Additions Deleted as Retraction of Surrender Validly Supported by Books Vouchers and Bank Withdrawals Issue Unexplained Gold: Whether excess gold jewellery found during a survey could be treated as unexplained investment when the assessee claimed it belonged to customers for repairs. Unexplained Cash: Whether cash found in excess of the cash book balance is unexplained… Read More »
Co-insurance Fees Allowed Without TDS and Computer Peripherals Treated as Revenue Expenditure Issue Co-insurance Fees: Whether administration fees paid for co-insurance attract TDS under Section 194H, failing which the expense is disallowable under Section 40(a)(ia). Nature of Expenses: Whether expenditure on computer consumables (pen drives, cables, etc.) is capital in nature (as held by the… Read More »
Allocation Method Upheld but Excise Refund Taxed; MAT Indexation Allowed Issue Expense Allocation (S. 80-IE): Can the AO substitute the assessee’s division-wise expense allocation with a turnover-based method without proving the assessee’s method perverse? MAT on Excise Refund (S. 115JB): Is excise duty/GST refund includible in book profits for MAT purposes? Business Expenditure (S. 37):… Read More »
AO’s Failure to Verify Depreciation on Impaired Goodwill Justifies Revision Under Section 263 Issue Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under Section 263 on the ground that the Assessing Officer failed to examine the claim of depreciation on goodwill which was impaired to nil in the books of account. Facts Nature… Read More »
Interest Income Earned from Staff Loans and Advances is Taxable as Business Income Issue Whether interest income earned by an assessee, engaged in the business of electricity distribution, from loans and advances given to its staff constitutes ‘Income from Business’ under Section 28(i) or ‘Income from Other Sources’ under Section 56. Facts Nature of… Read More »
Reassessment Valid on Fresh Material but Fictitious Loss Allegations Rejected on Merits Issue Reassessment Validity: Whether the reopening of assessment under Section 147 was valid based on information from the Investigation Wing regarding alleged fictitious losses. Genuineness of Losses: Whether losses claimed from trading in illiquid stock options and alleged “penny stocks” were genuine business… Read More »
Interest on Borrowed Capital for Unused Asset Disallowed as Business Expense but Deductible Under House Property Issue Whether interest paid on capital borrowed to acquire a commercial property constitutes an allowable deduction under Section 36(1)(iii) as business expenditure prior to the asset being put to use, or if it constitutes a deduction under Section 24(b)… Read More »
Section 14A Disallowance Cannot Exceed Exempt Income Earned; Finance Act 2022 Amendment Clarified as Prospective in Nature ISSUES Quantum of Disallowance: Whether the disallowance of expenditure under Section 14A read with Rule 8D can exceed the actual amount of exempt income earned by the assessee during the relevant previous year. Retrospectivity of FA 2022:… Read More »
Educational Trusts: Payments to Related Parties (Royalty, Services) Allowed in Absence of Market Comparables Proving Excessiveness; Hostel Activity Integral to Education ISSUES Section 13(1)(c) (Related Party Payments): Whether payments made to related parties for Advertisement, Services, and Royalty (4% of fees) can be disallowed as “undue benefit” merely due to common management, without the AO… Read More »
Accrual of Income: Notional Interest Cannot Be Taxed on Interest-Free Advances Without Contractual Right to Receive; RBI MCLR Benchmark Held Untenable ISSUES Accrual of Notional Interest: Whether the Assessing Officer (AO) can tax “notional interest” on interest-free loans/advances given by the assessee to other companies, in the absence of any contractual stipulation or legal… Read More »