Deductibility of Payments to Encroachers as ‘Cost of Improvement’ under Section 48 Facts The Transaction: During AY 2023-24, the assessee-company sold a parcel of land and computed Long-Term Capital Gains (LTCG). The Deduction: In its computation, the company claimed a deduction for “Cost of Improvement” regarding compensation paid to various encroachers to secure vacant possession… Read More »

Provision for Actuarial Liabilities under Section 37(1): Ascertained vs. Contingent Liability Facts The Scheme: The assessee-company operated an unfunded defined benefit plan for its employees known as the Bhavishya Kalyan Yojana (BKY). The Accounting: Following Ind AS 19, the assessee created a provision for this scheme based on a report from an independent actuary and… Read More »

Letting Out Property and Ancillary Receipts Not ‘Business’ per se: Exemption Upheld under Section 11 Facts The Profile: The assessee is a charitable trust registered under Section 12A, carrying out activities in line with its stated objects. The Revenue Stream: During AY 2014-15 and 2015-16, the trust derived income from letting out community halls, royalty,… Read More »

Limitation Period and Exclusions: Validation of Reassessment Notices for AY 2018-19 Facts The Discovery: An individual assessee with BOI NRE and PNB savings accounts did not file an ITR for AY 2018-19. Data from the Insight/NMS portal flagged significant foreign remittances, interest income, and time deposits. The Timeline: 22-03-2022: Notice under Section 148A(b) issued. 31-03-2022… Read More »

Deemed Dividend: Re-computation of Net Debit Balance Considering Day-to-Day Accrued Interest Facts The Parties: The assessee is a significant shareholder holding more than 10% shares in a closely-held company. The Transaction: The assessee maintained a running current account with the said company during the Assessment Year 2021-22. The Discrepancy: For a brief window of 8… Read More »

Seed Production as Agricultural Income: Control and Risk as Key Determinants Facts The Business: The assessee-company is engaged in the large-scale production, processing, and trading of hybrid seeds. The Model: The company leased land from farmers and entered into production agreements. Farmers performed operations under the strict guidance and supervision of the company’s employees. The… Read More »