Income Tax, (1989) 111 ITR 377 (SC) and Jonas Woodhead and Sons (India) Limited v. CIT

224 ITR 342Supreme Court of India1997#1895 most cited

What is Income Tax, (1989) 111 ITR 377 (SC) and Jonas Woodhead and Sons (India) Limited v. CIT authority for?

Expenditure incurred for the expansion, extension, or betterment of an existing business, or for improvisation that is part of the existing business, is allowable as revenue expenditure. Payments made for acquiring technical know-how and exclusive rights for setting up a new business can be capital expenditure.

60

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2007 to 2025.

Also referred to as

Jonas Woodhead and Sons (India) Limited v. CIT · 224 ITR 342 · revenue expenditure · capital expenditure · technical know-how · new business · existing business · accretion to capital asset · section 37(1)

Sections most often in play

Section 143(3)Section 37(1)Section 194HSection 35ABBSection 40(a)(ia)Section 144BSection 260A

Issues it is cited on

section 35abbsection 35abtest of enduring benefitsection 35aenduring benefitresulting companydisallowance under section 40(a)(ia)prohibited by lawsection 194hpptsection 35demerger

Judgments citing Income Tax, (1989) 111 ITR 377 (SC) and Jonas Woodhead and Sons (India) Limited v. CIT

DCIT Circle 4(2), New Delhi vs. Bharti Hexacom Ltd., Delhi

In the result, the appeals of the revenue are partly allowed as indicated above

ITA 1113/DEL/2023[2019-20]Status: DisposedITAT Delhi12 Dec 2025AY 2019-20

Bench: Shri C.N. Prasad & Shri M. Balaganesh

Section 143(3)Section 194HSection 260ASection 35ASection 37(1)Section 40

…h effect from 1 August 1999 and laid down that variable annual license fee to be paid on the basis of the annual gross revenue. It was held that the reliance placed by the Hon'ble High Court in cases of Jonas Woodhead and Sons India Limited v. CIT 91 Taxman 1/224 ITR 342 (SC)(SC); CIT v. Best and Co [1966] 60 ITR 11 (SC); Southern Switch Gear Limited v. CIT 232 ITR 359 (SC) was misplaced, as these cases do not deal with a single source or purpose to which the payments in different forms have been made. The purpose of the payments in the said case was traceable to different subject matters. In the instant case, th…

DCIT Circle 4(2), New Delhi vs. Bharti Hexacom Ltd., Delhi

In the result, the appeals of the revenue are partly allowed as indicated above

ITA 1112/DEL/2023[2018-19]Status: DisposedITAT Delhi12 Dec 2025AY 2018-19

Bench: Shri C.N. Prasad & Shri M. Balaganesh

Section 143(3)Section 194HSection 260ASection 35ASection 37(1)Section 40

…h effect from 1 August 1999 and laid down that variable annual license fee to be paid on the basis of the annual gross revenue. It was held that the reliance placed by the Hon'ble High Court in cases of Jonas Woodhead and Sons India Limited v. CIT 91 Taxman 1/224 ITR 342 (SC)(SC); CIT v. Best and Co [1966] 60 ITR 11 (SC); Southern Switch Gear Limited v. CIT 232 ITR 359 (SC) was misplaced, as these cases do not deal with a single source or purpose to which the payments in different forms have been made. The purpose of the payments in the said case was traceable to different subject matters. In the instant case, th…

DCIT Circle-4(2), New Delhi vs. Bharti Hexacom Ltd., Delhi

In the result, the appeals of the revenue are partly allowed as indicated above

ITA 1111/DEL/2023[2017-18]Status: DisposedITAT Delhi12 Dec 2025AY 2017-18

Bench: Shri C.N. Prasad & Shri M. Balaganesh

Section 143(3)Section 194HSection 260ASection 35ASection 37(1)Section 40

…h effect from 1 August 1999 and laid down that variable annual license fee to be paid on the basis of the annual gross revenue. It was held that the reliance placed by the Hon'ble High Court in cases of Jonas Woodhead and Sons India Limited v. CIT 91 Taxman 1/224 ITR 342 (SC)(SC); CIT v. Best and Co [1966] 60 ITR 11 (SC); Southern Switch Gear Limited v. CIT 232 ITR 359 (SC) was misplaced, as these cases do not deal with a single source or purpose to which the payments in different forms have been made. The purpose of the payments in the said case was traceable to different subject matters. In the instant case, th…

DCIT Circle 4(2), New Delhi vs. Bharti Hexacom Ltd., Delhi

In the result, the appeals of the revenue are partly allowed as indicated above

ITA 1110/DEL/2023[2016-17]Status: DisposedITAT Delhi12 Dec 2025AY 2016-17

Bench: Shri C.N. Prasad & Shri M. Balaganesh

Section 143(3)Section 194HSection 260ASection 35ASection 37(1)Section 40

…h effect from 1 August 1999 and laid down that variable annual license fee to be paid on the basis of the annual gross revenue. It was held that the reliance placed by the Hon'ble High Court in cases of Jonas Woodhead and Sons India Limited v. CIT 91 Taxman 1/224 ITR 342 (SC)(SC); CIT v. Best and Co [1966] 60 ITR 11 (SC); Southern Switch Gear Limited v. CIT 232 ITR 359 (SC) was misplaced, as these cases do not deal with a single source or purpose to which the payments in different forms have been made. The purpose of the payments in the said case was traceable to different subject matters. In the instant case, th…

The Defence Accounts Co-Operative Credit Society Limited, Meerut vs. ITO Ward 1(2)(4), Meerut

In the result, the appeals of the revenue are partly allowed as indicated above

ITA 1112/DEL/2024[2019-20]Status: DisposedITAT Delhi30 Jan 2025AY 2019-20

Bench: Shri C.N. Prasad & Shri M. Balaganesh

Section 143(3)Section 194HSection 260ASection 35ASection 37(1)Section 40

…h effect from 1 August 1999 and laid down that variable annual license fee to be paid on the basis of the annual gross revenue. It was held that the reliance placed by the Hon'ble High Court in cases of Jonas Woodhead and Sons India Limited v. CIT 91 Taxman 1/224 ITR 342 (SC)(SC); CIT v. Best and Co [1966] 60 ITR 11 (SC); Southern Switch Gear Limited v. CIT 232 ITR 359 (SC) was misplaced, as these cases do not deal with a single source or purpose to which the payments in different forms have been made. The purpose of the payments in the said case was traceable to different subject matters. In the instant case, th…

Vartul Sharma, Ghaziabad vs. ITO Ward 3(2), Najibabad

In the result, the appeals of the revenue are partly allowed as indicated above

ITA 1111/DEL/2024[2017-18]Status: DisposedITAT Delhi30 Jan 2025AY 2017-18

Bench: Shri C.N. Prasad & Shri M. Balaganesh

Section 143(3)Section 194HSection 260ASection 35ASection 37(1)Section 40

…h effect from 1 August 1999 and laid down that variable annual license fee to be paid on the basis of the annual gross revenue. It was held that the reliance placed by the Hon'ble High Court in cases of Jonas Woodhead and Sons India Limited v. CIT 91 Taxman 1/224 ITR 342 (SC)(SC); CIT v. Best and Co [1966] 60 ITR 11 (SC); Southern Switch Gear Limited v. CIT 232 ITR 359 (SC) was misplaced, as these cases do not deal with a single source or purpose to which the payments in different forms have been made. The purpose of the payments in the said case was traceable to different subject matters. In the instant case, th…

Choice Hospitality (India) P.Ltd, New Delhi vs. ACIT, Circle-6(1), New Delhi

In the result, the appeal of the assessee is partly allowed for statistical purpose

ITA 7575/DEL/2018[2014-15]Status: DisposedITAT Delhi15 May 2024AY 2014-15

Bench: Sh. Kul Bharatdr. B. R. R. Kumar

For Appellant: NoneFor Respondent: Sh. Vivek Kr. Upadhyay, Sr. DR
Section 37(1)

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’, NEW DELHI Before Sh. Kul Bharat, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 7575/Del/2018 : Asstt. Year : 2014-15 Choice Hospitality (India) Pvt. Ltd., Vs. ACIT, B-92, 9th Floor, Himalaya House, 23, Circle-6(1), Kasturba Gandhi Marg, New Delhi-110002 New Delhi-110001 (APPELLANT) (RESPONDENT) PAN No. AABCC4755C Assessee by : None Revenue by : Sh. Vivek Kr. Upadhyay, Sr. DR Date of Hearing: 11.03.2024 Date of Pronouncement: 15.05.2024 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against th…

ACIT, Circle- 2, Ltu, New Delhi vs. Gkn Driveline (India) Ltd., Faridabad

In the result, the appeal of the Revenue stands dismissed

ITA 8384/DEL/2019[2016-17]Status: DisposedITAT Delhi16 Mar 2023AY 2016-17
For Appellant: Shri S.K. Aggarwal, CAFor Respondent: Ms. Indu Bala Saini, Sr. DR

…into between the Appellant and AP Newall, UK. The AO has made disallowance of royalty payment, relying on the decision of Hon'ble -Supreme Court in the case of Southern Switch Gear Ltd. Vs. CIT (232 ITR 359) and. Jonas Wood Head and Sons (India) Ltd. Vs. CIT (224 ITR 342). 8.1 During the appellate proceeding, the Ld. AR of the appellant is submitted that the AP Newall, UK has agreed to grant a non- exclusive right to use the Trademarks to G KN India in relation to the provision and promotion of the services, manufacture, promotion 3 ITA No.8384/Del./2019 and sale of products. As a consideration appellant shall p…

Dic India Ltd., Kolkata vs. DCIT, Circle - 10(1), Kolkata

In the result, the appeal of the assessee is allowed

ITA 2084/KOL/2018[2014-15]Status: DisposedITAT Kolkata04 Jan 2023AY 2014-15

Bench: Shri Rajesh Kumar & Shri Sonjoy Sarmai.T.A. No. 2084/Kol/2018 Assessment Year: 2014-2015 Dic India Limited,..................................Appellant Transport Depot Road, Kolkata-700088 [Pan: Aabcc0703C] -Vs.- Deputy Commissioner Of Income Tax,......Respondent Circle-10(1), Aayakarbhawan, P-7, Chowringhee Square, Kolkata-700069 Appearances By: Shri Akkaldudhwewala, A.R., Appeared On Behalf Of The Assessee Shri Hukumasema, Cit, Appeared On Behalf Of The Revenue

Section 144CSection 144C(5)

….E.C. (Pumps) Ltd. (supra) the question should. be answered in favour of the assessee. 8. Ms.Gutgutia, learned advocate appearing for the revenue, drew our attention to a judgment of the apex Court in the case of Jonas Woodhead& Sons (India) Ltd. v. CIT[1997] 224 ITR 342/91 Taxman 1 (SC). She submitted that the moot question for consideration has been indicated in the aforesaid judgment as follows: "Whether the expenditure or payment thus made makes an accretion to the capital asset and after the court comes to the conclusion that it does so, then it has to be held. to be a capital expenditure." 9. She contended…

ACIT Large Tax Payer Unit 2, Chennai vs. M/S India Japan Lighting Limited, Chennai

In the result, the appeals filed by the Revenue are

ITA 719/CHNY/2018[2014-15]Status: DisposedITAT Chennai23 Nov 2022AY 2014-15

Bench: Shri Mahavir Singh & Shri G. Manjunathaआयकरअपीलसं./Ita Nos.: 718 & 719/Chny/2018 िनधा"रणवष" / Assessment Years: 2011-12 & 2014-15

For Appellant: Shri. AR V Sreenivasan, Addl. CITFor Respondent: Shri. N V Balaji, Advocate
Section 143(3)Section 14A

…egarding day-to-day operations, layout, etc. In our opinion, this decision is not directly applicable to the facts of the given case. Another decision relied on by the ld.DR is of Hon'ble Supreme Court rendered in the case of Jonas Woodhead & Sons Ltd vs CIT, 224 ITR 342 in which it has been held that when assessee sets up a new business and the foreign firm in addition to supplying technical know-how renders valuable services in setting up the factory itself and assessee is allowed to manufacture the product in question even after the expiry of the agreement it is justified in holding that 25% of the royalty, th…

ACIT Large Tax Payer Unit 2, Chennai vs. M/S India Japan Lighting Limited, Chennai

In the result, the appeals filed by the Revenue are

ITA 718/CHNY/2018[2011-12]Status: DisposedITAT Chennai23 Nov 2022AY 2011-12

Bench: Shri Mahavir Singh & Shri G. Manjunathaआयकरअपीलसं./Ita Nos.: 718 & 719/Chny/2018 िनधा"रणवष" / Assessment Years: 2011-12 & 2014-15

For Appellant: Shri. AR V Sreenivasan, Addl. CITFor Respondent: Shri. N V Balaji, Advocate
Section 143(3)Section 14A

…egarding day-to-day operations, layout, etc. In our opinion, this decision is not directly applicable to the facts of the given case. Another decision relied on by the ld.DR is of Hon'ble Supreme Court rendered in the case of Jonas Woodhead & Sons Ltd vs CIT, 224 ITR 342 in which it has been held that when assessee sets up a new business and the foreign firm in addition to supplying technical know-how renders valuable services in setting up the factory itself and assessee is allowed to manufacture the product in question even after the expiry of the agreement it is justified in holding that 25% of the royalty, th…

ACIT, Circle-9(1), New Delhi vs. Fcc Clutch India P.Ltd, Gurgaon

In the result, all the appeals of revenue are dismissed

ITA 443/DEL/2019[2013-14]Status: DisposedITAT Delhi30 Jul 2021AY 2013-14

Bench: Shri R.K. Panda & Shri Amit Shukla

For Appellant: Shri K.M. Gupta, AdvocateFor Respondent: Ms. Nidhi Srivastava, CIT(DR)
Section 143(3)Section 147

…f an exclusive privilege of manufacturing and selling the products. In the case before the Hon’ble Bench also the benefit available to the aseessee is exclusive in nature based on the discussion held in the earlier paras. In the case of Jonas Woodhead v CIT ( 224 ITR 342) the Hon’ble Supreme Court held Tribunal having considered the different clauses of the agreement and having come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know- how but rendered valuable services in…

ACIT Circle-9(1), New Delhi vs. Fcc Clutch India Pvt Ltd(Successor of Fcc Rico Ltd.), Gurgaon

In the result, all the appeals of revenue are dismissed

ITA 3667/DEL/2019[2009-10]Status: DisposedITAT Delhi30 Jul 2021AY 2009-10

Bench: Shri R.K. Panda & Shri Amit Shukla

For Appellant: Shri K.M. Gupta, AdvocateFor Respondent: Ms. Nidhi Srivastava, CIT(DR)
Section 143(3)Section 147

…f an exclusive privilege of manufacturing and selling the products. In the case before the Hon’ble Bench also the benefit available to the aseessee is exclusive in nature based on the discussion held in the earlier paras. In the case of Jonas Woodhead v CIT ( 224 ITR 342) the Hon’ble Supreme Court held Tribunal having considered the different clauses of the agreement and having come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know- how but rendered valuable services in…

ACIT Circle-9(1), New Delhi vs. Fcc Clutch India Pvt Ltd(Successor of Fcc Rico Ltd.), Gurgaon

In the result, all the appeals of revenue are dismissed

ITA 3664/DEL/2019[2011-12]Status: DisposedITAT Delhi30 Jul 2021AY 2011-12

Bench: Shri R.K. Panda & Shri Amit Shukla

For Appellant: Shri K.M. Gupta, AdvocateFor Respondent: Ms. Nidhi Srivastava, CIT(DR)
Section 143(3)Section 147

…f an exclusive privilege of manufacturing and selling the products. In the case before the Hon’ble Bench also the benefit available to the aseessee is exclusive in nature based on the discussion held in the earlier paras. In the case of Jonas Woodhead v CIT ( 224 ITR 342) the Hon’ble Supreme Court held Tribunal having considered the different clauses of the agreement and having come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know- how but rendered valuable services in…

ACIT Circle-9(1), New Delhi vs. Fcc Clutch India Pvt Ltd(Successor of Fcc Rico Ltd.), Gurgaon

In the result, all the appeals of revenue are dismissed

ITA 3663/DEL/2019[2010-11]Status: DisposedITAT Delhi30 Jul 2021AY 2010-11

Bench: Shri R.K. Panda & Shri Amit Shukla

For Appellant: Shri K.M. Gupta, AdvocateFor Respondent: Ms. Nidhi Srivastava, CIT(DR)
Section 143(3)Section 147

…f an exclusive privilege of manufacturing and selling the products. In the case before the Hon’ble Bench also the benefit available to the aseessee is exclusive in nature based on the discussion held in the earlier paras. In the case of Jonas Woodhead v CIT ( 224 ITR 342) the Hon’ble Supreme Court held Tribunal having considered the different clauses of the agreement and having come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know- how but rendered valuable services in…

ACIT, Circle-9(1), New Delhi vs. Fcc Clutch India P.Ltd, Gurgaon

In the result, all the appeals of revenue are dismissed

ITA 1504/DEL/2019[2015-16]Status: DisposedITAT Delhi30 Jul 2021AY 2015-16

Bench: Shri R.K. Panda & Shri Amit Shukla

For Appellant: Shri K.M. Gupta, AdvocateFor Respondent: Ms. Nidhi Srivastava, CIT(DR)
Section 143(3)Section 147

…f an exclusive privilege of manufacturing and selling the products. In the case before the Hon’ble Bench also the benefit available to the aseessee is exclusive in nature based on the discussion held in the earlier paras. In the case of Jonas Woodhead v CIT ( 224 ITR 342) the Hon’ble Supreme Court held Tribunal having considered the different clauses of the agreement and having come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know- how but rendered valuable services in…

ACIT, Circle-9(1), New Delhi vs. Fcc Clutch India P.Ltd, Gurgaon

In the result, all the appeals of revenue are dismissed

ITA 1503/DEL/2019[2014-15]Status: DisposedITAT Delhi30 Jul 2021AY 2014-15

Bench: Shri R.K. Panda & Shri Amit Shukla

For Appellant: Shri K.M. Gupta, AdvocateFor Respondent: Ms. Nidhi Srivastava, CIT(DR)
Section 143(3)Section 147

…f an exclusive privilege of manufacturing and selling the products. In the case before the Hon’ble Bench also the benefit available to the aseessee is exclusive in nature based on the discussion held in the earlier paras. In the case of Jonas Woodhead v CIT ( 224 ITR 342) the Hon’ble Supreme Court held Tribunal having considered the different clauses of the agreement and having come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know- how but rendered valuable services in…

ACIT, Circle-9(1), New Delhi vs. Fcc Clutch India P.Ltd, Gurgaon

In the result, all the appeals of revenue are dismissed

ITA 1502/DEL/2019[2012-2013]Status: DisposedITAT Delhi30 Jul 2021AY 2012-2013

Bench: Shri R.K. Panda & Shri Amit Shukla

For Appellant: Shri K.M. Gupta, AdvocateFor Respondent: Ms. Nidhi Srivastava, CIT(DR)
Section 143(3)Section 147

…f an exclusive privilege of manufacturing and selling the products. In the case before the Hon’ble Bench also the benefit available to the aseessee is exclusive in nature based on the discussion held in the earlier paras. In the case of Jonas Woodhead v CIT ( 224 ITR 342) the Hon’ble Supreme Court held Tribunal having considered the different clauses of the agreement and having come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know- how but rendered valuable services in…

Deputy Commissioner of Income Tax Circle-4(1)(1), Bangalore vs. M/Slmg Brands India Pvt Ltd, Bangalore

In the result, the appeal filed by the assessee is treated as allowed

ITA 3293/BANG/2018[2009-10]Status: DisposedITAT Bangalore25 Jun 2021AY 2009-10

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranassessment Year : 2009-10

For Appellant: Shri Sharath Rao, A.RFor Respondent: Shri Pradeep Kumar, D.R

…These are in the nature of day to day operations of the assessee's business. Being so, the CIT(Appeals) justified in allowing the expenditure as revenue expenditure. This position is fortified with the decision in the case of Jonas Woodhead & Sons Ltd. Vs.CIT 224 ITR 342 wherein it has been held that - " The Courts have applied different tests like starting of a new business on the basis of technical know-how received from the foreign firm, exclusive right of the company to use the patent or trademark which it receives from the foreign firm, the payments made by the company to the foreign firm whether a definite…

M/S Lmg Brands India Private Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle-11(5), Bangalore

In the result, the appeal filed by the assessee is treated as allowed

ITA 3242/BANG/2018[2009-10]Status: DisposedITAT Bangalore25 Jun 2021AY 2009-10

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranassessment Year : 2009-10

For Appellant: Shri Sharath Rao, A.RFor Respondent: Shri Pradeep Kumar, D.R

…These are in the nature of day to day operations of the assessee's business. Being so, the CIT(Appeals) justified in allowing the expenditure as revenue expenditure. This position is fortified with the decision in the case of Jonas Woodhead & Sons Ltd. Vs.CIT 224 ITR 342 wherein it has been held that - " The Courts have applied different tests like starting of a new business on the basis of technical know-how received from the foreign firm, exclusive right of the company to use the patent or trademark which it receives from the foreign firm, the payments made by the company to the foreign firm whether a definite…