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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

DCIT(CC)-8(3), Mumbai vs. Jsw Steel Limited, Mumbai

In the result, all the above appeals of the assessee are

ITA 5615/MUM/2024[2014-15]Status: DisposedITAT Mumbai08 Dec 2025AY 2014-15

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

Section 143(3)Section 144Section 147Section 251Section 263

work in the course of the expansion of the plant capacity by the assessee company at Vijaynagar. All payments made to BAIPL were towards Capital expenditure under contract awarded to the said party. Accordingly, for the year that the contracts were awarded/executed, the respective expenses had not been debited ... case are concerned, it was submitted by the assessee before the appellate authority that the AO erred in considering the amount of capital expenditure incurred by the appellant amounting to Rs.8,93,55,700/- instead of the actual expenditure debited to CWIP amounting to Rs.4,40,07,698/-. In order

DCIT(CC)-8(3), Mumbai vs. Jsw Steel Limited, Mumbai

In the result, all the above appeals of the assessee are

ITA 5601/MUM/2024[2015-16]Status: DisposedITAT Mumbai08 Dec 2025AY 2015-16

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

Section 143(3)Section 144Section 147Section 251Section 263

work in the course of the expansion of the plant capacity by the assessee company at Vijaynagar. All payments made to BAIPL were towards Capital expenditure under contract awarded to the said party. Accordingly, for the year that the contracts were awarded/executed, the respective expenses had not been debited ... case are concerned, it was submitted by the assessee before the appellate authority that the AO erred in considering the amount of capital expenditure incurred by the appellant amounting to Rs.8,93,55,700/- instead of the actual expenditure debited to CWIP amounting to Rs.4,40,07,698/-. In order

DCIT(CC)-8(3), Mumbai vs. Jsw Steel Limited, Mumbai

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

ITA 5599/MUM/2024[2013-14]Status: DisposedITAT Mumbai08 Dec 2025AY 2013-14

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

Section 143(3)Section 144Section 147Section 251Section 263

work in the course of the expansion of the plant capacity by the assessee company at Vijaynagar. All payments made to BAIPL were towards Capital expenditure under contract awarded to the said party. Accordingly, for the year that the contracts were awarded/executed, the respective expenses had not been debited ... case are concerned, it was submitted by the assessee before the appellate authority that the AO erred in considering the amount of capital expenditure incurred by the appellant amounting to Rs.8,93,55,700/- instead of the actual expenditure debited to CWIP amounting to Rs.4,40,07,698/-. In order

M/S. Jsw Steel Limited, Mumbai vs. DCIT, Central Circle 8(3), Mumbai

In the result, all the above appeals of the assessee are

ITA 5586/MUM/2024[2015-16]Status: DisposedITAT Mumbai08 Dec 2025AY 2015-16

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

Section 143(3)Section 144Section 147Section 251Section 263

work in the course of the expansion of the plant capacity by the assessee company at Vijaynagar. All payments made to BAIPL were towards Capital expenditure under contract awarded to the said party. Accordingly, for the year that the contracts were awarded/executed, the respective expenses had not been debited ... case are concerned, it was submitted by the assessee before the appellate authority that the AO erred in considering the amount of capital expenditure incurred by the appellant amounting to Rs.8,93,55,700/- instead of the actual expenditure debited to CWIP amounting to Rs.4,40,07,698/-. In order

M/S. Jsw Steel Limited, Mumbai vs. DCIT, Central Circle -8(3), Mumbai

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

ITA 5585/MUM/2024[2014-15]Status: DisposedITAT Mumbai08 Dec 2025AY 2014-15

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

Section 143(3)Section 144Section 147Section 251Section 263

work in the course of the expansion of the plant capacity by the assessee company at Vijaynagar. All payments made to BAIPL were towards Capital expenditure under contract awarded to the said party. Accordingly, for the year that the contracts were awarded/executed, the respective expenses had not been debited ... case are concerned, it was submitted by the assessee before the appellate authority that the AO erred in considering the amount of capital expenditure incurred by the appellant amounting to Rs.8,93,55,700/- instead of the actual expenditure debited to CWIP amounting to Rs.4,40,07,698/-. In order

M/S. Jsw Steel Limited, Mumbai vs. DCIT, Central Circle -8(3), Mumbai

In the result, all the above appeals of the assessee are

ITA 5584/MUM/2024[2013-14]Status: DisposedITAT Mumbai08 Dec 2025AY 2013-14

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

Section 143(3)Section 144Section 147Section 251Section 263Section 44A

work in the course of the expansion of the plant capacity by the assessee company at Vijaynagar. All payments made to BAIPL were towards Capital expenditure under contract awarded to the said party. Accordingly, for the year that the contracts were awarded/executed, the respective expenses had not been debited ... case are concerned, it was submitted by the assessee before the appellate authority that the AO erred in considering the amount of capital expenditure incurred by the appellant amounting to Rs.8,93,55,700/- instead of the actual expenditure debited to CWIP amounting to Rs.4,40,07,698/-. In order

Trifecta Projects Private Limited, Bengaluru vs. DCIT, Central Circle-2(2), Bangalore

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

ITA 918/BANG/2025[2020-21]Status: DisposedITAT Bangalore05 Dec 2025AY 2020-21

Bench: Shri Prashant Maharishi, Vice – & Shri Soundararajan K.Assessment Year : 2020-21

For Appellant: Shri V. Srinivasan, AdvocateFor Respondent: Shri Subramanian .S, JCIT-DR
Section 132Section 143(1)Section 143(2)Section 153ASection 271ASection 274Section 37Section 40ASection 40A(3)

since the payments were made in excess of Rs. 20,000/-. Similarly, the AO had added the revenue expenditure claimed by the assessee as capital expenditure. For the said additions, the assessee had accepted the said claims and paid the tax dues to the department to buy peace ... allowance of the expenditure when the said payment exceeds Rs. 20,000/-. Similarly, the revenue expenditure as claimed by the assessee is only a capital expenditure and therefore the debit entries made in the P&L account is not correct and addition should be made

Vaksons Metaplast Pvt Ltd, Delhi vs. PCIT(Central), Delhi

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

ITA 2218/DEL/2025[2019-20]Status: DisposedITAT Delhi05 Dec 2025AY 2019-20

Bench: Shris.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Smt. Rano Jain, AdvocateFor Respondent: Shri Amit Jain, CIT DR
Section 115BSection 132Section 139Section 143Section 153Section 153CSection 234ASection 263Section 69C

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

Vaksons Metaplast Pvt Ltd, Delhi vs. PCIT(Central), Delhi

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

ITA 2217/DEL/2025[2018-19]Status: DisposedITAT Delhi05 Dec 2025AY 2018-19

Bench: Shris.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Smt. Rano Jain, AdvocateFor Respondent: Shri Amit Jain, CIT DR
Section 115BSection 132Section 139Section 143Section 153Section 153CSection 234ASection 263Section 69C

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

Vaksons Metaplast Pvt Ltd, Delhi vs. PCIT(Central), Delhi

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

ITA 2216/DEL/2025[2017-18]Status: DisposedITAT Delhi05 Dec 2025AY 2017-18

Bench: Shris.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Smt. Rano Jain, AdvocateFor Respondent: Shri Amit Jain, CIT DR
Section 115BSection 132Section 139Section 143Section 153Section 153CSection 234ASection 263Section 69C

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

Deputy Commissioner of Income Tax, Bengaluru vs. Flipkart India Pvt Ltd, Bengaluru

In the result, both the appeals filed by the Revenue are dismissed

ITA 1395/BANG/2025[2021-22]Status: DisposedITAT Bangalore04 Dec 2025AY 2021-22

Bench: Shri Prashant Maharishi & Shri Keshav Dubey

For Appellant: Shri Shivanand Kalakeri, CIT(DR)(ITAT), BengaluruFor Respondent: Shri Ajay Vohra, Sr. Advocate
Section 143(3)Section 37

marketing intangibles and thereafter he made an addition of Rs.8008 crores holding the same to be expenses incurred in creation of marketing intangibles being capital expenditure. He granted deduction @ 25% on account of depreciation. Accordingly net addition of Rs.6006 crores was made. He also made the computation of final addition ... goods to the retailers at a low cost by which profit forgone by the assessee as discount could not be held to be capital expenditure in nature . 12. He further submitted a copy of order in MA No.159/Bang/2023 for AY 2017-18 wherein certain errors were rectified. Therefore, according

Deputy Commissioner of Income Tax, Central Circle-1(4), Bengaluru vs. Flipkart India Pvt Ltd, Bengaluru

In the result, both the appeals filed by the Revenue are dismissed

ITA 1394/BANG/2025[2020-21]Status: DisposedITAT Bangalore04 Dec 2025AY 2020-21

Bench: Shri Prashant Maharishi & Shri Keshav Dubey

For Appellant: Shri Shivanand Kalakeri, CIT(DR)(ITAT), BengaluruFor Respondent: Shri Ajay Vohra, Sr. Advocate
Section 143(3)Section 37

marketing intangibles and thereafter he made an addition of Rs.8008 crores holding the same to be expenses incurred in creation of marketing intangibles being capital expenditure. He granted deduction @ 25% on account of depreciation. Accordingly net addition of Rs.6006 crores was made. He also made the computation of final addition ... goods to the retailers at a low cost by which profit forgone by the assessee as discount could not be held to be capital expenditure in nature . 12. He further submitted a copy of order in MA No.159/Bang/2023 for AY 2017-18 wherein certain errors were rectified. Therefore, according

ACIT, Circle - 3 3 1, Mumbai vs. Jamnagar Utilities and Power Pvt Ltd, Mumbai

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

ITA 5312/MUM/2024[2019-20]Status: DisposedITAT Mumbai04 Dec 2025AY 2019-20

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Mr. Nimesh Vora/For Respondent: Mr. Vivek Perampurna, CIT-DR
Section 115JSection 135Section 139(1)Section 143(3)Section 144BSection 43ASection 80G

38Any expenditure 39 (not being expenditure of the nature described in sections 30 to 3640[***] and not being in the nature of capital expenditure 41 or personal expenses of the assessee), laid out or expended wholly and exclusively 41 for the purposes of the business 41 or profession shall

ACIT, Circle - 3 3 1, Mumbai vs. Jamnagar Utilities and Power Pvt Ltd, Mumbai

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

ITA 5310/MUM/2024[2020-21]Status: DisposedITAT Mumbai04 Dec 2025AY 2020-21

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Respondent: Mr. Nimesh Vora/
Section 115JSection 135Section 139(1)Section 143(3)Section 144BSection 43ASection 80G

38Any expenditure 39 (not being expenditure of the nature described in sections 30 to 3640[***] and not being in the nature of capital expenditure 41 or personal expenses of the assessee), laid out or expended wholly and exclusively 41 for the purposes of the business 41 or profession shall

Satendra Kumar, Gautam Budh Nagar vs. Income Tax Officer, Gautam Budh Nagar

In the result, ground no.1 and

ITA 6994/DEL/2025[2017-18]Status: DisposedITAT Delhi04 Dec 2025AY 2017-18

Bench: Shri Pawan Singh(Physical Hearing) Satendra Kumar, Income Tax Officer, H. No.60, Gali No.2, Mamura, Noida, Vs Gautam Budh Nagar, Gautam Budh Nagar, Uttar Pradesh-201301 Uttar Pradesh-201301 Pan:Arwpk 1280 B Appellant / Assessee Respondent / Revenue

Section 143(3)Section 254(1)Section 271ASection 68

proprietary firm of his son namely Anjali Construction, the Assessing Officer has not carried out further verification of fact or if any revenue or capital expenditure is incurred by the assessee out of the withdrawal shown. Considering the overall fact that it was an unforeseen situation for individual

Nehru Smaraka Vidya Kendra Trust, Bangalore vs. Commissioner of Income Tax, Exemptions, Bangalore

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 715/BANG/2025[2025-26]Status: DisposedITAT Bangalore03 Dec 2025AY 2025-26

Bench: Shri Waseem Ahmed & Shri Soundararajan K.Assessment Year : 2025-26

For Appellant: Dr. Sheetal Borkar, AdvocateFor Respondent: Shri Muthu Shankar, CIT-DR
Section 11(1)Section 11(1)(a)Section 12ASection 2(15)Section 80GSection 80G(5)(iii)

learned Commissioner of Income Tax (Exemptions) while arriving at the excess of income over expenditure has grossly ignored the capital expenditure applied during the year as application of income under section 11(1) of the Income tax Act, 1961. 8. The learned Commissioner of Income Tax (Exemptions) erred

St. Thomas Church, Mumbai vs. Income Tax Officer (Exemption) Ward 2(3), Mumbai

ITA 4187/MUM/2025[2023-24]Status: DisposedITAT Mumbai03 Dec 2025AY 2023-24

Bench: Smt. Beena Pillai (Jm) & Shri Omkareshwar Chidara (Am) St. Thomas Church Ito(E), Ward 2(3) 1, Church Road, Goregaon-E 6Th Floor, Mtnl Mumbai-400 063. Vs. Bldg, Peddar Road Mumbai-400 026. Pan : Aaatt4878R Appellant Respondent

For Appellant: Ms. Vasanti Patel & ShriFor Respondent: Shri Hemanshu Joshi
Section 11Section 11(3)Section 143(1)

under section 11 of the Act resulted in the disallowance of accumulation benefit of 15% of income, surplus claimed as “Application of Income” and capital expenditure claimed as “Application of Income”. Apart from the above disallowances, an addition of Rs. 10,58,000/- was also made

ACIT, Exemptions, Circle-1, Ahmedabad vs. Vyakti Vikas Kendra India, Ahmedabad

In the result, the appeal of the Revenue is dismissed

ITA 1656/AHD/2025[2016-17]Status: DisposedITAT Ahmedabad02 Dec 2025AY 2016-17

Bench: Ms. Suchitra Kamble & Shri Narendra Prasad Sinhaassessment Year: 2016-17

Section 10(23)(iiiad)Section 11Section 11(1)(a)Section 11(1)(d)Section 11(2)Section 143(3)Section 2(15)

case, Ld. CIT(A), NFAC is justified in deleting the addition made by AO amounting to Rs.18,00,38,753/- on account of capital expenditure holding that the assessee to be carrying out the activities falling in the category of providing "education and medical relief” as per section ... found eligible for the deductions u/s 11 & 12 of the Act, the addition of Rs.18,00,38,753/- on account of disallowance of capital expenditure was rightly deleted by ACIT Exemptions vs. Vyakti Vikas Kendra India Page 11 of 15 the Ld. CIT(A). Accordingly, the order

International Flavours & Fragrances India Private Limited, Chennai vs. Principal Commissioner of Income Tax, Chennai

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

ITA 268/CHNY/2025[2017-18]Status: DisposedITAT Chennai02 Dec 2025AY 2017-18
For Appellant: Shri. Percy Pardiwalla, Senior AdvocateFor Respondent: Shri. Bipin C.N., C.I.T
Section 143(1)Section 143(2)Section 143(3)Section 147Section 263Section 801B

such by the AO while passing the assessment order. 4. However, according to the Id.PCIT, the said payments were in the nature of capital expenditure and had been allowed without proper verification by the Assessing Officer as allowable expenditure. Accordingly, a Show Cause Notice dated 28.08.2024 was issued (Page Nos.165-167 ... holding that the AO had erred in allowing the claim of royalty payment as revenue expenditure. According to the Id.PCIT, the payment represented capital expenditure and only depreciation thereon was allowable. He accordingly held that the assessment order passed u/s.143(3) r.w.s.144C(13) dated 05.05.2022 was erroneous and prejudicial

Matrix Clothing Private Limited, Gurgaon vs. ACIT-CC-18, Delhi

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

ITA 3805/DEL/2024[2020-21]Status: DisposedITAT Delhi01 Dec 2025AY 2020-21

Bench: Shri M. Balaganesh & Shri Vimal Kumarmatrix Clothing Pvt. Ltd, Vs. Acit, Village Mohammadpur, Central Circle-18, Khandsa Road, Gurgaon- Delhi 122 001, Haryana (Appellant) (Respondent) Pan: Aabcm8475B Assessee By : Ms. Kavita Jha, Sr. Adv Shri Himanshu Agarwal, Adv Shri Akash Shukla, Adv Revenue By: Shri Chetan P. S. Rao, Cit Dr Date Of Hearing 02/09/2025 Date Of Pronouncement 01/12/2025 Matrix Clothing Pvt. Ltd, Vs. Acit, Village Mohammadpur, Central Circle-18, Khandsa Road, Gurgaon- Delhi 122 001, Haryana (Appellant) (Respondent) Pan: Aabcm8475B

For Appellant: Ms. Kavita Jha, Sr. AdvFor Respondent: Shri Chetan P. S. Rao, CIT DR
Section 133(6)Section 143(3)Section 144C(5)Section 92C

assessee also provided the following details:- a. list of capital assets purchased during FY 2016-17 utilized in R&D activities ; b. details of capital expenditure approved by Department of Scientific and Industrial Research (DSIR) for FY 2015-16; c. copy of invoices depicting purchase of capital assets during ... statutory authority, visited the premises of the assessee company for inspection and after duly considering the project documents and details of expenses submitted including capital expenditure, duly approved the R&D facilities of the assessee company. It was also submitted that DSIR had issued a certification in this regard approving