“Section 86(1)(a)”
The decision most relied on for Section 86(1)(a) is Raymond Ltd. v. Dy. CIT (86 ITD 791), cited in 154 judgments on BharatTax.
Leading authorities on Section 86(1)(a)
For services to qualify as 'Fees for Technical Services' or 'Fees for Included Services' under Double Taxation Avoidance Agreements (DTAAs), they must 'make available' technical knowledge, experience, skill, or processes to the recipient, enabling them to apply such expertise independently.
If a penalty is levied under Section 271A for failure to maintain books of account, then a separate penalty under Section 271B for failure to get accounts audited under Section 44AB cannot also be levied.
Even with an existing agreement, the deductibility of an amount claimed as an expenditure, such as commission, must be decided based on the specific facts and circumstances of each case, to ascertain if it was laid out wholly and exclusively for business purposes.
Disallowance under Section 14A read with Rule 8D(2)(iii) does not apply to long-term investments, including those in subsidiary/group concerns or strategic investments, and such investments should be excluded from the calculation.
Disallowance under Section 14A cannot be made if the assessee has not received any exempt income during the relevant assessment year. The mere possibility of earning exempt income does not trigger disallowance.
Excess stock of regularly traded items or excess cash, when found during a survey and properly explained as arising from business, constitutes business income, thereby avoiding assessment under sections 69, 69A, 69B and the higher tax rate prescribed by section 115BBE.
Penalty proceedings under section 271(1)(c) can only be initiated if the Assessing Officer (AO) is satisfied about the existence of conditions specified in the relevant clauses during the assessment proceedings. This satisfaction must precede the conclusion of assessment proceedings and the issuance of a notice.
Business expenditure is deductible even if the business has not yet commenced, provided it is incurred for the purpose of setting up the business. The commercial expediency of a businessman's decision regarding payment quantum is generally respected.
