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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

DCIT (It) 2(2)(2), Mumbai vs. The Hongkong and Shanghai Banking Corp Ltd, Mumbai

In the result, the captioned appeals by the assessee are partly

ITA 4787/MUM/2016[2006-07]Status: DisposedITAT Mumbai28 Jun 2024AY 2006-07

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

After considering the detailed submissions of the assessee, the Assessing Officer was of the opinion that the impugned expenditure is in the nature of capital expenditure and the assessee has not submitted any documents to show the mode of determination of compensation. Moreover, the payments made to the employees

The Hong Kong & Shanghai Banking Corporation Ltd., Mumbai vs. Addl. Director of Income Tax (International Taxation) - Range -3, Mumbai

In the result, the captioned appeals by the assessee are partly

ITA 4767/MUM/2016[2007-08]Status: DisposedITAT Mumbai28 Jun 2024AY 2007-08

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

After considering the detailed submissions of the assessee, the Assessing Officer was of the opinion that the impugned expenditure is in the nature of capital expenditure and the assessee has not submitted any documents to show the mode of determination of compensation. Moreover, the payments made to the employees

The Hong Kong & Shanghai Banking Corporation Ltd., Mumbai vs. Addl. Director of Income Tax (International Taxation) - Range -3, Mumbai

In the result, the captioned appeals by the assessee are partly

ITA 4766/MUM/2016[2006-07]Status: DisposedITAT Mumbai28 Jun 2024AY 2006-07

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

After considering the detailed submissions of the assessee, the Assessing Officer was of the opinion that the impugned expenditure is in the nature of capital expenditure and the assessee has not submitted any documents to show the mode of determination of compensation. Moreover, the payments made to the employees

Janta Adarsh Co-Operative Thrift & Credit Society Ltd., New Delhi vs. ITO, Ward-52(1), New Delhi

In the result, appeal of the assessee is partly allowed

ITA 3693/DEL/2023[2020-21]Status: HeardITAT Delhi28 Jun 2024AY 2020-21

Bench: Shri Kul Bharat

Section 2(19)Section 234BSection 234CSection 80P(2)(a)Section 80P(2)(d)

person belonging to the family of an employee in the event of his death ;] (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; [(iv) in the case of income

The Janta Adarsh Co-Operative Thrift & Credit Society Ltd., Delhi vs. ITO Ward-52(1), Delhi

In the result, appeal of the assessee is partly allowed

ITA 3692/DEL/2023[2018-19]Status: DisposedITAT Delhi28 Jun 2024AY 2018-19

Bench: Shri Kul Bharat

Section 2(19)Section 234BSection 234CSection 80P(2)(a)Section 80P(2)(d)

person belonging to the family of an employee in the event of his death ;] (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; [(iv) in the case of income

Sitas Films & Tv Productions P.Ltd, New Delhi vs. DCIT, Circle-23(2), New Delhi

Appeal of the assessee is dismissed

ITA 2137/DEL/2018[2013-14]Status: DisposedITAT Delhi28 Jun 2024AY 2013-14

Bench: Shri Kul Bharat & Shri Brajesh Kumar Singhassessment Year: 2013-14

Section 143(3)Section 271(1)(c)Section 37

Channels. These Pilots/ pilot episodes have no sale value as there is no guarantee of selection from TV Channels. These expenses are not capital expenditure in nature and the same are in nature of revenue expenditure. 5. That the addition has been confirmed despite the same having, been made grossly ... months) is not allowable u/s 37(1). Similarly, there are expenses of Rs. 9,93,760/- under the head 'Project Expenses'. This Is apparently capital expenditure. Neither during the assessment proceedings, nor during present appellate proceedings, any supporting were produced to controvert this apparent proposition finding. Moreover, there

Assistant Commissioner of Income Tax, Exemptions, Circle, Jaipur vs. Global Institute of Technology Society, Jaipur Rajasthan

In the results the appeal of the revenue stands dismissed

ITA 175/JPR/2024[2013-14]Status: DisposedITAT Jaipur27 Jun 2024AY 2013-14

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. S. L. Poddar, AdvFor Respondent: Sh. Anoop Singh, (Addl.CIT)
Section 11Section 12ASection 13(1)Section 13(3)Section 143(3)Section 147

Ground No 5:- Under the facts and Circumstances of the case and in Law, the learned Assessing Officer has erred in not allowing the capital expenditure as application out of receipts for the year. Not pressed. Additional Ground :- The learned AO has wrongly disallowed the claim of benefit

DCIT, Aayakar Bhwan vs. Tosoh India Private Limited, Mumbai

In the result, the appeal is dismissed

ITA 123/MUM/2024[2020-21]Status: DisposedITAT Mumbai26 Jun 2024AY 2020-21

Bench: Shri Amit Shukla & Shri Ratnesh Nandan Sahayassessment Year: 2020-21 Dcit, Tosoh India Private Aayakar Bhavan, Limited M. K. Road, E/302, Churchgate, Vs. Lotus Corporate Park, Mumbai – 400020. Graham Firth Compound, Goregaon (East), Mumbai – 400 063. Pan: Aaacl3709N (Appellant) (Respondent) Present For: Assessee By : Shri. Shalin S. Divatia, A.R. Revenue By : Shri. P.D. Chougule (Addl. Cit), Sr. D.R. Date Of Hearing : 22 . 05 . 2024 Date Of Pronouncement : 26 . 06 . 2024 O R D E R Per: Ratnesh Nandan Sahay: 1. This Appeal Has Been Filed By The Revenue Against The Order Of The Ld. Cit (Appeals) Passed U/S. 250 Of The Income Tax Act [The ‘Act’ In Short] Vide Din & Order No. Itba/ Nfac/S/250/2023-24/1057865127(1) Dated 10/11/2023 For The Assessment Year 2020-21. 2. Following Grounds Of Appeal Have Been Raised By The Revenue: 1. "Whether On The Facts & Circumstances Of The Case & In Law, The Ld. Cit(A) Erred In Deleting The Addition Of Rs.

For Appellant: Shri. Shalin S. Divatia, A.RFor Respondent: Shri. P.D. Chougule (Addl. CIT), Sr. D.R
Section 250

erred in deleting the addition ignoring the fact that the assessee converted the stock into fixed assets which is a part of capital expenditure and the fixed assets are part of the balance sheet as property, plant and equipment (P,P&E), fixed asset are tangible items that companies ... part of Profit & Loss A/c and Revenue Expenditure, whereas, the conversion of ‘stock-in-trade’ into ‘fixed assets’ is a part of capital expenditure and since capital expenses to acquire a business assets will last longer than a year, are not deductible as business expenses and, therefore, the Ld. Assessing

Rio Tinto India Pvt. Ltd., Haryana vs. ACIT Circle 19(1), Delhi

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

ITA 2021/DEL/2021[2011-12]Status: DisposedITAT Delhi26 Jun 2024AY 2011-12
Section 115JSection 142(1)Section 143(2)Section 143(3)Section 144CSection 254Section 92C

respect of motor vehicles taken on lease by the Appellant alleging that such payments is towards acquisition of capital asset and accordingly, is a capital expenditure. 2. That the Ld. AO has erred in solely relying in the case of IndusInd Bank Ltd. vs. Additional Commissioner of Income

J.K. Jewellers, Jaipur vs. Assistant Commissioner of Income Tax, Jaipur

In the result the disallowance of interest sustained by the ld

ITA 100/JPR/2024[2016-17]Status: DisposedITAT Jaipur25 Jun 2024AY 2016-17

Bench: The Ld. Cit(A) Was Filed By The Assessee Against The Order Dated 19.11.2018

For Appellant: Sh. S. L. Poddar, AdvFor Respondent: Sh. Anoop Singh, Add. CIT
Section 143(3)Section 37(1)Section 57

permissible only under Section 57, sub-section (iii) of which provides for deduction of any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly or exclusively for the purpose of making or earning such income. Evidently, this provision is not attracted in the case

Astrazeneca Pharma India Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-1(1)(1), Bangalore

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

ITA 284/BANG/2021[2016-17]Status: DisposedITAT Bangalore25 Jun 2024AY 2016-17

Bench: Shri Chandra Poojari & Shri Soundararajan K.

For Appellant: Sri Nikhil Tiwari, A.RFor Respondent: Ms. Neera Malhotra, D.R
Section 143(3)Section 37Section 37(1)

amount at which shares are issued to employees under ESOP are employee cost. Hence, such expenditure is not in the nature of capital expenditure and the same needs to be allowed as revenue expenditure. Further, he submitted that the Special Bench has held that discount on issue of ESOP ... receipt, is bereft of any force. By no stretch of imagination, such discount can be described as either a short capital receipt or a capital expenditure. It is nothing but the employees cost incurred by the company.” (Emphasis supplied) 7.3 He submitted that the said judgment of the Special Bench

Sajjad Ali, Chittorgarh vs. DCIT(Intl)- Jaipur, Jaipur

ITA 459/JPR/2024[2016-17]Status: DisposedITAT Jaipur24 Jun 2024AY 2016-17

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

For Appellant: Sh. Shrawan Kumar Gupta, AdvFor Respondent: Sh. Rajesh Ojha (CIT-DR)
Section 133(6)Section 142(1)Section 144Section 147Section 148Section 263Section 54

DCIT (intl.), Jaipur application of mind and that claim of assessee required examination as to whether expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessment on lines indicated by him - Whether under section 263 substitution of the judgment of the Commissioner

Bajaj Holdngs & Investment Ltd ( Erstwhile Bajaj Auto Ltd), Mumbai vs. Addl CIT RG 3(1), Mumbai

In the result, the appeal of the assessee is partly allowed and appeal of the revenue is dismissed

ITA 3043/MUM/2010[2002-013]Status: DisposedITAT Mumbai24 Jun 2024AY 2002-013

Bench: Shri Vikas Awasthy & Shri Amarjit Singhbajaj Holdings & Vs. Additional Commissioner Investment Ltd. Of Income-Tax, Range 3(1) Erstwile Bajaj Auto Ltd.) Aayakar Bhavan, Bajaj Bhavan, 226, M.K. Road, Nariman Point, Mumbai – 400 020 Mumbai – 400 021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aaacb3370K Appellant .. Respondent Dcit-3(4) Vs. M/S Bajaj Holding & Room No. 481-2, 4Th Floor, Investment Limited Aaykar Bhavan, (Erstwhile Bajaj Auto Ltd) Mumbai – 400020 226, Bajaj Bhavan, 2Nd Floor, Jamnalal Bajaj Marg, Nariman Point Mumbai – 400 021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aaacb3370K Appellant .. Respondent Appellant By : Percy Pardiwala & Vasanti Patel Respondent By : Ankush Kapoor

For Appellant: Percy Pardiwala &For Respondent: Ankush Kapoor
Section 143(3)Section 2(47)

loss account being expenditure incurred for the purchase and upgradation of various softwares. However, the assessing officer has treated the software expenses as capital expenditure and allowed depreciation @ 25% thereon. 30. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has sustained the action ... assessing officer for treating the software expenses as capital expenditure. 31. During the course of appellate proceedings before us at the outset the ld. Counsel submitted that software expenses are allowable as revenue expenditure u/s 37(1) of the Act. He also submitted that the decision of special bench

Addl CIT RG 3(1), Mumbai vs. Bajaj Auto Ltd, Mumbai

In the result, the appeal of the assessee is partly allowed and appeal of the revenue is dismissed

ITA 2899/MUM/2010[2002-03]Status: DisposedITAT Mumbai24 Jun 2024AY 2002-03

Bench: Shri Vikas Awasthy & Shri Amarjit Singhbajaj Holdings & Vs. Additional Commissioner Investment Ltd. Of Income-Tax, Range 3(1) Erstwile Bajaj Auto Ltd.) Aayakar Bhavan, Bajaj Bhavan, 226, M.K. Road, Nariman Point, Mumbai – 400 020 Mumbai – 400 021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aaacb3370K Appellant .. Respondent Dcit-3(4) Vs. M/S Bajaj Holding & Room No. 481-2, 4Th Floor, Investment Limited Aaykar Bhavan, (Erstwhile Bajaj Auto Ltd) Mumbai – 400020 226, Bajaj Bhavan, 2Nd Floor, Jamnalal Bajaj Marg, Nariman Point Mumbai – 400 021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aaacb3370K Appellant .. Respondent Appellant By : Percy Pardiwala & Vasanti Patel Respondent By : Ankush Kapoor

For Appellant: Percy Pardiwala &For Respondent: Ankush Kapoor
Section 143(3)Section 2(47)

loss account being expenditure incurred for the purchase and upgradation of various softwares. However, the assessing officer has treated the software expenses as capital expenditure and allowed depreciation @ 25% thereon. 30. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has sustained the action ... assessing officer for treating the software expenses as capital expenditure. 31. During the course of appellate proceedings before us at the outset the ld. Counsel submitted that software expenses are allowable as revenue expenditure u/s 37(1) of the Act. He also submitted that the decision of special bench

JCIT(OSD), C-1, (E), Chandigarh vs. The Sikh Educational Society, Patiala

ITA 874/CHANDI/2018[2010-11]Status: DisposedITAT Chandigarh21 Jun 2024AY 2010-11

Bench: The Ld. Cit(A) Against Assessment Order Dt. 30/03/2013 Which Was Passed By Additional Commissioner Of Income Tax, Patiala Range, Patiala, Punjab Which Order Is Hereinafter Referred To As “Ao’S Order”.

For Appellant: Shri Vibhor Garg, C.AFor Respondent: Smt. Kusum Bansal, CIT, DR
Section 11Section 143(1)Section 143(2)Section 250(6)

assessee claimed exemption under section 11 of the Income Tax Act, 1961. 8. The assessee society claimed capital expenditure of Rs. 6,61,52,498/- on account of construction of building. 9. The assessee society was called upon to justify and substantiate the aforesaid capital expenditure as claimed by them ... gross receipts and expenditure of the society from various sources as worked out is as under: Expenditure including Expenditure Income Gross Capital Expenditure depreciation. receipts. Samana 11427470 18954132 1130287 Patiala 37699750 84077224 6664172 Zirakpur 3373077 2651392 8076586 Society 22974168 7733275 47476722 75474465 113416023 63347767 11. From the above chart

The Sikh Educational Society, Patiala vs. Addl. CIT, Range, Patiala

ITA 687/CHANDI/2018[2010-11]Status: DisposedITAT Chandigarh21 Jun 2024AY 2010-11

Bench: The Ld. Cit(A) Against Assessment Order Dt. 30/03/2013 Which Was Passed By Additional Commissioner Of Income Tax, Patiala Range, Patiala, Punjab Which Order Is Hereinafter Referred To As “Ao’S Order”.

For Appellant: Shri Vibhor Garg, C.AFor Respondent: Smt. Kusum Bansal, CIT, DR
Section 11Section 143(1)Section 143(2)Section 250(6)

assessee claimed exemption under section 11 of the Income Tax Act, 1961. 8. The assessee society claimed capital expenditure of Rs. 6,61,52,498/- on account of construction of building. 9. The assessee society was called upon to justify and substantiate the aforesaid capital expenditure as claimed by them ... gross receipts and expenditure of the society from various sources as worked out is as under: Expenditure including Expenditure Income Gross Capital Expenditure depreciation. receipts. Samana 11427470 18954132 1130287 Patiala 37699750 84077224 6664172 Zirakpur 3373077 2651392 8076586 Society 22974168 7733275 47476722 75474465 113416023 63347767 11. From the above chart

Sh Tech Park Developers Pvt. Ltd., Gurgaon vs. ACIT, Circle-22(2), New Delhi

In the result, grounds raised by the assessee are allowed for

ITA 2043/DEL/2023[2018-19]Status: DisposedITAT Delhi21 Jun 2024AY 2018-19

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

Tech Park Developers Pvt. Ltd. vs. ACIT year aggregated to Rs.79,10,66,339/- and thus increase which represented capital expenditure on the construction has not been claimed as deduction. 12. It is most humbly submitted as to what the auditors have stated that as compared to the method

Srk Dev Build Pvt Ltd., Indore vs. DCIT/ACIT 5(1), Indore

Appeal is allowed

ITA 471/IND/2023[2016-17]Status: DisposedITAT Indore20 Jun 2024AY 2016-17

Bench: Shri Vijay Pal Rao & Shri B.M. Biyaniassessment Year: 2016-17 Srk Dev Build Pvt. Ltd, Dcit/Acit-5(1) 18/2, Lasudia Mori, Indore बनाम/ A.B. Road, Vs. Indore (Assessee/Appellant) (Revenue/Respondent) Pan: Aaqcs3387P Assessee By Shri Pranay Goyal & S.N. Goyal, Cas Revenue By Shri Ashish Porwal, Sr. Dr Date Of Hearing 15.04.2024 Date Of Pronouncement 20.06.2024

Section 143(3)Section 271(1)(c)Section 274Section 32Section 32(1)Section 37Section 37(1)Section 40

Therefore, in absence of documentary evidences total expenditure of Rs.1,03,54,633/- which is not a revenue expenditure and must be treated as capital expenditure, and it is hereby being disallowed and added back to closing stock of the Assessee company. Penalty proceedings

M/S Jyoti Vidyapeeth Trust, 143, Gomez Defence Colony, Vaishali Nagar, Jaipur vs. Circle (Exemption), Jaipur

Appeals are hereby dismissed

ITA 329/JPR/2023[2016-17]Status: DisposedITAT Jaipur20 Jun 2024AY 2016-17

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

For Appellant: Shri P. C. Parwal (C.A.)For Respondent: Shri Anoop Singh (Addl. CIT)
Section 12ASection 13Section 142(1)Section 143(2)Section 143(3)

surplus Rs. 3,52,40,552/-. ii. Addition on account of excess salary paid- Rs. 27,83,520/- iii. Addition due to disallowance of capital expenditure- Rs. 1,97,34,909/-.” Feeling aggrieved by said assessment, the assessee filed appeal. Learned CIT(A) partly allowed that appeal vide order dated ... total income of the assessee as under:- “Excess of income over expenditure Rs.3,52,40,552/- Add: Excess salary Rs. 25,60,000/- Add: Capital expenditure Rs. 1,97,34,909/- Total assessed Income Rs. 5,75,35,461/-“ 10. As noticed above, the assessee felt aggrieved by the assessment

M/S Jyoti Vidyapeeth Trust, Jaipur vs. Circle (Exemption) Jaipur, Jaipur

Appeals are hereby dismissed

ITA 328/JPR/2023[2015-16]Status: DisposedITAT Jaipur20 Jun 2024AY 2015-16

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

For Appellant: Shri P. C. Parwal (C.A.)For Respondent: Shri Anoop Singh (Addl. CIT)
Section 12ASection 13Section 142(1)Section 143(2)Section 143(3)

surplus Rs. 3,52,40,552/-. ii. Addition on account of excess salary paid- Rs. 27,83,520/- iii. Addition due to disallowance of capital expenditure- Rs. 1,97,34,909/-.” Feeling aggrieved by said assessment, the assessee filed appeal. Learned CIT(A) partly allowed that appeal vide order dated ... total income of the assessee as under:- “Excess of income over expenditure Rs.3,52,40,552/- Add: Excess salary Rs. 25,60,000/- Add: Capital expenditure Rs. 1,97,34,909/- Total assessed Income Rs. 5,75,35,461/-“ 10. As noticed above, the assessee felt aggrieved by the assessment