“Section 143(1)(a)(ii)”
The decision most relied on for Section 143(1)(a)(ii) is CIT v. Smifs Securities Ltd. (348 ITR 302), cited in 540 judgments on BharatTax.
Leading authorities on Section 143(1)(a)(ii)
Goodwill, whether arising from an amalgamation or a slump sale, is an intangible asset eligible for depreciation under Section 32(1) of the Income-tax Act. While the assessee must prove the existence and valuation of such goodwill, it is recognized as a depreciable asset.
Employee contributions to provident fund and ESI, if paid beyond the due date prescribed by the respective welfare fund statutes, are not allowed as a deduction under the Income Tax Act.
The Supreme Court approves the mixed fund theory, holding that no interest disallowance is warranted under section 36(1)(iii) if investments or advances are made from the assessee's own non-interest bearing funds, even when mixed funds are available. This presumption applies when non-interest bearing funds are sufficient to meet the investments.
An Explanation to a statutory provision can either clarify an existing ambiguity in the main provision or add to and widen its scope.
An Explanation to Section 9(1)(ii) of the Income Tax Act that widens the scope of the provision, rather than merely clarifying it, cannot be applied retrospectively to assessment periods prior to its effective date. Assessments must be made according to the law in force at the relevant time.
If an assessee possesses interest-free funds exceeding investments in tax-free securities, it is presumed that investments are made from these own funds, precluding disallowance of interest expenditure under Section 14A read with Rule 8D(2)(ii). Additionally, weighted deduction under Section 35(2AB) is computed on the gross expenditure incurred, not net expenditure after reducing income earned.
Courts must reject interpretations that defeat the plain intention of the legislature, even if language is imprecise. A statute must be read as a whole, construing provisions harmoniously to avoid rendering any part otiose or a dead letter.
If an assessee possesses sufficient interest-free funds, it is presumed that investments yielding exempt income were made from these funds, therefore disallowance of interest expenditure under Section 14A is not justified.
