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“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

Shree Balkrishna Commercial Co. Ltd, Gurgaon vs. DCIT Circle-23(1), New Delhi

In the result appeal of the Assessee stands allowed for statistical purposes

ITA 1665/DEL/2020[2014-15]Status: DisposedITAT Delhi07 Feb 2023AY 2014-15

Bench: Shri Anil Chaturvedi & Shri Narender Kumar Choudhry[Assessment Year: 2014-15

Section 250

appeal: “1. The learned DCIT as well as CIT (A) erred in treating the repair of false ceiling after repair of AC ducts as capital expenditure whereas the expenditure on repair of AC ducts has been allowed as revenue expenditure.. Access to AC duct is not possible unless ... addition/disallowance made by the AO and confirmed by the learned Commissioner on account of repair of false ceiling by treating the same as “capital expenditure “ instead of “revenue expenditure” as claimed by the Assessee. 5.1 The AO by perusing the P&L account of the Assessee found that during

ACIT (E), Circle- 2(1), New Delhi vs. Nav Nirman Sewa Samiti, Delhi

ITA 6282/DEL/2017[2014-15]Status: DisposedITAT Delhi07 Feb 2023AY 2014-15

Bench: Sh. Shamim Yahya & Sh. Anubhav Sharmaita No. 6282/Del/2017, A.Y. 2014-15 Acit(E), Vs. Nav Nirman Sewa Samiti, Circle-2(1), B N-9, Shalimar Bagh New Delhi (East), Delhi-110088 Pan : Aaaan6370R Appellant Respondent

Section 11Section 12ASection 143(3)

circumstances of the case and 1. in law, the Ld. CIT(A) has erred in allowing depreciation as already claimed by assessee as capital expenditure in earlier years. The Ld. CIT(A) has erred in allowing the appeal of the 2. assessee by ignoring the fact in the case

DCIT, C-11(1), New Delhi vs. Hero Motocorp Ltd., New Delhi

Appeal of the Revenue is dismissed

ITA 1982/DEL/2019[2014-15]Status: DisposedITAT Delhi03 Feb 2023AY 2014-15

Bench: Shri Narendra Kumar Billaiya & Shri Kul Bharat

Section 14ASection 2(22)(e)Section 40Section 40a

Indo-Japan DTAA. AO: In the assessment order, the AO treated the aforesaid expenditure incurred by way of royalty paid to Honda as capital expenditure on the ground that the assessee had received benefit of enduring nature. The assessing officer, accordingly, disallowed Rs. 91.87 crores, out of total expenditure ... Tribunal in assessee’s own case for assessment years 2010-11 and 2011-12 deleted the disallowance made by the assessing officer. Royalty- not capital expenditure No ownership rights - only limited right to use During the currency of the agreement, the assessee only had a limited right

Rakshita Patel, Delhi vs. AO Ward 49(2), Delhi

In the result the appeal of the assessee in ITA No

ITA 647/DEL/2022[2017-18]Status: DisposedITAT Delhi02 Feb 2023AY 2017-18

Bench: Shri N.K. Billaiya & Ms. Astha Chandra

For Appellant: Shri VedJain, AdvFor Respondent: Shri T.P. Kipgen, CIT- DR
Section 142(1)Section 143(3)Section 144Section 263Section 54

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

Perfetti Van Melle India Pvt. Ltd., Gurgaon vs. ACIT, Circle-3(1), Gurgaon

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

ITA 888/DEL/2021[2009-10]Status: DisposedITAT Delhi01 Feb 2023AY 2009-10

Bench: Shri Anil Chaturvedi & Shri Yogesh Kumar U.S.

For Appellant: ShriFor Respondent: Shri Rajesh Kumar
Section 143(3)Section 144CSection 254Section 92C

Delhi High Court that advertisement 110 23 Perfetti Van Melle India, Manesar expenditure generally is not and should not be treated as capital expenditure incurred or made for creating an intangible capital asset. Appropriate in this regard would be to reproduce the observations in CTT v. Monto Motors

M/S. Genpact Services Llc, Gurgaon vs. DCIT, New Delhi

In the result, the appeal is partly allowed

ITA 2524/DEL/2016[2010-11]Status: DisposedITAT Delhi31 Jan 2023AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2010-11 M/S. Genpact Services Llc, Vs. Dcit, Genpact Tower, Sector-53, Circle-1(3)(1), (International Dlf City, Phase-V, Taxation), Gurgaon New Delhi Pan :Aaccg3353P (Appellant) (Respondent)

enduring benefits to the assessee, the Assessing Officer called upon the assessee to show-cause, as to why, it should not be treated as capital expenditure. In response to the query raised by the Assessing Officer, the assessee furnished detailed submission stating that by incurring the expenditure, the assessee ... Thus, ultimately, the Assessing Officer concluded that the expenditure incurred of Rs.22,16,00,276/- is in the nature of capital expenditure. Accordingly, he allowed depreciation at the rate of 25% on such expenses. The balance amount of Rs.16,62,00,276/- was added back to the income

Assistant Commissioner of Income Tax, Circle-IV, Pathankot vs. The Gurdaspur Central Co. Opbank Ltd, Gurdaspur

In the result, the ground no

ITA 542/ASR/2017[2013-14]Status: DisposedITAT Amritsar31 Jan 2023AY 2013-14

Bench: Dr. M. L. Meenaandsh. Anikesh Banerjee

Section 143(3)Section 250(6)Section 40Section 43D

assessee. In relation to rejection of the addition Rs.1,65,100/- and Rs.57,135/- related to purchase of floor tiles are nature of capital expenditure. So, it is not the revenue expenditure & cannot be the part of the P & L a/c. It is to be directed that the depreciation ... capital expenditure should be allowed to the assessee in applicable rate. In relation to payment of the two Co- owners amount Rs.3,78,750/- the said addition is also deleted as each Co-owner is Rs. @ 12,500/- which is below the quantum of TDS. The violation of section

Deputy Commissioner of Income-Tax, Central Circle -1, Nashik vs. Mahakaleshwar Tollways Private Limited, Ujjain

In the result, the appeal of the Revenue is dismissed

ITA 123/IND/2021[2017-18]Status: DisposedITAT Indore30 Jan 2023AY 2017-18

Bench: Shri C.M. Garg, Judicial Memebr & Shri Bhagirath Mal Biyaniआयकरअपीलसं./I.T.A. No. 123/Ind/2021 (िनधा"रणवष" / Assessment Year : 2017-18)

For Appellant: Shri P.K. Mishra, CIT-D.R
Section 143(3)Section 32(1)(ii)

nature and the same cannot be amortized over the period for which the assessee can collect the toll; the right to collect toll is capital expenditure incurred bythe assessee and consequently, the assessee is entitled to claim depreciation on such intangible assets as provided under section

Supreme Auto 9India) Pvt, Ltd, Indore vs. ITO1 (4), Indore

In the result, the appealof assesseeis partly allowed in terms indicated above

ITA 133/IND/2020[2013-14]Status: DisposedITAT Indore30 Jan 2023AY 2013-14

Bench: Ms. Madhumita Roy & Shri B.M. Biyani

Section 143(2)Section 143(3)Section 56(2)Section 68

credit limit, which is an undisputed fact admitted by lower authorities. The lower authorities have made disallowance only by holding the same as a capital expenditure. However, we are consciously aware that the renewal of cash-credit limit is a regular feature, normally every year, being done by banks Supreme

M/S M/S Bagadiya Brothers Pvt.Ltd., Raipur, Raipur (Cg) vs. The Dy. Commissioner of Income Tax, -2(1), Raipur, Raipur (Cg)

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

ITA 37/BIL/2017[2011-12]Status: DisposedITAT Raipur24 Jan 2023AY 2011-12

Bench: Shri Ravish Sood & Shri G D Padmahshaliआयकर अपील सं. / Ita No. 37/Rpr/2017 "नधा"रण वष" / Assessment Year : 2011-12 Bagadiya Brothers Pvt. Ltd. Bagadiya Mansion, Jawahar Nagar, Raipur (C.G.) Pan : Aabcb8934G .......अपीलाथ" / Appellant बनाम / V/S. The Dy. Commissioner Of Income Tax-2(1), Raipur (C.G.) ……""यथ" / Respondent

For Appellant: Shri G.S.Agrawal, CAFor Respondent: Shri Debashish Lahiri, CIT-DR
Section 143(2)Section 143(3)Section 35D

aforesaid hotel had not came into existence, therefore, its claim for deduction of legal and professional charges being in the nature of a capital expenditure was not to be allowed as a deduction either u/s.37 or under any other provisions of the Act. Accordingly, the A.O on the basis ... supra) u/s.37(1) of the Act as claimed by it was in order; or the same was liable to be disallowed as a capital expenditure as observed by the A.O/ CIT(Appeals). 6 Bagadiya Brothers Pvt. Ltd. Vs. Dy.CIT-2(1), Raipur 9. Having given a thoughtful consideration, we find

ACIT, Central Circle-6, New Delhi vs. Fiitjee Edusoft Ltd (Merged With Fiitjee Ltd), New Delhi

In the result, the appeal filed by the assessee is partly allowed for

ITA 5266/DEL/2018[2013-14]Status: DisposedITAT Delhi23 Jan 2023AY 2013-14
For Appellant: Shri Anil Bajaj, CAFor Respondent: Shri Gurpreet Shah Singh, Sr. DR
Section 32Section 37

./2018 ITA No.5266/Del./2018 provided intellectual property right as know-how and he held that the earlier expenditure written off should be allowed as capital expenditure and depreciation should be allowed. Further he held that the action of AO not disallowing the same as revenue expenditure is upheld. The short

Fiitjee Edusoft Ltd (Merged With Fiitjee Ltd), New Delhi vs. ACIT, Central Circle-6, New Delhi

In the result, the appeal filed by the assessee is partly allowed for

ITA 4975/DEL/2018[2013-14]Status: DisposedITAT Delhi23 Jan 2023AY 2013-14
For Appellant: Shri Anil Bajaj, CAFor Respondent: Shri Gurpreet Shah Singh, Sr. DR
Section 32Section 37

./2018 ITA No.5266/Del./2018 provided intellectual property right as know-how and he held that the earlier expenditure written off should be allowed as capital expenditure and depreciation should be allowed. Further he held that the action of AO not disallowing the same as revenue expenditure is upheld. The short

Retina Forum, Delhi vs. CIT Exemption, Delhi

The appeal of the assessee is partly allowed for statistical purposes

ITA 1050/DEL/2022[-]Status: DisposedITAT Delhi20 Jan 2023

Bench: Shri R.S. Syal & Smt Suchitra Kamble

Section 142(1)Section 143(2)Section 68

provides that “Any expenditure (not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of business or profession shall be allowed in computing

Retina Forum, Delhi vs. CIT Exemption, Delhi

The appeal of the assessee is partly allowed for statistical purposes

ITA 1049/DEL/2022[-]Status: DisposedITAT Delhi20 Jan 2023

Bench: Shri R.S. Syal & Smt Suchitra Kamble

Section 142(1)Section 143(2)Section 68

provides that “Any expenditure (not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of business or profession shall be allowed in computing

Kalinga Institute of Social Scinces(Kiss), Patia vs. CIT (Exemption)- Hyderabad, Hyderabad

In the result, appeal of the assessee stands allowed

ITA 47/CTK/2022[2017-18]Status: HeardITAT Cuttack19 Jan 2023AY 2017-18

Bench: Shri George Mathan & Shri Arun Khodpiaआयकर अऩीऱ सं/Ita No.47/Ctk/2022 (ननधाारण वषा / Assessment Year :2017-2018) Kalinga Institute Of Social Sciences Vs Cit(Exemption), Hyderabad At (Kiss), Bhubaneswar Plot No.582/1540, Kiit Campus-10 Patia, Bhubaneswar-751024 Pan No. :Aaaak 7721 R (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee By : Shri S.K.Agrawalla & S.K.Hota, Ars राजस्व की ओर से /Revenue By : Shri M.K.Gautam, Cit-Dr सुनवाई की तारीख / Date Of Hearing : 19/01/2023 घोषणा की तारीख/Date Of Pronouncement : 19/01/2023 आदेश / O R D E R Per Bench : This Is An Appeal Filed By The Assessee Against The Order Of The Ld.Cit(E), Hyderabad At Bhubaneswar, Dated 14.03.2022, Passed In Din & Order No.Itba/Rev/F/Rev5/2021-22/1040706357(1) For The Assessment Year 2017-2018. 2. It Was Submitted By The Ld. Ar That The Assessee Is A Trust, Who Is Enjoying The Benefit Of Registration U/S.12A & 80G Of The Act. It Was Submitted That The Assessee Had Received Corpus Donations From M/S Kalinga Institute Of Industrial Technology (Kiit) In The Form Of Incurrence Of Capital Expenditure Of Rs.21,65,00,000/- & An Amount Of Rs.25,00,000/- From Container Corporation Of India (Cci). It Was Submitted That As Per The Mou Between The Assessee & Container Corporation Of India, The Container Corporation Of India Has Provided

For Appellant: Shri S.K.Agrawalla & S.K.Hota, ARsFor Respondent: Shri M.K.Gautam, CIT-DR
Section 12ASection 143(2)Section 143(3)Section 244ASection 263

submitted that the assessee had received corpus donations from M/s Kalinga Institute of Industrial Technology (KIIT) in the form of incurrence of capital expenditure of Rs.21,65,00,000/- and an amount of Rs.25,00,000/- from Container Corporation of India (CCI). It was submitted that

Ashoka Transways Services Pvt. Ltd., Raipur vs. Income Tax Officer, Ward-2(2), Raipur

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

ITA 168/RPR/2022[2014-15]Status: DisposedITAT Raipur19 Jan 2023AY 2014-15

Bench: Shri Ravish Soodआयकर अपील सं./ Ita No.168/Rpr/2022 "नधा"रण वष" / Assessment Year : 2014-15 Ashoka Transways Service Private Limited Oppo. Balaji Petrol Pump Bhanpuri, Raipur (C.G.)-492 001 Pan : Aadca4062G

For Appellant: None (written submission)For Respondent: Shri Piyush Tripathi, Sr. DR
Section 143(2)Section 143(3)Section 37(1)

expenditure which have been incurred wholly and exclusively for the purpose of business or profession; or (ii) is in the nature of a capital expenditure; or (iii) is in the nature of a personal expenditure; or (iv) is an expenditure incurred by the assessee for any purpose which

Raj Abhishek Corporation, Surat vs. Pr. CIT-1, Surat

In the result, appeal filed by the assessee is dismissed

ITA 117/SRT/2022[2017-18]Status: DisposedITAT Surat16 Jan 2023AY 2017-18

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकरअपीलसं./Ita No.117/Srt/2022 ("नधा"रणवष" / Assessment Year: (2017-18) (Physical Court Hearing) Raj Abhishek Corporation Principal Commissioner Of Income 501,Kohinoortextiles Market, Tax, Surat-1, Room No.123, Aaykar Vs. Ring Road, Surat-395002 Bhavan, Majura Gate, Surat—395002 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aajfr 6297 D (Appellant) (Respondent) िनधा"रती की ओर से /Assessee By : Shri Ketan Jagirdar, C.A राज"व क" ओर से /Respondent By : Shri Ashok B. Koli, Cit-D.R

For Appellant: Shri Ketan Jagirdar, C.AFor Respondent: Shri Ashok B. Koli, CIT-D.R
Section 143(3)Section 263Section 80Section 80I

that while passing the assessment order, the Assessing Officer 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

M/S. Bellezza (India) Pvt. Ltd., Nagpur vs. ACIT, Circle- 2, Nagpur

In the result, appeal of the Assessee is Partly Allowed

ITA 74/NAG/2015[2009-10]Status: DisposedITAT Nagpur13 Jan 2023AY 2009-10

Bench: S.S.Godara & Dr. Dipak P. Ripoteआयकर अपील सं. / Ita No.74/Nag/2015 िनधा"रण वष" / Assessment Year : 2009-10 M/S.Bellazza (India) Pvt. Ltd., The Acit, Circle-2, Lg-3, Achraj Tower-Ii, Vs Nagpur. Chhaoni Chowk, Chhindwara Road, Nagpur – 13. Pan: Aaccb 4029 M Appellant/ Assessee Respondent /Revenue Assessee By Shri S.C.Thakar – Ar Revenue By Shri G.J.Ninawe - Dr Date Of Hearing 17/11/2022 Date Of Pronouncement 13/01/2023 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(Appeals)-1, Nagpur Dated 05.11.2014 Emanating From The Order Of Acit(Ao) Dated 30.12.2011 Passed Under Section 143(3) Of The Act,1961. The Assessee Has Raised The Following Grounds Of Appeal: “1] A.C.I.T. Erred In Rejecting The Audited Books Of Account & Estimated Income @ 5% Of Total Receipts & Also Adding Additional Income Of Rs.30 Lacs To The Returned Income. Learned C.I.T.(A) Has Confirm The Addition Without Any Basis. 2] Learned C.I.T.(A) & A.C.I.T. Erred In Not Accepting The Assessee’S Various Submission & Supporting Documents Filed By The

Section 133ASection 143(3)Section 37

decision of Hon'ble Supreme Court, any expenditure incurred for increase in capital of the company assumes a character the capital expenditure as it is directly related to the expansion capital base of the company. Thus, the expenditure of ITA No.74/NAG/2015 for A.Y.2009-10 M/s.Bellazza (India) Pvt. Ltd.,[A] Rs.3

DCIT, Central Circle-1, Udipur vs. M/S. Wagad Constrution Company, Udaipur

In the result, appeals of the Revenue are dismissed

ITA 30/JODH/2020[2014-15]Status: DisposedITAT Jodhpur12 Jan 2023AY 2014-15
For Appellant: Shri S.L. Poddar (Advocate)For Respondent: Shri Venkatesh V. (JCIT-Sr.DR)
Section 143(1)

expenditure incurred wholly and exclusively for the purpose of business and not being in the nature of capital expenditure or personal expenses is allowable in computing the income chargeable under the head "profits and gains" of business or profession. The onus lies on the assessee to substantiate by documentary evidences

Inter Continental Hotels Group (Asia Pacific) Pte Ltd., Gurgaon vs. DCIT, Circle- 2(1)(1), International Taxation, New Delhi

In the result, the appeal is allowed

ITA 4608/DEL/2019[2013-14]Status: DisposedITAT Delhi11 Jan 2023AY 2013-14

Bench: Shri G.S. Pannu & Shri Saktijit Dey

Section 144C(3)

marketing), and other business support functions ( finance, human resources , IT etc .). IHG India works closely with hotel owners to develop and monitor business plans, capital expenditure budgets , review and operational audits o f the hotels etc. Guidance are provided to the General Managers ("GM") o f the hotels in analyzing