“Section 50(1)”
The decision most relied on for Section 50(1) is Kale Khan Mohammad Hanif v. CIT (50 ITR 1), cited in 581 judgments on BharatTax.
Leading authorities on Section 50(1)
The assessee bears the onus of proving the source and nature of any sum of money or receipt found to have been received by them. If the assessee fails to satisfactorily explain the receipt, the Income-tax Officer is entitled to treat it as taxable income.
The 20% tax rate under Section 112 applies to capital gains arising from the transfer of a depreciable asset, even if it is deemed a short-term capital gain under Section 50, provided the asset was held for more than 36 months. The fiction created by Section 50 for treating such gains as short-term does not alter the long-term nature of the asset for applying the tax rate under Section 112.
The Commissioner's revisional powers under Section 263, as clarified by Explanation (c) of Section 263(1) (retrospectively inserted by the Finance Act, 1989), extend to and are deemed always to have extended to matters that were not considered and decided in an appeal. This means the CIT can revise an order even if it was appealed, provided the specific issue under revision was not part of the appeal proceedings.
The balance 50% of additional depreciation, for new machinery or plant put to use for less than 180 days in the year of acquisition, is allowable in the immediately succeeding assessment year. The second proviso to Section 32(1)(iia) restricts only the allowance for the first year, not the total benefit.
When the High Court admits a substantial question of law concerning an assessee's claim or alleged default, it indicates the assessee's bona fides, thereby preventing the imposition of penalties under sections 271(1)(c) or 271C. The mere disallowance of a claim or an addition by revenue authorities does not automatically lead to a penalty if the issue is debatable and pending appeal.
The fiction created by Section 50(1) and (2) of the Income Tax Act, 1961, applies only to the computation of capital gains under Sections 48 and 49, and not to other provisions. Section 54E is available for exemption irrespective of whether the asset is depreciable or not.
Capital gains arising on a depreciable asset, which are exempt under Section 50, are to be excluded from the calculation of deemed profits under Section 115JA, as the exemption is preserved by Section 115JA(4).
A commission of 0.50% charged by a parent company for a corporate guarantee is considered to be at Arm's Length Price (ALP). This rate is used for adjustments in transfer pricing.
