Khoday Distilleries Ltd. v. CIT

307 ITR 312Supreme Court of India2008#6765 most cited
17

judgments rely on this decision, according to BharatTax’s citation analysis of 292,668 Indian tax judgments — from 2017 to 2026.

Sections most often in play

Section 143(3)Section 56(2)(viia)Section 56(2)(vii)(c)Section 142(1)Section 143(2)Section 50DSection 119Section 250(6)

Issues it is cited on

section 56(2)(vii)(c)section 56(2)(viia)section 49section 47purposive interpretationdemergersection 56(2)(vii)valuation of sharesfull value of considerationsection 56(2)fair market valuedate of transfer

Judgments citing Khoday Distilleries Ltd. v. CIT

NEWAGE VINIMAY PVT. LTD.,KOLKATA vs. D.C.I.T., CIRCLE - 8(2), KOLKATA

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

ITA 2307/KOL/2025[2015-2016]Status: DisposedITAT Kolkata11 Feb 2026AY 2015-2016

Bench: Shri George Mathan & Shri Rakesh Mishra

Section 143(2)Section 143(3)Section 250Section 271(1)(c)Section 56(2)Section 56(2)(viia)

…existing shareholder. It was argued that there was no "transfer" of shares in such a case, as shares do not come into existence until they are allotted. The appellant relied on various judicial pronouncements including Khoday Distilleries Ltd. v. CIT [(2008) 307 ITR 321 (SC)] and Sri Gopal Jalan & Co. v. Calcutta Stock Exchange [(1964) AIR SC 250], to contend that allotment of shares constitutes "creation" and not "transfer", and hence does not fall within the ambit of section 56(2)(viia). The appellant stated that section 56(2)(via) uses specific term 'receives' which is not being defined in the Income Tax Act.…

GAURAV VINIMAY PVT. LTD.,KOLKATA vs. D.C.I.T., CIRCLE - 8(1),, KOLKATA

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

ITA 2306/KOL/2025[205-2016]Status: DisposedITAT Kolkata10 Feb 2026

Bench: Shri George Mathan & Shri Rakesh Mishra

Section 143(3)Section 250Section 50DSection 56(2)Section 56(2)(viia)

…otted, the price fixed by the issuing company was paid, the shares were allotted to the group companies and not to any outsider. The assessee relied upon the decision of Khoday Distilleries Ltd. vs. Commissioner of Income-tax [2009] 176 Taxman 142 (SC)/[2008] 307 ITR 312 (SC)/[2008] 220 CTR 228 (SC)[14-11-2008] para 7 and 8, However, the same was rendered in the case of gift, as was argued by the Ld. DR. 6. The Ld. DR further stated that the assessee is relying upon a provision which came later and relied upon page 12 of the order of the Ld. CIT(A) in which the provisions have been reproduced. On page 14, the Ld.…

MADHUR COAL MINING PVT. LTD.,KOLKATA vs. D.C.I.T., CIRCLE - 8(1),, KOLKATA

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

ITA 1784/KOL/2025[2015-2016]Status: DisposedITAT Kolkata02 Jan 2026AY 2015-2016

Bench: Shri George Mathan & Shri Rakesh Mishra

Section 143(2)Section 143(3)Section 250Section 50DSection 56(2)(viia)

…IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.: 1784/KOL/2025 Assessment Year: 2015-16 Madhur Coal Mining Pvt. Ltd. D.C.I.T., Circle-8(1), Kolkata Vs. (Appellant) (Respondent) PAN: AAECM4877C Appearances: Assessee represented by : S. Bhattacharya, AR. Department represented by : Praveen Kishore, CIT (DR). Date of concluding the hearing : 13-October-2025 Date of pronouncing the order : 02-January-2026 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Co…

FRAGMENT NIVESH P.LTD,NEW DELHI vs. ACIT, CENTRAL CIRCLE-13, NEW DELHI

In the result, both the appeals of the assessee are allowed

ITA 572/DEL/2019[2015-16]Status: DisposedITAT Delhi30 Sept 2025AY 2015-16

Bench: Shri M Balaganesh & Shri Vimal Kumarassessment Year: 2015-16 M/S. Enormous Nivesh Pvt. Vs. Assistant Commissioner Of Ltd., 1, Zamrudpur Community Income Tax, Central Circle Centre, Kailash Colony, 13, Ara Centre, New Delhi – 1100 48 Jhandewalan Extension, Pan No. Aabcd1454F Delhi -1100 55 (Appellant) (Respondent) Assessment Year: 2015-16 M/S. Fragment Nivesh P. Ltd., Vs. Assistant Commissioner Of 1, Zamrudpur Community Income Tax, Central Circle Centre, Kailash Colony, 13, Ara Centre, New Delhi – 1100 48 Jhandewalan Extension, Pan No. Aaecs5314G Delhi -1100 55 (Appellant) (Respondent)

For Appellant: Shri Manoj Kataruka, AdvFor Respondent: Shri Kumar Avikal Manu, CIT - DR
Section 142(1)Section 143(2)Section 143(3)Section 250(6)Section 56(2)

…f decision in the case of Agro Portfolio Vs. PCIT. Ld. AO failed to reduce mortgage loan of ICICI Bank. Rule 11UA was not applicable. The apex Court in the case of Khoday Distilleries Ltd. vs. CIT & Anr. (2008) 220 CTR (SC) 228: (2008) 15 DTR (SC) 126: (2008) 307 ITR 312 (SC): (2008) 176 Taxmann 142 (SC), after referring to the decision in the case of Shri Gopal Jalan & Co. vs. Calcutta Stock Exchange Association Ltd. 1964 (3) SCC 698, noted the question arose as to the amendment of the word "allotment" held that the word "allotment" means appropriation out of previously unappropriated capital of a company, of a…

ENORMOUS NIVESH P.LTD,NEW DELHI vs. ACIT, CENTRAL CIRCLE-13, NEW DELHI

In the result, both the appeals of the assessee are allowed

ITA 570/DEL/2019[2015-16]Status: DisposedITAT Delhi30 Sept 2025AY 2015-16

Bench: Shri M Balaganesh & Shri Vimal Kumarassessment Year: 2015-16 M/S. Enormous Nivesh Pvt. Vs. Assistant Commissioner Of Ltd., 1, Zamrudpur Community Income Tax, Central Circle Centre, Kailash Colony, 13, Ara Centre, New Delhi – 1100 48 Jhandewalan Extension, Pan No. Aabcd1454F Delhi -1100 55 (Appellant) (Respondent) Assessment Year: 2015-16 M/S. Fragment Nivesh P. Ltd., Vs. Assistant Commissioner Of 1, Zamrudpur Community Income Tax, Central Circle Centre, Kailash Colony, 13, Ara Centre, New Delhi – 1100 48 Jhandewalan Extension, Pan No. Aaecs5314G Delhi -1100 55 (Appellant) (Respondent)

For Appellant: Shri Manoj Kataruka, AdvFor Respondent: Shri Kumar Avikal Manu, CIT - DR
Section 142(1)Section 143(2)Section 143(3)Section 250(6)Section 56(2)

…f decision in the case of Agro Portfolio Vs. PCIT. Ld. AO failed to reduce mortgage loan of ICICI Bank. Rule 11UA was not applicable. The apex Court in the case of Khoday Distilleries Ltd. vs. CIT & Anr. (2008) 220 CTR (SC) 228: (2008) 15 DTR (SC) 126: (2008) 307 ITR 312 (SC): (2008) 176 Taxmann 142 (SC), after referring to the decision in the case of Shri Gopal Jalan & Co. vs. Calcutta Stock Exchange Association Ltd. 1964 (3) SCC 698, noted the question arose as to the amendment of the word "allotment" held that the word "allotment" means appropriation out of previously unappropriated capital of a company, of a…

DCIT CENTRAL CIRCLE 05 , DELHI vs. DEEPAK KOTHARI , KANPUR

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

ITA 1834/DEL/2021[20017-18]Status: DisposedITAT Delhi06 Aug 2025

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI VIMAL KUMAR (Judicial Member)

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Dayainder Singh Sidhu, CIT DR
Section 143(3)Section 49(4)Section 56(2)(vii)

…meant to be applicable in cases of receipt of shares by a company or a firm on subsequent transfer of unlisted shares after their initial issuance by the issuing company. Hon'ble Supreme Court in the case of Khoday Distilleries Ltd. vs CIT reported in (2008) 307 ITR 312 has referred to the manner in which bonus shares are issued as under: "When the company is prosperous and accumulate a large surplus, it converts is surplus into capital and divided the capital amongst the members in proportion to their rights. This is done by issuing fully paid-up shares representing the increased capital. The shareholders to wh…

DEEPAK KATHARI,KANPUR vs. ACIT, CC-5, NEW DELHI

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

ITA 1205/DEL/2021[2017-18]Status: DisposedITAT Delhi06 Aug 2025AY 2017-18

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI VIMAL KUMAR (Judicial Member)

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Dayainder Singh Sidhu, CIT DR
Section 143(3)Section 49(4)Section 56(2)(vii)

…meant to be applicable in cases of receipt of shares by a company or a firm on subsequent transfer of unlisted shares after their initial issuance by the issuing company. Hon'ble Supreme Court in the case of Khoday Distilleries Ltd. vs CIT reported in (2008) 307 ITR 312 has referred to the manner in which bonus shares are issued as under: "When the company is prosperous and accumulate a large surplus, it converts is surplus into capital and divided the capital amongst the members in proportion to their rights. This is done by issuing fully paid-up shares representing the increased capital. The shareholders to wh…

THERMODYNE DYNAMICS PRIVATE LIMITED,HYDERABAD vs. INCOME-TAX OFFICER, WARD -17(3), HYDERABAD

ITA 500/HYD/2024[2013-2014]Status: DisposedITAT Hyderabad03 Jul 2025AY 2013-2014

Bench: Us :

For Appellant: Shri Pawan KumarFor Respondent: Shri B. Balakrishna -CIT-
Section 11USection 143(2)Section 143(3)Section 14ASection 234BSection 56

…reason also the provisions of Section 56(2)(viia) of the Act could not have been invoked. The Ld. AR to buttress his aforesaid claim had drawn support from the judgment of the Hon’ble Supreme Court in the case of Khoday Distilleries Ltd. Vs. CIT & Anr. (2008) 307 ITR 312 (SC) and that of the Hon'ble High Court of Gujarat in the case of PCIT Vs. Jigar Jashwantlal Shah 12 Thermodyne Dynamics Private Limited Vs. ITO (2024) 468 ITR 628 (Guj). The Ld. AR submitted that the Hon’ble Apex Court in the case of Khoday Distilleries Ltd. Vs. CIT & Anr. (supra), has held that there is a difference between the issue of a sha…

SILLS KARINGATTIL JOSE,NEDUMKANDOM vs. ITO WARD 2, THODUPUZHA

Appeal is partly allowed for statistical purpose

ITA 132/COCH/2023[2016-17]Status: DisposedITAT Cochin19 Nov 2024AY 2016-17

Bench: Shri Satbeer Singh Godara & Shri Amarjit Singhsils Karingattil Jose Income Tax Officer Np 3/406, Karingattil Ward - 2, House, Munnar Road Thodupuzha Vs. Nedumkandom P.O. [Pan: Afopj8789C] (Appellant) (Respondent)

For Appellant: Shri P. M. Veeramani, CAFor Respondent: Smt. V. Swarnalatha, Sr. D.R
Section 2(47)Section 2(47)(V)Section 250Section 50CSection 53ASection 56(2)(vii)

…ore, the provisions of section 56 would not be applicable at all. The findings recorded about valuation of shares to Rs. 205.55 is concerned, there are concurrent findings of fact which do not require any interference as the Commissioner of Income-tax *[2008] 307 ITR 312 (SC); [2009] 176 Taxman 142 (SC). ** [1963] 33 Comp Cas 862 (SC); [1964] 3 SCR 698. Page No : 0642 (Appeals) has rightly computed the fair market value on the basis of the balance-sheet which was available on record for the previous year and which was approved in Annual General Meeting. 21. In view of the foregoing reasons, we are of the opinion…

DY CIT CC-1(4), MUMBAI vs. M/S GRASIM INDUSTRIES LTD., MUMBAI

ITA 41/MUM/2021[2018-19]Status: DisposedITAT Mumbai30 Nov 2022AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri. J.D Mistry, Sr. AdvFor Respondent: Shri Anil Singh
Section 115OSection 115QSection 2

…of section 2(22)(a) of the Act. Distribution by itself presupposes existence of an asset. Distribution cannot be ITA Nos. 1935/MUM/2020 & 41/MUM/2021 Grasim Industries Ltd. 2018-19 applied when asset is created and allotted (Khoday Distilleries Ltd. vs. CIT (307 ITR 312)) (Para 8, Pg. 586, Pg. 582-590 of Legal Paper Book, Vol. II). In this case there are no shares in existence which are asset of the Appellant available for distribution. 95. The Appellant submits that Section 2(22)(a) of the Act does not take within its ambit an ‗indirect transfer‘ of assets by the Appellant to its shareholders (which can be the…

GRASIM INDUSTRIES LTD.,MUMBAI vs. DY CIT, CENTRAL CIRCLE-1(4), MUMBAI

ITA 1935/MUM/2020[2018-19]Status: DisposedITAT Mumbai30 Nov 2022AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri. J.D Mistry, Sr. AdvFor Respondent: Shri Anil Singh
Section 115OSection 115QSection 2

…of section 2(22)(a) of the Act. Distribution by itself presupposes existence of an asset. Distribution cannot be ITA Nos. 1935/MUM/2020 & 41/MUM/2021 Grasim Industries Ltd. 2018-19 applied when asset is created and allotted (Khoday Distilleries Ltd. vs. CIT (307 ITR 312)) (Para 8, Pg. 586, Pg. 582-590 of Legal Paper Book, Vol. II). In this case there are no shares in existence which are asset of the Appellant available for distribution. 95. The Appellant submits that Section 2(22)(a) of the Act does not take within its ambit an ‗indirect transfer‘ of assets by the Appellant to its shareholders (which can be the…

THE ACIT, CIRCLE-2(1)(2),, AHMEDABAD vs. SHRI JIGAR JASHWANTLAL SHAH, AHMEDABAD

Appeal is dismissed

ITA 1643/AHD/2017[2013-14]Status: DisposedITAT Ahmedabad06 May 2022AY 2013-14
For Appellant: Shri S.N. Soparkar, A.RFor Respondent: Shri Shibaji Simlai, Sr. D.R
Section 143(1)Section 148Section 234Section 271(1)Section 56(2)Section 56(2)(vii)

…sessee submitted that the Ld. Assessing Officer has not considered the I.T.A Nos. 1541 & 1643/Ahd/2017 A.Y. 2013-14 Page No. 8 Shri Jigar Jashwantlal Shah vs. ACIT & ACIT vs. Shri Jigar Jashwantlal Shah Supreme Court decision in the case of Khoday Distillers 307 ITR 312 (SC) wherein the Hon’ble Supreme Court held that the word 'allotment' indicates creation of shares by appropriation out of the unappropriated share capital to a particular person and such creation would not amount to transfer, and hence s. 56(2)(vii) of the Act cannot be invoked. The Ld. CIT(Appeals) gave part relief to the assessee in respect of…

SHRI JIGAR JASHWANTLAL SHAH,AHMEDABAD vs. THE ACIT, CIRCLE-2(1)(1),, AHMEDABAD

Appeal is dismissed

ITA 1541/AHD/2017[2013-14]Status: DisposedITAT Ahmedabad06 May 2022AY 2013-14
For Appellant: Shri S.N. Soparkar, A.RFor Respondent: Shri Shibaji Simlai, Sr. D.R
Section 143(1)Section 148Section 234Section 271(1)Section 56(2)Section 56(2)(vii)

…sessee submitted that the Ld. Assessing Officer has not considered the I.T.A Nos. 1541 & 1643/Ahd/2017 A.Y. 2013-14 Page No. 8 Shri Jigar Jashwantlal Shah vs. ACIT & ACIT vs. Shri Jigar Jashwantlal Shah Supreme Court decision in the case of Khoday Distillers 307 ITR 312 (SC) wherein the Hon’ble Supreme Court held that the word 'allotment' indicates creation of shares by appropriation out of the unappropriated share capital to a particular person and such creation would not amount to transfer, and hence s. 56(2)(vii) of the Act cannot be invoked. The Ld. CIT(Appeals) gave part relief to the assessee in respect of…

JSW LOGISTICS INFRASTRUCTURE PVT. LTD.,MUMBAI vs. DCIT - 5 (2)(1), MUMBAI

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

ITA 5814/MUM/2018[2014-15]Status: DisposedITAT Mumbai30 Nov 2021AY 2014-15

Bench: Shri S. Rifaur Rahman () & Shri Pavan Kumar Gadale () Assessment Year: 2014-15 M/S Jsw Logistics Infrastructure Pvt. Ltd., Dcit-5(2)(1), Jsw Centre, Bandra Kurla Complex, Vs. Mumbai. Bandra (E), Mumbai-400051. Pan No. Aaccj 5104 F Assessee Respondent

For Appellant: Mr. Gavrav Kabra, ARFor Respondent: Mr. S.N. Kabra, DR
Section 143(2)Section 143(3)Section 56Section 56(2)Section 56(2)(via)Section 56(2)(viia)

…"allotment of shares* have been used to indicate the creation of shares by appropriation out of the unappropriated share capital to a particular person. Reliance is also placed on the Hon'ble Supreme Court's judgement in the case of Khoday Distilleries Lta. (307 ITR 312), wherein the Hon"ble Supreme Court has relied on the above SC judgment in the case of Sri Gopal Jalan & Company (supra). Attention is also invited to CBDI Circular no 1/2011 which clearly states that the intention of inserting the provisions of section 56 (2) (vila) was to prevent the practice of transferring unlisted shares at prices much below…

PR. COMMISSIONER OF INCOME TAX- vs. DR. RANJAN PAI

In the result, we do not find any merit in this

ITA/501/2016HC Karnataka15 Dec 2020

Bench: ALOK ARADHE,H.T. NARENDRA PRASAD

Section 132Section 139(1)Section 142(1)Section 143(2)Section 260Section 260ASection 56(2)(v)Section 56(2)(vii)

…he department is accepted, there would be conflict between Section 56(2)(vii) of the Act and Section 55 of the Act. In support of aforesaid submissions, reliance has been placed on decisions in 'KHODAY DISTELLERIES LTD. VS. COMMISSIONEROF INCOME TAX', 307 ITR 312 (SC), 'THE SECRETARY TO THE BOARD OF REVENUE, SEPARATE REVENUE, MADRAS, REFERRING OFFICER VS. MADURA MILLS COMPANY LTD.', ILR 1937 MAD 559, 'HUNSUR PLYWOOD WORKS LTD. VS. COMMISSIONER OF INCOME-TAX', (1998) 229 ITR 112 (SC), 'WOOD CRAFT PRODUCTS LTD. VS. COMMISSIONEROF INCOME-TAX', (1993) 204 ITR 545 (CALCUTTA), 'COMMISSIONE…

DCIT, FARIDABAD vs. SMT. MAMTA BHANDARI,, DELHI

In the result, appeal of the Revenue dismissed

ITA 5681/DEL/2016[2010-11]Status: DisposedITAT Delhi10 Jul 2019AY 2010-11

Bench: Shri Bhavnesh Saini & Dr. B.R.R. Kumar

For Appellant: Shri R.S. Ahuja, C.AFor Respondent: Shri Sanjay Shivam, CIT-D.R
Section 132Section 153ASection 56(2)(vii)

…alth of shareholder assessee on account of bonus/right shares. Further, there is no element of “gift” in issuing of bonus/right shares to the assessee by the company. 18. Hon’ble Supreme Court in the case of Khoday Distilleries Ltd. vs CIT reported in (2008) 307 ITR 312 has referred to the manner in which bonus shares are issued as under: 21 ITA.No.5681/Del./2016 Smt. Mamta Bhandari, Delhi. “When the company is prosperous and accumulate a large surplus, it converts is surplus into capital and divided the capital amongst the members in proportion to their rights. This is done by issuing fully paid-up shares repr…

MEENU SATIJA,NEW DELHI vs. PR. CIT (CENTRAL), GURGAON

In the result appeal filed by the assessee stands allowed

ITA 3215/DEL/2016[2010-11]Status: DisposedITAT Delhi27 Jan 2017AY 2010-11

Bench: Shri J. S. Reddy & Smt. Beena A. Pillai

For Appellant: Sh. R. S. Ahuja, CAFor Respondent: Smt. Rachna Singh, CIT DR
Section 132(1)Section 133Section 143(2)Section 153A(1)(a)Section 153A(1)(b)Section 263Section 56(2)(vii)

…lder assessee on account of bonus/right shares. Further, there is Page 13 of 19 no element of “gift” in issuing of bonus/right shares to the assessee by the company. 18. Hon’ble Supreme Court in the case of Khoday Distilleries Ltd. vs CIT reported in (2008) 307 ITR 312 has referred to the manner in which bonus shares are issued as under: “When the company is prosperous and accumulate a large surplus, it converts is surplus into capital and divided the capital amongst the members in proportion to their rights. This is done by issuing fully paid-up shares representing the increased capital. The shareholders to w…

Khoday Distilleries Ltd. v. CIT (307 ITR 312) — Cited in 17 Judgments | BharatTax