Poona Electric Supply Co. Ltd. v. CIT

57 ITR 521Supreme Court of India1965#816 most cited

What is Poona Electric Supply Co. Ltd. v. CIT authority for?

Income tax is levied on real income, which represents profits determined by ordinary commercial principles after permissible deductions, considering the probability of realization. This principle distinguishes real profits from statutory profits specified for other purposes under the Income-tax Act.

126

judgments rely on this decision, according to BharatTax’s citation analysis of 366,418 Indian tax judgments — from 2010 to 2026.

Also referred to as

Poona Electric Supply Co. Ltd. v. CIT · 57 ITR 521 · real income theory · commercial principles · determination of income · permissible deductions · probability of realization · business income · mercantile system of accounting · statutory profits distinction

Sections most often in play

Section 143(3)Section 115BBESection 132Section 133ASection 143(2)Section 147Section 11Section 119
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Issues it is cited on

section 28(iv)explanation to section 37surrender of incomeright to receiveprincipal officersection 192section 30section 40(a)(i)mercantile system of accountingrejection of books of accountbeneficial ownerfees for technical services

Judgments citing Poona Electric Supply Co. Ltd. v. CIT

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

…r referring to Morvi Industries that real accrual of income and not a hypothetical accrual of income ought to be taken into consideration. For a similar conclusion, reference was made to Poona Electric Supply Co. Ltd. v. Commissioner of Income 22 Tax, [1965] 57 ITR 521 (SC) wherein it was held that income tax is a tax on real income. 25. Finally a reference was made to State Bank of Travancore v. Commissioner of Income Tax, [1986]158 ITR 102 (SC) wherein the majority view was that accrual of income must be real, taking into account the actuality of the situation; whether the accrual had taken place or not must,…

Moser Baer India Ltd vs. DCIT Circle -5 (1)

In the result appeal is allowed

ITA 882/DEL/2008[2002-2003]Status: DisposedITAT Delhi08 Dec 2015AY 2002-2003

Bench: Shri A.T. Varkey & Shri S.V.Mehrotra

For Appellant: Shri Neeraj Jain, Adv, Rama Katyal CA &For Respondent: Shri Amrender Kumar, CIT DR
Section 92C

…18 wherein it has been held as under: “77. As a concept and principle Chapter X does not artificially broaden, expand or deviate from the concept of "real income". "Real income", as held by the Supreme Court in Poona Electricity Supply Co. Ltd. v. CIT [1965] 57 ITR 521, means profits arrived at on commercial principles, subject to the provisions of the Act. Profits and gains should be true and correct profits and gains, 39 neither under nor over stated. Arm's length price seeks to correct distortion and shifting of profits to tax the actual income earned by a resident/domestic AE. The profit which would have ac…

Rampgreen Solutions Pvt Ltd vs. Commissioner of Income Tax

The appeal is allowed

ITA/102/2015HC Delhi10 Aug 2015

Bench: The Tribunal, Impugning The Assessment Order Passed By The Assessing Officer (Hereafter ‘Ao’) Making The Transfer Pricing Adjustments (Hereafter ‘Tp Adjustments’) In Respect Of The Assessment Year (Hereafter ‘Ay’) 2008-09 As Finalised By The Transfer Pricing Officer 2015:Dhc:6421-Db

Section 260A

…e following words:- “77. As a concept and principle Chapter X does not artificially broaden, expand or deviate from the concept of "real income". "Real income", as held by the Supreme Court in Poona Electricity Supply Company Limited versus CIT, : [1965] 57 ITR 521 (SC), means profits arrived at on commercial principles, subject to the provisions of the Act. Profits and gains should be true and correct profits and gains, neither under nor over stated. Arm's length price seeks to correct distortion and shifting of profits to tax the actual income earned by a resident/domestic AE. The profit which would…

(Now known as Sony India Limited)

ITA/16/2014HC Delhi16 Mar 2015

…Page 58 of 142 77. As a concept and principle Chapter X does not artificially broaden, expand or deviate from the concept of ―real income‖. ―Real income‖, as held by the Supreme Court in Poona Electricity Supply Company Limited versus CIT, [1965] 57 ITR 521 (SC), means profits arrived at on commercial principles, subject to the provisions of the Act. Profits and gains should be true and correct profits and gains, neither under nor over stated. Arm‘s length price seeks to correct distortion and shifting of profits to tax the actual income earned by a resident/domestic AE. The profit which would…

Commissioner of Income Tax Delhi vs. M/S D.T.T.D.C. Ltd. New Delhi

Appeals are disposed of

ITA/166/2001HC Delhi20 Mar 2012

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE R.V.EASWAR

For Respondent: ITAs 166/01, 161/04, 320/04 & ITR 30-33/1997
Section 256(1)Section 617

…her or not the amount received was income/profit. ITAs 166/01, 161/04, 320/04 & ITR 30-33/1997 Page 24 of 33 26. The Supreme Court in Poona Electric Supply Co. Ltd. vs. CIT, Bombay, (1965) 57 ITR 521 (SC) had drawn a distinction between payments out of profits and payments to earn profits. Distinction was drawn between deduction made for ascertaining profits and the distribution made out of profits. In addition to the said distinction, difference was made between profits/income which arise to an assessee and profits/ income of a third…

M/S. Southern Technologies Ltd vs. Joint Commnr. of Income Tax, Coimbatore

C.A. No.-001337-001337 - 2003Supreme Court11 Jan 2010
Section 145Section 2(24)Section 36(1)(vii)Section 37Section 37(1)

…added back as is sought to be done by the Department. In this connection, reliance was placed on “Real Income Theory”. We find no merit in the above contention. In the case of Poona Electric Supply Co. Ltd. v. Commissioner of Income-Tax, Bombay City I, 57 ITR 521 at page 530, this is what the Supreme Court had to say: “Income Tax is a tax on the “real income”, i.e., the profits arrived at on commercial principles subject to the provisions of the Income Tax Act. The real profit can be ascertained only by making the permissible deductions under the provisions of the Income Tax Act. There is a clear di…