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, New Delhi vs. M/S Gillete Diversified Operations Pvt. Ltd., New Delhi

ITA 499/DEL/2013[2005-06]Status: DisposedITAT Delhi01 Apr 2016AY 2005-06

Bench: Shri I.C.Sudhir & Shri Prashant Maharishiacit, Gillete Diversified Operations Pvt. Ltd., Circle-12(1), C/O. Jaikumar Tejwani & Co, Ca, Vs. New Delhi B-50, East Of Kailash, New Delhi Pan:Aaacg2469C (Appellant) (Respondent) Gillete Diversified Operations Pvt. Ltd., Acit, C/O. Jaikumar Tejwani & Co, Ca, Circle-12(1), Vs. B-50, East Of Kailash, New Delhi New Delhi Pan:Aaacg2469C (Appellant) (Respondent)

For Appellant: Sh. Pradeep Dinodia, AdvFor Respondent: Sh.Subhakant Sahu, Sr. DR
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…

Aplab Ltd, Thane vs. ACIT RG 1, Thane

The appeal of the assessee is allowed

ITA 8545/MUM/2011[2008-09]Status: DisposedITAT Mumbai09 Feb 2016AY 2008-09
Section 36(1)(iii)

…funds available”. Thereafter, the judgment of the Hon’ble Supreme Court in the case of East India Pharmaceutical Works Ltd. Vs. 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 10 M/s APLAB Ltd. 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…

DCIT, New Delhi vs. M/S. Sindhu Realtors Pvt. Ltd., New Delhi

In the result, the appeal of the assessee is allowed

ITA 2768/DEL/2012[2008-09]Status: DisposedITAT Delhi11 Dec 2015AY 2008-09

Bench: Shri G.D. Agrawal & Shri A.T. Varkey

For Appellant: S/Shri Salil Kapoor & Sanat Kapoor, AdvocatesFor Respondent: Shri B.R.R. Kumar, Senior DR
Section 142(1)Section 143Section 2(22)Section 2(22)(e)

…e funds, discretion lies in the. hands of the assessee for utilisation of those funds. Reliance for that purpose was placed on the judgment of the Calcutta High Court in the case of Woolcombers of India Ltd. vs. Commissioner of Income-tax (Central), Calcutta, 134 ITR 219. It was further submitted that the view taken by the Calcutta High Court had found approval by the Supreme Court in East India Pharmaceutical Works Ltd. vs. Commissioner of Income-Tax 224 ITR 627 (S.C.) Further reliance in this regard is placed on CIT vs Reliance Utilities and Power Ltd., ITA No. 1398/2008 (Mumbai High Court) pronounced on 09.01.…

M/S. Sindhu Realtors Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is allowed

ITA 2706/DEL/2012[2008-09]Status: DisposedITAT Delhi11 Dec 2015AY 2008-09

Bench: Shri G.D. Agrawal & Shri A.T. Varkey

For Appellant: S/Shri Salil Kapoor & Sanat Kapoor, AdvocatesFor Respondent: Shri B.R.R. Kumar, Senior DR
Section 142(1)Section 143Section 2(22)Section 2(22)(e)

…e funds, discretion lies in the. hands of the assessee for utilisation of those funds. Reliance for that purpose was placed on the judgment of the Calcutta High Court in the case of Woolcombers of India Ltd. vs. Commissioner of Income-tax (Central), Calcutta, 134 ITR 219. It was further submitted that the view taken by the Calcutta High Court had found approval by the Supreme Court in East India Pharmaceutical Works Ltd. vs. Commissioner of Income-Tax 224 ITR 627 (S.C.) Further reliance in this regard is placed on CIT vs Reliance Utilities and Power Ltd., ITA No. 1398/2008 (Mumbai High Court) pronounced on 09.01.…

DCIT, Circle - 8, Kolkata vs. M/S. E.I.H. Ltd., Kolkata

In the result, the appeal of the revenue in ITA NO

ITA 2182/KOL/2006[2003-04]Status: DisposedITAT Kolkata09 Dec 2015AY 2003-04

Bench: : Shri M. Balaganesh

For Appellant: Shri R.N Bajoria, Sr.Advocate &For Respondent: Shri Rajat Subhra Biswas, ld.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…

DCIT, Bangalore vs. M/S Grameen Financial Services Pvt. Ltd., Bangalore

In the result, the appeal by the Revenue is dismissed

ITA 949/BANG/2015[2011-12]Status: DisposedITAT Bangalore06 Nov 2015AY 2011-12

Bench: Smt. Asha Vijayaraghavan & Shri Jason P. Boazassessment Year : 2011-12

For Appellant: Ms. Neera Malhotra, CIT(DR)For Respondent: Shri Shesadri, CA
Section 143(3)Section 14A

…tions. The Supreme Court noted Page 7 of 10 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, New Delhi vs. Oriental Bank of Commerce, New Delhi

In the result, appeal of the assessee and revenue is partly allowed

ITA 1961/DEL/2011[2007-08]Status: DisposedITAT Delhi04 Nov 2015AY 2007-08

Bench: Sh. I.C.Sudhir, Jm & Sh. Prashant Maharishi, Am Asstt. Year: 2007-08

For Appellant: Sh. K.V.S.R.Krishna, CAFor Respondent: Sh. R.R.Singh, CIT., DR
Section 14ASection 36(1)(vii)Section 36(1)(viia)

…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…

Oriental Bank of Commerce, New Delhi vs. Addl. CIT, New Delhi

In the result, appeal of the assessee and revenue is partly allowed

ITA 1937/DEL/2011[2007-08]Status: DisposedITAT Delhi04 Nov 2015AY 2007-08

Bench: Sh. I.C.Sudhir, Jm & Sh. Prashant Maharishi, Am Asstt. Year: 2007-08

For Appellant: Sh. K.V.S.R.Krishna, CAFor Respondent: Sh. R.R.Singh, CIT., DR
Section 14ASection 36(1)(vii)Section 36(1)(viia)

…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 Stanley Lifestyle Pvt. Ltd., Bangalore vs. Pr.CIT, Bangalore

In the result, appeal of the assessee is partly allowed

ITA 608/BANG/2015[2010-11]Status: DisposedITAT Bangalore14 Aug 2015AY 2010-11

Bench: Shri. N. V. Vasudevan & Shri. Abraham P. George

For Appellant: Shri. V. Srinivasan, CAFor Respondent: Shri. Sunil Kumar Agarwala, JCIT
Section 143(3)Section 263

…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 ITA.608/Bang/2015 Page - 8 circumstances the appellant was ent…