“Section 133(5)”
The decision most relied on for Section 133(5) is Sree Meenakshi Mills Ltd. v. Commissioner of Income Tax (31 ITR 28), cited in 137 judgments on BharatTax.
Leading authorities on Section 133(5)
Expenditure incurred for commercial expediency, even without a direct or immediate benefit but indirectly facilitating business, is deductible as laid out wholly and exclusively for trade. The scope of reference jurisdiction under Section 66 is limited to questions of law, allowing challenges to Tribunal findings of fact only if they are perverse, unreasonable, or lack evidence.
For valid initiation of reassessment proceedings, the Assessing Officer must possess tangible material and apply independent mind to form a 'reason to believe' that income has escaped assessment. Reassessment cannot be based on mere borrowed satisfaction or unverified information without proper scrutiny.
Expenditure incurred by an assessee carrying on a composite business giving rise to both taxable and non-taxable income is allowable in its entirety without apportionment. This principle led to the subsequent introduction of Section 14A of the Income-tax Act.
If a Dependent Agency Permanent Establishment (DAPE) is remunerated at arm's length based on transfer pricing principles, no further profits can be attributed to the foreign enterprise. The principles of profit attribution under DTAA Article 7 are pari-materia to Section 9(1)(i) of the Income Tax Act.
Maersk Global Centres (India) establishes criteria for excluding companies from the list of comparables in transfer pricing analysis, holding that functional dissimilarity or abnormally high profit margins (not reflective of normal business conditions) justify their exclusion.
A subsidy not in the nature of income, even if credited to the profit and loss account, cannot be regarded as income for the purpose of computing book profit under section 115JB of the Income-tax Act and must be excluded.
The lower of unabsorbed depreciation or business loss is deductible from book profits under Clause (iii) of Explanation 1 to Section 115JB. Capital receipts, such as forfeiture of share warrants, which do not have the character of income, are not liable for book profits tax under Section 115JB.
Sales tax subsidies should be excluded when computing book profits under Section 115JB of the Income Tax Act.
