Prakash Cotton Mills Pvt. Ltd. v. CIT

201 ITR 684Supreme Court of India1993#766 most cited

What is Prakash Cotton Mills Pvt. Ltd. v. CIT authority for?

Compensatory interest or damages paid for a breach of contract, arising in the normal course of business, are allowable as a deduction under section 37(1) as wholly and exclusively incurred for business purposes. This principle extends to indirect taxes paid in the course of business, which are admissible as business expenditure.

133

judgments rely on this decision, according to BharatTax’s citation analysis of 367,368 Indian tax judgments — from 2010 to 2026.

Also referred to as

Prakash Cotton Mills v. CIT · Section 37(1) deduction · business expenditure · compensatory interest · damages for breach of contract · indirect tax · allowability of interest · business expediency · Supreme Court · 201 ITR 684

Sections most often in play

Section 37(1)Section 43BSection 36(1)(va)Section 143(3)Section 41(2)Section 201(1A)Section 41(1)Section 145(3)
Read the full judgment

Issues it is cited on

prohibited by lawinterest under section 201(1a)section 244asection 201(1a)business expediencyemployees contribution to pfinterest on securitiessection 41(1)section 37(1)section 41computer softwareeligible business

Judgments citing Prakash Cotton Mills Pvt. Ltd. v. CIT

Firdosh Noshir Anklesaria, Mumbai vs. ITO 17(2)(4), Mumbai

In the result, these appeals filed by the Assessee are partly allowed

ITA 5490/MUM/2015[2008-09]Status: DisposedITAT Mumbai11 Aug 2016AY 2008-09

Bench: Shri Amit Shukla & Shri Ashwani Tanejaassessment Year: 2008-09 & Assessment Year: 2009-10 Firdosh Noshir Anklesaria Ito 17(2)(4) 5 Gr Floor, Kaka Bldg, Piramal Chambers, बनाम/ 649 Firdoshi Rd. Dadar R.No. 220 4Th Floor, Vs. Mumbai-400014 Lalbaug, Mumbai-40013 (Appellant) (Respondent ) P.A. No.Aaapa6428N Appellant By Shri Neel Khandelwal (Ar) Revenue By Shri A.K. Dhondial (Dr)

Section 133(6)

…ly. Even where there is such breach merely to take advantage of the ruling market condition, the Compensation may have to be allowed as decided in South India Viscose Ltd. v. CIT 135 ITR 206'Mad). The Supreme Court itself in Prakash Cotton Mills P. Ltd. v. CT 201 ITR 684(SC) had held, that even where penalty Is levied, it may not always be a punitive one, so that where it is compensatory, it may well have to be allowed. The Punjab and Haryana High Court, therefore, allowed a claim for compensation for breach of contractual obligation in CIT v. S.A. Builders P.Ltd. 299 ITR 88(P&H) after review of the case law on t…

ACIT, Chennai vs. V.S.L.India Private Limited, Chennai

In the result, the appeal of the Department in ITA

ITA 1703/CHNY/2013[2008-09]Status: DisposedITAT Chennai01 Feb 2016AY 2008-09

Bench: Shri Chandra Poojari & Shri G. Pavan Kumar

For Appellant: Shri. V. Vivekanandan, CIT. DRFor Respondent: Shri. R. Vijayaraghavan, Advocate
Section 143(1)Section 143(2)Section 143(3)Section 195Section 40

…Nos.1701 to 1703/2013. :- 7 -: "18,51,471/- was wrongly added back and that should be allowed in view of Supreme Court decision in the case of M/s.Swadeshi Cotton Mills Company Ltd vs. CIT 223 ITR 1989 and M/s. Malwa Vanaspathi and Chemical Company vs. CIT 225 ITR 383 as interest payment takes the character of compensatory nature and be allowed. The ld. Assessing Officer found that no evidence was produced and the interest is penal in nature not compensatory considering the collection of tax from clients and defaulted on payment of taxes to Government not within the specified time is violation and made an…

ACIT, Chennai vs. V.S.L.India Private Limited, Chennai

In the result, the appeal of the Department in ITA

ITA 1702/CHNY/2013[2007-08]Status: DisposedITAT Chennai01 Feb 2016AY 2007-08

Bench: Shri Chandra Poojari & Shri G. Pavan Kumar

For Appellant: Shri. V. Vivekanandan, CIT. DRFor Respondent: Shri. R. Vijayaraghavan, Advocate
Section 143(1)Section 143(2)Section 143(3)Section 195Section 40

…Nos.1701 to 1703/2013. :- 7 -: "18,51,471/- was wrongly added back and that should be allowed in view of Supreme Court decision in the case of M/s.Swadeshi Cotton Mills Company Ltd vs. CIT 223 ITR 1989 and M/s. Malwa Vanaspathi and Chemical Company vs. CIT 225 ITR 383 as interest payment takes the character of compensatory nature and be allowed. The ld. Assessing Officer found that no evidence was produced and the interest is penal in nature not compensatory considering the collection of tax from clients and defaulted on payment of taxes to Government not within the specified time is violation and made an…

ACIT, Chennai vs. V.S.L.India Private Limited, Chennai

In the result, the appeal of the Department in ITA

ITA 1701/CHNY/2013[2006-07]Status: DisposedITAT Chennai01 Feb 2016AY 2006-07

Bench: Shri Chandra Poojari & Shri G. Pavan Kumar

For Appellant: Shri. V. Vivekanandan, CIT. DRFor Respondent: Shri. R. Vijayaraghavan, Advocate
Section 143(1)Section 143(2)Section 143(3)Section 195Section 40

…Nos.1701 to 1703/2013. :- 7 -: "18,51,471/- was wrongly added back and that should be allowed in view of Supreme Court decision in the case of M/s.Swadeshi Cotton Mills Company Ltd vs. CIT 223 ITR 1989 and M/s. Malwa Vanaspathi and Chemical Company vs. CIT 225 ITR 383 as interest payment takes the character of compensatory nature and be allowed. The ld. Assessing Officer found that no evidence was produced and the interest is penal in nature not compensatory considering the collection of tax from clients and defaulted on payment of taxes to Government not within the specified time is violation and made an…

Oberoi Realty Ltd ( Formelry Known As Kingston Properties P.Ltd), Mumbai vs. Asst CIT Cen Cir 23, Mumbai

ITA 1050/MUM/2013[2009-10]Status: DisposedITAT Mumbai04 Nov 2015AY 2009-10

Bench: Shri R.C.Sharma & Shri Pawan Singhassessment Year: 2009-10 Oberoi Realty Limited (Formerly Acit, Cc-23, R. No. 409, 4Th Floor, Aayakar Bhavan, Known As Kingston Properties Pvt. Ltd.) Commerz, 3Rd Floor, M.K.Road, Mumbai-400020 International Business Park, Oberoi Vs. Garden City, Off Wstern Express Highway, Goregaon (E), Mumbai- 400063. Pan: Aabck0235H (Appellant) (Respondent)

For Appellant: Shri R. MurlidharFor Respondent: Shri B.S.Bist (DR)
Section 14ASection 3Section 37(1)Section 80A(5)Section 80ISection 80r

…d upon the judgment dated 31.10.2014 in ITA No. 4239/Mum/2011 titled as M/s M.P.Gupta vs. ITO, wherein the coordinate bench of Mumbai Tribunal while relying upon the judgements of Hon’ble Supreme Court in the case of Prakash Cotton Mills P. Ltd. vs. CIT[1993] 201 ITR 684 (SC) and CIT vs. Ahmedabad Cotton Mfg. Co. Ltd. [1994] 205 ITR 163 (SC) , held that statutory impost paid as damages, penalty or interest, if compensatory in nature, it is allowable as business expenditure. The Id Sr. Counsel for the assessee also draw attention to the order of the ld. CIT(A) wherein reference was made to cases of T. Khemchand Te…

Oberoi Constructions Ltd ( Formerly Known As Oberoi Consructions P. Ltd ), Mumbai vs. Asst CIT Cen Cir 23, Mumbai

ITA 1010/MUM/2013[2009-10]Status: DisposedITAT Mumbai04 Nov 2015AY 2009-10

Bench: Shri R.C.Sharma & Shri Pawan Singhassessment Year: 2009-10 Oberoi Constructions Ltd. (Formerly Acit, Cc-23, R. No. 409, 4Th Floor, Aayakar Bhavan, Known As Oberoi Constructions Pvt. Ltd.) Commerz, 3Rd Floor, M.K.Road, Mumbai-400020 International Business Park, Oberoi Vs. Garden City, Off Estern Express Highway, Goregaon (E), Mumbai- 400063. Pan: Aaaco1805E (Appellant) (Respondent)

For Appellant: Shri R. MurlidharFor Respondent: Shri B.S.Bist (DR)
Section 14Section 143(3)Section 14ASection 37Section 37(1)

…d upon the judgment dated 31.10.2014 in ITA No. 4239/Mum/2011 titled as M/s M.P.Gupta vs. ITO, wherein the coordinate bench of Mumbai Tribunal while relying upon the judgements of Hon’ble Supreme Court in the case of Prakash Cotton Mills P. Ltd. vs. CIT[1993] 201 ITR 684 (SC) and CIT vs. Ahmedabad Cotton Mfg. Co. Ltd. [1994] 205 ITR 163 (SC) , held that statutory impost paid as damages, penalty or interest, if compensatory in nature, it is allowable as business expenditure. The Id Sr. Counsel for the assessee also draw attention to the order of the ld. CIT(A) wherein reference was made to cases of T. Khemchand Te…

Bses Rajdhani Power Ltd., New Delhi vs. ACIT, New Delhi

The appeal is partly allowed

ITA 3688/DEL/2011[2005-06]Status: DisposedITAT Delhi05 Oct 2015AY 2005-06

Bench: Shri I.C. Sudhir & Shri Inturi Rama Rao Assessment Year : 2005-06 Bses Rajdhani Power Ltd., Vs. Assistant Cit, Bses Bhawan, Nehru Place, Circle-3(1), New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent) Assessment Year: 2005-06 Deputy Cit, Vs. Bses Rajdhani Power Ltd., Circle 3(1), Bses Bhavan, Nehru Place, New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent) Assessment Year : 2006-07 Bses Rajdhani Power Ltd., Vs. Assistant Cit, Bses Bhawan, Nehru Place, Circle-3(1), New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent) Assessment Year: 2006-07 Deputy Cit, Vs. Bses Rajdhani Power Ltd., Circle 3(1), Bses Bhavan, Nehru Place, New Delhi. New Delhi. (Pan: Aagcs3187H) (Appellant) (Respondent)

Section 154

…ation paid in the regular course of business, which was purely compensatory in nature and cannot, be disallowed under section 37 of the Act. Reliance in this regard has been placed by the Learned AR on the following decisions: − Prakash Cotton Mills vs. CIT: 201 ITR 684 (SC) − CIT vs. Indian Copper Corporation Ltd.: 161 ITR 327 (Pat) − CIT vs. Grand Cashew Corporation: 182 ITR 216 (Ker) − Jama Auto Industries vs. CIT: 299 ITR 92 (P&H) − CIT vs. Hindustan Copper Ltd.: 55 Taxman 392 (Cal) − CIT vs. Todi Tea Col. Ltd: 239 ITR 28 (Cal.) − G.L. Rexroth Industries Ltd. vs. DCIT: 59 TTJ 757 (Ahd.) − CIT vs. Deversons I…

JUDGEMENTopens in new window

ITA/11/2002HC Delhi07 Aug 2014
Section 111Section 37

…ITA 11/2002 Page 1 of 5 $~R-38 *IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 7th August, 2014 + ITA 11/2002 COMMISSIONER OF INCOME TAX DELHI ..... Appellant Through Mr. Balbir Singh, Sr. Standing Counsel with Mr. Rupender Singhmar and Mr. Abhishekh Singh Baghel, Advocates. versus M/S VIKAS CHEMICALS ..... Respondent Through Mr. S.Krishnan, Advocate. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE V. KAMESWAR RAO SANJIV K…

The Commissioner of Income Tax V vs. Smt. Ch. Uma

ITTA/227/2013HC Telangana10 Jul 2013

Commissioner of Income Tax vs. M/s Ch.Veeraju AND co

ITTA/207/2013HC Telangana05 Jul 2013

Commissioner of Income Tax - VI vs. M/s. S.P. Steels

ITTA/200/2013HC Telangana04 Jul 2013

CIT vs. Desiccant Rotors International Pvt Ltd

ITA/572/2011HC Delhi11 Jul 2011

Bench: We Reproduce The Substantial Questions Of Law, Which Are To Be Answered, We Deem It Appropriate To State The Facts & Circumstances Under Which These Questions Of Law Arise For Consideration. The Respondent-Assessee Was Incorporated In

Section 37(1)

…he payment made in the course of carrying on assessee‟s business activity is to be allowed as business expenditure. The assessee also placed reliance on the decision of the Supreme Court in the case of Prakash Cotton Mills Vs. Commissioner of Income Tax [201 ITR 684]. After considering the AO‟s order and the assessee‟s submissions, the CIT(A) confirmed the AO‟s order in disallowing the assessee‟s claim of deduction of payment to SEMCO as a result of out of Court settlement in respect of the proceedings initiated by M/s SEMCO against the assessee company for infringement of their patent rights. 4. S…

Commissioner of Income Tax Delhi -IV vs. Govind Nagar Sugar Ltd

Appeals are allowed and orders passed by the Tribunal are set aside and the

ITA/1208/2008HC Delhi19 Nov 2010

Bench: HON'BLE MR. JUSTICE A.K.SIKRI,HON'BLE MR. JUSTICE SURESH KUMAR KAIT

Section 4Section 43B

…ITA No.1208 of 2008 & Ors. Page 1 of 15 REPORTABLE * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA No. 1208 of 2008 With ITA No. 1351 of 2010 ITA No. 965 of 2007 ITA No. 958 of 2007 Reserved On: 28th October, 2010. % Pronounced On: 19th November, 2010. 1) ITA No.1208 of 2008 COMMISSIONER OF INCOME TAX, DELHI-IV . . . Appellant through : Mr. Sanjeev Sabharwal, Sr. Standing Counsel. VERSUS GOVIND NAGAR SUGAR LTD. . . .Respondent through: Mr. Rajiv Dutta, S…