India Cements Ltd. v. CIT

60 ITR 52Supreme Court of India1966#350 most cited

What is India Cements Ltd. v. CIT authority for?

Expenses incurred for obtaining a loan for the purpose of the assessee's business, such as debenture discount, bank guarantee charges, and stamp duty, are considered revenue expenditure. These liabilities, though potentially spread over time, are deductible as revenue expenses.

247

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2008 to 2026.

Also referred to as

India Cements Ltd. v. CIT · 60 ITR 52 · Section 37(1) · revenue expenditure · expenses for obtaining loan · cost of raising finance · debenture discount · bank guarantee charges · stamp duty on loan · commercial expediency

Sections most often in play

Section 1961Section 37(1)Section 37Section 143(3)Section 142(1)Section 115JBSection 14ASection 40A(2)(b)

Issues it is cited on

section 35dsection 135commercial expediencydisallowance of interest expendituresection 139(5)section 40a(2)(b)revenue expendituresection 92bsection 36(1)(iii)section 244acorporate guaranteeenduring benefit

Judgments citing India Cements Ltd. v. CIT

M/S. Tata Industries Ltd, Mumbai vs. The ITO 2(3)(3), Mumbai

In the result, appeal of the assessee is treated as partly allowed

ITA 4894/MUM/2008[2004-2005]Status: DisposedITAT Mumbai20 Jul 2016AY 2004-2005

Bench: Shri G. S. Pannu, Accoutant Member & Shri Sanjay Gargtata Industries Ltd., Vs. The Income Tax Officer, Ward- Bombay House,24,Homi 2 (3) (3), Room No.555, Mody Street, Fort, Mumbai Aayakar Bhavan, Maharshi 400 001 Karve Road, Mumbai 400 020 Pan: Aaact 4058 L Appellant .. Respondent Appellant By Shri Dinesh Vyas, Ar Respondent By Shri Alok Johri, Dr Date Of Hearing 22-06-2016 Date Of Pronouncement 20-07-2016

Section 10ASection 115JSection 14ASection 36

…t. On the same analogy, the processing fees paid by the assessee for obtaining such loans is also allowable as business expenditure. More over the issue is covered with the decision of the Hon’ble Supreme Court’ in the case of India Cements Ltd. v. CIT [1966] 60 ITR 52, wherein the Supreme Court held that the expenditure in raising loans or issuing 52 debentures would be revenue in nature, irrespective of whether the borrowing is a long term or short term one. This issue is accordingly decided in favour of the assessee. 35. Ground No. 7: Ground No. 7 relates to the issue of disallowance of expenditure in the sha…

ACIT, New Delhi vs. Smt. Suman Jain, New Delhi

The appeal of the revenue is dismissed

ITA 3008/DEL/2013[2009-10]Status: DisposedITAT Delhi30 Mar 2016AY 2009-10

Bench: Shri G.D. Agrawal & Shri Kuldip Singh

For Appellant: Shri A.K. Chadha, CAFor Respondent: Smt. Anima Barnwal, Senior DR
Section 133Section 133(6)Section 143(2)

…whereby bank limit of Rs.5.5 crores was sanctioned at lower bank interest rate lying at page 1 to 17 of the additional evidence. 10 ITA No.3008/Del./2013 16. Hon’ble Apex Court has decided the identical issue in the judgment cited as Indian Cements Ltd. vs. 60 ITR 52 (SC) wherein it has been held that when the act of borrowing money was incidental to carrying on the business the loan obtained was not an asset or an advantage of enduring nature, the expenditure was made for securing the use of money for a certain period and it was irrelevant to consider the object with which the loan was taken. 17. In the ins…

Commissioner of Income Tax-1 vs. The Associated Taners

ITTA/271/2005HC Telangana14 Mar 2016

Bench: RAMESH RANGANATHAN,M.SATYANARAYANA MURTHY

ACIT, New Delhi vs. M/S Dlf Ltd., New Delhi

ITA 3061/DEL/2011[2006-07]Status: DisposedITAT Delhi11 Mar 2016AY 2006-07

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

Section 133ASection 142Section 143(2)Section 144Section 146Section 250

…g to the Commissioner, since the loan was raised for securing capital asset, the interest incurred thereon constituted part of capital expenditure. This finding of the Commissioner was erroneous. In the case of India Cements Page 69 of 144 Ltd. v. CIT [1966] 60 ITR 52 , it was held by the Supreme Court that in cases where the act of borrowing was incidental to carrying on of business, the loan obtained was not an asset. That, for the purposes of deciding the claim of deduction under section 10(2)(iii) of the Income-tax Act, 1922 [section 36(1)(iii) of the present Income-tax Act], it was irrelevant to consider th…

Dlf Ltd., New Delhi vs. Addl. CIT, New Delhi

ITA 2677/DEL/2011[2006-07]Status: DisposedITAT Delhi11 Mar 2016AY 2006-07

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

Section 133ASection 142Section 143(2)Section 144Section 146Section 250

…g to the Commissioner, since the loan was raised for securing capital asset, the interest incurred thereon constituted part of capital expenditure. This finding of the Commissioner was erroneous. In the case of India Cements Page 69 of 144 Ltd. v. CIT [1966] 60 ITR 52 , it was held by the Supreme Court that in cases where the act of borrowing was incidental to carrying on of business, the loan obtained was not an asset. That, for the purposes of deciding the claim of deduction under section 10(2)(iii) of the Income-tax Act, 1922 [section 36(1)(iii) of the present Income-tax Act], it was irrelevant to consider th…

I.T.O WD - 4(3), Kolkata vs. M/S Abp Entertainment Pvt Ltd, Kolkata

Accordingly, this portion of ground no.2 raised by the revenue is dismissed

ITA 966/KOL/2013[2009-10]Status: DisposedITAT Kolkata10 Feb 2016AY 2009-10

Bench: : Shri M. Balaganesh

For Appellant: None appearedFor Respondent: Shri Soumitra Chodhury, Advocate, ld. AR
Section 143(3)Section 2(22)Section 2(22)(e)

…er to avail of the services of the broker with a view of acquire the premises on rent". The five- year period was described in the said judgment as a relatively short period end, following the decision of the Supreme Court in India Cements Ltd. 's case [1966] 60 ITR 52 and the ratio spelt out therein it was held in Hoechst Pharmaceuticals Ltd. 5 case [1978] 113 ITR 877 (Bom) that the Tribunal had taken the correct view and allowed the expenditure as being expenditure of a revenue nature. 2. In the case of DCIT vs. Metro Shoes Pvt. Ltd., 258 ITR 106 ITAT, Mumbai Bench it was held that it is well settled that when…

Gas & Power Investment Company Ltd, Mumbai vs. ITO WD 1(1)(4), Mumbai

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

ITA 1118/MUM/2014[2006-07]Status: DisposedITAT Mumbai05 Feb 2016AY 2006-07

Bench: Shri C.N. Prasad & Shri Rajesh Kumarआयकर अपील सं/ I.Ta No.1118/Mum/2014 ("नधा"रण वष" / Assessment Year: 2006-07 M/S. Gas & Power The Ito, Ward 1(1)(4), बनाम/ Investment Co. Ltd., Aayakar Bhavan, Vs. Asian Building, Mumbai-40 020 Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai -400 001 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaccg 3843J (अपीलाथ" /Appellant) .. (""यथ" / Respondent) अपीलाथ" ओर से/ Appellant By: Shri Ishwer Rathi Shri Mahendra Mehta ""यथ" क" ओर से/Respondent By: Miss Bharti Singh

For Appellant: Shri Ishwer RathiFor Respondent: Miss Bharti Singh
Section 143(3)Section 147Section 148Section 40ASection 43BSection 619B

…the claim of the assessee. Thus, the Ld. Counsel submits that in the absence of any tangible materials coming on record, the reopening is bad in law. He further placing reliance on the decision of Hon’ble Supreme Court in the case of India Cements Ltd Vs CIT (60 ITR 52) submits that amount spent towards stamp duty, registration fees etc., in obtaining loan is not capital expenditure but it was only business expenses laid out wholly and exclusively for the purpose of business. Therefore, he submits that there is no question of reopening the assessment. 5.2. Placing reliance on the decision of the Punjab & Haryana…

DCIT, New Delhi vs. M/S Alcobex Metals Ltd., New Delhi

In the result, appeal filed by the revenue is dismissed

ITA 5344/DEL/2010[2003-04]Status: DisposedITAT Delhi12 Jan 2016AY 2003-04

Bench: Shri A.T.Varkey & Shri L.P. Sahu

For Appellant: Shri Gautam Jain, AdvocateFor Respondent: Shri K.K. Jaiswal, Senior DR
Section 10(2)(xv)

…have been disputed by the appellant company and therefore, are not eligible for deduction in the instant year. The learned AR however supported the finding of the CIT(A) by relying upon the judgment of the Apex Court in the case of India Cements Ltd. vs. CIT 60 ITR 52 and also in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT - 82 ITR 363. 5. We have considered the rival submissions and perused the material on record. We take note that CIT(A) has deleted the disallowance of Rs.28,42,760/- by holding as under: “It cannot be appreciated that how the Ld. AO has taken the expenditure as capital or as a contingent…

Gmr Power Corporation Limited, Bangalore vs. DCIT, Bangalore

In the result, assessee’s appeal viz

ITA 1072/BANG/2015[2009-10]Status: DisposedITAT Bangalore29 Dec 2015AY 2009-10

Bench: Shri Abraham P George & Shri Vijay Pal Rao & M/S.Gmr Power Corporation Ltd. 25/1, Skip House, Museum Road, Bangalore. … Appellant Pan:Aaacg 6037 G Vs. 1. Addl.Commissioner Of Income-Tax, Range-11, Bangalore. 2. Deputy Commissioner Of Income-Tax, Circle 3(1)(2), Bangalore … Respondent & (By The Revenue) ******** Assessee By: Shri Yogesh A Thar, Ca. Revenue By: Smt.Neera Malhotra, Cit(Dr).

For Appellant: Shri Yogesh A Thar, CAFor Respondent: Smt.Neera Malhotra, CIT(DR)
Section 143(3)Section 14ASection 154Section 57Section 57(111)

…ntion, he has relied upon the following judgments: 1. Continental Construction Ltd. vs. CIT (195 ITR 81)(SC) 2. DCIT vs. Prestige Garden Construction P.Ltd.(67 SOT 139) 3. H.K.Investment Co. Pvt. Ltd. vs. CIT (211 ITR 511) (Guj.) 4. India Cements Ltd. vs. CIT 60 ITR 52 (SC) 5.3 On the other hand, learned Departmental Representative has relied upon the finding of the AO as well as the CIT(A) and submitted that the assessee failed to prove that interest claim was wholly and exclusively utilised in respect of ‘income from other sources’ with regard to fixed deposit. Undisputedly, loans were taken by assessee for pu…

DCIT, Bangalore vs. M/S Gmr Power Corporation Ltd., (Formerly Known As Gmr Power Corporation Pvt. Ltd., Bangalore

In the result, assessee’s appeal viz

ITA 1629/BANG/2012[2009-10]Status: DisposedITAT Bangalore29 Dec 2015AY 2009-10

Bench: Shri Abraham P George & Shri Vijay Pal Rao & M/S.Gmr Power Corporation Ltd. 25/1, Skip House, Museum Road, Bangalore. … Appellant Pan:Aaacg 6037 G Vs. 1. Addl.Commissioner Of Income-Tax, Range-11, Bangalore. 2. Deputy Commissioner Of Income-Tax, Circle 3(1)(2), Bangalore … Respondent & (By The Revenue) ******** Assessee By: Shri Yogesh A Thar, Ca. Revenue By: Smt.Neera Malhotra, Cit(Dr).

For Appellant: Shri Yogesh A Thar, CAFor Respondent: Smt.Neera Malhotra, CIT(DR)
Section 143(3)Section 14ASection 154Section 57Section 57(111)

…ntion, he has relied upon the following judgments: 1. Continental Construction Ltd. vs. CIT (195 ITR 81)(SC) 2. DCIT vs. Prestige Garden Construction P.Ltd.(67 SOT 139) 3. H.K.Investment Co. Pvt. Ltd. vs. CIT (211 ITR 511) (Guj.) 4. India Cements Ltd. vs. CIT 60 ITR 52 (SC) 5.3 On the other hand, learned Departmental Representative has relied upon the finding of the AO as well as the CIT(A) and submitted that the assessee failed to prove that interest claim was wholly and exclusively utilised in respect of ‘income from other sources’ with regard to fixed deposit. Undisputedly, loans were taken by assessee for pu…

Gmr Power Corporation Limited, Bangalore vs. Addl.C.I.T., Bangalore

In the result, assessee’s appeal viz

ITA 1556/BANG/2012[2009-10]Status: DisposedITAT Bangalore29 Dec 2015AY 2009-10

Bench: Shri Abraham P George & Shri Vijay Pal Rao & M/S.Gmr Power Corporation Ltd. 25/1, Skip House, Museum Road, Bangalore. … Appellant Pan:Aaacg 6037 G Vs. 1. Addl.Commissioner Of Income-Tax, Range-11, Bangalore. 2. Deputy Commissioner Of Income-Tax, Circle 3(1)(2), Bangalore … Respondent & (By The Revenue) ******** Assessee By: Shri Yogesh A Thar, Ca. Revenue By: Smt.Neera Malhotra, Cit(Dr).

For Appellant: Shri Yogesh A Thar, CAFor Respondent: Smt.Neera Malhotra, CIT(DR)
Section 143(3)Section 14ASection 154Section 57Section 57(111)

…ntion, he has relied upon the following judgments: 1. Continental Construction Ltd. vs. CIT (195 ITR 81)(SC) 2. DCIT vs. Prestige Garden Construction P.Ltd.(67 SOT 139) 3. H.K.Investment Co. Pvt. Ltd. vs. CIT (211 ITR 511) (Guj.) 4. India Cements Ltd. vs. CIT 60 ITR 52 (SC) 5.3 On the other hand, learned Departmental Representative has relied upon the finding of the AO as well as the CIT(A) and submitted that the assessee failed to prove that interest claim was wholly and exclusively utilised in respect of ‘income from other sources’ with regard to fixed deposit. Undisputedly, loans were taken by assessee for pu…

DCIT, Circle-6, Kolkata vs. West Bengal Industrial Development Corporation Ltd., Kolkata

In the result, the appeals being ITA Nos

ITA 1376/KOL/2009[2002-03]Status: DisposedITAT Kolkata16 Dec 2015AY 2002-03

Bench: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi

Section 143(3)Section 254

…I.T.A. Nos. 1376, 1377, 1582 & 1531/KOL./2009 Assessment years: 2002-03, 2003-04, 2005-06 & 2005-06 & Assessment Year: 2006-2007 Page 1 of 20 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA ‘B’ BENCH, KOLKATA Before Shri P.M. Jagtap, Accountant Member and Shri S.S. Viswanethra Ravi, Judicial Member I.T.A. Nos. 1376, 1377, 1582/KOL/2009 Assessment Years: 2002-2003, 2003-2004, 2005-2006 Deputy Commissioner of Income Tax,..............................................Appellant Circle-6, Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700 069 -Vs.- West Bengal Industrial Development Corporation Limited,.…

ACIT Cir 4(2), Mumbai vs. Gupta Synthetics Ltd, Mumbai

In the result, the appeal filed by the revenue is treated as partly allowed for statistical purposes

ITA 1009/MUM/2011[2007-08]Status: DisposedITAT Mumbai09 Dec 2015AY 2007-08

Bench: S/Shri B.R.Baskaran & Shri Sandeep Gosainआयकर अपीऱ सं./I.T.A. No.1009/Mum/2011 (निर्धारण वर्ा / Assessment Year :2007-08) Asstt. Commissioner Of बिधम/ M/S Gupta Synthetics Ltd., Income Tax, 4(2), 326, Sardar Gruh Building, Vs. Room No.642, 6Th Floor,, 198, L T Road, Ayakar Bhavan, M K Road, Mumbai-400002 Mumbai-400020 स्थायी ऱेखा सं./ Pan : (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. स्थामी रेखा सं./जीआइआय सं./Pan. :Aaacg8559P

For Appellant: Ms.Anu Krishna AggarwalFor Respondent: Shri Satish R Mody

…s issue is a settled issue. The interest paid for acquiring a capital asset in a running business was held allowable as a revenue expenditure in CIT V/s Kasthuri and Sons (2000) 241 ITR 412 (Mad) based on a point established in India Cement Ltd V/s CIT (1966) 60 ITR 52(SC) where expenses incurred for mobilizing capital for a running business was found deductible. Similarly, where upfront frees was paid for obtaining a loan, though for purchase of machinery, will be deductible as a revenue expenditure where, such machinery was used for running a business, it was so held in CIT V/s Sri Meenakshi Mills Ltd (2007) 29…

Commissioner of Income Tax vs. Bharat Hotels Limited

The appeal is disposed of

ITA-62/2007HC Delhi31 Jul 2015
Section 36Section 43(1)

…The Assessee, inter alia, claimed as revenue expenditure, the payment of 2015:DHC:6084-DB ITA No.62 of 2007 Page 5 of 9 interest on the loans. After discussing the decisions of the Supreme Court in India Cements Ltd. v. CIT (1966) 60 ITR 52 and Challapalli Sugars Ltd. v. CIT (1975) 98 ITR 167, the Court summarised the legal position as follows: “The upshot of the aforesaid decisions as applied by the Tribunal in instant case is that: (i) a loan taken or capital borrowed is, by itself, not a capital asset, nor does it give an advantage of an enduring nature; (ii) as long as…

Commissioner of Income Tax vs. Bharat Hotels Limited

The appeal is disposed of

ITA/62/2007HC Delhi31 Jul 2015
Section 36Section 43(1)

…The Assessee, inter alia, claimed as revenue expenditure, the payment of 2015:DHC:6084-DB ITA No.62 of 2007 Page 5 of 9 interest on the loans. After discussing the decisions of the Supreme Court in India Cements Ltd. v. CIT (1966) 60 ITR 52 and Challapalli Sugars Ltd. v. CIT (1975) 98 ITR 167, the Court summarised the legal position as follows: “The upshot of the aforesaid decisions as applied by the Tribunal in instant case is that: (i) a loan taken or capital borrowed is, by itself, not a capital asset, nor does it give an advantage of an enduring nature; (ii) as long as…

CIT Large Tax Payers Unit vs. Indian Railway Finance Corp Ltd

ITA-1189/2011HC Delhi31 Oct 2013
Section 115Section 145

…n 1 I ] ITA 1189/2011 Page 10 of 14 2013:DHC:7829-DB connection with the issue of debentures or obtaining loan is revenue expenditure. Reference in this connection may be made to the leading judgment of the Supreme court in India Cements Ltd. v. CIT, (1966) 60 ITR 52. The question before us however, is whether it is a debenture issue or an issue of share capital ITA involving the strengthening of the capital base of the company. Though it prima facie appears that there are sufficient facts to indicate that what was contemplated was an issue of shares to the Mauritius Company under the Investor Agreement which w…

CIT vs. Vodafone Essar South Ltd

ITA/119/2012HC Delhi20 Nov 2012

Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE R.V.EASWAR

Section 143Section 143(3)Section 263Section 35Section 37

…ITA 119/2012 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI RESERVED ON: 09.10.2012 PRONOUNCED ON: 20.11.2012 + ITA No.119/2012 CIT ..... Appellant Through : Ms. Rashmi Chopra, Sr. Standing counsel versus VODAFONE ESSAR SOUTH LTD. ..... Respondent Through: Mr. N.Venkatraman, Sr. Advocate with Mr. Kavin Gulati, Mr. Raunak Dhillon, Mr. Varun Kumar and Mr. Aseem Mewar, Advocates CORAM: MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR MR. JUSTICE S.RAVINDRA BHAT % 1. The Revenue…

CIT vs. Havells India Ltd

In the result the appeals filed by the revenue are disposed of with no

ITA/57/2012HC Delhi21 May 2012

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE R.V.EASWAR

Section 195Section 260ASection 40Section 9(1)(vii)

…. It is well settled that expenditure incurred in connection with the issue of debentures or obtaining loan is revenue expenditure. Reference in this connection may be made to the leading judgment of the Supreme court in India Cements Ltd. v. CIT, (1966) 60 ITR 52. The question before us however, is whether it is a debenture issue or an issue of share capital ITA 55/2012 & 57/2012 Page 21 of 22 involving the strengthening of the capital base of the company. Though it prima facie appears that there are sufficient facts to indicate that what was contemplated was an issue of shares to t…

Commissioner of Income Tax vs. Havells India Ltd

In the result the appeals filed by the revenue are disposed of with no

ITA/55/2012HC Delhi21 May 2012
Section 195Section 201Section 260ASection 40Section 9(1)(vii)

…. It is well settled that expenditure incurred in connection with the issue of debentures or obtaining loan is revenue expenditure. Reference in this connection may be made to the leading judgment of the Supreme court in India Cements Ltd. v. CIT, (1966) 60 ITR 52. The question before us however, is whether it is a debenture issue or an issue of share capital 2012:DHC:3509-DB ITA 55/2012 & 57/2012 Page 21 of 22 involving the strengthening of the capital base of the company. Though it prima facie appears that there are sufficient facts to indicate that what was contemplated was an iss…

CIT vs. Havells India Ltd

In the result the appeals filed by the revenue are disposed of with no

ITA - 55 / 2012HC Delhi21 Apr 2012
Section 195Section 201Section 260ASection 40Section 9(1)(vii)

…. It is well settled that expenditure incurred in connection with the issue of debentures or obtaining loan is revenue expenditure. Reference in this connection may be made to the leading judgment of the Supreme court in India Cements Ltd. v. CIT, (1966) 60 ITR 52. The question before us however, is whether it is a debenture issue or an issue of share capital 2012:DHC:2688-DB ITA 55/2012 & 57/2012 Page 21 of 22 involving the strengthening of the capital base of the company. Though it prima facie appears that there are sufficient facts to indicate that what was contemplated was an iss…