“Section 49(3)”
The decision most relied on for Section 49(3) is CIT v. R. Nalini Devi ITTA 232 of 2013 (A. P) (294 ITR 49), cited in 299 judgments on BharatTax.
Leading authorities on Section 49(3)
Additions to income cannot be made solely based on uncorroborated third-party statements, documents, or loose sheets seized during a search, and such evidence requires the assessee to be provided with an opportunity for cross-examination.
Rental income from immovable property owned by an assessee must be assessed under the head 'Income from House Property' (Section 22), even if the assessee is engaged in the business of real estate or property development and leasing. This emphasizes the mandatory classification of income under its specific statutory head.
Export incentives, such as DEPB (Duty Entitlement Pass Book) and advance license benefits, constitute income taxable on an accrual basis under Section 28 of the Income-tax Act. Profit arising on the transfer of DEPB is not eligible for deduction under Section 80HHC.
For capital assets acquired by gift or will, the indexed cost of acquisition under Section 48 is computed with reference to the year the previous owner first held the asset. The period of holding for determining if an asset is long-term also includes the previous owner's holding period, as per Section 2(42A).
The deeming fiction in Section 50, which treats capital gains from depreciable assets as short-term, applies only for the purpose of computing capital gains under that section. For other provisions, such as set-off of losses under Section 74 or deductions under Section 54E/54EC, the asset's original character (long-term or short-term) is to be considered.
The core legal principle established in Sreelekh Banerjee v. CIT (1963) 49 ITR 112 (SC) relates to the burden of proof for explaining cash credits under the Income Tax Act.
Interest from debtors and foreign exchange rate difference arising from exports are includible in the eligible profit for computing deductions under section 80HHC.
Reassessment proceedings under Section 147 cannot be initiated based on a mere change of opinion or reappraisal of existing facts, but require new or fresh tangible material or information indicating escapement of income.
