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 367,181 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

Sri Pradeep Raj Jindal, Hisar vs. ITO, Hisar

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

ITA 1120/DEL/2017[2008-09]Status: DisposedITAT Delhi29 Sept 2017AY 2008-09

Bench: Shri R. K. Panda

For Appellant: Sh. K. Sampat & Sh. V. Rajakumar, AdvsFor Respondent: Sh. T. Vasanthan, Sr. DR
Section 143(3)Section 36Section 36(1)(vii)

…ven some interest free loans to various related parties. He submitted that the disallowance of interest made by the AO under Section 36 (1)(iii) is not warranted in view of the decision of Hon’ble Supreme Court in the case of CIT VS. S.A. Builders reported in 288 ITR 1. He submitted that the decision relied on by the AO in the case of Abhishek Industries Limited (Supra) has been reversed by the Hon’ble Supreme Court. He accordingly submitted that he has no objection if the matter is set aside to the AO with a direction to decide the issue afresh in the light of the decision of Hon’ble Supreme Court in the case of…

M/S. Multimax Engineering Works Pvt. Ltd., Meerut vs. DCIT, New Delhi

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

ITA 2231/DEL/2017[2012-13]Status: DisposedITAT Delhi28 Sept 2017AY 2012-13

Bench: Smt. Diva Singhita No. 2231/Del./2017 : Asstt. Year : 2012-13

For Appellant: Sh.V.K.Goel, AdvFor Respondent: Sh. T. Vasanthan, Sr. D.R

…cts qua the issue. Had a question been asked the assessee would have been in a position to explain the same because even on merits the addition was not maintainable considering the proposition of law as laid down by the Apex Court in the case of S.A. Builders 288 ITR 1 (SC). Accordingly it was his prayer that the addition be deleted on merits or the impugned orders, in the alternate be set aside back to the file of the CIT(A) or the Assessing Officer to first consider the facts. ITA 2231/Del/2017 Page 2 of 2 4. The Ld. Sr. D appearing on behalf of the Revenue considering the material available on record submitt…

Allen Career Institute, Jaipur vs. JCIT, Kota

In the result, the ground no

ITA 10/JPR/2013[2009-10]Status: DisposedITAT Jaipur27 Sept 2017AY 2009-10
For Appellant: Shri Mahendra Gargieya (Adv) &For Respondent: Shri R.A. Verma (Addl.CIT)
Section 143(3)Section 14ASection 234ASection 244A

…year earnings). Therefore no disallowance on account of interest on borrowed money should be made. 9. In support, the assessee relied upon the decision of CIT vs. Dalmia Cement (Bharat) Ltd.(2002) 254 ITR 377 (Del), S.A. Builders ltd. vs. CIT(Appeal) (2007) 288 ITR 1 (SC) , CIT Vs. Prem Heavy Engg. Works Pvt. Ltd. 285 ITR 554 (All) and CIT Vs. Radico Khaitan Ltd. (2005) 142 Taxman 681 (All). 10. Alternatively, the assessee submitted that had the investment in mutual fund was made not from the overdraft account, then FDR would be break for investment in mutual fund and total interest income on that much of amou…

ACIT, Chennai vs. Thiru Arooran Sugars Pvt. Ltd., Chennai

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

ITA 673/CHNY/2017[2012-13]Status: DisposedITAT Chennai27 Sept 2017AY 2012-13

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Mr.Ashish Tripathi,JCIT, DR
Section 14A

…ion is that the assessee has invested the available interest-free funds in share capital and mutual funds. Furthermore, making investment in sister concerns is for commercial expediency in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. It is not the case of the Revenue that the sister concern or any of the Directors has misused the funds invested by the assessee. When the sister concern uses the funds only for business purpose, there was commercial expediency for making investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance under…

ACIT 3(1)(2), Mumbai vs. Global World Ower Projects P. Ld, Mumbai

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

ITA 2639/MUM/2017[2012-13]Status: DisposedITAT Mumbai27 Sept 2017AY 2012-13

Bench: Sri Mahavir Singh, Jm Asst. Commissioner Of M/S. Global World Power Income Tax, Room No. 607, Projects Pvt. Ltd. 6Th Floor, Aayakar Bhavan, 106/107 , Bajaj Bhavan, Vs. 10Th Floor, Nariman Point, Mumbai-400 020 Mumbai-21 Pan No. Aadcg9880C Appellant .. Respondent

Section 143(3)Section 3Section 36(1)Section 36(1)(iii)Section 37

…ose of acquiring of share of sister concerns and for that purpose paid share application money and Tribunal set aside the issue back to the file of AO for fresh adjudication by following the decision of Hon’ble Supreme Court in the case of SA Builders Vs. CIT 288 ITR 1(SC) and for this tribunal observed as under: - “6. We have heard the rival submissions, perused the orders of the authorities below and the decisions relied on. The Assessing Officer while completing the assessment required the Assessee to furnish explanation as to why the interest incurred by the Assessee on unsecured loans should not be disallow…

Vodafone Mobile Services Limited, Coimbatore vs. DCIT, Coimbatore

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 755/CHNY/2017[2014-15]Status: DisposedITAT Chennai21 Sept 2017AY 2014-15

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

Vodafone Mobile Services Limited, Coimbatore vs. DCIT, Coimbatore

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 754/CHNY/2017[2012-13]Status: DisposedITAT Chennai21 Sept 2017AY 2012-13

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

Vodafone Cellular Limited, Coimbatore vs. DCIT, Coimbatore

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 377/CHNY/2015[2014-15]Status: DisposedITAT Chennai21 Sept 2017AY 2014-15

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

Vodafone Cellular Limited, Coimbatore vs. DCIT, Coimbatore

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 376/CHNY/2015[2013-14]Status: DisposedITAT Chennai21 Sept 2017AY 2013-14

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

Vodafone Cellular Limited, Coimbatore vs. DCIT, Coimbatore

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 2804/CHNY/2014[2011-12]Status: DisposedITAT Chennai21 Sept 2017AY 2011-12

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

Vodafone Cellular Limited, Coimbatore vs. ACIT, Coimbatore

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 1644/CHNY/2014[2010-11]Status: DisposedITAT Chennai21 Sept 2017AY 2010-11

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

Vodafone South Limited, Chennai vs. ITO TDS, Chennai

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 1415/CHNY/2014[2010-11]Status: DisposedITAT Chennai21 Sept 2017AY 2010-11

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

Vodafone South Limited, Chennai vs. ITO TDS, Chennai

In the result, all the appeal filed by the assessee are partly allowed for statistical purposes

ITA 1414/CHNY/2014[2011-12]Status: DisposedITAT Chennai21 Sept 2017AY 2011-12

Bench: Shri A. Mohan Alankamony & Shri Duvvuru Rl Reddy

For Appellant: Shri Salil Kapoor, Advocate
Section 131Section 133ASection 194HSection 201Section 201(1)

…is not given any encouragement, the business will not grow. In that view of the matter, in view of the observations of the Supreme Court, the Income Tax Officer cannot enter into the shoes of the assessee. (S.A. Builders Vs. Commissioner of Income Tax- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Dis…

ACIT, Chennai vs. Carburettors Ltd., Chennai

In the result, the Revenue’s appeal is allowed

ITA 209/CHNY/2017[2012-13]Status: DisposedITAT Chennai05 Sept 2017AY 2012-13

Bench: Shri N.R.S. Ganesan & Shri S. Jayaraman

For Appellant: Shri. Sreenivas, JCIT
Section 14A

…ld be realized out of Controlling interest. Further, 'Controlling interest' is not an asset as considered by the Supreme Court in the case of Vodafone India Ltd. Therefore, the claim of the assessee cannot be accepted. :-7-: I.T.A. N0. 209/Mds/2017 Vs. CIT 288 ITR 1 (SC), he rejected the assessee's claim that the investment in sister concern is for commercial expediency. On the other hand, the CIT(A) has allowed the appeal on the ratios of EIH Hotels Ltd Vs. DCIT, ITA No. 1503 & 1624/Mds/2012 dated 17.07.2013 (Chennai Tribunal), Cheminvest Ltd vs. CIT 378 ITR 33 order dated 02.09.2015 in ITA No. 749/2014 d…

Egger Pumps India Pvt Ltd., Coimbatore vs. ITO, Coimbatore

In the result, the appeal of the assessee is dismissed

ITA 477/CHNY/2017[2012-13]Status: DisposedITAT Chennai01 Sept 2017AY 2012-13

Bench: Shri Chandra Poojari

For Appellant: Mr.B.Sagadevan, JICIT, D.RFor Respondent: 11.07.2017
Section 43A

…a finding of fact that the money was advanced by tax-payer for business purposes which has been used by foreign AE for the purposes of business and hence relying on the decision of Hon’ble Supreme Court in the case of SA Builders Ltd. v. CIT (Appeals) 120071 288 ITR 1/158 Taxnian 74 such losses were allowed by the Mumbai Tribunal based on the facts of the case, while in the instant case the assessee company is not able to demonstrate that the loans/advances granted by the assessee company to its foreign AE in Emirates of Dubai in UAE was in the nature of trade/business advances for the purposes of business of th…

Mf Global Sify Securities India P.Ltd, Mumbai vs. Addl CIT RG 4(2), Mumbai

The appeal of the assessee is partly allowed in terms of our aforesaid observations

ITA 4407/MUM/2012[2008-09]Status: DisposedITAT Mumbai01 Sept 2017AY 2008-09

Bench: Shri G.S.Pannu, Am & Shri Ravish Sood, Jm आयकर अपील सं./ I.T.A. No. 4407/Mum/2012 (निर्धारण वर्ा / Assessment Year: 2008-09) Mf Global Sify Securities India Addl. Commissioner Of Private Ltd. (Formerly Known As Mf Income Tax- Range 4(2) बिधम/ Global Sify Securities India Private Limited); Room No. 669, Aayakar 2Nd Floor, Modern Centre, Block Vs. Bhavan, M.K. Road, C, Mahalaxmi-Mumbai. Mumbai- 400 020 स्थायीलेखासं./जीआइआरसं./ Pan/Gir No. Aabcr6382C (अपीलाथी/Appellant) (प्रत्यथी / Revenue) :

For Appellant: Shri Nishant Thakkar &For Respondent: Shri A.B. Koli, D.R
Section 143(3)Section 68

…he ld. A.R. that the judgment of the Hon’ble High Court of Bombay in the case of Phalton Sugar Works Ltd. (supra) relied upon by the A.O had been overruled by the Hon’ble Supreme Court while adjudicating the case of S.A. Builders Ltd. Vs. CIT(A) & Anr. (2007) 288 ITR 1 (SC). It was further submitted by the ld. A.R that the Hon’ble High Court in its aforesaid judgment had clearly held that where a „Holding company‟ being prompted by commercial expediency had made available an interest free advance to its „Wholly owned subsidiary‟ company („WOS‟), then no disallowance of any part of the interest paid by the holding…

DCIT, Rourkela vs. M/S. Tarini Minerals Pvt. Ltd., Rourkela

In the result, appeal filed by the revenue is dismissed

ITA 236/CTK/2015[2010-11]Status: DisposedITAT Cuttack31 Aug 2017AY 2010-11

Bench: S/Shri N.S Saini & Pavan Kumar Gadaleassessment Year : 2010-2011

For Appellant: Shri D.Pati, ARFor Respondent: Shri Kunal Singh, CIT DR
Section 133(6)

…ative of the business man, as are the related matters like incurring expenses, making investments, obtaining loans and providing advances, etc. Asse ssment Year : 20 10- 201 1 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…

DCIT, Rourkela vs. Indrani Patnaik, Rourkela

In the result, appeal filed by the revenue is dismissed

ITA 142/CTK/2015[2010-11]Status: DisposedITAT Cuttack31 Aug 2017AY 2010-11

Bench: S/Shri N.S Saini & Pavan Kumar Gadaleassessment Year : 2010-2011

For Appellant: Shri D.Pati, ARFor Respondent: Shri Kunal Singh, CIT DR
Section 133(6)Section 194H

…ative of the business man, as are the related matters like incurring expenses, Asse ssment Year : 20 10- 201 1 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…

Shri Purshottam B. Pitroda, Ahmedabad vs. The ACIT, Range -12, Ahmedabad

In the result, appeal filed by the assessee is partly allowed

ITA 351/AHD/2014[2009-10]Status: DisposedITAT Ahmedabad22 Aug 2017AY 2009-10

Bench: Shri N.K. Billaiya & Shri Mahavir Prasad

For Appellant: Shri Tushar P. Hemani, A.RFor Respondent: Shri Mudit Nagpal, Sr. D.R
Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 14ASection 22Section 234BSection 271(1)(c)Section 36(1)(iii)Section 44A

…आयकर अपील"य अ"धकरण, अहमदाबाद "यायपीठ ‘ए’ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ A ” BENCH, AHMEDABAD सव"ी एन.के. "ब"लैया, लेखा सद"य एवं महावीर "साद, "या"यक सद"य के सम" । BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER And SHRI MAHAVIR PRASAD, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 351/Ahd/2014 ("नधा"रण वष" / Assessment Year : 2009-10) Shri Purshottam B. Pitroda, The ACIT बनाम/ Prop. of J.P. Fabricators, Range – 12 Vs. Opp: Ambalal Estate, Ahmedabad. N.H.No.8, Ghodasar, Ahmedabad - 380050 "थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ABWPM 6274 B .. (अपीलाथ" /Appellant) (""यथ" / Respondent) अपीलाथ" ओर से /…

DCIT, Chennai vs. Sical Logistics Ltd., Chennai

ITA 1697/CHNY/2014[2010-11]Status: DisposedITAT Chennai18 Aug 2017AY 2010-11

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri Milind Madhukar, JCIT &For Respondent: Shri S. Sridhar, Advocate
Section 10Section 14A

…ion is that the assessee has invested the available interest-free funds in share capital and mutual funds. Furthermore, making investment in sister concerns is for commercial expediency in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. It is not the case of the Revenue that the sister concern or any of the Directors has misused the funds invested by the assessee. When the sister concern uses the funds only for business purpose, there was commercial expediency for making investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance under…