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 366,418 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

ACIT, Sonepat vs. M/S Atlas Cycles (Haryana) Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 4000/DEL/2013[2010-11]Status: DisposedITAT Delhi29 Jul 2016AY 2010-11

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

ACIT, Sonepat vs. M/S. Atlas Cycles (Haryana) Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 2132/DEL/2012[2009-10]Status: DisposedITAT Delhi29 Jul 2016AY 2009-10

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

Addl. CIT, Sonepat vs. M/S Atlas Cycles Haryana Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 3473/DEL/2011[2008-09]Status: DisposedITAT Delhi29 Jul 2016AY 2008-09

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

ACIT, Sonepat vs. M/S. Atlas Cycles Haryana Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 3472/DEL/2011[2005-06]Status: DisposedITAT Delhi29 Jul 2016AY 2005-06

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

DCIT, Sonepat vs. M/S Atlas Cycles (Haryana) Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 2491/DEL/2011[2004-05]Status: DisposedITAT Delhi29 Jul 2016AY 2004-05

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

DCIT, Sonepat vs. M/S Atlas Cycles (Haryana) Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 2490/DEL/2011[2003-04]Status: DisposedITAT Delhi29 Jul 2016AY 2003-04

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

DCIT, Sonepat vs. M/S Atlas Cycles (Haryana) Ltd., Sonepat

In the result ITA Nos. 2489/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 2489/DEL/2011[2006-07]Status: DisposedITAT Delhi29 Jul 2016AY 2006-07

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

DCIT, Sonepat vs. Shri Atlas Cycles Haryana Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 10/DEL/2011[2007-08]Status: DisposedITAT Delhi29 Jul 2016AY 2007-08

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

ACIT, Sonepat vs. M/S. Atlas Cycles (Haryana) Ltd., Sonepat

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 913/DEL/2010[2006-07]Status: DisposedITAT Delhi29 Jul 2016AY 2006-07

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

M/S. Atlas Cycles (Haryana) Ltd., Sonepat vs. ACIT, Haryana

In the result ITA Nos. 2484/Del/2011 and 4049/Del/2013 preferred by the department are dismissed

ITA 784/DEL/2010[2006-07]Status: DisposedITAT Delhi29 Jul 2016AY 2006-07

Bench: Shri G.D. Agrawal, Hon’Ble & Shri Sudhanshu Srivastava

…claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.’s case (1982) 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the…

Unitherm Engineers Ltd, Mumbai vs. Addl CIT RG 3, Thane

In the result, the appeals of the assessee are allowed

ITA 2955/MUM/2015[2010-11]Status: DisposedITAT Mumbai25 Jul 2016AY 2010-11

Bench: Hon’Ble S/Shri Joginder Singh (Jm) & Rajesh Kumar,(Am) आमकय अऩीर सं./I.T.A. No.2954 & 2955/Mum/2015 (ननधधायण वषा / Assessment Year : 2009-10 & 2010-11) M/S Unitherm Engineerings बनाम/ Additional Commissioner Of Income Tax, Range -3, Ltd., Vs. 6Th Floor, Ashar It Park, A-109, Boomerang, First Floor, Road No.16-Z, Chandivali Farm Road, Wagle Industrial Estate, Chandivali, Powai, Thane(W)-400604 Andheri (E), Mumbai-400072 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. स्थधमी रेखध सं./जीआइआय सं./Pan/Gir No. :Aaacu4041L अऩीरधथी ओय से / Appellant By: Shri Madhukar Khandekar प्रत्मथी की ओय से/Respondent By Shri H M Wanare & Shri Kailash Kanojiya सुनवधई की तधयीख / Date Of Hearing : 20.7.2016 घोषणध की तधयीख /Date Of Pronouncement : 25. 7.2016 आदेश / O R D E R Per Rajesh Kumar: These Are The Two Appeals Filed By The Assessee Against The Two Separate Orders Of Ld.Cit(A)-2, Thane, Dated 12.2.2015 For The Assessment Years 2009-10 & 20010-11. Since These Appeals Pertain To The Same Assessee, These Appeals Are Being Decided By This Common Order For The Sake Of Convenience. 2. The Common Issue Raised By The Assessee In The Sole Ground Of Appeal Is Against The Confirmation Of Addition On Account Of Notional

For Appellant: Shri Madhukar Khandekar
Section 36(1)(iii)

…आयकर अपीऱीय अधिकरण, म ुंबई न्यायपीठ “ए” म ुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE HON’BLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM) आमकय अऩीर सं./I.T.A. No.2954 and 2955/Mum/2015 (ननधधायण वषा / Assessment Year : 2009-10 and 2010-11) M/s Unitherm Engineerings बनाम/ Additional Commissioner of Income Tax, Range -3, Ltd., Vs. 6th floor, Ashar IT Park, A-109, Boomerang, First floor, Road No.16-Z, Chandivali Farm road, Wagle Industrial Estate, Chandivali, Powai, Thane(W)-400604 Andheri (E), Mumbai-400072 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. स्थधमी रेखध सं./जीआइआय सं./PAN/G…

Unitherm Engineers Ltd, Mumbai vs. Addl CIT RG 3, Thane

In the result, the appeals of the assessee are allowed

ITA 2954/MUM/2015[2009-10]Status: DisposedITAT Mumbai25 Jul 2016AY 2009-10

Bench: Hon’Ble S/Shri Joginder Singh (Jm) & Rajesh Kumar,(Am) आमकय अऩीर सं./I.T.A. No.2954 & 2955/Mum/2015 (ननधधायण वषा / Assessment Year : 2009-10 & 2010-11) M/S Unitherm Engineerings बनाम/ Additional Commissioner Of Income Tax, Range -3, Ltd., Vs. 6Th Floor, Ashar It Park, A-109, Boomerang, First Floor, Road No.16-Z, Chandivali Farm Road, Wagle Industrial Estate, Chandivali, Powai, Thane(W)-400604 Andheri (E), Mumbai-400072 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. स्थधमी रेखध सं./जीआइआय सं./Pan/Gir No. :Aaacu4041L अऩीरधथी ओय से / Appellant By: Shri Madhukar Khandekar प्रत्मथी की ओय से/Respondent By Shri H M Wanare & Shri Kailash Kanojiya सुनवधई की तधयीख / Date Of Hearing : 20.7.2016 घोषणध की तधयीख /Date Of Pronouncement : 25. 7.2016 आदेश / O R D E R Per Rajesh Kumar: These Are The Two Appeals Filed By The Assessee Against The Two Separate Orders Of Ld.Cit(A)-2, Thane, Dated 12.2.2015 For The Assessment Years 2009-10 & 20010-11. Since These Appeals Pertain To The Same Assessee, These Appeals Are Being Decided By This Common Order For The Sake Of Convenience. 2. The Common Issue Raised By The Assessee In The Sole Ground Of Appeal Is Against The Confirmation Of Addition On Account Of Notional

For Appellant: Shri Madhukar Khandekar
Section 36(1)(iii)

…आयकर अपीऱीय अधिकरण, म ुंबई न्यायपीठ “ए” म ुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE HON’BLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM) आमकय अऩीर सं./I.T.A. No.2954 and 2955/Mum/2015 (ननधधायण वषा / Assessment Year : 2009-10 and 2010-11) M/s Unitherm Engineerings बनाम/ Additional Commissioner of Income Tax, Range -3, Ltd., Vs. 6th floor, Ashar IT Park, A-109, Boomerang, First floor, Road No.16-Z, Chandivali Farm road, Wagle Industrial Estate, Chandivali, Powai, Thane(W)-400604 Andheri (E), Mumbai-400072 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. स्थधमी रेखध सं./जीआइआय सं./PAN/G…

D.C.I.T., Circle-4, Kolkata vs. M/S. Jay Shree Tea & Industries Ltd., Kolkata

In the result, the appeal of the revenue is dismissed

ITA 2773/KOL/2013[2008-2009]Status: DisposedITAT Kolkata13 Jul 2016AY 2008-2009

Bench: Shri M. Balaganesh, Am & Shri S. S. Viswanethra Ravi, Jm]

For Appellant: Md. S. S. Alam, JCIT, Sr. DRFor Respondent: Shri B. K. Chaturvedi, AR
Section 143(3)Section 14ASection 154

…l position, it would have to be presumd that the investment made by the assessee would be out of the interest-free funds available with the assessee. 6.1. Similar views were expressed in the following decisions :- Woolcombers of India Ltd vs CIT reported in 134 ITR 219 (Cal) East India Pharmaceutical Works Ltd vs CIT reported in (1997) 224 ITR 627 (SC) 6.2. We find that though the decision in the case of Reliance Utilities & Power Ltd was rendered in the context of allowability of interest u/s 36(1)(iii) of the Act, the analogy drawn thereon would apply with equal force for adjudicating the issue of disallowan…

Maruti Suzuki India Ltd., New Delhi vs. Addl. CIT, New Delhi

Appeal is allowed

ITA 5720/DEL/2011[2007-08]Status: DisposedITAT Delhi12 Jul 2016AY 2007-08

Bench: Shri I.C. Sudhir & Shri L.P. Sahu Assessment Year: 2007-08 Assessment Year: 2007-08 Maruti Suzuki India Ltd., Vs. Additional Cit, Plot No.1, Nelson Mandela Road, Range-6, Vasant Road, New Delhi. New Delhi. (Pan: Aaacm0829Q) (Appellant) (Respondent) Assessee By: S/Shri Ajay Vohra, Sr. Adv. Neeraj Jain, Rohit Jain, Adv. Romit Katyal & Ms. Tejasvi Jain, Cas Department By:Shri Amrendra Kumar, Cit(Dr)

For Appellant: S/Shri Ajay Vohra, Sr. Adv. NeerajFor Respondent: Shri Amrendra Kumar, CIT(DR)

…esumption 69 of utilization of borrowed funds or interest free funds can be made in favour of the assessee: 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) Alkali & Chemical Corp. of India v. CIT (1986) 161 ITR 820 (Cal.) CIT v. Suzlon Energy Ltd.: 215 Taxman 272 (G…

M/S Goyal Mg Gases Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 2194/DEL/2013[2008-09]Status: DisposedITAT Delhi30 Jun 2016AY 2008-09

Bench: Shri Sudhanshu Srivastava & Shri Prashant Maharishi

Section 143(3)Section 14A

…estments 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 deduc…

M/S Goyal Mg Gases Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 2193/DEL/2013[2009-10]Status: DisposedITAT Delhi30 Jun 2016AY 2009-10

Bench: Shri Sudhanshu Srivastava & Shri Prashant Maharishi

Section 143(3)Section 14A

…estments 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 deduc…

M/S Goyal Mg Gases Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 2192/DEL/2013[2007-08]Status: DisposedITAT Delhi30 Jun 2016AY 2007-08

Bench: Shri Sudhanshu Srivastava & Shri Prashant Maharishi

Section 143(3)Section 14A

…estments 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 deduc…

DCIT, Circle - 8, Kolkata vs. M/S. Eih Limited, Kolkata

In the result, the appeal of the assessee in ITA No

ITA 348/KOL/2011[2006-07]Status: DisposedITAT Kolkata01 Jun 2016AY 2006-07

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Respondent: Shri Vijay Shankar, CIT, DR
Section 143(3)Section 195Section 40Section 9(1)(vii)

…vances made during the course of assessee’s business. 7.4.3. We draw our support from the following decisions in support of our findings :- a) CIT vs Gopalakrishna Muralidhar reported in (1963) 47 ITR 469 (AP) b) Woolcombers of India Ltd vs CIT reported in 134 ITR 219 (CAL) c) CIT vs Hotel Savera reported in 239 ITR 795 (MAD) d) CIT vs Britannia Industries Ltd reported in 280 ITR 525 (CAL) e) S A Builders Ltd vs CIT reported in 288 ITR 1 (SC) f) Addl. CIT vs Tulip Star Hotels Ltd in CC No. 7138-7140 / 2012 dated 30.4.2012 by the Supreme Court , wherein it was held as below:- In our view, S.A.Builders Ltd…

Eih Limited, Kolkata vs. DCIT, Circle - 8, Kolkata

In the result, the appeal of the assessee in ITA No

ITA 314/KOL/2011[2006-07]Status: DisposedITAT Kolkata01 Jun 2016AY 2006-07

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Respondent: Shri Vijay Shankar, CIT, DR
Section 143(3)Section 195Section 40Section 9(1)(vii)

…vances made during the course of assessee’s business. 7.4.3. We draw our support from the following decisions in support of our findings :- a) CIT vs Gopalakrishna Muralidhar reported in (1963) 47 ITR 469 (AP) b) Woolcombers of India Ltd vs CIT reported in 134 ITR 219 (CAL) c) CIT vs Hotel Savera reported in 239 ITR 795 (MAD) d) CIT vs Britannia Industries Ltd reported in 280 ITR 525 (CAL) e) S A Builders Ltd vs CIT reported in 288 ITR 1 (SC) f) Addl. CIT vs Tulip Star Hotels Ltd in CC No. 7138-7140 / 2012 dated 30.4.2012 by the Supreme Court , wherein it was held as below:- In our view, S.A.Builders Ltd…

M/S Bharti Teletech Limited vs. DCIT, Circle-2(1)

ITA 753/DEL/2007[2003-2004]Status: DisposedITAT Delhi29 Apr 2016AY 2003-2004

Bench: Shri N.K. Saini & Shri Kuldip Singh

For Appellant: Shri Anil Bhalla, CAFor Respondent: Shri K.K. Jaiswal, DR
Section 143(2)Section 32Section 32(1)(ii)

…at considering the fact that AO has also not brought on record any material to show the nexus no disallowance was to be made. In its support the appellant has relied on the judgement of Calcutta High Court in case of Indian Explosive 147 ITR 392, Woolcom Bers 134 ITR 219 and British Paints 190 ITR 196. The appellant has also submitted that except for payment of interest to Bharti enterprises all other interest was paid on secured loans as well as against overdraft facilities. According to the appellant it was also in the business of advancing and that it had earned income by way of interest in preceding previous…