Morvi Industries Ltd. v. CIT

82 ITR 835Supreme Court of India1971#748 most cited

What is Morvi Industries Ltd. v. CIT authority for?

Income accrues when it becomes due, vesting the assessee with the right to claim the amount, even if payment is not immediate. It requires a corresponding liability from the other party to pay, emphasizing real rather than hypothetical accrual, particularly for assessees using the mercantile system of accounting.

136

judgments rely on this decision, according to BharatTax’s citation analysis of 366,459 Indian tax judgments — from 2010 to 2025.

Also referred to as

Morvi Industries Ltd. v. CIT · accrual of income · real income principle · mercantile system of accounting · right to receive income · income becomes due · corresponding liability to pay · taxability timing · date of payment irrelevant to accrual

Also reported as

4 SCC 451

Sections most often in play

Section 1908Section 1961Section 143(3)Section 45(1)Section 48Section 143(1)Section 144Section 147
Read the full judgment

Issues it is cited on

right to receivejdasection 48section 45section 17mercantile system of accountingdouble taxationprevious yearincome from other sourcestransfercompanysection 142(1)

Judgments citing Morvi Industries Ltd. v. CIT

DCIT, New Delhi vs. M/S. Janta Co- Operative Bank Ltd., New Delhi

Appeal of the Revenue is dismissed

ITA 2074/DEL/2012[2008-09]Status: DisposedITAT Delhi06 Dec 2016AY 2008-09

Bench: Shri R. S. Syal & Smt Suchitra Kamble

Section 41(1)

…Ld.CIT(A) XXV, New Delhi has erred in deleting the addition of Rs.42,12,605/- following the judgment of CIT vs. Shoorji Vallabhdas & Co. 46 ITR 144 (SC) 2 (1962) which stands distinguished by the judgment in the case of Morvi Industries Ltd. Vs. CIT (1971) 82 ITR 835 of Supreme Court.”. “On the facts and in circumstances of the case, Ld.CIT(A) has erred in deleting the addition of Rs.42,12,605/- made by A. On account of interest on NPAs ignoring the ratio of the case of State Bank of Travancore Vs. CIT reported in (1986) 158 ITR 102(SC).” (ii) On the facts and in circumstances of the case, Ld.CIT (A) has erre…

S. Mansukhlal & Co., Mumbai vs. DCIT 14(2), Mumbai

In the result, the appeal filed by the assessee in ITA No

ITA 4793/MUM/2014[2010-11]Status: DisposedITAT Mumbai24 Oct 2016AY 2010-11

Bench: Shri C.N. Prasad & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 4793/Mum/2014 ("नधा"रण वष" / Assessment Year : 2010-11) M/S. S. Mansukhlal & Co., The Deputy Commissioner बनाम/ Srbc & Associates Llp, Of Income Tax –14(2), V. Chartered Accountants, Earnest House, Iii Floor, 12 Th Floor, The Ruby, Nariman Point, 29, Senapati Bapat Marg, Mumbai – 400 021. Dadar (West), Mumbai – 400 028. "थायी लेखा सं./Pan : Aahfs9459A .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Respondent: Shri Sanjeev Kashyap (D.R.)
Section 143(3)Section 14A

…ccrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." ITA 4793/Mum/2014 17 18. The above passage was cited with approval in Morvi Industries Ltd. v. CIT (Central), [1971] 82 ITR 835 (SC) in which this Court also considered the dictionary meaning of the word "accrue" and held that income can be said to accrue when it becomes due. It was then observed that: "....... the date of payment ....... does not affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount even…

Bangalore Metro Rail Corporation Ltd., Bangalore vs. DCIT, Bangalore

In the result, four appeals of the assessee for AY: 2006-07 & 2008-

ITA 868/BANG/2015[2006-07]Status: DisposedITAT Bangalore05 Aug 2016AY 2006-07

Bench: Shri Sunil Kumar Yadav & Shri A.K.Garodia, Accounant Member

For Appellant: Shri Shreehari Kutsa, CAFor Respondent: Smt. P. Renugadevi, JCIT
Section 201Section 201(1)

…Ltd Vs CIT 26 ITR 27(SC) ii)Shoorji Vallabhdas & Co Vs CIT 46 ITR 144(SC) iii) CIT Vs Birla Gwalior Pvt.Ltd 89 ITR 266(SC) iv) CIT Vs WExcel Industries Ltd., 358 ITR 295(SC) v) State Bank of Travancore Vs CIT 158 ITR 102(SC) vi) Morvi Industries Ltd., Vs CIT 82 ITR 835 (SC) vii) Godhara Electricity Co.Ltd.,CIT 225 ITR 746 (SC) viii) M/s P.G & W.Sawoo Pv.Ltd., Vs ACIT in Civil appeal No.4091 of 2016 arising out of SLP (Civil) Nos.6384 of 2009 dated 19/04/2016. Reliance on these judgments was placed in support of this contention that the income tax is a tax on income and income has to be real income only and not…

Amish R. Kapadia, Mumbai vs. ITO 12(30(2), Mumbai

In the result, the assessee’s appeal is partly allowed for statistical purposes

ITA 1858/MUM/2010[2005-06]Status: DisposedITAT Mumbai06 May 2016AY 2005-06

Bench: Shri Sanjay Arora, Am & Shri Amit Shukla, Jm आयकर अपील सं./I.T.A. No. 1858/Mum/2010 ("नधा"रण वष" / Assessment Year: 2005-06) Amish R. Kapadia Ito, Ward – 12(3)(2), बनाम/ Aaykar Bhavan, 1St Floor, Indian Mercantile Mansion, Madam Kama Road, M. K. Road, Mumbai-400 020 Vs. Mumbai-400 039 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aabpk 4127 H (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri Dhirendra M. Shah ""यथ" क" ओर से/Respondent By : Shri S. R. Singh सुनवाई क" तार"ख / : 26.4.2016 Date Of Hearing घोषणा क" तार"ख / : 06.5.2016 Date Of Pronouncement आदेश / O R D E R Per Sanjay Arora, A. M.: This Is An Appeal By The Assessee Directed Against The Order By The Commissioner Of Income Tax (Appeals)-23, Mumbai (‘Cit(A)’ For Short) Dated 20.01.2010, Confirming The Levy Of Penalty U/S. 271(1)(C) Of The Income Tax Act, 1961 (‘The Act’ Hereinafter) For The Assessment Year (A.Y.) 2005-06 Vide Order Dated 31.3.2009. The Only Issue In Appeal Is The Sustainability Or Otherwise In Law Of The Penalty U/S. 271(1)(C), Levied In The Sum Of Rs.6,08,170/-, I.E., At The Minimum Rate Of 100% Of The Tax Sought To Be Evaded.

For Appellant: Shri Dhirendra M. ShahFor Respondent: Shri S. R. Singh
Section 271(1)(c)

…authorities are entitled to look into the surrounding circumstances and Courts and Tribunals are required to evaluate the material placed before them after applying the test of human probabilities as held by Hon'ble Supreme Court in case of Morvi Industries (82 ITR 835). Considering the changing stand of the assessee and the nature of illness and the entirety of facts and circumstances, we agree that the conclusion drawn by the lower authorities that the withdrawals of Rs 10 lacs and Rs 6.65 lacs by the assessee had been utilized for undisclosed purposes and were not available for re-depositing the same in Decem…

ITO 16(1)(3), Mumbai vs. L/H of Smt. Vimla Ratilal Mehta, Mumbai

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

ITA 3361/MUM/2014[2007-08]Status: DisposedITAT Mumbai09 Dec 2015AY 2007-08

Bench: S/Shri B.R.Baskaran, Am & Pawan Singh, Jm आमकय अऩीर सं./I.T.A. No.3361/Mum/14 (ननधधायण वषा / Assessment Year: 2007-08) बनाम/ Income Tax Officer-16 Shri Ashok Mehta, L/H Of (L) Smt. Vimla Ratilal (1)(3) Vs. Mehta, 201, Jeevan Villa, Room No.220, 2Nd Floor, N Dhabholkar Road, Matru Mandir, Mumbai-400006 Tardeo Road, Mumbai-400007 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) ..

Section 132Section 69

…rual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." 2:4.36 The above passage was cited with approval in Morvi Industries Ltd. v.Commissioner of Income-Tax (Central), [1971] 82 ITR 835 (SC) in which Supreme Court also 21 considered the dictionary meaning of the word "accrue" and held that income can be said to accrue when it becomes due. It was then observed that: "........ the date of payment ..... does not affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount…

The Commissioner of Income Tax vs. M/S Amco Power Systems Ltd

ITA/765/2009HC Karnataka07 Oct 2015

Bench: B.MANOHAR,VINEET SARAN

Section 260

…missions, learned counsel for both parties have relied on the following three decisions of the Apex Court: i) Keshav Mills Ltd. –vs- Commissioner of Income Tax (1953) 23 ITR 230 ii) Morvi Industries Ltd., -vs- Commissioner of Income Tax (1971) 82 ITR 835 iii) Commissioner of Income Tax –vs- Gajapathy Naidu (1964) 53 ITR 114 32. In the case of Keshav Mills (supra), in paragraph-13, the Apex Court has held as under: “The mercantile system of accounting or what is otherwise known as the double entry system is opposed to the cash system of book keeping under which a record is kept…

The Commissioner of Income Tax vs. M/S Amco Power Systems Ltd

ITA/769/2009HC Karnataka07 Oct 2015

Bench: B.MANOHAR,VINEET SARAN

Section 260

…missions, learned counsel for both parties have relied on the following three decisions of the Apex Court: i) Keshav Mills Ltd. –vs- Commissioner of Income Tax (1953) 23 ITR 230 ii) Morvi Industries Ltd., -vs- Commissioner of Income Tax (1971) 82 ITR 835 iii) Commissioner of Income Tax –vs- Gajapathy Naidu (1964) 53 ITR 114 32. In the case of Keshav Mills (supra), in paragraph-13, the Apex Court has held as under: “The mercantile system of accounting or what is otherwise known as the double entry system is opposed to the cash system of book keeping under which a record is kept…

The Commissioner of Income Tax vs. M/S Amco Power Systems Ltd

ITA/767/2009HC Karnataka07 Oct 2015

Bench: B.MANOHAR,VINEET SARAN

Section 260

…missions, learned counsel for both parties have relied on the following three decisions of the Apex Court: i) Keshav Mills Ltd. –vs- Commissioner of Income Tax (1953) 23 ITR 230 ii) Morvi Industries Ltd., -vs- Commissioner of Income Tax (1971) 82 ITR 835 iii) Commissioner of Income Tax –vs- Gajapathy Naidu (1964) 53 ITR 114 32. In the case of Keshav Mills (supra), in paragraph-13, the Apex Court has held as under: “The mercantile system of accounting or what is otherwise known as the double entry system is opposed to the cash system of book keeping under which a record is kept…

The Commissioner of Income Tax vs. M/S Amco Power Systems Ltd

ITA/1046/2008HC Karnataka07 Oct 2015

Bench: B.MANOHAR,VINEET SARAN

Section 260

…missions, learned counsel for both parties have relied on the following three decisions of the Apex Court: i) Keshav Mills Ltd. –vs- Commissioner of Income Tax (1953) 23 ITR 230 ii) Morvi Industries Ltd., -vs- Commissioner of Income Tax (1971) 82 ITR 835 iii) Commissioner of Income Tax –vs- Gajapathy Naidu (1964) 53 ITR 114 32. In the case of Keshav Mills (supra), in paragraph-13, the Apex Court has held as under: “The mercantile system of accounting or what is otherwise known as the double entry system is opposed to the cash system of book keeping under which a record is kept…

Commissioner of Income Tax-V vs. Sri Anand Krishna Conjeevaram

ITTA/593/2013HC Telangana10 Dec 2013

The Commissioner of Income-Tax vs. Sri M.D. Yashodharan

In the result, the appeal fails

RP/196/2013HC Karnataka24 Sept 2013

Bench: B.MANOHAR,DILIP B.BHOSALE

Section 143(3)Section 260Section 260ASection 263

…and the amount / demand made by the assessee was legally due to it and therefore, the same accrued to it. In support of aforesaid submissions, reliance has been placed on decisions 'MORVI INDUSTRIES LTD. VS. COMMISSIONER OF INCOME-TAX', (1971) 82 ITR 835 (SC), 'KESHAV 9 MILLS LTD. VS. COMMISSIONER OF INCOME-TAX', (1953) 23 ITR 230 (SC) and 'COMMISSIONER OF INCOME-TAX VS.A.GAJAPATHY NAIDU', (1964) 53 ITR 114 (SC). 5. On the other hand, learned counsel for the assessee has submitted that the mercantile system and accrual system of accounting are synonymous. In this connection, reference h…

Commissioner of Income Tax (TDS) vs. M/s. Yashoda Super Speciality Hospital

ITTA/196/2013HC Telangana04 Jul 2013

Commissioner of Income Tax vs. Gautam R. Chadha

Appeals stand disposed of

ITA - 310 / 2009HC Delhi27 Jul 2011

…y accrue to an assessee without actual receipt of the same and if the assessee acquires a right to receive the same, the income can be said to have accrued to him though it may be received later on, on its being ascertained.” and Morvi Industry Ltd v. CIT, 82 ITR 835 wherein it was observed that, “…once the income accrued, the fact that payment was deferred till after the accounts had been passed in the meetings of the managed company, did not affect the accrual of the income. Income accrues when it becomes due”. 9. On the other hand, learned counsel for the assessee heavily relies on Section 5 Article…

M/s. De vs. ons Pvt. Ltd

ITA/296/2006HC Delhi29 Nov 2010
Section 133(6)Section 271

…the Supreme Court after referring to its earlier decision in Morvi Industries Ltd. vs. 2010:DHC:5727-DB ITA No.367/2004 & 296/2006 Page 23 of 42 Commissioner of Income-tax (1971) 82 ITR 835, which was also a case where the mercantile system of accounting was being followed by the assessee, observed (89 ITR page 273) : “Hence it is clear that this court in Morvi Industries case did emphasise the fact that the real question for decision was whether the income had really accrued or not. It is not a hypothetical accrual of incom…

M/S De vs. Ons Pvt Ltdvs.Commissioner of Income Tax &

ITA - 367 / 2004HC Delhi19 Nov 2010
Section 133(6)Section 271

…the Supreme Court after referring to its earlier decision in Morvi Industries Ltd. vs. 2010:DHC:5593-DB ITA No.367/2004 & 296/2006 Page 23 of 42 Commissioner of Income-tax (1971) 82 ITR 835, which was also a case where the mercantile system of accounting was being followed by the assessee, observed (89 ITR page 273) : “Hence it is clear that this court in Morvi Industries case did emphasise the fact that the real question for decision was whether the income had really accrued or not. It is not a hypothetical accrual of incom…

M/s. De vs. ons Pvt. Ltd

ITA/367/2004HC Delhi19 Nov 2010
Section 133(6)Section 271

…the Supreme Court after referring to its earlier decision in Morvi Industries Ltd. vs. 2010:DHC:5593-DB ITA No.367/2004 & 296/2006 Page 23 of 42 Commissioner of Income-tax (1971) 82 ITR 835, which was also a case where the mercantile system of accounting was being followed by the assessee, observed (89 ITR page 273) : “Hence it is clear that this court in Morvi Industries case did emphasise the fact that the real question for decision was whether the income had really accrued or not. It is not a hypothetical accrual of incom…