Sutlej Cotton Mills Ltd. v. CIT

116 ITR 1Supreme Court of India1979#177 most cited

What is Sutlej Cotton Mills Ltd. v. CIT authority for?

A gain arising from the cancellation of a forward exchange contract entered into for the acquisition of a capital asset constitutes a capital receipt. Income-tax liability for such transactions is determined by the specific provisions of the Income Tax Act, independent of the accounting treatment in the books of account.

409

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2007 to 2026.

Also referred to as

Sutlej Cotton Mills Ltd · 116 ITR 1 · capital receipt · foreign exchange gain · forward contract · capital asset · Section 43A · income tax liability · accounting treatment · capital gains

Sections most often in play

Section 14ASection 37(1)Section 115JBSection 143(3)Section 32Section 143(2)Section 142(1)Section 250
Read the full judgment

Issues it is cited on

section 43aeligible businessbook profitssection 115jsection 115jbrevenue expendituresection 80iamercantile system of accountingamalgamationsection 37(1)section 80isection 43

Judgments citing Sutlej Cotton Mills Ltd. v. CIT

ACIT Cen Cir Cir-34, Mumbai vs. Prism Cement Ltd, Mumbai

Appeals are disposed of in terms

ITA 3859/MUM/2010[2006-07]Status: DisposedITAT Mumbai16 May 2016AY 2006-07

Bench: Shri Joginder Singh & Shri Rajendra

Section 143(3)Section 147Section 35E

…आयकर अपील"य अ"धकरण, मुंबई "यायपीठ, सी,मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “C”, MUMBAI "ी जो"ग"दर "संह, "या"यक सद"य एवं "ी राजे"", लेखा सद"य, के सम" Before Shri Joginder Singh, Judicial Member, and Shri Rajendra, Accountant Member ITA NO 5751/Mum/ 2009 Assessment Year: 2005-06 DCIT, CC-34, M/s Prism Cement Ltd. R. No.104, First Floor, 2nd Floor, Rahejas, Main बनाम/ Aayakar Bhavan, Avenue, V.P. Road, Vs. Mumbai-400020 Santacruz (W), Mumbai-400054 (राज"व /Revenue) ("नधा"रती /Assessee) PAN No.AAACP6224L Assessment Year : 2005-06 M/s Prism Cement Ltd. DCIT, CC-34, 2nd Floor, Rahejas, Main R.…

DCIT Cen Cir 34, Mumbai vs. Prism Cement Ltd, Mumbai

Appeals are disposed of in terms

ITA 5751/MUM/2009[2005-06]Status: DisposedITAT Mumbai16 May 2016AY 2005-06

Bench: Shri Joginder Singh & Shri Rajendra

Section 143(3)Section 147Section 35E

…आयकर अपील"य अ"धकरण, मुंबई "यायपीठ, सी,मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “C”, MUMBAI "ी जो"ग"दर "संह, "या"यक सद"य एवं "ी राजे"", लेखा सद"य, के सम" Before Shri Joginder Singh, Judicial Member, and Shri Rajendra, Accountant Member ITA NO 5751/Mum/ 2009 Assessment Year: 2005-06 DCIT, CC-34, M/s Prism Cement Ltd. R. No.104, First Floor, 2nd Floor, Rahejas, Main बनाम/ Aayakar Bhavan, Avenue, V.P. Road, Vs. Mumbai-400020 Santacruz (W), Mumbai-400054 (राज"व /Revenue) ("नधा"रती /Assessee) PAN No.AAACP6224L Assessment Year : 2005-06 M/s Prism Cement Ltd. DCIT, CC-34, 2nd Floor, Rahejas, Main R.…

DCIT, New Delhi vs. M/S. Laxmi Sugar Mills Co. Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 759/DEL/2014[2006-07]Status: DisposedITAT Delhi29 Apr 2016AY 2006-07

Bench: : Shri C.M. Garg & Shri L.P. Sahu

For Appellant: Shri Shravan Gotru, Sr. DRFor Respondent: Shri P.N. Mehta, C.A
Section 143(3)Section 148

…in the books of account is not relevant for ascertaining the real nature of the transaction. The assessee has also given reasons for making extra payment to the farmers for purchase of sugarcane. Hon’ble Supreme Court also in Sutlej Cotton Mills Ltd. vs. CIT, 116 ITR 1 (SC) has observed that the way in which entries are made by an assessee in his books of account is not determinative of the question whether the assessee has earned any profit or 5 ITA No.759/Del./2014 suffered any loss. The ld. DR could not be able to adduce any material on record to show that the above expenditures were incurred by the assessee…

M/S. B O C India Ltd., Kolkata vs. A.C.I.T., Cir-12, Kolkata

In the result, assessee’s appeal is partly allowed for statistical purpose

ITA 669/KOL/2008[2003-04]Status: DisposedITAT Kolkata19 Apr 2016AY 2003-04

Bench: Shri Mahavir Singh & Shri Waseem Ahmed

Section 143(3)Section 28

…se of Badridas Daga v. CIT 34 ITR 10 wherein it was held that loss other than capital loss which is really incidental to the business is allowable under section 28 of the Income Tax Act. The assessee also relied in the case of Satluj Cotton Mills Ltd. Vs. CIT 116 ITR 1 wherein it was held that the loss on account of trading assets was allowable deduction and the loss on account of capital asset was not allowable deduction. In the instant case the security deposits were classified as current assets i.e. trading assets ITA No.1071& 669/Kol/2008 A.Y. 2003-04 DCIT Cir-12 Kol. v. M/s BOC India Ltd. Page 4 as these we…

D.C.I.T., Cir-12, Kolkata vs. M/S. B O C India Ltd

In the result, assessee’s appeal is partly allowed for statistical purpose

ITA 1071/KOL/2008[2003-04]Status: DisposedITAT Kolkata19 Apr 2016AY 2003-04

Bench: Shri Mahavir Singh & Shri Waseem Ahmed

Section 143(3)Section 28

…se of Badridas Daga v. CIT 34 ITR 10 wherein it was held that loss other than capital loss which is really incidental to the business is allowable under section 28 of the Income Tax Act. The assessee also relied in the case of Satluj Cotton Mills Ltd. Vs. CIT 116 ITR 1 wherein it was held that the loss on account of trading assets was allowable deduction and the loss on account of capital asset was not allowable deduction. In the instant case the security deposits were classified as current assets i.e. trading assets ITA No.1071& 669/Kol/2008 A.Y. 2003-04 DCIT Cir-12 Kol. v. M/s BOC India Ltd. Page 4 as these we…

M/S. Krishak Bharati Cooperative Ltd., New Delhi vs. ACIT, New Delhi

In the result, both the Appeals filed by the Assessee stand allowed

ITA 6786/DEL/2015[2011-12]Status: DisposedITAT Delhi09 Mar 2016AY 2011-12

Bench: Shri H.S. Sidhu & Shri O.P. Kant

For Appellant: Sh. Vijay Ranjan, Adv. Sh. VartikFor Respondent: Sh. Amit Mohan Govil, CIT(DR)
Section 143(2)Section 143(3)Section 263

…tled position of law that accounting entries are not determinative of taxability under the Income Tax Act, 1961. For this proposition, reference is made to the following Supreme Court decisions which settle this issue: (i) Sutlej Cotton Mills Limited Vs. CIT 116 ITR 1 (ii) Kedarnath Jug Mfg. Co. Limited vs. CIT 82 ITR 363 Further, it is a well settled principle of taxation that no income can be taxed on hypothetical basis and only real income can be brought to tax under the Income Tax Act. For this proposition, kind reference is invited to the following cases: (i) Shoorji Vallabhdas & Co. 46 ITR 144 (SC) (ii)…

M/S. Krishak Bharati Cooperative Ltd., New Delhi vs. ACIT, New Delhi

In the result, both the Appeals filed by the Assessee stand allowed

ITA 6785/DEL/2015[2010-11]Status: DisposedITAT Delhi09 Mar 2016AY 2010-11

Bench: Shri H.S. Sidhu & Shri O.P. Kant

For Appellant: Sh. Vijay Ranjan, Adv. Sh. VartikFor Respondent: Sh. Amit Mohan Govil, CIT(DR)
Section 143(2)Section 143(3)Section 263

…tled position of law that accounting entries are not determinative of taxability under the Income Tax Act, 1961. For this proposition, reference is made to the following Supreme Court decisions which settle this issue: (i) Sutlej Cotton Mills Limited Vs. CIT 116 ITR 1 (ii) Kedarnath Jug Mfg. Co. Limited vs. CIT 82 ITR 363 Further, it is a well settled principle of taxation that no income can be taxed on hypothetical basis and only real income can be brought to tax under the Income Tax Act. For this proposition, kind reference is invited to the following cases: (i) Shoorji Vallabhdas & Co. 46 ITR 144 (SC) (ii)…

Eih Limited., Kolkata vs. C.I.T Kol - III, Kolkata

In the result, the order passed by the Learned CIT u/s 263 of the Act is set aside and the appeal of the assessee is allowed

ITA 529/KOL/2013[2008-2009]Status: DisposedITAT Kolkata19 Feb 2016AY 2008-2009

Bench: : Shri N.V. Vasudevan & Shri M. Balaganesh

For Appellant: Shri R.N Bajoria, Sr. Advocate &For Respondent: G. Mallikarjun, CIT, ld.DR
Section 143(3)Section 263Section 38Section 38(2)

…ng the taxable income under the provisions of the Act. In support of this proposition, he relied on the following decisions :- • Kedarnate Jute Manufacturing Co Ltd vs CIT reported in (1971) 82 ITR 363 (SC) • Sutlej Cotton Mills Ltd vs CIT reported in (1979) 116 ITR 1 (SC) 4.2.2. He further argued that the claim of lease rentals have been accepted by the revenue in all the earlier years in scrutiny assessment proceedings on the same set of facts and hence the order passed by the Learned AO cannot be termed as erroneous. In support of this proposition, he relied on the following decisions :- • Radhasoami Satsan…

DCIT, Circle - 11, Kolkata vs. M/S. Eveready Industries India Ltd., Kolkata

In the result appeal by the revenue is dismissed

ITA 94/KOL/2012[2005-06]Status: DisposedITAT Kolkata03 Feb 2016AY 2005-06

Bench: Hon’Ble Shri N.V.Vasudevan, Jm & Shri M.Balaganesh, Am] Assessment Year : 2005-06

For Appellant: MD.Ghayas Uddin, JCIT, Sr.DR
Section 41(1)Section 43B

…counts on mercantile basis; deduction is permissible once the assessee establishes that a liability or loss accrued during the relevant year. In this regard reference was made to observation of the Supreme Court in the case of, Sutlej Cotton Mills Ltd Vs CIT (116 ITR 1):- "It is now well settled that the way in which entries are made by an assessee in his books of account are not determinative of the question whether the asesseee has earned profit or suffered any loss. The assessee may by making entries which are not in accordance with proper principle of accounting conceal profit or show loss and entries made b…

ACIT, New Delhi vs. M/S. Orient Abrasives Ltd., New Delhi

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

ITA 940/DEL/2012[2008-09]Status: DisposedITAT Delhi22 Jan 2016AY 2008-09

Bench: : Shri C.M. Garg & Shri L.P. Sahu

For Appellant: Sh. Tarandeep Singh, C.AFor Respondent: Sh. P. Dam Kanunjna, Sr. DR
Section 80I

…A), in appeal by assessee, deleted the addition after accepting the contention of assessee that the foreign currency loan was taken to acquire a capital asset and following the decision of Hon’ble Supreme Court in the case of Sutlej Cotton Mills Ltd. vs. CIT, 116 ITR 1 (SC), observed that therefore, any gain arising on account of fluctuation in the value of the currency would not be exigible to tax. Being aggrieved, the Revenue is in appeal before us. 3. During the course of hearing, the ld. DR relying upon the order of the AO, submitted that admittedly, no evidence in support of the stand that the foreign curre…

ITO, Ward - 12(3), Kolkata vs. Umt Investment Ltd., Kolkata

In the result, the appeal of the revenue is allowed subject to the direction contained hereinabove

ITA 554/KOL/2009[2004-05]Status: DisposedITAT Kolkata30 Dec 2015AY 2004-05

Bench: : Shri Mahavir Singh & Shri M. Balaganesh

For Appellant: S/Shri Nageswar Rao, AdvocateFor Respondent: Shri G.Mallikarjun, CIT/ld. DR
Section 143(3)Section 145(2)

…UMT Investment Ltd 3 AO (viz Coca Cola Exp. Corpn 158 ITR 446 ) is in favour of the assessee. e. The case on which reliance placed by the AO on the principle of revenue recognition (63 ITR 328) can be distinguished on facts. f. Sutlej Cotton Mills Ltd case (116 ITR 1) , the case on which AO placed reliance to distinguish capital account with that of revenue account, the Apex court only laid down the general principles for deciding the nature of ‘gain’ and the facts can be distinguished. g. Foreign exchange gain is on account of fixed capital and not circulating capital. h. The gain is only contingent and notion…

Ambattur Clothing Ltd., Chennai vs. DCIT, Chennai

In the result, the appeals of the assessee in ITA Nos

ITA 910/CHNY/2015[2010-11]Status: DisposedITAT Chennai28 Dec 2015AY 2010-11

Bench: Shri Chandra Poojari & Shri V. Durga Raoआयकर अपील सं./ I.T.A. Nos.1436, 1643/Mds/2014, 910/Mds/2015 ("नधा"रण वष" / Assessment Year : 2008-09, 2009-10 & 2010-2011)

For Appellant: Shri. T. Banusekar, C.AFor Respondent: Shri. Rajib Kumar Hota, IRS, CIT
Section 10BSection 14ASection 14A(2)

….910/Mds/2015. method of accounting that has been regularly followed would have to be continued for the sake of consistency. In coming to these conclusions, the Supreme Court followed the rationale of its earlier decision in Sutlej Cotton Mills Ltd. vs. CIT 116 ITR 1 where it was held that profit or loss in fluctuation of foreign currency would ordinarily be a trading profit or loss, if held on the revenue account as a trading asset or as part of circulating capital earmarked in business. The Id. AR has clarified that the forward contract was on revenue account and not for capital assets. The decision so re…

Ambattur Clothing Ltd., Chennai vs. DCIT, Chennai

In the result, the appeals of the assessee in ITA Nos

ITA 1643/CHNY/2014[2009-10]Status: DisposedITAT Chennai28 Dec 2015AY 2009-10

Bench: Shri Chandra Poojari & Shri V. Durga Raoआयकर अपील सं./ I.T.A. Nos.1436, 1643/Mds/2014, 910/Mds/2015 ("नधा"रण वष" / Assessment Year : 2008-09, 2009-10 & 2010-2011)

For Appellant: Shri. T. Banusekar, C.AFor Respondent: Shri. Rajib Kumar Hota, IRS, CIT
Section 10BSection 14ASection 14A(2)

….910/Mds/2015. method of accounting that has been regularly followed would have to be continued for the sake of consistency. In coming to these conclusions, the Supreme Court followed the rationale of its earlier decision in Sutlej Cotton Mills Ltd. vs. CIT 116 ITR 1 where it was held that profit or loss in fluctuation of foreign currency would ordinarily be a trading profit or loss, if held on the revenue account as a trading asset or as part of circulating capital earmarked in business. The Id. AR has clarified that the forward contract was on revenue account and not for capital assets. The decision so re…

Ambattur Clothing Ltd., Chennai vs. DCIT, Chennai

In the result, the appeals of the assessee in ITA Nos

ITA 1436/CHNY/2014[2008-09]Status: DisposedITAT Chennai28 Dec 2015AY 2008-09

Bench: Shri Chandra Poojari & Shri V. Durga Raoआयकर अपील सं./ I.T.A. Nos.1436, 1643/Mds/2014, 910/Mds/2015 ("नधा"रण वष" / Assessment Year : 2008-09, 2009-10 & 2010-2011)

For Appellant: Shri. T. Banusekar, C.AFor Respondent: Shri. Rajib Kumar Hota, IRS, CIT
Section 10BSection 14ASection 14A(2)

….910/Mds/2015. method of accounting that has been regularly followed would have to be continued for the sake of consistency. In coming to these conclusions, the Supreme Court followed the rationale of its earlier decision in Sutlej Cotton Mills Ltd. vs. CIT 116 ITR 1 where it was held that profit or loss in fluctuation of foreign currency would ordinarily be a trading profit or loss, if held on the revenue account as a trading asset or as part of circulating capital earmarked in business. The Id. AR has clarified that the forward contract was on revenue account and not for capital assets. The decision so re…

ACIT, Circle - 7, Kolkata vs. C.D. Equifinance Pvt. Ltd., Kolkata

In the result, all the appeals filed by the Revenue are dismissed, while the appeal of the assessee is allowed

ITA 1790/KOL/2008[2005-06]Status: DisposedITAT Kolkata09 Dec 2015AY 2005-06

Bench: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi

Section 10(38)

…fore, the treatment given by the assessee to these shares/units in the books of account is not material. The Hon'ble Supreme Court in the cases of Kedarnath Jute Manufacturing Co. Ltd. vs. CIT [1971] 82 ITR 363 (SC) and Sutlej Cotton Mills Ltd. vs. CIT [1979] 116 ITR 1 (SC) has held that accounting entries alone are not determinative of the exact nature, character and scope of the transactions. 7(a). The assessee has received speculation profit of Rs.3,17,35,947/-. This profit has been earned by the assessee in "Futures and Options" transactions. The transactions have taken place throughout the year. An investor…

DCIT, New Delhi vs. M/S Givo Ltd., Delhi

In the result, the appeal of the filed by the Revenue is dismissed

ITA 2887/DEL/2013[2006-07]Status: DisposedITAT Delhi06 Nov 2015AY 2006-07

Bench: Shri N.K. Saini, Am & Smt. Beena A. Pillai, Jm Assessment Year : 2006-07

For Appellant: Shri Vinod Bindal &For Respondent: Shri T. Vasanthan, Sr. DR
Section 143(1)Section 143(3)Section 37(1)

…e u/s 37(1) of the Act since all conditions laid down in that section were fully met. Reliance has been placed on the following judicial decisions:- 1. CIT Vs Woodward Governor India (P) Ltd. (2007) 294 ITR 451 (Del). 2. Sutlej Cotton Mills Ltd. Vs CIT (1979) 116 ITR 1 (SC). 3. CIT Vs International Combustion (I) Pvt. Ltd. (1982) 137 ITR 184 (Cal.). 4. CIT Vs V.S. Dempo & Co. (P) Ltd. (1994) 206 ITR 291 (Bom). 5. CIT Vs IBM World Trade Corporation (1986) 161 ITR 673 (Bom.). 6. Oil & Natural Gas Corpn. Ltd. Vs DCIT (2002) 83 ITD 151 (Del.) (SB). I have considered the submissions of the appellant, the findings of t…

Inventurus Knowledge Services P.Ltd, Navi Mumbai vs. ITO 5(2)(1), Mumbai

In the result appeal of the assessee company is partly allowed

ITA 5922/MUM/2013[2009-10]Status: DisposedITAT Mumbai21 Oct 2015AY 2009-10

Bench: Shri Joginder Singh & Shri Ramit Kocharassessment Year: - 2009-10 Inventurus Knowledge Services V. Income Tax Officer Pvt. Ltd. 5(2)(1), C/O. Seren Properties Pvt. Ltd. 525, Aaykar Bhavan, (Sez), Unit No. 204, Build No. 5, M.K. Road, Mindspace Airoli Camp, Plot No. Mumbai - 400 020. 3, Gat No. 95, Kalwa Trans, Thane Creek, Midc Industrial Area, Thane Belapur Road, Airoli, Navi Mumbai – 400 708. Pan/Gir No. Aabck4601P

…r scrutiny of the said decision indicates that the Calcutta High Court in this case relied upon its earlier judgment in Sutlej Cottons Mills Ltd v CIT (1971) 81 ITR 641. It will be recalled that the Hon'ble Supreme Court in Sutlej Cotton Mills Ltd v CIT(1979) 116 ITR 1 reversed the aforesaid decision of the Calcutta High Court on this point and held that such liability would be treated as a trading loss. In that view of the matter, the reliance placed by the revenue on the judgment of the Calcutta High Court in Bestobell (India Ltd., (1979) 117 ITR 789 appears misplaced." 56. The controversy stands now resolved i…

Ircon International Ltd vs. Deputy Commissioner of Income Tax

ITA/37/2000HC Delhi15 May 2015
Section 143(3)Section 260ASection 28

…ITA 37/2000 Page 1 $~ * IN THE HIGH COURT OF DELHI AT NEW DELHI RESERVED ON: 19.03.2015 % PRONOUNCED ON: 15.05.2015 + ITA 37/2000 IRCON INTERNATIONAL LTD. ..... Appellant Through: Mr. V.Giri, Sr. Advocate with Mr. Tanmay Mehta, Advocate. versus DEPUTY COMMISSIONER OF INCOME TAX ..... Respondent Through: Mr. Kamal Sawhney, Sr. Standing Counsel with Mr. Basabraj Chakraborty and Mr. Shikhar Garg, Advocates. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K. GAUBA JUSTICE S.RAVINDRA BHA…

Commissioner of Income Tax-VI vs. Vrm India Ltd

ITA/318/2014HC Delhi18 Mar 2015
Section 143(3)Section 260Section 80Section 80I

…of the assessee as to the contractors only. Even admission of the assessee is held to be not conclusive as held by the Hon’ble Delhi High Court in the case of Faster Industries Ltd. 316 ITR 260. Hon’ble Supreme Court in the case of Staluj Cotton Mills -116 ITR 1 observed that the way in which entries are made by an assessee in his books of account is not determinative of the question whether the assessee has earned any profit or suffered any loss. The assessee may, by making entries which are not in conformity with the proper principles of accountancy, concealed profit or showed loss and the entries…

Commissioner of Income Tax-VI vs. Vrm India Ltd

ITA/320/2014HC Delhi18 Mar 2015
Section 143(3)Section 260Section 80Section 80I

…of the assessee as to the contractors only. Even admission of the assessee is held to be not conclusive as held by the Hon’ble Delhi High Court in the case of Faster Industries Ltd. 316 ITR 260. Hon’ble Supreme Court in the case of Staluj Cotton Mills -116 ITR 1 observed that the way in which entries are made by an assessee in his books of account is not determinative of the question whether the assessee has earned any profit or suffered any loss. The assessee may, by making entries which are not in conformity with the proper principles of accountancy, concealed profit or showed loss and the entries…