Taparia Tools Ltd. v. JCIT

260 ITR 102High Court2003#1527 most cited

What is Taparia Tools Ltd. v. JCIT authority for?

Under the mercantile system of accounting, revenue and expenses are matched on an accrual basis, comparing income earned and expenses incurred irrespective of cash flow. If the Department seeks to substitute an assessee's chosen method of accounting, the burden is on the Department to prove that the existing method is incorrect or distorts profits.

74

judgments rely on this decision, according to BharatTax’s citation analysis of 366,314 Indian tax judgments — from 2008 to 2025.

Also referred to as

Taparia Tools Ltd. v. JCIT · 260 ITR 102 · Section 145 · mercantile system of accounting · accrual basis · matching concept · burden of proof · substitution of accounting method · completed contract method · distortion of profits · income tax accounting methods

Sections most often in play

Section 143(3)Section 132Section 153ASection 144Section 145Section 153B(1)(b)Section 153DSection 250

Issues it is cited on

section 14a(1)project completion methodpercentage completion methodsection 28(iv)section 53amercantile system of accountingright to receivewithholding taxinterest on securitiesrule of consistencydeemed dividendicds

Judgments citing Taparia Tools Ltd. v. JCIT

Krishna Filaments Ltd, Thane vs. ACIT (OSD-II) (C)-7, Mumbai

In the result, both the appeals of the assessee are allowed partly for statistical purposes (as indicated above)

ITA 1675/MUM/2014[2003-04]Status: DisposedITAT Mumbai15 Jun 2016AY 2003-04

Bench: Sri Mahavir Singh, Jm & Sri Ramit Kochar, Am

Section 143(3)Section 245D(4)Section 35D

…essee was claimed on such NCDs based on the decision of the Hon’ble Supreme Court in the case of Rakesh Shantilal Mardia Vs DCIT [210 Taxman 565 (SC)] and also based on the decision of the Hon’ble Bombay High Court in the case of Taparaia Tools Ltd. Vs. JCIT [260 ITR 102 (Bom.)]. According to the learned Counsel for the assessee interest has to be allowed during the year under consideration since it is genuine and is relatable to the debentures/loans. The learned Counsel for the assessee also argued that the assessee Company has not provided the interest of NCD in its books of account and as such non-provisioning…

Krishna Filaments Ltd, Thane vs. ACIT (OSD-II) (C)-7, Mumbai

In the result, both the appeals of the assessee are allowed partly for statistical purposes (as indicated above)

ITA 1674/MUM/2014[2002-03]Status: DisposedITAT Mumbai15 Jun 2016AY 2002-03

Bench: Sri Mahavir Singh, Jm & Sri Ramit Kochar, Am

Section 143(3)Section 245D(4)Section 35D

…essee was claimed on such NCDs based on the decision of the Hon’ble Supreme Court in the case of Rakesh Shantilal Mardia Vs DCIT [210 Taxman 565 (SC)] and also based on the decision of the Hon’ble Bombay High Court in the case of Taparaia Tools Ltd. Vs. JCIT [260 ITR 102 (Bom.)]. According to the learned Counsel for the assessee interest has to be allowed during the year under consideration since it is genuine and is relatable to the debentures/loans. The learned Counsel for the assessee also argued that the assessee Company has not provided the interest of NCD in its books of account and as such non-provisioning…

DCIT, New Delhi vs. M/S. Friends Buildtech & Developers Pvt. Ltd., New Delhi

In the result, the appeal of the revenue is dismissed

ITA 2102/DEL/2012[2008-09]Status: DisposedITAT Delhi11 Mar 2016AY 2008-09

Bench: Shri A.T. Varkey & Shri Prashant Maharishi

For Appellant: Shri Prashant Khandelwal, CAFor Respondent: Ms. Susan George, Senior DR
Section 145Section 145(3)

…me is binding on the department unless it is shown the chosen method distorts the profits. (iv) Under the mercantile system of accounting, the matching of expenses and revenue (matching concept) is required to be done on accrual basis. (Taparia Tools vs. JCIT 260 ITR 102 (Bom)) (v) That the method followed by the assessee company cannot be called as an unreasonable method and any change in the method is revenue neutral. Further, the tax department cannot change the method of accounting which was accepted by it over the years. 4 ITA No.2102/Del./2012 (vi) That the Government has not specified AS-7 in Section 145…

Four Dimensions Securities (I) Ltd, Mumbai vs. Addl CIT RG 4(1), Mumbai

The appeal of the assessee is allowed for statistical purposes, whereas, the appeal of the Revenue is dismissed

ITA 9085/MUM/2010[2007-08]Status: DisposedITAT Mumbai01 Jan 2016AY 2007-08

Bench: Shri Joginder Singh & Shri Ashwani Tanejaassessment Year: 2007-08 M/S Four Dimensions Addl. Commissioner Of Securities (India) Ltd. Income Tax, Range-4(1), बनाम/ 209-Arcadia Building 2Nd 6Th Floor, Aayakar Bhavan, Vs. Floor Nariman Point, Mumbai-400020 Mumbai-400021 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaacf1734F Assessment Year: 2007-08 Addl. Commissioner Of M/S Four Dimensions Income Tax, Range-4(1), Securities (India) Ltd. बनाम/ 6Th Floor,Aayakar Bhavan, 209-Arcadia Building 2Nd Vs. Mumbai-400020 Floor Nariman Point, Mumbai-400021 (राज"व /Revenue) ("नधा"रती /Assessee) Pan. No.Aaacf1734F

Section 14A

…igh Court, we find merit in the contention of the assessee. So far as, the contention of the ld. DR that the impugned issue is covered in favour of the Revenue in Taparia Tools Ltd. vs 12 Four dimensions Securities India Pvt. Ltd. ITA No.9085/Mum/2010 & JCIT 260 ITR 102 (Bom.). This decision has been reversed by Hon’ble Apex Court in Taparia Tools vs JCIT 372 ITR 605 (SC), order dated 23/03/2015, thus, this ground of the assessee is allowed.” We note that the Tribunal on identical issue has made an elaborate discussion and then decided the issue in favour of the assessee. Following the aforesaid decision, we al…

The ADIT (I.T)3(1) vs. M/S. Honkong & Shanghani Banking Corpn. Ltd

In the result, ITA Nos.2519 and 2520/Mum/2004 by revenue stand dismissed, ITA No

ITA 2519/MUM/2004[1999-2000]Status: DisposedITAT Mumbai20 Nov 2015AY 1999-2000

Bench: S/Shri B.R.Baskaran, Am & Pawan Singh, Jm आयकर अपील सं./I.T.A. No.2519 & 2520/Mum/2004 ("नधा"रण वष" / Assessment Year:1999-2000 & 2000-01) M/S Hongkong & Shanghani Asstt.Direrctor Of Income Tax बनाम/ Banking Corporation Ltd., (International Taxation)-3(1), Vs. 52/60, M G Road, 136, Scindia House, Mumbai-400001 N M Marg, Ballard Estate, Mumbai-400038 .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

Section 143(3)

…e bank V/s DCIT (Bang ITAT) –(2013) 38 taxmann.com 25); c) Bharat Earth Movers V/s CIT -245 ITR 428 (SC); d) Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC); e) Rotork India Pvt. Ltd. Vs. CIT reported in 314 ITR 63 (SC); f) Taparia Tools Ltd v Joint CIT [2003] 260 ITR 102 (Bom),; g) Vinitee Corporation (P) Ltd. (2005) 146 Taxman 313 (Delhi); and h) CIT v. Beema Manufacturers P. Ltd. (2003) 130 Taxman 400 (Mad) 24 and other six appeals 87. We find that the ld.CIT(A) has considered this issue with detailed discussions, we also find that an identical issue had come up before the various forums/ Judicial authorities,…

Four Dimensions Securities (I) Ltd, Mumbai vs. Addl CIT RG 4(1), Mumbai

Appeals are disposed off in terms indicated hereinabove

ITA 1011/MUM/2010[2006-07]Status: DisposedITAT Mumbai28 Oct 2015AY 2006-07

Bench: Shri Joginder Singh & Shri Ramit Kocharassessment Year: 2005-06 M/S Four Dimensions Addl. Commissioner Of Securities (India) Ltd. Income Tax, Range-4(1), बनाम/ 29, Bank Street, 1St Floor, 6Th Floor, Aayakar Bhavan, Vs. Fort, Mumbai Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaacf1734F Assessment Year: 2005-06 Addl. Commissioner Of M/S Four Dimensions Income Tax, Range-4(1), Securities (India) Ltd. बनाम/ 6Th Floor,Aayakar Bhavan, 29, Bank Street, 1St Floor, Vs. Mumbai-400020 Fort, Mumbai (राज"व /Revenue) ("नधा"रती /Assessee) Pan. No.Aaacf1734F Assessment Year: 2006-07 M/S Four Dimensions Addl. Commissioner Of Securities (India) Ltd. Income Tax, Range-4(1), बनाम/ 29, Bank Street, 1St Floor, 6Th Floor, Aayakar Bhavan, Vs. Fort, Mumbai Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaacf1734F

Section 143(1)Section 143(3)Section 94(7)

…’ble Delhi High Court (discussed in the aforesaid order) and Gujarat High Court, we find merit in the contention of the assessee. So far as, the contention of the ld. DR that the impugned issue is covered in favour of the Revenue in Taparia Tools Ltd. vs JCIT 260 ITR 102 (Bom.). This decision has been reversed by Hon’ble Apex Court in 19 Four dimensions Securities India Pvt. Ltd. ITA No.322 & 790/Mum/2009 & Ors cases Taparia Tools vs JCIT 372 ITR 605 (SC), order dated 23/03/2015, thus, this ground of the assessee is allowed. 6. Now, we shall take up the Cross appeal raised by the Revenue (ITA No.790/Mum/2009) (A…

DCIT -4(1), Mumbai vs. Four Dimension Securities (I) Ltd, Mumbai

Appeals are disposed off in terms indicated hereinabove

ITA 790/MUM/2009[2005-2006]Status: DisposedITAT Mumbai28 Oct 2015AY 2005-2006

Bench: Shri Joginder Singh & Shri Ramit Kocharassessment Year: 2005-06 M/S Four Dimensions Addl. Commissioner Of Securities (India) Ltd. Income Tax, Range-4(1), बनाम/ 29, Bank Street, 1St Floor, 6Th Floor, Aayakar Bhavan, Vs. Fort, Mumbai Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaacf1734F Assessment Year: 2005-06 Addl. Commissioner Of M/S Four Dimensions Income Tax, Range-4(1), Securities (India) Ltd. बनाम/ 6Th Floor,Aayakar Bhavan, 29, Bank Street, 1St Floor, Vs. Mumbai-400020 Fort, Mumbai (राज"व /Revenue) ("नधा"रती /Assessee) Pan. No.Aaacf1734F Assessment Year: 2006-07 M/S Four Dimensions Addl. Commissioner Of Securities (India) Ltd. Income Tax, Range-4(1), बनाम/ 29, Bank Street, 1St Floor, 6Th Floor, Aayakar Bhavan, Vs. Fort, Mumbai Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaacf1734F

Section 143(1)Section 143(3)Section 94(7)

…’ble Delhi High Court (discussed in the aforesaid order) and Gujarat High Court, we find merit in the contention of the assessee. So far as, the contention of the ld. DR that the impugned issue is covered in favour of the Revenue in Taparia Tools Ltd. vs JCIT 260 ITR 102 (Bom.). This decision has been reversed by Hon’ble Apex Court in 19 Four dimensions Securities India Pvt. Ltd. ITA No.322 & 790/Mum/2009 & Ors cases Taparia Tools vs JCIT 372 ITR 605 (SC), order dated 23/03/2015, thus, this ground of the assessee is allowed. 6. Now, we shall take up the Cross appeal raised by the Revenue (ITA No.790/Mum/2009) (A…

Four Dimensions Securities (India) Ltd, Mumbai vs. Addl CIT RG 4(1), Mumbai

Appeals are disposed off in terms indicated hereinabove

ITA 322/MUM/2009[2005-2006]Status: DisposedITAT Mumbai28 Oct 2015AY 2005-2006

Bench: Shri Joginder Singh & Shri Ramit Kocharassessment Year: 2005-06 M/S Four Dimensions Addl. Commissioner Of Securities (India) Ltd. Income Tax, Range-4(1), बनाम/ 29, Bank Street, 1St Floor, 6Th Floor, Aayakar Bhavan, Vs. Fort, Mumbai Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaacf1734F Assessment Year: 2005-06 Addl. Commissioner Of M/S Four Dimensions Income Tax, Range-4(1), Securities (India) Ltd. बनाम/ 6Th Floor,Aayakar Bhavan, 29, Bank Street, 1St Floor, Vs. Mumbai-400020 Fort, Mumbai (राज"व /Revenue) ("नधा"रती /Assessee) Pan. No.Aaacf1734F Assessment Year: 2006-07 M/S Four Dimensions Addl. Commissioner Of Securities (India) Ltd. Income Tax, Range-4(1), बनाम/ 29, Bank Street, 1St Floor, 6Th Floor, Aayakar Bhavan, Vs. Fort, Mumbai Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaacf1734F

Section 143(1)Section 143(3)Section 94(7)

…’ble Delhi High Court (discussed in the aforesaid order) and Gujarat High Court, we find merit in the contention of the assessee. So far as, the contention of the ld. DR that the impugned issue is covered in favour of the Revenue in Taparia Tools Ltd. vs JCIT 260 ITR 102 (Bom.). This decision has been reversed by Hon’ble Apex Court in 19 Four dimensions Securities India Pvt. Ltd. ITA No.322 & 790/Mum/2009 & Ors cases Taparia Tools vs JCIT 372 ITR 605 (SC), order dated 23/03/2015, thus, this ground of the assessee is allowed. 6. Now, we shall take up the Cross appeal raised by the Revenue (ITA No.790/Mum/2009) (A…

Piramyd Retail & Merchandising P.Ltd, Mumbai vs. DCIT 5(2), Mumbai

In the result, appeal of the assessee stands allowed

ITA 4848/MUM/2012[2004-05]Status: DisposedITAT Mumbai15 Oct 2015AY 2004-05

Bench: Shri D. Karunakara Rao & Shri Amit Shukla

For Respondent: Shri S K Mahapatra
Section 143(1)Section 143(3)Section 271(1)(c)Section 37Section 37(1)

…ss expenditure’. For coming to this conclusion, he relied upon the decision of Hon’ble Supreme Court in the case of Madras Industrial Investment Corporation, reported in 225 ITR 802 and Bombay High Court decision in the case of Taparia Tools Ltd., reported in 260 ITR 102 which as per the AO has given the legal recognition to the concept of “deferred revenue expenses”. From the stage of the CIT(A) such a disallowance of expenditure was reduced to Rs. 40,55,560/- on the ground that to 3 Piramyd Retail and Merchandising Pvt Ltd ITA 4848/M/2012 this extent the expenditure amount was not verifiable from third party bi…

Ca India Technologies Pvt. Ltd., Mumbai vs. A.C.I.T. RG. 6(2), Mumbai

The appeal of the AO stands dismissed

ITA 8376/MUM/2011[2004-05]Status: DisposedITAT Mumbai07 Oct 2015AY 2004-05
For Appellant: S/Shri Kanchan Kaushal ,Dhanesh Bafna &For Respondent: Shri N.K. Chand -CIT
Section 254(1)Section 271

…ended by the ICAI,that if any change in the method of accounting wass to be made so as to comply with the statutory requirements it could not be considered to be a malafide change and a loss in revenue. The assessee referred to the matter of Taparia Tools Ltd(260 ITR 102)in its support.It also relied upon other cases and argued that it was open to an assessee to make a clean change of the regular method adopted by it irrespective of the resultant loss to the revenue,that change in the method of accounting was made to reflect true and correct picture of the profits,that had this change not been made by the assesse…

ACIT Cir 10(1), Mumbai vs. Ca (India) Technologies P. Ltd ( Formerly Knowan As C.A. Computer Associates (I) P.Ltd, Mumbai

The appeal of the AO stands dismissed

ITA 8106/MUM/2011[2004-05]Status: DisposedITAT Mumbai07 Oct 2015AY 2004-05
For Appellant: S/Shri Kanchan Kaushal ,Dhanesh Bafna &For Respondent: Shri N.K. Chand -CIT
Section 254(1)Section 271

…ended by the ICAI,that if any change in the method of accounting wass to be made so as to comply with the statutory requirements it could not be considered to be a malafide change and a loss in revenue. The assessee referred to the matter of Taparia Tools Ltd(260 ITR 102)in its support.It also relied upon other cases and argued that it was open to an assessee to make a clean change of the regular method adopted by it irrespective of the resultant loss to the revenue,that change in the method of accounting was made to reflect true and correct picture of the profits,that had this change not been made by the assesse…

Ca (India) Technologies P Ltd`, Mumbai vs. Asst CIT 10(1), Mumbai

The appeal of the AO stands dismissed

ITA 8218/MUM/2010[2006-07]Status: DisposedITAT Mumbai07 Oct 2015AY 2006-07
For Appellant: S/Shri Kanchan Kaushal ,Dhanesh Bafna &For Respondent: Shri N.K. Chand -CIT
Section 254(1)Section 271

…ended by the ICAI,that if any change in the method of accounting wass to be made so as to comply with the statutory requirements it could not be considered to be a malafide change and a loss in revenue. The assessee referred to the matter of Taparia Tools Ltd(260 ITR 102)in its support.It also relied upon other cases and argued that it was open to an assessee to make a clean change of the regular method adopted by it irrespective of the resultant loss to the revenue,that change in the method of accounting was made to reflect true and correct picture of the profits,that had this change not been made by the assesse…

Commissioner of Income Tax vs. Jagatjit Industries Ltd

Accordingly, the same stands dismissed without any order as to

ITA/848/2010HC Delhi06 Sept 2010

Bench: HON'BLE THE ACTING CHIEF JUSTICE,HON'BLE MR. JUSTICE MANMOHAN

Section 143(2)Section 260ASection 271(1)(c)

…er accounting year…” [Underlining is ours] 14. In CIT V. Bilahari Investment P. Ltd., [2008] 299 ITR 1 (SC), while dealing with accounting standards, their Lordships referred to the decisions in Taporia Tools Ltd. v. Joint CIT, [2003] 260 ITR 102 (Bombay) and J.K. Industries Ltd. v. Union of India, [2007] 13 Scale 204 and thereafter adverted to the recognition and identification of income under the 1961 Act as is attainable by several methods of accounting. Their Lordships referred to the completed contract method and the percentage of completion method which were the issues in the…

Commnr. of Income Tax, Chennai vs. M/S. Bilahari Investment P. Ltd

Appeals are dismissed

C.A. No.-001625-001625 - 2008Supreme Court27 Feb 2008
For Respondent: M/s Bilahari Investment (P) Ltd

…thod of accounting. 13. Before us, Shri Parag P. Tripathi, learned Additional Solicitor General, relied on the judgment of the Bombay High Court in the case of Taparia Tools Ltd. v. Joint Commissioner of Income-tax reported in [2003] 260 ITR 102 in which the matching principle has been discussed threadbare. We quote hereinbelow the said concept from the judgment, which reads as follows: "The mercantile system of accounting is based on http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5 accrual. Basically, it is a Double Entry System of accounting. Under the mercantile system o…