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LTCG isn’t bogus if fully documented, despite the company’s weak financials. Issue Can an Assessing Officer treat a Long-Term Capital Gain (LTCG) from the sale of shares as bogus under Section 68 of the Income-tax Act, 1961, simply because the company is a “penny stock” whose price is not supported by its financial fundamentals, even… Read More »

An addition under Section 68 is justified when the money trail proves funds were routed back to the assessee through shell companies. Issue Can share application money be treated as unexplained cash credit under Section 68 of the Income-tax Act, 1961, if the tax department provides evidence, such as a money trail, to show that… Read More »

A disallowance for unverifiable creditors was restricted to 25% when sales were accepted. Issue When the purchases made by a business are considered genuine (because the corresponding sales are accepted), but the creditors for those purchases are found to be non-existent or unverified, should the entire amount be added to income, or should a portion… Read More »

Depreciation on goodwill claim remanded for a fresh hearing due to lack of documents. Issue What is the appropriate course of action when a taxpayer’s claim for depreciation on goodwill is dismissed by the Commissioner (Appeals) without any specific finding on the merits, primarily because the taxpayer failed to furnish the required supporting documents? Facts… Read More »

Income from hybrid seeds is agricultural if produced under the company’s supervision. Issue Can the income a company earns from selling hybrid seeds be considered “agricultural income” exempt from tax, even if the seeds are grown on land owned and tilled by third-party farmers? Facts The assessee, a company in the business of producing and… Read More »

Interest on compensation for the compulsory acquisition of exempt agricultural land is also exempt. Issue Is the interest received on delayed payment of compensation for compulsorily acquired agricultural land taxable as “Income from Other Sources” under Section 56 of the Income-tax Act, 1961, or does it take on the character of the compensation itself and… Read More »

A scrutiny assessment that allows a claim will always override a contrary adjustment made on the same issue during the initial summary processing of a tax return. Issue Can a tax demand created by a disallowance in a summary processing intimation under Section 143(1)(a) of the Income-tax Act, 1961, be sustained, even after a detailed… Read More »