NATIONAL CO-OPERATIVE DEVELOPMENT CORPORATION vs COMMISSIONER OF INCOME TAX, DELHI-V

Bench: 2 — Sanjay Kishan Kaul, Indu Malhotra

In Brief

The National Cooperative Development Corporation challenged the denial of income tax deductions for non-refundable grants it disbursed to cooperative societies from interest income earned on idle capital funds. After 44 years of litigation through five adjudicatory stages, the Supreme Court held that grants disbursed by the Corporation constitute revenue expenditure deductible under Section 37 of the Income Tax Act. The Court found that the Corporation's sole business is receiving and advancing funds as loans or grants; interest income from idle funds is business income; and such grants are expenditure incurred wholly for business purpose. Interest income retains its revenue character even after merging with capital receipts in the common fund. The appeal was allowed.

The lawyer headnote and full judgment text are available to registered users.

Income Tax Law Business Income Revenue Expenditure Capital Expenditure Deductions Statutory Authorities Cooperative Societies Income Tax Appellate Tribunal High Court Reference Public Sector Undertakings Government Litigation Policy Advance Tax Ruling

Read the full judgment & headnote. It's free.

Register to read the complete Supreme Court judgment text and the headnote, and to search 1 lakh+ Supreme Court judgments by meaning. It is a free service.