“Section 10(10)(ii)”
The decision most relied on for Section 10(10)(ii) is CIT v. Yokogawa India Ltd. (341 ITR 385), cited in 270 judgments on BharatTax.
Leading authorities on Section 10(10)(ii)
A provision for doubtful debts cannot be added back while computing book profits under Section 115JB of the Income-tax Act for Minimum Alternate Tax (MAT) purposes.
If an assessee possesses interest-free funds exceeding investments in tax-free securities, it is presumed that investments are made from these own funds, precluding disallowance of interest expenditure under Section 14A read with Rule 8D(2)(ii). Additionally, weighted deduction under Section 35(2AB) is computed on the gross expenditure incurred, not net expenditure after reducing income earned.
If an assessee possesses sufficient interest-free funds, it is presumed that investments yielding exempt income were made from these funds, therefore disallowance of interest expenditure under Section 14A is not justified.
Reopening assessment based on a mere re-look of accounts already furnished and assessed under section 143(3) is not permissible if there was no failure on the part of the assessee to make a true and full disclosure. The assessment cannot be reopened on the ground that income has escaped assessment merely by re-examining previously filed accounts.
The Supreme Court held that discount on the issue of debentures is a deductible expenditure that can be spread proportionately over the period for which the debentures remain outstanding, rather than being claimed entirely in the year of issue. This treatment acknowledges the enduring benefit derived from the funds raised through debentures.
Disallowance under Section 14A of the Income-tax Act, 1961 cannot exceed the actual amount of exempt income earned by the assessee during the relevant previous year. This principle applies to assessment years prior to the amendment by Finance Bill 2022.
The court considers statements made by an assessee regarding unrecorded cash receipts utilized for business expenses as reflecting unexplained or unaccounted work in progress.
A payment of bonus or commission is allowable as a business deduction under Section 36(1)(ii) unless it constitutes a distribution of profits or dividends, thereby distinguishing payments genuinely for services from those merely intended to escape taxation.