“Section 25(2)”
The decision most relied on for Section 25(2) is Sapthagiri Finance & Investments v. ITO (90 DTR 289), cited in 61 judgments on BharatTax.
Leading authorities on Section 25(2)
When a return is filed or deemed filed in response to a Section 148 reassessment notice, issuing a notice under Section 143(2) is mandatory if the Assessing Officer finds issues needing explanation; failure to do so renders the assessment invalid.
Payment of commission to doctors for referring patients to diagnostic centers or providing gifts, freebies, or hospitality to medical practitioners by pharmaceutical companies is against public policy and cannot be allowed as a business expenditure under Section 37(1). Demanding such benefits is unethical on the part of doctors, and paying them is equally unethical on the part of companies.
The exemption for income accumulated under section 11(1)(a) (presently 15%) is absolute, and section 11(2) does not restrict its operation or require such accumulated income to be invested in specified securities. Investment requirements under section 11(2) apply only to accumulation beyond this absolute exemption limit.
The time limit for completing an assessment or reassessment under Section 34(2) of the Income Tax Act, 1922, is calculated from the date the assessment or reassessment is made, not the date it is served on the assessee.
If an assessee has applied for approval of a fund or exemption within a reasonable time, the exemption should not be denied due to delays in processing by the tax authorities. The taxing authorities erred in holding that gross receipts are taxable without allowing expenditure when exemption is denied.
If the deductee has already paid the tax due, the deductor cannot be deemed to be in default under section 201(1) or liable for interest under section 201(1A). The Revenue must establish that the tax is not recoverable from the deductee before deeming the deductor as an assessee in default.
A charitable or religious trust is entitled to accumulate 25% of its income, with donations received constituting its property for this purpose.
Interest paid by an Indian branch of a bank to its overseas head office is not allowable as a deduction. This is because the payment is not considered chargeable to tax in India, and therefore, Section 195 TDS provisions are not attracted.
