SA Builders, 288 ITR 1 (SC) and CIT v. Panipat Woollen and General Mills Company Ltd.

103 ITR 66Supreme Court of India1976#1030 most cited

What is SA Builders, 288 ITR 1 (SC) and CIT v. Panipat Woollen and General Mills Company Ltd. authority for?

The Income Tax Department cannot sit in the armchair of a businessman or question their commercial wisdom and business decisions. Expenses incurred for business expediency, determined from the businessman's point of view, are allowable business expenses.

105

judgments rely on this decision, according to BharatTax’s citation analysis of 367,359 Indian tax judgments — from 2016 to 2026.

Also referred to as

SA Builders · Panipat Woollen Mills · commercial expediency · business expenditure · allowable expenses · revenue cannot question commercial wisdom · Income Tax Department armchair businessman · genuine business expenses · Section 37(1) income tax

Sections most often in play

Section 1961Section 1962Section 143(3)Section 56(2)(viib)Section 142(1)Section 143(2)Section 133(6)Section 68

Issues it is cited on

nav methoddcf methodstrategic investmentsection 56(2)(viib)valuation of sharescommercial rightscommercial expediencysection 251(1)section 56(2)(vii)date of transferintangible assetssection 56(2)

Judgments citing SA Builders, 288 ITR 1 (SC) and CIT v. Panipat Woollen and General Mills Company Ltd.

DCIT, New Delhi vs. M/S. Ajay Enterprises Pvt. Ltd., New Delhi

In the result, the appeals of the assessee for A

ITA 1348/DEL/2013[2008-09]Status: DisposedITAT Delhi31 Jul 2017AY 2008-09

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: A.Y. 2008-09For Respondent: A.Y. 2008-09
Section 41(1)

…O cannot question on the quantum of the expenditure. The reasonableness of expenditure, the test of commercial expediency would required to be judged from the point of view of the businessman, as has been held in CIT Vs. Panipat Woolen & General Mills Limited 103 ITR 66 (SC). It has been held that even the voluntary payments made for the services rendered are allowable, as it is the businessman's prerogative to decide the quantum of payment. Following further judgments support this view:- 1. Sasoon J. David & NCo. Pvt. Ltd. Vs. CIT 118 ITR 261 (SC). 2. CIT Vs. Walchand & Co. 65 ITR 381 (SC). 3. J. K. Woolen Mills…

Ajay Enterprises Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeals of the assessee for A

ITA 898/DEL/2013[2008-09]Status: DisposedITAT Delhi31 Jul 2017AY 2008-09

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: A.Y. 2008-09For Respondent: A.Y. 2008-09
Section 41(1)

…O cannot question on the quantum of the expenditure. The reasonableness of expenditure, the test of commercial expediency would required to be judged from the point of view of the businessman, as has been held in CIT Vs. Panipat Woolen & General Mills Limited 103 ITR 66 (SC). It has been held that even the voluntary payments made for the services rendered are allowable, as it is the businessman's prerogative to decide the quantum of payment. Following further judgments support this view:- 1. Sasoon J. David & NCo. Pvt. Ltd. Vs. CIT 118 ITR 261 (SC). 2. CIT Vs. Walchand & Co. 65 ITR 381 (SC). 3. J. K. Woolen Mills…

Sh. Sushil Kumar, Karnal vs. ITO, New Delhi

In the result, appeal of the assessee is dismissed

ITA 6763/DEL/2013[2009-10]Status: DisposedITAT Delhi09 Jun 2017AY 2009-10

Bench: Sh. H.S. Sidhu & Sh. O.P. Kantassessment Year: 2009-10 Vs. Income Tax Officer, Ward -21(3), Sh. Sushil Kumar, H. No. 145, Sector – 14, Karnal New Delhi Pan : Aaspk5603R (Appellant) (Respondent) Appellant By Ms. Pallavi Goel, Ca Respondent By Sh. Umesh Chand Dubey, Sr.Dr Date Of Hearing 22.05.2017 Date Of Pronouncement 09.06.2017 Order Per O.P. Kant, A.M.: This Appeal By The Assessee Is Directed Against Order Dated 26/09/2013 Of The Ld. Commissioner Of Income-Tax (Appeals)-Xxii, New Delhi [In Short “The Cit-(A)”] For Assessment Year 2009-10, Raising Following Grounds:

Section 143(2)Section 143(3)

…running of 6 business that the buyers of petroleum (in this case the Assessee) purchase their own tank lorries as they need to transport petroleum on frequent basis. Reliance in this regard is placed on CIT vs. Panipat Wollen & General Mills Co. Ltd. (1976) 103 ITR 66 (SC) [Page 41 of Case Law Compilation]. The Apex court held: “the test of commercial expediency cannot be reduced in the shape of a ritualistic formula, nor can it be put in a watertight compartment so as to be confined in a strait-jacket the test merely means that the Court will place itself in the position of a businessman and find out whether…

Creative Labels P.Ltd, Mumbai vs. DCIT 4(1)(2), Mumbai

In the result, appeal of the assessee is allowed

ITA 5777/MUM/2016[2013-14]Status: DisposedITAT Mumbai15 Mar 2017AY 2013-14

Bench: Shri D.Karunakara Rao & Shri Pawan Singhcreative Labels Pvt. Ltd. Dcit, 4(1)(2), Room No. 640, 6Th Floor, Room No. 305, Sharaf Mansion, 3Rd Floor, Princess Street, Vs. Aayakar Bhavan, M.K. Road, Kalbadevi, Mumbai-400002. Mumbai-400020. Pan: Aaccc6150G (Appellant) (Respondent)

For Appellant: Shri Pankaj R. Toprani (AR)For Respondent: Shri Saurabh Kumar Rai
Section 143(3)Section 145(3)Section 253Section 254(1)

…under which circumstances. The commercial expediency is the sole discretion of businessmen to safeguard his interest. In support of his contention, the ld. AR of the assessee relied upon the decision of CIT vs. Panipat Woollen & General Mills Co. Ltd. (1976) (103 ITR 66), CIT vs. Dhanrajgiriji (1973) (91 ITR 544) and the decision of S.A. Builders Ltd. vs. CIT (2007) (288 ITR 1). On the other hand, the ld. DR for the Revenue supported the order of authorities below. 4. We have considered the rival contention of the parties and perused the material available on record. The AO while framing assessment order observed…

Aig Capital India P. Ltd, Mumbai vs. ITO RG 6(1)(4), Mumbai

ITA 2940/MUM/2011[2007-08]Status: DisposedITAT Mumbai27 Jul 2016AY 2007-08

Bench: Shri Amit Shukla () & Shri Ashwani Taneja ()

Section 143(3)Section 250

…r Investment & Finance P. Ltd. 277 ITR 20 (Cal), ITAT. (b) CIT Vs. Amalgamations Pvt Ltd (1997)226 ITR 188 (SC) (c) CIT Vs. Malayalam Plantations Ltd (1987)188 ITR 63 (SC) CIT Vs. Jagannath Kishonlal 41 ITR 360 (SC). (d) CIT Vs. Panipat Woolen & General Mills 103 ITR 66. (e) (f) Madhavprasad Jatia Vs. CIT 118 ITR 200 (SC), and (g) S.A. Builders Ltd Vs. CIT288 ITR 1(SC).” 6. Ld. CIT(A) considered the submission of the assessee, but he was not satisfied and did not find force in the arguments of the assessee. It was held by the Ld.CIT(A) that the impugned expenses have been incurred by the assessee for making inves…