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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
551
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
126
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
125
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
83
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

Dy Commissioner of Income Tax, Central Circle-6(2), Mumbai vs. Hemendra Merchant, Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 856/MUM/2022[2004-05]Status: DisposedITAT Mumbai30 Nov 2022AY 2004-05

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Dy Commissioner of Income Tax, Mumbai vs. Hemendra Merchant, Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 855/MUM/2022[2005-06]Status: DisposedITAT Mumbai30 Nov 2022AY 2005-06

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Dy Commissioner of Income Tax, Central Circle-6(2), Mumbai vs. Hemendra Merchant, Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 854/MUM/2022[2001-02]Status: DisposedITAT Mumbai30 Nov 2022AY 2001-02

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Dy Commissioner of Income Tax, Central Circle-6(2), Mumbai vs. Hemendra Merchant, Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 853/MUM/2022[2006-07]Status: DisposedITAT Mumbai30 Nov 2022AY 2006-07

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Hemendra Ranchooddas Merchant, Mumbai vs. Dy CIT, Central Circle-6(2), Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 812/MUM/2022[2006-07]Status: DisposedITAT Mumbai30 Nov 2022AY 2006-07

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Hemendra Ranchooddas Merchant, Mumbai vs. Dy CIT-Central Circle-6(2), Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 811/MUM/2022[2005-06]Status: DisposedITAT Mumbai30 Nov 2022AY 2005-06

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Hemendra Ranchooddas Merchant, Mumbai vs. Dy CIT-Central Circle-6(2), Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 810/MUM/2022[2004-05]Status: DisposedITAT Mumbai30 Nov 2022AY 2004-05

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Hemendra Ranchooddas Merchant, Mumbai vs. Dy CIT-Central Circle-6(2), Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 809/MUM/2022[2003-04]Status: DisposedITAT Mumbai30 Nov 2022AY 2003-04

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Hemendra Ranchooddas Merchant, Mumbai vs. Dy CIT Central Circle-6(2), Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 808/MUM/2022[2002-2003]Status: DisposedITAT Mumbai30 Nov 2022AY 2002-2003

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Hemendra Ranchooddas Merchant, Mumbai vs. Dy CIT Cen-Circle 6(2). Mumbai, Mumbai

In the result, all the appeals of the assessee are allowed as partly for statistical purposes and appeal of the revenue except assessment year of 2005-06 are allowed for statistical purposes

ITA 807/MUM/2022[2001-02]Status: DisposedITAT Mumbai30 Nov 2022AY 2001-02

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail ()

For Respondent: Shri. D.V. Sawant, Adv
Section 253

assets/investment, then no separates addition to the extent of application of such undisclosed receipt/income may be required to be made following the real income theory. 11.4 In the case in hand also the Assessing Officer has stated that assessee has siphoned off money from the six partnership firms

Shri Sanjay Shantilal Jain, Mumbai vs. JCIT, Central Range-8, Mumbai

In the result, the appeals of the assessee for assessment year

ITA 6140/MUM/2018[2011-12]Status: DisposedITAT Mumbai30 Nov 2022AY 2011-12

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2011-12 & Assessment Year: 2011-12 & Assessment Year: 2012-13 & Assessment Year: 2013-14 & Assessment Year: 2014-15

For Respondent: Assessee by Mr. Rushabh Mehta
Section 269SSection 271DSection 273B

side i.e. either the undisclosed receipt or made only for one side i.e. either the undisclosed receipt or undisclosed investment following the real income theory. The Ld. undisclosed investment following the real income theory. The Ld. undisclosed investment following the real income theory. The Ld. counsel of assessee counsel

M/S United Spirits Limited, Bangalore vs. Joint Commissioner of Income Tax Special Range-7, Bangalore

In the result, ground 7 is allowed for statistical purposes

ITA 3091/BANG/2018[2014-15]Status: DisposedITAT Bangalore22 Nov 2022AY 2014-15

Bench: Shri George George K, Jm & Shri Laxmi Prasad Sahu, Am It(Tp)A No.3091/Bang/2018 : Asst.Year 2014-2015 M/S.United Spirits Limited The Joint Commissioner Of 6Th Floor, Ub Towers, Income-Tax, Special Range-7 V. Bangalore. # 24 Vittal Mallya Road Bangalore – 560 001. Pan : Aaccm8043J. (Appellant) (Respondent)

For Appellant: Sri.Percy Pardiwala, Senior Counsel and Sri.Ankur Pai, AdvocateFor Respondent: Sri. Manjunath Karkihalli, CIT –DR
Section 115PSection 143(2)Section 143(3)Section 14ASection 234BSection 36(1)(iii)Section 92C

merely because of reduction of receivables by making provision for doubtful loans and advances. The decisions relied on by the learned AR on real income theory are under the general provisions and not under the transfer pricing regime. Similarly, the other decisions relied on by the learned

DCIT- CC-1(2), Mumbai vs. Niranjan L. Hiranandani, Mumbai

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

ITA 1896/MUM/2021[2015-16]Status: DisposedITAT Mumbai31 Oct 2022AY 2015-16

Bench: Shri Amit Shukla, Jm & Shri Prashant Maharishi, Am आयकरअपीलसं./ I.T.A. No. 1896 & 1895/Mum/2021 (निर्धारणवर्ा / Assessment Year: 2015-16 & 2016-17)

For Appellant: Shri Chetan M. KachaFor Respondent: Shri K. Gopal, Ld. AR
Section 143(3)Section 3Section 57

Honours, claim of interest paid is under specific head and based on specific provision of the Income Tax Act and not merely on real income theory. iii) In the said case, the claim for deduction of interest paid was not based on section 5 7(iii), rather it was conceded

Shri Sanjay Shantilal Jain, Mumbai vs. JCIT, Central Range-8, Mumbai

In the result, the appeal of the In the result, the appeal of the assessee is having ITA No

ITA 6124/MUM/2018[2010-11]Status: DisposedITAT Mumbai31 Oct 2022AY 2010-11

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2010-11 Shri Sanjay Shantilal Jain, Dcit-Cc 8(3), 72-7, Kalpataru Residency Tower 6Th Floor, Aayakar Bhavan, Vs. B, Sion Koliwada Road, Sion, M.K. Road, Mumbai-400022. Mumbai-400020. Pan No. Aabpj 3761 A Appellant Respondent Assessment Year: 2010-11 Shri Sanjay Shantilal Jain, Jcit, Central Range-8, 72-7, Kalpataru Residency Tower 6Th Floor, Aayakar Bhavan, Vs. B, Sion Koliwada Road, Sion, M.K. Road, Mumbai-400022. Mumbai-400020. Pan No. Aabpj 3761 A Appellant Respondent : Assessee By Mr. Rushabh Mehta, Ar Revenue By : Mr. Manoj Kumar, Cit- Dr : Date Of Hearing 15/09/2022 Date Of Pronouncement : 31/10/2022

For Respondent: Assessee by Mr. Rushabh Mehta, AR
Section 143(3)Section 40A(3)Section 50Section 68Section 69C

undisclosed receipt or made only for one side i.e. either the undisclosed receipt or undisclosed investment following the r undisclosed investment following the real income theory. The eal income theory. The Ld. counsel of assessee particularly stated that assessee has already of assessee particularly stated that assessee has already

Shri Sanjay Shantilal Jain, Mumbai vs. DCIT, Central Range-8 (3), Mumbai

In the result, the appeal of the In the result, the appeal of the assessee is having ITA No

ITA 6123/MUM/2018[2010-11]Status: DisposedITAT Mumbai31 Oct 2022AY 2010-11

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2010-11 Shri Sanjay Shantilal Jain, Dcit-Cc 8(3), 72-7, Kalpataru Residency Tower 6Th Floor, Aayakar Bhavan, Vs. B, Sion Koliwada Road, Sion, M.K. Road, Mumbai-400022. Mumbai-400020. Pan No. Aabpj 3761 A Appellant Respondent Assessment Year: 2010-11 Shri Sanjay Shantilal Jain, Jcit, Central Range-8, 72-7, Kalpataru Residency Tower 6Th Floor, Aayakar Bhavan, Vs. B, Sion Koliwada Road, Sion, M.K. Road, Mumbai-400022. Mumbai-400020. Pan No. Aabpj 3761 A Appellant Respondent : Assessee By Mr. Rushabh Mehta, Ar Revenue By : Mr. Manoj Kumar, Cit- Dr : Date Of Hearing 15/09/2022 Date Of Pronouncement : 31/10/2022

For Respondent: Assessee by Mr. Rushabh Mehta, AR
Section 143(3)Section 40A(3)Section 50Section 68Section 69C

undisclosed receipt or made only for one side i.e. either the undisclosed receipt or undisclosed investment following the r undisclosed investment following the real income theory. The eal income theory. The Ld. counsel of assessee particularly stated that assessee has already of assessee particularly stated that assessee has already

The Asstt Commissioner of Income Tax, Central Circle-5(4), Mumbai vs. Wadhwa Construction and Infrastructure Ltd, Mumbai

In the result, all the appeals of the assessee as well as learned Assessing Officer are dismissed

ITA 851/MUM/2022[2014-15]Status: DisposedITAT Mumbai21 Sept 2022AY 2014-15

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Jitendra Jain, ARFor Respondent: Shri Ajay Singh, DR
Section 132Section 153ASection 194ISection 2Section 40Section 69C

Rs.3,68,000/- towards undisclosed income. The Appellant submits that the income has been offered on a percentage of receipt basis under the real income theory and thus the addition made is unjust and deserves to be deleted. b) The CIT (A) erred in not allowing the deduction of selling

ACIT Central Cir 5(4), Mumbai vs. M/S. Wadhwa Construction & Infrastructure Pvt. Ltd, Mumbai

In the result, all the appeals of the assessee as well as learned Assessing Officer are dismissed

ITA 631/MUM/2022[2015-16]Status: DisposedITAT Mumbai21 Sept 2022AY 2015-16

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Jitendra Jain, ARFor Respondent: Shri Ajay Singh, DR
Section 132Section 153ASection 194ISection 2Section 40Section 69C

Rs.3,68,000/- towards undisclosed income. The Appellant submits that the income has been offered on a percentage of receipt basis under the real income theory and thus the addition made is unjust and deserves to be deleted. b) The CIT (A) erred in not allowing the deduction of selling

M/S Wadhwa Construction and Infrastructure Pvt Ltd, Mumbai vs. DCIT Central Circle 5(4), Mumbai

In the result, all the appeals of the assessee as well as learned Assessing Officer are dismissed

ITA 585/MUM/2022[2016-17]Status: DisposedITAT Mumbai21 Sept 2022AY 2016-17

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Jitendra Jain, ARFor Respondent: Shri Ajay Singh, DR
Section 132Section 153ASection 194ISection 2Section 40Section 69C

Rs.3,68,000/- towards undisclosed income. The Appellant submits that the income has been offered on a percentage of receipt basis under the real income theory and thus the addition made is unjust and deserves to be deleted. b) The CIT (A) erred in not allowing the deduction of selling

M/S Wadhwa Construction and Infrastruction Pvt Ltd, Mumbai vs. DCIT, Central Circle 5(4), Mumbai

In the result, all the appeals of the assessee as well as learned Assessing Officer are dismissed

ITA 584/MUM/2022[2015-16]Status: DisposedITAT Mumbai21 Sept 2022AY 2015-16

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Jitendra Jain, ARFor Respondent: Shri Ajay Singh, DR
Section 132Section 153ASection 194ISection 2Section 40Section 69C

Rs.3,68,000/- towards undisclosed income. The Appellant submits that the income has been offered on a percentage of receipt basis under the real income theory and thus the addition made is unjust and deserves to be deleted. b) The CIT (A) erred in not allowing the deduction of selling

ACIT Cent. Cir 5(4), Mumbai vs. M/S. Wadhwa Construction & Infrastructure Pvt. Ltd, Mumbai

In the result, all the appeals of the assessee as well as learned Assessing Officer are dismissed

ITA 227/MUM/2022[2016-17]Status: DisposedITAT Mumbai21 Sept 2022AY 2016-17

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Jitendra Jain, ARFor Respondent: Shri Ajay Singh, DR
Section 132Section 153ASection 194ISection 2Section 40Section 69C

Rs.3,68,000/- towards undisclosed income. The Appellant submits that the income has been offered on a percentage of receipt basis under the real income theory and thus the addition made is unjust and deserves to be deleted. b) The CIT (A) erred in not allowing the deduction of selling