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“real income theory”

Judicial DoctrinesCIT vs Shoorji VallabhdasCIT vs Shoorji Vallabhdas205 judgments

The decision most relied on for real income theory is CIT v. Shoorji Vallabhdas & Co. (46 ITR 144), cited in 551 judgments on BharatTax.

Leading authorities on real income theory

CIT v. Shoorji Vallabhdas & Co.

46 ITR 144 · 1962 · Supreme Court

citing judgments

Income tax is levied only on real income that actually materializes, not on hypothetical or notional income, even if accounting entries suggest otherwise. If no income results, there is no tax liability.

Poona Electric Supply Co. Ltd. v. CIT

57 ITR 521 · 1965 · Supreme Court

citing judgments

Income tax is levied on real income, which represents profits determined by ordinary commercial principles after permissible deductions, considering the probability of realization. This principle distinguishes real profits from statutory profits specified for other purposes under the Income-tax Act.

CIT v. Vasisth Chay Vyapar Ltd.

330 ITR 440 · 2011 · High Court

citing judgments

Interest income is taxable under the mercantile system of accounting even if it is not actually recovered, provided there is a right to receive it. The decision also touches upon the treatment of bad debts and provisions for doubtful debts under Section 36(1)(viia).

CIT v. Birla Gwalior (P.) Ltd.

89 ITR 266 · 1973 · Supreme Court

citing judgments

The Supreme Court holds that income tax is levied on real income, not on hypothetical or notional accrual. For income to be taxable, it must genuinely accrue or be received, taking into account the realistic probability of its realization.

Judgments citing real income theory

M/S. Te Connectivity Services India Private Limited, Bangalore vs. Assistant Commissioner of Income Tax, Circle-7(1)(1), Bangalore

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

ITA 191/BANG/2022[2017-18]Status: DisposedITAT Bangalore16 Sept 2022AY 2017-18

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sit(Tp)A No.191/Bang/2022 Assessment Year : 2017-18 M/S. Te Connectivity Services India Private Vs. National Faceless Assessment Centre, Limited, Delhi. 59/2, 1St Floor, Gurudas Heritage, Block-B, 100 Feet Ring Road, Banashankari 2Nd Stage, Bengaluru – 560 070. Pan: Aafct 3474 R Appellant Respondent Assessee By : Shri. Sriram Seshadri, Ca Revenue By : Dr. Manjunath Karkihalli, Cit(Dr)(Itat), Bengaluru. Date Of Hearing : 14.09.2022 Date Of Pronouncement : 16.09.2022 O R D E R Per N. V. Vasudevan:

For Appellant: Shri. Sriram Seshadri, CAFor Respondent: Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 143(3)Section 144BSection 92Section 92C

amount of INR 4,53,11,205 has actually been paid out as interest expenditure after duly deducting tax at source thereon; (b) real income theory and (c) the principle that accounting treatment is not decisive for tax treatment. The Learned AO has erred in rejecting the interest expense claimed

Cifco Finance Ltd, Mumbai vs. DCIT (OSD-II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 489/MUM/2013[2006-07]Status: DisposedITAT Mumbai29 Aug 2022AY 2006-07

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

Cifco Finance Ltd, Mumbai vs. DCIT (OSD-II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 488/MUM/2013[2004-05]Status: DisposedITAT Mumbai29 Aug 2022AY 2004-05

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

Cifco Finance Ltd, Mumbai vs. DCIT (OSD-II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 487/MUM/2013[2003-04]Status: DisposedITAT Mumbai29 Aug 2022AY 2003-04

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

Cifco Finance Ltd, Mumbai vs. Asst CIT (OSD-II) Cir 7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 7547/MUM/2012[2004-05]Status: DisposedITAT Mumbai29 Aug 2022AY 2004-05

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

Cifco Finance Ltd., Mumbai vs. ACIT (OSD II) Cir.7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 6147/MUM/2011[2008-09]Status: DisposedITAT Mumbai29 Aug 2022AY 2008-09

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

Cifco Finance Ltd., Mumbai vs. ACIT (OSD II) Cir.7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 6146/MUM/2011[2007-08]Status: DisposedITAT Mumbai29 Aug 2022AY 2007-08

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

Cifco Finance Ltd, Mumbai vs. ACIT (OSD-II) Cr 7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 6075/MUM/2009[2006-07]Status: DisposedITAT Mumbai29 Aug 2022AY 2006-07

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

Cifco Finance Ltd, Mumbai vs. ACIT (OSD II), Cr 7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 1919/MUM/2009[2005-2006]Status: DisposedITAT Mumbai29 Aug 2022AY 2005-2006

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

M/A. Cifco Finance Ltd, Mumbai vs. The ACIT (OSD II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 490/MUM/2008[2004-2005]Status: DisposedITAT Mumbai29 Aug 2022AY 2004-2005

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

M/S. Cifco Finance Ltd., Mumbai vs. ACIT (OSD-II) Cr.-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 5462/MUM/2006[2003-2004]Status: DisposedITAT Mumbai29 Aug 2022AY 2003-2004

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

M/S. Cifco Finance Ltd., Mumbai vs. ACIT (OSD-II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 2499/MUM/2006[2002-2003]Status: DisposedITAT Mumbai29 Aug 2022AY 2002-2003

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

M/S. Cifco Finance Ltd., Mumbai vs. ACIT (OSD-II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 2498/MUM/2006[2001-2002]Status: DisposedITAT Mumbai29 Aug 2022AY 2001-2002

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

M/S. Cifco Finance Ltd., Mumbai vs. ACIT (OSD-II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 2497/MUM/2006[2000-2001]Status: DisposedITAT Mumbai29 Aug 2022AY 2000-2001

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

M/S. Cifco Finance Ltd., Mumbai vs. ACIT (OSD-II) Cr-7, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 2496/MUM/2006[1999-2000]Status: DisposedITAT Mumbai29 Aug 2022AY 1999-2000

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

The ACIT (OSD-II) Cen RG-7, Mumbai vs. M/S. Cifco Finance Ltd, Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 2341/MUM/2006[2000-2001]Status: DisposedITAT Mumbai29 Aug 2022AY 2000-2001

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

ACIT (OSD-II) Cent. RG. - 7, Mumbai vs. M/S. Cifco Finance Ltd., Mumbai

In the result all 16 appeals related to the assessee are disposed off

ITA 2323/MUM/2006[1999-2000]Status: DisposedITAT Mumbai29 Aug 2022AY 1999-2000

Bench: The Income Tax Appellate Tribunal C Bench Mumbai Before Sri Amit Shukla J M & Prashant Maharishi Am In The Matter Of Cifco Finance Limited, [ Aaacc1765F] Bhupen Chambers, Dalal Street, Mumbai V The Asst Commissioner Of Income Tax Aykar Bhavan 4Th Floor , M K Road Mumbai 20

Section 143Section 147Section 271

accordance with the circular issued by the CBDT, based on the remand report submitted by the AO and on the correct appreciation of real income theory. Therefore, we find no merit in the appeal of the AO. Accordingly, the solitary ground raised by the AO is dismissed

ACIT-2(3)(2), Mumbai vs. M/S Icici Bank Ltd., Mumbai

In the result, the appeal of the assessee is allowed while for the appeal of the revenue stand dismissed

ITA 3864/MUM/2019[2010-11]Status: DisposedITAT Mumbai22 Aug 2022AY 2010-11

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopalicici Bank Limited Vs. The Acit, Circle 2(3)(2) Icici Bank Towers Aayakar Bhavan, 5Th Bandra Kurla Complex Floor, Room No. 552/556 Bandra (East) Mumbai – 400 020 Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Appellant .. Respondent The Acit, Circle 2(3)(2) Vs. Icici Bank Limited Aayakar Bhavan, 5Th Icici Bank Towers Floor, Room No. 552 Bandra Kurla Complex Mumbai – 400 020 Bandra (East) Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Respondent .. Appellant

For Appellant: Aarti VisanjiFor Respondent: R.A. Dhyani &

Section 143(3)Section 147Section 148Section 43D

specific in this regard in the Act. 7.3.1 The appellant has further contended that the income recognition should have regard to the real income theory. In this regard, it is stated that any theory of this kind cannot apply which makes the implementation of a prescribed rule in I.T. Rules ... days even as per RBI guidelines. Therefore, the contention of the assessee in respect of accrual of income and thereby the real income theory would not be relevant in view of the extant provisions of section 430 r.w.r.6EA of the Rules. In respect of the decision of Hon'ble Apex

Icici Bank Limited, Mumbai vs. The Asst. CIT Circle 2(3)(2), Mumbai

In the result, the appeal of the assessee is allowed while for the appeal of the revenue stand dismissed

ITA 3215/MUM/2019[2010-11]Status: DisposedITAT Mumbai22 Aug 2022AY 2010-11

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopalicici Bank Limited Vs. The Acit, Circle 2(3)(2) Icici Bank Towers Aayakar Bhavan, 5Th Bandra Kurla Complex Floor, Room No. 552/556 Bandra (East) Mumbai – 400 020 Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Appellant .. Respondent The Acit, Circle 2(3)(2) Vs. Icici Bank Limited Aayakar Bhavan, 5Th Icici Bank Towers Floor, Room No. 552 Bandra Kurla Complex Mumbai – 400 020 Bandra (East) Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Respondent .. Appellant

For Appellant: Aarti VisanjiFor Respondent: R.A. Dhyani &

Section 143(3)Section 147Section 148Section 43D

specific in this regard in the Act. 7.3.1 The appellant has further contended that the income recognition should have regard to the real income theory. In this regard, it is stated that any theory of this kind cannot apply which makes the implementation of a prescribed rule in I.T. Rules ... days even as per RBI guidelines. Therefore, the contention of the assessee in respect of accrual of income and thereby the real income theory would not be relevant in view of the extant provisions of section 430 r.w.r.6EA of the Rules. In respect of the decision of Hon'ble Apex

M/S. Onmobile Global Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle- 5(1)(2), Bengaluru

In the result, both these appeals are partly allowed

ITA 2560/BANG/2019[2015-16]Status: DisposedITAT Bangalore10 Aug 2022AY 2015-16

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri T. Suryanarayana, AdvocateFor Respondent: Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 143(3)Section 14ASection 234BSection 244ASection 32

which is deemed to accrue or arise in India. Thus, the benefit of the Explanation would now be available and on application of real income theory, the quantum of tax paid in Saudi Arabia, attributable to income arising or accruing in India would be reduced for the purposes of computing