Kesoram Industries & Cotton Mills Ltd. v. CIT

196 ITR 845High Court1992#1884 most cited

What is Kesoram Industries & Cotton Mills Ltd. v. CIT authority for?

Expenses incurred for obtaining a project report, legal opinion, or conducting due diligence to explore the feasibility of expanding an existing business or setting up a new factory in the same line are considered revenue expenditures, not capital.

61

judgments rely on this decision, according to BharatTax’s citation analysis of 292,668 Indian tax judgments — from 2005 to 2026.

Also referred to as

Kesoram Industries v CIT · 196 ITR 845 · revenue expenditure · capital expenditure · business expansion expenses · feasibility study costs · project report expenses · legal opinion acquisition · due diligence charges · section 35D · allowable deductions

Sections most often in play

Section 10BSection 10CSection 115JBSection 14ASection 250Section 40A(2)(a)Section 92CSection 8D(2)(ii)

Issues it is cited on

section 8d(2)(ii)section 8dsection 92f(ii)section 92apreliminary expensessection 40a(2)(a)section 14a(1)legal expensessection 92fsection 35dstrategic investmentsection 36(2)

Judgments citing Kesoram Industries & Cotton Mills Ltd. v. CIT

D.C.I.T CIR - 10(1), KOLKATA vs. M/S EUREKA FORBS LTD, KOLKATA

The appeal is dismissed

ITA 2037/KOL/2019[2015-16]Status: DisposedITAT Kolkata12 Jan 2026AY 2015-16

Bench: Shri Pradip Kumar Choubey & Shri Rakesh Mishra

Section 115JSection 14ASection 250Section 92C

…ore -Trib.) it was held that Professional charges paid for conducting due diligence for acquisition of another company which was to be acquired is allowed as a revenue expenditure. f. It was held in case of Kesoram Industries & Cotton Mills Ltd. v. CIT [1992] 196 ITR 845 (Cal) that: "This expenditure was not related to the setting up of a new factory, it pertained to exploring the feasibility of expanding or extending the existing business by setting up a new factory in the same line of business. The assessee, during the course of its business, might incur expenditure for obtaining a project report or legal opini…

D.C.I.T CIR - 10(1), KOLKATA vs. M/S EUREKA FORBS LTD, KOLKATA

The appeal is dismissed

ITA 1248/KOL/2019[2014-15]Status: DisposedITAT Kolkata12 Jan 2026AY 2014-15

Bench: Shri Pradip Kumar Choubey & Shri Rakesh Mishra

Section 115JSection 14ASection 250Section 92C

…ore -Trib.) it was held that Professional charges paid for conducting due diligence for acquisition of another company which was to be acquired is allowed as a revenue expenditure. f. It was held in case of Kesoram Industries & Cotton Mills Ltd. v. CIT [1992] 196 ITR 845 (Cal) that: "This expenditure was not related to the setting up of a new factory, it pertained to exploring the feasibility of expanding or extending the existing business by setting up a new factory in the same line of business. The assessee, during the course of its business, might incur expenditure for obtaining a project report or legal opini…

D.C.I.T CIR - 10(1), KOLKATA vs. M/S EUREKA FORBS LTD, KOLKATA

The appeal is dismissed

ITA 1247/KOL/2019[2013-14]Status: DisposedITAT Kolkata12 Jan 2026AY 2013-14

Bench: Shri Pradip Kumar Choubey & Shri Rakesh Mishra

Section 115JSection 14ASection 250Section 92C

…ore -Trib.) it was held that Professional charges paid for conducting due diligence for acquisition of another company which was to be acquired is allowed as a revenue expenditure. f. It was held in case of Kesoram Industries & Cotton Mills Ltd. v. CIT [1992] 196 ITR 845 (Cal) that: "This expenditure was not related to the setting up of a new factory, it pertained to exploring the feasibility of expanding or extending the existing business by setting up a new factory in the same line of business. The assessee, during the course of its business, might incur expenditure for obtaining a project report or legal opini…

D.C.I.T CIR - 10(1), KOLKATA vs. M/S EUREKA FORBS LTD, KOLKATA

The appeal is dismissed

ITA 1246/KOL/2019[2012-13]Status: DisposedITAT Kolkata12 Jan 2026AY 2012-13

Bench: Shri Pradip Kumar Choubey & Shri Rakesh Mishra

Section 115JSection 14ASection 250Section 92C

…ore -Trib.) it was held that Professional charges paid for conducting due diligence for acquisition of another company which was to be acquired is allowed as a revenue expenditure. f. It was held in case of Kesoram Industries & Cotton Mills Ltd. v. CIT [1992] 196 ITR 845 (Cal) that: "This expenditure was not related to the setting up of a new factory, it pertained to exploring the feasibility of expanding or extending the existing business by setting up a new factory in the same line of business. The assessee, during the course of its business, might incur expenditure for obtaining a project report or legal opini…

M/S. BRIDGESTONE INDIA PVT. LTD.,PUNE vs. THE ACIT NFAC, DELHI

In the result, appeal of assessee is partly allowed

ITA 84/IND/2022[2017-18/]Status: DisposedITAT Indore17 Jul 2023

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanibridgestone India Pvt. Ltd. Acit (Nfac) Plot No.A-43, Phase-Ii, Delhi Midc Chakan, Village Vs. Sawardari, Taluka Khed, Pune (Appellant / Assessee) (Respondent/ Revenue) Pan: Aabcb 2304 E Assessee By Shri Sukhsagar Syal, Ar Revenue By Shri P.K. Mishra, Cit-Dr Date Of Hearing 23.05.2023 Date Of Pronouncement 17.07.2023

Section 143(3)Section 144C(13)Section 144C(5)Section 43(1)

…in the case of Ostime. It must be held that these subsidies are of revenue character and will have to be taxed accordingly. 33. A Division Bench of the Calcutta High Court in the case of Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Income Tax, 191 ITR 518 also examined a scheme of refund of sales tax framed by Andhra Pradesh Government to assist newly set up industries. There the assessee had set up a cement plant. The Calcutta High Court held that receipt of the incentives from the State Government was incidental to carrying on the business of the assessee . Such subsidies were received year afte…

ACIT,CIRCLE-19(1), NEW DELHI vs. ONGC VIDESH LIMITED, NEW DELHI

ITA 2185/DEL/2022[2016-17]Status: DisposedITAT Delhi31 May 2023AY 2016-17

Bench: Sh. N.K.Billaiya & Sh. Anubhav Sharmaacit, Vs. Ongc Videsh Limited Circle-19(1), Tower-B5, Nelson Mandela New Delhi Marg, Vasant Kinj, New Delhi Pan : Aaaco1230F (Appellant) (Respondent)

Section 143(3)Section 32Section 37(1)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related ONGC Videsh Ltd. 11 to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses…

WELSPUN CORP LTD,MUMBAI vs. DCIT CEN CIR 22, MUMBAI

In the result, the appeals filed by the revenue are dismissed and the appeals filed by the assessee are partly allowed for statistical purposes

ITA 3890/MUM/2016[2008-09]Status: DisposedITAT Mumbai03 Apr 2023AY 2008-09

Bench: Shri Prashant Maharishi & Shri Pavan Kumar Gadale

Section 143(3)Section 14ASection 32(1)(iia)

…ubsidy received as refund of sales tax or purchase tax was held to be on revenue account and therefore taxable. Vide decision in the case of Tamilnadu Sugar Corporation v. CIT 251 ITR 843 (Mad), CIT v. Chindwara Fuels 245 ITR 9 (Cal), Kesoram Industries v CIT 191 ITR 518 (Cal.). Therefore, refund of excise duty receipts are to be taxed as revenue receipts only. 6.10. In view of above, I hold that the Refunds of Excise Duty paid received by the assessee amounting to Rs.122,22,92,941 is treated as revenue receipt and taxed accordingly. Penalty proceedings u/s.271(1)(c) of the IT Act, 1961 are initiated separately f…

ADDL. CIT,SPL RNAGE-7, NEW DELHI vs. ONGC VIDESH LTD., NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 2379/DEL/2019[2014-15]Status: DisposedITAT Delhi05 Sept 2022AY 2014-15
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

ADDL. CIT, SPECIAL RANGE-7, NEW DELHI vs. ONGC VIDESH LTD., NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 158/DEL/2018[2013-14]Status: DisposedITAT Delhi05 Sept 2022AY 2013-14
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

ADDL. CIT, SPECIAL RANGE-7, NEW DELHI vs. ONGC VIDESH LTD., NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 7435/DEL/2017[2011-12]Status: DisposedITAT Delhi05 Sept 2022AY 2011-12
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

ADDL. CIT, SPECIAL RANGE- 7, NEW DELHI vs. ONGC VIDESH LTD., NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 6281/DEL/2017[2012-13]Status: DisposedITAT Delhi05 Sept 2022AY 2012-13
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

ADDL. CIT, NEW DELHI vs. M/S ONGC VIDESH LTD.,, NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 2119/DEL/2017[2010-11]Status: DisposedITAT Delhi05 Sept 2022AY 2010-11
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

DCIT, NEW DELHI vs. M/S. ONGC VIDESH LTD., NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 3816/DEL/2015[2009-10]Status: DisposedITAT Delhi05 Sept 2022AY 2009-10
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

DCIT, NEW DELHI vs. M/S. ONGC VIDESH LTD., NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 3210/DEL/2014[2008-09]Status: DisposedITAT Delhi05 Sept 2022AY 2008-09
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

DCIT, NEW DELHI vs. M/S. ONGC VIDESH LTD., NEW DELHI

In the result, the appeals of the Revenue stand dismissed

ITA 3209/DEL/2014[2007-08]Status: DisposedITAT Delhi05 Sept 2022AY 2007-08
Section 32(1)(ii)Section 42

…not be included in the expenditure covered by the Agreement. Therefore, the view of the AO that the expenditure incurred on support equipments are covered by sec 42 of the IT Act is erroneous. 4.2.4 In case of Kesoram Industries and Cotton Mills Ltd. Vs CIT (196 ITR 845), the Hon'ble Calcutta High Court held that expenses incurred on setting up a new unit in the same line of business by the assessee are not related to setting up of new business but amounts to an extension of existing business only. The observations of the High Court are as under: "It cannot be disputed that if the expenses are incurred in conne…

JOINT CIT (OSD) CENT CIR. 1(4), MUMBAI vs. GRASIM INDUSTRIES LTD., MUMBAI

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

ITA 2155/MUM/2016[1996-97]Status: DisposedITAT Mumbai29 Apr 2022AY 1996-97
Section 143(3)

…ase of Ponni Sugars and Court in the case of subsequently in its recent decisions of Chaphalkar Kesoram Industries and (supra), Balaji Alloys (supra) and Munjal (supra) has Cotton Mills Ltd. v. CIT consistently held that the only test to hold whether a [1991] 191 ITR 518 (Cal.) subsidy is a capital receipt or revenue is its object and purpose. What was the matter between the assessee and Further, Hon‟ble Tribunal in the case of DCIT v. the Sales- Tax Department Indo Rama Textiles Ltd (25 taxmann.com 161) (Del. is no concern to the Trib.) (PB 4 Pg no. 1116-1120) held that sales tax income-tax Department. subsidy i…

THE INDIAN HOTELS CO. LTD.,MUMBAI vs. PR. CIT-1, MUMBAI

In the result, the appeal of the assessee is hereby allowed

ITA 950/MUM/2021[2014-15]Status: DisposedITAT Mumbai12 Apr 2022AY 2014-15

Bench: Shri Amarjit Singh, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.950/Mum/2021 (ननधधारण वर्ा / Assessment Years: 2014-15) बनधम/ The Indian Hotels Company Pcit-1 Room No.330, 3Rd Floor, Ltd. Vs. 9Th Floor, Express Towers, Aayakar Bhavan, Barrister Rajini Patel Marg, Maharishi Karve Road, Nariman Point, Mumbai- Mumbai-400020. 400021. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaact3957G (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee By: Shri K. K. Ved Revenue By: Shri Surendra Kumar (Dr) सुनवाई की तारीख / Date Of Hearing: 17/03/2022 घोषणा की तारीख /Date Of Pronouncement: 12/04/2022 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 31.03.2021 Passed By The Principal Commissioner Of Income Tax-01, Mumbai [Hereinafter Referred To As The “Pcit”] Relevant To The A.Y.2014-15 In Which The Principal Commissioner Of Income Tax-01 Has Invoked The Revisional Power U/S 263 Of The I.T. Act, 1961. 2. The Assessee Has Raised The Following Grounds Of Appeal: - “Re.: Validity Of Order U/S, 263; On The Facts & In The Circumstances Of The Case & In Law, The Impugned Order Dated 31 March 2021 Passed Under Section 263 Of The Act Is Without Jurisdiction & Bad In Law. Without Prejudice To The Above, On The Facts & Circumstances Of The Case & In Law, The Principal Commissioner Of Income Tax (“Pcit”) Has Erred In Passing The Order Dated 31 March 2021 U/S. 263 Of The Act.

For Appellant: Shri K. K. VedFor Respondent: Shri Surendra Kumar (DR)
Section 143(3)Section 144CSection 263Section 36

…m-Trib) (viii) Enpro India Ltd. Vs. DCIT (2000) 113 Taxman 132 (Del-Trib) (ix) Gujarat Green Revolution Co. Ltd. V ACIT (2013) 26 ITR 567 (x) Franco Indian Pharmaceuticals P. Ltd. 3 ITR 754 (mum) 29 A.Y. 2014-15 (xi) Kesoram Industries and Cotton Mills Ltd. (196 ITR 845) 7. Subsequently, after the reply of the assessee, the AO passed the order u/s 143(3) r.w.s. 144C(13) of the Act. In the said order, one possible view has already been taken. Examining the issue again and again nowhere seems justifiable. When a possible view has been taken by AO then the assessment is not liable to be reopened again on the basis…

BG EXPLORATION & PRODUCTION INDIA LIMITED,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCOME TAX, DDIT/ADIT (INTERNATIONAL TAXATION), CIRCLE -1, DEHRADUN

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

ITA 5/DDN/2022[2017-2018]Status: DisposedITAT Dehradun31 Mar 2022AY 2017-2018
For Appellant: Shri Ajay Vohra, Sr. Advocate &For Respondent: Shri T.S. Mapwal, Sr. DR
Section 143(3)Section 144C(13)Section 92C

…Bombay High Court in the case of CIT v . Essar Oil Ltd. [IT Appeal No. 921 of 2008 , dated 16-10- 2008], such expenditure is to be allowed as revenue expenditure. Hon’ble Calcutta High Court in the case of Kesoram Industries & Cotton Mills Ltd . v. CIT [1992] 196 ITR 845 held that where the setting up does not amount to starting of new business but expansion or extension of the business already being carried on by the Assessee, expenses in connection with such expansion or extension of the business must be held to be deductible as revenue expenses . One has to consider purpose of the expenditure and its object an…

BG EXPLORATION & PRODUCTION INDIA LIMITED,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCOME TAX DDIT/ADIT (INTERNATIONAL TAXATION ) CIRCLE-1, DEHRADUN

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

ITA 7/DDN/2021[2016-17]Status: DisposedITAT Dehradun14 Dec 2021AY 2016-17

Bench: Shri R.K. Panda & Shri V.P. Raoassessment Years: 2016-17

For Appellant: Sh. Ajay Vohra, Sr. AdvocateFor Respondent: Sh. N.S. Jangpangi, CIT/DR
Section 143(3)Section 144C(13)Section 144C(5)Section 44C

…of Bombay High Court in the case of CIT v. Essar Oil Ltd. [IT Appeal No. 921 of 2008, dated 16-10- 2008], such expenditure is to be allowed as revenue expenditure. Hon’ble Calcutta High Court in the case of Kesoram Industries & Cotton Mills Ltd. v. CIT [1992] 196 ITR 845 held that where the setting up does not amount to starting of new business but expansion or extension of the business already being carried on by the Assessee, expenses in connection with such expansion or extension of the business must be held to be deductible as revenue expenses. One has to consider purpose of the expenditure and its object and…

TORRENT POWER LTD.,,AHMEDABAD vs. THE ACIT.,RANGE-8,, AHMEDABAD

In the result cross objection filed by the assessee is partly allowed for statistical purposes

ITA 776/AHD/2012[2008-09]Status: DisposedITAT Ahmedabad08 Dec 2021AY 2008-09

Bench: Shri Rajpal Yadav & Shri Waseem Ahmed

For Appellant: Shri S.N. Soparkar, Sr. AdvocateFor Respondent: Shri Vinod Tanwani, CIT.D.R
Section 143(3)Section 254

…treated as capital in nature as these expenses do not fall under the mischief of the provisions of section 35D of the Act. We take support of the judgment of Hon’ble High Court of Calcutta in case of Kesoram Industries & Cotton Mills Ltd. Vs. CIT reported in 196 ITR 845 wherein it was held as under: “The principles are well-settled. It cannot be disputed that if the expenses are incurred in connection with the setting up of a new business, such expenses will be no capital account. But where the setting up does not amount to starting of a new business but expansion or extension of the business already being carri…

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Kesoram Industries & Cotton Mills Ltd. v. CIT (196 ITR 845) — Cited in 61 Judgments | BharatTax