“Section 9(1)(viii)”
The decision most relied on for Section 9(1)(viii) is South Indian Bank Ltd. v. CIT (262 ITR 579), cited in 48 judgments on BharatTax.
Leading authorities on Section 9(1)(viii)
For banks, bad debts written off from non-rural advances are not subject to the limitations of the provisos to sections 36(1)(vii) and 36(1)(viii), as these provisos apply only to rural advances; section 36(1)(viia) also applies exclusively to rural advances. Additionally, depreciation on investments valued at market price on the balance sheet date is eligible for deduction.
Advances made by banks that become bad debts are eligible for deduction under Section 36(1)(vii) if they meet the conditions specified in Section 36(2).
Expenses arising from foreign exchange fluctuations on revenue expenditure and foreign currency loans for day-to-day business operations are notional or anticipated losses and are allowable.
Where an expense is incurred for the purpose of acquiring a capital asset, and that asset is subsequently sold, the expenditure must be considered as part of the cost of acquisition of that asset for the purpose of calculating capital gains. This is because the expense forms an integral part of the cost of acquiring the asset, not an expenditure of revenue nature.
Section 14A of the Income Tax Act is not applicable to investments made in tax-free securities if interest-free funds are available with the assessee. This is because there is a presumption that such investments are made out of these available interest-free funds.
Contributions made by an assessee to upgrade an elementary school, if it results in preference for admission of employees' children, are an allowable deduction as business expenditure under section 37(1) of the Income Tax Act.
Expenditure directly relatable to earning exempt income can be considered, but notional expenditure is disallowed. The Assessing Officer must establish a nexus between the expenditure and the exempt income.
Disallowance under section 14A is legally impermissible for investments made using interest-free funds, as the rule of law interprets section 14A in favour of assessees when interest-free funds are sufficient to meet investments.
