“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

Deputy Commissioner of Income Tax, Nashik vs. Chakradhar Contractors and Engineers Private Limited, Jalgaon

In the result, both the appeals of the Revenue are

ITA 1939/PUN/2024[2020-21]Status: DisposedITAT Pune26 Dec 2024AY 2020-21

Bench: Shri Rama Kanta Panda & Shri Vinay Bhamore

For Appellant: Shri Sanket M JoshiFor Respondent: Shri Amol Khairnar, CIT-DR

Section 131Section 143Section 143(1)(a)Section 143(2)Section 270ASection 270A(3)(i)Section 270A(6)(a)Section 270A(9)

para 4 of the assessment order that on perusal of Schedule EC of the ITR, the Ld. AO noticed that the assessee had claimed capital expenditure of Rs.2,40,02,040/-. Vide notice u/s 142(1) of the Act he required the assessee to furnish headwise and naturewise bifurcation ... said capital expenditure. It was in reply thereof that the assessee submitted revised computation showing capital expenditure of Rs.97,47,772/- for which explanation was submitted. On consideration of such explanation, the Ld. AO observed in para 4.5 of the assessment order that the assessee has obtained fresh loans

DCIT Circle 1(1), Pune, Swargate vs. Entrata India Pvt. Ltd, Pune

In the result, the appeal filed by the Revenue in ITA

ITA 66/PUN/2024[2013-14]Status: DisposedITAT Pune24 Dec 2024AY 2013-14

Bench: Shri R. K. Panda & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.133/Pun/2024 िनधा"रण वष" / Assessment Year: 2013-14 Entrata India Pvt. Ltd., Vs. Dcit, Circle-1(1), Pune. International Tech Park, Block-1, Wing-A, 14Th Floor, Kharadi, Pune- 411014. Pan : Aaacw7089A Appellant Respondent आयकर अपील सं. / Ita No.66/Pun/2024 िनधा"रण वष" / Assessment Year: 2013-14 Dcit, Circle-1(1), Pune. Vs. Entrata India Pvt. Ltd., International Tech Park, Block-1, Wing-A, 14Th Floor, Kharadi, Pune- 411014. Pan : Aaacw7089A Appellant Respondent Assessee By : Shri Kishor B. Phadke Revenue By : Shri Ramnath P. Murkunde Date Of Hearing 14.11.2024 : Date Of Pronouncement : 24.12.2024 आदेश / Order Per Vinay Bhamore, Jm: These Are The Cross Appeals Filed By The Assessee As Well As By The Revenue Are Directed Against The Order Dated 24.11.2023 Passed By Ld. Cit(A)-13, Pune [‘Cit(A)’] For The Assessment Year 2013-14. 2. First, We Shall Take Up The Appeal Of The Assessee In Ita No.133/Pun/2024 For Adjudication.

For Appellant: Shri Kishor B. PhadkeFor Respondent: Shri Ramnath P. Murkunde

Section 10ASection 115JSection 143(2)Section 143(3)Section 32

erred in law and on facts in disallowing expenses claimed on account of leasehold improvements of Rs.4,64,08,661/-, treating the same as capital expenditures without considering the nature of expenses involved therein and without appreciating various judicial pronouncements. On this point, the Ld. CIT(A) ought to have ... applied the provisions of explanation-1 to Section 32 in para 6.2.1 of the assessment order extracted above and held the same to be capital expenditure and allowed depreciation at the rate of 10%. He also relied on the Hon'ble apex court's decision on Ballimal Naval Kishore

Entrata India Pvt. Ltd., Pune vs. DCIT, Circle-1(1), Pune

In the result, the appeal filed by the Revenue in ITA

ITA 133/PUN/2024[2013-14]Status: DisposedITAT Pune24 Dec 2024AY 2013-14

For Appellant: Shri Kishor B. PhadkeFor Respondent: Shri Ramnath P. Murkunde

Section 10ASection 115JSection 143(2)Section 143(3)Section 32

Deputy Commissioner of Income Tax, Circle- V (I), Kolkata vs. Birla Corporation Limited, Birla Building

In the result, both the appeals of the revenue is dismissed, as also the cross objection filed by the assessee for both the years

ITA 1024/KOL/2023[2016-17]Status: DisposedITAT Kolkata24 Dec 2024AY 2016-17

Bench: SHRI SONJOY SARMA, JUDICIAL MEMBER SHRI SANJAY AWASTHI (Accountant Member)

Section 115JSection 14ASection 250Section 80I

basis of TPO’s report. (ii) An amount of Rs. 69,53,754/- was added back as capital expenditure, instead of Revenue expenditure claimed, on account of rent/compensation paid in connection with mining activity. (iii) The Ld. AO disallowed an amount of Rs. 6,82,71,486/- in addition ... circumstances of the case, the CIT(A) has erred in holding that compensation paid to obtain mining lease is revenue expenditure and not capital expenditure. 3. Whether on the facts and circumstances of the case, the CIT(A) has erred in law by deleting the addition made

M/S. United Phosphors Ltd., Mumbai vs. DCIT Cen. Cir. - 38, Mumbai

In the result, both the appeals of the assessee and the revenue are partly

ITA 2990/MUM/2005[2001-2002]Status: DisposedITAT Mumbai24 Dec 2024AY 2001-2002

Bench: Shri Amit Shukla

For Respondent: Shri Heera Ram Choudhary, Sr. DR

Section 143(3)

Task force expenses: Rs. 7,68,26,307 These were claimed as revenue expenditure but Ld. AO held these to be capital expenditure and entirely disallowed the claim. The disallowance made by the AO was partly upheld by the Ld. CIT(A) who treated it as a deferred revenue expenditure ... form of right to sale its products by obtaining product registration and it is an advantage of enduring nature. Hence, the same are capital expenditure. Thus, no deduction was granted of the aforesaid expenses in the assessment order. 8.5. In para 17.9.4-17.9.9 of the CIT(A)order

The Dy CIT CC-38, Mumbai vs. M/S. United Phosphourous Ltd., Mumbai

ITA 4099/MUM/2004[2000-2001]Status: DisposedITAT Mumbai24 Dec 2024AY 2000-2001

Bench: Shri Amit Shukla & Smt.Renu Jauhri, Accountan Member

For Appellant: Ms. Vasanti Patel, Adv &For Respondent: Shri Heera Ram Choudhary, Sr. DR

Section 143(3)

M/S. United Phosphorus Ltd, Mumbai vs. The Dy CIT Cen Cir-38, Mumbai

In the result, both the appeals of the assessee and the revenue are partly

ITA 3456/MUM/2004[2000-2001]Status: DisposedITAT Mumbai24 Dec 2024AY 2000-2001

Bench: Shri Amit Shukla

For Respondent: Shri Heera Ram Choudhary, Sr. DR

Section 143(3)

Eastern Cargo Carriers (India) Private Limited, Mumbai, Maharashtra, India vs. The Assessment Unit, Income Tax Department

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

ITA 4610/MUM/2023[2021-2022]Status: DisposedITAT Mumbai20 Dec 2024AY 2021-2022

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan () Assessment Year: 2021-22 M/S Eastern Cargo Carriers (India) The Assessment Unit, Income Tax Pvt. Ltd., Department, Vs. Unit No. 26, Adarsh Ind. Estates, Aaykar Bhavan, M.K. Road, Sahar Road, Andheri East, Mumbai-400020. Mumbai-400099. Pan No. Aaace 1520 E Appellant Respondent

For Appellant: Mr. Niraj Sheth a/wFor Respondent: Mr. Hemanshu Joshi, Sr. DR

Section 40A(2)(a)

income tax act which expenditure is laid down of the income tax act which speaks that any expenditure which is not a capital expenditure or speaks that any expenditure which is not a capital expenditure or speaks that any expenditure which is not a capital expenditure or personal expenses

Poonam Sabharwal, New Delhi vs. ITO Ward 28(5), New Delhi

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 88/DEL/2024[2018-19]Status: DisposedITAT Delhi20 Dec 2024AY 2018-19

Bench: Shri S. Rifaur Rahman & Shri Sudhir Kumar

For Appellant: Shri Sunil Agarwal, CAFor Respondent: Ms. Harpreet Kaur Hansra, Sr. DR

Section 143(1)Section 143(1)(a)Section 143(3)Section 234BSection 36(1)Section 438Section 43B

nature of expenditure prescribed in Sections 30 to 36 of the Act and also not being in the nature of capital expenditure or personal expenses of the assessee. Thus, in view of such mandate of law, the deduction of expenditure under the general clause of Section 37(1) would

Autope Payment Solutions Private Limited, Ghaziabad vs. ACIT, Circle-2(2), Delhi

In the result, ground nos

ITA 86/DEL/2023[2017-18]Status: DisposedITAT Delhi20 Dec 2024AY 2017-18

Bench: Shri Mahavir Singh & Shri S. Rifaur Rahmanassessment Year : 2017-18

For Appellant: Shri Akhilesh Kumar, Adv.; &For Respondent: Shri Yogesh Kumar Nayyar, Sr. DR

Section 142(1)Section 143(2)Section 143(3)Section 56(2)

ground against the disallowance of Rs. 39,285/- made by Id. AO by arbitrarily and against the facts on record holding said expenses as capital expenditure.” 6. At the time of hearing learned AR submitted that ground no. 1 is general. 6 Autope Payment Solutions Pvt. Ltd. Ground

The DCIT, Circle-1(1), Now Circle-1(1)(1), Baroda vs. Gujarat State Electricity Corporation Ltd., Baroda

In the result, the appeal filed by the Assessee in ITA No

ITA 3164/AHD/2015[2011-12]Status: DisposedITAT Ahmedabad19 Dec 2024AY 2011-12

Bench: DR. BRR Kumar (Vice President), Shri T.R. Senthil Kumar (Judicial Member)

Section 115JSection 143(3)Section 28Section 37Section 43(1)

DISCOMs it is proposed not to allocate the FRP grant to DISCOMs for the F.Y. 2009-10. As regards to GETCO, they have incurred capital expenditure of Rs.650 crores upto January'10. Against the said capital expenditure, they have received consumers' contribution to the tune of Rs.87 crores. Further

Gujarat State Electricity Corporation Ltd., Baroda vs. The Dy.CIT, Circle-1(1), Baroda

In the result, the appeal filed by the Assessee in ITA No

ITA 3124/AHD/2015[2011-12]Status: DisposedITAT Ahmedabad19 Dec 2024AY 2011-12

Bench: DR. BRR Kumar (Vice President), Shri T.R. Senthil Kumar (Judicial Member)

Section 115JSection 143(3)Section 28Section 37Section 43(1)

Kiran Suryaprakash (India) Pvt Ltd, Mumbai vs. ACIT-6(3)(1), Mumbai

In the result, appeal of the assessee is allowed for statistical purposes

ITA 4094/MUM/2024[2017-18]Status: DisposedITAT Mumbai19 Dec 2024AY 2017-18

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Sandeep Singh Karhail, Hon’Ble

For Appellant: Shri Ruturaj H. Gurjar, A/RFor Respondent: Shri Hemanshu Joshi, Sr. D/R

Section 115JSection 234DSection 270ASection 80I

nature. 3. Without prejudice to the above ground, the amount of Rs.7,26,79,652/- paid in respect of option premium charges disallowed as capital expenditure in nature by the AO, depreciation ought to have been allowed on the same. 4. On facts and circumstances of the case

Dewan Jewellers, Lajpat Nagar II, New Delhi vs. DCIT Circle 52(1), New Delhi

In the result, impugned order is set aside and appeal of the assessee is allowed

ITA 3875/DEL/2023[2020-2021]Status: DisposedITAT Delhi18 Dec 2024AY 2020-2021

Bench: SHRI VIKAS AWASTHY (Judicial Member)

For Appellant: Shri Ankit Malik, Chartered AccountantFor Respondent: Shri Sanjay Tripathi, Sr. DR

Section 143(3)

assessee in appeal is against the findings of the CIT(A) in treating expenditure incurred towards show room fitting expenses Rs.54,62,703/- as capital expenditure. 3. The appeal is time barred by 29 days. The assessee has filed an application seeking condonation of delay in filing of appeal ... enduring nature. Hence, the AO and CIT(A) have rightly rejected assessee’s claim of expenditure as revenue and have held it to be capital expenditure. The ld. DR prayed upholding the impugned order and dismissing appeal of the assessee. 6. Both sides heard, orders of the authorities below examined

Deputy Commissioner of Income Tax, Central Circle-2, Ludhaina vs. Homeland City Project Ltd, New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 559/CHANDI/2024[2020-21]Status: DisposedITAT Chandigarh17 Dec 2024AY 2020-21

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Shri Rohit Sharma, CIT DR

Section 143(1)Section 143(1)(a)Section 37

Quote 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). laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed

The DCIT, Circle-1(1)(1), Vadodara vs. Gujarat State Fertilizer & Chemical Ltd, Vadodara

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

ITA 538/AHD/2020[2016-17]Status: DisposedITAT Ahmedabad17 Dec 2024AY 2016-17

Bench: Dr. B.R.R. Kumar, Vice-Shri Siddhartha Nautiyal

For Appellant: Shri Manish J. Shah, Shri Jimi Patel and Shri Rushin Patel, ARsFor Respondent: Shri Durga Dutt, CIT (DR) &

Section 115Section 115JSection 143(3)Section 144(2)Section 14ASection 35Section 80GSection 8D(2)(ii)

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER

Gujarat State Fertilisers and Chemicals Ltd., Vadodara vs. The ACIT Circle-1(1)1(), Vadodara

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

ITA 348/AHD/2020[2016-17]Status: DisposedITAT Ahmedabad17 Dec 2024AY 2016-17

Bench: Dr. B.R.R. Kumar, Vice-Shri Siddhartha Nautiyal

For Appellant: Shri Manish J. Shah, Shri Jimi Patel and Shri Rushin Patel, ARsFor Respondent: Shri Durga Dutt, CIT (DR) &

Section 115Section 115JSection 143(3)Section 144(2)Section 14ASection 35Section 80GSection 8D(2)(ii)

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER

Kongu Trust, Salem vs. ACIT, Exemptions, Coimbatore

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

ITA 1267/CHNY/2024[2015-16]Status: DisposedITAT Chennai17 Dec 2024AY 2015-16

Bench: Shri George George Kand Shri Jagadish

For Appellant: Shri G. Baskar, AdvocateFor Respondent: Ms. Anitha, Addl.CIT

Section 11Section 12ASection 139(9)Section 143(1)Section 154Section 250

further submitted that out of the total gross receipts, the assessee has excess application of income towards revenue and capital expenditure and thus, applied more than the receipts towards educational activities and is thus, eligible for deduction u/s.11 of the Act. 8. The ld.DR supported the order

ACIT CC-6(1), Mumbai, Bkc vs. Prism Johnson Limited, Mumbai

ITA 5685/MUM/2024[2010-11]Status: DisposedITAT Mumbai17 Dec 2024AY 2010-11

Bench: Smt. Beena Pillai, Hon'Bleι.Τ.Α. No. 5685/Mum/2024

For Appellant: Shri Vijay Mehta, A/RFor Respondent: Mr. R.A. Dhyani, CIT, D/R

assessee as a capital receipt without appreciating that the subsidy received by the assessee is purely linked to production of goods and not to capital expenditure undertaken by the assessee?" Ground II) "Whether, on the facts and in the circumstances of the case ... assessee as a capital receipt without appreciating that the income received by the assessee is purely linked to production of goods and not to capital expenditure undertaken by the assessee." Ground IV) Whether, on the facts and in the circumstances of the case

Mahanagar Gas Limited, Mumbai vs. Deputy Commissioner of Income Tax, Income Tax

ITA 505/MUM/2024[2021-22]Status: DisposedITAT Mumbai17 Dec 2024AY 2021-22

Bench: Justice (Retd.) Shri C.V. Bhadang & Shri B.R. Baskaran

For Appellant: Shri P.P. JayramanFor Respondent: Shri R.R. Makwana, Sr.DR

Section 143(1)Section 143(3)

considering commercial prudence, the above expenses of Rs.11.58 crores were shown as revenue expenditure. The AO, however, disallowed the said claim holding it as capital expenditure, but the Ld. CIT(A) allowed it as revenue expenditure. However, the ITAT reversed the decision of Ld CIT(A) and restored the addition ... held that it would be misleading to suppose that, in all cases, securing a benefit for the business would be prima facie capital expenditure "so long as the benefit is not so transitory as to have no endurance at all". 21. Further, it was held that there may be cases