Liquidators of Pursa Ltd. v. CIT

25 ITR 265Supreme Court of India1954#3174 most cited

What is Liquidators of Pursa Ltd. v. CIT authority for?

Expenses incurred during the pre-commencement period of a business are not deductible as business expenses or losses, although such expenses may be eligible for depreciation if they can be capitalized to assets. The interpretation of 'used for the purposes of the business' regarding machinery, plant, or buildings, and whether it includes passive as well as active user, was left open.

37

judgments rely on this decision, according to BharatTax’s citation analysis of 366,369 Indian tax judgments — from 2008 to 2025.

Also referred to as

Liquidators of Pursa Ltd. v. CIT · 25 ITR 265 · pre-commencement expenses · business loss · depreciation · passive user · active user · Section 32

Sections most often in play

Section 143(3)Section 144BSection 144C(13)Section 144C(5)Section 32Section 54Section 92BSection 92C(1)
Read the full judgment

Issues it is cited on

businesscompanysection 143(3)

Judgments citing Liquidators of Pursa Ltd. v. CIT

Bharath Beedi Works Pvt. Ltd., Mangalore vs. Joint Commissioner of Income-Tax, Mangalore

In the result, the appeal of the assessee for Assessment Year 2007-08 is also dismissed

ITA 1903/BANG/2016[2007-08]Status: DisposedITAT Bangalore29 Nov 2017AY 2007-08

Bench: Shri Arun Kumar Garodia & Shri Laliet Kumar

For Appellant: Smt. Sheetal Borkar, AdvocateFor Respondent: Shri N. Sukumar, Addl. CIT (DR)
Section 43B

…sessable, at least for a part of the accounting year concerned. If the machinery and plant have not at all been used at any time during the accounting year, no allowance can be claimed under this section in respect of them [The Liquidators of Pusa Ltd Vs CIT (25 ITR 265). The expression 'used for the purposes of the business' in these provisions means 'used for the purposes of the business during the accounting year' and not merely that the machinery etc. must have been used for other purposes (Central Provinces Manganese Ore Co. Ltd. Vs CIT) (5 ITR 734). 6.4 In view of the above, the learned Authorized Represe…

ITO, WD-11(3), Kolkata vs. M/S Kesoram Textile Mills Ltd., Kolkata

In the result the appeal by the revenue is dismissed

ITA 126/KOL/2016[2005-2006]Status: DisposedITAT Kolkata15 Nov 2017AY 2005-2006

Bench: Hon’Ble Shri J.Sudhakar Reddy, Am & Shri A.T.Varkey, Jm ] Assessment Year : 2005-06

For Appellant: Shri Arindam Bhattacharjee, Addl. CITFor Respondent: Shri Akkal Dudhwewala
Section 50

…the above judicial precedent, we allow this claim of the assessee.” 4. In our view the proposition of law laid down in this order apply to the facts of this case. The judgment of the Hon’ble Supreme Court in the case of Liquidators of Pursa Ltd vs CIT (1954) 25 ITR 265 and the decision of the Hon’ble Bombay High Court in the case of Machinery Manufacturers Corporation Ltd vs CIT 31 ITR 203(Bom) are not applicable to the facts of the case for the reason these judgments were delivered prior to the block asset brought under the income tax. ITA No.126/Kol/2016 M/s. Kesoram Textile Mills Ltd A.Y.2005-06 3 5. Even o…

Deputy Commissioner of Income Tax, Central Circle-7(3), Mumbai vs. Nepean Holding Reality LLP., Mumbai

In the result, appeal of the revenue is dismissed

ITA 5094/MUM/2017[2013-14]Status: DisposedITAT Mumbai15 Nov 2017AY 2013-14

Bench: Shri R.C.Sharma, Am Dcit, Central Circle – 7(3) Vs. M/S. Nepean Holding Reality Mumbai Llp, Room No.655, 6Th Floor 1001, Dalmal House, Aayakar Bhavan, J.P. Road, M.K. Road, Nariman Point, Mumbai – 400 020 Mumbai – 400 021 Pan/Gir No. Aaifn2753N Appellant) Respondent) ..

Section 143(3)Section 250

…tio laid down in the judgments of this Court to the facts of 4 M/s. Nepean Holding Reality Ltd., the present case in order to uphold the assessee's claim for depreciation." 6.2.3. The decision cited by the A.O, in the case of Liquidators of Pursa Ltd ( [1954] 25 ITR 265(SC) is based on different facts and is relevant for disallowance in respect of section 41(2) read with Sec.28(i) of the I.T, Act 1961, corresponding to Section 10(2) (vii), read with section 10(i) of the I.T. Act 1922 in respect of A.Y. 1945-46. Similarly the decision in the case of Dinesh Kumar Gulabchand Agarwal 267 ITR 768 is based on different…

DCIT, New Delhi vs. M/S. Cement Corporation of India Ltd., New Delhi

In the result, the appeal is allowed for statistical purposes

ITA 1985/DEL/2013[2007-08]Status: DisposedITAT Delhi31 Aug 2017AY 2007-08

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

Section 32

…been claimed on the plants which stood completely closed and as such in view of the provisions of section 32, the AO was quite justified in disallowing the depreciation after relying on the decision of Hon’ble Supreme Court in Liquidators of Pursa Ltd vs. CIT 25 ITR 265(SC). 5. On the other hand, the ld. Counsel for the assessee-respondent submitted that even if it is taken for granted that some units of the assessee are closed, the depreciation has to be allowed on the entire block of assets as defined u/s. 2(11) of the IT Act and individual asset of each unit cannot be considered for that purpose, as also held…

M/S. Kla India Public Ltd., Delhi vs. JCIT, Rohtak

In the result, the appeal of the assessee is allowed

ITA 3332/DEL/2014[2010-11]Status: DisposedITAT Delhi30 Mar 2017AY 2010-11

Bench: : Shri H.S. Sidhu & Shri L.P. Sahu

For Appellant: Sh. Gautam Jain, AdvocateFor Respondent: Sh. Umesh Chand Dubey, Sr. DR

…tion might be allowed in certain cases even though the machinery was not in use or was kept idle. The question whether the word 'used' would include both passive as well as active user was left open by the Apex Court in Liquidators of Pursa Ltd, v. CIT [1954] 25 ITR 265 . The word 'used' for the purposes of the business is capable of a larger and a narrower interpretation. If the expression 'used' is construed strictly, it can be taken as connoting or requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include not only…

Steranco Health Care P.Ltd, Mumbai vs. ITO 8(3)(2), Mumbai

In the result, the appeal filed by the assessee for AY 2006-07 is partly allowed and the appeals for remaining years are allowed

ITA 7402/MUM/2012[2009-2010]Status: DisposedITAT Mumbai17 Nov 2015AY 2009-2010

Bench: S/Shri B.R.Baskaran, Am & Pawan Singh, Jm आमकय अऩीर सं./I.T.A. No.5083/Mum/2009 (ननधधायण वषा / Assessment Year:2006-07) बनाम/ Steranco Health Care Pvt Ltd., Income Tax Officer 5(1)(4), Dcit, Cc-44, Mumbai. A-25, Nanddham Industrial Vs. Estae, Marol Maroshi Road, Andheri (E), Mumbai-400059 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. आमकय अऩीर सं./I.T.A. No.4524/Mum/2010 (ननधधायण वषा / Assessment Year:2007-08) बनाम/ Steranco Health Care Pvt Ltd., Dy. Commissioner Of Income Tax Officer 8 (3), D-2, Medley House, Vs. Mumbai. Midc Area, Andheri (W), Mumbai-400093 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) ..

…idered to have used them for the purposes of its business or not. The tax authorities have taken the view that the assets should have been used by the assessee exclusively for the purpose of its business. In the case of Liquidators of pursa Ltd Vs. CIT (1954)(25 ITR 265), the Hon’ble Supreme Court has held that the words used for the purposes of the business” obviously mean used for the purpose of enabling the owner to carry on the business and earn profits in the business. In the instant case, the submission of the assessee is that the object of installing the surgical equipments in the hospital premises is to e…

Steranco Health Care P. Ltd, Mumbai vs. ITO 8(3)(2), Mumbai

In the result, the appeal filed by the assessee for AY 2006-07 is partly allowed and the appeals for remaining years are allowed

ITA 6467/MUM/2011[2008-09]Status: DisposedITAT Mumbai17 Nov 2015AY 2008-09

Bench: S/Shri B.R.Baskaran, Am & Pawan Singh, Jm आमकय अऩीर सं./I.T.A. No.5083/Mum/2009 (ननधधायण वषा / Assessment Year:2006-07) बनाम/ Steranco Health Care Pvt Ltd., Income Tax Officer 5(1)(4), Dcit, Cc-44, Mumbai. A-25, Nanddham Industrial Vs. Estae, Marol Maroshi Road, Andheri (E), Mumbai-400059 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. आमकय अऩीर सं./I.T.A. No.4524/Mum/2010 (ननधधायण वषा / Assessment Year:2007-08) बनाम/ Steranco Health Care Pvt Ltd., Dy. Commissioner Of Income Tax Officer 8 (3), D-2, Medley House, Vs. Mumbai. Midc Area, Andheri (W), Mumbai-400093 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) ..

…idered to have used them for the purposes of its business or not. The tax authorities have taken the view that the assets should have been used by the assessee exclusively for the purpose of its business. In the case of Liquidators of pursa Ltd Vs. CIT (1954)(25 ITR 265), the Hon’ble Supreme Court has held that the words used for the purposes of the business” obviously mean used for the purpose of enabling the owner to carry on the business and earn profits in the business. In the instant case, the submission of the assessee is that the object of installing the surgical equipments in the hospital premises is to e…

Steranco Health Care P. Ltd, Mumbai vs. DCIT 8(3), Mumbai

In the result, the appeal filed by the assessee for AY 2006-07 is partly allowed and the appeals for remaining years are allowed

ITA 4524/MUM/2010[2007-08]Status: DisposedITAT Mumbai17 Nov 2015AY 2007-08

Bench: S/Shri B.R.Baskaran, Am & Pawan Singh, Jm आमकय अऩीर सं./I.T.A. No.5083/Mum/2009 (ननधधायण वषा / Assessment Year:2006-07) बनाम/ Steranco Health Care Pvt Ltd., Income Tax Officer 5(1)(4), Dcit, Cc-44, Mumbai. A-25, Nanddham Industrial Vs. Estae, Marol Maroshi Road, Andheri (E), Mumbai-400059 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. आमकय अऩीर सं./I.T.A. No.4524/Mum/2010 (ननधधायण वषा / Assessment Year:2007-08) बनाम/ Steranco Health Care Pvt Ltd., Dy. Commissioner Of Income Tax Officer 8 (3), D-2, Medley House, Vs. Mumbai. Midc Area, Andheri (W), Mumbai-400093 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) ..

…idered to have used them for the purposes of its business or not. The tax authorities have taken the view that the assets should have been used by the assessee exclusively for the purpose of its business. In the case of Liquidators of pursa Ltd Vs. CIT (1954)(25 ITR 265), the Hon’ble Supreme Court has held that the words used for the purposes of the business” obviously mean used for the purpose of enabling the owner to carry on the business and earn profits in the business. In the instant case, the submission of the assessee is that the object of installing the surgical equipments in the hospital premises is to e…

Steranco Health Care P. Ltd, Mumbai vs. DCIT CC-44, Mumbai

In the result, the appeal filed by the assessee for AY 2006-07 is partly allowed and the appeals for remaining years are allowed

ITA 5083/MUM/2009[2006-07]Status: DisposedITAT Mumbai17 Nov 2015AY 2006-07

Bench: S/Shri B.R.Baskaran, Am & Pawan Singh, Jm आमकय अऩीर सं./I.T.A. No.5083/Mum/2009 (ननधधायण वषा / Assessment Year:2006-07) बनाम/ Steranco Health Care Pvt Ltd., Income Tax Officer 5(1)(4), Dcit, Cc-44, Mumbai. A-25, Nanddham Industrial Vs. Estae, Marol Maroshi Road, Andheri (E), Mumbai-400059 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. आमकय अऩीर सं./I.T.A. No.4524/Mum/2010 (ननधधायण वषा / Assessment Year:2007-08) बनाम/ Steranco Health Care Pvt Ltd., Dy. Commissioner Of Income Tax Officer 8 (3), D-2, Medley House, Vs. Mumbai. Midc Area, Andheri (W), Mumbai-400093 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) ..

…idered to have used them for the purposes of its business or not. The tax authorities have taken the view that the assets should have been used by the assessee exclusively for the purpose of its business. In the case of Liquidators of pursa Ltd Vs. CIT (1954)(25 ITR 265), the Hon’ble Supreme Court has held that the words used for the purposes of the business” obviously mean used for the purpose of enabling the owner to carry on the business and earn profits in the business. In the instant case, the submission of the assessee is that the object of installing the surgical equipments in the hospital premises is to e…

Carefour Wc&C India Private Limited vs. Deputy Commissioner of Income Tax

ITA/42/2014HC Delhi22 Sept 2014
Section 260ASection 28Section 43D

…expenses during the pre- commencement period will not be deductable. Similarly loss incurred during the period cannot also be treated as business loss. It cannot, therefore, be carried forward. It has been so held in Liquidators of Pursa Ltd. V CIT [1954] 25 ITR 265 (SC) to the extent to which such expense could be capitalized to the assets, the assessee may well be eligible for depreciation as was found in Challapalli Sugars Ltd. V CIT [1975] 98 ITR 167 (SC). As otherwise such expenses like audit fee would be a dead loss. 3.3 A business is set up in the case of manufacturing concern, when it is rea…

CIT vs. Lakshmiji Sugar Mills Ltd

Appeals are dismissed

ITA/1132/2011HC Delhi06 Feb 2012

Bench: The Assessing Officer, The Respondent Assessee Had Submitted As Under:-

Section 260A

…ight be allowed in certain cases even though the machinery was not in use or was kept idle. The question whether the word “used” would include both passive as well as active user was left open by the apex court in Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265. The words “used for the purposes of the business” are capable of a larger and a narrower interpretation. If the expression “used” is construed strictly, it can be taken as connoting or requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include n…

CIT vs. Lakshmiji Sugar Mills Ltd

Appeals are dismissed

ITA/1133/2011HC Delhi06 Feb 2012

Bench: The Assessing Officer, The Respondent Assessee Had Submitted As Under:-

Section 260A

…ight be allowed in certain cases even though the machinery was not in use or was kept idle. The question whether the word “used” would include both passive as well as active user was left open by the apex court in Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265. The words “used for the purposes of the business” are capable of a larger and a narrower interpretation. If the expression “used” is construed strictly, it can be taken as connoting or requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include n…

CIT vs. Lakshmiji Sugar Mills Ltd

Appeals are dismissed

ITA - 1134 / 2011HC Delhi06 Feb 2012

Bench: The Assessing Officer, The Respondent Assessee Had Submitted As Under:-

Section 260A

…ight be allowed in certain cases even though the machinery was not in use or was kept idle. The question whether the word “used” would include both passive as well as active user was left open by the apex court in Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265. The words “used for the purposes of the business” are capable of a larger and a narrower interpretation. If the expression “used” is construed strictly, it can be taken as connoting or requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include n…

CIT vs. Lakshmiji Sugar Mills Ltd

Appeals are dismissed

ITA - 1133 / 2011HC Delhi06 Feb 2012

Bench: The Assessing Officer, The Respondent Assessee Had Submitted As Under:-

Section 260A

…ight be allowed in certain cases even though the machinery was not in use or was kept idle. The question whether the word “used” would include both passive as well as active user was left open by the apex court in Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265. The words “used for the purposes of the business” are capable of a larger and a narrower interpretation. If the expression “used” is construed strictly, it can be taken as connoting or requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include n…

CIT vs. Lakshmiji Sugar Mills Ltd

Appeals are dismissed

ITA - 1132 / 2011HC Delhi06 Feb 2012

Bench: The Assessing Officer, The Respondent Assessee Had Submitted As Under:-

Section 260A

…ight be allowed in certain cases even though the machinery was not in use or was kept idle. The question whether the word “used” would include both passive as well as active user was left open by the apex court in Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265. The words “used for the purposes of the business” are capable of a larger and a narrower interpretation. If the expression “used” is construed strictly, it can be taken as connoting or requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include n…

Commisioner of Income Tax vs. M/s. Oswal Agro Mills Ltd

ITA-161/2006HC Delhi24 Dec 2010

…* IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA No.161 of 2006 with ITA No. 617 of 2006 ITA No. 998 of 2008 ITA No.1104 of 2008 ITA No. 1283 of 2008 Reserved On: OCTOBER 27, 2010. % Pronounced On: DECEMBER 24, 2010. 1) ITA No.161 of 2006 COMMISIONER OF INCOME TAX . . . Appellant through : Mr. N.P. Sahni, Advocate and Ms. P.L. Bansal, Advocate. VERSUS M/s. OSWAL AGRO MILLS LTD. . . .Respondent through: Mr. C.S. Aggarwal, Sr. Advocate with…

Commissioner of Income Tax vs. Saraya Industries Ltd

The appeal is dismissed with costs

ITA/571/2007HC Delhi11 Jan 2008

Bench: HON'BLE MR. JUSTICE MADAN B. LOKUR,HON'BLE MR. JUSTICE V.B. GUPTA

Section 271(1)(c)Section 32(1)

…urposes of its business. According to the Assessee, both conditions were satisfied by the Assessee but, unfortunately, the Assessing Officer took a different view. 12. In The Liquidators of Pursa Limited v. Commissioner of Income-tax, Bihar, [1954] 25 ITR 265, the expression “used for the purpose of the business” as appearing in Section 10(2)(vii) of the Income Tax Act, 1922 was considered by the Supreme Court. It was held that the words obviously mean “used for the purpose of enabling the owner to carry on the business and earn profits in the business.” 13. This Court had occasion to consider t…