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“preliminary expenses”

Business ExpensesSection 35DSection 35D132 judgments

The decision most relied on for preliminary expenses is Kesoram Industries & Cotton Mills Ltd. v. CIT (196 ITR 845), cited in 61 judgments on BharatTax.

Leading authorities on preliminary expenses

Kesoram Industries & Cotton Mills Ltd. v. CIT

196 ITR 845 · 1992 · High Court

citing judgments

Expenditure incurred for exploring the feasibility of expanding or extending an existing business by setting up a new unit in the same line of business is revenue expenditure, not capital expenditure. Such expenditure, including obtaining project reports or legal opinions on desirability or feasibility, does not constitute the setting up of a new business.

CIT v. Priya Village Roadshows Ltd.

332 ITR 594 · 2011 · High Court

citing judgments

Expenditure incurred for starting a new business is capital in nature, irrespective of whether the project materializes. The essential purpose for which an expenditure is incurred determines its character as capital or revenue under Section 37(1).

CIT v. Shree Synthetics Ltd.

162 ITR 819 · 1986 · High Court

citing judgments

Expenses incurred in connection with a public issue of shares or debentures are allowable as revenue expenditure eligible for deduction under section 35D of the Income-tax Act. This includes expenses related to Qualified Institutional Buyers (QIBs).

CIT v. Multi Metals Ltd.

188 ITR 151 · 1991 · High Court

citing judgments

Expenditure incurred in connection with the extension of an undertaking or setting up a new unit by an Indian company is eligible for deduction under section 35D of the Income-tax Act.

Berger Paints India Ltd. v. Commissioner of Income- Tax, Delhi-V

393 ITR 113 · 2017 · Supreme Court

citing judgments

Premiums collected on share capital are not to be construed for the purpose of Section 35D(3)(b) of the Income Tax Act.

City Union Bank Ltd. v. CIT

118 Taxmann.com 96 · 2020 · High Court

citing judgments

Amounts held in a stale draft account cannot be treated as income of the assessee.

Judgments citing preliminary expenses

ACIT, Circle- 14(1)(1), Mumbai vs. M/S. Akshay Infrastructure Pvt. Ltd., Mumbai

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

ITA 2923/MUM/2022[2013-14]Status: DisposedITAT Mumbai04 Sept 2023AY 2013-14

Bench: Shri Br Baskaran & Shir Pavan Kumar Gadaleacit, Circle – 14(1)(1) Vs. M/S.Akshayinfrastructure Room No. 432, Pvt Ltd.102, 4Th Floor, Siddhivinayak Chsl, Aayakar Bhavan, Tilak Nagar, M.K. Road, Chembur, Mumbai- 400020. Mumbai-400089 Pan/Gir No. : Aahca2331A Appellant .. Respondent Assessee By : Mr.Ajaysingh&Yogeshjoijode.Ar Revenue By : Mr.Manoj Kumar.Dr Date Of Hearing 03.07.2023 Date Of Pronouncement 04.09.2023 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Revenue Has Filed The Appeal Against The Order Of The National Faceless Appeal Centre (Nfac), Delhi /Cit(A) Mumbai Passed U/Sec 250 Of The Act. The Revenue Has Raised The Fallowing Grounds Of Appeal. 1."On The Facts & In The Circumstances Of The Case, The Ld. Cit(A) Erred In Deleting The Addition Made By The A.O. Of Rs2,03,00,000/- On Account Of Disallowance U/S 68 Of The Income Tax Act Merely Relying On The Submissions Made By The A.R. Of The Assessee & On The Basis Of

For Appellant: Mr.AjaySingh&YogeshJoijode.ARFor Respondent: Mr.Manoj Kumar.DR

Section 143(2)Section 143(3)Section 68

made addition of Rs. 2,03,00,000/-.(ii) the AO found that the assessee has debited preliminary expenses of Rs.32,350/- pertaining to share issue expenses and has treated as capital expenditure and disallowed the claim.(iii) The assesee has sold property and the A.O calculated the LTCG without

ITO, New Delhi vs. M/S. Rajesh Buildcon & Infrastructure Pvt. Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 3220/DEL/2017[2010-11]Status: DisposedITAT Delhi18 Aug 2023AY 2010-11

Bench: Shri Kul Bharat & Dr.B.R.R.Kumar[Assessment Year : 2010-11] Ito, Vs M/S. Rajesh Buildcon & Ward-15(2), Infrastructure Pvt.Ltd., New Delhi. Lodhi Road, New Delhi-.110003. Pan-Aaefp8228P Appellant Respondent Appellant By Shri Vivek Vardhan, Sr.Dr Respondent By None Date Of Hearing 02.08.2023 Date Of Pronouncement 18.08.2023

Section 143(2)Section 143(3)

claimed in the P&L account. This sum includes the expenses related to the cost of land sold, depreciation, preliminary expenses written off and various administrative expenses incurred by the appellant for day to day running of the business. There is no reason to treat these expenses as capital expenses

Jsw Steels Ltd, Mumbai vs. DCIT CC 8(3), Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 5459/MUM/2017[2009-10]Status: DisposedITAT Mumbai30 Jun 2023AY 2009-10

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

Jsw Steels Ltd, Mumbai vs. DCIT CC 8(3), Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 5458/MUM/2017[2011-12]Status: DisposedITAT Mumbai30 Jun 2023AY 2011-12

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

Jsw Steels Ltd, Mumbai vs. DCIT CC 8(3), Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 5457/MUM/2017[2010-11]Status: DisposedITAT Mumbai30 Jun 2023AY 2010-11

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

DCIT CC 8(3)(Erstwhile DCIT, CC-46, Mumbai vs. Jsw Steels Ltd, Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 5327/MUM/2017[2011-12]Status: DisposedITAT Mumbai30 Jun 2023AY 2011-12

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

DCIT CC 8(3)(Erstwhile DCIT, CC-46, Mumbai vs. Jsw Steels Ltd, Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 5326/MUM/2017[2010-11]Status: DisposedITAT Mumbai30 Jun 2023AY 2010-11

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

DCIT CC 8(3), Mumbai vs. Jsw Steels Ltd, Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 5325/MUM/2017[2009-10]Status: DisposedITAT Mumbai30 Jun 2023AY 2009-10

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

DCIT CC 8(3), Mumbai vs. Jsw Steels Ltd, Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 4632/MUM/2017[2008-09]Status: DisposedITAT Mumbai30 Jun 2023AY 2008-09

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

Jsw Steel Limited, Mumbai vs. ACIT, CC-46, Mumbai

Appeal of the revenue is partly allowed and appeal of the assessee is dismissed

ITA 4287/MUM/2017[2008-09]Status: DisposedITAT Mumbai30 Jun 2023AY 2008-09

facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.” 7. On the facts and the circumstances ... next issue that came up for our consideration from ground no 6 of revenue appeal is deletion of adjustments of interest computed on preliminary expenses for 2009-10. 7.2.1. The Ld.TPO noticed that the assessee had incurred an amount of Rs 22,32,12,000/- as preliminary expenditure on behalf

Danish Health Care P Ltd, Ujjain vs. Pr CIT -1, Indore

ITA 100/IND/2022[2017-18]Status: DisposedITAT Indore15 Jun 2023AY 2017-18

Bench: Ms. Suchitra R Kamble & Shri B.M. Biyaniassessment Year: 2017-18 M/S Danish Health Care Pr. Cit-1, Private Limited, Indore बनाम/ 76/27, Maxi Road, Industrial Area, Vs. Ujjain (Appellant / Assessee) (Respondent / Revenue) Pan: Aaecd5554F Assessee By Ms.Ruchira Negi, Ld. Ar Revenue By Shri P.K. Mishra, Cit-Dr Date Of Hearing 22.03.2023 Date Of Pronouncement 15.06.2023

Section 143(2)Section 143(3)Section 263

expenses, Sundry Creditors of Rs. 3,89,998/-, Trade payable of Rs. 3,13,53,253/-, Fixed assets of Rs. 23,58,560/- and Preliminary expenses of Rs. 1,36,065/-. In this regard, Ld. AR has made a simple submission that the books of account of assessee were produced

M/S.Atc Telecom Infrastructure Private Limited(Formerly Known As Viom Networks Limited), Mumbai vs. Deputy Commissioner of Income Tax 9(1)(2), Mumbai

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

ITA 6148/MUM/2018[2009-10]Status: DisposedITAT Mumbai12 Jun 2023AY 2009-10

Bench: Shir Pavan Kumar Gadale & Shri S Rifaur Rahman, Acountant Member

For Respondent: Smt. Shailja Rai.CIT DR

Section 143(2)Section 250Section 35DSection 40

details and the case was discussed. The AO on perusal of the financial statements found that (i) the assessee has claimed deduction/ Amortization of preliminary expenses u/s 35D and the explanations were called with regard to the nature of the expenses. The assessee has filed the details mentioning that ... Amortization of 1/5 of the preliminary expenses being fee paid to the registrar of companies towards increase in authorized share capital and to the registrar of stamps. Whereas the AO found that this expenditure is not for registration of the company and there is no public subscription of shares

DCIT, New Delhi vs. Sh. Subhash Chandra Sehgal, New Delhi

In the result, the appeal of the Revenue is dismissed for AY 2009-10

ITA 3205/DEL/2014[2009-10]Status: DisposedITAT Delhi06 Apr 2023AY 2009-10

Bench: Shri G.S. Pannu, Hon’Ble & Ms. Astha Chandraasstt. Year: 2004-05 Asstt. Year: 2006-07 Asstt. Year: 2009-10

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Umesh Takyar, Sr. DR

Section 143(1)Section 143(2)Section 143(3)Section 2(22)(e)Section 40A(2)(a)Section 80I

made the impugned disallowance out of sales promotion, marketing expenses, repairs and maintenance, telephone expenses, vehicle running and maintenance, travelling expenses, general expenses, preliminary expenses written off, brokerage and donation. 8.7 Before the Ld. CIT(A) the assessee contended that the Ld. AO is influenced by the special audit conducted

ACIT, New Delhi vs. Sh. Subhash Chander Sehgal, New Delhi

In the result, the appeal of the Revenue is dismissed for AY 2009-10

ITA 325/DEL/2012[2004-05]Status: DisposedITAT Delhi06 Apr 2023AY 2004-05

Bench: Shri G.S. Pannu, Hon’Ble & Ms. Astha Chandraasstt. Year: 2004-05 Asstt. Year: 2006-07 Asstt. Year: 2009-10

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Umesh Takyar, Sr. DR

Section 143(1)Section 143(2)Section 143(3)Section 2(22)(e)Section 40A(2)(a)Section 80I

made the impugned disallowance out of sales promotion, marketing expenses, repairs and maintenance, telephone expenses, vehicle running and maintenance, travelling expenses, general expenses, preliminary expenses written off, brokerage and donation. 8.7 Before the Ld. CIT(A) the assessee contended that the Ld. AO is influenced by the special audit conducted

DCIT, New Delhi vs. Shri Subash Chander Sehgal, New Delhi

In the result, the appeal of the Revenue is dismissed for AY 2009-10

ITA 3054/DEL/2010[2006-07]Status: DisposedITAT Delhi06 Apr 2023AY 2006-07

Bench: Shri G.S. Pannu, Hon’Ble & Ms. Astha Chandraasstt. Year: 2004-05 Asstt. Year: 2006-07 Asstt. Year: 2009-10

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Umesh Takyar, Sr. DR

Section 143(1)Section 143(2)Section 143(3)Section 2(22)(e)Section 40A(2)(a)Section 80I

made the impugned disallowance out of sales promotion, marketing expenses, repairs and maintenance, telephone expenses, vehicle running and maintenance, travelling expenses, general expenses, preliminary expenses written off, brokerage and donation. 8.7 Before the Ld. CIT(A) the assessee contended that the Ld. AO is influenced by the special audit conducted

Pegasus Integrated Systems (P) Ltd, New Delhi vs. ACIT, Central Circle-13, New Delhi

In the result the appeal of the assessee in ITA No

ITA 1469/DEL/2022[2013-14]Status: DisposedITAT Delhi01 Feb 2023AY 2013-14

Bench: Shri N.K. Billaiya & Ms. Astha Chandra

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Shri T.P. Kipgen, CIT- DR

Section 132Section 143(1)Section 143(2)Section 153ASection 68Section 69C

surmises and conjectures must be deleted. 5. The learned CIT(A) erred in law and on facts in Confirming the disallowance made for preliminary expenses of Rs. 80,861/- by ignoring the submissions and information placed on record. Thus, the addition made on surmises and conjectures must be deleted

Matrix Cellular International Services Ltd., New Delhi vs. JCIT, Special Range- 6, New Delhi

In the result, the appeal is partly allowed

ITA 6916/DEL/2019[2016-17]Status: DisposedITAT Delhi18 Jan 2023AY 2016-17

Bench: Sh. G. S. Pannu, Hon’Ble & Sh. Saktijit Dey

For Appellant: Sh. A. K. Khanna, CAFor Respondent: Sh. Sanjay Kumar, Sr. DR

Section 195Section 40

dispute to IIFL Holdings Ltd., which is one of the merchant bankers to the issue. It was submitted, these are in the nature of preliminary expenses for business expansion. Hence, has to be allowed. The Assessing Officer, however, did not accept the claim of the assessee on the reasoning that ... towards 6 Matrix Cellular International Services Ltd. getting approval from SEBI for issue of IPO. He submitted, since these were in the nature of preliminary expenses for business 1/10th expansion, assessee claimed of such expenses as deduction under section 35D. 13. He submitted, the proposed IPO was ultimately dropped because

Kargil Holding Pvt. Ltd., Ahemdabad vs. DCIT Circle 3(3), Mumbai

ITA 2018/MUM/2003[1998-99]Status: DisposedITAT Mumbai16 Dec 2022AY 1998-99

Bench: Shri Kuldip Singh & Shri Amarjit Singhassessment Year: 1998-99

For Appellant: Ms. Mitali Gopani, A.RFor Respondent: Dr. Samuel Pitta, D.R

Section 10(33)Section 234BSection 234C

Selling Expenses - Rs.6,373,527 Payment to Auditors – Audit Fees - Rs. 2,500 Rates & Taxes - Rs. 149,387 Other Expenses - Rs.1,925,321 Preliminary Expenses - Rs. 3,981 9. When the assessee has brought on record all the financials showing sufficient surplus funds at its disposal and all these documents

M/S. About U Fashions Private Limited, Mumbai vs. DCIT-15(1)(1), Mumbai

In the result, appeal filed by the assessee for A

ITA 2150/MUM/2018[2011-12]Status: DisposedITAT Mumbai15 Dec 2022AY 2011-12

Section 143(1)Section 148Section 14ASection 68

assessee for A.Y. 2014-15, wherein the assessee is contesting following issues :- a) Disallowance made under section 14A b) Disallowance of prior expenses and preliminary expenses c) Adhoc disallowance of 10% from sales promotion and general expenses 3 M/s. About U. Fashion Pvt. Ltd. 7. The first issue relates ... Next issue relates to disallowance of Rs. 3,31,454/- and Rs. 2,100/- being prior period expenses and preliminary expenses respectively. We noticed from the order passed by the learned CIT(A) that the assessee has not pressed this ground before him. Accordingly the learned CIT(A) has dismissed

Zenith Charitable Trust, Mumbai vs. CIT (E), Mumbai

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

ITA 1153/MUM/2019[2018-19]Status: DisposedITAT Mumbai02 Dec 2022AY 2018-19

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Poojan MehtaFor Respondent: Shri Prabhat Kumar Gupta

Section 12ASection 36ASection 80G

treat the TB patients in near future but since the transaction is still in process hence should be accounted either in trustee account or preliminary expenses and also trust does have 12 A so from Audit point of view I cannot give the trust expenses benefit nor the income counting