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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

Income Tax Officer, Corporate Ward -3(1), Chennai vs. Ttk Healthcare Limited, Chennai

In the result, the appeal filed by the Revenue is dismissed

ITA 2254/CHNY/2024[2015-16]Status: DisposedITAT Chennai27 Nov 2024AY 2015-16

Bench: Shri S.S. Viswanethra Ravi & Shri Jagadishआयकर अपील सं./I.T.A. No.2254/Chny/2024 िनधा"रण वष"/Assessment Year: 2015-16 The Income Tax Officer, Vs. Ttk Healthcare Limited, Corporate Ward 3(1), No. 6, Cathedral Road, Chennai. Gopalapuram, Chennai 600 086. [Pan:Aabct3312J] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri C. Murugesan, Addl. Cit ""थ" की ओर से/Respondent By : Shri Vikram Vijayaraghavan, Advocate (Virtual) सुनवाई की तारीख/ Date Of Hearing : 26.11.2024 घोषणा की तारीख /Date Of Pronouncement : 27.11.2024 आदेश /O R D E R Per S.S. Viswanethra Ravi: This Appeal Filed By The Revenue Is Directed Against The Order Dated 27.06.2024 Passed By The Ld. Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi For The Assessment Year 2015-16. 2. We Note That The Return Of Income Filed By The Assessee Was Selected For Scrutiny & Assessment Order Was Passed Assessing Income Of ₹.35,75,45,407/-. The Assessing Officer Reopened The 2

For Appellant: Shri C. Murugesan, Addl. CITFor Respondent: Shri Vikram Vijayaraghavan, Advocate
Section 147Section 14A

factum of payment made by assessee of logo charges @ 2% of the gross sales. The only strife is that per revenue, it is capital expenditure whereas the assessees plea of treating it as a revenue expenditure stands accepted by CIT(A). We find that in exactly the similar circumstances ... merely paid to the licensor for use of such trade-marks. Therefore, expenses are to be treated as revenue expenditure and not capital expenditure. The assessee was required to pay royalty every year. But for payment of royalty, every year the assessee could not continue receiving the license

DCIT, Circle- 27(2), New Delhi vs. Wharton Engineers & Developers Pvt. Ltd. (Earlier Wilful Finance Investment Co. Pvt.), New Delhi

In the result the appeal of the revenue is dismissed

ITA 7841/DEL/2018[2014-15]Status: DisposedITAT Delhi27 Nov 2024AY 2014-15

Bench: Sh. Pradip Kumar Kedia & Sh. Sudhir Kumarassessment Year: 2014-15 Dcit Vs. Wharton Engineers & Circle 27 (2) Developers Pvt. Ltd. New Delhi (Earlier Willful Finance Investment Co.Pvt.) New Delhi Pan No.Aaacw0629C (Appellant) (Respondent)

Section 115BSection 142(1)Section 143(2)Section 143(3)Section 37

para 7.6 herein above is deleted.” 9. Section 37 of the Act provides that any expenditure not being in the nature of capital expenditure or personal expenses of the assessee laid out or expanded wholly and exclusively for the purposes of the business or profession shall be allowed in computing

Deputy Commissioner of Income-Tax, Central Circle-2(2), Bangalore vs. Sarasoule Pvt. Ltd., Bangalore

In the result, the ground of appeal of the revenue is hereby dismissed

ITA 180/BANG/2024[2015-16]Status: DisposedITAT Bangalore26 Nov 2024AY 2015-16

Bench: Shri Waseem Ahmed & Shri Soundararajan K

For Appellant: Shri M Monish, AdvocateFor Respondent: Shri Sridhar E, CIT (DR)
Section 132Section 132(4)Section 153ASection 37(1)

incurred during the year for the business or profession carried out by the assessee 4. It should not be in the nature of capital expenditure. 10.1 The Hon’ble Supreme Court in the case of Sassoon J. David & Co. Pvt. Ltd. Vs CIT reported in 118 ITR 261 has also

Asian Hotels (North) Limited, New Delhi vs. Pr, CIT, Delhi-1, New Delhi

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

ITA 654/DEL/2021[2016-17]Status: DisposedITAT Delhi26 Nov 2024AY 2016-17

Bench: Shri S. Rifaur Rahman & Shri Sudhir Pareek, Judicialmember M/S. Asian Hotels (North) Limited, Vs. Pr.Cit, 1A, Hotel Hyatt Regency, Delhi – 1. Bhikaji Cama Place, New Delhi – 110 066. (Pan: Aaaca0125H) (Appellant) (Respondent) Assessee By : Shri Abhishek Jain, Ca Revenue By : Shri Javed Akhtar, Cit Dr Date Of Hearing : 17.09.2024 Date Of Order : 26.11.2024 O R D E R Per S. Rifaur Rahman, Am : 1. This Appeal Is Filed By The Assessee Against The Order Of Ld. Principal Commissioner Of Income-Tax, Delhi-1 (Hereinafter Referred To ‘Ld. Pcit’) Dated 31.03.2021 For Assessment Year 2016-17. 2. Brief Facts Of The Case Are, Assessee Filed Its Return Of Income On 29.09.2016 Declaring A Loss Of Rs.32,48,76,393/-. The Case Was Selected For Complete Scrutiny Under Cass. The Assessment Was Completed Under Section 143 (3)

For Appellant: Shri Abhishek Jain, CAFor Respondent: Shri Javed Akhtar, CIT DR
Section 143Section 143(3)Section 41(1)Section 438

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

Piramal Capital and Housing Finance Limited, Mumbai vs. Assistant Commissioner of Income Tax TDS - 2 (1), Mumbai

Accordingly, in terms of paragraph 13 & 17 above, all the four appeals preferred by the Assessee are allowed

ITA 2351/MUM/2024[AY 2017-18]Status: DisposedITAT Mumbai25 Nov 2024

Bench: IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Yogesh Thar, Shri RonakFor Respondent: Ms. Madhu Malati Ghosh &
Section 191Section 193Section 194Section 194ASection 201Section 201(1)

Taxman 488/258 ITR 601 (Bom) wherein it was held that broken-period-interest should be treated as revenue expenditure and not capital expenditure in the hands of the buyer of the securities. On perusal of the aforesaid judgment we find that the issue raised before the Hon’ble Bombay High

Piramal Capital and Housing Finance Limited, Mumbai vs. Assistant Commissioner of Income Tax TDS - 2 (1), Mumbai

Accordingly, in terms of paragraph 13 & 17 above, all the four appeals preferred by the Assessee are allowed

ITA 2348/MUM/2024[AY 2018-19]Status: DisposedITAT Mumbai25 Nov 2024

Bench: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Yogesh Thar, Shri RonakFor Respondent: Ms. Madhu Malati Ghosh &
Section 191Section 193Section 194Section 194ASection 201Section 201(1)

Taxman 488/258 ITR 601 (Bom) wherein it was held that broken-period-interest should be treated as revenue expenditure and not capital expenditure in the hands of the buyer of the securities. On perusal of the aforesaid judgment we find that the issue raised before the Hon’ble Bombay High

Piramal Capital and Housing Finance Limited, Mumbai vs. Assistant Commissioner of Income Tax TDS - 2 (1), Mumbai

Accordingly, in terms of paragraph 13 & 17 above, all the four appeals preferred by the Assessee are allowed

ITA 2347/MUM/2024[AY 2019-20]Status: DisposedITAT Mumbai25 Nov 2024

Bench: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Yogesh Thar, Shri RonakFor Respondent: Ms. Madhu Malati Ghosh &
Section 191Section 193Section 194Section 194ASection 201Section 201(1)

Taxman 488/258 ITR 601 (Bom) wherein it was held that broken-period-interest should be treated as revenue expenditure and not capital expenditure in the hands of the buyer of the securities. On perusal of the aforesaid judgment we find that the issue raised before the Hon’ble Bombay High

Piramal Capital and Housing Finance Limited, Mumbai vs. Assistant Commissioner of Income Tax TDS - 2 (1), Mumbai

Accordingly, in terms of paragraph 13 & 17 above, all the four appeals preferred by the Assessee are allowed

ITA 2345/MUM/2024[AY 2020-21]Status: DisposedITAT Mumbai25 Nov 2024

Bench: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Yogesh Thar, Shri RonakFor Respondent: Ms. Madhu Malati Ghosh &
Section 191Section 193Section 194Section 194ASection 201Section 201(1)

Taxman 488/258 ITR 601 (Bom) wherein it was held that broken-period-interest should be treated as revenue expenditure and not capital expenditure in the hands of the buyer of the securities. On perusal of the aforesaid judgment we find that the issue raised before the Hon’ble Bombay High

Bhagabhai Tribhovandas Patel, Ahmedabad vs. ITO.Ward 4(2)(1), Ahmedabad

In the result, appeal of the assessee is hereby allowed

ITA 1161/AHD/2024[2011-12]Status: DisposedITAT Ahmedabad22 Nov 2024AY 2011-12

Bench: Dr. B.R.R. Kumar, Vice-Ms. Suchitra Kamble

For Appellant: Shri S.N. Divetia, AR & Shri Samir Vora, ARFor Respondent: Shri Dharnidas V.S., Sr DR
Section 143(3)Section 250Section 271(1)(c)

Revenue Authorities disallowed the cost of improvement only on the ground that the expenses incurred were revenue in nature so cannot be considered as capital expenditure. We find that the issue of capital expenditure/revenue expenditure is not to be considered at this juncture and the cost of improvement incurred

Bhagabhai Tribhovandas Patel, Ahmedabad vs. ITO.Ward-4(2)(1), Ahmedabad

In the result, appeal of the assessee is hereby allowed

ITA 1160/AHD/2024[2011-12]Status: DisposedITAT Ahmedabad22 Nov 2024AY 2011-12

Bench: Dr. B.R.R. Kumar, Vice-Ms. Suchitra Kamble

For Appellant: Shri S.N. Divetia, AR & Shri Samir Vora, ARFor Respondent: Shri Dharnidas V.S., Sr DR
Section 143(3)Section 250Section 271(1)(c)

Revenue Authorities disallowed the cost of improvement only on the ground that the expenses incurred were revenue in nature so cannot be considered as capital expenditure. We find that the issue of capital expenditure/revenue expenditure is not to be considered at this juncture and the cost of improvement incurred

Syngenta India Private Limited (Earlier Known As Syngenta India Ltd), Mumbai vs. Assistant Commissioner of Income Tax-Range 1(3)(1), Mumbai

In the result, the appeals of the assessee for AY 2015-16 to 2018-19 are partly allowed

ITA 4414/MUM/2024[2017-18]Status: DisposedITAT Mumbai21 Nov 2024AY 2017-18

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri Rajan Vora & Shri PranayFor Respondent: Shri Nagnath Bhimrao Pasale
Section 10(1)Section 115Section 35(1)(iv)Section 37(1)

that since the appellant in its return had taken a conscious explicit plea with regard to the part of the claim being ascribable to capital expenditure and partly to revenue expenditure, it was not open for the appellant to plead for the first time before the ITAT that the entire ... objection given by the representative of the department, allowing the appellant to set up the fresh claim to treat the amount declared as capital expenditure in the returns (as originally filed), as revenue expenditure. As a result, the objection now taken by the department cannot be countenanced. 11. Learned

Syngenta India Pvt Ltd ( Erstwhile Known As Syngenta India Ltd), Mumbai vs. Assistant Commissioner of Income Tax -Range 1(3)(1), Mumbai

In the result, the appeals of the assessee for AY 2015-16 to 2018-19 are partly allowed

ITA 3831/MUM/2024[2015-16]Status: DisposedITAT Mumbai21 Nov 2024AY 2015-16

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri Rajan Vora & Shri PranayFor Respondent: Shri Nagnath Bhimrao Pasale
Section 10(1)Section 115Section 35(1)(iv)Section 37(1)

that since the appellant in its return had taken a conscious explicit plea with regard to the part of the claim being ascribable to capital expenditure and partly to revenue expenditure, it was not open for the appellant to plead for the first time before the ITAT that the entire ... objection given by the representative of the department, allowing the appellant to set up the fresh claim to treat the amount declared as capital expenditure in the returns (as originally filed), as revenue expenditure. As a result, the objection now taken by the department cannot be countenanced. 11. Learned

Syngenta India Private Ltd, Mumbai vs. Assistant Commissioner of Income Tax Circle 1(3)(1), Mumbai

In the result, the appeals of the assessee for AY 2015-16 to 2018-19 are partly allowed

ITA 3449/MUM/2024[2016-17]Status: DisposedITAT Mumbai21 Nov 2024AY 2016-17

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri Rajan Vora & Shri PranayFor Respondent: Shri Nagnath Bhimrao Pasale
Section 10(1)Section 115Section 35(1)(iv)Section 37(1)

that since the appellant in its return had taken a conscious explicit plea with regard to the part of the claim being ascribable to capital expenditure and partly to revenue expenditure, it was not open for the appellant to plead for the first time before the ITAT that the entire ... objection given by the representative of the department, allowing the appellant to set up the fresh claim to treat the amount declared as capital expenditure in the returns (as originally filed), as revenue expenditure. As a result, the objection now taken by the department cannot be countenanced. 11. Learned

Syngenta India Private Ltd, Mumbai vs. Assistant Commissioner of Income Tax- Circle 1(3)(1), Mumbai

In the result, the appeals of the assessee for AY 2015-16 to 2018-19 are partly allowed

ITA 3448/MUM/2024[2018-19]Status: DisposedITAT Mumbai21 Nov 2024AY 2018-19

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri Rajan Vora & Shri PranayFor Respondent: Shri Nagnath Bhimrao Pasale
Section 10(1)Section 115Section 35(1)(iv)Section 37(1)

that since the appellant in its return had taken a conscious explicit plea with regard to the part of the claim being ascribable to capital expenditure and partly to revenue expenditure, it was not open for the appellant to plead for the first time before the ITAT that the entire ... objection given by the representative of the department, allowing the appellant to set up the fresh claim to treat the amount declared as capital expenditure in the returns (as originally filed), as revenue expenditure. As a result, the objection now taken by the department cannot be countenanced. 11. Learned

DCIT (It)-2(1)(2), Air Building, Nariman Point, Mumbai vs. Dbs Bank Limited, Mumbai

ITA 4722/MUM/2023[2015-16]Status: DisposedITAT Mumbai21 Nov 2024AY 2015-16

Bench: Shri Narendra Kumar Billaiya, Hon'Ble & Shri Sunil Kumar Singh, Hon'Bleι.Τ.Α. No. 3691/Mum/2023

For Appellant: Shri P.J. Pardiwala/Shri Madhur Agarwal, A/RsFor Respondent: Shri Vivek Permpurna, CIT, D/R
Section 143(3)Section 14ASection 28Section 36Section 36(1)(vii)Section 36(1)(viia)Section 36(2)Section 37(1)Section 44C

आयकर अपीलीय अधिकरण न्यायपीठ, मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON

Dbs Bank Ltd (Dbs Bank Ltd., India Branches Now Converted Into Dbs Bank India Ltd), Mumbai vs. DCIT (Int Txt)-2(1)(2), Mumbai

In the result, appeal of the assessee in ITA No

ITA 3691/MUM/2023[2015-16]Status: DisposedITAT Mumbai21 Nov 2024AY 2015-16

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

For Appellant: Shri P.J. Pardiwala/Shri Madhur Agarwal, A/RsFor Respondent: Shri Vivek Permpurna, CIT, D/R
Section 143(3)Section 14ASection 28Section 36Section 36(1)(vii)Section 36(1)(viia)Section 36(2)Section 37(1)Section 44C

expenditure would be on revenue account, even though the advantage may endure for an indefinite period. The word capital connotes permanency and the capital expenditure therefore closely akin to the concept of securing something tangible or intangible property, corporeal or incorporeal rights so that it could be of a lasting ... 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 I.T.A. No. 3691/Mum/2023 I.T.A. No. 4722/Mum/2023 22 as to have no endurance at all". There may be cases where expenditure

ITO(Exemption), Ward-1(3), Kolkata vs. Suresh Amiya Memorial Trust, Kolkata

In the result, the appeal of the Revenue in ITA No

ITA 652/KOL/2024[2020-21]Status: DisposedITAT Kolkata20 Nov 2024AY 2020-21

Bench: Shri Rajpal Yadav & Shri Rakesh Mishraassessment Year: 2020-21

For Appellant: Shri Kaustav Chakraborty &For Respondent: Shri Arup Chatterjee, CIT DR
Section 11Section 12ASection 12A(1)Section 12A(1)(b)Section 143(1)Section 250Section 44A

taxable income and the applications and accumulation made by the Trust were considered as NIL. However, in Schedule ER (Revenue Expenditure) and Schedule EC (Capital Expenditure) of the intimation, the details of application made by the Trust was duly computed. Aggrieved with the aforesaid intimation, the assessee filed an appeal ... under section 11/12 of the Act. The assessee, in its return of income had claimed revenue expenditure of Rs. 3,03,61,526/- and capital expenditure of Rs. 11,86,082/-. From the return of income, it was seen that the appellant was registered by the CIT West Bengal

M/S Punjab Tourism Developmenet Corporation Limited, Chandigarh vs. DCIT, Circle-1(1), Chandigarh

Appeal of the assessee is allowed

ITA 142/CHANDI/2020[2016-17]Status: DisposedITAT Chandigarh18 Nov 2024AY 2016-17

Bench: Ao)

For Appellant: Sh.Tejmohan Singh, Adv. and Sh. Vineet Khurana, C. AFor Respondent: Sh.Vivek Vardhan, JCIT, Sr. D. R
Section 142(1)Section 143(2)Section 253

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 in computing the income ... states that 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 expenditure of the assessee) laid out or expended wholly and exclusion for the purpose of business or profession shall be allowed in computing

M/S Punjab Tourism Developmenet Corporation Limited, Chandigarh vs. DCIT, Circle-1(1), Chandigarh

Appeal of the assessee is allowed

ITA 141/CHANDI/2020[2015-16]Status: DisposedITAT Chandigarh18 Nov 2024AY 2015-16

Bench: Ao)

For Appellant: Sh.Tejmohan Singh, Adv. and Sh. Vineet Khurana, C. AFor Respondent: Sh.Vivek Vardhan, JCIT, Sr. D. R
Section 142(1)Section 143(2)Section 253

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 in computing the income ... states that 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 expenditure of the assessee) laid out or expended wholly and exclusion for the purpose of business or profession shall be allowed in computing

M/S Punjab Tourism Developmenet Corporation Limited, Chandigarh vs. DCIT, Circle-1(1), Chandigarh

Appeal of the assessee is allowed

ITA 140/CHANDI/2020[2014-15]Status: DisposedITAT Chandigarh18 Nov 2024AY 2014-15

Bench: Ao)

For Appellant: Sh.Tejmohan Singh, Adv. and Sh. Vineet Khurana, C. AFor Respondent: Sh.Vivek Vardhan, JCIT, Sr. D. R
Section 142(1)Section 143(2)Section 253

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 in computing the income ... states that 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 expenditure of the assessee) laid out or expended wholly and exclusion for the purpose of business or profession shall be allowed in computing