“Section 70(2)”
The decision most relied on for Section 70(2) is MavaliyaBhikhubhaiBalabhai v. ITO (TDS)\n (70 Taxmann.com 45), cited in 93 judgments on BharatTax.
Leading authorities on Section 70(2)
Interest received under Section 28 of the Land Acquisition Act, 1894, forms an integral part of enhanced compensation and is not taxable as "Income from Other Sources" under Section 56(2)(viii) of the Income-tax Act, 1961. The Finance Act, 2009 amendments do not alter the compensatory nature of such interest.
For the purpose of accumulation of income under section 11(1)(a), the calculation is to be made on the gross receipts of the trust before deducting any expenses. This interpretation is based on the plain language of section 11(1)(a) and is supported by Supreme Court decisions.
Expenditure incurred for the transfer of the use of licenses, without acquiring ownership rights or an enduring benefit, constitutes revenue expenditure. Such payments are allowable as a deduction if they are directly relatable to services in the revenue field.
Each transaction can be considered a separate source of income, allowing taxpayers to choose between the Income-tax Act and a Double Taxation Avoidance Agreement (DTAA) for each transaction. Section 70(2) of the Act does not prescribe an order for setting off specific short-term capital losses against specific short-term capital gains, favouring the taxpayer in interpretation.
Capital gains arising from the transfer of equity shares and equity-oriented mutual funds are exempt if the shares are long-term capital assets, transferred on the stock exchange, and the sale transaction is subject to levy. The case also relates to the application of beneficial provisions and the rejection of claims under Double Taxation Avoidance Agreements (DTAA).
Long-term capital loss on the sale of shares can be set off and carried forward under sections 70 and 71, as section 10(38) only exempts long-term capital gains and does not encompass capital losses.
Where an assessee claims treaty benefits under Article 13(4) of the India-Mauritius DTAA, exempting capital gains from Indian taxation, brought forward short-term and long-term capital losses cannot be set off against such exempt gains, nor can they be carried forward to subsequent years.
The set-off of short-term capital loss against capital gains is permissible under section 70(2) of the Income-tax Act, regardless of whether the gains are taxed at normal rates or special rates. This applies even when the assessee has capital gains chargeable to tax at different rates.
