← All Phrases

“commercial expediency”

Business ExpensesSection 37Section 371,685 judgments

The decision most relied on for commercial expediency is S.A. Builders Ltd. v. CIT (288 ITR 1), cited in 1,484 judgments on BharatTax.

Leading authorities on commercial expediency

S.A. Builders Ltd. v. CIT
288 ITR 1 · 2007 · Supreme Court
1,484
citing judgments

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

Empire Jute Co. Ltd. v. CIT
124 ITR 1 · 1980 · Supreme Court
622
citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

CIT v. Reliance Industries Ltd.
410 ITR 466 · 2019 · Supreme Court
501
citing judgments

When mixed funds are available, interest-free advances are presumed to be made from the assessee's own interest-free funds, preventing disallowance of interest expenditure under section 36(1)(iii). This principle also applies to section 14A disallowance, where interest expenditure is not disallowed if surplus funds are available and no direct nexus is established with borrowed funds for investments earning exempt income.

CIT v. Dalmia Cement (Bharat) Ltd.
254 ITR 377 · 2002 · High Court
417
citing judgments

When there is a nexus between an expenditure and the purpose of business, incurred on grounds of commercial expediency, the Revenue cannot question its reasonableness or assume the role of the businessman to compel profit maximization. This principle applies even if the business is not that of the assessee itself.

Hero Cycles Pvt. Ltd. v. CIT
379 ITR 347 · 2015 · Supreme Court
361
citing judgments

The Revenue cannot substitute its judgment for that of a businessman regarding the necessity or reasonableness of an expenditure. If an expense is incurred wholly and exclusively for business purposes, it is deductible, and the Revenue cannot question its commercial expediency.

CIT v. Abhishek Industries Ltd.
286 ITR 1 · 2006 · High Court
359
citing judgments

For interest on borrowed capital to be deductible under Section 36(1)(iii), there must be a nexus between the use of the borrowed funds and the purpose of the business. This decision has been overruled by the Supreme Court in Munjal Sales Corporation v. CIT (2008).

Eastern Investments Ltd. v. CIT
38 ITR 601 · 1960 · Supreme Court
346
citing judgments

Expenditure must be commercially expedient for carrying on the business, and it is not for revenue authorities to dictate how an assessee should conduct its business. The court will not question the business expediency of a transaction, even if a third party also benefits.

Sassoon J. David & Co. Pvt. Ltd. v. CIT
118 ITR 261 · 1979 · Supreme Court
323
citing judgments

An expense incurred by an assessee for its own business, such as advertising, marketing, and promotional (AMP) expenses, cannot be disallowed merely because it incidentally or indirectly benefits the assessee's sister concerns or associated enterprises.

Judgments citing commercial expediency

Deputy Commissioner of Income Tax, Circle- 1(1)(2), Bangalore vs. M/S. Bioplus Life Sciences Private Limited, Bangalore

In the result appeals filed by assessee stands allowed and appeals filed by revenue stands partly allowed for assessment years 2012-13 & 2013-14

ITA 1374/BANG/2019[2013-14]Status: DisposedITAT Bangalore30 Dec 2021AY 2013-14

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Appeal No. Appellant Respondent Year M/S. Bioplus Life The Deputy Sciences Pvt. Ltd., Commissioner Of No. 10/1A, 2012-13

Section 14ASection 234BSection 37(1)

expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of business, may yet be expended wholly and exclusively for the purposes of the trade

Deputy Commissioner of Income Tax, Circle- 1(1)(2), Bangalore vs. M/S. Bioplus Life Sciences Private Limited, Bangalore

In the result appeals filed by assessee stands allowed and appeals filed by revenue stands partly allowed for assessment years 2012-13 & 2013-14

ITA 1373/BANG/2019[2012-13]Status: DisposedITAT Bangalore30 Dec 2021AY 2012-13

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Appeal No. Appellant Respondent Year M/S. Bioplus Life The Deputy Sciences Pvt. Ltd., Commissioner Of No. 10/1A, 2012-13

Section 14ASection 234BSection 37(1)

expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of business, may yet be expended wholly and exclusively for the purposes of the trade

M/S. Bioplus Life Sciences Private Limited, Bengaluru vs. The Income Tax Officer, Ward - 1(1)(1), Bengaluru

In the result appeals filed by assessee stands allowed and appeals filed by revenue stands partly allowed for assessment years 2012-13 & 2013-14

ITA 1255/BANG/2019[2013-14]Status: DisposedITAT Bangalore30 Dec 2021AY 2013-14

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Appeal No. Appellant Respondent Year M/S. Bioplus Life The Deputy Sciences Pvt. Ltd., Commissioner Of No. 10/1A, 2012-13

Section 14ASection 234BSection 37(1)

expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of business, may yet be expended wholly and exclusively for the purposes of the trade

M/S. Bioplus Life Sciences Private Limited, Bengaluru vs. The Assistant Commissioner of Income Tax, Circle- 2(1)(1), Bengaluru

In the result appeals filed by assessee stands allowed and appeals filed by revenue stands partly allowed for assessment years 2012-13 & 2013-14

ITA 1254/BANG/2019[2012-13]Status: DisposedITAT Bangalore30 Dec 2021AY 2012-13

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Appeal No. Appellant Respondent Year M/S. Bioplus Life The Deputy Sciences Pvt. Ltd., Commissioner Of No. 10/1A, 2012-13

Section 14ASection 234BSection 37(1)

expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of business, may yet be expended wholly and exclusively for the purposes of the trade

ACIT, Circle- 28(1), New Delhi vs. Chadha Power, New Delhi

In the result, the appeal filed by the Revenue is dismissed

ITA 3055/DEL/2018[2013-14]Status: DisposedITAT Delhi23 Dec 2021AY 2013-14

Bench: Hon’Ble, Shri G.S. Pannu & Shri Amit Shukla

For Appellant: Shri Rakesh Gupta, AdvocateFor Respondent: Ms. Yagyasaini Kakkar, CIT DR
Section 143(3)Section 40

erred in holding that the entire amount paid to Chadha power (SA) Pty. Ltd on account of reimbursement of expenses is not backed by commercial expediency. iv) On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the reimbursement expenses ... also inflating the expenses of the assessee firm in the garb of support services where no such services were required from the angle of commercial expediency.” 3. In nutshell, in the grounds of appeal, the Revenue has challenged the deletion of addition made u/s 40(a)(i) for reimbursement

DCIT, Circle-19(2), New Delhi vs. Pci Ltd., New Delhi

The Appeal of the Assessee is dismissed

ITA 7959/DEL/2019[2015-16]Status: DisposedITAT Delhi22 Dec 2021AY 2015-16

Bench: Shri R. K. Pandaa N D Shri N. K. Choudhry(Through Video Conferencing)

For Appellant: Shri SatishAggarwal, C. AFor Respondent: Shri M. Barnwal, Sr. D. R
Section 250Section 36(1)(iii)

Court held that the Authorities has to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. 6.15 The material facts of the case

Pci Ltd., New Delhi vs. ACIT, Circle-19(2), New Delhi

The Appeal of the Assessee is dismissed

ITA 7302/DEL/2019[2015-16]Status: DisposedITAT Delhi22 Dec 2021AY 2015-16

Bench: Shri R. K. Pandaa N D Shri N. K. Choudhry(Through Video Conferencing)

For Appellant: Shri SatishAggarwal, C. AFor Respondent: Shri M. Barnwal, Sr. D. R
Section 250Section 36(1)(iii)

Court held that the Authorities has to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. 6.15 The material facts of the case

Gokaldas Images Pvt. Ltd vs. Addl C.I.T

In the result, the ground No

ITA 667/BANG/2013[2008-09]Status: HeardITAT Bangalore16 Dec 2021AY 2008-09

Bench: Shri B.R.Baskaran, Am & Smt.Beena Pillai, Jm

For Appellant: Sri.Ashok A.Kulkarni, AdvocateFor Respondent: Sri.Sri.Vilas V.Shinde, CIT-DR

interest free advance given to M/s Hinduja Investments P Ltd. The Tribunal, in the first round, held that these advances have been given on commercial expediency and accordingly deleted the interest disallowance. The Hon’ble High Court quashed the finding of the Tribunal that the amount of Rs.7 crores advanced ... assessee to M/s.Hinduja Investments Private Limited was for business purposes and on commercial expediency. The High Court restored the issue to the file of the Tribunal with the direction to decide the same afresh in accordance with law. 4. We heard the parties on this issue. The learned AR submitted

Nokia India Pvt. Ltd., Gurgaon vs. Addl.CIT, Special Range-6, New Delhi

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

ITA 6502/DEL/2017[2013-14]Status: DisposedITAT Delhi16 Dec 2021AY 2013-14

Bench: Shri R.K.Panda & Shri Kul Bharat

Section 143(3)Section 144CSection 40Section 928Section 92C(1)

handsets) [Disallowance amount of Rs.6,26,25,925/-] Revenue’s case Disallowance made on the ground that the assessee failed to justify the commercial expediency of the expenditure. Specific allegation in this regard are as under: a) Basis of computation, methodology of determining the stock lying unsold with the dealer ... change in market demand of particular model which affects the sales, the distributor is protected by the Trade Price Protection. This is actually a commercial expediency in modern day technological changes which are very fast and vast. Besides, Trade Price Protection is offered to distributors on handsets which have

Srf Limited, New Delhi vs. ACIT, Circle- 1, Ltu, New Delhi

In the result, appeal of the assessee is partly allowed

ITA 6620/DEL/2018[2014-15]Status: DisposedITAT Delhi13 Dec 2021AY 2014-15

Bench: Sh. Anil Chaturvedi & Shri Kuldip Singh(Through Video Conferencing) Srf Limited Vs. Acit The Galleria, Dlf Mayur Circle – 1, Vihar, Unit No.236 & 237, Ltu 2Nd Floor, Mayur Place, New Delhi Noida Link Road, Mayur Vihar, Phase-I, Extension, Delhi-110 091 Pan : Aaacs 0206 P (Appellant) (Respondent) Assessee By Shri Pradeep Dinodia, C.A. Revenue By Ms. Meera Srivastava, Cit-D.R. Date Of Hearing: 16.09.2021 Date Of Pronouncement: 13.12.2021 Order Per Anil Chaturvedi, Am :

Section 115JSection 143(2)Section 143(3)Section 144C(5)Section 92C

further submitted that no adjustment is required when it is reimbursement of expenses. He further submitted that transactions were undertaken from commercial expediency point of view and were not intended for the exploitation of return. He thereafter submitted that Co-ordinate 20 Bench of Tribunal in the case of Vedanta ... done by the assessee. It is further assessee’s submissions that the reimbursement are on cost to cost basis and transactions were undertaken for commercial expediency and not intended with the expectation of return. The aforesaid contentions of the AR have not found to be false. We find that

ACIT, Circle- 26(2), New Delhi vs. Viney Corporation Ltd., New Delhi

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

ITA 6471/DEL/2018[2014-15]Status: DisposedITAT Delhi08 Dec 2021AY 2014-15

Bench: Shri Prashant Maharishi & Shri K. Narasimha Charyassessment Year: 2014-15

For Appellant: Sh. Pradeep Dinodia, FCAFor Respondent: Sh. B.S. Anant, Sr. DR
Section 143(3)Section 14ASection 37

shape of enhancement of export. It, therefore, establishes the fact that the purchase of shares of Vimercati SPA by the assessee was for commercial expediency and in view of the decision of Hon’ble Supreme Court in the case of SA Builders (supra), such expense shall be deemed to have

Viney Corporation Ltd., New Delhi vs. ACIT, Circle- 26(2), New Delhi

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

ITA 6028/DEL/2018[2014-15]Status: DisposedITAT Delhi08 Dec 2021AY 2014-15

Bench: Shri Prashant Maharishi & Shri K. Narasimha Charyassessment Year: 2014-15

For Appellant: Sh. Pradeep Dinodia, FCAFor Respondent: Sh. B.S. Anant, Sr. DR
Section 143(3)Section 14ASection 37

shape of enhancement of export. It, therefore, establishes the fact that the purchase of shares of Vimercati SPA by the assessee was for commercial expediency and in view of the decision of Hon’ble Supreme Court in the case of SA Builders (supra), such expense shall be deemed to have

Metalsa India Pvt. Ltd., New Delhi vs. DCIT, Circle-16(2), New Delhi

In the result, appeal of the assessee is allowed

ITA 449/DEL/2019[2012-13]Status: DisposedITAT Delhi07 Dec 2021AY 2012-13

Bench: Shri Amit Shukla & Dr. B.R.R. Kumar(Through Video Conferencing)

For Appellant: Shri Pradeep Dinodia, C. AFor Respondent: Shri Mrinal Kumar Das, Sr
Section 143(3)Section 271(1)(c)Section 92C

facts in determining the ALP of the payment of Intra Group Services at Nil, by alleging no economic benefit to appellant and thus judging commercial expediency of the said transaction, which was outside his jurisdiction. 3.5 The Ld. TPO and consequently the Ld. CIT(A) have grossly erred in applying ... when a huge payment has been made by it to the AEs.” 27. The ld. AR has argued that the TPO has judged the commercial expediency of the services availed by the appellant from AE and therefore has surpassed its jurisdiction by concluding that there was no necessity of availing

ACIT, Ltu, New Delhi vs. The Oriental Insurance Co. Ltd., New Delhi

In the result, the order passed by the tribunal dated 09

ITA 5723/DEL/2018[2014-15]Status: DisposedITAT Delhi07 Dec 2021AY 2014-15

Bench: Smt. Diva Singh & Shri N.K. Billaiya

Section 14ASection 44

thus the landlords had no intention to carry out the necessary repairs. The appellant has incurred the said expenses out of business necessity and commercial expediency. It is not the case of the learned Assessing Officer that such expenses are non-genuine or not at all incurred. The said expenses

Hero Moto Corp Ltd., New Delhi vs. Neac, Delhi

ITA 706/DEL/2021[2016-17]Status: DisposedITAT Delhi26 Nov 2021AY 2016-17

Bench: Shri Kul Bharat & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri Ajay Vohra, Sr. AdvocateFor Respondent: Shri Surendra Pal
Section 143(3)Section 144BSection 144CSection 144C(13)Section 145Section 1lSection 80ISection 92C

terms of Accounting Standard 18 issued by the Institute of Chartered Accountants of India, alleging the same to be, excessive, without appreciating the commercial expediency behind such purchases. 7.1 That on the facts and circumstances of the case, the assessing officer erred in not appreciating that the aforesaid parties were ... such price is warranted in terms of section 80IA(8) of the Act and the transaction was a genuine business transaction borne out of commercial expediency. While deciding the appeal for the assessment year 2009-10 and 2015-16, the Hon‟ble Tribunal has decided the issue in favor

M/S. Lucina Land Development Ltd., New Delhi vs. ACIT, New Delhi

In the result, grounds no

ITA 962/DEL/2017[2012-13]Status: DisposedITAT Delhi26 Nov 2021AY 2012-13

Bench: Shri Sudhanshu Srivastava & Shri O.P. Kantassessment Year: 2012-13 M/S. Lucina Land Vs. Acit, Development Ltd., Circle-15(2), M-62 & 63, 1St Floor, New Delhi Connaught Place, New Delhi Pan :Aabcl2130N (Appellant) (Respondent)

Section 143(3)Section 234BSection 36Section 36(1)(iii)

appellant has divested itself of the shareholding in the said company as at the end of the impugned financial year. There could be no commercial expediency that is discernible in the entire transaction. 3.7.4 The second company to whom advance has been given ... appellant continued to block its interest bearing funds by way of this interest free advance. There could be no commercial expediency in the entire 5 transaction. Hence the disallowance of interest by the AO on this account in respect of this advance made for A.Y. 2010-11 is confirmed

Bharti Infratel Ltd., New Delhi vs. DCIT, Circle- 2(1), New Delhi

In the result appeal of assessee is allowed

ITA 425/DEL/2018[2011-12]Status: DisposedITAT Delhi15 Nov 2021AY 2011-12

Bench: Shri Amit Shukla & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri Rohit Jain, Advocate; &For Respondent: Shri Satpal Gulati [CIT] – DR
Section 115JSection 143(3)Section 2Section 37Section 37(1)

Reliance Industries Ltd. 410 ITR 466. Even otherwise explaining the facts of the case he submitted that advances are made out of commercial expediency and, therefore, no disallowance could have been made. He relied upon the decision of Hon’ble Supreme Court in the case of S. A. Builders

Addl. CIT, New Delhi vs. M/S. Jasper Infotech Pvt. Ltd., New Delhi

ITA 2605/DEL/2017[2012-13]Status: DisposedITAT Delhi10 Nov 2021AY 2012-13

Bench: Ms Suchitra Kamble & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: N o n eFor Respondent: Ms. Sarita Singh [CIT] – D. R
Section 143(3)

often perceived as conferring a competitive advantage on those who adopt those strategies or schemes. Expenditure towards that end is based on pure commercial expediency, which the revenue in this case, ought to have recognised, and allowed. The revenue's arguments on this point too are insubstantial." 3.4.7 Keeping

Addl. CIT, Special Range- 5, New Delhi vs. Johnson Matthey India Pvt. Ltd., New Delhi

In the result, all the appeals of the assessee are partly allowed and all the appeals of the Revenue are dismissed

ITA 889/DEL/2018[2013-14]Status: DisposedITAT Delhi03 Nov 2021AY 2013-14

Bench: Ms. Suchitra Kambledr. B. R. R. Kumar(Through Video Conferencing) Ita No. 2025/Del/2017 : Asstt. Year : 2011-12 Ita No. 279/Del/2018 : Asstt. Year : 2012-13 Ita No. 889/Del/2018 : Asstt. Year : 2013-14 Addl. Cit, Vs M/S Johnson Matthey India Pvt. Ltd., Special Range-5, 103, Ashok Estate, Barakhamba Road New Delhi New Delhi (Appellant) (Respondent) Pan No. Aaacj2919A

For Appellant: Sh. Sumit Mangal, Adv. &For Respondent: Sh. Surenderpal, CIT DR &

very difficult to hold that the payment of ‘sales commission’ to AE Japan is either for the purpose of business or for any commercial expediency. Under the arms length scenario no independent enterprise will pay to a third party in a foreign country where it has not been able ... customers nor has it been established that any such services have been rendered by the foreign entity which can have some commercial expediency benefitting the Indian company. Thus, under arms length conditions also such a payment does not stand the test of ALP; and accordingly, we confirm the order

Addl.CIT, Special Range-5, New Delhi vs. Johnson Matthey India Pvt. Ltd., New Delhi

In the result, all the appeals of the assessee are partly allowed and all the appeals of the Revenue are dismissed

ITA 279/DEL/2018[2012-13]Status: DisposedITAT Delhi03 Nov 2021AY 2012-13

Bench: Ms. Suchitra Kambledr. B. R. R. Kumar(Through Video Conferencing) Ita No. 2025/Del/2017 : Asstt. Year : 2011-12 Ita No. 279/Del/2018 : Asstt. Year : 2012-13 Ita No. 889/Del/2018 : Asstt. Year : 2013-14 Addl. Cit, Vs M/S Johnson Matthey India Pvt. Ltd., Special Range-5, 103, Ashok Estate, Barakhamba Road New Delhi New Delhi (Appellant) (Respondent) Pan No. Aaacj2919A

For Appellant: Sh. Sumit Mangal, Adv. &For Respondent: Sh. Surenderpal, CIT DR &

very difficult to hold that the payment of ‘sales commission’ to AE Japan is either for the purpose of business or for any commercial expediency. Under the arms length scenario no independent enterprise will pay to a third party in a foreign country where it has not been able ... customers nor has it been established that any such services have been rendered by the foreign entity which can have some commercial expediency benefitting the Indian company. Thus, under arms length conditions also such a payment does not stand the test of ALP; and accordingly, we confirm the order