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Documents citing Challapalli Sugar Ltd vs The Commissioner Of Income Tax, A.P. ... on 31 October, 1974

Ircon International Limited, New Delhi vs Acit, New Delhi on 31 October, 2019

This proposition is unassailable. One cannot take resort to a principle or rule of accountancy when the Act provides specifically for the situation at hand. But when the situation is one where there is no definitive provision, a Court can take resort to well accepted accountancy rules and principles. The Supreme Court in Tuticorin Alkali Chemicals (supra) has not derogated from this principle enunciated in Challapalli Sugar Mills Ltd. (supra).
Income Tax Appellate Tribunal - Delhi Cites 91 - Cited by 8 - Full Document

Longulf Trading (India) P.Ltd, Mumbai vs Dcit 8(2), Mumbai on 1 May, 2019

8. Before us, the Ld. counsel for the assessee submitted that during the financial year relevant to the assessment year under consideration, the assessee entered into a number of forward contracts. The provision was made as per the accounting policy followed by the appellant in accordance with accounting standards notified by Central Government. Following the accounting standard, the assessee adopted the accounting policy to provide losses arising on market to market basis in respect of outstanding contracts in the light of available information. Without prejudice, the Ld. counsel submitted that there is no loss of revenue as due to the said provision the cost gets 6 ITA No. 592/MUM/2013 Assessment Year: 2008-09 substituted and a new lower cost is carried forward and at the time of completion of contract either due to lower opening cost there will be higher profit or a lower loss. Since, the tax rates in both the years were same, there was no loss to the revenue. The Ld. counsel further relying on the decision of the Hon'ble Supreme Court in the case of Challapally Sugar Ltd. vs. CIT 98 ITR submitted that in the absence of any statutory provisions, the assessee is bound to follow the rule of accountancy laid down by ICAI. The Ld. counsel further submitted that in the light of the aforesaid facts, the provisional amount is an allowable deduction. The Ld. counsel further pointed out that in the subsequent assessment year 2009-10, the Ld. CIT (A) allowed the identical ground of appeal of the assessee and deleted the addition made by the AO. Since, the impugned order is inconsistent with the order passed by the Ld. CIT (A) in assessee's own case for the AY 2009-10, the same is liable to be set aside.
Income Tax Appellate Tribunal - Mumbai Cites 27 - Cited by 0 - Full Document

Ongc Mangalore Petrochemicals Ltd, ... vs Assistant Commissioner Of Income Tax, ... on 15 March, 2019

14. There is another perspective from which the present issue can be examined. Under section 208 of the Companies Act, 1956, a company can pay interest on share capital which is issued for a specific purpose to defray expenses for construction of any work and which cannot be made profitable for a long period subject to certain restrictions contained in sub-section (2) to (7) of section 208. This section was specifically noted by the Supreme Court in Challapalli Sugars Ltd. v. CIT (1975) 98 ITR 167. The Supreme Court went on to observe at page 175 as follows:
Income Tax Appellate Tribunal - Bangalore Cites 20 - Cited by 1 - Full Document

Smt. Amita Narang, Delhi vs The Dy Commissioner Of Income Tax, Jammu on 29 March, 2019

4.5 At this stage, it may also be relevant to dwell on the nature of the interest cost. The interest cost represents the time cost of funds. That is, relates to the period for which the funds are borrowed or made available by one person, at a cost, to another. The same would stand to be incurred irrespective of the purpose for which the funds borrowed are deployed. Where, therefore, the acquisition of an asset itself involves, and essentially so, time, as where it is under construction, the corresponding interest cost, i.e., relatable to the construction period, would qualify as a cost of acquisition in-as-much as the same is incurred for bringing the asset into existence, as approved in Challapalli Sugars (supra), a decision followed in CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC) and Collector of Central Excise v. Dai Ichi ,Karkaria Ltd. [1999] 156 CTR 172 (SC), upholding the principle of commercial accounting, which in fact stands since formalized per accounting standard, stating likewise (refer AS 10 by ICAI). How would then, a cost, which has nothing to do with the acquisition cost of the asset and, besides, relates to the period after its' acquisition, be regarded as a part of the acquisition cost? How, one may ask, could the acquisition cost vary with the period for which the capital asset is held, as the interest cost would? Again, how could the date of its' sale and, thus, the period for which it is held prior thereto, determine its' cost.
Income Tax Appellate Tribunal - Amritsar Cites 15 - Cited by 0 - Full Document

M/S. India Metal One Steel Plate vs The Deputy Commissioner Of Income on 13 June, 2019

In the case of Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167, this Court examined the question whether interst paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in Section 10(5) of the Indian Income-tax Act, 1922 and whether the assessee will be entitled to depreciation allowances and development rebate with reference to such http://www.judis.nic.in 12 interest also. The Court held that the accepted accountancy rule for determining cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition. In case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalised and added to the cost of the fixed assets created as a result of such expenditure. By the same reasoning if the assessee receives any amount which are inextricably linked with the process of setting up its plant and machinery, such receipts will go to reduce the cost of its assets. These are receipts of a capital nature and cannot be taxed as income.
Madras High Court Cites 14 - Cited by 0 - Full Document

Solarfield Energy Pvt. Ltd., Mumbai vs Ito Ward 2(3)(3), Mumbai on 16 July, 2019

Further, the Hon'ble Supreme Court took note of the decision of the Hon'ble Supreme Court in Challapalli Sugars Ltd. v/s CIT, [1995] 98 ITR 167 (SC) wherein it was held that accepted accountancy rule for determining cost of fixed deposit is to include all expenditure necessary to bring such assets into existence and to pay them in working condition. In case money Is borrowed by newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalized and added to the cost of fixed asset created as a result of such expenditure.
Income Tax Appellate Tribunal - Mumbai Cites 14 - Cited by 1 - Full Document

Sugam Vanijya Holdieng P.Ltd, Bengluru vs Dcit, Circle-24(2), New Delhi on 26 July, 2019

Under Section 208 of the Companies Act, 1956 a company can pay interest on share capital which is issued for a specific purpose to defray expenses for construction of any work and which cannot be made profitable for a long period subject to certain restrictions contained in Section (2) to (7) of Section 208. This section was specifically noted by the Supreme Court in Challapalli Sugars Ltd vs CIT (1975) 98 ITR 167. The Supreme Court went on to observe at page 175 as follows:
Income Tax Appellate Tribunal - Delhi Cites 28 - Cited by 1 - Full Document

Sri Ramadas Paper Boards (P) Ltd., ... vs Dcit, Circle-3(2), Hyderabad, ... on 9 August, 2019

6. The ld. DR, on the other hand, submitted that the CIT(A) has elaborately discussed the facts of the case and came to proper conclusion. He relied on the judgment of the Hon'ble Supreme Court in the case of Challapalli Sugars Vs. CIT [1975] 98 ITR 167. Further, he submitted that term loan conversion into FCNR and back in rupee loan is only a conversion of capital and it is capital in nature, as such conversion cannot be allowed as revenue expenditure.
Income Tax Appellate Tribunal - Hyderabad Cites 19 - Cited by 0 - Full Document
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