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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

M/S. Nicholas Piramal India Ltd, Mumbai vs. The ACIT Cur 7(1)

In the result, the appeal filed by the revenue is dismissed and the appeal filed by the assessee is partly allowed for statistical purposes

ITA 769/MUM/2008[2004-2005]Status: DisposedITAT Mumbai28 Jun 2022AY 2004-2005

Bench: Shri Pavan Kumar Gadale & Shri S Rifaur Rahmanpiramal Enterprises Ltd Vs. Acit, Circle – 7(1) (Formerly Known As Aayakar Bhavan Piramal Healthcare Ltd) Mumbai – 400020. (Before Known As Nicholas Piramal Ind) Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400013. Pan/Gir No. : Aaacn4538P Appellant .. Respondent Dcit, Circle – 7(1) Vs. Piramal Enterprises Ltd Aayakar Bhyavan (Formerly Known As Mumbai – 400 020. Piramal Healthcare Ltd) (Before Known As Nicholas Piramal Ind) Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013. Pan/Gir No. : Aaacn4538P Assessee By : Mr.Ronak Doshi & Ms.Manshi Padhiyar.Ar Revenue By : Mr.S.N.Kabra.Dr

For Appellant: Mr.Ronak Doshi &For Respondent: Mr.S.N.Kabra.DR
Section 143(3)Section 145Section 32Section 35Section 80

ignoring the fact that the disallowance made by the Assessing Officer comprise of revenue expenditure of Rs.8,42,02,053/-, capital expenditure on Research & Development of Rs,2,70,60,585/-/-, depreciation of the current year of Rs.45, 10,098/- and depreciation on opening WDV of Rs.5,33,2501- (total ... profit and loss account on the loan of Rs.200 Crores from ICICT Ltd which was restructured, as stated above, is held as capital expenditure and the same is hereby disallowed as the interest on loans obtained for the purpose of buying the equity shares, which is not the business

Morgan Stanley Advantage Services P Ltd., Mumbai vs. CIT (Apeals), Nationa Faceless Appeal Centre, Delhi, Mumbai

In the result, appeal of the assessee is allowed

ITA 1083/MUM/2021[2016-17]Status: DisposedITAT Mumbai27 Jun 2022AY 2016-17

Bench: Shri Kuldip Singh & Shri Gagan Goyalmorgan Stanley Advantage Services Pvt. Ltd. Athena Building No.5, Sector-30, Mindspace, Goregaon (West), Mumbai-400090 Pan: Aaeca3400B ...... Appellant Vs. Commissioner Of Income Tax (Appeals), National Faceless Appeals Centre, Delhi. ..... Respondent Appellant By : Sh. Sunil M. Lala Respondent By : Sh. Amol B. Kirtane Date Of Hearing : 20/06/2022 Date Of Pronouncement : 27/06/2022 Order Per Gagan Goyal, A.M: This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax (Appeals), National Faceless Appeals Centre (Nfac), Delhi. [Hereinafter Referred To As ‘The Cit(A)’] Vide Order Dated 11.12.2018 For The Assessment Year (Ay) 2016-17. The Assessee Has Raised The Following Grounds Of Appeal: “Ground 1: Disallowance Of Expenditure Claimed Towards Employee Stock Option Scheme (Esop) Under Section 37(1) Of The Income-Tax Act, 1961 (Act) Amounting To Rs 1,84,75,816. In This Regard, The Learned Cit(A)/ Learned Assessing Officer Has, On The Facts & Circumstances Of The Case & In Law, Erred On The Following Grounds:

For Appellant: Sh. Sunil M. LalaFor Respondent: Sh. Amol B. Kirtane
Section 143(2)Section 271Section 271(1)(c)Section 30Section 37(1)

under 37(1) Any expenditure (not being expenditure of the nature described in section 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 purchases of the business or profession shall be allowed ... sections, stated below: “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 the business or profession shall be allowed

Savita Oil Technologies Ltd, Mumbai vs. DCIT Cen Cir 47, Mumbai

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

ITA 867/MUM/2014[2008-09]Status: DisposedITAT Mumbai24 Jun 2022AY 2008-09

Bench: Shri Aby T. Varkey, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.867/Mum/2014 (निर्धारण वर्ा / Assessment Years: 2008-09) M/S. Savita Oil बिधम/ Dcit, Central Circle-47 Technologies Ltd. Aayakar Bhavan, M. K. Vs. 66/67, Nariman Bhavan, Road, Mumbai-400020. Nariman Point, Mumbai- 400021. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaacs7934A (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Hiro Rai Revenue By: Shri Sanjeev Kashyap सुनवाई की तारीख / Date Of Hearing: 26/05/2022 घोषणा की तारीख /Date Of Pronouncement: 24/06/2022 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax(A)-38, Mumbai Dated 21.11.2013 For The Assessment Year 2008-09. At The Outset, The Ld. Ar Of The Assessee Brought To Our Notice 2. That The Following Grounds Raised By The Assessee Is Neither Being Pressed Nor Does They Survive For The Reasons Given Therein As Under: - “(I) Ground.4- Disallowance U/S 14A In View Of Order Giving Effect To Cit(A) Order & Order U/S 154, Not Pressed Qua Balance Disallowance Of Rs.7,74,722/- (Ii) Ground No. 5 Disallowance As Capital Expenditure Since Depreciation (Ground No.6) Allowed, Not Pressed. (Iii) Ground No. 6 – Allowance Of Depreciation In Order U/S 154, Ao Has Allowed Depreciation. Hence, Does Not Survive.

For Appellant: Shri Hiro RaiFor Respondent: Shri Sanjeev Kashyap
Section 143(3)Section 14ASection 154Section 158BSection 80Section 801ASection 80I

effect to CIT(A) order and order u/s 154, not pressed qua balance disallowance of Rs.7,74,722/- (ii) Ground No. 5 Disallowance as capital expenditure Since depreciation (Ground No.6) allowed, not pressed. (iii) Ground No. 6 – Allowance of depreciation In order u/s 154, AO has allowed depreciation. Hence, does

M/S Altisource Business Solutions Private Limited, Bangalore vs. Income Tax Officer Ward-1(1)(1), Bangalore

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

ITA 3368/BANG/2018[2014-15]Status: DisposedITAT Bangalore24 Jun 2022AY 2014-15

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sit(Tp)A No.3368/Bang/2018 Assessment Year : 2014-15 M/S. Altisource Business Solutions Pvt. Ltd., Vs. Ito, Pritech Park, Block Nok.12, 3Rd Floor, 5Th Ward – 1(1)(1), Floor, B-Wing & 4Th Floor, B-Wing, Bengaluru. Bellandur Village, Bengaluru-560 103. Pan : Aaaco 9467 A Appellant Respondent Assessee By : Smt. Rashmi R, Advocate Revenue By : Shri. V. S. Chakrapani, Cit(Dr)(Itat), Bengaluru. Date Of Hearing : 21.06.2022 Date Of Pronouncement : 24.06.2022 O R D E R Per N V Vasudevan

For Appellant: Smt. Rashmi R, AdvocateFor Respondent: Shri. V. S. Chakrapani, CIT(DR)(ITAT), Bengaluru
Section 143(3)Section 144C(13)Section 92Section 92B

endure for a long or indefinite period. 21. The AO and the DRP held that the software expenses claimed by the assessee was capital expenditure and cannot be allowed as deduction. The revenue authorities however allowed depreciation on software expenses and disallowed the remaining sum. The point for consideration ... Rs.4,45,39,896 had to be regarded as revenue expenditure and the remaining sum of Rs.9,29,78,104 was regarded as capital expenditure and depreciation of Rs.5,57,86,862 was allowed on the software expenses treated as capital expenditure. Therefore the disallowance ultimately stood reduced to Rs.3

M/S. Deepali Company Privae Limited, Bangalore vs. Income Tax Officer, Ward- 2(1)(2), Bangalore

In the result, the appeal filed by assessee stands dismissed

ITA 585/BANG/2020[2016-17]Status: DisposedITAT Bangalore21 Jun 2022AY 2016-17

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Year : 2016-17 M/S. C. Krishniah Chetty & Co. Pvt. Ltd., The Income Tax (Earlier Known As :Deepali Co. Officer, Pvt. Ltd.) Ward – 2 (1)(2), 35, Commercial Street, Bangalore. Bangalore – 560 001. Vs. Pan: Aaacd5120H Appellant Respondent : Shri Narendra Sharma, Assessee By Advocate : Smt. Priyadarshini Revenue By Basaganni, Addl. Cit (Dr) Date Of Hearing : 01-06-2022 Date Of Pronouncement : 21-06-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against Order Dated 03.0.2020 Passed By Ld.Cit(A)-2, Bangalore For A.Y. 2016-17 On The Following Grounds Of Appeal: “1.1 On The Facts & Circumstances Of The Case, The Learned Commissioner Of Income Tax Erred In Not Allowing Business Loss For The Year Of Rs. 114,66.766/- On The Ground That The Business Of The Assessee Company Is Closed & There Are No Receipts From Operation Of Business.

For Respondent: Shri Narendra Sharma
Section 143(2)Section 24Section 72

says "37. (1) 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, lord out or expended wholly and exclusively for the purposes of the business or profession shall be allowed