Liberty India v. CIT

317 ITR 218Supreme Court of India2009#109 most cited

What is Liberty India v. CIT authority for?

The Supreme Court clarified that for profits and gains to be eligible for deductions under sections like 10B, 80IA, or 80IB, the income must be "derived from" or have a direct nexus to the eligible business activity. Income from incidental sources like the sale of scrips/licenses or interest on employee loans is generally not considered as derived from the eligible business for such deductions.

571

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2009 to 2026.

Also referred to as

Liberty India v. CIT · 317 ITR 218 · section 10B · section 80IA · section 80IB · profits derived from · direct nexus · eligible business · export undertaking deduction · sale of scrips income · interest income deduction

Also reported as

183 Taxmann 349

Sections most often in play

Section 143(3)Section 14ASection 10BSection 80IBSection 147Section 80IASection 1961Section 250
Read the full judgment

Issues it is cited on

section 75section 80hsection 80hhsection 80hhcsection 80icsection 80ibeligible businessdeduction under section 80iasection 80isection 80iadisallowance u/s 14agross total income

Judgments citing Liberty India v. CIT

Gleg Engineers P. Ltd, Mumbai vs. ITO 9(1)(4), Mumbai

In the result, the appeals filed by the assessee are treated as allowed for statistical purpose

ITA 1696/MUM/2012[2003-04]Status: DisposedITAT Mumbai23 Nov 2015AY 2003-04

Bench: Shri N.K. Billaiya & Shri Pawan Singhआयकर अपील सं/ I.Ta Nos.1696, 7250 & 7251/Mum/2012 ("नधा"रण वष" / Assessment Years: 2003-04 To 2005-06 आयकर अपील सं/ I.Ta No.4456/Mum/2010 ("नधा"रण वष" / Assessment Year:2006-07 आयकर अपील सं/ I.Ta No.5046/Mum/2011 ("नधा"रण वष" / Assessment Year:2007-08 आयकर अपील सं/ I.Ta No.1697/Mum/2012 ("नधा"रण वष" / Assessment Year:2008-09 आयकर अपील सं/ I.Ta No.7780/Mum/2012 ("नधा"रण वष" / Assessment Year:2009-10 बनाम/ M/S. Gleg Engineers Pvt. The Ito 9(1)(4), Ltd., Aayakar Bhavan, Vs. 302-303, Dheeraj Plaza, Mumbai Hill Road, Bandra (W), Mumbai-400 050 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacg 8338G (अपीलाथ" /Appellant) (""यथ" / Respondent) .. अपीलाथ" ओर से/ Appellant By: Shri M. Subramanian ""यथ" क" ओर से/Respondent By: Shri Abani Kanta Nayak सुनवाई क" तार"ख / Date Of Hearing :23.11.2015 घोषणा क" तार"ख /Date Of Pronouncement :23.11.2015 आदेश / O R D E R Per Bench:

For Appellant: Shri M. SubramanianFor Respondent: Shri Abani Kanta Nayak
Section 80I

…eatment of income received from fixed deposit and its eligibility for the claim of deduction, the AO is directed to decide the same in the light of the 5 M/s. Gleg Engineers Pvt. Ltd. decision of the Hon’ble Supreme Court in the case of Liberty India Vs. CIT 317 ITR 218. 11. In so far as disallowance of claim of expenditure is concerned, the AO is directed to decide the issue afresh after giving reasonable and sufficient opportunity of being heard to the assessee. 12. In the result, the appeals filed by the assessee are treated as allowed for statistical purpose. Order pronounced in the open court at the time of…

Riviera Home Furnishing vs. Tax Range 15

The appeal is allowed in the above terms, but with no order as to costs

ITA/459/2015HC Delhi19 Nov 2015
Section 10BSection 143(2)Section 260A

…ITA No.459/2015 Page 1 of 12 $~ * IN THE HIGH COURT OF DELHI AT NEW DELHI 9. + ITA 459/2015 RIVIERA HOME FURNISHING ..... Appellant Through: Mr. Ved Jain and Mr. Pranjal Srivastava, Advocates. versus ADDL. COMMISSIONER OF INCOME TAX RANGE 15 ..... Respondent Through: Mr. Ashok Manchanda, Senior Standing counsel. CORAM: JUSTICE S. MURALIDHAR JUSTICE VIBHU BAKHRU O R D E R % 19…

Asst CIT Cen Cir 25, Mumbai vs. Patel Engineering Ltd, Mumbai

In the result, appeal of revenue is dismissed, whereas cross objection of the assessee is allowed in part, in terms indicated hereinabove

ITA 6605/MUM/2013[2005-06]Status: DisposedITAT Mumbai18 Nov 2015AY 2005-06
For Appellant: Shri Mayur KisnadwalaFor Respondent: Shri Deepkant Prasad
Section 115Section 115JSection 143(3)Section 14ASection 234BSection 234DSection 80Section 80ISection 80l

…ditional CIT 37 SOT 322 (Mum), wherein it was held that indirect expenses not directly relatable to the unit cannot but be ignored while computing income "derived from". Further reliance was placed on decision of the Hon'ble Apex Court in Liberty India v. (IT 317 ITR 218 (SC), wherein the Hon'ble Court explained that "the words "derived from" are narrower in connotation as compared to the words "attributable to”. In other words, by & CO No.9/15 using the expression "derived from", Parliament intended to cover sources not beyond the first degree. 27. In view of the above, ld. AR contended that no reallocation of e…

DCIT 9(2), Mumbai vs. Kryfs Power Components Ltd, Mumbai

ITA 9106/MUM/2010[2006-07]Status: DisposedITAT Mumbai04 Nov 2015AY 2006-07
For Appellant: Shri Yogesh TharFor Respondent: Shri R.A. Dhyani
Section 143(1)Section 147Section 148Section 254(1)Section 80I

…interest was the application of surplus fund, that direct and effective source of income was the deposit, that the industrial undertaking could not be treated the ultimate source of income.Referring to 9106/10 Kryfs power the decisions of Liberty India Ltd.(317 ITR 218); Pandiyan Chemicals Ltd. ( 262ITR278) and Sterling Foods Ltd.( 237ITR579), the AO held that the income from sale of scrap had not been derived from industrial undertaking.Finally, FD interest income of Rs.8.64 lacs (Rs.7.09 lacs and Rs.1.57 lacs) and income from sale of scrap (Rs.1.37 cr.) was excluded from the profits of the undertaking for the…

Nathuram Ramnarayan P. Ltd, Mumbai vs. Addl CIT 2(2), Mumbai

In the result, assessee’s appeal is partly allowed

ITA 2583/MUM/2011[2007-08]Status: DisposedITAT Mumbai30 Oct 2015AY 2007-08

Bench: Shri Rajendra & Shri Saktijit Deyआमकय अऩीर सं. / Ita No.2583/Mum./2011 (ननधधायण वषा / Assessment Year : 2007–08) M/S. Nathuram Ramnarayan Pvt. Ltd. Rustom Building …….………. अऩीरधथी / 29, Veer Nariman Road Appellant Mumbai 400 023 Pan – Aaacn1289P V/S Addl. Commissioner Of Income Tax ..…….………. प्रत्मथी / Range–2(2), Aayakar Bhawan Respondent 101, M.K. Road, Mumbai 400 020 ननधधारयती की ओय से / Assessee By : Shri H.S. Raheja यधजस्व की ओय से / Revenue By : Shri Samir Tekriwal सुनवधई की तधयीख / आदेश घोषणध की तधयीख / Date Of Hearing – 08.10.2015 Date Of Order – 30.10.2015

For Appellant: Shri H.S. RahejaFor Respondent: Shri Samir Tekriwal

…erved that as there is no first degree nexus between the interest income and assessee’s business, such income cannot be treated as having been derived from business as per the principles laid down by the Hon'ble Supreme Court in Liberty India v/s CIT, [2009], 317 ITR 218 (SC). Accordingly, he also upheld the decision of the M/s. Nathuram Ramnarayan Pvt. Ltd. 5 Assessing Officer in treating the interest income as income from other sources. 6. The learned Counsel for the assessee contesting the findings of the Assessing Officer and first appellate authority, submitted allegation by the Departmental Authorities tha…

ACIT, Haridwar vs. M/S. Kirby Building Systems India (Uttaranchal) Pvt. Ltd., Haridwar

Appeal stands dismissed and the assessee’s cross objection stands allowed

ITA 923/DEL/2012[2008-09]Status: DisposedITAT Delhi21 Oct 2015AY 2008-09

Bench: Shri N.K. Saini & Smt. Beena Pillai

Section 80I

…he present case, in view of the words derived from, we have to look at the immediate source which has generated or remitted in the said receipt/income. The meaning of “derive from” as explained by the Apex Court in the decision of Liberty India vs. CIT (2009) 317 ITR 218 also needs to be applied in the case of provisions for 80IC. 11. Ground no. 1 deals with the deletion of income from interest, miscellaneous income and income from foreign exchange fluctuation. Bank Interest: He ld.CIT(A) has observed that the assessee has to import raw materials for which it has to open letters of credit. Ld. CIT(A) in his order…

ACIT, Haridwar vs. M/S. Kirby Building Systems India (Uttaranchal) Pvt. Ltd., Haridwar

Appeal stands dismissed and the assessee’s cross objection stands allowed

ITA 5607/DEL/2012[2009-10]Status: DisposedITAT Delhi21 Oct 2015AY 2009-10

Bench: Shri N.K. Saini & Smt. Beena Pillai

Section 80I

…he present case, in view of the words derived from, we have to look at the immediate source which has generated or remitted in the said receipt/income. The meaning of “derive from” as explained by the Apex Court in the decision of Liberty India vs. CIT (2009) 317 ITR 218 also needs to be applied in the case of provisions for 80IC. 10. In the light of the above, we shall analyze the grounds raised by the Revenue. 11. Ground no. 1 deals with the deletion of income from interest, miscellaneous income and income from foreign exchange fluctuation. Bank Interest: He ld.CIT(A) has observed that the assessee has to impor…

Prafulla Kumar Ghosh, Malda vs. ITO, Ward-2, Malda

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

ITA 686/KOL/2012[2006-07]Status: DisposedITAT Kolkata18 Sept 2015AY 2006-07

Bench: Shri Mahavir Singh, Jm & Shri M.Balaganesh, Am] Assessment Year : 2006-07 (Appellant ) (Respondent) Prafulla Kumar Ghosh -Versus- I.T.O., Ward-2, Malda Malda (Pan:Adhpg 8048 C) For The Appellant : Shri K.M.Roy, Fca For The Respondent : Shri S.S.Alam, Jcit Date Of Hearing : 10.09.2015. Date Of Pronouncement : 18.09.2015. Order Per Shri M.Balaganesh, Am 1. This Appeal Of The Assessee Arises Out Of The Order Of The Learned Cita In Appeal No. 279/Mld/Cit(A)/Jal/08-09 Dated 02.03.2012 For The Asst Year 2006-07 Arising Out Of The Order Of The Learned Assessing Officer Framed U/S 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As The ‘Act’).

For Appellant: Shri K.M.Roy, FCAFor Respondent: Shri S.S.Alam, JCIT
Section 133(6)Section 142ASection 143(3)Section 145(3)Section 69B

…As far as the interest on FD of Rs 72,355/- is concerned, we hold that the same is to be assessed as income from other sources. Reliance in this regard is placed on the decision of the Hon’ble Apex Court in the case of Liberty India vs CIT reported in (2009) 317 ITR 218 (SC) and also Pandian Chemicals case reported in 262 ITR 278 (SC). Accordingly, the ground no.2 raised by the assessee is partly allowed. 4. The last issue to be decided in this appeal is as to whether the Learned CITA is justified in upholding the addition made by the Learned AO towards cash credits in the facts and circumstances of the case.…

DCIT, Bangalore vs. M/S Ge Medical System (I) (P) Limited, Bangalore

In the result, the revenue’s appeal is dismissed and the assessee’s appeal is partly allowed

ITA 337/BANG/2011[2004-05]Status: DisposedITAT Bangalore30 Jun 2015AY 2004-05

Bench: Smt. P. Madhavi Devi & Shri Abraham P George

For Appellant: Shri K.R.Vasudevan, AdvocateFor Respondent: Shri C.H.Sundar Rao, CIT(DR)
Section 10ASection 143(3)Section 92C

…IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER and SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER IT(TP)A Nos.332 & 333/Bang/2011 (Assessment years: 2004-05 & 2005-06) M/s.GE Medical Systems India Pvt. Ltd. 122, Part-1, EPIP, Whitefield Road, Bangalore-560006. … Appellant PAN:AAACG7655G Vs. Deputy Commissioner of Income-tax, Circle 11(3), Bangalore. … Respondent AND IT(TP)A No.337/Bang/2011 (Assessment year: 2004-05) Deputy Commissioner of Income-tax, Circle 11(3), Bangalore. … Appellant Vs. M/s.GE Medical Systems India Pvt. Ltd. Bangalore. … Respondent Asses…

Ge Medical Systems India Private Limited, Bangalore vs. DCIT, Bangalore

In the result, the revenue’s appeal is dismissed and the assessee’s appeal is partly allowed

ITA 333/BANG/2011[2005-06]Status: DisposedITAT Bangalore30 Jun 2015AY 2005-06

Bench: Smt. P. Madhavi Devi & Shri Abraham P George

For Appellant: Shri K.R.Vasudevan, AdvocateFor Respondent: Shri C.H.Sundar Rao, CIT(DR)
Section 10ASection 143(3)Section 92C

…IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER and SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER IT(TP)A Nos.332 & 333/Bang/2011 (Assessment years: 2004-05 & 2005-06) M/s.GE Medical Systems India Pvt. Ltd. 122, Part-1, EPIP, Whitefield Road, Bangalore-560006. … Appellant PAN:AAACG7655G Vs. Deputy Commissioner of Income-tax, Circle 11(3), Bangalore. … Respondent AND IT(TP)A No.337/Bang/2011 (Assessment year: 2004-05) Deputy Commissioner of Income-tax, Circle 11(3), Bangalore. … Appellant Vs. M/s.GE Medical Systems India Pvt. Ltd. Bangalore. … Respondent Asses…

Ge Medical Systems India Private Limited, Bangalore vs. DCIT, Bangalore

In the result, the revenue’s appeal is dismissed and the assessee’s appeal is partly allowed

ITA 332/BANG/2011[2004-05]Status: DisposedITAT Bangalore30 Jun 2015AY 2004-05

Bench: Smt. P. Madhavi Devi & Shri Abraham P George

For Appellant: Shri K.R.Vasudevan, AdvocateFor Respondent: Shri C.H.Sundar Rao, CIT(DR)
Section 10ASection 143(3)Section 92C

…IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER and SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER IT(TP)A Nos.332 & 333/Bang/2011 (Assessment years: 2004-05 & 2005-06) M/s.GE Medical Systems India Pvt. Ltd. 122, Part-1, EPIP, Whitefield Road, Bangalore-560006. … Appellant PAN:AAACG7655G Vs. Deputy Commissioner of Income-tax, Circle 11(3), Bangalore. … Respondent AND IT(TP)A No.337/Bang/2011 (Assessment year: 2004-05) Deputy Commissioner of Income-tax, Circle 11(3), Bangalore. … Appellant Vs. M/s.GE Medical Systems India Pvt. Ltd. Bangalore. … Respondent Asses…

M/S Sterling Developers Pvt. Ltd., Bangalore vs. JCIT, Bangalore

In the result, appeal filed by the assessee is partly allowed, whereas the appeal of Revenue stands dismissed

ITA 1417/BANG/2012[2009-10]Status: DisposedITAT Bangalore23 Jun 2015AY 2009-10

Bench: Shri. N. V. Vasudevan

For Appellant: Shri. V. Srinivasan, CAFor Respondent: Dr. P. K. Srihari, Addl. CIT
Section 14ASection 5Section 57Section 70Section 80I

…acing reliance on the judgment of Hon’ble Apex Court in the case of Synco Industries Ltd v. AO [(2008) 299 ITR 444)], Ld. AO was not impressed. According to him, by virtue of the decision of the Hon’ble Apex Court in the case of Liberty India v. CIT [(2009) 317 ITR 218] and due to the overriding provision contained in Sec.80IA of the Act, loss of eligible business could not be allowed for set off from profit from non-eligible business. Taking this view of the matter, he disallowed the loss of Rs.1,13,69,446/- claimed for set off against the business profits of the non-80IB projects. 05. AO also found that as…

ACIT, Bangalore vs. M/S K. Mohan & Company (Exports) Pvt. Ltd., Bangalore

In the result, ITA 1057/B/12 is partly allowed and ITA 1103/B/12 is dismissed

ITA 1103/BANG/2012[2008-09]Status: DisposedITAT Bangalore24 Apr 2015AY 2008-09

Bench: Shri N.V. Vasudevan & Shri Jason P. Boaz

For Appellant: Shri V. Srinivasan, C.AFor Respondent: Shri P. Dhivahar, Jt. CIT(DR)
Section 10BSection 10B(3)

…articles or things. According to him, gain on foreign exchange forward contracts cannot be said to be derived from the business of export of articles or things. He also placed reliance on the decision of the Hon’ble Supreme Court in the case of Liberty India, 317 ITR 218 wherein the concept of the words “derived from” was explained by the Supreme Court as immediate or direct nexus with the business of the assessee. It was also submitted by him that the transaction of foreign exchange forward contract entered into by the assessee was not a hedging transaction as it did not fall within the ambit of clause (a) of se…

M/S K. Mohan & Company (Exports) Private Limited, Bangalore vs. ACIT, Bangalore

In the result, ITA 1057/B/12 is partly allowed and ITA 1103/B/12 is dismissed

ITA 1057/BANG/2012[2008-09]Status: DisposedITAT Bangalore24 Apr 2015AY 2008-09

Bench: Shri N.V. Vasudevan & Shri Jason P. Boaz

For Appellant: Shri V. Srinivasan, C.AFor Respondent: Shri P. Dhivahar, Jt. CIT(DR)
Section 10BSection 10B(3)

…articles or things. According to him, gain on foreign exchange forward contracts cannot be said to be derived from the business of export of articles or things. He also placed reliance on the decision of the Hon’ble Supreme Court in the case of Liberty India, 317 ITR 218 wherein the concept of the words “derived from” was explained by the Supreme Court as immediate or direct nexus with the business of the assessee. It was also submitted by him that the transaction of foreign exchange forward contract entered into by the assessee was not a hedging transaction as it did not fall within the ambit of clause (a) of se…

M/S. K. Mohan & Company (Exports) Pvt. Ltd., Bangalore vs. ACIT, Bangalore

In the result, ITA 1057/B/12 is partly allowed and ITA 1103/B/12 is dismissed

ITA 1266/BANG/2010[2007-08]Status: DisposedITAT Bangalore24 Apr 2015AY 2007-08

Bench: Shri N.V. Vasudevan & Shri Jason P. Boaz

For Appellant: Shri V. Srinivasan, C.AFor Respondent: Shri P. Dhivahar, Jt. CIT(DR)
Section 10BSection 10B(3)

…articles or things. According to him, gain on foreign exchange forward contracts cannot be said to be derived from the business of export of articles or things. He also placed reliance on the decision of the Hon’ble Supreme Court in the case of Liberty India, 317 ITR 218 wherein the concept of the words “derived from” was explained by the Supreme Court as immediate or direct nexus with the business of the assessee. It was also submitted by him that the transaction of foreign exchange forward contract entered into by the assessee was not a hedging transaction as it did not fall within the ambit of clause (a) of se…

M/S K. Mohan & Compnay (Exports) Pvt. Ltd., Bangalore vs. ACIT, Bangalore

In the result, ITA 1057/B/12 is partly allowed and ITA 1103/B/12 is dismissed

ITA 1093/BANG/2009[2006-07]Status: DisposedITAT Bangalore24 Apr 2015AY 2006-07

Bench: Shri N.V. Vasudevan & Shri Jason P. Boaz

For Appellant: Shri V. Srinivasan, C.AFor Respondent: Shri P. Dhivahar, Jt. CIT(DR)
Section 10BSection 10B(3)

…articles or things. According to him, gain on foreign exchange forward contracts cannot be said to be derived from the business of export of articles or things. He also placed reliance on the decision of the Hon’ble Supreme Court in the case of Liberty India, 317 ITR 218 wherein the concept of the words “derived from” was explained by the Supreme Court as immediate or direct nexus with the business of the assessee. It was also submitted by him that the transaction of foreign exchange forward contract entered into by the assessee was not a hedging transaction as it did not fall within the ambit of clause (a) of se…

The Commissioner of Income Tax vs. M/S Wipro Ltd

The appeals stand disposed of, accordingly

ITA/211/2009HC Karnataka25 Mar 2015

Bench: N.KUMAR,B.SREENIVASE GOWDA

Section 260

…unsel appearing for the assessee, assailing the said finding, contends that the income derived from AMC has a direct nexus with the manufacturing activity and it falls within the first degree as enunciated by the Apex Court in Liberty India’s case [(2009) 317 ITR 218] and the same amount is also to be included for determining deduction under Section 80IB. 95. Per contra, the learned senior Counsel appearing for the revenue contends that, the profits derived from AMC has no direct nexus with the manufacturing activity, it does not fall within first degree and, therefore, as held by the Apex…

M/S Wipro Limited vs. The Deputy Commissioner of Income Tax

The appeals stand disposed of, accordingly

ITA/881/2008HC Karnataka25 Mar 2015

Bench: N.KUMAR,B.SREENIVASE GOWDA

Section 260

…unsel appearing for the assessee, assailing the said finding, contends that the income derived from AMC has a direct nexus with the manufacturing activity and it falls within the first degree as enunciated by the Apex Court in Liberty India’s case [(2009) 317 ITR 218] and the same amount is also to be included for determining deduction under Section 80IB. 95. Per contra, the learned senior Counsel appearing for the revenue contends that, the profits derived from AMC has no direct nexus with the manufacturing activity, it does not fall within first degree and, therefore, as held by the Apex…

The Commissioner of Income Tax vs. M/S Motorola India Electronics (P) Ltd

ITA/428/2007HC Karnataka11 Dec 2013

Bench: N.KUMAR,RATHNAKALA

Section 10ASection 260Section 4

…The derivation of profits on the deposit made with Electricity - 12 - Board cannot be said to flow directly from the industrial undertaking itself.” The Apex Court in the case of LIBERTY INDIA VS. COMMISSIONER OF INCOME TAX REPORTED IN (2009) 317 ITR 218, while interpreting Section 80IB of the Act, which also allowed deduction in respect of profits and gains derived from eligible business has held as under: “14. xxxxxxxxxxxx The words “derived from” is narrower in connotation as compared to the words “attributable to”. In other words, by using the expression “derived from”, Parlia…

The Commissioner of Income Tax vs. M/S Robert Bosch (India)Ltd

In the result, the question formulated by us is

ITA/507/2007HC Karnataka10 Oct 2013

Bench: B.MANOHAR,DILIP B.BHOSALE

Section 260

…, though formed part of gross total income had to be excluded as they were ‘independent incomes’ which had no element of export turnover. That, the said items distorted the figure of export profits.” 11. In LIBERTY INDIA –vs- COMMISSIONER OF INCOME TAX (2009) 317 ITR 218, the Supreme Court while considering the word ‘derived’ as occurred in Sub-section (1) of Section 80HHE, in paragraph 14 observed thus: “The words “derived from” is narrower in connotation as compared to the words “attributable to”. In other words, by using the expression “derived from”, Parliament intended to cover sources not beyond the f…