Punjab Stainless Steel Inds v. CIT

324 ITR 396High Court2010#1719 most cited

What is Punjab Stainless Steel Inds v. CIT authority for?

This case establishes that merely having sufficient interest-free own funds does not automatically prevent interest disallowance on interest-free advances; the assessee must affirmatively prove the business or commercial expediency of such advances.

66

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2017 to 2025.

Also referred to as

Punjab Stainless Steel Industries · 324 ITR 396 · section 36(1)(iii) · section 37(1) · interest free advances · disallowance of interest expenditure · commercial expediency · business purpose · own funds · business purpose proof

Also reported as

196 Taxmann 404

Sections most often in play

Section 36(1)(iii)Section 37(1)Section 57(iii)Section 143(3)Section 153ASection 2(28A)Section 234ASection 234B

Issues it is cited on

section 36(i)(iii)section 33acsection 115vinterest free advancessection 10(2)section 2(28a)section 36(1)(iii)business expediencysection 57(iii)commercial expediencydisallowance of interest expendituresection 33

Judgments citing Punjab Stainless Steel Inds v. CIT

Til Healthcare Pvt Ltd., Chennai vs. ACIT Corpore Ward 3(1), Chennai

In the result, the appeal of the assessee is allowed

ITA 2416/CHNY/2017[2012-13]Status: DisposedITAT Chennai17 Apr 2018AY 2012-13

Bench: Shri N.R.S. Ganesan & Shri A.Mohan Alankamonyआयकर अपील सं./I.T.A.No.2416/Chny/2017 ("नधा"रण वष" / Assessment Year: 2012-13) Vs The Acit, M/S. Til Healthcare Pvt. Ltd., Corporate Ward – 3(1), Jhaver Centre, Raja Annamalai Building, Chennai. No.72, Marshalls Road, Egmore, Chennai – 600 008. Pan: Aabct0985H (अपीलाथ"/Appellant) (""यथ"/Respondent) : Shri T. Banusekar, Ca अपीलाथ" क" ओर से/ Appellant By : Shri Ar.V. Sreenivasan, Jcit ""यथ" क" ओर से/Respondent By : 08.02.2018 सुनवाई क" तार"ख/Date Of Hearing : 17.04.2018 घोषणा क" तार"ख /Date Of Pronouncement

For Appellant: Shri AR.V. Sreenivasan, JCITFor Respondent: 08.02.2018
Section 10Section 143(2)Section 143(3)Section 14ASection 250(6)Section 36(1)(iii)

…interest attributable to the interest free loan extended to M/s. DK Securities and M/s.Artec Products Pvt. Ltd.. On appeal, the Ld.CIT(A) relying in the decision of the Hon’ble High Court of Delhi in the case Punjab Stainless Steel Indus vs. CIT reported in 324 ITR 396, the decision of the Hon’ble Jurisdictional Madras High Court in the case K. Somasundaram & Bros. vs. CIT reported in 238 ITR 939, the decision of the Hon’ble High Court of Kerala in the case CIT vs. Popular Vehicles and Services Ltd., reported in 325 ITR 523 and the decision of the Hon’ble Jurisdictional Madras High Court in the case CIT vs. P.…

Horizon Infrastructure Ltd, Mumbai vs. ACIT CC 38, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 356/MUM/2015[2010-11]Status: DisposedITAT Mumbai15 Nov 2017AY 2010-11

Bench: Shri G.S. Pannu & Shri Amarjit Singh: A.Y : 2010-11

For Appellant: Shri J.P. BairagraFor Respondent: Shri M.C. Omi Ningshen &
Section 143(3)Section 14ASection 36

…justified the disallowance of interest expenditure. Again, the ratio of the judgment is not applicable in the instant case. Thirdly, CIT(A) has relied upon the judgment of the Hon'ble Delhi High Court in the case of Punjab Stainless Steel Industries Vs. CIT, 324 ITR 396 (Delhi). In the said case, assessee had made interest-free advance to a sister concern in which two of the partners of the assessee-firm were also partners. The Hon'ble High Court upheld the disallowance of interest expenditure by noticing various facts. Primarily, the Hon'ble High Court noted that the assessment 15 M/s. Horizon Infrastructure L…

M/S. Vrv Foods Ltd., New Delhi vs. DCIT, New Delhi

ITA 6639/DEL/2014[2010-11]Status: DisposedITAT Delhi10 Oct 2017AY 2010-11

Bench: Shri R.K. Panda & Shri Kuldip Singh

For Appellant: Shri Mukesh Aggarwal, FCAFor Respondent: Shri S.S. Rana, CIT DR
Section 143Section 14ASection 36(1)(iii)

…he contentions raised by the assessee that the loan has been advanced out of its own interest free funds and the same were given for business expediency. No doubt, Hon’ble Delhi High Court in case of Punjab 20. Stainless Steel Industries vs. CIT-VII (2010) 324 ITR 396 (Delhi) relied upon by the ld. DR for the Revenue held that when advances have been made out of borrowed funds and not out of credit balance available with assessee company, interest has to be disallowed. 21. However, in the instant case, when the assessee has come up with specific defence that the advance has been made out of interest free…

ACIT, Kota vs. Shiv Agrevo Ltd., Baran

In the result, appeal of the revenue is partly allowed

ITA 453/JPR/2016[2011-12]Status: DisposedITAT Jaipur23 May 2017AY 2011-12
For Appellant: Shri Mahendra GargieyaFor Respondent: Shri Ajay Malik (JCIT)
Section 143(2)Section 36(1)(iii)Section 40A(2)(b)

…een incurred under any legal obligation, but yet it is allowable as business expenditure, if it was incurred on grounds of commercial expendiency’’. Further, following this judgment, the High Court of Delhi, in the case of Punjab Stainless Steel Inds. Vs. CIT 324 ITR 396, has further elaborated ‘’The commercial expediency would include such purpose as is expected by the assessee to advance its business interest and may include measures taken for preservation, protection or advancement of its business interests, which has to be distinguished from the personal interest of its directors or partners, as the case may…

Jaguar International Ltd., Gurgaon vs. ITO, New Delhi

In the result, the appeal of the assessee is allowed

ITA 4371/DEL/2016[2012-13]Status: DisposedITAT Delhi27 Apr 2017AY 2012-13

Bench: Shri N. K. Saini

For Appellant: Ms. Rano Jain, Adv. &For Respondent: Sh. Rajesh Kumar, Sr. DR
Section 36(1)(iii)

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER ITA No. 4371/Del/2016 : Asstt. Year : 2012-13 Jaguar International Ltd., Vs Income Tax Officer, Plot No. 30, Institutional Sec.-44, Ward-13(1), Gurgaon, Haryana-122002 New Delhi. (APPELLANT) (RESPONDENT) PAN No. AABCJ0573B Assessee by : Ms. Rano Jain, Adv. & Sh. Ashish Goel, CA Revenue by : Sh. Rajesh Kumar, Sr. DR Date of Hearing : 01.02.2017 Date of Pronouncement : 27.04.2017 ORDER This is an appeal by the assessee against the order dated 29.07.2016 of ld. CIT (A)-V, Delhi. 2. Following grounds have…

DCIT 8(3)(1), Mumbai vs. Urban Infrastructure Holding P.Ltd, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 1979/MUM/2015[2009-10]Status: DisposedITAT Mumbai31 Mar 2017AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm Dcit- 8(3)(1), Mumbai – Vs. Urban Infrastructure Holding Pvt. Ltd., 1St Floor, 400 020 Jai Centre, 34 Pd Mello Road, Opp. Rd Gate, Masjid – 400 009 Pan/Gir No. Aajcs2680L Appellant) .. Respondent)

Section 143(3)Section 14ASection 14aSection 36Section 36(1)(iii)

…een incurred under any legal obligation, but yet it is allowable as a business expenditure, if it was incurred on' grounds of commercial expediency". Further, following this judgment the High Court of Delhi, in the case of Punjab Stainlees Steel Inds. Vs; OTT 324 ITR 396, has further elaborated "The commercial expediency would include such purpose as is expected by the assessee to advance its business interests, which has to be distinguished from the personal interest of its directors or partners as the case may be. In other words, there has to be a nexus between the advancing of funds and business interest of th…