“Section 2(1)(b)(ii)”
The decision most relied on for Section 2(1)(b)(ii) is CIT v. Karnataka Power Corporation (247 ITR 268), cited in 124 judgments on BharatTax.
Leading authorities on Section 2(1)(b)(ii)
Income earned during the project construction stage, which has a direct nexus or is inextricably linked to the project's setting up, constitutes a capital receipt not liable to tax and reduces the project cost.
A payment of bonus or commission is allowable as a business deduction under Section 36(1)(ii) unless it constitutes a distribution of profits or dividends, thereby distinguishing payments genuinely for services from those merely intended to escape taxation.
Once an Assessing Officer forms a reason to believe that income has escaped assessment and issues a notice under section 148, they can assess or reassess income related to other issues not originally included in the reasons recorded.
Disallowance under Section 40A(2)(b) is not maintainable when both the payer and payee are assessed at the maximum marginal rate, as it results in a revenue-neutral situation.
A decision by the Gujarat High Court in CIT v. C-Sam (India) Pvt Ltd. does not support the case of a party relying on it, particularly when other High Courts have made contrary findings.
Interest paid on delayed remittances of service tax is compensatory in nature and not a penalty hit by the Explanation to Section 37(1) of the Income Tax Act, 1961, making it a allowable business expenditure.
Interest chargeable under section 201(1A) of the Income Tax Act is not penal in nature and therefore cannot be waived on the basis of intentional default or other grounds.
A debatable issue cannot be decided under section 143(1)(a) of the Income-tax Act, as its scope is restricted to adjustments for prima facie mistakes and omissions apparent from the record.
