“Section 108(1)”
The decision most relied on for Section 108(1) is CIT v. Gabriel India Ltd. (203 ITR 108), cited in 990 judgments on BharatTax.
Leading authorities on Section 108(1)
The Commissioner cannot revise an assessment order under Section 263 merely because they hold a different opinion or believe a deeper inquiry was warranted if the Assessing Officer has applied their mind and conducted some inquiry. Revision under Section 263 is permissible only in cases of a complete lack of inquiry or non-application of mind by the Assessing Officer, not for merely inadequate inquiry.
When computing disallowance under Section 14A of the Income-tax Act using Rule 8D of the Income-tax Rules, only investments that have actually yielded exempt income during the relevant previous year are to be considered for the calculation.
Taxing statutes must be interpreted strictly, assuming that the law-making authority does not commit a mistake or make an omission. There is no room for purposive interpretation under direct tax laws.
Knowledge Process Outsourcing (KPO) service providers are functionally dissimilar to Business Process Outsourcing (BPO) or Information Technology Enabled Services (ITeS) providers and cannot be compared for transfer pricing purposes, even under the Transactional Net Margin Method (TNMM). Further, companies with significantly different business models, such as those with extensive subcontracting, should be excluded as comparables.
Tax authorities cannot substitute their judgment for that of a businessman regarding business decisions unless the transaction is proven to be a sham or lacks bona fides. The department cannot sit in the armchair of businessmen and decide how they should have entered into a contract.
Disallowance of expenditure under Section 14A for earning income not forming part of total income, such as dividend or interest, requires a clear nexus between the funds utilized and the exempt income.
Where the shares of beneficiaries in a trust are determinate, trustees must be assessed separately for each beneficiary's share, treating each beneficiary as an individual. The income is then taxed at the marginal rate applicable to individuals, not at the maximum rate for an association of persons.
The Assessing Officer cannot use the same books of accounts that were rejected for the purpose of making other additions. This principle is established through multiple High Court decisions.
