Sir Kikabhai Premchand v. CIT

24 ITR 506Supreme Court of India1953#632 most cited

What is Sir Kikabhai Premchand v. CIT authority for?

One cannot make a taxable profit or loss from transactions with oneself, as profit only arises from dealings with external third parties, even when transferring assets between different accounts or divisions of the same entity.

156

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2008 to 2025.

Also referred to as

Sir Kikabhai Premchand v. CIT · profit from self · self-dealing transactions · internal transfers · anticipated business profits · permanent establishment · head office · shares business stock · investment account · taxable event · income recognition

Sections most often in play

Section 148Section 143(1)Section 143(3)Section 147Section 148A(b)Section 148A(d)Section 69ASection 132(4)
Read the full judgment

Issues it is cited on

unexplained jewellerysubstantive assessmentprotective assessmentinterest u/s 234aon-moneysection 234aunexplained investmentsalarysection 69aundisclosed incomesection 132section 153a

Judgments citing Sir Kikabhai Premchand v. CIT

ACIT, New Delhi vs. Punjab National Bank, New Delhi

In the result, assessee’s appeals, namely, ITA Nos

ITA 2469/DEL/2011[2007-08]Status: DisposedITAT Delhi09 Jan 2019AY 2007-08

Bench: Shri Prashant Maharishi & Shri K.Narasimha Chary

For Appellant: S/Shri K. Sampath & V. Raja Kumar, AdvocateFor Respondent: Smt. Sulekha Verma, CIT,DR
Section 14Section 14A

…nnot be said to be making profit from transferring as though from one pocket to the other pocket when it had operated the inter branch accounts of this nature. In our view, the decision of the Hon'ble Apex Court in the case of Sir Kikabhai Premchand Vs. CIT - 24 ITR 506 and Hon'ble Calcutta Vs. CIT - 116 ITR 425 are clearly in favour of the assessee. The accounting entries, which according to the Revenue, yield the income are in the inter branch accounts of the bank. It cannot be said that transactions between the branch can result in an income to the bank as a whole. No man can make profit to himself by the tra…

Punjab National Bank, New Delhi vs. ACIT, New Delhi

In the result, assessee’s appeals, namely, ITA Nos

ITA 2236/DEL/2011[2007-08]Status: DisposedITAT Delhi09 Jan 2019AY 2007-08

Bench: Shri Prashant Maharishi & Shri K.Narasimha Chary

For Appellant: S/Shri K. Sampath & V. Raja Kumar, AdvocateFor Respondent: Smt. Sulekha Verma, CIT,DR
Section 14Section 14A

…nnot be said to be making profit from transferring as though from one pocket to the other pocket when it had operated the inter branch accounts of this nature. In our view, the decision of the Hon'ble Apex Court in the case of Sir Kikabhai Premchand Vs. CIT - 24 ITR 506 and Hon'ble Calcutta Vs. CIT - 116 ITR 425 are clearly in favour of the assessee. The accounting entries, which according to the Revenue, yield the income are in the inter branch accounts of the bank. It cannot be said that transactions between the branch can result in an income to the bank as a whole. No man can make profit to himself by the tra…

ACIT, New Delhi vs. M/S. Housing & Urban Development Corporation Ltd., New Delhi

In the result, Assessee’s appeal vide ITA No

ITA 6151/DEL/2014[2007-08]Status: DisposedITAT Delhi21 Dec 2018AY 2007-08

Bench: Shri Amit Shukla & Shri Anadee Nath Misshra

For Appellant: Sh. Gagan Kumar, Adv. &For Respondent: Sh. K.J. Singh, CIT (DR)
Section 143(3)Section 14ASection 263

…this year, it will cause hardship to the Assessee because the aforesaid claim of Rs. 1,60,00,000 towards ad hoc provision on account of pay revision has not been claimed by the Assessee in the subsequent years. However, in view of Kikabhai Premchand v/s CIT 24 ITR 506 (SC), ITO v/s Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC), CIT v/s British Paints India Ltd. 188 ITR 44 (SC) and CIT v/s Basant Rai Takht Singh 1 ITR 197 (SC), it is well settled that each year is separate and self-contained period, Income Tax is annual in its structure and organization. Thus, each previous year is a distinct unit of time for…

M/S. Housing & Urban Development Corporation Ltd. (Hudco), New Delhi vs. DCIT, New Delhi

In the result, Assessee’s appeal vide ITA No

ITA 5705/DEL/2014[2007-08]Status: DisposedITAT Delhi21 Dec 2018AY 2007-08

Bench: Shri Amit Shukla & Shri Anadee Nath Misshra

For Appellant: Sh. Gagan Kumar, Adv. &For Respondent: Sh. K.J. Singh, CIT (DR)
Section 143(3)Section 14ASection 263

…this year, it will cause hardship to the Assessee because the aforesaid claim of Rs. 1,60,00,000 towards ad hoc provision on account of pay revision has not been claimed by the Assessee in the subsequent years. However, in view of Kikabhai Premchand v/s CIT 24 ITR 506 (SC), ITO v/s Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC), CIT v/s British Paints India Ltd. 188 ITR 44 (SC) and CIT v/s Basant Rai Takht Singh 1 ITR 197 (SC), it is well settled that each year is separate and self-contained period, Income Tax is annual in its structure and organization. Thus, each previous year is a distinct unit of time for…

Asst. CIT, Circle-6, Pune vs. Sakal Papers Limited, Pune

In the result, appeal of the Revenue in ITA No

ITA 926/PUN/2013[2006-07]Status: DisposedITAT Pune20 Dec 2018AY 2006-07

Bench: Shri R.S. Syal, Vp & Shri Partha Sarathi Chaudhury, Jm

For Appellant: Shri Ashok KotharyFor Respondent: Shri Sudhendu Das
Section 80I

…in-trade into capital assets as a transfer or to deem the fair market value as on the date of conversion as the cost of acquisition of the capital assets. The tribunal relied upon the decision of the Supreme Court in the case of Sir Kikabhai Premchand vs. CIT 24 ITR 506, for the proposition that no man can make a profit out of himself and on the decision of the Calcutta High Court in the case of CIT vs. Dhanuka and Sons 124 ITR 24, where the High Court held that there could not be any actual profit or loss on withdrawal of stock from a trading business. It is clear from this decision of the Supreme Court that con…

Km. Preeti Singh, Meerut vs. ITO, Noida

ITA 6909/DEL/2014[2009-10]Status: DisposedITAT Delhi31 Oct 2018AY 2009-10

Bench: Shri Amit Shukla & Shri Anadee Nath Misshra

For Appellant: Sh. M.P. Rastogi, AdvFor Respondent: Sh. Surender Pal, Sr. DR
Section 253(3)Section 253(5)

…us year under consideration (relevant to A.Y. 2009-10). It is well settled that each year is separate and self-contained period. Income Tax is annual in its structure and organization. We take strength from decisions reported at Kikabhai Premchand vs. CIT 24 ITR 506(SC); ITO vs. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC); CIT vs. British Paints India Ltd. 188 ITR 44(SC) and CIT vs. Basant Rai Takht Singh 1 ITR 197 (SC) for the proposition that each 'previous year' is a distinct unit of time for the purposes of assessment and further, that the profits made; and the liabilities of losses made before or afte…

ITO, WD-1(4), Kolkata vs. M/S Command Constructions Pvt. Ltd., Kolkata

In the result, the appeal by the Revenue is dismissed”

ITA 571/KOL/2015[2006-2007]Status: DisposedITAT Kolkata16 Oct 2018AY 2006-2007

Bench: Hon’Ble Shri A T Varkey, Jm & Shri M.Balaganesh, Am] I.T.A No. 571/Kol/2015 Assessment Year : 2006-07 Ito, Ward-1(4), Kolkata -Vs- M/S Command Constructions Private Ltd. [Pan: Aaccc5075A ] (Appellant) (Respondent)

For Appellant: Shri Md.Usman, CIT DRFor Respondent: Shri J. P. Khaitan, Sr. Counsel
Section 143(1)Section 147Section 148Section 45(3)

…the stock, which necessarily results in imaginary or notional profits to the assessee which he has not actually received. In fact such a notional imaginary profit cannot be taxed. It is a well settled principle as held in Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 (SC) the Constitution Bench judgment that the firm cannot make a profit out of itself The transaction which is not business transaction and does not derive immediate pecuniary gain is not subjected to tax. In the present case by showing the market value of the closing stock the assessee has earned potential profit out of itself in as much as the s…

ITO, WD-1(4), Kolkata vs. M/S Orchid Griha Nirman Private Ltd., Kolkata

In the result, the appeal by the Revenue is dismissed”

ITA 569/KOL/2015[2006-2007]Status: DisposedITAT Kolkata26 Sept 2018AY 2006-2007

Bench: Hon’Ble Shri M.Balaganesh, Am & Shri S.S. Viswanethra Ravi, Jm] I.T.A No. 569/Kol/2015 Assessment Year : 2006-07 Ito, Ward-1(4), Kolkata -Vs- M/S Orchid Griha Nirman Pvt. Ltd. [Pan: Aaaco 7148 L ] (Appellant) (Respondent)

For Appellant: Shri Goulean Hangshing, CIT DRFor Respondent: Shri J. P. Khaitan, Sr. Counsel
Section 143(1)Section 147Section 148Section 45(3)

…the stock, which necessarily results in imaginary or notional profits to the assessee which he has not actually received. In fact such a notional imaginary profit cannot be taxed. It is a well settled principle as held in Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 (SC) the Constitution Bench judgment that the firm cannot make a profit out of itself The transaction which is not business transaction and does not derive immediate pecuniary gain is not subjected to tax. In the present case by showing the market value of the closing stock the assessee has earned potential profit out of itself in as much as the s…

Asst CIT 19(3), Mumbai vs. Vishal Ashok Bhansali, Mumbai

The appeal stand partly allowed in terms of our above order

ITA 2458/MUM/2017[2012-13]Status: DisposedITAT Mumbai12 Sept 2018AY 2012-13

Bench: Shri Saktijit Dey, Jm & Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./I.T.A. No.2458/Mum/2017 (िनधा"रणवष" / Assessment Year: 2012-13) Assistant Commissioner Of Vishal Ashok Bhansali C-112, Grand Paradi Income Tax-19(3) बनाम/ A.K.Marg, Kemps Corner Room No.206, 2Nd Floor Vs. Mumbai-400 036 Tardeo Road Mumbai-400 007 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aeipb-9981-P (अपीलाथ"/Appellant) (""थ" / Respondent) :

For Appellant: Written Submissions dated 01/08/2018For Respondent: Rajeev Gubangotra, Ld. DR
Section 143(3)Section 145(3)

…ITA No.2458/Mum/2017 Vishal Ashok Bhansali Assessment Year-2012-13 आयकर अपीलीय अिधकरण “एफ” "ायपीठ मुंबई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI "ी श""जीत दे,"ाियक सद" एवं "ी मनोज कुमार अ"वाल, लेखा सद" के सम"। BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./I.T.A. No.2458/Mum/2017 (िनधा"रणवष" / Assessment Year: 2012-13) Assistant Commissioner of Vishal Ashok Bhansali C-112, Grand Paradi Income Tax-19(3) बनाम/ A.K.Marg, Kemps Corner Room No.206, 2nd Floor Vs. Mumbai-400 036 Tardeo Road Mumbai-400 007 "थायीलेखासं./जीआइआरसं./PAN/GIR No. AEIPB-9981-P (अपीलाथ"/Appellant) ("…

ITO, WD-1(4), Kolkata vs. M/S Blue Heaven Griha Nirman Pvt. Ltd., Kolkata

In the result, the appeal by the Revenue is dismissed”

ITA 570/KOL/2015[2006-2007]Status: DisposedITAT Kolkata01 Aug 2018AY 2006-2007

Bench: Hon’Ble Shri Aby. T. Varkey, Jm & Shri M.Balaganesh, Am ] I.T.A No. 570/Kol/2015 Assessment Year : 2006-07 Ito, Ward-1(4), Kolkata -Vs- M/S Blue Heaven Griha Nirman Pvt. Ltd. [Pan: Aaccb 3287 F ] (Appellant) (Respondent)

For Appellant: Shri Goulean Hangshing, CIT DRFor Respondent: Shri J. P. Khaitan, Sr. Counsel
Section 143(1)Section 147Section 148Section 45(3)

…the stock, which necessarily results in imaginary or notional profits to the assessee which he has not actually received. In fact such a notional imaginary profit cannot be taxed. It is a well settled principle as held in Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 (SC) the Constitution Bench judgment that the firm cannot make a profit out of itself The transaction which is not business transaction and does not derive immediate pecuniary gain is not subjected to tax. In the present case by showing the market value of the closing stock the assessee has earned potential profit out of itself in as much as the s…

Shibir India Limited, Kolkata vs. DCIT, Circle-1, Kolkata

In the result, the appeal of the assessee is allowed

ITA 1688/KOL/2016[2007-08]Status: DisposedITAT Kolkata14 Mar 2018AY 2007-08

Bench: Shri P.M. Jagtap & Shri A.T. Varkey

…I.T.A. No. 1688/KOL./2016 Assessment year: 2007­2008 Page 1 of 8 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA ‘C’ BENCH, KOLKATA Before Shri P.M. Jagtap, Accountant Member and Shri A.T. Varkey, Judicial Member I.T.A. No. 1688/KOL/ 2016 Assessment Year: 2007-2008 Shibir India Limited,...........................................................Appellant 25, Princep Street, Kolkata-700 072 [PAN: AAHCS 5421 K] -Vs.- Deputy Commissioner of Income Tax,...............................Respondent Circle-1, Kolkata, P-7, Chowringhee Square, Aayakar Bhawan, Kolkata-700 069 Appearances by: Shri Subash Agarwal, Advocate, f…

Addl CIT 1(1), Mumbai vs. Bennett Coleman & Co Ltd, Mumbai

Appeal of the Revenue is dismissed as above

ITA 3537/MUM/2012[2008-09]Status: DisposedITAT Mumbai08 Jan 2018AY 2008-09

Bench: Shri D.T. Garasia & Shri Rajesh Kumarassessment Year: 2008-09 M/S. Bennett Coleman & Addl. Commissioner Of Co. Ltd., Income Tax, The Time Of India Bldg., Range – 1(1), Vs. Dr. D.N. Road, Room No.538, Mumbai – 400 001 Aayakar Bhavan, Pan: Aaacb4373Q M.K. Marg, Mumbai – 400 020 (Appellant) (Respondent) Assessment Year: 2008-09

For Appellant: Shri S. Venkataraman, A.RFor Respondent: Shri Purushottam Kumar, D.R
Section 10(34)Section 14A

…nding out the true nature of the transaction, the Court must take into consideration the substance of the transaction and not the legal effect of the agreement entered Into and the Supreme Court accepted the proposition. In Sir Kikabhai Premchand v CIT [1953] 24 ITR 506, the Supreme Court had observed "It is well recognised that in revenue cases regard must be had to the substance of the transaction rather than to its mere form. 5 .11 These observations were made the basis for the decision of the Bombay High Court in CIT v Sir Homi Mehta's Executors [1955] 28 ITR 928 Further the Supreme Court in B M Kharwar's ca…

Bennett Coleman & Co. Ltd, Mumbai vs. Asst CIT RG 1(1), Mumbai

Appeal of the Revenue is dismissed as above

ITA 3298/MUM/2012[2008-09]Status: DisposedITAT Mumbai08 Jan 2018AY 2008-09

Bench: Shri D.T. Garasia & Shri Rajesh Kumarassessment Year: 2008-09 M/S. Bennett Coleman & Addl. Commissioner Of Co. Ltd., Income Tax, The Time Of India Bldg., Range – 1(1), Vs. Dr. D.N. Road, Room No.538, Mumbai – 400 001 Aayakar Bhavan, Pan: Aaacb4373Q M.K. Marg, Mumbai – 400 020 (Appellant) (Respondent) Assessment Year: 2008-09

For Appellant: Shri S. Venkataraman, A.RFor Respondent: Shri Purushottam Kumar, D.R
Section 10(34)Section 14A

…nding out the true nature of the transaction, the Court must take into consideration the substance of the transaction and not the legal effect of the agreement entered Into and the Supreme Court accepted the proposition. In Sir Kikabhai Premchand v CIT [1953] 24 ITR 506, the Supreme Court had observed "It is well recognised that in revenue cases regard must be had to the substance of the transaction rather than to its mere form. 5 .11 These observations were made the basis for the decision of the Bombay High Court in CIT v Sir Homi Mehta's Executors [1955] 28 ITR 928 Further the Supreme Court in B M Kharwar's ca…

DCIT, New Delhi vs. M/S. Puri Construction Pvt. Ltd., New Delhi

ITA 754/DEL/2015[2006-07]Status: DisposedITAT Delhi27 Dec 2017AY 2006-07

Bench: Shri B.P. Jain & Shri Sudhanshu Srivastava[Assessment Year: 2006-07] M/S Puri Construction Ltd Vs. The Dy. C.I.T W-82/A, Greater Kailash - Ii Circle - 18 New Delhi New Delhi Pan : Aaacp2760 K

For Appellant: Shri Salil Aggarwal, AdvFor Respondent: Smt. Aparna Karan- CIT [DR]
Section 132(1)Section 143(3)Section 153A

…ined for assessment year 2005-06, its genuineness could only be considered in the assessment year 2005-06 and could not be shifted to the assessment year 2006-07 as the law on this issue has been laid down in the case of Kikabhai Premchand vs. CIT reported in 24 ITR 506 (SC) and CIT vs. S.K. Chitnavis (1932) 2 Company Cases 464 that the assessing officer can only take into consideration income, profit or gains made in that year and is not concerned with the profits or losses for another year. It was thus held that genuineness of expenditure could have been examined only in assessment year 2005- 06 and not in the…

M/S Puri Construction Ltd., New Delhi vs. DCIT, New Delhi

ITA 995/DEL/2011[2006-07]Status: DisposedITAT Delhi27 Dec 2017AY 2006-07

Bench: Shri B.P. Jain & Shri Sudhanshu Srivastava[Assessment Year: 2006-07] M/S Puri Construction Ltd Vs. The Dy. C.I.T W-82/A, Greater Kailash - Ii Circle - 18 New Delhi New Delhi Pan : Aaacp2760 K

For Appellant: Shri Salil Aggarwal, AdvFor Respondent: Smt. Aparna Karan- CIT [DR]
Section 132(1)Section 143(3)Section 153A

…ined for assessment year 2005-06, its genuineness could only be considered in the assessment year 2005-06 and could not be shifted to the assessment year 2006-07 as the law on this issue has been laid down in the case of Kikabhai Premchand vs. CIT reported in 24 ITR 506 (SC) and CIT vs. S.K. Chitnavis (1932) 2 Company Cases 464 that the assessing officer can only take into consideration income, profit or gains made in that year and is not concerned with the profits or losses for another year. It was thus held that genuineness of expenditure could have been examined only in assessment year 2005- 06 and not in the…

DCIT, New Delhi vs. M/S Puri Construction Ltd., New Delhi

ITA 1327/DEL/2011[2006-07]Status: DisposedITAT Delhi27 Dec 2017AY 2006-07

Bench: Shri B.P. Jain & Shri Sudhanshu Srivastava[Assessment Year: 2006-07] M/S Puri Construction Ltd Vs. The Dy. C.I.T W-82/A, Greater Kailash - Ii Circle - 18 New Delhi New Delhi Pan : Aaacp2760 K

For Appellant: Shri Salil Aggarwal, AdvFor Respondent: Smt. Aparna Karan- CIT [DR]
Section 132(1)Section 143(3)Section 153A

…ined for assessment year 2005-06, its genuineness could only be considered in the assessment year 2005-06 and could not be shifted to the assessment year 2006-07 as the law on this issue has been laid down in the case of Kikabhai Premchand vs. CIT reported in 24 ITR 506 (SC) and CIT vs. S.K. Chitnavis (1932) 2 Company Cases 464 that the assessing officer can only take into consideration income, profit or gains made in that year and is not concerned with the profits or losses for another year. It was thus held that genuineness of expenditure could have been examined only in assessment year 2005- 06 and not in the…

Devkant Synthetics (India) P.Ltd, Mumbai vs. Pr CIT 3, Mumbai

In the result, the appeal of the assessee stands allowed

ITA 3153/MUM/2017[2013-14]Status: DisposedITAT Mumbai06 Nov 2017AY 2013-14

Bench: Shri D.T.Garasia, Jm & Shri Rajesh Kumar, Am

For Appellant: Shri Rajeev KhandelwalFor Respondent: Shri B Pruseth
Section 143(3)Section 14ASection 260ASection 263

…with such type of disallowances. The ld. DR relied on the following decisions : a) Rajrnandir Estates Pvt Ltd -386 ITR 162 b) Subhlakshmi Vanijya Pvt. Ltd -155 ITD 171 c) Kalwa Devadattam & Ors-49 ITR 165 d) K.S.N. Bhatt -37 CTR 273 e) Sir Kikabhai Premchand -24 ITR 506 7. We have carefully considered the rival contentions, perused the material placed before us during the course of hearing including the decisions of authorities below and also the decisions relied upon by the parties. We find in the instant case, the revisionary jurisdiction has been exercised by the ld.PCIT setting aside the assessment order u/s…

Bnp Pribas Sa, Mumbai vs. Addl DIT (It) RG 3, Mumbai

ITA 1182/MUM/2015[2010-11]Status: DisposedITAT Mumbai16 Oct 2017AY 2010-11
For Appellant: Shri M.V. SondeFor Respondent: Shri Samuel Darse-CIT-DR
Section 143(2)Section 143(3)Section 254(1)Section 90

…was payment to self, which did not give rise to any income as per the Income-tax Act. In support of this contention, reliance was placed on behalf of the assessee on the decision of Hon'ble Supreme Court in the case of Sir Kikabhai Premchand vs. CT (Central) 24 ITR 506 as well as the decision of Kolkata Special Bench of the ITAT in the case of ABN Amro Bank NV vs. Asst. Director of Income-tax 98 TTJ 295. The contention of the assessee, however, was not accepted by the Ld. CIT (A) and relying on the decision of Mumbai Bench of the ITAT in the case of Dresdner Bank AG vs. Add1. CIT 108 ITD 375, he held that the in…

Religare Technova Global Solutions Ltd, New Delhi vs. ACIT Cir 2(1), Mumbai

In the result, the appeal is partly allowed

ITA 245/MUM/2012[2007-08]Status: DisposedITAT Mumbai09 Dec 2016AY 2007-08

Bench: Shri Saktijit Dey, Jm & Shri N. K. Pradhan, Am

For Appellant: Shri Dhanesh Bafna & Shri RaviFor Respondent: Shri Prakash R. Mane,DR
Section 143(3)Section 14A

…IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI "ी शि"तिजत डे, "या"यक सद"य, एवं "ी एन के "धान, लेखा सद"य, के सम" BEFORE SHRI SAKTIJIT DEY, JM AND SHRI N. K. PRADHAN, AM आयकर अपील सं/ I.T.A. No.245/Mum/2012 ("नधा"रण वष" / Assessment Year: 2007-08) Religare Technova Global ACIT Cir 2(1),Aaykar बनाम/ Solutions Ltd. (Now known as Bhavan,M K Road, Vs. Dion Global Solutions Ltd) D3, Mumbai -20 P3B, District Centre, Saket, New Delhi-110017 "थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACF1917E .. (अपीलाथ" /Appellant) (""यथ" / Respondent) Assessee by: Shri Dhanesh Bafna & Shri Ravi Sawana, AR Department by: Shri Pr…

I.T.O.WD-1(4), Kolkata vs. M/S Blue Heaven Griha Nirman Pvt. Ltd., Kolkata

In the result, the appeal by the Revenue is dismissed

ITA 2270/KOL/2013[2008-09]Status: DisposedITAT Kolkata16 Nov 2016AY 2008-09

Bench: Shri P. M. Jagtap, Am & Shri K. Narasimha Chary, Jm] I.T.A No. 2270/Kol/2013 Assessment Year: 2008-09 Income-Tax Officer, Wd-1(4), Kolkata. Vs. Blue Heaven Griha Nirman Pvt. Ltd. (Pan: Aaccb3287F) (Appellant) (Respondent)

For Appellant: Shri Niraj Kumar, CIT, DRFor Respondent: Shri S. Jhajharia, CA & Shri Sujoy Sen, Advocate
Section 143(1)Section 143(3)Section 147

…the stock, which necessarily results in imaginary or notional profits to the assessee which he has not actually received. In fact such a notional imaginary profit cannot be taxed. It is a well settled principle as held in Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 (SC) the Constitution Bench judgment that the firm cannot make a profit out of itself. The transaction which is not business transaction and does not derive immediate pecuniary gain is not subjected to tax. In the present case by showing the market value of the closing stock the assessee has earned potential profit out of itself in as much as the…