Water Fall Estates Ltd. v. CIT

65 ITR 638Supreme Court of India1967#7065 most cited

What is Water Fall Estates Ltd. v. CIT authority for?

Income from a business is taxable only if the business was carried on during the relevant year. If a business is discontinued before the accounting year begins, income received in that year is not taxable as the source of income has ceased to exist.

16

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

Water Fall Estates Ltd. v. CIT · 65 ITR 638 · Section 10 · discontinued business · ceased to exist · taxable income · relevant year of account · source of income

Sections most often in play

Section 10Section 143(3)Section 147Section 234BSection 234CSection 271(1)(c)Section 37

Judgments citing Water Fall Estates Ltd. v. CIT

Omprakash Daulatram Nogaja, Mumbai vs. Income Tax Officer - 17(2(5), Mumbai

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

ITA 3996/MUM/2024[2014-15]Status: DisposedITAT Mumbai18 Feb 2025AY 2014-15

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

For Appellant: Shri Vanesh Kumar NadarFor Respondent: Shri Mahesh Pamnani (SR DR)
Section 10Section 143(3)Section 147Section 271(1)(c)Section 37Section 37(1)

….CIT(A) that the question whether expenditure u/s 37(1) of the Act could be allowed in a case, where business was closed down before the commencement of the relevant financial year was considered by the Hon'ble Supreme Court in the case of LM Chhabra vs CIT, 65 ITR 638, wherein it was held “For income of a business to be taxable 10 of the Act it is one of the conditions that the assessee must carry on the business in the relevant year of account. If the business is discontinued before the commencement of the accounting year, the income attributable to that business received in the year cannot be taxed under sec…

Deputy Commissioner of Income Tax, Central Circle -1(2), Bengaluru vs. M/S. Purvankara Projects Limited, Bengaluru

In the result, the appeals of the revenue are allowed for statistical purposes

ITA 348/BANG/2021[2011-12]Status: DisposedITAT Bangalore08 Nov 2021AY 2011-12

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Pradeep Kumar, CIT(DR)(ITAT), BengaluruFor Respondent: Shri Padamchand Khincha, CA
Section 139(1)Section 80Section 80I

…interlacing, interconnectivity or interdependence of various units was not there, various activities have to be treated as separate and distinct, as held by the Hon’ble Apex Court in Water Fall Estates Ltd. v. CIT, 219 ITR 563. in L.M. Chhabda & Sons v. CIT, 65 ITR 638, the Hon’ble Apex Court has also held that where an ITA Nos.347 & 348/Bang/2021 Page 10 of 11 assessee carried on business ventures at different places, there was no general principle that they should all be considered as part of single business. Thus, if an assessee had different units resulting in positive gross total income, in view of decisio…

Deputy Commissioner of Income Tax, Central Circle -1(2), Bangalore vs. M/S. Purvankara Projects Limited, Bengaluru

In the result, the appeals of the revenue are allowed for statistical purposes

ITA 347/BANG/2021[2010-11]Status: DisposedITAT Bangalore08 Nov 2021AY 2010-11

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Pradeep Kumar, CIT(DR)(ITAT), BengaluruFor Respondent: Shri Padamchand Khincha, CA
Section 139(1)Section 80Section 80I

…interlacing, interconnectivity or interdependence of various units was not there, various activities have to be treated as separate and distinct, as held by the Hon’ble Apex Court in Water Fall Estates Ltd. v. CIT, 219 ITR 563. in L.M. Chhabda & Sons v. CIT, 65 ITR 638, the Hon’ble Apex Court has also held that where an ITA Nos.347 & 348/Bang/2021 Page 10 of 11 assessee carried on business ventures at different places, there was no general principle that they should all be considered as part of single business. Thus, if an assessee had different units resulting in positive gross total income, in view of decisio…

M/S. Ceebros Hotels Pvt. Ltd., Chennai vs. DCIT, CC - 1 (2), Chennai

In the result, appeal filed by the assessee is allowed

ITA 3372/CHNY/2019[2015-16]Status: DisposedITAT Chennai31 Mar 2021AY 2015-16

Bench: Shri V. Durga Rao & Shri G. Manjunatha

For Appellant: Mr. Abani Kanta Nayak, CITFor Respondent: 09.02.2021
Section 36(1)(ii)Section 36(1)(iii)Section 37(1)

…s that MRC Nagar project is a standalone project and has to be considered distinctively, as it is governed by a set a terms & conditions. The learned DR further referring to the decision of Hon'ble Supreme Court in the case of L.M.Chhabada & Sons 26 Vs.CIT 65 ITR 638 and a decision of Hon’ble Calcutta High Court in the case of Ritz Continental Hotels Vs. CIT 114 ITR 554(Cal) submitted that MRC Nagar project should be treated as standalone project because there is no interlacing, interconnection, interdependence or dovetailing with other project at Egmore either operationally or financially or spatially.…

Aes Orissa Distribution Private Limited, Bhubaneswar vs. DCIT, Circle-2(1), Bhubaneswar

In the result, both appeals of the assessee are allowed

ITA 69/CTK/2018[2013-14]Status: DisposedITAT Cuttack24 Jan 2020AY 2013-14
For Appellant: Shri B.K.Mahapatra, FCAFor Respondent: Shri Subhendu Datta, DR
Section 147Section 148

…ss has been closed or discontinued before the commencement of the previous year, no deduction in respect of such discontinued business is permissible while computing the taxable income of the previous year from other sources' L.M Chhabda &. Sons Vs. CIT(1967) 65 ITR 638 (SC). In response to notice, the assessee filed his return of income electronically on 19.07.2016 declaring same loss as filed in the original return of income u/s.139(1) of the Act. Subsequently, notice u/s.142(1) of the Act was issued to the assessee. In compliance to the above notice, the authorized representative appeared before the AO and…

Aes Orissa Distribution Private Limited, Bhubaneswar vs. DCIT, Circle-2(1), Bhubaneswar

In the result, both appeals of the assessee are allowed

ITA 68/CTK/2018[2011-12]Status: DisposedITAT Cuttack24 Jan 2020AY 2011-12
For Appellant: Shri B.K.Mahapatra, FCAFor Respondent: Shri Subhendu Datta, DR
Section 147Section 148

…ss has been closed or discontinued before the commencement of the previous year, no deduction in respect of such discontinued business is permissible while computing the taxable income of the previous year from other sources' L.M Chhabda &. Sons Vs. CIT(1967) 65 ITR 638 (SC). In response to notice, the assessee filed his return of income electronically on 19.07.2016 declaring same loss as filed in the original return of income u/s.139(1) of the Act. Subsequently, notice u/s.142(1) of the Act was issued to the assessee. In compliance to the above notice, the authorized representative appeared before the AO and…

M/S. Panasonic Consumer India Pvt. Ltd, New Delhi vs. ITO, New Delhi

The appeal are allowed

ITA 6086/DEL/2016[2013-14]Status: DisposedITAT Delhi31 Oct 2019AY 2013-14

Bench: Shri Amit Shukla & Shri Prashant Maharishipanasonic Consumer India Pvt. Vs. Ito, Ltd, Ward-19(3), K-39, Connaught Place, New Delhi New Delhi Pan: Aaacn1498G (Appellant) (Respondent)

For Appellant: Shri Pradeep Dinodia, CAFor Respondent: Shri Surender Pal, Sr. DR
Section 143(3)Section 30Section 37

…INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Panasonic Consumer India Pvt. Vs. ITO, Ltd, Ward-19(3), K-39, Connaught Place, New Delhi New Delhi PAN: AAACN1498G (Appellant) (Respondent) Assessee by : Shri Pradeep Dinodia, CA Revenue by: Shri Surender Pal, Sr. DR Date of Hearing 01/08/2019 Date of pronouncement 31/10/2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-12, New Delhi dated 18.10.2016 for the Assessment Year 2013-14, wherein, the a…

Glaxosmithkline Asia (P) Ltd., Gurgaon vs. ACIT, Chandigarh

In the result, appeal of the Assessee is allowed for statistical purposes

ITA 1323/CHANDI/2012[2003-04]Status: DisposedITAT Chandigarh28 Sept 2018AY 2003-04
For Appellant: Sh. Neeraj Jain (C.A), Sh. Abhishek Mukherjee (C.A)For Respondent: Dr. Gulshan Raj
Section 143(3)

…s laid down by the Supreme Court repeatedly in the following decisions: - Setabganj Sugar Mills Ltd. vs. CIT : 41 ITR 272 (SC) - CIT vs. Prithvi Insurance Co. Ltd.: 63 ITR 632 (SC) - Hoogly Trust (P) Ltd. v CIT 73 ITR 685 (SC) - L.M. Chhabda & Sons vs. CIT : 65 ITR 638 (SC) - Standard Refinery & Distillery Ltd. v. CIT: 79 ITR 589 (SC) - B.R. Ltd. v. V.P. Gupta: 113 ITR 647 (SC) - Produce Exchange Corporation Ltd. Vfs. CIT : 77 ITR 739 (SC) In the case of the appellant, aquafresh business is only part of same line of business, which the assessee is already engaged under the control and supervision of the existin…

Sea King Club P.Ltd, Mumbai vs. ITO WD 8(3)(1), Mumbai

In the result, this appeal filed by the assessee stands allowed

ITA 64/MUM/2017[2012-13]Status: DisposedITAT Mumbai07 Feb 2018AY 2012-13

Bench: Shri Shamim Yahyaआयकर अपील सं./I.T.A. No. 64/Mum/2017 ("नधा"रण वष" / Assessment Year: 2012-13) Sea King Club P. Ltd. I.T.O., Ward-8(3)(1), बनाम/ 202, 2Nd Floor, Aayakar Bhavan, Hotel Golden Manor, Opp. Juhu Church, Juhu, M. K. Road, Mumbai-400 020 Vs. Mumbai-400 049 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaacs 5781 M (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Ms. Dinkle Hariya ""यथ" क" ओर से/Respondent By : Ms. Hemalatha सुनवाई क" तार"ख / : 27.11.2017 Date Of Hearing घोषणा क" तार"ख / : 07.02.2018 Date Of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: This Appeal By The Assessee Is Directed Against The Order By The Commissioner Of Income Tax (Appeals) Dated 07.10.2016 & Pertains To The Assessment Year 2012- 13. 2. The Grounds Of Appeal Read As Under: 1.1 The Learned Commissioner Of Income - Tax (Appeals) - 18, Mumbai, ["Ld. Cit (A)"] Erred In Confirming The Action Of The A.O. Of Making Disallowance Of Business Loss Of Rs.15,01,303/-, On The Ground Of 2 Sea King Club P. Ltd. Vs. Ito Discontinuation Of Business Activity Before Commencement Of Previous Year Under Consideration. 1.2 It Is Submitted That, In The Facts & The Circumstances Of The Case & In Law, No Such Disallowance Was Called For. 1.3 Without Prejudice To The Above, In The Alternative, Assuming - But Not Admitting - That Some Disallowance Was Called For, The Computation Of The Same Is Not In Accordance With The Law, Is Arbitrary & Excessive.

For Appellant: Ms. Dinkle HariyaFor Respondent: Ms. Hemalatha
Section 30

…d before the commencement of the previous year no deduction in respect of such discontinued business is permissible while computing the taxable income of the previous year. This fact is confirmed by the Apex Court in the case of L.M. Chhabda& Sons V CIT[1967] 65 ITR 638. In view of the above, it is crystal clear that the business of the company is discontinued since February, 2010 i.e. before the commencement of previous year for further expansion and even as on today the company is still waiting for approvals related to construction activity and the assessee company has not given any cogent reason in respect of…

Shirpur Gold Refinery Ltd, Mumbai vs. ITO Cir 9(3)(1), Mumbai

ITA 7983/MUM/2011[2008-09]Status: DisposedITAT Mumbai19 May 2017AY 2008-09

Bench: S/Sh.Rajendra & Ramlal Negiआयकर आयकर अपील अपील संसंसंसं./Ita./7983/Mum/2011,िनधा"रण िनधा"रण वष" वष"/Assessment Year-2008-09 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" & आयकर आयकर अपील अपील संसंसंसं./Ita/2917/Mum/2012,िनधा"रण िनधा"रण वष" वष"/ Assessment Year-2009-10 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" M/S. Shirpur Gold Refinery Ltd. Dcit, -Circle -9 (3) 5, Trishala , 5Th Floor, 122, Sheikh M.St. 279, Aayakar Bhavan Zaveri Bazar Vs. Mumbai-20. Mumbai-400 002. Pan:Aaaca 4896 K (अपीलाथ" /Appellant) (""यथ" / Respondent) Revenue By: Shri E. Shankaran-Dr Assessee By: S/Shri B.S. Sharma & Dalpat Shah-Ar

For Appellant: S/Shri B.S. Sharma and Dalpat Shah-ARFor Respondent: Shri E. Shankaran-DR
Section 254(1)

…eing carried out in true sense, that it had claimed that business revival in July, 2010, that the claim was yet verified by the Department, that none of the deductions were permissible under section 30 to 44D of the Act. He referred to the case of LN Chhabra (65 ITR 638) and dismissed the appeal filed by the assessee. 4.Before us,the AR argued that the refinery was settled during the AY.2001-02,that plant and machinery were installed till AY.2004-05, that during that period trial production was on as per the audited financial statements, that commercial production and sales commenced during the AY.2005 -06,that t…

DCIT (OSD) RG 8(1), Mumbai vs. Gold Star Jewellry P.Ltd, Mumbai

In the result, appeals filed by revenue as well as assessee are dismissed

ITA 7348/MUM/2013[2002-03]Status: DisposedITAT Mumbai21 Dec 2016AY 2002-03

Bench: Shri R.C.Sharma, Am & Shri Pawan Singh, Jm Dcit – 8(1), Mumbai Vs. M/S. Gold Star Jewellery Ltd., Unit Iii-A, Gold Star House, Black “C”, Plot 16P, 17,28 & 29, Seepz-Sez, Andheri (E), Mumbai – 400096 Pan/Gir No. Aaacg3264B Appellant) .. Respondent) & M/S. Gold Star Jewellery Vs. Dcit – 8(1), Mumbai Ltd., Unit Iii-A, Gold Star House, Black “C”, Plot 16P, 17,28 & 29, Seepz-Sez, Andheri (E), Mumbai – 400096 Pan/Gir No. Aaacg3264B Appellant) Respondent) ..

Section 10ASection 143Section 143(3)Section 234Section 263Section 80H

…Madras has however, taken a different view. In the case of Chamundi Textile (Silk Gold Star Jewellery Ltd., Mills) Ltd. (supra), the Hon'ble' High Court of Madras referred to the judgment of the Hon'ble Supreme Court in the case of L.M. Chhabda & Sons [1967] 65 ITR 638 (SC) in which it was held that there was no such general principle that where an assessee carries on business ventures of the same character at different places it must be held as a matter of law that the ventures are parts of a single business. The Hon'ble High Court also referred to the judgment of the Hon'ble Supreme Court in the case of Waterf…

Hero Motocorp Limited, New Delhi vs. JCIT, New Delhi

In the result appeal of the assessee in ITA No

ITA 1545/DEL/2015[2010-11]Status: DisposedITAT Delhi24 Oct 2016AY 2010-11

Bench: Sh. I. C. Sudhir & Shri Prashant Maharishihero Motocorp Limited, Jcit, 34, Basant Lok, Vasant Range-1, New Delhi Vs. Vihar, New Delhi Pan: Aaach0812J (Appellant) (Respondent) Dcit, M/S. Hero Moto Corp. Circle-11(1), Ltd., 34, Community Vs. New Delhi Centre, Basant Lok, Vasant Vihar, New Delhi-110057 (Appellant) (Respondent) Dcit, M/S. Hero Moto Corp. Circle-11(1), Ltd., 34, Community

For Appellant: Sh. Ajay Vohra, Sr. AdvFor Respondent: Sh. NC Sawain, CIT DR
Section 143Section 143(3)Section 144CSection 92C

…i) Produce Exchange Corporation Ltd. vs. CIT: 77 ITR 739 (SC) (ii) Setabganj Sugar Mills Ltd. vs. CIT : 41 ITR 272 (SC) (iii) CIT vs. Prithvi Insurance Co. Ltd.: 63 ITR 632 (SC) (iv) Hoogly Trust (P) Ltd. v CIT 73 ITR 685 (SC) (v) L.M. Chhabda& Sons vs. CIT : 65 ITR 638 (SC) (vi) Standard Refinery & Distillery Ltd. v. CIT: 79 ITR 589 (SC) (vii) B.R. Ltd. v. V.P. Gupta: 113 ITR 647 (SC) f) It has been held that expenditure incurred in connection with expansion of business, involving setting up of new unit, which satisfies the test of unity of control, interlacing of funds, common management, etc. would be allowab…

ACIT, Madurai vs. The Metal Powder Company Ltd., Madurai

In the result, appeal of the Revenue is dismissed

ITA 1143/CHNY/2014[2010-11]Status: DisposedITAT Chennai29 Mar 2016AY 2010-11

Bench: Shri A.Mohan Alankamony & Shri. G. Pavan Kumar

For Appellant: Shri. A.V.Sreekanth, IRS, JCITFor Respondent: Shri. A.S. Sriraman, Advocate
Section 143(1)Section 143(2)Section 143(3)Section 195Section 40Section 80I

…ependence of various units was not there, various activities have to be treated as separate and distinct, as held by Hon'ble Apex Court in the case of Water Fall Estates Ltd. v. CIT (219 ITR 563). Hon'ble Apex Court in the case of L.M. Chhabda & Sons. v. CIT (65 ITR 638) has also held that where an assessee carried on business ventures at different places, there was no general principle that they should all be considered as part of single business. Thus, if an assessee had different units resulting in positive gross total income, in view of decisions of Hon'ble jurisdictional High Court in the case of CIT v. Macm…

Commissioner of Income Tax

Accordingly, the appeal filed by the Revenue is dismissed with

ITA/530/2011HC Delhi16 Dec 2011
Section 143(1)Section 143(2)Section 15(1)Section 260A

…d machinery was not actually used for the purpose of the assessee’s business during the relevant previous year, no depreciation was allowable. In support of his decision he relied on the judgments of the Supreme Court in L. M. Chhabda & Sons v. CIT (1967) 65 ITR 638 and CIT vs. Gemini Cashew Sales Corpn. (1967) 65 ITR 643. In the aforesaid view of the matter, the Assessing Officer disallowed the entire loss claimed by the assessee and determined the income at Rs.Nil. 4. The assessee carried the matter in appeal before the CIT(Appeals) and filed written submissions, which showed that the expenses debite…

Commissioner of Income Tax Delhi II vs. Monnet Industries Ltd

In the result, the appeal is dismissed

ITA/450/2008HC Delhi21 Nov 2008

Bench: HON'BLE MR. JUSTICE BADAR DURREZ AHMED,HON'BLE MR. JUSTICE RAJIV SHAKDHER

For Respondent: Mr R.D. Jolly
Section 143(1)(a)Section 143(2)Section 260A

…control and management, the Supreme Court in the cases of Setabganj Sugar ITA No. 450/1998 Page 10 of 21 Mills Ltd v. Commissioner of Income Tax: (1961) 41 ITR 272 (SC) and L.M.Chhabda and Sons v. Commissioner of Income Tax, Gujarat: (1967) 65 ITR 638, laid down the tests that the following will have to be borne in mind, the inter-relation of the businesses, the employment of same capital, the maintenance of common books of account, employment of same staff to run the business, the nature of the different transactions, the possibility of one being closed without affecting the texture of oth…

Commissioner of Income Tax Delhi II vs. Monnet Industries Ltd

In the result, the appeal is dismissed

ITA - 450 / 2008HC Delhi21 Nov 2008
For Respondent: Mr R.D. Jolly
Section 143(1)(a)Section 143(2)Section 260A

…agement, the Supreme Court in the cases of Setabganj Sugar 2008:DHC:3088-DB ITA No. 450/1998 Page 10 of 21 Mills Ltd v. Commissioner of Income Tax: (1961) 41 ITR 272 (SC) and L.M.Chhabda and Sons v. Commissioner of Income Tax, Gujarat: (1967) 65 ITR 638, laid down the tests that the following will have to be borne in mind, the inter-relation of the businesses, the employment of same capital, the maintenance of common books of account, employment of same staff to run the business, the nature of the different transactions, the possibility of one being closed without affecting the texture of oth…