“Section 2(14)(3)”
The decision most relied on for Section 2(14)(3) is CIT v. Siemens Aktiongesellschaft (310 ITR 320), cited in 259 judgments on BharatTax.
Leading authorities on Section 2(14)(3)
Reimbursements of actual expenses without any profit element are not taxable income. Additionally, mere amendments to the Income-tax Act do not override the provisions of Double Taxation Avoidance Agreements (DTAAs).
The determinative test for whether land is agricultural land or a capital asset is its actual user for agricultural purposes, not merely ownership. An explicit intention to stop cultivation or convert the land to non-agricultural use can cause it to lose its agricultural character, making its sale proceeds chargeable to capital gains tax.
The Supreme Court established the foundational test for distinguishing between capital and revenue expenditure, holding that the aim and object of the expenditure and whether it brings into existence an asset or an advantage of an enduring nature determines its character, irrespective of the payment method. An advantage lasting five years or more can be considered enduring.
Surrender of tenancy rights is a transfer of a capital asset, and the consideration received is a capital receipt subject to capital gains tax. If the cost of acquisition cannot be determined, the transfer of such an asset was not taxable under capital gains prior to the amendment of Section 55(2) in 1995.
Income is considered agricultural income, exempt under Section 10(1), only if the land undergoes a measure of cultivation involving basic primary operations prior to germination and subsequent post-germination activities requiring human skill and labour.
Income from sources not falling under any other head of income under Section 14 of the Income Tax Act is taxed under the residuary head 'income from other sources'. If income cannot be taxed under Section 45 (capital gains), it cannot be taxed at all.
The assessee has the burden to prove whether shares are held as investments or as stock-in-trade. This requires the assessee to produce evidence from their records clearly distinguishing between shares held for investment and those held as stock-in-trade.
The character of land as agricultural land or a capital asset is a question of fact determined by the cumulative effect of all circumstances. Classification in revenue records alone is not conclusive evidence of agricultural use; actual agricultural operations must be proven.
