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“income from other sources”

Income HeadsSection 56Section 568,248 judgments

The decision most relied on for income from other sources is Jute Corporation of India Ltd. v. CIT (187 ITR 688), cited in 1,372 judgments on BharatTax.

Leading authorities on income from other sources

Jute Corporation of India Ltd. v. CIT
187 ITR 688 · 1991 · Supreme Court
1,372
citing judgments

The Commissioner of Income Tax (Appeals) possesses co-terminus powers with the Assessing Officer and can direct the Assessing Officer to perform actions he failed to do, but cannot introduce a new source of income in the assessment. The appellate assessment must be confined to the items of income that were the subject matter of the original assessment.

Totgars Co-operative Sale Society Ltd. v. ITO
322 ITR 283 · 2010 · Supreme Court
1,283
citing judgments

The interest income earned by a cooperative society from investing its surplus funds in fixed deposits with banks is not "derived from" its eligible business activities and is taxable as "income from other sources" under Section 56, thus not qualifying for deduction under Section 80P.

K.P. Varghese v. ITO
131 ITR 597 · 1981 · Supreme Court
989
citing judgments

An addition to income cannot be made merely on the basis of a difference in valuation of assets or a Valuation Officer's report without establishing actual understatement of consideration or the source of unexplained funds through proper enquiry. The Assessing Officer must conduct proper enquiry and satisfy the conditions for making such additions.

GE India Technology Centre Pvt. Ltd. v. CIT
327 ITR 456 · 2010 · Supreme Court
663
citing judgments

Tax must be deducted at source from payments made to a non-resident under Section 195 only if such payment is chargeable to tax in India. The Assessing Officer bears the onus to establish that the payments made are indeed chargeable to tax under the Income Tax Act.

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.
342 ITR 169 · 2012 · High Court
658
citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT
227 ITR 172 · 1997 · Supreme Court
621
citing judgments

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

Kale Khan Mohammad Hanif v. CIT
50 ITR 1 · 1963 · Supreme Court
581
citing judgments

The assessee bears the onus of proving the source and nature of any sum of money or receipt found to have been received by them. If the assessee fails to satisfactorily explain the receipt, the Income-tax Officer is entitled to treat it as taxable income.

Liberty India v. CIT
317 ITR 218 · 2009 · Supreme Court
571
citing judgments

The Supreme Court clarified that for profits and gains to be eligible for deductions under sections like 10B, 80IA, or 80IB, the income must be "derived from" or have a direct nexus to the eligible business activity. Income from incidental sources like the sale of scrips/licenses or interest on employee loans is generally not considered as derived from the eligible business for such deductions.

Judgments citing income from other sources

Arth Nagari Sahkari Patsanstha Limited Nashik, Nashik vs. The ITO, Ward-1(1), Nashik

In the result, appeal of the assessee is allowed

ITA 2042/PUN/2024[2017-18]Status: DisposedITAT Pune27 Nov 2024AY 2017-18

Bench: Dr.Dipak P. Ripote & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.2042/Pun/2024 िनधा"रण वष" / Assessment Year: 2017-18 Arth Nagari Sahakari V The Income Tax Officer, Patsanstha Limited, S Ward-1(1), Nashik. Gala No.4, Shanti Daya Society, Hirawadi Shakti Nagar, Panchavati, Nashik – 422003. Pan: Aacaa7908C Appellant/ Assessee Respondent / Revenue Assessee By Shri Prashant Shrishrimal – Ar Revenue By Shri Manoj Tripathi – Dr Date Of Hearing 26/11/2024 Date Of Pronouncement 27/11/2024 आदेश/ Order Per Dr. Dipak P. Ripote, Am: This Is An Appeal Filed By The Assessee Against The Order Of Ld.Commissioner Of Income Tax(Appeals)[Nfac] For Assessment Year 2017-18 Dated 01.08.2024 Passed U/Sec.250 Of The Income Tax Act, 1961. The Assessee Has Raised The Following Grounds Of Appeal : “1. On The Facts & In Law The Ld.Cit(A) Has Erred In Holding That Interest From Nationalized Bank Rs.3,13,518/- Is Not Eligible For Deduction U/S 80P(2)(A)(I) & Held It To Be Taxable Income Of The Society. 2. On The Facts & In Law The Ld.Cit(A) Has Erred In Assessing Gross Interest Received From Nationalized Bank As Income Without Allowing Expenditure For Earning The Said Interest Income On Pro-Rata Basis. 3. The Appellant Craves Leave To Add Alter Delete Above Or Any Other Ground/S Of Appeal.” Submission Of Ld.Ar : 2. Ld.Ar For The Assessee Submitted That Assessee Had Earned Interest Income Of Rs.3,13,518/- From Nationalized Bank. The Ao Has Disallowed Assessee’S Claim For Deduction U/Sec.80P(2)(A)(I) Of The Act & Held That Interest Income Shall Be Taxed Under The Head “Income From Other Sources”. Ld.Ar Relied On Following Decisions Of Itat Pune Bench :  Dcit Vs. Shree Parshwanath Nagari Sah. Pat Sanstha Ltd., In Ita No.265/Pun/2019, Dated 27.01.2022.  Baliraja Gramin Bigar Sheti Sahakari Patsanstha Maiyadit V. Ito

Section 250Section 80P(2)(a)

Assessee’s claim for deduction u/sec.80P(2)(a)(i) of the Act and held that interest income shall be taxed under the head “Income from Other Sources”. Ld.AR relied on following decisions of ITAT Pune Bench :  DCIT Vs. Shree Parshwanath Nagari Sah. Pat Sanstha Ltd., in ITA No.265/PUN/2019, dated ... providing credit facilities to its members, deposited surplus funds in fixed deposits and earned interest thereon, said interest would be assessable as 'income from other sources' and, thus, not eligible for deduction under section 80P(2)(a)(i) of the I.T. Act, 1961. Being aggrieved by the said decision