“Section 10(2)”
The decision most relied on for Section 10(2) is CIT v. Reliance Utilities & Power Ltd. (313 ITR 340), cited in 2,118 judgments on BharatTax.
Leading authorities on Section 10(2)
Where an assessee claims that investments were made out of own funds, interest disallowance under Section 14A read with Rule 8D may not apply if the assessee demonstrates the availability of sufficient interest-free funds to cover such investments.
The Commissioner cannot revise an assessment under Section 263 merely because the assessment order does not explicitly reflect an inquiry, or because the Commissioner holds a different opinion. An inquiry, even if considered inadequate, or an assessment based on a plausible view by the Assessing Officer after due examination, does not automatically make the order erroneous or prejudicial to the interests of the revenue.
Employee contributions to provident fund, ESI, and other welfare funds, if deposited by the due date for furnishing the return of income under Section 139(1), are allowable as a deduction and cannot be disallowed under Section 36(1)(va) read with Section 2(24)(x) or Section 43B, even if deposited after the due date prescribed by the respective welfare Acts.
Disallowance under Section 14A, for expenditure incurred in relation to exempt income, is not permissible when the assessee has not earned any exempt income, such as dividend income under Section 10(34), during the year under consideration.
Tax authorities are entitled to examine surrounding circumstances and apply the test of human probabilities to determine the genuineness of long-term capital gains arising from the sale of manipulated penny stock, even if prima facie documents appear to support the transaction.
For exercising revisional jurisdiction under Section 263, the Commissioner must first find that the Assessing Officer's order is erroneous and unsustainable in law, as this is a condition precedent. An order is not erroneous merely because two views are possible, or if the Commissioner disagrees with the Assessing Officer's permissible view, or to simply remit the matter for further enquiries.
Where an assessee has sufficient interest-free funds, investments yielding exempt income are presumed to be made out of such funds, precluding disallowance of related interest expenditure under section 14A.
Interest received under Section 28 of the Land Acquisition Act, 1894, is considered part of the enhanced compensation on compulsory acquisition of land. It is taxable as 'capital gains' and not separately as 'interest income' under the head Income from Other Sources.