“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

Peritus Exim Private Limited, Delhi vs. DCIT, Circle-19(1), Delhi

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

ITA 5118/DEL/2025[2020-21]Status: DisposedITAT Delhi12 Feb 2026AY 2020-21

Bench: Shri S. Rifaur Rahman & Shri Raj Kumar Chauhan

For Appellant: Sh. Dinesh Bansal, CAFor Respondent: Ms. Ankush Kalra, Sr DR

Section 143(1)Section 154Section 244ASection 37(1)Section 40Section 44A

assessee brought to our notice page 6 of the First Appellate Order and submitted that assessee itself has disallowed the capital expenditure incurred by it on the loss on sale of fixed assets Rs.1,98,108/- and personal expenditure relating to interest on taxes to the extent of Rs.6

Bandekar Brothers Private Limited, Vasco-Da-Gama, Goa vs. Assistant Commissioner of Income Tax, Panaji, Goa

The appeal of the assessee is PARTLY ALLOWED in aforestated terms

ITA 38/PAN/2025[2013-14]Status: DisposedITAT Panaji11 Feb 2026AY 2013-14

Bench: Hon’Ble Shri Pavan Kumar Gadale & Shri G. D. Padmahshaliassessment Years: 2013-14 Bandekar Brothers Pvt. Ltd. Post Box No. 11, Suvarna Bandekar Bldg., Swatantra Path, Vasco-Da-Gama Goa-403802 Pan: Aaacb5502B . . . . . . . Appellant V/S Asstt. Commissioner Of Income Tax, Circle-2(1), Panaji, Goa. . . . . . . . Respondent Represented Assessee By: Mr Pramod & Mr Shriniwas Deshpande [‘Ld. Ar’] Revenue By: Mr M Satish & Mr Renga Rajan [‘Ld. Dr’] Date Of Conclusive Hearing : 12/01/2026 Date Of Pronouncement : 11/02/2026 Order Per G. D. Padmahshali; This Assessee’S Appeal Filed U/S 253(1) Of The Income-

For Appellant: Mr Pramod & Mr Shriniwas Deshpande [‘Ld. AR’]For Respondent: Mr M Satish & Mr Renga Rajan [‘Ld. DR’]

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 2(14)Section 246ASection 250Section 253(1)Section 37(1)

Mining Lease of Rs16,00,00,000/- He failed to appreciate that the learned Assessing Officer was wrong in holding the expenditure as Capital Expenditure. He ignored the fact that the appellant was in mining business since past several years in the same mine, hence charges for renewal of mining ... cost incurred in acquiring such rights/interest partakes its character from an underlying subject matter of transfer namely capital asset, hence it is a capital expenditure for the purpose of the Act. Such cost being capital in nature & not being a revenue in substance hence not deductible

Deputy Commissioner of Income Tax, Circle 4(2), New Delhi, I.P.Estate vs. Beacon Higher Education Services Private Limited, Vasant Kunj, New Delhi

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

ITA 2574/DEL/2024[2017-18]Status: DisposedITAT Delhi11 Feb 2026AY 2017-18

Bench: Shri Vimal Kumar, Hon’Ble & Mrs. Renu Jauhri, Hon’Ble

For Appellant: Shri Y K Kapur, AdvocateFor Respondent: Shri Jitender Singh, CIT DR

Section 143(3)Section 2Section 250Section 32Section 72A

37Cr. to the three parties during the F.Y. 2011-12. The same was treated as an intangible asset and the expenditure was booked as capital expenditure on which depreciation @ 25% was claimed u/s 32(i)(ii) of the Act in the return filed for A.Y. 2012-13. Subsequently, for A.Ys ... light of the decision of the Hon’be Apex Court in Sharp Business Systems (supra), but having claimed depreciation treating it as capital expenditure over several years, has requested as under vide written submission dated 28.01.2026: 4 | P a g e 1867_DEL_2020_Beacon Higher Education Services

Beacon Higher Education Services Pvt Ltd, New Delhi vs. ACIT Circle-4(2), New Delhi

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

ITA 1867/DEL/2020[2016-17]Status: DisposedITAT Delhi11 Feb 2026AY 2016-17

Bench: Shri Vimal Kumar, Hon’Ble & Mrs. Renu Jauhri, Hon’Ble

For Appellant: Shri Y K Kapur, AdvocateFor Respondent: Shri Jitender Singh, CIT DR

Section 143(3)Section 2Section 250Section 32Section 72A

M/S. Cimmco Ltd., New Delhi vs. ITO, New Delhi

In the result, the appeal of the assessee is allowed

ITA 5724/DEL/2016[2005-06]Status: DisposedITAT Delhi11 Feb 2026AY 2005-06

Bench: Shri Satbeer Singh Godara, Hon’Ble & Shri Naveen Chandra, Hon’Ble

Section 143(3)Section 250(6)Section 271(1)(c)Section 36

assessment order u/s 143(3)/147 on 28.12.2011 disallowing the claim of Rs 1,04,81,261/- on account of write off capital Expenditure in P & L account. The said claim included an expense of Rs. 72,06,320/- as export benefits as non-recoverable ... neglect in filing of return of income. 4. The Ld. DR, before us stated that the Auditor had quantified the said expense as capital expenditure which was disallowed. The ld DR submitted that as the assessee filed inaccurate particulars, the penalty u/s 271(1)(c) was levied. 5. We have

Marathi Bandhkam Vya vs. Ayik Association, Punevs.ITO, Exemption Ward-1(1), Pune

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

ITA 2310/PUN/2025[2018-19]Status: DisposedITAT Pune10 Feb 2026AY 2018-19

For Appellant: Shri Suhas P. BoraFor Respondent: Shri Milind Debaje (Virtual)

Section 143(2)Section 143(3)

chargeable under head ‘Income from other sources’. Section 57(iii) provides for deduction of any other expenditure, which is not in the nature of capital expenditure and is laid out or expended wholly and exclusively for the purpose of making or earning such income. The respondent-assessee must have incurred

John Dewey Educational Trust, Villupuram vs. DCIT / ACIT, Exemptions, Chennai

In the result, the appeal of the assessee is allowed

ITA 2917/CHNY/2025[2022-23]Status: DisposedITAT Chennai10 Feb 2026AY 2022-23

Bench: Shri Aby T. Varkey & Ms. Padmavathy.Sआयकर अपील सं./Ita No.2917/Chny/2025 िनधा$रण वष$ /Assessment Year: 2022-23

For Appellant: Ms. Nidhi Jain, C.A ()For Respondent: Ms. R. Anitha, Addl. CIT

Section 11Section 143(3)Section 250

that funds of Rs. 87,76,248/- and Rs. 53,24,467/- were shown by the appellant as available to meet revenue expenditure and capital expenditure, respectively from borrowed funds, would not automatically prove that the appellant had not claimed the said amounts as its application of income ... previous year Capital Account Rs. NIL". Coupled with this, it is noted that in column 5A of the Schedule "Sources of fund to meet Capital Expenditures", sum of Rs. 53,24,467/- is mentioned, which means that the said sum was utilized towards capital expenditure during the said year. Conjoint

Indorigin Electric Ltd, Wadala Mumbai vs. ACIT Central Circle 4 4 Mumbai, Mumbai

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

ITA 4682/MUM/2025[2014-15]Status: DisposedITAT Mumbai10 Feb 2026AY 2014-15

Bench: Shri Vikram Singh Yadavshri Sandeep Singh Karhailm/S. Indorigin Electric Ltd. Rectifier House, 570, Naigum Cross Road, Wadala, Mumbai- 400 031. ............... Appellant Pan: Aaaci1040B V/S Acit, Central Circle-4(4), Mumbai R. No. 424, 4Th Floor, Kautilya Bhavan, ……………… Respondent C-41 To C-43, G Block, Bandra Kurla Complex, Bandra (East), Mumbai- 400 051

For Appellant: Shri Kalpesh Turalkar, AdvFor Respondent: Shri Virabhadra Mahajan, Sr. DR

Section 10(34)Section 142(1)Section 143(2)Section 143(3)Section 14ASection 250

submission dated 19/12/2018 filed before the learned CIT(A)-12, Mumbai, in support of its submission that the expenditure is in the nature of capital expenditure along with necessary documentary evidence. 11. From the perusal of the paper book filed by the assessee before us, we find that the assessee

DCIT Central Circle 7 (1), Mumbai vs. Dr D Y Patil Educational Academy, Mumbai

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

ITA 2289/MUM/2025[2015-16]Status: DisposedITAT Mumbai10 Feb 2026AY 2015-16

Bench: Hon’Ble Shri Sandeep Gosain & Shri Girish Agrawal

Section 12ASection 132Section 132(4)Section 153Section 250

further submitted that no complaints are received from the parents or students regarding charging of development fees and collection of management fees for incurring capital expenditure is allowed by UGC notification dated October 1997 as per the prescribed guidelines. 38. The ld DR argued that for the receipt ... corpus. In summary the ld DR submitted that the corpus nature cannot be presumed merely because the Trust decides to apply the fund for capital expenditure and the CIT(A) has erred in allowing the claim of the assessee. 39. We heard the parties and perused the material on record

DCIT Central Circle 7 (1), Mumbai vs. Dr D Y Patil Educational Academy, Mumbai

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

ITA 2251/MUM/2025[2017-18]Status: DisposedITAT Mumbai10 Feb 2026AY 2017-18

Bench: Hon’Ble Shri Sandeep Gosain & Shri Girish Agrawal

Section 12ASection 132Section 132(4)Section 153Section 250

Incometax Officer, Ward-1, Ballari vs. Bellary Urban Development Authority, Ballari

ITA 1523/BANG/2025[2015]Status: DisposedITAT Bangalore09 Feb 2026

Bench: Shri Laxmi Prasad Sahu & Shri Soundararajan K.

For Appellant: Shri Ajith V, AdvocateFor Respondent: Shri Balusamy .N, JCIT-DR

Section 10(46)Section 139(1)Section 142(1)Section 143(2)Section 148Section 271(1)(c)

accepted the said explanations and subjected the fixed security deposits to tax since the same is in the nature of capital expenditure. The assessment has been completed accordingly. Thereafter the AO had issued a notice u/s. 271(1)(c) of the Act r.w.s. 274 of the Act on the allegation

ACIT-4(1)(1), Mumbai vs. Bnp Paribas India Solutions Pvt Ltd, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 5688/MUM/2025[2017-18]Status: DisposedITAT Mumbai09 Feb 2026AY 2017-18

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

For Appellant: Shri Niraj Sheth, AdvocateFor Respondent: Shri Vaibhav Jain, CIT DR

Section 143(3)

expenditure resulted in enduring benefit to the 2 BNP Paribas India Solutions Private Limited AY 2017-18 assessee and hence was rightly treated as capital expenditure by the Assessing Officer". 2 "Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred ... that such expenditure resulted in acquisition of software tools and licenses of enduring utility and benefit to the assessee, and hence rightly treated as capital expenditure by the Assessing Officer". 3. "Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) failed

Shriram Fiance Ltd., Chennai vs. DCIT, Corporate Circle-3(1), Chennai

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

ITA 2635/CHNY/2025[2014-15]Status: DisposedITAT Chennai05 Feb 2026AY 2014-15

Bench: Shri George George K & Shri Inturi Rama Raoआयकर अपील सं./Ita No.: 2635/Chny/2025 िनधा"रण वष"/Assessment Year: 2014-15 Shriram Finance Limited, The Deputy Commissioner (Since Shriram City Union Finance Vs. Of Income Tax, Limited Amalgamated With Corporate Circle 3(1), Shriram Transport Finance Co. Chennai. Ltd. & Presently Known As Shriram Finance Ltd.,) Sri Towers, Plot No.14A, South Phase, Industrial Estate, Guindy, Chennai – 600 032. Pan: Aaacs 7703H (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri R. Sivaraman, Advocate ""यथ" क" ओर से/Respondent By : Ms. Gouthami Manivasagam, Addl.Cit सुनवाई क" तारीख/Date Of Hearing : 04.02.2026 घोषणा क" तारीख/Date Of Pronouncement : 05.02.2026

For Appellant: Shri R. Sivaraman, AdvocateFor Respondent: Ms. Gouthami Manivasagam

Section 143(3)Section 148Section 250

investment’ and not ‘stock-in-trade’ as claimed by the assessees. Once it is treated as an investment, it can only be disallowed as capital expenditure and cannot be allowed as deduction treating it as normal business expenditure. Moreover, it is a mere provision written off and not an actual

Acitltu-2, Chennai vs. Ashok Leyland Limited, Chennai

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

ITA 945/CHNY/2018[2009-10]Status: DisposedITAT Chennai05 Feb 2026AY 2009-10

Bench: Shri S.S. Viswanethra Ravi & Shri Jagadishआयकर अपील सं./I.T.A. No.895/Chny/2018 िनधा"रण वष"/Assessment Year: 2009-10 Ashok Leyland Limited, Vs. The Deputy Commissioner Of 1, Sardar Patel Road, Guindy, Income Tax, Chennai 600 032. Company Circle – Ltu, Chennai. [Pan: Aaaca4651L] (अपीलाथ"/Appellant) (""थ"/Respondent) आयकर अपील सं./I.T.A. No.945/Chny/2018 िनधा"रण वष"/Assessment Year: 2009-10 The Assistant Commissioner Of Vs. Ashok Leyland Limited, Income Tax, 1, Sardar Patel Road, Guindy, Large Taxpayer Unit – 2, Chennai. Chennai 600 032. (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Assessee By : Shri Vikram Vijayaraghavan, Advocate (Virtual) ""थ" की ओर से/Respondent By : Shri Ar V Sreenivasan, Cit सुनवाई की तारीख/ Date Of Hearing : 10.11.2025 घोषणा की तारीख /Date Of Pronouncement : 05.02.2026 आदेश /O R D E R Per S.S. Viswanethra Ravi: Both The Cross Appeals Filed By The Assessee & The Revenue Are Directed Against The Order Dated 28.12.2017 Passed By The Ld.

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri AR V Sreenivasan, CIT

assessment order. We find that the assessee claimed exchange gain by way of FCCN and treated the same under the head of capital expenditure by stating that the FCCN has been made for the purpose of purchasing of capital assets and relied on the decision of the Hon’ble High ... section 35(2AB) i.e., non-production of the certificate in Form 3CL from the competent authority, the Assessing Officer disallowed the R & D capital expenditure. The ld. CIT(A) confirmed the order of the Assessing Officer. 38. Before us, the ld. AR placed reliance on the decision of this Tribunal

Ashok Leyland Limited, Chennai vs. DCIT Company Circle 1 (1), Chennai

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

ITA 895/CHNY/2018[2009-10]Status: DisposedITAT Chennai05 Feb 2026AY 2009-10

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri AR V Sreenivasan, CIT

Amarsingh N Thakur, Mumbai vs. Asst. CIT Circle -1, Thane

ITA 7686/MUM/2025[2018-19]Status: DisposedITAT Mumbai04 Feb 2026AY 2018-19

Bench: Shri Amit Shukla & Shri Makarand Vasant Mahadeokar

Section 143(3)Section 144BSection 250Section 57

judicial precedents relied upon by the assessee were distinguishable on facts. 14. Section 57(iii) of the Act provides that any expenditure, not being capital expenditure, laid out or expended wholly and exclusively for the purpose of making or earning income chargeable under the head “Income from Other Sources”, shall

Tata Chemicals Ltd., Mumbai vs. Dy CIT 2 (3)(1), Mumbai

ITA 7912/MUM/2019[2015-16]Status: DisposedITAT Mumbai04 Feb 2026AY 2015-16

Bench: Shri Om Prakash Kant () & Shri Rahul Chaudhary ()

For Appellant: Mr. Nitesh Joshi a/wFor Respondent: Mr. Ajay Chandra, CIT-DR

Section 14ASection 35Section 43BSection 80Section 91Section 92Section 92A(3)

learned Assessing Officer erred disallowing Rs. 146,73,00,000/- in respect of interest expenditure:- an amount of a. by treating the same as capital expenditure for the acquiring controlling interest in the subsidiary companies, b. by not following the Supreme Court decision in the case of Core Health Care

Technocraft Industries (India) Limited, Mumbai vs. Asst. CIT. 11(3)(1), Mumbai

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

ITA 7423/MUM/2025[2012-13]Status: DisposedITAT Mumbai03 Feb 2026AY 2012-13

Bench: Shri Anikesh Banerjee & Shri Makarand Vasant Mahadeokar

For Appellant: Shri Tarang Mehta, Adv. a/w Shri Akash GogariCAFor Respondent: Shri Ritesh Misra (CIT DR)

Section 143(3)Section 148Section 250Section 37

expenditure. 3. Such expenditure is not of Capital in nahere le expenses should be of revenue in nature. The word "Capital" connotes permanency and "Capital Expenditure" is. therefore, closely Technocraft Industries India Ltd. akin to the concept of securing something, tangible or intangible property, or corporeal or incorporeal right

Technocraft Industries (India) Limited, Mumbai vs. Asst. CIT 11(3)(1), Mumbai

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

ITA 7422/MUM/2025[2013-14]Status: DisposedITAT Mumbai03 Feb 2026AY 2013-14

Bench: Shri Anikesh Banerjee & Shri Makarand Vasant Mahadeokar

For Appellant: Shri Tarang Mehta, Adv. a/w Shri Akash GogariCAFor Respondent: Shri Ritesh Misra (CIT DR)

Section 143(3)Section 148Section 250Section 37

Mr. Anmol Govindram Sekhri, Bandra Arcade, Nandi Gully, Opp Bandra Railway St vs. Circle 16(2), Mumbai, Aayakar Bhawan

In the result, appeal of the assessee is allowed

ITA 1091/MUM/2025[2018-19]Status: DisposedITAT Mumbai02 Feb 2026AY 2018-19

Bench: Shri Sandeep Gosain & Shri Prabhash Shankarmrs. Suneeta Sekhri V/S. Deputy Commissioner Of (Legal Heir Of Mr. Anmol बनाम Income Tax, Circle – 16(2), Govindram Sekhri), Aayakar Bhavan, Mumbai – Ground Floor, Bandra Arcade, 400020, Maharashtra Nandi Gully, Opp. Bandra Railway Station, Bandra(West), Mumbai – 400 050, Maharashtra स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Alhps9957L Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Shri Aditya Ajgaonkar & Ms. Rupal Shrimal, ARsFor Respondent: Shri Rajesh Kumar Yadav, (CIT-DR)

Section 144BSection 147Section 263Section 68

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