“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

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

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

ITA 1152/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

Raymond Limited, Mumbai vs. Addl C.I.T. -2(3), Mumbai

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

ITA 2660/MUM/2008[2002-2003]Status: DisposedITAT Mumbai14 Nov 2022AY 2002-2003

Bench: Shri Vikas Awasthy, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Raymond Limited V. Addl. Cit– Range 2(3) New Hind House 5Th Floor, Aayakar Bhavan Narottam Morarjee Marg M.K. Road, Mumbai - 400020 Ballard Estate, Mumbai - 400001 Pan: Aaacr4896A (Appellant) (Respondent) Acit–2(3) V. M/S. Raymond Limited Room No. 555 New Hind House Aayakar Bhavan, Mumbai Narottam Morarjee Marg Ballard Estate, Mumbai - 400001 Pan: Aaacr4896A (Appellant) (Respondent)

For Appellant: Shri Nitesh Joshi &For Respondent: Shri Samuel Pitta

Section 115JSection 14ASection 35DSection 92C

held as under: “We have carefully perused the orders of the lower authorities. Section 35D of the Act relates to amortization of certain preliminary expenses whereby the assessee is allowed deduction of an amount equal to 1/10th of such expenditure for each of the ten successive previous years beginning with ... operation. The past history of the assessee was that there is no dispute insofar as the eligibility criteria of the assessee is concerned. The preliminary expenses were incurred by the assessee in assessment year 1996-97, which was the first year of the claim of 1/10th of the expenditure. Since

M/S. ACIT 2(3), Mumbai vs. Raymond Ltd., Mumbai

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

ITA 2519/MUM/2008[2002-2003]Status: DisposedITAT Mumbai14 Nov 2022AY 2002-2003

For Appellant: Shri Nitesh Joshi &For Respondent: Shri Samuel Pitta

Section 115JSection 14ASection 35DSection 92C

DCIT, Chennai vs. B.V.Reddy Enterprises Pvt Ltd., Chennai

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

ITA 1914/CHNY/2019[2010-11]Status: DisposedITAT Chennai04 Nov 2022AY 2010-11

Bench: Shri V. Durga Rao & Shri Manoj Kumar Aggarwalआयकर अपील सं./I.T.A. No.1914/Chny/2019 िनधा"रण वष"/Assessment Year: 2010-11 The Deputy Commissioner Of Vs. M/S. B.V. Reddy Enterprises Pvt. Ltd., Income Tax, New No. 21/Old No. 10A, First Floor, Corporate Circle 1(2), Umayal Road, Kilpauk, Chennai 600 034. Chennai 600 010. [Pan:Aaccn2252L] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri G. Johnson, Addl. Cit ""थ" की ओर से/Respondent By : Shri S. Sridhar, Advocate सुनवाई की तारीख/ Date Of Hearing : 15.09.2022 घोषणा की तारीख /Date Of Pronouncement 04.11.2022 : आदेश /O R D E R Per V. Durga Rao: This Appeal Filed By The Revenue Is Directed Against The Order Of The Ld. Commissioner Of Income Tax (Appeals) 1, Chennai, Dated 29.03.2019 Relevant To The Assessment Year 2010-11. 2. Facts Are, In Brief, That The Assessee Filed Its Return Of Income For The Assessment Year 2010-11 On 13.10.2010 Admitting Total Income Of ₹.15,50,25,060/-. The Assessing Officer Has Completed The Assessment Under Section 143(3) Of The Income Tax Act, 1961 [“Act” In Short] Dated

For Appellant: Shri G. Johnson, Addl. CITFor Respondent: Shri S. Sridhar, Advocate

Section 14Section 143(2)Section 143(3)Section 147Section 148

banks and sisters concerns: Remuneration to Managing Director Salaries Staff Welfare expenses Travelling expenses Telephone charges Printing & Stationery Bank charges Audit fees General charges Preliminary Expenses Vehicle Expenses Depreciation Considering the fact that assessee had earned interest only from banks and sister concerns and such interest was directly credited

Hinduja Leyland Finance Limited, Tamil Nadu vs. ACIT, Chennai

In the result, appeal filed by the assessee is allowed

ITA 116/CHNY/2022[2017-18]Status: DisposedITAT Chennai14 Oct 2022AY 2017-18

Bench: Shri V. Durga Rao, Hon’Ble & Shri G. Manjunatha, Hon’Bleआयकर अपील सं./Ita No.116/Chny/2022 िनधा"रण वष" /Assessment Year: 2017-18 M/S.Hinduja Leyland Finance Ltd., V. The Dy. Commissioner- No.1, Sardar Patel Road, Guindy, Of Income Tax, Chennai. Cpc, Bangalore. [Pan: Aacch 1807 P] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Respondent: Mr.K.N.Dhandapani, Addl.CIT

Section 143(1)(a)Section 37Section 37(1)

assessee planned to M/s.Hinduja Leyland Finance Ltd. :: 7 :: raise fresh capital through Initial Public Offering (IPO) and for this purpose, has incurred certain preliminary expenses to go for public issue. However, the assessee could not go for public issue to raise capital and thus, abandoned the proposal due to various

ITO -6(1) (1), Mumbai vs. M/S. Arm Infra & Utilities Pvt. Ltd, Mumbai

Appeal is allowed

ITA 1720/MUM/2022[2014-15]Status: DisposedITAT Mumbai29 Sept 2022AY 2014-15

Bench: Shri Kuldip Singh & Shri S. Rifaur Rahmanassessment Year: 2014-15

For Appellant: Shri Jay Bhansali, A.RFor Respondent: Shri Manoj Singa, D.R

Section 143(3)Section 263Section 56(2)(viib)

issue of unissued shares of the company to the members of the company as fully paid bonus shares; : (b) in writing off the preliminary expenses of the company; (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures

DCIT, Corporate Circle -4(1), Chennai vs. L&T Access Distribution Services Limited, Chennai

ITA 362/CHNY/2018[2013-14]Status: DisposedITAT Mumbai25 Aug 2022AY 2013-14

Bench: Shri Kuldip Singh & Shri Om Prakash Kantassessment Year: 2013-14

For Appellant: Shri Alpesh Dharod, A.R. &For Respondent: Ms. Shailaja Rai, D.R

Section 143(3)Section 350Section 35D

incurred for the purpose of setting up and expanding the business Expenditures of this nature are covered u/s 35D as under: Amortisation of certain preliminary expenses 4 M/s. L & T Access Distribution Services Ltd. '35D (1) Where an assessee, "being an Indian company or a person (other than a company

M/S A & A Hotels Pvt Ltd, Mumbai vs. Asstt.Commissioner of Income Tax, Circle 1(1)(1), Mumbai

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

ITA 628/MUM/2022[2014-15]Status: DisposedITAT Mumbai15 Jul 2022AY 2014-15

Bench: The Itat. Immediately Thereafter, Appeal Was Filed On 7.5.2022 & It Has Resulted A Delay Of 1062 Days. The Ld A.R Submitted That The Office Of The Assessee Did Not Function Properly Due To Pandemic. Accordingly, The Learned Ar Submitted That There Was Sufficient

Section 271(1)(c)

assessee for the year under consideration was taken up for scrutiny. Before the Assessing Officer, the assessee wrongly represented the above expenditure as preliminary expenses and the said representation was rightly rejected by the Assessing Officer holding that the impugned expenses do not fall under the category preliminary expenses

ACIT 13 (3)(2), Mumbai vs. M/S Vega Chemicals Pvt Ltd, Mumbai

In the result, appeal is partly allowed

ITA 750/MUM/2019[2013-14]Status: DisposedITAT Mumbai14 Jun 2022AY 2013-14

Bench: Shri M Balaganesh & Shri Pavan Kumar Gadaleacit – 13(3)(2) Vs. M/S Vega Chemicals Room No. 229/2019, Pvt Ltd 2Nd Floor, Aayakar C-404, Gokuldham, Bhavan, Mk Road, Dindoshi Mumbai-400020. Goregaon (W), Mumbai-400063 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaecv1029M Appellant .. Respondent Assessee By : Mr.Aditya Ramchandra.Ar Revenue By : Mr.S.N.Kabra.Dr Date Of Hearing 23.05.2022 Date Of Pronouncement 22.06.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Revenue Has Filed The Appeal Against The Order Of The Commissioner Of Income Tax (Appeals)-21 Mumbai Passed U/S 143(3) & 250 Of The Act. The Revenue Has Raised The Following Grounds Of Appeal:

For Appellant: Mr.Aditya Ramchandra.ARFor Respondent: Mr.S.N.Kabra.DR

Section 143(1)Section 143(2)Section 143(3)Section 44A

share capital with ROC-at the time of M/s Vego Chemicals, Mumbai formation and other miscellaneous items. The Appellant has submitted that total preliminary expenses incurred during formation of the company is Rs 2,68,406/- which it did not claim at all and the AO has disallowed ... only as per the provisions of Sec. 35D(c)(ili) of the Act, if its arguments do not find favour. The preliminary expenses include fees paid to ROC towards application of DIN, filing of forms for registration of MOA and AOA, stamp duty, registration charges and professional fees. After analysing

Ygroo Digital Private Limited, Mumbai vs. ACIT, ACIT Circle 15(2)(1), Mumbai

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

ITA 1786/MUM/2021[2007-08]Status: DisposedITAT Mumbai02 Jun 2022AY 2007-08

Bench: Shri Pavan Kumar Gadale & Shri Gagan Goyalygroo Digital P Ltd, Vs. Acit, Cicle – 15(2)(1) Him & Kays House # Room No. 357, 3Rd 1, Powai Vihar, Floor, Aayakar Mumbai – 400076 Bhavan, Mk Road Mumbai-400020. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aacct4903A Appellant .. Respondent Appellant By : Mr.Mukesh Maheswari.Ar Respondent By : Ms.Kavita Kaushik.Dr Date Of Hearing 07.06.2022 Date Of Pronouncement 13.06.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Of The Cit(A)- National Faceless Appeal Centre (Nfac), Delhi Passed U/S 143(3) R.W.S 254 & 250 Of The Act. The Assessee Has Raised The Following Grounds Of Appeal:

For Appellant: Mr.Mukesh Maheswari.ARFor Respondent: Ms.Kavita Kaushik.DR

Section 142(1)Section 143(3)Section 35D

legal fees. The A.O. based on the information on the record found that the claim of the assessee is in the nature of preliminary expenses and do not pertain to day to day expenses of the assessee, hence the claim of the assessee is not acceptable and made a addition

Income Tax Officer, Ward-1(1)(3), Bangalore vs. M/S. Bharat Energy Ventures Limited, Bangalore

In the result, the appeal of the revenue is partially allowed

ITA 1511/BANG/2019[2014-15]Status: DisposedITAT Bangalore17 May 2022AY 2014-15

Bench: Shri N.V Vasudevan & Ms. Padmavathy Sassessment Year : 2014-15

For Appellant: Shri Manoj Kumar, ARFor Respondent: Shri Srinivasa T Bidari, CIT(DR)

shareholder agreement etc. ITA No.1511 /Bang/2019 Page 7 of 12 7. As per the provisions of the agreement, the major milestones are Development and Preliminary expenses. Activities relating to other Non-EPC items, Activities relating to Establishment & Maintenance. Project development activities relating to specifications, legal, tax, insurance and other related

M/S. Wellknown Technologies P. Ltd., Mumbai vs. Dy CIT, CC-7(4), Mumbai

In the result, appeal by the assessee is allowed

ITA 1342/MUM/2021[2015-16]Status: DisposedITAT Mumbai06 May 2022AY 2015-16

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Ms. Vinita ShahFor Respondent: Shri Hoshang B. Irani

Section 10Section 10(34)Section 143(3)Section 14ASection 250

page 13 of paperbook, are as under: Other Expenses Rates and taxes 30,400 Legal and professional fees 200 Payment to auditors 22,472 Preliminary expenses written off - Miscellaneous expenses 605 Total 53,677 9. Further, in the present case, it has not been disputed that during the year under

M/S. Steer Engineering Pvt. Ltd., Bengaluru vs. Deputy Commissioner of Income-Tax, Circle-6(1)(2), Bengaluru

In the result, appeal of the Assessee is partly allowed

ITA 2071/BANG/2018[2012-13]Status: DisposedITAT Bangalore27 Apr 2022AY 2012-13

Bench: Shri N. V. Vasudevan & Ms. S. Padmavathyassessment Year : 2012-13 M/S. Steer Engineering Private Limited, Vs. Dcit, No.290, 4Th Main, 4Th Phase, Circle – 6(1)(2), Peenya Industrial Area, Nagawara, Bengaluru. Bengaluru – 560 058. Pan : Aabcs 8840 E Appellant Respondent Assessee By : Shri. Narendra Jain, Advocate Revenue By : Mrs. Susan D. George, Cit(Dr)(Itat), Bengaluru. Date Of Hearing : 18.04.2022 Date Of Pronouncement : 27.04.2022

For Appellant: Shri. Narendra Jain, AdvocateFor Respondent: Mrs. Susan D. George, CIT(DR)(ITAT), Bengaluru

Section 144CSection 92(1)Section 92ASection 92A(1)Section 92CSection 92C(2)Section 92F

including foreign exchange losses but excluding extraordinary expenses, non-recurring expenses, non-operating expenses, [i.e., profit / (loss) on sale of fixed assets, amortisation of preliminary expenses, any interest payments, etc.], fringe benefit tax, provision of income tax and deferred tax. Operating Profit = Operating Revenues - Operating Cost 6. The Assessee chose

M/S Poddar Finin Consultancy P. Ltd., Mumbai vs. ITO Ward-7(3)(1), Mumbai

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

ITA 1860/MUM/2020[2012-13]Status: DisposedITAT Mumbai07 Apr 2022AY 2012-13

Bench: Shri Amarjit Singh, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No. 1860/Mum/2020 (निर्धारण वर्ा / Assessment Year: 2012-13) M/S. Poddar Finin Consultancy बिधम/ Ito Ward Pvt. Ltd. Maharashtra-410206. Vs. 4A/B, Ground Floor, Tk Industries Estate, Sitaram Palturam Murai Marg, Mumbai- 400015. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aagcp3938D (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee By: None Revenue By: Shri R. A. Dhyani (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 16/03/2022 घोषणा की तारीख /Date Of Pronouncement: 07/04/2022 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 06.08.2020 Passed By The Commissioner Of Income Tax (Appeals)- Thane [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y.2012-13. 2. The Assessee Has Raised The Following Grounds: - “1) The Assessment Order Passed By The Id. Assessing Officer (Ao) Is Invalid & Bad In Law. 2) (A) The Id. Commissioner Of Income Tax (Appeals) [Cit(A)] Erred In Law & Facts In Confirming The Action Of The Ld. Assessing Officer

For Appellant: NoneFor Respondent: Shri R. A. Dhyani (Sr. AR)

Section 143(2)Section 35DSection 56(2)Section 56(2)(viib)Section 68

Account, it was observed that there was no receipt either from operational or other income and the only expenses debited was on account of preliminary expenses written off of Rs.4,07,786/- and after reducing allowable expenses u/s 35D loss to be carried forward was claimed of Rs.87

The United Western Bank Ltd. (Through Successors Idbi Bank Ltd.), Mumbai vs. DCIT, Satara

In the result, all the three appeals filed by the assessee are disposed of as above

ITA 289/PUN/2010[2002-03]Status: DisposedITAT Mumbai23 Mar 2022AY 2002-03

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

For Appellant: Shri C Narseh, ARFor Respondent: Shri

Section 143(3)Section 14ASection 35DSection 36(1)(vii)Section 36(1)(viia)Section 37

Nuchem Ltd. [2015] 59 taxmann.com 455 (Punjab & Haryana), has held that assessee bank extending financial services would be entitled to amortization of preliminary expenses for public subscription. The Hon'ble Punjab and Haryana High Court has also held that fees of ROC, for enhancement of authorized capital is deductible over

The United Western Bank Ltd., Mumbai vs. Deputy Commissioner of Income-Tax, Jalgaon

In the result, all the three appeals filed by the assessee are disposed of as above

ITA 1339/PUN/2007[2002-03]Status: DisposedITAT Mumbai23 Mar 2022AY 2002-03

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

For Appellant: Shri C Narseh, ARFor Respondent: Shri

Section 143(3)Section 14ASection 35DSection 36(1)(vii)Section 36(1)(viia)Section 37

The United Western Bank Ltd., Satara vs. Additional Commissioner of Income-Tax, Satara

In the result, all the three appeals filed by the assessee are disposed of as above

ITA 1738/PUN/2005[2002-03]Status: DisposedITAT Mumbai23 Mar 2022AY 2002-03

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

For Appellant: Shri C Narseh, ARFor Respondent: Shri

Section 143(3)Section 14ASection 35DSection 36(1)(vii)Section 36(1)(viia)Section 37

Deputy Commissioner of Income Tax Circle-1(1)(2), Bangalore vs. M/S Bharath Energy Venture Pvt Ltd, Bangalore

In the result, both the appeals are dismissed

ITA 2418/BANG/2018[2013-14]Status: DisposedITAT Bangalore23 Feb 2022AY 2013-14

Bench: Shri N.V. Vasudevan & Shri B. R. Baskaran

For Appellant: NoneFor Respondent: Shri. Sankar Ganesh K, JCIT(DR)(ITAT), Bengaluru

Section 28Section 29Section 3

potential equity participants and ensure closure of shareholder agreement etc. 7. As per the provisions of the agreement, the major milestones are Development and Preliminary expenses. Activities relating to other Non-EPC items, Activities relating to Establishment & Maintenance. Project development activities relating to specifications, legal, tax, insurance and other related

Deputy Commissioner of Income Tax Circle-1(1)(2), Bangalore vs. M/S Bharath Energy Venture Pvt Ltd, Bangalore

In the result, both the appeals are dismissed

ITA 2417/BANG/2018[2012-13]Status: DisposedITAT Bangalore23 Feb 2022AY 2012-13

Bench: Shri N.V. Vasudevan & Shri B. R. Baskaran

For Appellant: NoneFor Respondent: Shri. Sankar Ganesh K, JCIT(DR)(ITAT), Bengaluru

Section 28Section 29Section 3

ACIT, Circle- 19(2), New Delhi vs. Pc Jewellers Ltd., Delhi

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

ITA 6650/DEL/2017[2014-15]Status: DisposedITAT Delhi07 Dec 2021AY 2014-15

Bench: Sh. Amit Shukladr. B. R. R. Kumar(Through Video Conferencing) Ita No. 6649/Del/2017 : Asstt. Year : 2013-14 Ita No. 6650/Del/2017 : Asstt. Year : 2014-15 Acit, Vs Pc Jewellers Ltd., Circle-19(2), C-54, Preet Vihar, New Delhi New Delhi-110092 (Appellant) (Respondent) Pan No. Aadcp5443Q Co No. 68/Del/2020 : Asstt. Year : 2013-14 Co No. 74/Del/2020 : Asstt. Year : 2014-15 Pc Jewellers Ltd., Vs Acit, C-54, Preet Vihar, Circle-19(2), New Delhi-110092 New Delhi (Appellant) (Respondent) Pan No. Aadcp5443Q Assessee By : Sh. S. S. Nagar, Ca Revenue By : Sh. Hemant Gupta, Sr. Dr Date Of Hearing: 25.11.2021 Date Of Pronouncement: 07.12.2021

For Appellant: Sh. S. S. Nagar, CAFor Respondent: Sh. Hemant Gupta, Sr. DR

Section 143(2)Section 143(3)Section 194HSection 2(24)(X)Section 40

wherein it was held as under: “We do not find any merit in the above contention. Section 35D deals with amortisation of certain preliminary expenses. Under Section 35D(1)(ii), it is laid down that after the commencement of the business any expenditure as described in Section 35D(2), which