Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT

227 ITR 172Supreme Court of India1997#96 most cited

What is Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT authority for?

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

621

judgments rely on this decision, according to BharatTax’s citation analysis of 371,887 Indian tax judgments — from 2007 to 2026.

Also referred to as

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT · 227 ITR 172 · Section 28 · Section 56 · Section 57 · income from other sources · business income · interest income · commencement of business · capitalization of interest · year of expenditure claim

Also reported as

141 CTR 387

Sections most often in play

Section 250Section 143(3)Section 41(1)Section 14ASection 40(a)(ia)Section 37(1)Section 147Section 28(iv)

Issues it is cited on

section 57profits and gains of business or professionsection 56section 32revenue expenditureincome from other sourcessection 28section 37(1)capital expendituresection 43section 37previous year

Judgments citing Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT

Olympia Tech Park (Chennai) Pvt. Ltd., Chennai vs. ITO, Chennai

In the result, the appeal of the assessee is allowed for

ITA 2065/CHNY/2016[2012-13]Status: DisposedITAT Chennai25 Jan 2017AY 2012-13

Bench: Shri Abraham P. George

For Appellant: Shri. M.I. Sirish, C.AFor Respondent: Shri. Ashish Tripathi, IRS, JCIT

…per ld. Assessing Officer assessee was still to set up its business. Since it had no income from its operations in the relevant previous year, he applied the judgment of Hon’ble Apex Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd vs. CIT 227 ITR 172 and held that such interest was to be taxed under the head ‘’income from other sources’’. An addition of "8,40,320/- was made. 3. Aggrieved, assessee moved in appeal before the ld. Commissioner of Income Tax (Appeals). Argument of the assessee was that it had commenced its business activities before the previous year relevant to preceding as…

DCIT (Ltu), New Delhi vs. M/S. Power Finance Corporation Ltd., New Delhi

In the result, all the three appeals filed by the Revenue in ITA Nos

ITA 5918/DEL/2013[2001-02]Status: DisposedITAT Delhi20 Jan 2017AY 2001-02

Bench: Sh. S.K. Yadav & Sh. O.P. Kant

Section 36(1)(viii)

…hich the assessee could claim deduction u/s 36(l)(viii), is not correct and certainly not as per the law. In this regard reliance is placed on the decision of Hon’ble Supreme Court in the case of M/s. Tuticorin Alkalies Chemical & Fertilizers Ltd. reported in 227 ITR 172 (SC). As per the decisions, principles of accountancy cannot over ride the provisions of tax statutes. It may also be added that the assessee has deviated from the accounting principles followed consistently by it in earlier years. Thus it is clear that the excess deduction claimed in the revised return on account of 36(l)(viii) of Rs. 12,41,83,1…

DCIT (Ltu), New Delhi vs. M/S. Power Finance Corporation Ltd., New Delhi

In the result, all the three appeals filed by the Revenue in ITA Nos

ITA 5917/DEL/2013[2000-01]Status: DisposedITAT Delhi20 Jan 2017AY 2000-01

Bench: Sh. S.K. Yadav & Sh. O.P. Kant

Section 36(1)(viii)

…hich the assessee could claim deduction u/s 36(l)(viii), is not correct and certainly not as per the law. In this regard reliance is placed on the decision of Hon’ble Supreme Court in the case of M/s. Tuticorin Alkalies Chemical & Fertilizers Ltd. reported in 227 ITR 172 (SC). As per the decisions, principles of accountancy cannot over ride the provisions of tax statutes. It may also be added that the assessee has deviated from the accounting principles followed consistently by it in earlier years. Thus it is clear that the excess deduction claimed in the revised return on account of 36(l)(viii) of Rs. 12,41,83,1…

DCIT (Ltu), New Delhi vs. M/S. Power Finance Corporation Ltd., New Delhi

In the result, all the three appeals filed by the Revenue in ITA Nos

ITA 4059/DEL/2009[1996-97]Status: DisposedITAT Delhi20 Jan 2017AY 1996-97

Bench: Sh. S.K. Yadav & Sh. O.P. Kant

Section 36(1)(viii)

…hich the assessee could claim deduction u/s 36(l)(viii), is not correct and certainly not as per the law. In this regard reliance is placed on the decision of Hon’ble Supreme Court in the case of M/s. Tuticorin Alkalies Chemical & Fertilizers Ltd. reported in 227 ITR 172 (SC). As per the decisions, principles of accountancy cannot over ride the provisions of tax statutes. It may also be added that the assessee has deviated from the accounting principles followed consistently by it in earlier years. Thus it is clear that the excess deduction claimed in the revised return on account of 36(l)(viii) of Rs. 12,41,83,1…

M/S Emta Steel & Energy Limited, Kolkata vs. DCIT, Central Circle - Xvi, Kolkata

In the result, the appeal of the assessee is dismissed

ITA 1018/KOL/2012[2007-08]Status: DisposedITAT Kolkata06 Jan 2017AY 2007-08

Bench: Shri P.M. Jagtap & Shri N.V. Vasudevan

Section 153A

…sessing Officer and the same was brought to tax by him in the hands of the assessee under the head “income from other sources” by relying on the decision of the Hon’ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Limited –vs.- CIT [227 ITR 172]. On appeal, the ld. CIT(Appeals) upheld the order of the Assessing Officer on this issue on the ground that the facts involved in the case of the assessee were more similar to the facts involved in the case of Tuticorin Alkali Chemicals and Fertilizers Limited (supra) relied upon by the Assessing Officer rather than the facts involved in the cas…

Addl.C.I.T. RG. 5(2), Mumbai vs. C.A. India Technologies Pvt. Ltd., Mumbai

The appeal of the AO is dismissed

ITA 17/MUM/2012[2005-06]Status: DisposedITAT Mumbai04 Jan 2017AY 2005-06
For Appellant: Shri Dhanesh Bafna and Shri Ravi SawnnaFor Respondent: Shri N.K. Chand-CIT
Section 143(3)Section 254(1)

…आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, , , , मुंबई आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण मुंबई मुंबई “ “ “ “ केकेकेके” ” ” ” खंडपीठ मुंबई खंडपीठ खंडपीठ खंडपीठ Income-tax Appellate Tribunal -“K”Bench Mumbai सव"ी सव"ी सव"ी राजे"" सव"ी राजे"" राजे"",लेखा राजे"" लेखा लेखा सद"य लेखा सद"य सद"य एवं सद"य एवं एवं, , , , शि"जीत डे एवं शि"जीत डे शि"जीत डे, "याियक शि"जीत डे "याियक "याियक सद"य "याियक सद"य सद"य सद"य Before S/Shri Rajendra,Accountant Member and Saktijit Dey,Judicial Member आयकर आयकर अपील अपील संसंसंसं/ ITA No.17/Mum/2012 : िनधा"रण िनधा"रण वष" वष"/Assessment Year-2005-06 आयकर आयकर अपील अपील िनधा"रण िनधा"रण व…

Horizon Cuntry Wide Logistics Ltd, Mumbai vs. ACIT 1(2), Mumbai

In the result, appeal filed by the assessee is partly allowed

ITA 6328/MUM/2014[2009-10]Status: DisposedITAT Mumbai21 Dec 2016AY 2009-10

Bench: Shri B.R. Baskaran (Am) & Shri Amit Shukla (Jm)

Section 35DSection 56

…e from pre-operative expenses and accordingly did not offer the same as its income while computing total income. The Assessing Officer, by pacing reliance on the decision of Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. (227 ITR 172) and also on the decision rendered by Hon'ble Madras High Court in the case of South India Shipping Corporation Ltd. (240 ITR 24) held that interest income is assessable as income of the assessee under the head “income from other sources” u/s. 56 of the Act. Accordingly, he assessed the above said income of ` 3,28,17,073/- as income of the assess…

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 subsequent year. The assessee is free to take remedial measures permissible in law in the A.Y. 2008-09 where it has claimed to have offered the said income. 3.7.7 The Hon'ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 227 ITR 172 (SC) has held 'It is true that this court has very often referred to accounting practice for ascertainment of profit made by a company or value of the assets of a company. But when the question is whether a receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or not, the question has to be deci…

M/S. Hindustan Petroleum Corporation Ltd., Mumbai vs. Addl. CIT. RG. - 1(1), Mumbai

In the result, appeal of the Revenue is dismissed

ITA 2736/MUM/2007[2003-2004]Status: DisposedITAT Mumbai23 Nov 2016AY 2003-2004

Bench: Shri R.C. Sharma & Shri Pawan Singh

For Respondent: Shri Rahul Raman, (CIT-DR)
Section 14ASection 253Section 32(1)(ii)Section 35Section 35ASection 36(1)(iii)Section 37(1)Section 80MSection 86

…t AO has treated the Administrative Expenses incurred on Engineering Project and the ld. CIT(A) while considering this ground of appeal concurred with the finding of AO. 19. The Hon’ble Supreme Court in Tuticorin alkali Chemicals and Fertilizers Ltd. vs. CIT (227 ITR 172(SC) held that when the question is whether a receipt of money is taxable or not, or whether certain deduction from receipt are permissible in law or not. The question has to be decided according to the principle of law and not in accordance with the Accounting practice. The Hon’ble Apex Court held that Accounting Practices cannot be override sect…

The Commissioner of Income Tax vs. The Nagarbail Salt-Owners

Appeal is dismissed without any order as to costs

ITA/100067/2015HC Karnataka19 Nov 2016

Bench: Offering The Profit For Tax?”

Section 143(2)Section 143(3)Section 147Section 148Section 2(31)Section 260ASection 44ASection 80P(1)(d)

…iety is diverted as expenses before offering to tax. In support of this contention, Revenue has placed reliance on the following rulings: i) Judgment of Hon’ble Supreme Court in the case of TUTICORIN ALKALI CHEMICALS & FERTILIZERS Ltd v. CIT reported in 227 ITR 172 (SC) to contend that an issue will have to be decided on the principle of law and not in accordance with the accounting practice; ii) Income Tax Officer v. C H Atchaiah reported in 218 ITR 239 (SC) to contend that if the income is of an ‘association of persons’, then, in law, it is the association alone which has to be taxed. iii)…

Principal Commissioner of Income-Tax-02 vs. Bussan Auto Finance India Pvt. Ltd

ITA/702/2016HC Delhi08 Nov 2016
Section 260ASection 71

…ess. The Income Tax Appellate Tribunal (ITAT) affirmed the order of the CIT(A). Learned counsel for the Revenue contends that the impugned order is erroneous and contrary to the law declared by the Supreme Court in Tuticorin Alkali & Chemicals Ltd. v. CIT 227 ITR 172 as well as CIT v. Whirlpool of India Limited 2009 (185) Taxmann 387. It was submitted that the business activity, i.e. NBFC could not by law be said to have started or commenced or being established before the license was even obtained. The license was in fact obtained on 09.04.2008. Therefore, all income derived and expenditure incurred fo…

DCIT 7(2), Mumbai vs. Swan Energy Ltd, Mumbai

In the result appeal filed by the Revenue is dismissed

ITA 5442/MUM/2013[2008-09]Status: DisposedITAT Mumbai24 Oct 2016AY 2008-09

Bench: Shri R.C. Sharma() & Shri Amarjeet Singh () Assessment Year: 2008-09

For Appellant: Shri. J.P. BairagraFor Respondent: Shri. H.N. Singh
Section 143(3)

…terest income. The question for consideration is as to whether this interest was assessable under the head “Business Income” as claimed by the appellant or under the head “ Income from other Sources” as held by AO. In the case of Tuticorin Alkaline Chemicals, 227 ITR 172 (SC) the interest earned before commencement of business was held to be income fro other sources. In the case of Bokaro Steel Ltd. 236 ITR 315 (SC) the rent received from contractor for hiring accommodation and other things were held to be capital receipts deductible from cost of construction. Such rent was also received prior to commencement of…

Wondervalue Realty Developers P.Ltd, Mumbai vs. ITO WD 5(3)(4), Mumbai

In the result, the assessee’s is allowed for statistical purposes

ITA 6059/MUM/2014[2010-11]Status: DisposedITAT Mumbai05 Oct 2016AY 2010-11

Bench: Shri Sanjay Arora, Am & Shri Amarjit Singh, Jm आयकर अपील सं./I.T.A. No. 6059/Mum/2014 ("नधा"रण वष" / Assessment Year: 2010-11) Wondervalue Realty Developers P. Ltd. Ito, Ward 5(3)(4), बनाम/ Aaykar Bhavan, 5Th Floor, 505, Ceejay House, Dr. Annie Besant Road, Worli, Mumbai-400 018 New Marine Lines, Mumbai Vs. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaacw 8249 C (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri Mandar Vaidya ""यथ" क" ओर से/Respondent By : Shri Airiju Jaikaran

For Appellant: Shri Mandar VaidyaFor Respondent: Shri Airiju Jaikaran
Section 143(3)Section 56

…), this was not valid. The interest income is on funds deemed surplus for the time being and, accordingly, assessable as ‘income from other sources’ u/s. 56 of the Act. Reliance was placed by him on Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT [1997] 227 ITR 172 (SC) and CIT vs. L & T Mcneil Ltd. (1993) 202 ITR 662 (Bom). The claim qua administrative expenditure and depreciation was even otherwise inadmissible as the business had not been set up. The assessee’s case in this regard, made out with reference to the offer letter from MHADA, i.e., for redevelopment of property, was found not tenable as the sa…

ITO, New Delhi vs. M/S Iffco Chhattisgarh Power Ltd., New Delhi

In the result, Appeal filed by the Revenue Stands dismissed

ITA 6483/DEL/2015[2011-12]Status: DisposedITAT Delhi02 Sept 2016AY 2011-12

Bench: Shri H.S. Sidhua.Y. : 2011-12

For Appellant: SH. SURENDER KUMAR, CAFor Respondent: Sh. FR MEENA, SR. DR

…009) 315 ITR 255 and also upon the Hon’ble Supreme Court decision in the case of M/s Bokaro Steel Limited (1999) 236 ITR 315 without appreciating the ratio of Hon’ble Supreme Court judgment in the case of M/s Tuticorin Alkalies Chemicals & Fertilizers Limited 227 ITR 172 3. The appellant craves to add, alter, amend, modify, add or forego any ground of appeal at any time before or during the hearing of the appeal.” 2. From the above, I find that the tax effect in the Revenue’s Appeal is less than Rs.10,00,000/-, therefore, the Department’s Appeal is not maintainable, in view of the Circular No. 21/2015 dated 10th…

ACIT, New Delhi vs. M/S. Porbandar Solar Power Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 6539/DEL/2015[2012-13]Status: DisposedITAT Delhi30 Aug 2016AY 2012-13

Bench: Shri H.S. Sidhuassessment Year: 2012-13

For Appellant: Shri Sanjeev Kapoor, CAFor Respondent: Sh. FR Meena, Sr. DR
Section 143(1)Section 143(2)Section 143(3)

…ing up its 4 plant and machinery, such receipts will go to reduce the cost of its assets. These are receipts of a capital nature and cannot be taxed as income. The AO has relied on the ratio of Tuticorin Alkali Chemicals and Fertilizers Ltd. VS. CIT (1997) 227 ITR 172. The AO has held that short term deposits has been made by the appellant out of surplus funds which were not immediately required and therefore parked in FDRs. It is however noted that in the previous year, the audited financials reflect that the appellant had "Current Liabilities” of Rs.13,23,82,781/- and a corresponding "Cash and Bank Balanc…

Mumbai Integrated Sez Ltd ( Formelry Known As Gujarat Positra Port Infrastructures Ltd), Mumbai vs. DCIT Cir 2(2), Mumbai

In the result, Assessee’s appeal is partly allowed

ITA 3928/MUM/2010[2004-05]Status: DisposedITAT Mumbai23 Aug 2016AY 2004-05

Bench: Shri Shailendra Kumar Yadav & Shri Rajesh Kumar.

For Appellant: Shri Anuj KisnadwalaFor Respondent: Shri Chandra Vijay, DR
Section 234Section 234BSection 57

…he purpose of the Income Tax Act, it is setting up on the business that has to be considered and not the commencement. e. On the facts and circumstances of the case, the decision of the Supreme Court in Tuticorin Alkalies Chemicals & Fertilizers Ltd. Vs. CIT (227 ITR 172) would not apply. 2. The Appellant, therefore, prays that it be held that the Appellants business was already set up and accordingly the ratio of the decision in Tuticorin Alkalies Chemicals & Fertilizers Ltd. (supra) would not be applicable. GROUND II WITHOUT PRJUDICE ABOVE, 1. On the facts and in the circumstances of the case and in law, th…

A.C.I.T.19(2), Mumbai vs. Alka Kiritkumar Upadhyay, Mumbai

In the result, the appeal filed by the Revenue in ITA N0

ITA 2617/MUM/2012[2008-09]Status: DisposedITAT Mumbai17 Aug 2016AY 2008-09

Bench: Shri Mahavir Singh & Shri Ramit Kocharआयकर अपील सं./I.T.A. No.2617/Mum/2012 ("नधा"रण वष" / Assessment Year : 2008-09) A.C.I.T. – 19(2), Smt. Alka Kiritkumar बनाम/ Room No. 315, 3 Rd Floor, Upadhyay, V. Piramal Chambers, Alka Bldg., 6T H Floor, Lalbaug, Parel, Santacruz (W), Mumbai – 400 012. Mumbai –400 054. "थायी लेखा सं./Pan : Aaapu0228Q (अपीलाथ" /Appellant) .. (""यथ" / Respondent)

For Appellant: Shri Nishit GandhiFor Respondent: Shri A. Ramachandran
Section 143(2)Section 143(3)

…ooks of account showing shares as investments are not a determinative factor to conclusively decide the real nature of transaction. The A.O. relied on the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilisers Ltd. v. CIT, 227 ITR 172 and observed that the facts and circumstances of the case were to be taken into consideration to come to any conclusion regarding the real nature of transaction and entries in the books of accounts are not conclusive proof to decide income and consequently its chargeability to tax. The A.O. by relying on several case laws observed that in assesse…

ACIT 12(2)(1), Mumbai vs. Etisaltat DB Telecom P.Ltd, Mumbai

ITA 7544/MUM/2014[2008-09]Status: DisposedITAT Mumbai05 Aug 2016AY 2008-09
For Appellant: NoneFor Respondent: Shri N. Sathya Moorthy-DR
Section 143Section 143(3)Section 254(1)

…ssment proceedings,the AO held that the interest received by the assessee was to be taxed under the head income from other sources.He relied upon the cases of Bokaro Steel Ltd.(236ITR315)Pink Star (72ITD137) and Tuticorin alkali Chemicals and Fertilisers Ltd (227 ITR 172). 3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority (FAA).Before him,it was argued that the assessee had 7544/M/14-Etisalat DB Telecom P.Ltd. returned its entire interest income,that it had excluded that component which was the result of the direct deployment of its fund in margin moneis pl…

ACIT Cir 12(3), Mumbai vs. Lake View Developers, Mumbai

In the result, the Revenue’s appeal is allowed

ITA 4495/MUM/2013[2009-10]Status: DisposedITAT Mumbai28 Jul 2016AY 2009-10

Bench: Shri Sanjay Arora, Am & Shri Ram Lal Negi, Jm आयकर अपील सं./I.T.A. No.3409/Mum/2013 ("नधा"रण वष" / Assessment Year: 2009-10) Lake View Developers Addl. Cit, Range 12(3), बनाम/ 514, Dalamal Towers, Mumbai 211 F.P.J. Marg, Nariman Point, Vs. Mumbai-400 021 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaafl 0589 R (Assessee) : (Revenue) & आयकर अपील सं./I.T.A. No. 4495/Mum/2013 ("नधा"रण वष" / Assessment Year: 2009-10) बनाम/ Addl. Cit, Range 12(3), Lake View Developers Mumbai Mumbai-400 021 Vs. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaafl 0589 R (Revenue) (Assessee) : & आयकर अपील सं./I.T.A. No. 4496/Mum/2013 ("नधा"रण वष" / Assessment Year: 2009-10) Addl. Cit, Range 12(3), Omega Associates, बनाम/ Mumbai 514, Dalamal Tower, 211-F.P.J. Marg, Nariman Point, Vs. Mumbai-400 021 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaafl 0589 R (Revenue) : (Assessee) : Shri Chetan Karia Revenue By Assessee By : Shri R. P. Rastogi सुनवाई क" तार"ख / : 03.5.2016 Date Of Hearing घोषणा क" तार"ख / : 28.7.2016 Date Of Pronouncement

For Appellant: Shri R. P. Rastogi
Section 143(3)Section 22

…tely under the head ‘leased stock’ under the grouping ‘current assets’. The treatment accorded in books, though un-evidenced, would not, in our view, be determinative of the matter, as is trite law (Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT [1997] 227 ITR 172 (SC); Sutlej Cotton Mills Ltd. vs. CIT [1979] 116 ITR 1 (SC), etc). On the contrary, the said treatment is contradicted by the assessee claiming depreciation on a part of the leased assets, i.e., furniture and fixture, which is leased out along with the house property. Forming part of the assets under lease, claimed as trading assets, how could,…

Anand R Bahl, Mumbai vs. DCIT RG 20(3), Mumbai

In the result, the appeals by the assessee are dismissed and that by the Revenue is allowed for statistical purposes

ITA 7706/MUM/2011[2007-08]Status: DisposedITAT Mumbai20 Jul 2016AY 2007-08

Bench: Shri Sanjay Arora & Shri Pawan Singh

For Appellant: Shri Hiten M. Vasant (AR)For Respondent: Shri B. Pruseth (DR)
Section 2(14)

…uld also to be little consequence; the treatment in its books of account by the assessee being not determinative of the matter, as (A.Ys. 2007-08 & 2008-09) Anand R Behl explained in, among others, Tuticorin Alkali Chemical and Fertilizers Ltd. vs. CIT [1997] 227 ITR 172 (SC) (at Page 183), referred to the assessment order. The assessee has also returned LTCG, which has not been disturbed by the Revenue, so that where and to the extent his accounts are conform with his undisputed behaviour, the same stands fairly accepted by the Revenue. We may add that no contentions were raised by the assessee with regard to se…