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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 Siddaganga Urban Co-Operative Bank Ltd, Tumkur vs. Assistant Commissioner of Income Tax Circle-1, Tumkur

In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed

ITA 93/BANG/2018[2012-13]Status: DisposedITAT Bangalore25 May 2022AY 2012-13
For Respondent: Shri S.V. Ravishankar
Section 143Section 37

objects of the scheme. It is submitted that, the contribution do not constitute any element of personal expenditure, and therefore, not a capital expenditure as there is no enduring benefit out of the said expenditure. Page 6 of 11 6.5 It is submitted that the expenditures are incurred

Agio Pharmaceuticals Ltd, Mumbai vs. DCIT 9(1)(1), Mumbai

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

ITA 3542/MUM/2019[2013-14]Status: DisposedITAT Mumbai23 May 2022AY 2013-14

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri S. Rahul Chaudhary, Hon'Ble

For Appellant: Shri Yogesh Thar &For Respondent: Shri Mehul Jain
Section 33Section 35Section 37Section 37(1)

respect of its facilities for R&D nor has it submitted any explanation in this regard. As regards the claim of depreciation on this capital expenditure incurred, it is important to understand the purpose for which a payment of Rs.4.8 crore is being made. The assessee has incurred this expenditure

Agio Pharmaceuticals Ltd, Mumbai vs. DCIT 9(1)(1), Mumbai

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

ITA 3541/MUM/2019[2015-16]Status: DisposedITAT Mumbai23 May 2022AY 2015-16

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri S. Rahul Chaudhary, Hon'Ble

For Appellant: Shri Yogesh Thar &For Respondent: Shri Mehul Jain
Section 33Section 35Section 37Section 37(1)

respect of its facilities for R&D nor has it submitted any explanation in this regard. As regards the claim of depreciation on this capital expenditure incurred, it is important to understand the purpose for which a payment of Rs.4.8 crore is being made. The assessee has incurred this expenditure

Agio Pharmaceuticals Ltd, Mumbai vs. DCIT 9(1)(1), Mumbai

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

ITA 3540/MUM/2019[2014-15]Status: DisposedITAT Mumbai23 May 2022AY 2014-15

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri S. Rahul Chaudhary, Hon'Ble

For Appellant: Shri Yogesh Thar &For Respondent: Shri Mehul Jain
Section 33Section 35Section 37Section 37(1)

respect of its facilities for R&D nor has it submitted any explanation in this regard. As regards the claim of depreciation on this capital expenditure incurred, it is important to understand the purpose for which a payment of Rs.4.8 crore is being made. The assessee has incurred this expenditure

Agio Pharmaceuticals Ltd, Mumbai vs. DCIT 9(1)(1), Mumbai

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

ITA 3539/MUM/2019[2012-13]Status: DisposedITAT Mumbai23 May 2022AY 2012-13

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri S. Rahul Chaudhary, Hon'Ble

For Appellant: Shri Yogesh Thar &For Respondent: Shri Mehul Jain
Section 33Section 35Section 37Section 37(1)

respect of its facilities for R&D nor has it submitted any explanation in this regard. As regards the claim of depreciation on this capital expenditure incurred, it is important to understand the purpose for which a payment of Rs.4.8 crore is being made. The assessee has incurred this expenditure

Assistant Commissioner of Income Tax Range- 9(1)(1), Mumbai vs. M/S.Abhishek Millennium Contracts Private Limited, Mumbai

In the result, the present appeal is dismissed

ITA 5568/MUM/2018[2011-12]Status: DisposedITAT Mumbai23 May 2022AY 2011-12
For Appellant: Shri Sashi TulsiyanFor Respondent: Shri Mehul Jain
Section 143(1)Section 143(3)Section 147Section 250Section 28

hands of the transferee. There are different considerations for determining whether the cost paid by the transferor is to be regarded as capital expenditure or revenue expenditure. 38. As far as category (a) is concerned the receipt would fall for consideration under the head capital gains as there

M/S. Wipro Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(2), Bangalore

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

ITA 2556/BANG/2019[2015-16]Status: HeardITAT Bangalore23 May 2022AY 2015-16

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranit(Tp)A No.2556/Bang/2019 Assessment Year : 2015-16

For Appellant: Shri S. Ganesh, Sr. ARFor Respondent: Shri T. Roumuan Paite, D.R
Section 143(3)

reads as under: "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 purposes of the business or profession shall be allowed ... business or profession." 2.15 As seen from above, any expenditure which is not covered by section 30 to 36 and which is not capital expenditure is claimed under section 37(l). This shows that even as per the assessee this was not an expenditure covered

Indianoil Skytanking Private Limited, Bangalore vs. Assistant Commissioner of Income Tax, Circle- 3(1)(1), Bengaluru

In the result, the appeals are partly allowed

ITA 407/BANG/2020[2017-18]Status: DisposedITAT Bangalore20 May 2022AY 2017-18

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 115Section 143(3)Section 36(1)(iii)Section 37(1)Section 80Section 80I

erred in law and on facts in not appreciating that the tax auditor of the Assessee had certified that there were no capital expenditure debited to the profit and loss account during the AY 2015-16. 14. The CIT(A) erred in law and on facts in not appreciating that

M/S. Indianoil Skytaking Private Limited, Bangalore vs. Assistant Commissioner of Income Tax, Circle- 3(1)(1), Bangalore

In the result, the appeals are partly allowed

ITA 299/BANG/2020[2016-17]Status: DisposedITAT Bangalore20 May 2022AY 2016-17

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 115Section 143(3)Section 36(1)(iii)Section 37(1)Section 80Section 80I

erred in law and on facts in not appreciating that the tax auditor of the Assessee had certified that there were no capital expenditure debited to the profit and loss account during the AY 2015-16. 14. The CIT(A) erred in law and on facts in not appreciating that

Cerner Healthcare Solution India Private Limited(Earlier Known As Cerner India Health Services Private Limited) ( Erstwhile Cerner Healthcare Solutions Private Limited), Bangalore vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

The appeal is allowed in favour of the assessee

ITA 254/BANG/2021[2016-17]Status: DisposedITAT Bangalore18 May 2022AY 2016-17

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri Chavali Narayan, CAFor Respondent: Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru
Section 10ASection 143(1)Section 143(3)Section 144CSection 271(1)(c)Section 37Section 40

revenue. In such circumstances, we do not see any basis on which it could be said that the expenditure in question was a capital expenditure of the foreign parent company. As far as the assessee is concerned, the difference between the fair market value of the shares of the parent

Additional Commissioner of Income Tax (Ltu), Bangalore vs. M/S Texas Instruments (India) Private Limited, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 606/BANG/2019[2014-15]Status: DisposedITAT Bangalore17 May 2022AY 2014-15

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

1447/Bang/2019 ITA Nos. 365, 1075,1076/Bang-2019 Page 4 of 38 10 and in those Assessment Years similar expenditure was treated as capital expenditure and depreciation at 60% was allowed. Following the reasoning given in the aforesaid orders, the AO treated the EDA as capital expenditure and allowed 60% depreciation. Consequently ... expenditure in question helps the assessee to bring into existence the capital asset and therefore the expenditure ought to have been treated as a capital expenditure. It was submitted that the expenditure was part of the profit making operative and therefore ought to be considered as capital expenditure. Learned Counsel

M/S Texas Instruments India Pvt Ltd, Bangalore vs. Additional Commissioner of Income Tax Ltu, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 365/BANG/2019[2014-15]Status: DisposedITAT Bangalore17 May 2022AY 2014-15

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

1447/Bang/2019 ITA Nos. 365, 1075,1076/Bang-2019 Page 4 of 38 10 and in those Assessment Years similar expenditure was treated as capital expenditure and depreciation at 60% was allowed. Following the reasoning given in the aforesaid orders, the AO treated the EDA as capital expenditure and allowed 60% depreciation. Consequently ... expenditure in question helps the assessee to bring into existence the capital asset and therefore the expenditure ought to have been treated as a capital expenditure. It was submitted that the expenditure was part of the profit making operative and therefore ought to be considered as capital expenditure. Learned Counsel

Joint Commissioner of Income Tax, Ltu, Bangalore vs. M/S. Texas Instruments (India) Private Limited, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1447/BANG/2019[2013-14]Status: DisposedITAT Bangalore17 May 2022AY 2013-14

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

1447/Bang/2019 ITA Nos. 365, 1075,1076/Bang-2019 Page 4 of 38 10 and in those Assessment Years similar expenditure was treated as capital expenditure and depreciation at 60% was allowed. Following the reasoning given in the aforesaid orders, the AO treated the EDA as capital expenditure and allowed 60% depreciation. Consequently ... expenditure in question helps the assessee to bring into existence the capital asset and therefore the expenditure ought to have been treated as a capital expenditure. It was submitted that the expenditure was part of the profit making operative and therefore ought to be considered as capital expenditure. Learned Counsel

Joint Commissioner of Income Tax, Ltu, Bangalore vs. M/S. Texas Instruments (India) Private Limited, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1446/BANG/2019[2012-13]Status: DisposedITAT Bangalore17 May 2022AY 2012-13

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

1447/Bang/2019 ITA Nos. 365, 1075,1076/Bang-2019 Page 4 of 38 10 and in those Assessment Years similar expenditure was treated as capital expenditure and depreciation at 60% was allowed. Following the reasoning given in the aforesaid orders, the AO treated the EDA as capital expenditure and allowed 60% depreciation. Consequently ... expenditure in question helps the assessee to bring into existence the capital asset and therefore the expenditure ought to have been treated as a capital expenditure. It was submitted that the expenditure was part of the profit making operative and therefore ought to be considered as capital expenditure. Learned Counsel

M/S. Texas Instruments (India) Private Limited, Bangalore vs. Joint Commissioner of Income Tax, Ltu, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1076/BANG/2019[2013-14]Status: DisposedITAT Bangalore17 May 2022AY 2013-14

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

1447/Bang/2019 ITA Nos. 365, 1075,1076/Bang-2019 Page 4 of 38 10 and in those Assessment Years similar expenditure was treated as capital expenditure and depreciation at 60% was allowed. Following the reasoning given in the aforesaid orders, the AO treated the EDA as capital expenditure and allowed 60% depreciation. Consequently ... expenditure in question helps the assessee to bring into existence the capital asset and therefore the expenditure ought to have been treated as a capital expenditure. It was submitted that the expenditure was part of the profit making operative and therefore ought to be considered as capital expenditure. Learned Counsel

M/S. Texas Instruments (India) Private Limited, Bangalore vs. Joint Commissioner of Income Tax, Ltu, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1075/BANG/2019[2012-13]Status: DisposedITAT Bangalore17 May 2022AY 2012-13

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

1447/Bang/2019 ITA Nos. 365, 1075,1076/Bang-2019 Page 4 of 38 10 and in those Assessment Years similar expenditure was treated as capital expenditure and depreciation at 60% was allowed. Following the reasoning given in the aforesaid orders, the AO treated the EDA as capital expenditure and allowed 60% depreciation. Consequently ... expenditure in question helps the assessee to bring into existence the capital asset and therefore the expenditure ought to have been treated as a capital expenditure. It was submitted that the expenditure was part of the profit making operative and therefore ought to be considered as capital expenditure. Learned Counsel

Joint Commissioner of Income-Tax(Ltu), Bangalore vs. M/S. Texas Instruments(India) Pvt. Ltd, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1967/BANG/2018[2010-11]Status: DisposedITAT Bangalore17 May 2022AY 2010-11

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

1447/Bang/2019 ITA Nos. 365, 1075,1076/Bang-2019 Page 4 of 38 10 and in those Assessment Years similar expenditure was treated as capital expenditure and depreciation at 60% was allowed. Following the reasoning given in the aforesaid orders, the AO treated the EDA as capital expenditure and allowed 60% depreciation. Consequently ... expenditure in question helps the assessee to bring into existence the capital asset and therefore the expenditure ought to have been treated as a capital expenditure. It was submitted that the expenditure was part of the profit making operative and therefore ought to be considered as capital expenditure. Learned Counsel

DCIT vs. M/S Fiza Developers & Infrastructer Pvt. Ltd

In the result, all the miscellaneous petitions are allowed

ITA 985/BANG/2013[2007-08]Status: DisposedITAT Bangalore13 May 2022AY 2007-08

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Respondent: Shri T.N. Prakash, Addl.CIT(DR)(ITAT), Bengaluru
Section 263Section 54FSection 57

from other sources" shall be computed after making the following deductions, namely :— (i) …… (ii) …… (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;” 31. This section provides for deduction ... 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 from other sources. Section 57 allows certain specific deduction of other income referred to in section 56. The deduction u/s. 56 is allowable only

Narmada Bridge Tollway Ltd., Mumbai vs. ACIT 15 (2)(1), Mumbai

In the result, appeal by assessee is allowed

ITA 442/MUM/2020[2014-15]Status: DisposedITAT Mumbai09 May 2022AY 2014-15

Bench: Shri Vikas Awasthy & Shri M. Balaganeshआअसं. 442/मुं/2020 ("न. व. 2014-15 ) Narmada Bridge Tollway Ltd. Hincon House, Lbs Marg, Vikhroli West, Mumbai 400 083. Pan: Aaecn-0349-N ...... अपीलाथ" /Appellant बनाम Vs. The Acit 15(2)(1), Room No.357, 3Rd Floor, Aaykar Bhavan, M.K.Road, Mumbai 400 020 . ..... ""तवाद"/Respondent अपीलाथ" "वारा/ Appellant By : Shri H.P.Mahajani ""तवाद" "वारा/Respondent By : Shri Tejinder Pal Singh सुनवाई क" "त"थ/ Date Of Hearing : 11/02/2022 घोषणा क" "त"थ/ Date Of Pronouncement : 09/05/2022 आदेश/ Order Per Vikas Awasthy, Jm: This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-24, Mumbai [N Short ‘ The Cit(A) ] Dated 31/10/2019 For The Assessment Year 2014-15. 2. Shri H.P.Mahajani Appearing On Behalf Of The Assessee Narrating The Facts Of The Case Submitted That The Assessee Is Engaged In The Business Of Operation & Maintenance Of Six Laning Of Road Kms 192 To Km 198 Between

For Appellant: Shri H.P.MahajaniFor Respondent: Shri Tejinder Pal Singh
Section 32(1)(ii)

Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. Departmental Representative submitted that the assessee had capitalized expenditure incurred on rehabilitation of Narmada Bridge and subsequently, on foreclosure of agreement claimed the expenditure and revenue. The assessee cannot be allowed to change nature ... revenue loss. The Assessing Officer did not accept the claim holding that the project was abandoned by the assessee and treated the expenditure as capital expenditure 6 not allowable The assessee continued to agitate this question arguing that the amount of Rs.45.29 lakhs was a business loss. The said project

M/S Indianoil Skytanking Private Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

In the result, the appeals are partly allowed

ITA 583/BANG/2019[2015-16]Status: DisposedITAT Bangalore09 May 2022AY 2015-16

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 115Section 143(3)Section 36(1)(iii)Section 37(1)Section 80Section 80I

erred in law and on facts in not appreciating that the tax auditor of the Assessee had certified that there were no capital expenditure debited to the profit and loss account during the AY 2015-16. 14. The CIT(A) erred in law and on facts in not appreciating that