Shahzada Nand & Sons. v. CIT

108 ITR 358Supreme Court of India1977#2221 most cited

What is Shahzada Nand & Sons. v. CIT authority for?

The tax department cannot sit in the armchair of a businessman to question the commercial expediency of business decisions, including how contracts are entered into. The revenue cannot substitute its own judgment for the assessee's commercial wisdom when an expenditure is incurred wholly and exclusively for business purposes.

52

judgments rely on this decision, according to BharatTax’s citation analysis of 292,668 Indian tax judgments — from 2010 to 2024.

Also referred to as

Shahzada Nand & Sons v. CIT · 108 ITR 358 · commercial expediency · business discretion · business expenditure · Section 10(2)(xv) · Section 37(1) · revenue's role · assessee's wisdom · armchair of businessman

Issues it is cited on

section 10(2)(xv)section 112section 111section 114section 10(2)legal expensesinterest under section 201(1a)percentage completion methodsection 199furnishing inaccurate particulars of incomebusiness connectionfurnishing inaccurate particulars

Judgments citing Shahzada Nand & Sons. v. CIT

THE COMMISSIONER OF INCOME TAX III, vs. M/S. SAVIJANA SEA FOODS PVT. LTD.,

Appeals of the Revenue are dismissed

ITTA/55/2010HC Telangana20 Dec 2024

Bench: J SREENIVAS RAO,ALOK ARADHE

Section 260

…. 29. The mere fact that the space buyer‟s agreement or the allotment letter did not mandate payment of compensation would not come in the way of the Assessee treating such payment as „revenue expenditure.‟ In Shahzada Nand & Sons v. CIT, Patiala (1977) 108 ITR 358 (SC) it was held that the requirement of „commercial expediency‟ “must be judged not in the light of the 19th century laissez faire doctrine which regarded man as an economic being concerned only to protect and advance his self-interest but in the context of current socio-economic thinking which places the general interest of the community…

ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI vs. MATIX FERTILISERS AND CHEMICALS LTD, MUMBAI

In the result, the appeals of the Revenue for assessment year

ITA 2154/MUM/2023[2013-2014]Status: DisposedITAT Mumbai18 Jan 2024AY 2013-2014

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Ita Nos. 1688, 1687, 1686, 1685, 1683, 1684/Mum/2023 Assessment Years: 2014-15 To 2019-2020

For Appellant: Mr. Ajay R. Singh, &

…l also referred to the decision of . The Ld. Counsel also referred to the decision of . The Ld. Counsel also referred to the decision of preme Court in the case of Shahzada Nand and Shahzada Nand and the Hon’ble Supreme Court in the case of Sons v. CIT [1977] 108 ITR 358 (SC) Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that and submitted that the Department cannot sit Department cannot sit in arm chair of businessmen and decide how m chair of businessmen and decide how he should have entered in the contract. he should have entered in the contract. The Ld. Counsel also The Ld. Counsel also relied on the deci…

ASSISTANT COMMISSIONER OF INCOME TAX-CC-5(4), MUMBAI vs. MATIX FERTILISERS AND CHEMICALS LTD, MUMBAI

In the result, the appeals of the Revenue for assessment year

ITA 2152/MUM/2023[2015-16]Status: DisposedITAT Mumbai18 Jan 2024AY 2015-16

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Ita Nos. 1688, 1687, 1686, 1685, 1683, 1684/Mum/2023 Assessment Years: 2014-15 To 2019-2020

For Appellant: Mr. Ajay R. Singh, &

…l also referred to the decision of . The Ld. Counsel also referred to the decision of . The Ld. Counsel also referred to the decision of preme Court in the case of Shahzada Nand and Shahzada Nand and the Hon’ble Supreme Court in the case of Sons v. CIT [1977] 108 ITR 358 (SC) Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that and submitted that the Department cannot sit Department cannot sit in arm chair of businessmen and decide how m chair of businessmen and decide how he should have entered in the contract. he should have entered in the contract. The Ld. Counsel also The Ld. Counsel also relied on the deci…

ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI vs. MATIX FERTILISERS AND CHEMICALS LTD, MUMBAI

In the result, the appeals of the Revenue for assessment year

ITA 2149/MUM/2023[2017-2018]Status: DisposedITAT Mumbai18 Jan 2024AY 2017-2018

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Ita Nos. 1688, 1687, 1686, 1685, 1683, 1684/Mum/2023 Assessment Years: 2014-15 To 2019-2020

For Appellant: Mr. Ajay R. Singh, &

…l also referred to the decision of . The Ld. Counsel also referred to the decision of . The Ld. Counsel also referred to the decision of preme Court in the case of Shahzada Nand and Shahzada Nand and the Hon’ble Supreme Court in the case of Sons v. CIT [1977] 108 ITR 358 (SC) Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that and submitted that the Department cannot sit Department cannot sit in arm chair of businessmen and decide how m chair of businessmen and decide how he should have entered in the contract. he should have entered in the contract. The Ld. Counsel also The Ld. Counsel also relied on the deci…

ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI vs. MATIX FERTILISERS AND CHEMICALS LTD, MUMBAI

ITA 2148/MUM/2023[2016-2017]Status: DisposedITAT Mumbai18 Jan 2024AY 2016-2017

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

Section 37(1)Section 56

…ment by and between the parties has to be understood as held in the case of Bishwannath P Singh v. Rajendra Prasad (2006) 4 SCC 432. The Ld. Counsel also referred to the decision of the Hon'ble Supreme Court in the case of Shahzada Nand and Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that the Department cannot sit in arm chair of businessmen and decide how he should have entered in the contract. The Ld. Counsel also relied on the decision of the Hon'ble Gujarat High Court in the case of Margabhai Kisanbhai Patel & Co. v. CIT (1977) 108 ITR 54, wherein it is held that “unless the transaction in proved as sha…

MATIX FERTILISERS AND CHEMICALS LTD ,MUMBAI vs. COMMISSIONER OF INCOME TAX, CIT(A)53, MUMBAI

In the result, the appeals of the Revenue for assessment year

ITA 1687/MUM/2023[2015-2016]Status: DisposedITAT Mumbai18 Jan 2024AY 2015-2016

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Ita Nos. 1688, 1687, 1686, 1685, 1683, 1684/Mum/2023 Assessment Years: 2014-15 To 2019-2020

For Appellant: Mr. Ajay R. Singh, &

…l also referred to the decision of . The Ld. Counsel also referred to the decision of . The Ld. Counsel also referred to the decision of preme Court in the case of Shahzada Nand and Shahzada Nand and the Hon’ble Supreme Court in the case of Sons v. CIT [1977] 108 ITR 358 (SC) Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that and submitted that the Department cannot sit Department cannot sit in arm chair of businessmen and decide how m chair of businessmen and decide how he should have entered in the contract. he should have entered in the contract. The Ld. Counsel also The Ld. Counsel also relied on the deci…

MATIX FERTILISERS AND CHEMICALS LTD ,MUMBAI vs. COMMISSIONER OF INCOME TAX, CIT(A)53, MUMBAI

In the result, the appeals of the Revenue for assessment year

ITA 1686/MUM/2023[2016-2017]Status: DisposedITAT Mumbai18 Jan 2024AY 2016-2017

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Ita Nos. 1688, 1687, 1686, 1685, 1683, 1684/Mum/2023 Assessment Years: 2014-15 To 2019-2020

For Appellant: Mr. Ajay R. Singh, &

…l also referred to the decision of . The Ld. Counsel also referred to the decision of . The Ld. Counsel also referred to the decision of preme Court in the case of Shahzada Nand and Shahzada Nand and the Hon’ble Supreme Court in the case of Sons v. CIT [1977] 108 ITR 358 (SC) Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that and submitted that the Department cannot sit Department cannot sit in arm chair of businessmen and decide how m chair of businessmen and decide how he should have entered in the contract. he should have entered in the contract. The Ld. Counsel also The Ld. Counsel also relied on the deci…

MATIX FERTILISERS AND CHEMICALS LTD ,MUMBAI vs. COMMISSIONER OF INCOME TAX, CIT(A)53, MUMBAI

In the result, the appeals of the Revenue for assessment year

ITA 1684/MUM/2023[2019-20]Status: DisposedITAT Mumbai18 Jan 2024AY 2019-20

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Ita Nos. 1688, 1687, 1686, 1685, 1683, 1684/Mum/2023 Assessment Years: 2014-15 To 2019-2020

For Appellant: Mr. Ajay R. Singh, &

…l also referred to the decision of . The Ld. Counsel also referred to the decision of . The Ld. Counsel also referred to the decision of preme Court in the case of Shahzada Nand and Shahzada Nand and the Hon’ble Supreme Court in the case of Sons v. CIT [1977] 108 ITR 358 (SC) Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that and submitted that the Department cannot sit Department cannot sit in arm chair of businessmen and decide how m chair of businessmen and decide how he should have entered in the contract. he should have entered in the contract. The Ld. Counsel also The Ld. Counsel also relied on the deci…

MATIX FERTILISERS AND CHEMICALS LTD ,MUMBAI vs. COMMISSIONER OF INCOME TAX, CIT(A)53, MUMBAI

In the result, the appeals of the Revenue for assessment year

ITA 1683/MUM/2023[2018-2019]Status: DisposedITAT Mumbai18 Jan 2024AY 2018-2019

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Ita Nos. 1688, 1687, 1686, 1685, 1683, 1684/Mum/2023 Assessment Years: 2014-15 To 2019-2020

For Appellant: Mr. Ajay R. Singh, &

…l also referred to the decision of . The Ld. Counsel also referred to the decision of . The Ld. Counsel also referred to the decision of preme Court in the case of Shahzada Nand and Shahzada Nand and the Hon’ble Supreme Court in the case of Sons v. CIT [1977] 108 ITR 358 (SC) Sons v. CIT [1977] 108 ITR 358 (SC) and submitted that and submitted that the Department cannot sit Department cannot sit in arm chair of businessmen and decide how m chair of businessmen and decide how he should have entered in the contract. he should have entered in the contract. The Ld. Counsel also The Ld. Counsel also relied on the deci…

D.C.I.T,CIRCLE-9(1), KOLKATA vs. M/S APOLLO GLENEAGLES HOSPITAL, KOLKATA

In the result, appeal of the Revenue for AY 2012-13 is dismissed

ITA 1639/KOL/2019[2013-14]Status: DisposedITAT Kolkata27 Apr 2023AY 2013-14

Bench: Shri Sanjay Garg, Hon’Ble & Shri Girish Agrawal, Hon’Ble

For Appellant: Ms. Vandana Bhandari, FCA and Shri SaibalFor Respondent: Shri G. Hukuga Sema, CIT, D/R
Section 143(3)Section 14A

…e earlier years cannot be an estoppel against charging a fair or arm's length rate of royalty in the subsequent years. Reliance was placed in this regard on the decision of the judgment of Hon'ble Supreme Court in the case of Shahzada Nand & Sons v. CIT[1977] 108 ITR 358 and CIT v. Laxmi Cement Distributors (P.) Ltd.[1976] 104 ITR 711 (Guj.), wherein it has been held that remuneration paid for services rendered could not be disallowed merely because no remuneration for such services was paid in the past. Similarly, in the case of Addl CIT v. Nestle India Ltd.[2005] 147 Taxman 20 (Mag.) (Delhi) the Hon'ble Tribuna…

D.C.I.T,CIRCLE-9(1), KOLKATA vs. M/S APOLLO GLENEAGLES HOSPITAL, KOLKATA

In the result, appeal of the Revenue for AY 2012-13 is dismissed

ITA 1501/KOL/2019[2012-13]Status: DisposedITAT Kolkata27 Apr 2023AY 2012-13

Bench: Shri Sanjay Garg, Hon’Ble & Shri Girish Agrawal, Hon’Ble

For Appellant: Ms. Vandana Bhandari, FCA and Shri SaibalFor Respondent: Shri G. Hukuga Sema, CIT, D/R
Section 143(3)Section 14A

…e earlier years cannot be an estoppel against charging a fair or arm's length rate of royalty in the subsequent years. Reliance was placed in this regard on the decision of the judgment of Hon'ble Supreme Court in the case of Shahzada Nand & Sons v. CIT[1977] 108 ITR 358 and CIT v. Laxmi Cement Distributors (P.) Ltd.[1976] 104 ITR 711 (Guj.), wherein it has been held that remuneration paid for services rendered could not be disallowed merely because no remuneration for such services was paid in the past. Similarly, in the case of Addl CIT v. Nestle India Ltd.[2005] 147 Taxman 20 (Mag.) (Delhi) the Hon'ble Tribuna…

M/S. C. J. GROUP & GAJRAS BUILDERS & DEVELOPERS,PANVEL, MUMBAI vs. DCIT, CIRCLE-1, BHARUCH, BHARUCH

In the result, this ground of appeal is also dismissed

ITA 2/SRT/2021[2011-12]Status: DisposedITAT Surat27 Feb 2023AY 2011-12

Bench: Shri Pawan Singh & Dr Arjun Lal Sainiआ.अ.सं./Ita No.02/Srt/2021 (Ay 2011-12) (Hearing In Physical Court) M/S C.J. Group & Gajras Deputy Commissioner Of Income Tax, Circle-1, Builders & Developers, Vs Bharuch Bhoomi Land Mark, Plot No. 30-30A, Sector-17, Khan Colony, Panvel-410206, Maharashtra Pan No. Aagfc 4658 J अपीलाथ"/Appellant ""यथ" /Respondent

Section 143(3)Section 254(1)

…he order of Ld. CIT(A). In the written submission, the assessee relied upon various decisions of Hon'ble Apex Court and various High Courts e.g. in CIT Vs. Dalmia Cement (Bharat) Ltd. (2002) 254 ITR 377(Del), in the case of Shahzada Nand & Sons vs. CIT (1977) 108 ITR 358 (SC); in the case of J.K. Steel Industries vs. CIT (1978) 112 ITR 285 (Cal); in the case of CIT vs. Keshavlal Chandulal (1966) 59 ITR 120 (Guj). On the basis of ratio of aforesaid decisions, the assessee submitted that the transaction of payment of commission is bona fide and genuine. The commission was paid for sale of flats to sole selling agen…

DCIT CIRCLE-9(1), NEW DELHI vs. FEDERAL MOGUL GOETZE (INDIA) LTD., NEW DELHI

In the result, both the appeals filed by Revenue are

ITA 8286/DEL/2019[2013-14]Status: DisposedITAT Delhi16 Sept 2022AY 2013-14

Bench: Or During The Hearing Of This Appeal.”

Section 143(3)Section 148Section 40

…2008] 296 ITR 682 (Delhi) Page 5 of 15 ITA No.8285 & 8286/Del/2019 DCIT vs. Federal Mogul Goetze (India) Ltd. • S.A. Builders Ltd. vs CIT [2007] 288 ITR 1 (SC) • Sasoon J. David & Co. Pvt. Ltd. vs CIT [1979] 118 ITR 261 (SC) • Shahzada Nand & Sons vs CIT 108 ITR 358 (SC) • CIT vs Chandulal Keshavlal & Co. [1960] 38 ITR 601 (SC) (C.1.1) Ld. Counsel for the assessee also submitted that the disallowances in respect of club membership expenses was deleted by the Ld. CIT(A) in assessee’s own case for Assessment Years 2009-10, 2010-11 and 2014-15, and he added that Revenue was not in appeal against these orders…

DCIT CIRCLE-9(1), NEW DELHI vs. FEDERAL MOGUL GOETZE (INDIA) LTD., NEW DELHI

In the result, both the appeals filed by Revenue are

ITA 8285/DEL/2019[2012-13]Status: DisposedITAT Delhi16 Sept 2022AY 2012-13

Bench: Or During The Hearing Of This Appeal.”

Section 143(3)Section 148Section 40

…2008] 296 ITR 682 (Delhi) Page 5 of 15 ITA No.8285 & 8286/Del/2019 DCIT vs. Federal Mogul Goetze (India) Ltd. • S.A. Builders Ltd. vs CIT [2007] 288 ITR 1 (SC) • Sasoon J. David & Co. Pvt. Ltd. vs CIT [1979] 118 ITR 261 (SC) • Shahzada Nand & Sons vs CIT 108 ITR 358 (SC) • CIT vs Chandulal Keshavlal & Co. [1960] 38 ITR 601 (SC) (C.1.1) Ld. Counsel for the assessee also submitted that the disallowances in respect of club membership expenses was deleted by the Ld. CIT(A) in assessee’s own case for Assessment Years 2009-10, 2010-11 and 2014-15, and he added that Revenue was not in appeal against these orders…

ACIT, CENTRAL CIRCLE, VAPI vs. M/S. SHAH VIRCHAND GOVANJI JEWELLERS PVT. LTD, SURAT

In the result, ground No. 2 of appeal raised by revenue is also dismissed

ITA 176/SRT/2020[2012-13]Status: DisposedITAT Surat08 Sept 2022AY 2012-13

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

For Respondent: “1. On the facts and circumstances o
Section 254(1)Section 68

…t the assessee in the extent case having dis-similar and distinguishable facts and circumstances. 41. Now, at this juncture we also find it appropriate to consider the ratio of the decision of Hon'ble Supreme Court in the case of Shahzada Nand and Sons [1977] 108 ITR 358 (SC), which has been relied by the learned Senior Counsel, wherein their Lordship speaking for the Apex Court of India held that “It is not necessary that the commission should be paid under a contractual obligation, it may be purely voluntary. But it must be for services rendered and here services were in fact rendered.” In the present case the…

ACIT, CENTRAL CIRCLE, VAPI vs. M/S. SHAH VIRCHAND GOVANJI JEWELLERS PVT. LTD, SURAT

In the result, ground No. 2 of appeal raised by revenue is also dismissed

ITA 175/SRT/2020[2010-11]Status: DisposedITAT Surat08 Sept 2022AY 2010-11

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini

For Respondent: “1. On the facts and circumstances o
Section 254(1)Section 68

…t the assessee in the extent case having dis-similar and distinguishable facts and circumstances. 41. Now, at this juncture we also find it appropriate to consider the ratio of the decision of Hon'ble Supreme Court in the case of Shahzada Nand and Sons [1977] 108 ITR 358 (SC), which has been relied by the learned Senior Counsel, wherein their Lordship speaking for the Apex Court of India held that “It is not necessary that the commission should be paid under a contractual obligation, it may be purely voluntary. But it must be for services rendered and here services were in fact rendered.” In the present case the…

WHIRLPOOL OF INDIA LTD.,GURGAON vs. NATIONAL E-ASSESSMENT CENTRE, NEW DELHI

In the result, the appeal is partly allowed

ITA 476/DEL/2021[2016-17]Status: DisposedITAT Delhi11 Jul 2022AY 2016-17

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2016-17

Section 143(3)Section 144C(13)Section 92B

…lfare activities and the expenditure incurred in marriage of the employees’ daughters is not wholly and exclusively for the purpose of business of the assessee. 22. Basing on the de4cision of the Hon’ble Apex Court in the case of Shahzada Nand & Sons vs. CIT 108 ITR 358, Ld. AR submitted that the ex-gratia compensation paid to an employee is an allowable expenditure. He further submitted that under section 37(1) of the Act, deduction is admissible for expenditure incurred wholly and exclusively for the purpose of business and such expenditure is justified by business consideration and incurred out of commercial…

DCIT CC 44, MUMBAI vs. SOPARIWALA EXPORTS, MUMBAI

ITA 3039/MUM/2014[2007-08]Status: DisposedITAT Mumbai21 Sept 2021AY 2007-08
Section 132Section 143(2)Section 143(3)Section 153ASection 92

…that the Assessing Officer sitting in the judgement of necessity of expenditure is totally unsustainable. In this regard he placed reliance on the following decisions :- • Sasson J. David & Co. Pvt. Ltd. Vs. CIT (118 ITR 261) • Shahzad-a-Nand & Sons Vs. CIT (108 ITR 358) • Voltamp Transformers Pvt. Ltd. Vs. CIT (129 ITR 105) 15. He further submitted that the contract between the parties is to be understood as is understood by the parties and Assessing Officer cannot give his own interpretation to the contract. In this regard he placed reliance upon 15 M/s. Sopariwala Exports M/s. Sopariwala Exports Pvt. Ltd. th…

ADDL. CIT, NEW DELHI vs. M/S. UNITED HOTELS LTD., NEW DELHI

In the result, appeal of the Revenue is dismissed

ITA 2155/DEL/2017[2013-14]Status: PendingITAT Delhi28 Jul 2021AY 2013-14

Bench: Sh. Anil Chaturvedi & Sh. Kuldip Singh(Through Video Conferencing) Acit, Vs. M/S. United Hotels Limited Special Range – 9, The Ambassador Hotel, New Delhi Sujan Singh Park, Cornwallis Road, Pan No. Aaacu 0031 C New Delhi-110003 (Appellant) (Respondent) Assessee By Shri Prakash Dubey, Sr. D.R. Revenue By Shri Jagdish Ajmani, C.A. Date Of Hearing: 14/07/2021 Date Of Pronouncement: 28/07/2021 Order Per Anil Chaturvedi, Am:

Section 143(3)Section 14ASection 36(1)(ii)

…e past. He thereafter submitted that the case laws relied upon by the AO are distinguishable on facts and therefore not applicable to the present facts. He submitted that on the contrary the Hon’ble Apex Court in the case of Shazada Nand & Sons vs. CIT (1997) 108 ITR 358 has held that the sharing of profit by employees should be encouraged by adopting 10 a progressive and liberal approach. He thus supported the order of CIT(A). 15. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to deleting the disallowance made by AO of the comm…

ITO, NEW DELHI vs. M/S. NIMAI DEVELOPERS PVT. LTD., NEW DELHI

In the result, appeal of the Revenue is dismissed

ITA 2115/DEL/2017[2012-13]Status: DisposedITAT Delhi28 Jul 2021AY 2012-13

Bench: Sh. Anil Chaturvedi & Sh. Kuldip Singh(Through Video Conferencing) Acit, Vs. M/S. United Hotels Limited Special Range – 9, The Ambassador Hotel, New Delhi Sujan Singh Park, Cornwallis Road, Pan No. Aaacu 0031 C New Delhi-110003 (Appellant) (Respondent) Assessee By Shri Prakash Dubey, Sr. D.R. Revenue By Shri Jagdish Ajmani, C.A. Date Of Hearing: 14/07/2021 Date Of Pronouncement: 28/07/2021 Order Per Anil Chaturvedi, Am:

Section 143(3)Section 14ASection 36(1)(ii)

…e past. He thereafter submitted that the case laws relied upon by the AO are distinguishable on facts and therefore not applicable to the present facts. He submitted that on the contrary the Hon’ble Apex Court in the case of Shazada Nand & Sons vs. CIT (1997) 108 ITR 358 has held that the sharing of profit by employees should be encouraged by adopting 10 a progressive and liberal approach. He thus supported the order of CIT(A). 15. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to deleting the disallowance made by AO of the comm…

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