“Section 32(1)(ia)”
The decision most relied on for Section 32(1)(ia) is CIT v. Faizan Shoes (P.) Ltd. (367 ITR 155), cited in 139 judgments on BharatTax.
Leading authorities on Section 32(1)(ia)
Disallowance under section 40(a)(i) for non-deduction of tax at source on export agency commission paid to a non-resident does not apply if the non-resident's income is not taxable in India under section 9(1), such as when the agent operates outside India without a permanent establishment or business connection in India.
Depreciation is allowable on computer software, including software licenses, at the rate of 60%.
Extraction and processing of iron ore constitutes "production" for the purpose of claiming tax benefits like investment allowance under Section 32A and additional depreciation under Section 32(1)(iia), even if it does not amount to "manufacture".
The onus is on the revenue to establish the nexus between expenses incurred and exempt income before making a disallowance under section 14A.
Specified intangible assets like business claims, information, records, contracts, employees, and know-how acquired under a slump sale are considered 'business or commercial rights' eligible for depreciation under section 32(1)(ii).
Section 40(a)(i)/(ia) of the Income Tax Act, 1961, pertains to outgoing revenue expenditure and does not apply to capital expenditure, meaning depreciation cannot be disallowed under these provisions for capital expenses, such as software purchases.
Amounts referred to under section 40(a)(ia) of the Income-tax Act, 1961, are not deductible in computing income chargeable under the head 'Profits and gains of business or profession'.
A one-time payment of lease rent, even if commuted and discounted over a long period like 90 years, is revenue in nature and therefore an allowable business expenditure. The Assessing Officer must record satisfaction before applying Rule 8D for disallowance under Section 14A.
