What is McDowell & Co. Ltd. v. CTO authority for?

The Supreme Court held that while legitimate tax planning is permissible, transactions structured as a "colourable device" or "subterfuge" solely to avoid tax are impermissible. It mandates a judicial shift to look beyond the form to the substance of a transaction, allowing the lifting of the corporate veil in tax evasion arrangements.

How many judgments cite McDowell & Co. Ltd. v. CTO?

741 judgments on BharatTax cite McDowell & Co. Ltd. v. CTO (154 ITR 148), spanning 2008 to 2026.

Which sections of the Income Tax Act does McDowell & Co. Ltd. v. CTO come up under?

It is most often cited in judgments turning on Section 143(3), Section 148, Section 147, Section 68, Section 69C, Section 133A.

McDowell & Co. Ltd. v. CTO (154 ITR 148)

DCIT, Mumbai vs. Anita Kothari, Mumbai

In the result, all appeals filed by the Revenue stands dismissed

ITA 2996/MUM/2025[2018-19]Status: DisposedITAT Mumbai22 Aug 2025AY 2018-19

Bench: Smt. Beena Pillai () & Shri Omkareshwar Chidara ()

Section 10(35)Section 133A

…the Act. That such use cannot be called "abuse of law". Even assuming that the transaction was pre-planned there is nothing to impeach the genuineness of the transaction. With regard to the ruling in McDowell & Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126: (1985) 154 ITR 148 (SC), it may be stated that in the later decision of this Court in Union of India vs. Azadi Bachao Andolan& Anr (2003) 184 CTR 450,263 ITR 706 (SC) it has been held that a citizen is free to carry on its business within the four corners of the law. That, mere tax planning, without any motive to evade taxes through colourable devices is not frowne…

DCIT, Mumbai vs. Lalita Kothari, Mumbai

In the result, all appeals filed by the Revenue stands dismissed

ITA 2990/MUM/2025[2018]Status: DisposedITAT Mumbai22 Aug 2025

Bench: Smt. Beena Pillai () & Shri Omkareshwar Chidara ()

Section 10(35)Section 133A

…the Act. That such use cannot be called "abuse of law". Even assuming that the transaction was pre-planned there is nothing to impeach the genuineness of the transaction. With regard to the ruling in McDowell & Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126: (1985) 154 ITR 148 (SC), it may be stated that in the later decision of this Court in Union of India vs. Azadi Bachao Andolan& Anr (2003) 184 CTR 450,263 ITR 706 (SC) it has been held that a citizen is free to carry on its business within the four corners of the law. That, mere tax planning, without any motive to evade taxes through colourable devices is not frowne…

DCIT, Mumbai vs. Anita Kothari, Mumbai

In the result, all appeals filed by the Revenue stands dismissed

ITA 2988/MUM/2025[2019-20]Status: DisposedITAT Mumbai22 Aug 2025AY 2019-20

Bench: Smt. Beena Pillai () & Shri Omkareshwar Chidara ()

Section 10(35)Section 133A

…the Act. That such use cannot be called "abuse of law". Even assuming that the transaction was pre-planned there is nothing to impeach the genuineness of the transaction. With regard to the ruling in McDowell & Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126: (1985) 154 ITR 148 (SC), it may be stated that in the later decision of this Court in Union of India vs. Azadi Bachao Andolan& Anr (2003) 184 CTR 450,263 ITR 706 (SC) it has been held that a citizen is free to carry on its business within the four corners of the law. That, mere tax planning, without any motive to evade taxes through colourable devices is not frowne…

DCIT, New Delhi vs. Sh. Niranjan Koirala, New Delhi

In the result, appeal of the Revenue is dismissed

ITA 2253/DEL/2010[2006-07]Status: DisposedITAT Delhi19 Aug 2025AY 2006-07

Bench: Shri Vikas Awasthy & Shri Avdhesh Kumar Mishraआअसं.2253/िद"ी/2010(िन.व. 2006-07) Deputy Commissioner Of Income Tax, Circle-31(1), R. No. 1405, 14Th Floor, E-2 Block, Pratyakshkar Bhawan, Civic Centre, Jln Marg, ...... अपीलाथ"/Appellant New Delhi बनाम Vs. Niranjan Koirala, 27, Akbar Road, New Delhi ..... "ितवादी/Respondent Pan: Aaupk-0483-B Assessee By : Shri Tarandeep Singh, Advocate Department By : Shri Manoj Kumar, Sr. Dr सुनवाई क" ितिथ/ Date Of Hearing : 23.05.2025 घोषणा क" ितिथ/ Date Of Pronouncement : : 19.08.2025 आदेश/Order Per Vikas Awasthy, Jm: This Appeal By The Revenue Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-Xxx, New Delhi (Hereinafter Referred To As 'The Cit(A)') Dated 18.02.2010, For Assessment Year 2006-07. 2. This Appeal Was Decided By The Tribunal Vide Order Dated 20.07.2018. Thereafter, The Revenue Filed Miscellaneous Application Seeking Rectification In The Order Of Tribunal On The Ground That The Additional Grounds Of Appeal Raised By The Revenue Vide Application Dated 13.08.2014 Remained To Be Decided. The Tribunal In Ma No. 732/Del/2018 Vide Order Dated 10.07.2023 Recalled The Order

For Appellant: Shri Tarandeep Singh, AdvocateFor Respondent: Shri Manoj Kumar, Sr. DR

Section 54F

…g as it is wrong to encourage or entertain the belief that it is honorable to avoid payment of tax by resorting to dubious methods. It is the obligation of every taxpayer to pay taxes honestly without resorting to subterfuge {McDowell & Co. Ltd. v. CTO (1985) 154 ITR 148 (SC)}. These trite propositions in law have also been exposited in a catena of other judgements which include Twinstar Holdings Ltd. Vs. DCIT (2003) 260 ITR; R.Krishnamurthy Vs. CIT (2003) 261 ITR 623(Mad); Bhagat Construction Co.(P) Ltd Vs. CIT(2001) 250 /TR 291 (Delhi;, Workmen of Association Rubber Industry Ltd. Vs. Associated Rubber Industry…

Assistant Commissioner of Income Tax, 4(1)(1), Mumbai vs. Haresh Shantichand Jhaveri, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 1971/MUM/2025[2015-16]Status: DisposedITAT Mumbai12 Aug 2025AY 2015-16

Bench: Shri Saktijit Dey & Shri Prabhash Shankarassistant Commissioner Of V/S. Haresh Shantichand Income Tax, Ward – 4(1)(1), बनाम Jhaveri, Room No. 642, Aaykar Bhavan, Ps 6-7 Rotunda Bldg, M.K. Road, Churchgate, Samachar Marg, Mumbai – Mumbai–400 020, Maharashtra 400 023, Maharashtra स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aabpj8053B Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Shri Nitin Shantilal Doshi, ARFor Respondent: Shri Hemanshu Joshi (Sr. DR)

Section 147

…al observations, devoid of any specific factual finding which is relevant to the impugned transaction. He observed that the principles relating to use of colourable device laid down by the Hon'ble Supreme Court in the case of McDowell & Co Ltd. Vs CTO (1977) (1 SCR 914) (SC) could not be applied on the facts of the present case. On similar facts, he placed reliance on hon'ble Gujrat High Court in the case of Banyan & Berry Vs CIT (1996) (222 ITR 831) (Gujarat), Sandipkumar Parsottam bhai Patel Vs ITO (2022) (137 taxmann.com 373) (Surat-Trib.), Champalal Gopiram Agarwal [2023] 155 taxmann.com 66 (Gujarat)/[2024] 4…

DCIT, Mumbai vs. 2015 Grover Family Trust, Mumbai

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

ITA 5108/MUM/2024[2016-17]Status: DisposedITAT Mumbai12 Aug 2025AY 2016-17

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 133ASection 143(3)Section 147Section 94(7)(E)

…the Act. That such use cannot be called "abuse of law", Even assuming that the transaction was pre-planned there is nothing to impeach the genuineness of the transaction. With regard to the ruling in McDowell & Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC), it may be stated that in the later decision of this Court in Union of India vs. Azadi Bachao Andolan & Anr (2003) 184 CTR 450,263 ITR 706 (SC) it has been held that a citizen is free to carry on its business within the four corners of the law. That, mere tax planning, without any motive to evade taxes through colourable devices is not frown…

DCIT, Mumbai vs. Cms Computers Limited, Mumbai

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

ITA 5105/MUM/2024[2016-17]Status: DisposedITAT Mumbai12 Aug 2025AY 2016-17

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 133ASection 143(3)Section 147Section 94(7)(E)

…the Act. That such use cannot be called "abuse of law", Even assuming that the transaction was pre-planned there is nothing to impeach the genuineness of the transaction. With regard to the ruling in McDowell & Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC), it may be stated that in the later decision of this Court in Union of India vs. Azadi Bachao Andolan & Anr (2003) 184 CTR 450,263 ITR 706 (SC) it has been held that a citizen is free to carry on its business within the four corners of the law. That, mere tax planning, without any motive to evade taxes through colourable devices is not frown…

DCIT 2(2)(1), Mumbai vs. Max Hospitals and Allied Services Limited, Mumbai

In the result, appeals by the revenue are dismissed

ITA 3085/MUM/2025[2018-19]Status: DisposedITAT Mumbai11 Aug 2025AY 2018-19

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Revenue byFor Respondent: Shri Vivek Perampurna, CIT D/R

Section 143(3)Section 263Section 56(2)(viib)

…ial for a regarding colourable I.T.A. No. 3083/Mum/2025 I.T.A. No. 3084/Mum/2025 I.T.A. No. 3085/Mum/2025 4 devices used for the purpose of tax evasion and in particular the decision of the Hon’ble Supreme Court in the case of Mc. Dowell and Co. Ltd., (1985) 154 ITR 148. 7. The premium attached to the shares has not been received from open market. It is an admitted position that it is a limited group transaction and is not entered with open and general subscribers who could pay the premium. 8. The shares had no capability and no intrinsic value to give price to premium in the industrial, normal and actual worth…

DCIT 2(2)(1), Mumbai vs. Max Hospitals and Allied Services Limited, Mumbai

In the result, appeals by the revenue are dismissed

ITA 3084/MUM/2025[2017-18]Status: DisposedITAT Mumbai11 Aug 2025AY 2017-18

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Revenue byFor Respondent: Shri Vivek Perampurna, CIT D/R

Section 143(3)Section 263Section 56(2)(viib)

…ial for a regarding colourable I.T.A. No. 3083/Mum/2025 I.T.A. No. 3084/Mum/2025 I.T.A. No. 3085/Mum/2025 4 devices used for the purpose of tax evasion and in particular the decision of the Hon’ble Supreme Court in the case of Mc. Dowell and Co. Ltd., (1985) 154 ITR 148. 7. The premium attached to the shares has not been received from open market. It is an admitted position that it is a limited group transaction and is not entered with open and general subscribers who could pay the premium. 8. The shares had no capability and no intrinsic value to give price to premium in the industrial, normal and actual worth…

DCIT 2(2)(1), Mumbai vs. Max Hospitals and Allied Services Limited, Mumbai

In the result, appeals by the revenue are dismissed

ITA 3083/MUM/2025[2016-17]Status: DisposedITAT Mumbai11 Aug 2025AY 2016-17

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Revenue byFor Respondent: Shri Vivek Perampurna, CIT D/R

Section 143(3)Section 263Section 56(2)(viib)

…ial for a regarding colourable I.T.A. No. 3083/Mum/2025 I.T.A. No. 3084/Mum/2025 I.T.A. No. 3085/Mum/2025 4 devices used for the purpose of tax evasion and in particular the decision of the Hon’ble Supreme Court in the case of Mc. Dowell and Co. Ltd., (1985) 154 ITR 148. 7. The premium attached to the shares has not been received from open market. It is an admitted position that it is a limited group transaction and is not entered with open and general subscribers who could pay the premium. 8. The shares had no capability and no intrinsic value to give price to premium in the industrial, normal and actual worth…

Income Tax Officer, Coimbatore vs. Damayanti Ramachandran, Gn Mills Post, Coimbatore

ITA 149/CHNY/2025[2016-17]Status: DisposedITAT Chennai07 Aug 2025AY 2016-17

Bench: Hon'Ble Shri Manu Kumar Giri & Hon'Ble Shri S. R. Raghunathaआयकर अपील सं./Ita No.103/Chny/2025, निर्धारण वर्ष/Assessment Year: 2015-16 Income Tax Officer, Non-Corporate Ward-4(3) Coimbatore Damayanti Ramachandran, Pb No.5303, Gn Mills Post, Coimbatore, Tamil Nadu-641029 [Pan: Aabhd8298Q] (अपीलार्थी/Appellant) V. (प्रत्यर्थी/Respondent) Co No.19/Chny/2025, निर्धारण वर्ष/Assessment Year: 2015-16 Damayanti Ramachandran, Pb No.5303, Gn Mills Post, Coimbatore, Tamil Nadu-641029 [Pan: Aabhd8298Q] Income Tax Officer, Non-Corporate Ward-4(3) Coimbatore V. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) आयकर अपील सं./Ita No.149/Chny/2025, निर्धारण वर्ष/Assessment Year: 2016-17 Income Tax Officer, Non-Corporate Ward-4(3) Coimbatore Damayanti Ramachandran, Pb No.5303, Gn Mills Post, Coimbatore, Tamil Nadu-641029 [Pan: Aabhd8298Q] (अपीलार्थी/Appellant) V. (प्रत्यर्थी/Respondent) Co No.20/Chny/2025, निर्धारण वर्ष/Assessment Year: 2016-17 Damayanti Ramachandran, Pb No.5303, Gn Mills Post, Coimbatore, Tamil Nadu-641029 [Pan: Aabhd8298Q] Income Tax Officer, Non-Corporate Ward-4(3) Coimbatore (अपीलार्थी/Appellant) V. (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Appellant By Mr.Ketan K. Ved, C.A

Section 45(4)

…आयकर अपीलीय अधिकरण, "सी" न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH: CHENNAI माननीय श्री मनु कुमार गिरि, न्यायिक सदस्य एवं माननीय श्री एस.आर.रघुनाथा,लेखा सदस्य के समक्ष । BEFORE HON'BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON'BLE SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.103/Chny/2025, निर्धारण वर्ष/Assessment Year: 2015-16 Income Tax Officer, Non-Corporate Ward-4(3) Coimbatore Damayanti Ramachandran, PB No.5303, GN Mills Post, Coimbatore, Tamil Nadu-641029 [PAN: AABHD8298Q] (अपीलार्थी/Appellant) V. (प्रत्यर्थी/Respondent) CO No.19/Chny/2025, निर्धारण वर्ष/Assessmen…

Income Tax Officer, Coimbatore vs. Damayanti Ramachandran, Gn Mills Post, Coimbatore

In the result, both the appeals of revenue for the A

ITA 103/CHNY/2025[2015-16]Status: DisposedITAT Chennai07 Aug 2025AY 2015-16

Bench: Hon’Ble Shri Manu Kumar Giri & Hon’Ble Shri S. R. Raghunathaआयकर अपील सं./Ita No.103/Chny/2025, ननिाारण वर्ा/Assessment Year: 2015-16

For Appellant: Mr.Ketan K. Ved, C.AFor Respondent: Mr.Bipin C.N, CIT

Section 45(4)

…आयकर अपीलीय अधिकरण, ‘’सी’’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री मनु कुमार गिरि, न्याययक सदस्य एवं माननीय श्री एस.आर.रघुनाथा ,लेखा सदस्य के समक्ष । BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.103/Chny/2025, ननिाारण वर्ा/Assessment Year: 2015-16 Income Tax Officer, Damayanti Ramachandran, Non-Corporate Ward-4(3) PB No.5303, GN Mills Post, v. Coimbatore Coimbatore, Tamil Nadu-641029 [PAN: AABHD8298Q] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) CO No.19/Chny/2025, ननिाारण वर्ा/Assess…

ITO 41(3)(1), Mumbai vs. Deepika Anil Agarwal, Mumbai

In the result the appeal filed by the revenue stands

ITA 1885/MUM/2025[2011-12]Status: DisposedITAT Mumbai06 Aug 2025AY 2011-12

Bench: Hon’Ble Shri Sandeep Gosain& Shri Girish Agrawal

Section 10(38)Section 132Section 132(4)Section 143Section 147Section 148Section 263Section 68

…Thus, the addition made on the basis of bad-assessment order is also bad-in-law and requires to be deleted. E. CASE LAWS RELIED BY LD. AO DISTINGUISHED 1. The Ld. AO in para 12.5pg no 28 of assessment order has laid reliance on Mc Dowell and Co. Ltd. Vs. CTO 154 ITR 148 which is distinguished as under:- SR. NO. MC DOWELL AND CO. LTD. CASE OF ASSESSEE 1. "Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious method. It…

Govind Corporation, Mumbai vs. DCIT Central Circle 8(1), Mumbai

In the result the appeal filed by the assessee stands

ITA 3229/MUM/2025[2014-15]Status: HeardITAT Mumbai24 Jul 2025AY 2014-15

Bench: Hon’Ble Shri Sandeep Gosain

Section 10(38)Section 115BSection 143(3)Section 250Section 68

…t is essential on the part of the Assessing Officer to look into the real nature of transaction and what happens in the real word and contextualize the same to such transactions in the real market situation. Further, in the case of McDowell &: Co. Ltd.[(1985) 154 ITR 148 (SC)], the Hon'ble Supreme Court have observed as under: "Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every…