“capital expenditure”

Business ExpensesSection 37Section 373,515 judgments

The decision most relied on for capital expenditure is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 judgments on BharatTax.

Leading authorities on capital expenditure

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.

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT

227 ITR 172 · 1997 · Supreme Court

621

citing judgments

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

Madras Industrial Investment Corporation Ltd. v. CIT

225 ITR 802 · 1997 · Supreme Court

568

citing judgments

Expenditure that provides an enduring benefit should be amortized over its useful life, not allowed as a deduction in a single year, to prevent a distorted picture of profits. Specifically, premium paid on debentures for their issue should be amortized on a straight-line method over the life of the debentures.

South Indian Bank Ltd. v. CIT

438 ITR 1 · 2021 · Supreme Court

508

citing judgments

The mixed fund theory is affirmed, holding that no disallowance of interest expenditure under Section 14A can be made if the assessee possesses sufficient non-interest bearing funds, such as capital and reserves, to cover investments made in tax-free securities.

CIT v. Institute of Banking Personnel Selection

264 ITR 110 · 2003 · High Court

398

citing judgments

Depreciation is allowable on assets for which the cost has been fully allowed as an application of income under Section 11 in previous years, when computing the income of a charitable trust. Charitable trusts are also entitled to carry forward their deficit.

Taparia Tools Ltd. v. JCIT

372 ITR 605 · 2015 · Supreme Court

343

citing judgments

An expenditure does not automatically become capital in nature merely because it results in some enduring benefit for the assessee; it can be treated as revenue expenditure if incurred for genuine business purposes.

Biocon Ltd. v. DCIT

35 Taxmann.com 335 · 2013 · ITAT

322

citing judgments

The discount arising from the grant of Employee Stock Option Plans (ESOPs) is an allowable business expenditure under Section 37(1) of the Income-tax Act, 1961, as it is an ascertained liability, not a contingent one, and constitutes a revenue expense rather than a capital expense.

Alembic Chemical Works Co. Ltd. v. CIT

177 ITR 377 · 1989 · Supreme Court

275

citing judgments

Expenditure that provides a commercial advantage of an enduring nature may still be classified as revenue expenditure if its purpose is to facilitate existing trading operations, improve business efficiency, or upgrade existing products, depending on the specific context and objective.

Judgments citing capital expenditure

DCIT, New Delhi vs. Carissa Investment Pvt. Ltd., Delhi

In the result, the appeal of the Revenue is dismissed

ITA 1648/DEL/2021[2013-14]Status: DisposedITAT Delhi07 Feb 2024AY 2013-14

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Us

For Appellant: Sh. Mayank Patwari, CAFor Respondent: Ms. Sapna Bhatia, CIT-DR

Section 14A

claim of the assessee in respect of amount written off ignoring the fact that the amount written off is non- business, prior period and capital expenditure.” 2 Carissa Investment Pvt. Ltd. Disallowance u/s 14A: 3. During the assessment proceedings, the Assessing Officer has worked out the disallowance

Qrg Central Hospital and Research Centre Ltd, New Delhi vs. ACIT, Circle-20(2), New Delhi

In the result, both the appeals of the assessee are allowed

ITA 4283/DEL/2018[2015-16]Status: DisposedITAT Delhi07 Feb 2024AY 2015-16

Bench: Shri Saktijit Dey & Shri M. Balaganeshqrg Central Hospital Research Vs. Acit, Centre Ltd, Circle-21(2), 909, 9Th Floor, Surya Kiran New Delhi Building, Kg Marg, Connaught Place, New Delhi (Appellant) (Respondent) Pan:Aaacq1682M Qrg Central Hospital Research Vs. Acit, Centre Ltd, Circle-20(2), 909, 9Th Floor, Surya Kiran New Delhi Building, Kg Marg, Connaught Place, New Delhi (Appellant) (Respondent) Pan:Aaacq1682M Assessee By : Dr. Rakesh Gupta, Adv Shri Deepesh Garg, Adv Revenue By: Shri S. L. Anuragi, Sr. Dr Date Of Hearing 14/11/2023 Date Of Pronouncement 07/02/2024

For Appellant: Dr. Rakesh Gupta, AdvFor Respondent: Shri S. L. Anuragi, Sr. DR

Section 143(3)Section 15Section 23Section 28Section 37

that the expenses are incurred in respect of the ownership of the firm and takeover of its business assets and liabilities which is a capital expenditure as well as personal expenses amounting to be Rs 2,80,788/- cannot be allowed as expenses wholly and exclusively for business purposes ... firm. M/s Central Hospital and Research Centre. That the AO has disallowed the same on the basis that the said legal expenses are a capital expenditure as well as personal expenditure of the directors/ ex- partners of the Company/ firm. In this connection, it is submitted as under:- “i) That

Qrg Central Hospital and Research Centre Ltd, New Delhi vs. ACIT, Circle-21(2), New Delhi

In the result, both the appeals of the assessee are allowed

ITA 4854/DEL/2017[2014-15]Status: DisposedITAT Delhi07 Feb 2024AY 2014-15

For Appellant: Dr. Rakesh Gupta, AdvFor Respondent: Shri S. L. Anuragi, Sr. DR

Section 143(3)Section 15Section 23Section 28Section 37

ACIT, Circle- 19(1), New Delhi vs. Ojas Industries (P) Ltd., New Delhi

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

ITA 4143/DEL/2017[2008-09]Status: DisposedITAT Delhi07 Feb 2024AY 2008-09

Bench: Dr. B. R. R. Kumarshri Yogesh Kumar Us

For Appellant: Sh. K.V.S.R. Krishna, CAFor Respondent: Sh. Subhra Jyoti Chakraborty, CIT-DR

Section 14ASection 37

bills for the expenses on building repairs paid to M/s. K.K. Construction was provided. Further, he also states that the expenditure might be a capital expenditure and therefore also disallows the same. The assessee has provided the ledger account showing the payments to M/s. K.K. Construction. In the narration column ... manure site repair. Therefore, this is recurring day-to-day expenditure and is to be allowed as current repairs and not a capital expenditure as has been presumed by the AO. Again in case the AO had a doubt or wanted clarification then he should have asked for clarification

M/S. Ojas Industries (P) Ltd., New Delhi vs. DCIT, New Delhi

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

ITA 3714/DEL/2017[2008-09]Status: DisposedITAT Delhi07 Feb 2024AY 2008-09

Bench: Dr. B. R. R. Kumarshri Yogesh Kumar Us

For Appellant: Sh. K.V.S.R. Krishna, CAFor Respondent: Sh. Subhra Jyoti Chakraborty, CIT-DR

Section 14ASection 37

Demi Realtors, Hyderabad vs. DCIT, Circle-6(1), Hyderabad

In the result, the appeal of the assessee is partly allowed for statistical purposes on the above terms

ITA 156/HYD/2023[2008-09]Status: DisposedITAT Hyderabad05 Feb 2024AY 2008-09

Bench: Shri R.K. Panda & Shri Laliet Kumar

For Respondent: Ms. T. Vijaya Lakhsmi, CIT-DR

Section 143(3)Section 37(1)Section 40Section 40A(3)Section 40a

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI R.K. PANDA

Yes Bank Ltd., Mumbai vs. DCIT(2)(2)(2), Mumbai

ITA 4278/MUM/2019[2015-16]Status: DisposedITAT Mumbai05 Feb 2024AY 2015-16

Bench: Shri Om Prakash Kant () & Ms. Kavitha Rajagopal ()

Section 14ASection 251Section 35DSection 8D(2)

4278/M/2019 आयकर अपीलीय अधिकरण COME TAX APPELLATE TRIBUNAL SPEEDY JUSTICE fact that such expenditure is in the nature of capital expenditure and forms a part of cost of assets?" 3. "Whether on the facts and in the circumstances of the case and in law, Ld.CIT (A) was right in directing

ACIT - 2(2)(2), Mumbai vs. Yes Bank Limited, Mumbai

ITA 3017/MUM/2019[2015-16]Status: DisposedITAT Mumbai05 Feb 2024AY 2015-16

Bench: Shri Om Prakash Kant () & Ms. Kavitha Rajagopal () Acit-2(2)(2), Room No. 545, 5Th Floor, Aayakar Bhavan, Mumbai-400020. Appellant Yes Bank Ltd., 15Th Floor, Yes Bank Tower, Ifc 2, Senapati Bapat Marg, Elphistone (West), Mumbai-400013. Pan No. Aaacy 2068 D Appellant Assessee By Revenue By Date Of Hearing Date Of Pronouncement

Section 14ASection 251Section 35DSection 8D(2)

directing to delete the disallowances of brokerage paid on acquisition of investments without appreciating the fact that such expenditure is in the nature of capital expenditure and forms a part of cost of assets?" 3. "Whether on the facts and in the circumstances of the case and in law, Ld.CIT

Karamveer Electronics Limited, Meerut vs. Pr, CIT, Ghaziabad

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

ITA 1223/DEL/2023[2018-19]Status: DisposedITAT Delhi05 Feb 2024AY 2018-19

Bench: Shri Saktijit Dey & Shri N.K. Billaiya

For Appellant: Shri Devashish Bhadauria, AdvFor Respondent: Shri Subhra Jyoti Chakraborty, CIT-DR

Section 142(1)Section 143(3)Section 263Section 263(1)Section 56(2)

Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that

Honda Motorcycle and Scooter India Pvt. Ltd., Gurgaon vs. ACIT, Circle-1(1), Gurugram

In the result, appeal is partly allowed

ITA 1524/DEL/2022[2018-19]Status: DisposedITAT Delhi05 Feb 2024AY 2018-19

Bench: Shri Saktijit Dey, Vice- & Shri Pradip Kumar Kediaassessment Year: 2018-19

For Appellant: Sh. Harpreet Singh Ajmani, AdvFor Respondent: Sh. Rajesh Kumar, CIT-DR

Section 143(3)Section 92C

Article 17 of the above agreement. Therefore, he submitted that the above argument might be considered where the royalty is considered as capital expenditure. 10. We have carefully considered the rival contentions and perused the orders of the lower authorities. Ground number 2 - 5 and challenging the rejection ... Ground No. 8 of the appeal is with respect to the expenses of signage, which was considered by the ld. AO as capital expenditure whereas the assessee claimed it to be revenue expenditure. On carefully consideration of rival contentions, we find that this issue is squarely considered the coordinate bench

Vidyarthi Vikas Pratishthan Jalgaon, Jalgaon vs. Income Tax Department (NFAC), Delhi

ITA 1194/PUN/2023[2020-21]Status: DisposedITAT Pune02 Feb 2024AY 2020-21

Bench: Shri S.S.Godara & Dr. Dipak P. Ripoteआयकरअपीलसं. / Ita No.1194/Pun/2023 िनधा"रणवष" / Assessment Year : 2020-21 Vidyarthi Vikas Pratishthan Assessment Unit, Income Jalgaon, V Tax Department(Nfac) Gat No.148, Yashwant Nagar, S Ramanand Nagar, Maharashtra – 425001. Pan: Aaatv6624R Appellant/ Assessee Respondent /Revenue Assessee By Shri Hari Krishnan – Ar Revenue By Shri Sourabh Nayak – Jcit-Dr Date Of Hearing 01/02/2024 Date Of Pronouncement 02/02/2024 आदेश/ Order Per Dr. Dipak P. Ripote, Am: This Is An Appeal Filed By The Assessee Against The Order Of Ld.Commissioner Of Income Tax(Appeal)[Nfac], Delhi Under Section 250 Of The Income Tax Act, 1961 For A.Y.2020-21 Passed On 20.09.2023 Emanating From Order Under Section 143(3) R.W.S 144B Of The Income Tax Act, 1961 Dated 20.09.2022. The Assessee Has Raised The Following Grounds Of Appeal : “1. The Learned Cit(A) Has Erred In Dismissing The Grounds Of Appeal Filed Before Him By The Assessee & In Vidyarthi Vikas Pratishthan Jalgaon[A]

Section 11Section 143(3)Section 250Section 57

section 57(iii) is reproduced here as under : “Section 57(iii) of the Act : (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income;” 8. Thus, as per section ... expenditure which has been incurred wholly and exclusively for earning income and which is not capital expenditure is an allowable deduction. In this case, it is not the case of the AO that the expenditure was capital expenditure. Thus, the only thing one needs to verify is that whether

Onkar Society for Engineering & Technological Research & Development, Kolkata vs. ITO, Ward 1(2), Exempt., Kolkata

In the result, the appeal of the assessee is allowed

ITA 1303/KOL/2023[AY 2020-21]Status: DisposedITAT Kolkata02 Feb 2024

Bench: Shri Sonjoy Sarma & Shri Girish Agrawal]

Section 10BSection 11Section 11(1)(a)Section 12ASection 139(4)Section 143(1)Section 250

order of ld. AO wherein he has disallowed the exemption claimed u/s 11of the Act amounting to Rs. 7,45,35,949/- comprising capital expenditure of Rs. 1,85,37,546/- and revenue expenditure of Rs. 4,68,18,969/-incurred during the year for charitable purposes of the trust

Zenith Weldaids Private Limited, Ghaziabad vs. Comissioner of Income Tax Appeal (NFAC), Delhi

In the result, appeal filed by the assessee stands allowed for statistical

ITA 3536/DEL/2023[2020-21]Status: DisposedITAT Delhi02 Feb 2024AY 2020-21

Bench: Sh. Shamim Yahyazenith Weldaids Pvt. Ltd. Cit(Nfac) Vs. C-164, Bs Road, Industrial Delhi Area, Ghaziabad-201 003 Pan No. Aaacz 0626 J (Appellant) (Respondent) Assessee By Shri Rakesh Kumar Garg, C.A. & Shri Ankit Garg, C.A. Revenue By Shri Om Prakash, Sr. D.R. Date Of Hearing: 29.01.2024 Date Of Pronouncement: 02.02.2024

Section 143(1)Section 2(24)Section 36(1)(va)Section 37(1)

nature of expenditure prescribed in Sections 30 to 36 of the Act and also not being in the nature of capital expenditure or personal expenses of the assessee. Thus, in view of such mandate of law, the deduction of expenditure under the general clause of Section 37(1) would