik Chambers, Saki Vihar Road, Sakinaka, Andheri (E), Mumbai-72 PAN : AAACD5580D APPELLANT RESPONDEDNT Appellant by Shri Deepak P Tikekar Respondent by Dr P Daniel Date of hearing 01-11 -2017 Date of pronouncement 19-01-2018…

DCIT, Cir-6(1), Kolkata vs. M/S India City Properties Ltd., Kolkata

In the result, the revenue’s appeal for A

ITA 1185/KOL/2015[2011-2012]Status: DisposedITAT Kolkata29 Nov 2017AY 2011-2012
Section 23

…come and not notional or hypothetical income. The following decisions of the Supreme Court relied upon by the appellant is applicable to its case: 1. UCO Bank vs CIT (237 ITR 889) 2. CIT vs Shoorji Vallabhdas (46 ITR 144) 3. Godra Electricity Co. Ltd. vs CIT (225 ITR 746) I further find that this particular issue has been adjudicated upon by various Courts including the jurisdictional Calcutta High Court in the case of CIT vs Satya Co. Ltd. (75 Taxman 193) and Full Bench of Delhi High Court in the case of CIT vs Moni Kumar Subba (333 ITR 38) wherein the notional interest assessed by the AO on security deposits re…

DCIT, Cir-6(1), Kolkata vs. M/S India City Properties Ltd., Kolkata

In the result, the revenue’s appeal for A

ITA 1184/KOL/2015[2010-2011]Status: DisposedITAT Kolkata29 Nov 2017AY 2010-2011
Section 23

…come and not notional or hypothetical income. The following decisions of the Supreme Court relied upon by the appellant is applicable to its case: 1. UCO Bank vs CIT (237 ITR 889) 2. CIT vs Shoorji Vallabhdas (46 ITR 144) 3. Godra Electricity Co. Ltd. vs CIT (225 ITR 746) I further find that this particular issue has been adjudicated upon by various Courts including the jurisdictional Calcutta High Court in the case of CIT vs Satya Co. Ltd. (75 Taxman 193) and Full Bench of Delhi High Court in the case of CIT vs Moni Kumar Subba (333 ITR 38) wherein the notional interest assessed by the AO on security deposits re…

DCIT, Cir-6(1), Kolkata vs. M/S India City Properties Ltd., Kolkata

In the result, the revenue’s appeal for A

ITA 1183/KOL/2015[2009-2010]Status: DisposedITAT Kolkata29 Nov 2017AY 2009-2010
Section 23

…come and not notional or hypothetical income. The following decisions of the Supreme Court relied upon by the appellant is applicable to its case: 1. UCO Bank vs CIT (237 ITR 889) 2. CIT vs Shoorji Vallabhdas (46 ITR 144) 3. Godra Electricity Co. Ltd. vs CIT (225 ITR 746) I further find that this particular issue has been adjudicated upon by various Courts including the jurisdictional Calcutta High Court in the case of CIT vs Satya Co. Ltd. (75 Taxman 193) and Full Bench of Delhi High Court in the case of CIT vs Moni Kumar Subba (333 ITR 38) wherein the notional interest assessed by the AO on security deposits re…

DCIT, Jaipur vs. Harshvardhan Land Ltd., Jaipur

In the result, all the appeals of the Revenues are dismissed

ITA 582/JPR/2016[2010-11]Status: DisposedITAT Jaipur22 Nov 2017AY 2010-11
For Appellant: Shri Sandeep Jhanwar (C.A.)For Respondent: Shri Vrindera Mehta (CIT)
Section 138Section 153A

…recoverable. It is settled law that the income tax cannot be levied on hypothetical income. In support of his contention he has relied upon the following decisions. • CIT Vs. shoorji Vallabhadas & Company 46ITR 144 (SC) • Godhra Electricity Co. Ltd. Vs. CIT 225 ITR 746 (SC) • CIT Vs. Excel Industries ltd. 358 ITR 295 (SC) • CIT Vs. Eastern Investment Ltd. 213 ITR 334 (Cal.)(HC) • CIT Vs. Mahavir Co. (P) Ltd. 206 ITR 68(Raj.)(HC) 5. We have considered the rival submissions as well as relevant material on record. The assessee has entered into lease agreement with M/s R.L. Verma & Sons (HUF) dated 19.08.2009 whe…

ACIT, New Delhi vs. Shri Pavel Garg, New Delhi

The appeal of the department stands partly allowed for statistical purposes in terms of our observations

ITA 5381/DEL/2011[2008-09]Status: DisposedITAT Delhi01 Nov 2017AY 2008-09

Bench: Shri Sudhanshu Srivastava & Shri Prashant Maharishi

For Appellant: Shri Rakesh Gupta, AdvocateFor Respondent: Shri Atiq Ahmod, Sr. DR
Section 139(5)Section 143(3)

…g company did not accept the claim and nothing was paid to the assessee in form of compensation. Records also revealed that the matter was in already in litigation at the time of first appellate proceedings. In the case of Godhra Electricity Co. Ltd. vs. CIT 225 ITR 746 (SC), the Hon’ble Apex Court held that if the income does not result at all, it cannot be taxed even though in book keeping an entry has been made about the hypothetical income which does not materialise. Thus, we are of the considered opinion that mere filing of insurance claim did not give any right to the assessee to receive income as the cla…