“Section 2(71)”
The decision most relied on for Section 2(71) is CIT v. Shivakami Co. (P.) Ltd. (159 ITR 71), cited in 133 judgments on BharatTax.
Leading authorities on Section 2(71)
The burden of proving an understatement of consideration or the receipt of 'on-money' lies solely with the Revenue, which must provide cogent evidence of actual receipt of higher consideration, beyond mere estimates or suspicion. Additions cannot be made based on assumptions like differences from circle rates without such evidence.
Investments made by a holding company in its subsidiary can be considered a business activity, allowing related business expenditures to be deducted and not disallowed.
Expenditure incurred towards the purchase of shares is a capital expenditure and therefore, interest expenditure incurred on such purchases is not eligible for deduction under Section 36(1)(iii) of the Income Tax Act.
Expenditure incurred by a holding company for making investments in a subsidiary can be treated as business expenditure and is not disallowable, as such investment activity can itself constitute a business.
An Assessing Officer (AO) is expected to conduct a detailed inquiry during assessment proceedings under Section 143(3) and should not accept the assessee's claims at face value. A failure to investigate glaring issues amounts to a lack of proper inquiry.
The Assessing Officer (AO) has the power to disturb the valuation of shares provided by the assessee's chartered accountant, even if Rule 11UA(2) is followed. If the AO doubts the valuation report, they are not necessarily bound to refer the matter to the Valuation Officer and can adopt a different method to determine the fair market value.
A difference between the registered value of a property and the assessee's declared value, if within a 10% tolerance limit, does not warrant an addition to income. Decisions rely on this case to argue that minor valuation discrepancies should not lead to additions.
Expenditure incurred for the transfer of the use of licenses, without acquiring ownership rights or an enduring benefit, constitutes revenue expenditure. Such payments are allowable as a deduction if they are directly relatable to services in the revenue field.
