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“enduring benefit”

Business ExpensesSection 37Section 371,056 judgments

The decision most relied on for enduring benefit is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 judgments on BharatTax.

Leading authorities on enduring benefit

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.

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.

CIT v. De Beers India Minerals (P.) Ltd.
346 ITR 467 · 2012 · High Court
371
citing judgments

For fees for technical or consultancy services to 'make available' technical knowledge or know-how under a DTAA, the service must transmit such knowledge, allowing the recipient to derive an enduring benefit and utilize it independently in the future.

Eastern Investments Ltd. v. CIT
38 ITR 601 · 1960 · Supreme Court
346
citing judgments

Expenditure must be commercially expedient for carrying on the business, and it is not for revenue authorities to dictate how an assessee should conduct its business. The court will not question the business expediency of a transaction, even if a third party also benefits.

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.

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.

CIT v. Madras Auto Service (P) Ltd.
233 ITR 468 · 1998 · Supreme Court
246
citing judgments

Expenditure providing an enduring advantage, such as upfront lease rent for land, is revenue expenditure if no capital asset is acquired or generated, allowing for deduction under Section 37, even when capitalized in the books of account.

Brooke Bond India Ltd. v. CIT
225 ITR 798 · 1997 · Supreme Court
228
citing judgments

Expenditure incurred for increasing a company's share capital or expanding its capital base, such as expenses related to the issue of shares, constitutes capital expenditure. Such expenses are not deductible as revenue expenditure under Section 37(1) of the Income-tax Act, 1961, even if they incidentally benefit the business.

Judgments citing enduring benefit

M/S. Genpact Services Llc, Gurgaon vs. DCIT, New Delhi

In the result, the appeal is partly allowed

ITA 2524/DEL/2016[2010-11]Status: DisposedITAT Delhi31 Jan 2023AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2010-11 M/S. Genpact Services Llc, Vs. Dcit, Genpact Tower, Sector-53, Circle-1(3)(1), (International Dlf City, Phase-V, Taxation), Gurgaon New Delhi Pan :Aaccg3353P (Appellant) (Respondent)

assessee had claimed the amount of Rs.22.16,00,276/- as revenue/business expenditure. 4. Being of the view that such expenditure incurred has given enduring benefits to the assessee, the Assessing Officer called upon the assessee to show-cause, as to why, it should not be treated as capital expenditure ... query raised by the Assessing Officer, the assessee furnished detailed submission stating that by incurring the expenditure, the assessee has not derived any enduring benefit, nor acquired any capital asset. Therefore, it has to be allowed as revenue expenditure. The Assessing Officer, however, was not convinced with the submissions

Deputy Commissioner of Income-Tax, Central Circle -1, Nashik vs. Mahakaleshwar Tollways Private Limited, Ujjain

In the result, the appeal of the Revenue is dismissed

ITA 123/IND/2021[2017-18]Status: DisposedITAT Indore30 Jan 2023AY 2017-18

Bench: Shri C.M. Garg, Judicial Memebr & Shri Bhagirath Mal Biyaniआयकरअपीलसं./I.T.A. No. 123/Ind/2021 (िनधा"रणवष" / Assessment Year : 2017-18)

For Appellant: Shri P.K. Mishra, CIT-D.R
Section 143(3)Section 32(1)(ii)

asset - "License to collect Toll" for the reason that by incurring the expenditure on development and construction of infrastructure facility the assessee got an enduring benefit in form of a right to collect Toll from the motorists using the road for a specified period, In this background, the assessee claimed ... silent on whether the right to collect toll satisfies the definition of intangible asset. The circular even provides that the assessee derives an enduring benefit in the form of right to collect the toll during the period of the agreement. 2. The issue of applicability of CBDT circular has been

M/S M/S Bagadiya Brothers Pvt.Ltd., Raipur, Raipur (Cg) vs. The Dy. Commissioner of Income Tax, -2(1), Raipur, Raipur (Cg)

In the result, appeal of the assessee is allowed in terms of our aforesaid observations

ITA 37/BIL/2017[2011-12]Status: DisposedITAT Raipur24 Jan 2023AY 2011-12

Bench: Shri Ravish Sood & Shri G D Padmahshaliआयकर अपील सं. / Ita No. 37/Rpr/2017 "नधा"रण वष" / Assessment Year : 2011-12 Bagadiya Brothers Pvt. Ltd. Bagadiya Mansion, Jawahar Nagar, Raipur (C.G.) Pan : Aabcb8934G .......अपीलाथ" / Appellant बनाम / V/S. The Dy. Commissioner Of Income Tax-2(1), Raipur (C.G.) ……""यथ" / Respondent

For Appellant: Shri G.S.Agrawal, CAFor Respondent: Shri Debashish Lahiri, CIT-DR
Section 143(2)Section 143(3)Section 35D

project of the assessee company due to commercial expediency could not proceed any further and had to be abandoned, therefore, in absence of any enduring benefit arising to the assessee company qua the expenditure incurred towards due diligence was rightly claimed by it as a deduction u/s.37

Inter Continental Hotels Group (Asia Pacific) Pte Ltd., Gurgaon vs. DCIT, Circle- 2(1)(1), International Taxation, New Delhi

In the result, the appeal is allowed

ITA 4608/DEL/2019[2013-14]Status: DisposedITAT Delhi11 Jan 2023AY 2013-14

Bench: Shri G.S. Pannu & Shri Saktijit Dey

Section 144C(3)

best have persuasive value . The expression "make available" only means that the recipient of the service should be in a position to derive an enduring benefit and be in a position to utilize the knowledge or know-how in future on his own. The list of services rendered

Inter Continental Hotels Group (Asia Pacific) Pte Ltd., Singapore vs. ACIT, Circle- 2(1)(1), International Taxation, New Delhi

In the result, the appeal is allowed

ITA 2986/DEL/2019[2014-15]Status: DisposedITAT Delhi11 Jan 2023AY 2014-15

Bench: Shri G.S. Pannu & Shri Saktijit Dey

Section 144C(3)

best have persuasive value . The expression "make available" only means that the recipient of the service should be in a position to derive an enduring benefit and be in a position to utilize the knowledge or know-how in future on his own. The list of services rendered

DCIT, Chennai vs. Siva Ventures Ltd., Chennai

The appeal of the revenue stand partly allowed in terms of our above order

ITA 1417/CHNY/2016[2008-2009]Status: DisposedITAT Chennai23 Dec 2022AY 2008-2009

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am.

For Appellant: Shri B. Ramakrishnan (CA) – Ld. ARFor Respondent: Ms. Ann L.Kapthuama (CIT) –Ld. DR
Section 143(3)Section 14ASection 250(6)

Learned AO failed to appreciate that the consulting fee was incurred in the normal course of business and does not result in any enduring benefit to the appellant. 14. The Learned CIT(A) erred in upholding the action of the Learned AO ignoring the fact the appellant has incurred ... Learned AO failed to appreciate that the escrow fee was incurred in the normal course of business and does not result in any enduring benefit to the appellant. 17. The Learned CIT(A) and the Learned AO erred in ignoring the fact that the expression "for the purpose of business

Siva Industries and Holdings Limited, Chennai vs. DCIT, Chennai

The appeal of the revenue stand partly allowed in terms of our above order

ITA 1390/CHNY/2016[2008-09]Status: DisposedITAT Chennai23 Dec 2022AY 2008-09

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am.

For Appellant: Shri B. Ramakrishnan (CA) – Ld. ARFor Respondent: Ms. Ann L.Kapthuama (CIT) –Ld. DR
Section 143(3)Section 14ASection 250(6)

Learned AO failed to appreciate that the consulting fee was incurred in the normal course of business and does not result in any enduring benefit to the appellant. 14. The Learned CIT(A) erred in upholding the action of the Learned AO ignoring the fact the appellant has incurred ... Learned AO failed to appreciate that the escrow fee was incurred in the normal course of business and does not result in any enduring benefit to the appellant. 17. The Learned CIT(A) and the Learned AO erred in ignoring the fact that the expression "for the purpose of business

Solvay Specialities India Pvt Ltd, Mumbai vs. DCIT 16(2), Mumbai

In the result, Ground No. 2 of the appeal of the assessee is allowed and ld

ITA 604/MUM/2022[2017-18]Status: DisposedITAT Mumbai23 Dec 2022AY 2017-18

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm Solvay Specialties India Pvt Ltd Dcit 16(2) Equinox Business Park, Aayakar Bhavan, Tower-4, 9Th Floor, Unit No. Vs. Mumbai-400 020 903, Lbs Marg, Kurla (West), Mumbai-400 070 (Respondent) (Appellant) Pan No. Aajcs0613F Assessee By : Anuj Kisnadwala Revenue By : Richa Gulati – Sr Ar Date Of Hearing: 23.12.2022 Date Of Pronouncement : 23.12.2022

For Appellant: Anuj KisnadwalaFor Respondent: Richa Gulati – Sr AR
Section 143Section 143(3)Section 144C(1)Section 37Section 92C

expenditure were capital expenditure. 07. The ld. DRP categorically held that on aborting the project neither an asset come into existence nor an enduring benefit was received hence, this expenditure cannot be capital in nature. The ld. DRP also accepted that the issue is covered in favor of the assessee ... market would have an over capacity of the product. Naturally, on aborting the project neither a new asset came into existence, nor any enduring benefit accrued to the assessee. Therefore, it is apparent that such expenses would classify only as revenue expenditure. It is not at all a capital expenditure

Edenred Sa, Mumbai vs. ACIT (It) 2(2)(1), Mumbai

In the result, this appeal by the assessee is allowed

ITA 5193/MUM/2018[2015-16]Status: DisposedITAT Mumbai23 Dec 2022AY 2015-16

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash
Section 143(3)Section 144CSection 144C(13)Section 144C(5)

like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words

Edenred Sa, Mumbai vs. DCIT (It) 2(1)(2), Mumbai

In the result, this appeal by the assessee is allowed

ITA 7248/MUM/2017[2014-15]Status: DisposedITAT Mumbai23 Dec 2022AY 2014-15

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash
Section 143(3)Section 144CSection 144C(13)Section 144C(5)

like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words

Edenred Sa, Mumbai vs. DCIT (It) 2(1)(2), Mumbai

In the result, this appeal by the assessee is allowed

ITA 7247/MUM/2017[2013-14]Status: DisposedITAT Mumbai23 Dec 2022AY 2013-14

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash
Section 143(3)Section 144CSection 144C(13)Section 144C(5)

like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words

Edenred Sa, Mumbai vs. DCIT (It) 2(2)(1), Mumbai

In the result, this appeal by the assessee is allowed

ITA 508/MUM/2016[2012-13]Status: DisposedITAT Mumbai23 Dec 2022AY 2012-13

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash
Section 143(3)Section 144CSection 144C(13)Section 144C(5)

like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words

A.R.A.P Enterprises P Ltd, Chennai vs. ACIT(OSD), Ncr-1, Chennai

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

ITA 535/CHNY/2021[2015-16]Status: DisposedITAT Chennai14 Dec 2022AY 2015-16

Bench: Shri V. Durga Rao, Hon’Ble & Shri G. Manjunatha, Hon’Bleआयकर अपील सं./Ita No.535/Chny/2021 िनधा"रण वष" /Assessment Year: 2015-16 M/S.A.R.A.P. Enterprises Pvt. Ltd., V. The Asst. Commissioner Of New No.35-37, Old No.17-18, Income Tax (Osd), Gandhi Irwin Road, Ncr-1, Chennai. Egmore, Chennai-600 008. [Pan: Aagca 9262 R] (अपीलाथ"/Appellant) (""यथ"/Respondent) : अपीलाथ" क" ओर से/ Appellant By Mr.R.Venkatraman, Irs & Mr.R.Viswanathan, Ca ""यथ" क" ओर से /Respondent By : Mr. Ar.V.Sreenivasan, Addl.Cit सुनवाई क" तारीख/Date Of Hearing : 07.12.2022 घोषणा क" तारीख /Date Of Pronouncement : 14.12.2022

For Respondent: Mr. AR.V.Sreenivasan
Section 37(1)

evident from the Assessment Order itself. 4.2 The learned CIT(A) erred in concluding that the expenses were of capital in nature giving an enduring benefit whereas the expenses are revenue in nature. Tax Effect: 2,53,566/- 5.1 The learned CIT(A) erred in concluding ithat the permit

Regan Powertech Pvt Ltd, Chennai vs. DCIT, CC-5(1), Chennai

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

ITA 572/CHNY/2021[2016-17]Status: DisposedITAT Chennai07 Dec 2022AY 2016-17

Bench: Shri Mahavir Singh, Hon’Ble & Shri G. Manjunatha, Hon’Bleआयकर अपील सं./Ita Nos.571 & 572/Chny/2021 िनधा"रण वष" /Assessment Year: 2015-16 & 2016-17 V. M/S.Regen Powertech Pvt. Ltd., The Dy. Commissioner – Sivanandam, Of Income Tax, No.1, Pulla Avenue, Corporate Circle-5(1), Shenoy Nagar, Chennai. Chennai- 600 030. [Pan: Aadcr 5531 M] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Mr.B.Ramakrishnan, FCAFor Respondent: Mr.S. Marudhu Pandian, CIT
Section 32(1)(iia)Section 35Section 35(1)(i)Section 35(1)(iv)Section 37(1)

disallowed the license fee paid to M/s.Wind-direct GMBH on the ground that the said payment is in the nature of capital expenditure which gives enduring benefit to the assessee. The AO further noted that the assessee could not justify payment of license fee to its parent company with necessary evidences

Regan Powertech Pvt Ltd, Chennai vs. DCIT, CC-5(1), Chennai

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

ITA 571/CHNY/2021[2015-16]Status: DisposedITAT Chennai07 Dec 2022AY 2015-16

Bench: Shri Mahavir Singh, Hon’Ble & Shri G. Manjunatha, Hon’Bleआयकर अपील सं./Ita Nos.571 & 572/Chny/2021 िनधा"रण वष" /Assessment Year: 2015-16 & 2016-17 V. M/S.Regen Powertech Pvt. Ltd., The Dy. Commissioner – Sivanandam, Of Income Tax, No.1, Pulla Avenue, Corporate Circle-5(1), Shenoy Nagar, Chennai. Chennai- 600 030. [Pan: Aadcr 5531 M] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Mr.B.Ramakrishnan, FCAFor Respondent: Mr.S. Marudhu Pandian, CIT
Section 32(1)(iia)Section 35Section 35(1)(i)Section 35(1)(iv)Section 37(1)

disallowed the license fee paid to M/s.Wind-direct GMBH on the ground that the said payment is in the nature of capital expenditure which gives enduring benefit to the assessee. The AO further noted that the assessee could not justify payment of license fee to its parent company with necessary evidences

M/S. Hindustan Lever Ltd vs. The Dy CIT 1(1)

ITA 1039/MUM/2005[1999-2000]Status: DisposedITAT Mumbai02 Dec 2022AY 1999-2000
For Appellant: Shri Nishant Thakkar &For Respondent: Shri Sandeep Raj
Section 143(3)Section 80Section 80HSection 80I

same to be capital in nature. The contention of Revenue is that this expenditure should have been capitalized as the retirement scheme gave enduring benefit to the Assessee. The contention of the Assessee is that while passing order for Assessment Year ITA. No. 1039 & 1244/Mum/2005 Assessment Year

Dy CIT CC-1(4), Mumbai vs. M/S Grasim Industries Ltd., Mumbai

ITA 41/MUM/2021[2018-19]Status: DisposedITAT Mumbai30 Nov 2022AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri. J.D Mistry, Sr. AdvFor Respondent: Shri Anil Singh
Section 115OSection 115QSection 2

IN THE INCOME TAX APPELLATE TRIBUNAL ―G‖ BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI PAVAN KUMAR GADALE, JM

Grasim Industries Ltd., Mumbai vs. Dy CIT, Central Circle-1(4), Mumbai

ITA 1935/MUM/2020[2018-19]Status: DisposedITAT Mumbai30 Nov 2022AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri. J.D Mistry, Sr. AdvFor Respondent: Shri Anil Singh
Section 115OSection 115QSection 2

IN THE INCOME TAX APPELLATE TRIBUNAL ―G‖ BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI PAVAN KUMAR GADALE, JM

Deputy Commissioner of Income Tax, Central Circle-1(3), Bangalore vs. M/S. Wipro Ge Medical Systems Limited, Bangalore

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

ITA 1020/BANG/2007[2000-01]Status: DisposedITAT Bangalore30 Nov 2022AY 2000-01

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year : 2000-01 M/S. Wipro Ge The Deputy Medical Systems Ltd., Commissioner Of Plot No. 4, Kadugodi Income Tax, Indl. Area, Central Circle – Sadaramangala, 1(3), Vs. Bangalore – 560 067. Bangalore. Pan: Aaacw1685G Appellant Respondent : Shri K.R. Pradeep & Assessee By Smt. Girija G.P., Advocates : Shri K.R. Narayana, Addl. Revenue By Cit-Dr Date Of Hearing : 21-10-2022 Date Of Pronouncement : 30-11-2022 Order Per Beena Pillaipresent Appeal Arises Out Of Remand By Hon'Ble Karnataka High Court In Ita No. 1058/2008 Vide Order Dated 02/12/2016 In An Appeal Filed By Revenue. 2. The Ld.Ar Submitted That Revenue Filed Appeal Before The Hon’Ble Karnataka High Court Against Order Dated 20/06/2008 Passed By This Tribunal On Following Issues. 1) Reduction In Claim Of Exemption Of Profits U/S. 10A. 2) Reduction In Claim U/S. 80Hhe.

For Respondent: Shri K.R. Pradeep &
Section 10ASection 80HSection 80I

balance being Rs.88,60,879/- as revenue expenditure. 9. The Ld.AO while considering the claim was of the opinion that assessee received an enduring benefit and therefore the expenditure cannot be allowed as revenue in the hands of assessee. The Ld.CIT(A) relied on the decision of Hon’ble Supreme ... some month of time. 10. The Ld.AO further recorded the observations of the Hon’ble Supreme Court that went to add that, although an enduring benefit need not be of an everlasting character it should not be so Page 5 transiting and ephemeral that it can be terminated

Shell Informaation Technology International Bv, Mumbai vs. Dy Commissioner of Income Tax (International Taxation)-4(2)(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 996/MUM/2022[2018-19]Status: DisposedITAT Mumbai28 Nov 2022AY 2018-19
Section 143(3)Section 144C(13)Section 144C(5)Section 2(24)Section 234BSection 270A

held the view that the expression 'in available only means that the recipient of the service should be in a position to derive an enduring benefit and be in a position to utilize the knowledge or knowhow in future on his own". Here, information technology relating to design, engineering, manufacturing