S.A. Builders Ltd. v. CIT

288 ITR 1Supreme Court of India2007#26 most cited

What is S.A. Builders Ltd. v. CIT authority for?

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

1,484

judgments rely on this decision, according to BharatTax’s citation analysis of 367,368 Indian tax judgments — from 2008 to 2026.

Also referred to as

S.A. Builders Ltd. v. CIT · 288 ITR 1 · Section 36(1)(iii) · commercial expediency · business expediency · interest-free advances · disallowance of interest · onus to prove business purpose · borrowed funds · Revenue interference

Also reported as

158 Taxmann 74158 Taxmann.com 74

Sections most often in play

Section 143(3)Section 36(1)(iii)Section 14ASection 1961Section 148Section 147Section 40(a)(ia)Section 142(1)
Read the full judgment

Issues it is cited on

commercial expediencyinterest free advancessection 36(1)(iii)business expediencydisallowance of interest expendituresection 36(1)section 36revenue expendituresection 37(1)section 37capital expendituresection 14a

Judgments citing S.A. Builders Ltd. v. CIT

M/S. Design Forum International, New Delhi vs. ACIT, New Delhi

Appeal of the assessee is partly allowed

ITA 3317/DEL/2017[2013-14]Status: DisposedITAT Delhi30 Oct 2019AY 2013-14

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi[Assessment Year: 2013-14]

Section 142(1)Section 143(2)

…rogative of the businessman and that the Revenue cannot justifiably claim to put itself in the armchair of the businessman and dictate as to what is “commercial expediency”. The Ld. AR relied upon the following decisions: 1. S. A. Builders Ltd. vs. CIT (2007) 288 ITR 1 (SC) 2. Hero Cycles (P.) Ltd. vs. CIT (2015) 379 ITR 347 (SC) 3. PCIT vs. Basti Sugar Mills Co. Ltd. (Del. HC) (ITA No. 205 order dated 28.09.2018) 4. DCIT vs. M/s Jetair Pvt. Ltd. (Tri. Del.) (ITA Nos. 2712, 2713 and 6884/Del/2015 order dated 19.09.2018) 5. Chemical Sales and Services 3N vs. ITO (Tri. Del.) (ITA No. 4146/Del/2015 order dated 26.0…

Dsp Merrill Lynch Ltd., Mumbai vs. Asst. CIT Circle-4(1), Mumbai

The appeal stands partly allowed for statistical purposes in terms of our above order

ITA 2845/MUM/2002[1996-97]Status: DisposedITAT Mumbai22 Oct 2019AY 1996-97

Bench: Hon’Ble Shri Mahavir Singh, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ I.T.A. No.2845/Mum/2002 (िनधा"रण वष" / Assessment Year: 1996-97) Dsp Merrill Lynch Limited Jcit-Special Range-22 Ground Floor, A Wing Mumbai बनाम/ One Bkc, G Block Vs. Bandra Kurla Complex Bandra (East), Mumbai-400 05 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaacd-0535-G (अपीलाथ"/Appellant) (""थ" / Respondent) : Appellant By : Shri Nitesh Joshi- Ld. Ar Respondent By : Shri Ajay Kumar- Ld. Dr सुनवाई की तारीख/ : 01/08/2019 Date Of Hearing घोषणा की तारीख / : 22/10/2019 Date Of Pronouncement आदेश / O R D E R

For Appellant: Shri Nitesh Joshi- Ld. ARFor Respondent: Shri Ajay Kumar- Ld. DR
Section 80

…deduction u/s 80-O. It was noted that none of the agreements entered into by the assessee had received the approvals either from Chief Commissioner of Income Tax or from the Board and therefore, the decision in CIT V/s Bhaichand Amouluk Consultancy Pvt. Ltd. 208 ITR 1 was found to be not applicable to the facts of the case. 2.4 Another addition arose out of adhoc disallowance of entertainment expenditure. The assessee considered 25% of business meeting expenses as entertainment expenditure. However, Ld. AO estimated the same @75%. Further, the assessee worked out travelling expenditure disallowance u/r 6D by not…

Unitech Ltd., New Delhi vs. DCIT, Circle- 27(1), New Delhi

Appeal of the assessee is partly allowed for statistical purposes

ITA 7923/DEL/2018[2014-15]Status: DisposedITAT Delhi10 Oct 2019AY 2014-15
Section 142(1)Section 143(2)Section 143(3)Section 2(24)(x)Section 24Section 36(1)(iii)Section 36(1)(va)

…uch an advance was for the business purpose. Accordingly, we hold that such an advance was for commercial expediency and therefore, no disallowance could have been made in view of the judgment of Hon’ble Supreme Court in the case of SA Builders Ltd. vs CIT(A) 288 ITR 1(SC). 31. It is further noticed that the assessee company had huge surplus funds which far exceeded the advances; and therefore, without their being a nexus proved by the AO that only borrowed funds were advanced, then presumption can be drawn that such advances have been given out of interest free funds. This view is now well supported by various j…

Kokuyo Camlin Ltd, Mumbai vs. Asst CIT 10(1)(2), Mumbai

In the result, appeal of the assessee is allowed for statistical purpose

ITA 5190/MUM/2018[2014-15]Status: DisposedITAT Mumbai04 Oct 2019AY 2014-15

Bench: Shri R.C. Sharma & Shri Pawan Singhkokuyo Camlin Limited Acit -10(1)(2) 48/2, Hilton House, Central Road, Aayakar Bhawan, Midc, Andheri (E), Vs. M. K. Road, Mumbai-400093. Mumbai-400020. Pan: Aaacc1647E Appellant Respondent

For Appellant: Shri Rajesh S. Athavale with Ms. Ruchira Parekh (AR)For Respondent: Shri Manoj Kumar Singh (DR)
Section 143(3)Section 254(1)

…IN THE INCOME-TAX APPELLATE TRIBUNAL “H” BENCH MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER Kokuyo Camlin Limited ACIT -10(1)(2) 48/2, Hilton House, Central Road, Aayakar Bhawan, MIDC, Andheri (E), Vs. M. K. Road, Mumbai-400093. Mumbai-400020. PAN: AAACC1647E Appellant Respondent Appellant by : Shri Rajesh S. Athavale with Ms. Ruchira Parekh (AR) Respondent by : Shri Manoj Kumar Singh (DR) Date of Hearing : 29.08.2019 Date of Pronouncement : 04.10.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is dire…

Adhiraj Ventures Pvt. Ltd, Mumbai vs. DCIT (CC)-1(1)(1), Mumbai

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 2918/MUM/2018[2013-14]Status: DisposedITAT Mumbai04 Oct 2019AY 2013-14

Bench: Shri Mahavir Singh, Jm & Shri M.Balaganesh, Am M/S. Adhiraj Ventures Pvt. Vs. Deputy Commissioner Of Ltd., Income Tax – 1(1)(1) 303, Sharda Chambers, 15 Mumbai New Marine Lines Mumbai – 400 013 Pan/Gir No. Aaaca5217G (Appellant) .. (Respondent)

Section 143(3)Section 36(1)(iii)

…s and progresses, the assessee company would be benefitted by the same as the valuation and net worth of the assessee would also increase. The assessee placed reliance on the decision of Hon’ble Supreme Court in the case of S A Builders Ltd vs CIT reported in 288 ITR 1 (SC) among other decisions. 5. The ld CITA observed that during the appellate proceedings, the assessee had filed a copy of ledger account of Shri Abhishek Manu Singhvi. From the said ledger account and also from the bank statement of the assessee, the ld CITA observed that on 6.11.2009, the assessee received RTGS from HSBC account to the tune of…

Shri Hiren Balkrishana Oza, Ahmedabad vs. The Income Tax Officer, Ward-1(3)(2), Ahmedabad

In the result, the appeal of the assessee is allowed

ITA 603/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad01 Oct 2019AY 2012-13

Bench: Shri Kul Bharat & Shri Waseem Ahmedआयकर अपील सं./Ita No. 603/Ahd/2017 "नधा"रण वष"/Asstt. Year: 2012-2013 Shri Hiren Balkrishana Oza, I.T.O, K/302 Dec Castel, Vs. Ward-1(3)(2) B/H Hotel Topaz, Ahmedabad. Govindwadi, Isanpur, Ahmedabad-380063. Pan: Aanpo8935B

Section 250

…Hon’ble Gujarat High Court in the case of Raghuvir synthetics Ltd reported in 354 ITR 222 wherein it was held as under: Asstt. Year 2012-13 11 9. We may refer to the judgment of the apex court at this stage given in case of S. A. Builders Ltd. v. CIT [2007] 288 ITR 1/158 Taxman 74 (SC) where the question was whether interest on funds borrowed by the assessee to give an interest-free loan to sister concern should be allowed as deduction and the apex court ruled thus (pages 7 and 8) : "We have considered the submission of the respective parties. The question involved in this case is only about the allowability of…

DCIT, Circle-4(2), Ahmedabad vs. M/S. Deloitte Haskins and Sells, Ahmedabad

ITA 1984/AHD/2017[2014-15]Status: DisposedITAT Ahmedabad01 Oct 2019AY 2014-15

Bench: Shri Sudhanshu Srivastava & Shri Amarjit Singhay: 2013-14 Ay: 2014-15

For Appellant: Shri Percy Pardiwala, Niraj Sheth, ARsFor Respondent: Shri S.K. Dev, Sr. DR
Section 143

…ent’s case that the funds have been diverted for any personal benefit of the directors. The Ld. authorised ITA 1983 & 1984/AHD/2017 AY: 2013-14 representative placed reliance on the judgement of the Hon’ble Apex Court in the case of SA Builders reported in 288 ITR 1 (SC) as well as on another judgement of the Hon’ble Apex Court in the case of Hero Cycles for the proposition that business expediency has to be judged from the view point of the businessman. It was further emphasised that no similar disallowance had been made in earlier assessment years. It was submitted that the Ld. first appellate authority…

DCIT, Circle-4(2), Ahmedabad vs. M/S. Deloitte Haskins and Sells, Ahmedabad

ITA 1983/AHD/2017[2013-14]Status: DisposedITAT Ahmedabad01 Oct 2019AY 2013-14

Bench: Shri Sudhanshu Srivastava & Shri Amarjit Singhay: 2013-14 Ay: 2014-15

For Appellant: Shri Percy Pardiwala, Niraj Sheth, ARsFor Respondent: Shri S.K. Dev, Sr. DR
Section 143

…ent’s case that the funds have been diverted for any personal benefit of the directors. The Ld. authorised ITA 1983 & 1984/AHD/2017 AY: 2013-14 representative placed reliance on the judgement of the Hon’ble Apex Court in the case of SA Builders reported in 288 ITR 1 (SC) as well as on another judgement of the Hon’ble Apex Court in the case of Hero Cycles for the proposition that business expediency has to be judged from the view point of the businessman. It was further emphasised that no similar disallowance had been made in earlier assessment years. It was submitted that the Ld. first appellate authority…

Sigma Research & Consulting Pvt. Ltd., New Delhi vs. ITO, Ward- 23(4), New Delhi

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 7332/DEL/2018[2014-15]Status: DisposedITAT Delhi26 Sept 2019AY 2014-15

Bench: Shri R.K. Pandaassessment Year: 2014-15 Sigma Research & Consulting Pvt. Ltd., Vs. Ito, C-23, First Floor, South Extension, Ward-23(4), Part-I, New Delhi. New Delhi. Pan: Aamcs3537P (Appellant) (Respondent) Assessee By : Shri K.V.S. Gupta, Advocate Revenue By : Shri S.L. Anuragi, Sr.Dr Date Of Hearing : 05.08.2019 Date Of Pronouncement : 26.09.2019 Order This Appeal By The Assessee Is Directed Against The Order Dated 4Th September, 2018 Of The Cit(A)-8, New Delhi, Relating To Assessment Year 2014-15. 2. Ground Of Appeal No.1 By The Assessee Reads As Under:- “The Action Of The Ld.Cit(A) In Confirming The Action Of The Ld. Assessing Officer In Disallowing The Sum Of Rs.75,449/- Being The Interest Paid On Late Deposit Of Tds, Is Illegal, Arbitrary, Unwarranted, Uncalled For & Against The Facts & Circumstances Of The Case.”

For Appellant: Shri K.V.S. Gupta, AdvocateFor Respondent: Shri S.L. Anuragi, Sr.DR
Section 37Section 37(1)

…d the grounds raised before him. 18. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 19. The ld. counsel for the assessee, referring to the decision of the Hon'ble Supreme Court in the case of SA Builders reported in 288 ITR 1, submitted that this expenditure should be allowed on account of commercial expediency. Referring to the decision of the Hon'ble Gujarat High Court in the case of Commercial Ahmedabad Mills Co. Ltd. vs. CIT, 204 ITR 505, he submitted that under identical circumstances the Hon'ble High Court has allowed the claim of the assessee on account of Pooja…

Shri Dinesh Mills Ltd., Baroda vs. The ACIT, Circle -2(1)(1), Baroda

In the result, the appeal of the Revenue is partly allowed for statistical purposes

ITA 781/AHD/2016[2012-13]Status: DisposedITAT Ahmedabad25 Sept 2019AY 2012-13

Bench: Shri Waseem Ahmed & Ms. Madhumita Roy

For Appellant: Shri Bandish Soparkar, ARFor Respondent: Shri N.R. Soni, CIT-DR &
Section 10Section 11Section 115JSection 12Section 14ASection 154ASection 194HSection 40(1)(ia)

…that the assessee failed to demonstrate that interest free funds were available for diversion to sister concern. The principle laid down by the Supreme Court in case of S.A. Builders Ltd. v. Commissioner of Income-tax (Appeals) and another reported in (2007) 288 ITR 1 (SC) would not apply. 9. Facts emerging from the record are quite clear. The assessee had purchased shares of a subsidiary company by investing sum of Rs.7.86 crores. In view of the Assessing Officer, there had to be disallowance of interest matching to such sum since interest bearing funds were diverted for such purpose. Firstly, we are unable to…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2283/CHNY/2018[2014-15]Status: DisposedITAT Chennai25 Sept 2019AY 2014-15

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…e provision was also furnished. This is nothing but difference in royalty and this provision is made for ascertained liability and the same is deductable as deduction and placed reliance on the following judgments. S.A. Builders Ltd vs. CIT (A) & Anr (2007) 288 ITR 1 (SC) Hero Cycles (P) Ltd vs CIT, (2015) 379 ITR 347 (SC) Sassoon J. David & Co P Ltd vs. CIT (1979) 118 ITR 261 12. We heard the rival submissions and perused the material on record. We shall take up the primary ground which goes to the very root of the matter i.e validality of the reopening of the assessment. Admittedly original assessment or…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2282/CHNY/2018[2013-14]Status: DisposedITAT Chennai25 Sept 2019AY 2013-14

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…e provision was also furnished. This is nothing but difference in royalty and this provision is made for ascertained liability and the same is deductable as deduction and placed reliance on the following judgments. S.A. Builders Ltd vs. CIT (A) & Anr (2007) 288 ITR 1 (SC) Hero Cycles (P) Ltd vs CIT, (2015) 379 ITR 347 (SC) Sassoon J. David & Co P Ltd vs. CIT (1979) 118 ITR 261 12. We heard the rival submissions and perused the material on record. We shall take up the primary ground which goes to the very root of the matter i.e validality of the reopening of the assessment. Admittedly original assessment or…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2281/CHNY/2018[2012-13]Status: DisposedITAT Chennai25 Sept 2019AY 2012-13

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…e provision was also furnished. This is nothing but difference in royalty and this provision is made for ascertained liability and the same is deductable as deduction and placed reliance on the following judgments. S.A. Builders Ltd vs. CIT (A) & Anr (2007) 288 ITR 1 (SC) Hero Cycles (P) Ltd vs CIT, (2015) 379 ITR 347 (SC) Sassoon J. David & Co P Ltd vs. CIT (1979) 118 ITR 261 12. We heard the rival submissions and perused the material on record. We shall take up the primary ground which goes to the very root of the matter i.e validality of the reopening of the assessment. Admittedly original assessment or…

ACIT Central Circle, Salem vs. Thriveni Earthmovers Pvt. Ltd., Salem

In the result, the appeal filed by the Revenue in ITA

ITA 2280/CHNY/2018[2011-12]Status: DisposedITAT Chennai25 Sept 2019AY 2011-12

Bench: Shri Inturi Rama Rao & Shri Duvvuru Rl Reddy] आयकर अपील सं./I.T.A. Nos. 2280, 2281, 2282 & 2283/Chny/2018 "नधा"रण वष" /Assessment Years :2011-12, 2012-13, 2013-14 & 2014-15 The Assistant Commissioner Vs. M/S. Thriveni Earthmovers Pvt Ltd, Of Income Tax, 22/110, Greenways Road, Central Circle, Fairlands, Salem Salem 636 016. [Pan Aabct 6759R] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. M. Srinivasa Rao, IRS, CIT
Section 143(3)Section 148

…e provision was also furnished. This is nothing but difference in royalty and this provision is made for ascertained liability and the same is deductable as deduction and placed reliance on the following judgments. S.A. Builders Ltd vs. CIT (A) & Anr (2007) 288 ITR 1 (SC) Hero Cycles (P) Ltd vs CIT, (2015) 379 ITR 347 (SC) Sassoon J. David & Co P Ltd vs. CIT (1979) 118 ITR 261 12. We heard the rival submissions and perused the material on record. We shall take up the primary ground which goes to the very root of the matter i.e validality of the reopening of the assessment. Admittedly original assessment or…

Mafatlal Industries Ltd, Mumbai vs. ACIT 6(3), Mumbai

In the result, assessee’s appeal and cross objection are partly allowed and Revenue’s appeal stands dismissed

ITA 5202/MUM/2011[2004-05]Status: DisposedITAT Mumbai20 Sept 2019AY 2004-05

Bench: Shri Shamim Yahya (Am) & Shri Ravish Sood (Jm)

Section 14ASection 37(1)

…s noted that ITAT in assessee's own case for earlier years has remitted the issue to the file of assessing officer for fresh consideration in light of earlier tribunal orders and also the judgement of the honourable Supreme Court in the case of S.A. Builders (288 ITR 1). 4. In light of the aforesaid precedent from the ITAT in assessee's own case both the councel agreed that the issue may be similarly remitted. Accordingly this issue is remitted to the file of assessing officer to consider the issue afresh in light of ITAT order in earlier years as referred above. 5. Ground No. 12 relates to issue of valuation o…

M/S.Paytronic Network Private Limited, Mumbai vs. Deputy Commissioner of Income Tax, Circle-7(1), Mumbai

In the result, appeal of the assessee in ITA

ITA 1417/MUM/2018[2011-12]Status: DisposedITAT Mumbai18 Sept 2019AY 2011-12

Bench: Shri R.C.Sharma, Am & Shri Pawan Singh, Jm

Section 143(2)Section 143(3)Section 271(1)(c)Section 276CSection 36Section 40

…e interest expense of Rs.67,157/- u/s 36(1 )(iii) of the Act, holding that the interest bearing funds are used for giving interest free advance to group concern. Under the identical facts the Hon'ble Supreme Court of India in the case of S.A. Builders Vs. CIT 288 ITR 1 has allowed the interest expense as deductible revenue expense wherein the interest free funds are given by the assessee to its sister concern as a measure of commercial expediency. 12. Under these facts and circumstances, it cannot be said that the assessee has concealed its income or furnished inaccurate particulars of such income. It is only a…

Smt. Suman Lakhani, New Delhi vs. ACIT, Faridabad

In the result, the penalty amounting to Rs

ITA 857/DEL/2016[2008-09]Status: DisposedITAT Delhi13 Sept 2019AY 2008-09

Bench: Shri Amit Shukla & Shri Anadee Nath Misshra

For Appellant: Shri Gaurav Madan, CAFor Respondent: Shri Janardan Das, Sr. DR
Section 143(3)Section 271(1)(c)Section 36

…he spectrum without due regard to specific facts and circumstances of any case had led to unnecessary litigation apart from unmitigated hardships to assessees. Although, subsequently the Hon’ble Supreme Court itself in the case of S.A Builders vs. CIT [(2007) 288 ITR 1 (SC)] had amplified the scope of “commercial expediency” specifically in the context of sec 36(l)(iii) of the Act, there was no let-up in the litigation on this count. With the latest judgement in the case of Hero Cycles (P) Ltd, the Hon’ble Supreme Court has again upheld in no uncertain terms that “Once it is established that there is nexus betwee…

ACIT, Rourkela Circle, Rourkela vs. M/S. Tarini Minerals Pvt. Ltd., Rourkela

In the result, appeal of the revenue is dismissed

ITA 341/CTK/2017[2011-12]Status: DisposedITAT Cuttack04 Sept 2019AY 2011-12

Bench: Shri Chandra Mohan Garg & Laxmi Prasad Sahuassessment Year : 2011-12

For Appellant: NoneFor Respondent: Shri Subhendu Dutta, DR
Section 133(6)

…ing one’s business sis the prerogative of the business man, as are the related matters like incurring expenses, making investments, obtaining loans and providing advances, etc. The decision of Hon’ble Supreme Court in the case of S.A. Builders Limited vs CIT, 288 ITR 1 (SC) is relevant. The Hon’ble Court held in the above ratio reiterated the settled position in the past that no businessman can be compelled to maximize his profit. While considering the claim of deduction of any expenditure, income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. Once it…

Kamesh Bhargava Hospital &, Chandigarh vs. DCIT, Chandigarh

In the result, appeal of the assessee is allowed

ITA 28/CHANDI/2016[2012-13]Status: DisposedITAT Chandigarh22 Aug 2019AY 2012-13
For Appellant: Shri Jaspal Sharma, AdvocateFor Respondent: Smt. Chanderkanta, Sr.DR
Section 250(6)Section 36(1)(iii)

…the judgement of Hon'ble Punjab and Haryana High Court in the case of Abhishek Industries Ltd. (286 ITR 1) has been amplified, discussed and clarified by Hon'ble Supreme Court in the cases of M/s Core Health Care Ltd. (298 ITR 194) and M/s S.A. Builders Ltd. (288 ITR 1) and as the advances were given on the ground of commercial expediency, no disallowance is required to be made. 36. The Assessing Officer did not agree with the explanation of the assessee and disallowed proportionate interest of Rs. 5,15,119/-, computed @ 12% per annum on the aforesaid interest free advances with the following observations: (i) Th…

DCIT, New Delhi vs. M/S. Sentia Power Ltd., New Delhi

In the result, ITA number 146/Del/2016 filed by the learned assessing officer for assessment year 2012 – 13 is dismissed

ITA 1461/DEL/2016[2012-13]Status: DisposedITAT Delhi21 Aug 2019AY 2012-13

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishisentia Power Ltd, Vs. Ito, (Formerly Known As Indiabulls Ward-11(4), Cseb Bhiyathan Power Ltd), New Delhi M-62 & 63, 1St Floor, Connaught Place, New Delhi Pan: Aabci8901M (Appellant) (Respondent) The Deputy Commissioner Of Vs. Sentia Power Ltd, Income Tax (Formerly Known As Circle 23(2) Indiabulls Cseb Bhiyathan New Delhi Power Ltd), M-62 & 63, 1St Floor, Connaught Place, New Delhi Pan: Aabci8901M (Appellant) (Respondent)

For Appellant: Shri Ajay Wadhwa, AdvFor Respondent: Shri Arun Kumar Yadav, Sr DR

…laid out or expended wholly and exclusively for the purpose of the business of the Assessee, there was no reason why the amount expended should not have been allowed. Hence, it should be allowed as revenue expenditure. i) S.A. Builders Ltd. v. CIT fAl [2007] 288 ITR 1 fSCl "We agree with the view taken by the Delhi High Court in CIT v. Dalmia Cement (Bharat) Ltd. [2002] 254 ITR 377 2 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the…