Woolcombers of India Ltd. v. CIT

134 ITR 219High Court1982#795 most cited

What is Woolcombers of India Ltd. v. CIT authority for?

Where an assessee's own funds or interest-free funds exceed the interest-free advances or investments made, no disallowance of interest expenditure can be made, including under Section 14A.

129

judgments rely on this decision, according to BharatTax’s citation analysis of 292,668 Indian tax judgments — from 2015 to 2025.

Also referred to as

Woolcombers of India Ltd. v. CIT · 134 ITR 219 · Section 36(1)(iii) · Section 14A · disallowance of interest · interest expenditure · own funds · interest-free funds · investments · surplus funds · presumption of own funds · East India Pharmaceutical approval

Also reported as

148 CTR 585

Sections most often in play

Section 14ASection 36(1)(iii)Section 37(1)Section 143(2)Section 147Section 148Section 143(3)Section 143(1)

Issues it is cited on

interest free advancessection 36(1)(iii)disallowance of interest expendituredisallowance u/s 14adisallowance under section 14asection 40asection 32section 37(1)capital expendituresection 14arevenue expendituresection 36(1)

Judgments citing Woolcombers of India Ltd. v. CIT

DCIT, NEW DELHI vs. M/S. VODAFONE ESSAR DIGILINK LTD., NEW DELHI

ITA 1158/DEL/2015[2010-11]Status: DisposedITAT Mumbai14 Oct 2025AY 2010-11

Bench: SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SHRI OMKARESHWAR CHIDARA (Accountant Member)

For Appellant: Shri Ketan Ved & Shri Ninad PatadeFor Respondent: Shri Pankaj Kumar
Section 143(1)Section 143(3)Section 144C(1)Section 144C(5)Section 92C

…lable". Thereafter, the judgment of the Hon'ble Supreme Court in the case of East India Pharmaceuticals Works Ltd. v. CIT [1997] 224 ITR 627/91 Taxman 185 (SC) and also the judgment of the Hon'ble Calcutta High Court in Woolcombers of India Ltd. v. CIT [1981] 134 ITR 219/[1981] 7 Taxman 188 were considered. It was finally concluded that: "The principle, therefore, would be that if there are funds available both interest free and overdraft and/or loans taken, then a presumption would arise that the investments would be out of interest free funds generated or available with the company, if the interest free funds w…

VODAFONE DIGILINK LIMITED,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME-TAX, NEW DELHI

ITA 1073/DEL/2015[2010-11]Status: DisposedITAT Mumbai14 Oct 2025AY 2010-11
Section 143(1)Section 144C(1)Section 144C(5)Section 92C

…”.\nThereafter, the judgment of the Hon'ble Supreme Court in the\ncase of East India Pharmaceuticals Works Ltd. v. CIT [1997] 224\nITR 627/91 Taxman 185 (SC) and also the judgment of the\nHon'ble Calcutta High Court in Woolcombers of India Ltd. v. CIT\n[1981] 134 ITR 219/[1981] 7 Taxman 188 were considered. It\nwas finally concluded that: \"The principle, therefore, would be\nthat if there are funds available both interest free and overdraft\nand/or loans taken, then a presumption would arise that the\ninvestments would be out of interest free funds generated or\navailable with the company, if the interest free f…

MARUTI SUZUKI INDIA LTD.,NEW DELHI vs. DCIT, NEW DELHI

In the result, all the three appeals of the assessee are allowed as indicated above and the appeal of Revenue is partly allowed

ITA 901/DEL/2017[2012-13]Status: DisposedITAT Delhi08 Oct 2025AY 2012-13

Bench: Shris.Rifaur Rahman & Shri Vimal Kumar

For Appellant: Shri Ajay Vohra, Sr. AdvocateFor Respondent: Shri G.C. Srivastava, Spl. Counsel for the Department
Section 143(3)Section 144CSection 144C(1)Section 144C(5)Section 14ASection 32Section 35Section 43B

…cases :-  East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627 (SC)  CIT v. UTI Bank Ltd: 215 Taxman 8 (Mag.) - Revenue’s SLP dismissed in Civil Appeal No. 468/2014  Indian Explosives Ltd. V. CIT: 147 ITR 392 (Cal.)  Woolcombers of India Ltd. v. CIT: 134 ITR 219 (Cal.) - approved by Supreme Court in the case of East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627  Alkali & Chemical Corp. of India v. CIT: (1986) 161 ITR 820 (Cal.)  CIT v. Reliance Utilities and Power Ltd.: 313 ITR 340 (Bom.)  CIT vs. M/s. Ashok Commercial Enterprises: ITA No. No.2985 of 2009 (Bom)  Gujarat State Fertilizers and C…

DCIT, NEW DELHI vs. M/S. MARUTI SUZUKI INDIA LTD., NEW DELHI

In the result, all the three appeals of the assessee are allowed as indicated above and the appeal of Revenue is partly allowed

ITA 1024/DEL/2016[2011-12]Status: DisposedITAT Delhi08 Oct 2025AY 2011-12

Bench: Shris.Rifaur Rahman & Shri Vimal Kumar

For Appellant: Shri Ajay Vohra, Sr. AdvocateFor Respondent: Shri G.C. Srivastava, Spl. Counsel for the Department
Section 143(3)Section 144CSection 144C(1)Section 144C(5)Section 14ASection 32Section 35Section 43B

…cases :-  East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627 (SC)  CIT v. UTI Bank Ltd: 215 Taxman 8 (Mag.) - Revenue’s SLP dismissed in Civil Appeal No. 468/2014  Indian Explosives Ltd. V. CIT: 147 ITR 392 (Cal.)  Woolcombers of India Ltd. v. CIT: 134 ITR 219 (Cal.) - approved by Supreme Court in the case of East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627  Alkali & Chemical Corp. of India v. CIT: (1986) 161 ITR 820 (Cal.)  CIT v. Reliance Utilities and Power Ltd.: 313 ITR 340 (Bom.)  CIT vs. M/s. Ashok Commercial Enterprises: ITA No. No.2985 of 2009 (Bom)  Gujarat State Fertilizers and C…

ACIT, CIRCLE-33(1), NEW DELHI vs. LUCKY EXPORTS, NEW DELHI

Accordingly ground nos. 1 and 2 are dismissed

ITA 7113/DEL/2017[2012-13]Status: DisposedITAT Delhi27 Aug 2025AY 2012-13

Bench: Shri S. Rifaur Rahman & Shri Sudhir Pareek

For Appellant: Sh. P. Roy Chaudhuri, AdvFor Respondent: Ms. Suman Malik, CIT(DR)
Section 143(1)

…e funds available. Thereafter, the judgment of the Hon'ble Supreme Court in the case of East India Pharmaceutical Works Ltd. Vn. CIT (1997) 224 ITR 627 (SC)) and also the judgment of the Hon'ble Calcutta High Court in Woolcombers of India Ltd. Vs. CIT ((1981) 134 ITR 219 (Cal)) were considered. It was finally concluded that: "The principle, therefore, would be that if there are funds available both interest free and overdraft and/or loans taken, then a presumption would arise that the investments would be out of interest free funds generated or available with the company, if the interest free funds were sufficien…

ACIT, CIRCLE-33(1), NEW DELHI vs. LUCKY EXPORTS, NEW DELHI

Accordingly ground nos. 1 and 2 are dismissed

ITA 5502/DEL/2017[2011-12]Status: DisposedITAT Delhi27 Aug 2025AY 2011-12

Bench: Shri S. Rifaur Rahman & Shri Sudhir Pareek

For Appellant: Sh. P. Roy Chaudhuri, AdvFor Respondent: Ms. Suman Malik, CIT(DR)
Section 143(1)

…e funds available. Thereafter, the judgment of the Hon'ble Supreme Court in the case of East India Pharmaceutical Works Ltd. Vn. CIT (1997) 224 ITR 627 (SC)) and also the judgment of the Hon'ble Calcutta High Court in Woolcombers of India Ltd. Vs. CIT ((1981) 134 ITR 219 (Cal)) were considered. It was finally concluded that: "The principle, therefore, would be that if there are funds available both interest free and overdraft and/or loans taken, then a presumption would arise that the investments would be out of interest free funds generated or available with the company, if the interest free funds were sufficien…

GOLDFIELD SALES AGENCIES LTD.,FARIDABAD vs. DCIT, CENTRAL CIRCLE- 2, FARIDABAD

In the result, the appeal being ITA No

ITA 1776/DEL/2019[2013-14]Status: DisposedITAT Delhi30 Jun 2025AY 2013-14

Bench: Shri S.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Shri Somil Agarwal, AdvocateFor Respondent: Shri Om Prakash, Sr. DR
Section 143Section 143(2)Section 36(1)(iii)Section 37(1)

…19 It has been held in the following judicial decisions that Hon'ble Courts have gone to the extent of holding that when amount is withdrawn from a current account in which sales proceeds and borrowed funds have been withdrawn. Woolcombers of India Ltd vs CIT 134 ITR 219(Cal) CIT vs Hotel Savera 148 CTR 585, 591 (Mad) CIT vs Coimbatore Salem Transport P Ltd 611TR 480(Mad) CITvs Indian Explosives Ltd 1921TR 144, 147(Cal) It is respectfully submitted that the disallowance made by Ld. AO is absolutely misconceived and that being so there is no justification for making any disallowance out of the interest as made by…

GOLDFIELD SALES AGENCIES LTD.,FARIDABAD vs. DCIT, CENTRAL CIRCLE- 2, FARIDABAD

In the result, the appeal being ITA No

ITA 1775/DEL/2019[2013-14]Status: DisposedITAT Delhi30 Jun 2025AY 2013-14

Bench: Shri S.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Shri Somil Agarwal, AdvocateFor Respondent: Shri Om Prakash, Sr. DR
Section 143Section 143(2)Section 36(1)(iii)Section 37(1)

…19 It has been held in the following judicial decisions that Hon'ble Courts have gone to the extent of holding that when amount is withdrawn from a current account in which sales proceeds and borrowed funds have been withdrawn. Woolcombers of India Ltd vs CIT 134 ITR 219(Cal) CIT vs Hotel Savera 148 CTR 585, 591 (Mad) CIT vs Coimbatore Salem Transport P Ltd 611TR 480(Mad) CITvs Indian Explosives Ltd 1921TR 144, 147(Cal) It is respectfully submitted that the disallowance made by Ld. AO is absolutely misconceived and that being so there is no justification for making any disallowance out of the interest as made by…

GOLDFIELD SALES AGENCIES LTD.,FARIDABAD vs. DCIT, CENTRAL CIRCLE- 2, FARIDABAD

In the result, the appeal being ITA No

ITA 1774/DEL/2019[2010-11]Status: DisposedITAT Delhi30 Jun 2025AY 2010-11

Bench: Shri S.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Shri Somil Agarwal, AdvocateFor Respondent: Shri Om Prakash, Sr. DR
Section 143Section 143(2)Section 36(1)(iii)Section 37(1)

…19 It has been held in the following judicial decisions that Hon'ble Courts have gone to the extent of holding that when amount is withdrawn from a current account in which sales proceeds and borrowed funds have been withdrawn. Woolcombers of India Ltd vs CIT 134 ITR 219(Cal) CIT vs Hotel Savera 148 CTR 585, 591 (Mad) CIT vs Coimbatore Salem Transport P Ltd 611TR 480(Mad) CITvs Indian Explosives Ltd 1921TR 144, 147(Cal) It is respectfully submitted that the disallowance made by Ld. AO is absolutely misconceived and that being so there is no justification for making any disallowance out of the interest as made by…

GOLDFIELD SALES AGENCIES LTD.,FARIDABAD vs. DCIT, CENTRAL CIRCLE- 2, FARIDABAD

In the result, the appeal being ITA No

ITA 3576/DEL/2018[2012-13]Status: DisposedITAT Delhi30 Jun 2025AY 2012-13

Bench: Shri S.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Shri Somil Agarwal, AdvocateFor Respondent: Shri Om Prakash, Sr. DR
Section 143Section 143(2)Section 36(1)(iii)Section 37(1)

…19 It has been held in the following judicial decisions that Hon'ble Courts have gone to the extent of holding that when amount is withdrawn from a current account in which sales proceeds and borrowed funds have been withdrawn. Woolcombers of India Ltd vs CIT 134 ITR 219(Cal) CIT vs Hotel Savera 148 CTR 585, 591 (Mad) CIT vs Coimbatore Salem Transport P Ltd 611TR 480(Mad) CITvs Indian Explosives Ltd 1921TR 144, 147(Cal) It is respectfully submitted that the disallowance made by Ld. AO is absolutely misconceived and that being so there is no justification for making any disallowance out of the interest as made by…

DCIT CIRCLE- 1, LTU, NEW DELHI vs. MAWANA SUGAR LTD., NEW DELHI

Appeal is partly allowed as above and the appeal of the Revenue is dismissed as above

ITA 5984/DEL/2019[2016-17]Status: DisposedITAT Delhi30 Apr 2025AY 2016-17

Bench: Shri Challa Nagendra Prasad & Shri Avdhesh Kumar Mishra

Section 115JSection 14ASection 36(1)(iii)

…d that the Courts had taken the consistent view that where the assessee's own funds were in excess of the interest free loans & advances, etc. no disallowance out of interest could be made. He placed reliance on following cases: (i) Woolcombers of India Ltd. 134 ITR 219 227 (Cal) M/s. Mawana Sugar Ltd. (ii) Alkali and Chemical Corporation of India Ltd. 161 ITR 820 (Cal) (iii) Hotel Savera 239 ITR 795 799-800 (Mad) (iv) Radico Khaitan Ltd. 274 ITR 354 (All) (v) Britannia Industries Ltd. 280 ITR 525 (Cal) (vi) Reliance Utilities and Power Ltd. 313 ITR 340 (Bom) (vii) East India Pharmaceutical Works Ltd. 224 ITR 6…

SARBINDER SINGH BINDRA,NEW DELHI vs. ACIT CIRCLE-47(1), NEW DELHI

In the result, the appeal of the Assessee is partly allowed

ITA 7591/DEL/2019[2016-17]Status: DisposedITAT Delhi19 Feb 2025AY 2016-17

Bench: Shri Vikas Awasthy & Shri Manish Agarwalsarbinder Singh Bindra Asst. Cit, 362, 2Nd Floor, Circle-47(1), Naya Katra, Chandni Vs. Delhi. Chowk, Delhi-110006. Pan-Aaepb2783P (Appellant) (Respondent)

Section 154

…ssessee has also relied on following case laws wherein it has been held that where the assessee is having own funds in excess of the investment made, no disallowance of interest could be made, the same are as under: (i) Woolcombers of India Ltd. v. CIT (1982) 134 ITR 219 @ 227 (Cal). (ii) Alkali and Chemical Corporation of India Ltd. v. CIT 161 ITR 820 (Cal). (iii) CIT v. Hotel Savera (1999) 239 ITR 795 @799-800 (Mad) (iv) CIT v. Radico Khaitan Ltd. (2005) 274 ITR 354 @ 365-366 (All) (v) CIT v. Britannia Industries Ltd. (2006) 280 ITR 525 @ 532-534 (Cal) In CIT v. Reliance Utilities and Power Ltd. (2009) 313 ITR…

SAPPHIRE FOODS INDIA LIMITED,MUMBAI vs. DCIT, CIRCLE 3(3)(1), MUMBAI

In the result the appeal filed by the assessee stands dismissed

ITA 3579/MUM/2024[AY 2022-23]Status: DisposedITAT Mumbai13 Jan 2025

Bench: Smt. Beena Pillai, Jm

Section 143(2)Section 14ASection 250

…reported in 313 ITR 340. • The assessee also took cue from the decision of Hon’ble Supreme Court in case of East India Pharmaceutical Works Ltd reported in 224 ITR 667 and decision of Hon’ble Calcutta High Court in case of Woolcombers of India Ltd reported in 134 ITR 219. • Decision of Hon’ble Delhi High Court in case of the Tin Box Co. reported in 260 ITR 637 • decision of Hon’ble Gujarat High Court in case of Gujarat Power Corp Ltd., vide order dated 28/03/2011 • decision of Hon’ble Punjab and Haryana High Court in case of Hero Cycles Ltd reported in 323 ITR 518; • The assessee had also relied on decision of th…

ITO, NEW DELHI vs. M/S ANSAL HOUSING & CONSTRUCTION LTD., NEW DELHI

In the result, the cross-objection filed by the assessee is dismissed

ITA 2731/DEL/2010[2007-08]Status: DisposedITAT Delhi26 Jul 2024AY 2007-08

Bench: Shri G.S.Pannu & Shri Kul Bharat[Assessment Year : 2007-08] Dcit, Vs Ansal Housing & Construction Ltd., Central Circle-20, Ugf-15, Indraprastha Building, 21, New Delhi. Barakhamba Road, New Delhi. Pan-Aaaca0377R Appellant Respondent

Section 143(3)Section 14ASection 80Section 80I

…& Others v. CIT: Civil Appeal No. 9606 of 2011(SC) - CIT vs. Reliance Industries Limited: 410 ITR 466 (SC) - East India Pharmaceutical Works Ltd. v. CIT: 224 ITR 627 (SC) - Indian Explosives Ltd. V. CIT: 147 ITR 392 (Cal.) - Woolcombers of India Ltd. v. CIT: 134 ITR 219 (Cal.) - approved by Supreme Court in the case of East India - Pharmaceutical Works Ltd. v. CIT: 224 ITR 627 - CIT v. Reliance Utilities and Power Ltd.: 313 ITR 340 (Bom.) - CIT v. M/s Ashok Commercial Enterprises: ITA No. 2985 of 2009 (Bom) - Gurdas Garg v. CIT: ITA No.413 of 2014 (P&H) - Bright enterprises Pvt Ltd. v. CIT: 381 ITR 107 (P&H) - P…

ACIT, CIRCLE-2(1), VISAKHAPATNAM vs. VIZAG SEAPORT PVT. LTD., VISAKHAPATNAM

In the result, appeal of the Revenue is dismissed

ITA 383/VIZ/2017[2012-2013]Status: DisposedITAT Visakhapatnam12 Apr 2024AY 2012-2013

Bench: Shri Duvvuru Rl Reddy, Hon‟Ble & Shri S Balakrishnan, Hon‟Ble(Through Hybrid Hearing) आयकरअपीलसं./ I.T.A. No. 383/Viz/2017 (धनधाारणिर्ा/ Assessment Year : 2012-13) The Assistant Commissioner Of Vs. M/S. Vizag Seaport Pvt Ltd., Income Tax, Administrative Block, Circle-5(1), S4 Gallery, Port Area, Visakhapatnam. Visakhapatnam – 530035. (अपीलाथी/ Appellant) (प्रत्यथी/ Respondent) [Pan :Aabcv2484K] अपीलाथी की ओर से/ Assessee By : Sri Fenil A Bhatt, Ar प्रत्याथी की ओर से/ Revenue By : Dr. Satyasai Rath, Cit-Dr सुनिाई की तारीख/ Date Of Hearing : 15/02/2024 घोर्णा की तारीख/Date Of : /04/2024 Pronouncement O R D E R Pers. Balakrishnan:

For Appellant: Sri Fenil A Bhatt, ARFor Respondent: Dr. Satyasai Rath, CIT-DR
Section 115JSection 143(1)Section 143(2)Section 143(3)Section 194CSection 194JSection 36(1)(iii)Section 40

…vestments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT (1997) 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions…

DY CIT CC 6(4), MUMBAI vs. ARSHIYA LTD., MUMBAI

ITA 971/MUM/2020[2013-14]Status: DisposedITAT Mumbai08 Apr 2024AY 2013-14

Bench: Shri Aby T Varkey & Shri Amarjit Singh

For Appellant: Ajay ChandraFor Respondent: Piyush Chhajed
Section 10(34)Section 143(2)Section 143(3)Section 14A

…vestments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions…

M/S ARSHIYA LTD. ,MUMBAI vs. DCIT CC 6 (4) , MUMBAI

In the result, the appeal of the revenue vide ITA No

ITA 7900/MUM/2019[2013-14]Status: DisposedITAT Mumbai08 Apr 2024AY 2013-14

Bench: Shri Aby T Varkey & Shri Amarjit Singhacit, Cc-6(4) Vs. M/S Arshiya Ltd. R. No. 32(1), 308, Level 3, Ceejay Ground Floor, Aayakar House, F Block Shiv Bhavan, M.K. Road, Sagar Estate, Dr. A.B. Mumbai -400 020 Road, Worli, Mumbai – 400018 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aaaci2679A Appellant .. Respondent Dcit, Cc-6(4) Vs. M/S Arshiya Ltd. R. No. 1925, 19Th Floor, 308, Level 3, Ceejay Air India Building, House, F Block Shiv Nariman Point, Sagar Estate, Dr. A.B. Mumbai -400 021 Road, Worli, Mumbai – 400021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aaaci2679A Appellant .. Respondent M/S Arshiya Ltd. Vs. Dcit, Cc-6(4) 308, Level 3, Ceejay R. No. 1925, 19Th Floor, House, F Block Shiv Sagar Air India Building, Estate, Dr. A.B. Road, Nariman Point, Worli, Mumbai – 400018 Mumbai -400 021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aaaci2679A Appellant .. Respondent

For Appellant: Ajay ChandraFor Respondent: Piyush Chhajed
Section 10(34)Section 143(2)Section 143(3)Section 14A

…vestments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions…

RAJESH AGRAWAL,RAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, RAIPUR-1(1), RAIPUR

In the result, the appeal of the assessee is allowed in terms of our aforesaid observations

ITA 249/RPR/2022[2010-11]Status: DisposedITAT Raipur19 Oct 2023AY 2010-11

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita No.249/Rpr/2022 "नधा"रण वष" / Assessment Year : 2010-11 Rajesh Agrawal C/O. M/S. Chhattisgarh Steel Traders, 15/343, Main Road, Jawahar Nagar, Raipur (C.G.)-492 001. Pan : Acppa2905F .......अपीलाथ" / Appellant बनाम / V/S. The Deputy Commissioner Of Income Tax, Raipur-1(1), Raipur (C.G.) ……""यथ" / Respondent

For Appellant: Shri Ravi Agrawal, CAFor Respondent: Shri Satya Prakash Sharma, Sr. DR
Section 143(2)Section 143(3)Section 36(1)(iii)

…vestments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT (1997) 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions…

ACIT CIRCLE-28(1), DELHI vs. SAM OVERSEAS, NEW DELHI

In the result, the appeal of the Revenue is dismissed and the appeal of the assessee is allowed

ITA 169/DEL/2021[2011-12]Status: DisposedITAT Delhi22 Jun 2023AY 2011-12

Bench: Shri G. S. Pannua N D Shri Challa Nagendra Prasad

For Appellant: Sr. Advocate
Section 195

…estments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. vs. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. [1982] 134 ITR 219.where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions…

SAM OVERSEAS ,NEW DELHI vs. ACIT CIRCLE- 24(1), NEW DELHI

In the result, the appeal of the Revenue is dismissed and the appeal of the assessee is allowed

ITA 1695/DEL/2020[2011-12]Status: DisposedITAT Delhi22 Jun 2023AY 2011-12

Bench: Shri G. S. Pannua N D Shri Challa Nagendra Prasad

For Appellant: Sr. Advocate
Section 195

…estments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. vs. CIT [1997] 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. [1982] 134 ITR 219.where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions…

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Woolcombers of India Ltd. v. CIT (134 ITR 219) — Cited in 129 Judgments | BharatTax