Section 43CB Mandates Straight-Line Revenue Recognition for Time-Bound Service Contracts. Facts The Assessee: A company manufacturing, installing, and maintaining elevators and escalators. The Transaction: The company enters into Annual Maintenance Contracts (AMCs) with customers for periods of 1 to 2 years. The Accounting: The assessee recognized revenue on a straight-line basis over the tenure of… Read More »

Deduction for Logo Royalty Upheld Based on Unrebutted Additional Evidence and Valid Agreements. The Facts: For AYs 2010-11 to 2012-13, the assessee claimed a deduction for royalty paid for the use of a brand/logo. The AO disallowed the portion attributable to the logo. The Decision: The assessee provided additional evidence, including relevant agreements, to support… Read More »

Interest on Borrowed Capital: Own Funds vs. Interest-Bearing Loans (Section 36(1)(iii)) Presumption of Own Funds for Business Advances The Facts: For AY 2017-18, the assessee had an outstanding advance of Rs. 80 lakhs given to A.M. Enterprises. The Assessing Officer (AO) disallowed interest of Rs. 9.60 lakhs (calculated at 12%) under Section 36(1)(iii), assuming that… Read More »

Airport Infrastructure: Rights, Depreciation, and Capital Receipts under Income Tax I. Procedure of CIT(A) – Duty to Adjudicate All Grounds Assessee-Airport Operator’s Right to Merits-Based Adjudication The Facts: The assessee raised additional grounds before the Commissioner (Appeals) regarding bogus accommodation entries and investment write-offs (under normal provisions and Section 115JB). The CIT(A) ignored these grounds… Read More »

Rejection of Benami Allegations Based on Business Arrangements and Consideration Tests Facts The Allegation: The Initiating Officer (IO) provisionally attached a property, alleging a benami transaction. The IO pointed to several “suspicious” factors: The Benamidar (the legal owner) operated their business from the premises of the alleged Beneficial Owner. There was no formal lease agreement… Read More »