“ capital expenditure ”

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT

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.

227 ITR 172 · 1997 · Supreme Court

621

Madras Industrial Investment Corporation Ltd. v. CIT

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.

225 ITR 802 · 1997 · Supreme Court

568

South Indian Bank Ltd. v. CIT

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.

438 ITR 1 · 2021 · Supreme Court

508

CIT v. Institute of Banking Personnel Selection

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.

264 ITR 110 · 2003 · High Court

398

Taparia Tools Ltd. v. JCIT

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.

372 ITR 605 · 2015 · Supreme Court

343

35 Taxmann.com 335 · 2013 · ITAT

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

322

Alembic Chemical Works Co. Ltd. v. CIT

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.

177 ITR 377 · 1989 · Supreme Court

275

ITA 224/HYD/2024[2018-19]Status: DisposedITAT Hyderabad22 Jul 2024AY 2018-19

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

Sree Kanyaka Mutually Aided Co-Op Thrift Credit and Marketg. Society Limited, Hindupur vs. Income Tax Officer, Ward 1, Hindupur

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

Bench: Shri Laliet Kumar, Hon’Ble & Shri Madhusudan Sawdia

For Appellant: Shri D. Shree Raksha, CAFor Respondent: Shri Shakeer Ahamed, DR

Section 143(3)Section 56Section 80PSection 80P(2)(a)

sources" shall be computed after making the following deductions, namely: -- (i)------------ (ia)----------- (ii)------------ (iia)---------- (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.” 12.1. From the reading of Section

Ram Ratan Jangir, Amer vs. Income Tax Officer, Ward -7(2), Jaipur

In the result ground no. 1 raised by the

ITA 550/JPR/2024[2013-14]Status: DisposedITAT Jaipur22 Jul 2024AY 2013-14

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Sh. Anoop Bhatiya, CAFor Respondent: Smt. Monisha Choudhary (Addl. CIT)

Section 143(3)Section 147Section 148

also pointed out that the Assessee had borrowed Rs.43.62 crores by way of issue of debentures and the said amount was utilised as capital expenditure and inter-corporate deposit. It was the Assessee's submission that no part of the interest bearing funds (viz. Issue of debentures) had gone into

Maini Materials Movement Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-4(1)(1), Bangalore

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

ITA 1069/BANG/2024[2015-16]Status: DisposedITAT Bangalore22 Jul 2024AY 2015-16

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year : 2015-16

For Appellant: Shri Srinivas K.P, CAFor Respondent: Shri Chinmay Anand Jain, JCIT (DR)

Section 14ASection 14A(1)Section 35(1)(iv)

view that the benefit of such expenses is of enduring nature and, therefore, the same should be treated as capital expenditure. Thus, the AO disallowed the same and added to the total income of the assessee. 9. On appeal, the ld. CIT(A) also confirmed the order ... before the ld. CIT(A). As such, without going into the merit of the case, we note that the assessee is eligible for the capital expenditure under the provisions of sec. 35(1)(vi) of the Act. The relevant extract of the order reads as under

Avirat Rajendra Sonpal, Mumbai vs. DCIT, CPC, Bangalure

ITA 2198/MUM/2024[2018-19]Status: DisposedITAT Mumbai22 Jul 2024AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Anikesh Banerjee, Jm Avirat Rajendra Sonpal Dy. Commissioner Of 54/B, Miramar Co-Op Hsg, Income Tax, Cpc, Society, 3, L. Jagmohandas Bangaluru, Vs. Marg Napeansea Road, Piramal Chambers, Lalbaug, Mumbai-400 036 Mumbai-400 012 (Appellant) (Respondent) Pan No. Aahps2278R Assessee By : Shri Vishal D. Shah, Ar Revenue By : Shri Manoj Kumar Sinha, Dr Date Of Hearing: 11.07.2024 22.07.2024 Date Of Pronouncement :

For Appellant: Shri Vishal D. Shah, ARFor Respondent: Shri Manoj Kumar Sinha, DR

Section 139(1)Section 143(1)Section 250Section 37(1)Section 44A

which were revenue expenditure incurred by the appellant for the sales promotion of the business carried on by the appellant. Therefore, treating it as capital expenditure and personal in nature and affirming the disallowance of the aforesaid business expenditure is bad in law.” Brief fact of the case is that ... processing of the return under Section 143(1) of the Act, the learned Assessing Officer has treated the amount as capital expenditure and rejected the assessee’s claim under Section 37(1) of the Act. Being aggrieved on the Avirat Rajendra Sonpal; A.Y. 2018-19 assessment order, the assessee filed

M/S. Sjs Enterprises Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-6(1)(1), Bangalore

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

ITA 973/BANG/2024[2020-21]Status: DisposedITAT Bangalore19 Jul 2024AY 2020-21

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadav

For Appellant: Sri. Rony Anthony, CAFor Respondent: Ms. Neha Sahay, JCIT-DR

Section 143(2)Section 32(1)(ii)Section 37Section 37(1)

erred in holding that by entering into non-competition agreement appellant acquired benefit of enduring nature and, as such, the expenditure was capital expenditure. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified, rather grossly erred in not considering

Gravita India Ltd., Jaipur vs. PCIT-2, Jaipur

13. For the foregoing reasons and discussion, this appeal is allowed and the impugned order passed by the Learned PCIT u/s 263 of the Act is hereby set aside

ITA 753/JPR/2024[2018-19]Status: DisposedITAT Jaipur18 Jul 2024AY 2018-19

Bench: SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

For Appellant: Shri P. C. Parwal, C.AFor Respondent: Shri Ajay Malik (CIT)

Section 263Section 37(1)Section 80J

particularly relates to 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 or exclusively for the purposes of the business or profession. In Mahendra Singh

Samkeet Arya Homes LLP, Ahmedabad vs. The Income Tax Officer, Ward-3(3)(5), Ahmedabad

In the result, appeal filed by the assessee is allowed

ITA 249/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad16 Jul 2024AY 2018-19

Bench: Ms. Suchitra Kamble & Shri Makarand Vasant Mahadeokarassessment Year: 2018-10

Section 133(6)Section 143(2)Section 37

erred in law and on facts by considering the non- compete fees amounting to Rs.38,00,000/- to be a capital expenditure without considering the nature of the expenditure. 2) The Ld. CIT(A) has erred in law and on facts by holding that the non- compete fees gives enduring

ACIT., Circle-1(1), Tirupati vs. Southern Power Distribution Company of Andhra Pradesh Limited, Tirupati

In the result, appeal filed by the Revenue is dismissed

ITA 244/HYD/2024[2018-19]Status: DisposedITAT Hyderabad16 Jul 2024AY 2018-19

Bench: Shri Manjunatha, G. & Shri K. Narasimha Charyआ.अपी.सं /Ita No.244/Hyd/2024 (िनधा"रण वष"/Assessment Year: 2018-19 ) Acit Vs. Southern Power Circle 1(1) Distribution Company Of Tirupati Andhra Pradesh, Tirupati Pan:Aahcs4056Q (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: C.A Mohan Acharya राज" व "ारा/Revenue By:: Shri Kumar Pranav, Cit(Dr) सुनवाई की तारीख/Date Of Hearing: 10/07/2024 घोषणा की तारीख/Pronouncement: 16/07/2024 आदेश/Order

For Appellant: C.A Mohan AcharyaFor Respondent: : Shri Kumar Pranav, CIT(DR)

Section 43(1)

./other institutions and the same has been credited to capital reserve account. The assessee further submitted that it has capitalized the amount incurred for capital expenditure out of the said grants to fixed assets. Further, the appellant had claimed depreciation on capital receipts and debited to P&L Account ... their share of capital cost for erecting transmission lines and sub stations for power distribution. Further, the company has capitalized the amount spent for capital expenditure out of the said grants to fixed assets. Further, the appellant had claimed depreciation on capital assets and debited to P&L Account

Jawaharlal Nehru Shekshanik and Samajik Sansthan, Jaipur vs. Exemption Ward 1, Jaipur

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

ITA 630/JPR/2023[2016-17]Status: DisposedITAT Jaipur16 Jul 2024AY 2016-17

For Appellant: Sh. Tarun Mittal, CAFor Respondent: Sh. A. S. Nehra, Add. CIT

Section 143(3)Section 250

circumstances of the case and in law, Id.CIT(A) has erred in confirming the action of ld.AO in not allowing the capital expenditure of Rs.39,69,426/- incurred by assessee for the purpose of trust, arbitrarily. 3. That the appellant craves the right to add, delete, amend or abandon ... late and 12AA registration was not granted/ certificate was not placed on record. The ld. AO also noted that the assessee has claimed capital expenditure as an application of income for which the assessee has not submitted any evidence and therefore, the assessee was denied the benefit of capital expenditure

M/S. Kodava Education Society, Ponnampet vs. Assistant Commissioner of Income Tax, Exemptions, Circle-1, Bengaluru

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

ITA 764/BANG/2024[2017-18]Status: DisposedITAT Bangalore16 Jul 2024AY 2017-18

Bench: Shri Chandra Poojari & Shri Keshav Dubeykodava Education Society Acit (Exemptions), Circle-1 Po Box No. 11, Halligattu Unity Building Annexe Vs. Ponnampet 571216 5Th Floor, Mission Road Pan – Aaaak1322J Bengaluru 560027 (Appellant) (Respondent) Assessee By: Shri Vishal Rao, Ca Revenue By: Shri Ganesh R. Gale, Standing Counsel Date Of Hearing: 28.05.2024 Date Of Pronouncement: 16.07.2024 O R D E R Per: Keshav Dubey, J.M. This Appeal At The Instance Of The Assessee Is Directed Against The Order Of The National Faceless Appeal Centre, Delhi /Cit(A) Under Section 250 Of The Income Tax Act, 1961 (The Act) Vide Din & Order No. Itba/Nfac/S/250/ 2003-24/1061703575(1) Dated 28.02.2024 For Assessment Year (Ay) 2017-18. 2. The Assessee Has Raised The Following Grounds Of Appeal: - “1 The Impugned Order Of The Appellate Commissioner Of Income Tax Is Liable To Set Aside In So Far As The Same Is Incorrect, Irregular, Improper, Unlawful & Oppose To The Law & Facts Of The Case. 2 That The Learned Appellate Commissioner Erred In Not Taking Cognizance Of The Fact That The Appellant Had Committed Certain Errors & Omissions In Filling Up The Return Of Income Which Ought To Have Been Substituted With The Correct Figures To Arrive At The Taxable Income, If Any & As Such The Impugned Order Is Liable To Set Aside.

For Appellant: Shri Vishal Rao, CAFor Respondent: Shri Ganesh R. Gale, Standing Counsel

Section 11Section 11(1)(a)Section 11(1)(d)Section 12ASection 143(3)Section 234BSection 234DSection 250

excluding voluntary contributions of Rs.6,74,22,285/-, application on account of revenue expenditure of Rs.6,98,90,881/- and application on account of capital expenditure of Rs.42,88,937/- ( Pages 77 & 78 of the Paper book No.1). Thereafter the case of the Trust was selected for scrutiny through CASS ... provisions contained in section 11(6) of the Act as the assessee has also claimed capital expenditure as application of income and thus assessed on a total taxable income of Rs.32,57,688/- as against the returned income of Rs. Nil. Therefore, the only disallowance made

Chandrakant Narayan Patkar Charitable Trust, Mumbai vs. Commissioner of Income Tax (Exemption), Pune

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

ITA 2034/MUM/2024[2017-18]Status: DisposedITAT Mumbai16 Jul 2024AY 2017-18

Bench: Shri Pavan Kumar Gadale & Shri Omkareshwar Chidarachandrakant Narayan Vs. Cit(Exemption), Room.No 322,3Rd Floor, Patkar Charitable Trust Income Tax Office, 1St Floor, Patkar Trust Pmt Building, Office Buillding, Sankar Seth Road, Station Road, Pune-411037, Near Canara Bank, Maharashtra. Dombivli (E), Thane-421201. Maharashtra. Pan/Gir No. Aaatt2801N (अपीलाथ"/Appellant) (""यथ"/Respondent)

Section 11Section 11(2)Section 12ASection 147Section 148Section 263

excluding OME corpus contribution as per Schedule Al of ITR Rs 1,58,60,115/- Less. Revenue Expenditure Rs. 51,07,083/- Capital Expenditure Rs. 44,10,577/- Less: 15% accumulation on Gross receipt of Rs. 1,37,59,967/- Rs. 20,63,995/- 4 Chandrakant Narayan Patkar Charitable Trust

ACIT, Circle-1(1)(1), Vejalpur vs. The Gujarat State Co-Op. Bank Ltd., Ahmedabad City

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

ITA 124/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad15 Jul 2024AY 2017-18

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 143(3)Section 37

Maturity (HTM) category is capital investment of the bank and hence expenditure of the premium amortization of Rs.3,76,31,284/- is a capital expenditure which is a disallowable expenditure u/s.37 of the Act. Whereas the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier

Ami Life Sciences Pvt. Ltd., Vadodara vs. The ACIT, Circle-1(1)(1), Vadodara

Accordingly, the disallowance made by the AO and confirmed by the Ld.CIT(A) is deleted, and the assessee's claim is allowed in full

ITA 544/AHD/2023[2016-17]Status: DisposedITAT Ahmedabad15 Jul 2024AY 2016-17

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokar, Accountnat Member आयकर अपील सं /Ita No.544/Ahd/2023 "नधा"रण वष" /Assessment Year : 2016-17 Ami Life Sciences Pvt.Ltd. The Acit बनाम/ 701 To 710 Lilleria 1038 Circle-1(1)(1) Next To Zydex Office Vadodara V/S. Gotri Sevasi Road Vadodara – 390 020 (Gujarat) "थायी लेखा सं./Pan: अपीलाथ"/ (Appellant) ….. "" यथ"/ (Respondent) Assessee By : Shri S.N. Soparkar, Sr.Advocate Revenue By : Shri Sudhakar Verma, Sr.Dr सुनवाई क" तार"ख/Date Of Hearing : 04/07/2024 घोषणा क" तार"ख /Date Of Pronouncement: 15/07/2024 आदेश/O R D E R Per Shri Makarand V. Mahadeokar, Am: This Appeal Is Filed By The Assessee As Against The Order Dated 12/06/2023 Passed By The Ld.Commissioner Of Income-Tax(Appeals) - National Faceless Appeal Centre (Nfac), Delhi [Hereinafter Referred To As “The Ld.Cit(A)” In Short], Arising Out Of The Assessment Order Dated 21/12/2018 Passed By The Assessing Officer (Ao) Under Section 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As "The Act") Relevant To The Assessment Year (Ay) 2016-17. Ami Life Sciences Pvt.Ltd. Vs. Acit Asst. Year : 2016-17 2 Facts Of The Case:

For Appellant: Shri S.N. Soparkar, Sr.AdvocateFor Respondent: Shri Sudhakar Verma, Sr.DR

Section 143(2)Section 143(3)Section 36Section 36(1)(ii)

that the company had undertaken the research work and had spent certain amount during the relevant assessment years on scientific research, not being the capital expenditure in the nature of land and building. 8.3. The assessee also placed reliance on judgement in case of Bosch Ltd. Vs. Secretary, Dept

Parul University, Vadodara vs. The Dy.CIT, Exemption Circle-1, Ahmedabad

Appeals are allowed

ITA 993/AHD/2023[2017-18]Status: DisposedITAT Ahmedabad12 Jul 2024AY 2017-18

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar, Accountnat Member

ITA 992/AHD/2023[2017-18]Status: DisposedITAT Ahmedabad12 Jul 2024AY 2017-18

1019/Ahd/2023. Parul Arogya Seva Mandal Trust & Parul University (ITA 993/Ahd/2023) Asst. Years :2016-17 & 2017-18 11 the exemptions, the capital expenditure claimed by the assessee was also not allowed as application / exempt. 2.18. In case of Parul University, the AO concluded that the amount of bogus salary was Rs.16 ... disallowed capital expenditure amounted to Rs. 7,93,12,126/-. The AO also identified unexplained transaction of Rs. 89,21,987/- and added to the total income. 2.19. While assessing the income of the assessee for A.Y. 2017-18, the AO gave credit

Parul Arogya Seva Mandal Trust, Ahmedabad vs. The Dy.CIT, Central Circle-1(2), Ahmedabad

Appeals are allowed

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar, Accountnat Member

ITA 991/AHD/2023[2016-17]Status: DisposedITAT Ahmedabad12 Jul 2024AY 2016-17

Parul Arogya Seva Mandal Trust, Ahmedabad vs. The Dy.CIT, Central Circle-1(2), Ahmedabad

Appeals are allowed

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar, Accountnat Member

ITA 1019/AHD/2023[2017-18]Status: DisposedITAT Ahmedabad12 Jul 2024AY 2017-18

DCIT, Central Circle-1(2), Ahmedabad, Aayakar Bhawan, Ashram Road vs. Parul Arogya Seva Mandal Trust, Ahmedabad

Appeals are allowed

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar, Accountnat Member

ITA 1018/AHD/2023[2016-17]Status: DisposedITAT Ahmedabad12 Jul 2024AY 2016-17

DCIT, Central Circle1(2), Ahmedabad vs. Parul Arogya Seva Mandal Trust, Ahmedabad

Appeals are allowed

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar, Accountnat Member