Case Name : Bombay steam navigation co. (1953) (P.) Ltd. Vs. CIT

Citation : [1965] 56 ITR 52 (sc)

Court : Supreme court

Section : 36

Meaning : The expression ‘capital’ in the context in which it occurs means money and not any other asset, for interest is payable on capital borrowed and interest becomes payable on a loan of money and not on any other asset acquired under a contract.

Case Name : Schenectady beck india ltd. V. Dy. Cit 

Citation : [2004] 91 ITD 23 (mum. – Trib.)(Tm)

Court : Itat-mumbai

Section : 36

Meaning : The word ‘capital’ connotes permanency and capital expenditure is, therefore, closely akin to the concept of securing something, tangible or intangible property, or corporeal or incorporeal rights, so that they could be of a lasting or enduring benefit to the enterprise in issue. Revenue expenditure, on the other hand, is operational in its perspective and solely intended for the furtherance of the enterprise. To put it differently, capital means an asset which has an element of permanency about it and which is capable of being a source of income and capital expenditure must, therefore, generally mean acquisition of an asset and the asset must be intended to be of a lasting value, while revenue expenses are generally running expenses incurred in earning profit or expenses incurred with the primary object of an immediate return or acquisition of assets which are not of lasting value and are likely to get exhausted or consumed in the process of the return or a very limited number of returns.

Case Name : Cit v. Lallubhai gordhandas mehta charitable trust 

Citation : [1993] 115 ctr (guj.) 315

Court : Gujarat high court

Section : 13

Meaning : The word ‘capital’ in section 13(4) in case of company would not include its reserves.

Case Name : Cit v. Islamic academy of education 

Citation : [2014] 48 taxmann.Com 172/369 itr 76 (kar.)

Court : Karnataka high court

Section : 13

Meaning : The expression used is ‘capital’ of the concern. If the intention of the legislature was to restrict it to share capital, then they would have expressly stated so. In the absence of any such expression, before the word ‘capital’ if one was to read ‘share’, it would amount to court’s legislating which was not permissible.

Therefore, especially while granting the benefit to the charitable institution, when the legislature consciously provided for the funds of the said trust by way of investment and they had fixed a limit of 5 per cent, by placing an interpretation which was contrary to the expressed words, said benefit could not be denied to the assessee.

Thus word ‘capital’ of the concern should be understood as the total capital of concern.

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