“Section 14(2)”
The decision most relied on for Section 14(2) is Escorts Ltd. v. UOI (199 ITR 43), cited in 267 judgments on BharatTax.
Leading authorities on Section 14(2)
A statute should not be construed to permit double deduction for the same expenditure unless specifically provided by law.
Reimbursements of actual expenses without any profit element are not taxable income. Additionally, mere amendments to the Income-tax Act do not override the provisions of Double Taxation Avoidance Agreements (DTAAs).
The determinative test for whether land is agricultural land or a capital asset is its actual user for agricultural purposes, not merely ownership. An explicit intention to stop cultivation or convert the land to non-agricultural use can cause it to lose its agricultural character, making its sale proceeds chargeable to capital gains tax.
The Supreme Court established the foundational test for distinguishing between capital and revenue expenditure, holding that the aim and object of the expenditure and whether it brings into existence an asset or an advantage of an enduring nature determines its character, irrespective of the payment method. An advantage lasting five years or more can be considered enduring.
Surrender of tenancy rights is a transfer of a capital asset, and the consideration received is a capital receipt subject to capital gains tax. If the cost of acquisition cannot be determined, the transfer of such an asset was not taxable under capital gains prior to the amendment of Section 55(2) in 1995.
Income is considered agricultural income, exempt under Section 10(1), only if the land undergoes a measure of cultivation involving basic primary operations prior to germination and subsequent post-germination activities requiring human skill and labour.
Income from sources not falling under any other head of income under Section 14 of the Income Tax Act is taxed under the residuary head 'income from other sources'. If income cannot be taxed under Section 45 (capital gains), it cannot be taxed at all.
A charitable trust can claim depreciation on assets when computing the income applied for charitable or religious purposes under Section 11 of the Income Tax Act, for assessment years prior to the introduction of Section 11(6). The restriction on claiming depreciation, as introduced by Section 11(6), is prospective from AY 2015-16.
