“profits and gains of business or profession”

Income HeadsSection 28Section 281,710 judgments

The decision most relied on for profits and gains of business or profession is CIT v. Excel Industries Ltd. (358 ITR 295), cited in 935 judgments on BharatTax.

Leading authorities on profits and gains of business or profession

CIT v. Excel Industries Ltd.

358 ITR 295 · 2013 · Supreme Court

935

citing judgments

When an income or expenditure is revenue neutral across different assessment years, where any benefit derived is offset by a corresponding liability or reversal, no additional tax liability arises, particularly concerning income recognition under the mercantile system of accounting.

Southern Technologies Ltd. v. JCIT

320 ITR 577 · 2010 · Supreme Court

353

citing judgments

The case concerns the allowability of deductions for provisions made under Section 36 of the Income Tax Act, 1961, especially those related to bad and doubtful debts. It distinguishes such deductions from the recognition of interest income on non-performing assets (NPAs).

Attar Singh Gurmukh Singh v. ITO

191 ITR 667 · 1991 · Supreme Court

254

citing judgments

Section 40A(3) is not absolute, and its application considers business expediency, practical difficulties, and other relevant factors, while keeping in mind its objective to curb the practice of ploughing unaccounted money into the system.

Karanpura Development Co. Ltd. v. CIT

44 ITR 362 · 1962 · Supreme Court

157

citing judgments

The income derived from letting out assets, such as coal mining leases, constitutes "profits and gains of business or profession" if the primary object and activity of the assessee company are to acquire, develop, and sub-lease such assets. This classification holds even if the income arises from letting, provided the letting itself constitutes the assessee's business.

(P.) Ltd. v. CIT

56 ITR 52 · 1965 · Supreme Court

146

citing judgments

Expenditure is revenue if incurred for operating a business to earn profit, even if an incidental enduring advantage results; it is capital if it creates an asset or an enduring advantage for the entire business structure.

Anupam Tele Services v. ITO

366 ITR 122 · 2014 · High Court

124

citing judgments

Section 40A(3) disallowances are not absolute; genuine and bonafide cash payments, where the payee's identity is established and business expediency is proven, fall outside its scope, as the section's purpose is to curb unaccounted money, not disallow genuine expenditure.

ACG Associated Capsule Private Limited v. Commissioner of Income Tax, Central IV, Mumbai

3 SCC 321 · 2022 · Reported

citing judgments

Profits of a business are computed under the head 'Profits and Gains of Business or Profession' and then reduced by specific receipts mentioned in Explanation (baa) to Section 80HHC. This means that for the purposes of Section 80HHC, only profits computed under the business head are considered, with subsequent adjustments for specified receipts.

Rayala Corporation Pvt. Ltd. v. ACIT

386 ITR 500 · 2016 · Supreme Court

citing judgments

If an assessee company's main business object is to acquire and rent out properties, the rental income derived is taxable as 'Profits and gains of business or profession', rather than 'Income from house property', as the nature of the activity constitutes a business.

Judgments citing profits and gains of business or profession

Servicos De Petroleo Constellation Sa, Mumbai vs. DCIT (International Taxation), Circle-4(2)(1), Mumbai

In the result, the appeal filed by the assessee is allowed

ITA 4815/MUM/2023[2021-22]Status: DisposedITAT Mumbai09 Sept 2024AY 2021-22

Bench: Ms. Kavitha Rajagopal, Jm & Smt Renu Jauhri, Am Servicos De Petroleo Constellation Sa Dcit(International Taxation), India Project Office: Circle-4(2)(1) Unit No. 1803 To 1808, 18Th Floor, Mumbai B-Wing, Business Park, Vs. Veer Savarkar Road, Part Site, Vikhroli (W), Mumbai-400 079

For Appellant: ShriPrashant ShahFor Respondent: Smt. Shaileja Rai &

Section 143(2)Section 143(3)Section 144C(1)Section 44B

section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession" : 5 Servicos De Petroleo Constellation SA vs. DCIT(IT) Provided that this sub-section shall not apply in a case where the provisions ... said Circulars pertain to resident payees only where the charging section 28 and the computation sections are applicable for determining the profits and gains of business and profession and the same does not apply in case of a non resident tax payers when there is a special provision exclusively

M/S. Bajaj Auto Ltd., Mumbai vs. Addl. CIT. RG. - 3(1), Mumbai

ITA 1496/MUM/2007[2003-2004]Status: DisposedITAT Mumbai09 Sept 2024AY 2003-2004

Section 115JSection 14ASection 250Section 35DSection 40Section 80H

dies and moulds with assessee's business, deduction for depreciation is to be allowed while computing income under the head ’Profits and Gains of Business or Profession'. The CIT(A), following the order for assessment year 2000-01 in assessee's own case, directed the AO to include the income ... from lease rent received under the head 'Profits and Gains of Business or Profession'. No further appeal was filed by the Revenue against the direction of the CIT (A) in AY 2000-01. 78. We have heard the contentions of both parties. The present case is whether lease rent income

Sivakarthikeyan Transports, Karur vs. Income Tax Officer, Ward - 2 Karur, Karur

In the result the appeal of the assessee is allowed

ITA 970/CHNY/2023[2014-15]Status: DisposedITAT Chennai04 Sept 2024AY 2014-15

Bench: Shri Aby T. Varkey & Shri S.R. Raghunathaआयकर अपील सं./Ita No.970/Chny/2023 िनधा"रण वष" /Assessment Year: 2014-15 Sivakarthikeyan Transports, The Income Tax Officer, 23, Pasuapthypuram, Vs. Ward-2, Karur – 639001. Karur. Tamil Nadu. [Pan: Aaias 3396N] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" की ओर से/ Assessee By : Shri S. Sridhar, Advocate ""थ" की ओर से /Revenue By : Shri D. Hema Bhupal, Jcit सुनवाई की तारीख/Date Of Hearing : 19.06.2024 घोषणा की तारीख /Date Of Pronouncement : 04.09.2024 आदेश / O R D E R Per S.R. Raghunatha, A.M : This Appeal By The Assessee Is Arising Out Of The Order Of The Commissioner Of Income Tax (Appeals), [Nfac], Delhi [Hereinafter “Cit(A)] In Din & Order No.Itba/Nfac/S/250/2023- 24/1054458891(1), Dated 19.07.2023. 2. The Grounds Of Appeal Raised By The Assessee Are As Under: (A) The Order Passed By The Learned Cit(A) Is Against The Probabilities & Evidence Of Facts Put Forth Before It & Also Contrary To Settled Principles With Regard To The Law On Taxation. :- 2 -:

For Appellant: Shri S. Sridhar, AdvocateFor Respondent: Shri D. Hema Bhupal, JCIT

Section 40Section 40ASection 40A(3)

Proviso to (3A) reads as follows: Provided that no disallowance shall be made and no payment shall be deemed to be profits and gains of business or profession under sub-section (3) and this sub-section where a payment or aggregate of payments made to a person

Dy. Commissioner of Income Tax, Circle- 1(1), Hyderabad vs. Union Bank of India, Hyderabad

In the result, the appeals filed by the assessee as well as the Revenue are partly allowed for statistical purposes

ITA 1230/HYD/2017[2012-13]Status: DisposedITAT Hyderabad28 Aug 2024AY 2012-13

Bench: Shri Manjunatha, G. & Shri K. Narasimha Charyआ.अपी.सं /Ita No.1018/Hyd/2017 (िनधा"रण वष"/Assessment Year: 2012-13) Andhra Bank Vs. Dy. C. I. T. Hyderabad Circle 1(1) Pan:Aabca7375C Hyderabad (Appellant) (Respondent) आ.अपी.सं /Ita No.1230/Hyd/2017 (िनधा"रण वष"/Assessment Year: 2012-13 ) Dy. C. I. T. Vs. Andhra Bank Circle 1(1) Hyderabad Hyderabad Pan:Aabca7375C (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri Ananthan, Ca राज" व "ारा/Revenue By:: Shri Kumar Pranav, Cit(Dr) सुनवाई की तारीख/Date Of Hearing: 02/07/2024 घोषणा की तारीख/Pronouncement: 28/08/2024 आदेश/Order Per Manjunatha, G. A.M These Cross Appeals Filed By The Assessee, As Well As The Revenue, Are Directed Against The Order Dated 16/02/2016 Of Page 1 Of 59

For Appellant: Shri Ananthan, CAFor Respondent: : Shri Kumar Pranav, CIT(DR)

Section 36(1)(vi)Section 36(1)(vii)Section 36(1)(viia)Section 41(4)

earn profits therefrom. However, we are not concerned with those profits which would naturally be treated as income under the head profits and gain from business and profession. What happens is that in the process when the shares are held as stock-in-trade, certain dividend income is also earned ... business or banking. Therefore, the income arises from such investments is attributable to business of banking falling under the head ‘profits and gains of business and profession’. On that basis, the Circular contains the decision of the Board that no appeal would be filed on this ground by the officers

Union Bank of India, Hyderabad vs. Dy. Commissisoner of Income Tax, Circle-1(1), Hyderabad

In the result, the appeals filed by the assessee as well as the Revenue are partly allowed for statistical purposes

ITA 1018/HYD/2017[2012-13]Status: DisposedITAT Hyderabad28 Aug 2024AY 2012-13

For Appellant: Shri Ananthan, CAFor Respondent: : Shri Kumar Pranav, CIT(DR)

Section 36(1)(vi)Section 36(1)(vii)Section 36(1)(viia)Section 41(4)

DCIT, Circle, Patiala vs. M/S Punjab State Power Corporation Ltd., Patiala

In the result, ground no. 1 & 3 of the Revenue’s appeal is allowed and ground no

ITA 737/CHANDI/2022[2017-18]Status: DisposedITAT Chandigarh27 Aug 2024AY 2017-18

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Rajiv Saldi, CAFor Respondent: Smt. Kusum Bansal, CIT, DR

Section 143(2)

said amount, the same would have been employed in the business of banking resulting into the income classifiable under the head `Profits and gains of business or profession'. He relied on the judgment of the Hon'ble Supreme Court in the case of Donald Miranda ... that the tax demanded when refunded assumed its original character and the interest on such refund was chargeable under the head ` Profits and gains of business or profession'. The learned A.R. also relied on an order passed by the Chandigarh Bench of the Tribunal in Punjab State Co- operative Bank

Ganesh Chhaganlal Jain, Mumbai vs. ADIT CPC Bengaluru, Bengaluru

In the result, appeal of the assessee is allowed

ITA 366/MUM/2024[2020-2021]Status: DisposedITAT Mumbai27 Aug 2024AY 2020-2021

Bench: Shri Amarjit Singh & Shri Rahul Chaudharyassessment Year: 2020-21

For Appellant: Shri Prakash JhunjhunwalaFor Respondent: Shri Preetam Kumar H. Turerao, SR. DR

Section 143(1)Section 207Section 207(2)(a)Section 234CSection 4

spite of the fact that the appellant (Senior Citizen) did not have ‘any income chargeable’ to tax under the head ‘profit or gain from business and profession’ (PGBP). ii. On the facts and in the law, the ld. AO failed to appreciate that the provisions of section 4 ‘Charge ... shall not apply to an individual resident in India who- (a) does not have any income chargeable under the head ‘profits and gains of business or profession and (b) is of the age of sixty years or more at any time during the previous year]” 8. It is undisputed fact

M/S. Bandhan Bank Ltd. (Erstwhile Ghosh Finance Ltd), Kolkata vs. DCIT, Cir-5(1), Kol, Kolkata

In the result, the appeal of the assessee is allowed

ITA 465/KOL/2023[2016-17]Status: DisposedITAT Kolkata26 Aug 2024AY 2016-17

Bench: Shri Sanjay Garg & Shri Rakesh Mishraassessment Year: 2016-17

For Appellant: Shri Biswanath Paul, FCAFor Respondent: Shri Subhro Das, Addl. CIT, Sr. DR

Section 143(3)Section 17(2)(vi)Section 192Section 250Section 37

nature of employee cost and hence is allowable u/s. 37(1) as deduction in computing the income under the head profits and gains of business and profession during the vesting period. The ground raised by the appellant regarding this issue is allowed.” 7.1. Considering the facts on record ... exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head, "Profits and Gains of Business or Profession". 20 M/s Bandhan Bank Limited: AY: 2016-17 7. Thus, from perusal of section 37(1) of the Act, it is evident that

Meena Chetan Vora, Mumbai vs. ACIT-24(2), Mumbai

The appeal is allowed for statistical purposes

ITA 763/MUM/2024[2013-14]Status: DisposedITAT Mumbai23 Aug 2024AY 2013-14

Bench: Shri Amit Shukla (Jm) & Shri Omkareshwar Chidara (Am)

profit as per audited accounts at Rs. 2,00,58,582/-, whereas in the computation of total income under the head “profits and gains of business or profession”, net loss was admitted at Rs. 23,59,215/-. The appellant has mentioned reason 2 Meena Chetan Vora for loss is because

Cma Cgm Agencies India Private Limited, Elphinstone Road-West, Mumbai vs. Deputy Commissioner of Income Tax, Circle 1(1), Pune

In the result, the appeal filed by the assessee stands partly allowed

ITA 1454/PUN/2023[2013-14]Status: DisposedITAT Pune22 Aug 2024AY 2013-14

Bench: Shri G. D. Padmahshali & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.1454/Pun/2023 िनधा"रण वष" / Assessment Year : 2013-14 Cma Cgm Agencies India Vs. Dcit, Circle-1(1), Pune. Private Limited, One International Centre, Tower-3, 8Th Floor, Senapati Bapat Marg, Elphistone Road- West, Mumbai- 400013. Pan : Aadcc3951G Appellant Respondent Assessee By : Mahenov Thakkar Revenue By : Shri Nitin Patil Date Of Hearing : 24.07.2024 Date Of Pronouncement : 22.08.2024 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Dated 03.11.2023 Passed By Ld Cit(A)/Nfac For The Assessment Year 2013-14. 2. The Appellant Raised The Following Grounds Of Appeal :- “Disallowance Under Section 40(A)(Ia) Of The Act Amounting To Rs.4,86,77,518/- 1. Erred In Upholding The Action Of The Learned Assessing Officer (‘Ao’) & Holding That Payment Of It Services To Be In The Nature Of Royalty Under Section 9(1)(Vi) Of The Act/ Fees For Technical Services Under Section 9(1)(Vii) Of The Act;

For Appellant: Mahenov ThakkarFor Respondent: Shri Nitin Patil

Section 143(2)Section 143(3)Section 194JSection 195Section 271(1)(c)Section 40Section 9(1)(vi)Section 9(1)(vii)

contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession” (a) in the case of any assessee- (i) …...... ….. …... (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees

Hyundai Motor India Limited, Kancheepuram vs. DCIT Non Corp Circle 8(1), Chennai

In the result, appeal filed by the assessee is dismissed

ITA 609/CHNY/2024[2016-17]Status: DisposedITAT Chennai21 Aug 2024AY 2016-17

Bench: Shri Aby T Varkey, Hon’Ble & Shri S. R. Raghunatha, Hon’Bleआयकरअपीलसं./Ita No.: 609/Chny/2024 िनधा"रणवष" / Assessment Year: 2016-17 Deputy Commissioner Of Income M/S. Hyundai Motor India V. Tax, Limited, Non Corporate Circle – 8(1), Plot No. H-1, Sipcot Chennai – 600 034. Industrial Park, Irungatukottai, Sriperumbudurtaluk, Kancheepuram District, Tamil Nadu – 602 117. [Pan: Aaach-2364-M] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ"क"ओरसे/Appellant By : Shri. S.P. Chidambaram, Advocate ""यथ"क"ओरसे/Respondent By : Shri. V. Nanda Kumar, Cit सुनवाई क" तार"ख/Date Of Hearing : 06.06.2024 घोषणा क" तार"ख/Date Of Pronouncement : 21.08.2024 आदेश /O R D E R

For Appellant: Shri. S.P. Chidambaram, AdvocateFor Respondent: Shri. V. Nanda Kumar, CIT

Section 115JSection 143(3)Section 14ASection 250Section 43BSection 92

income-tax and computation of total income, be classified in five distinct heads of income i.e., Salaries, Income from House Property, Profits and Gains of business or profession, capital gains or income from other sources. In other words, once an item has been found to be covered within the meaning ... also find that the provisions of Sec.28 specify the income which shall be chargeable to Income Tax under the heads ‘Profits and Gains of business or Profession’. The sub-clause (i) provides that profits and gains of business or profession which was being carried on by the assessee

Chandra Shekhar, Bangalore vs. Deputy Commissioner of Income, Central Circle-1(3), Bangalore

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 863/BANG/2024[2018-19]Status: DisposedITAT Bangalore19 Aug 2024AY 2018-19

Bench: Shri Chandra Poojari (Accountant Member), Shri Soundararajan K. (Judicial Member)

For Appellant: Ms. Pooja Maru, CAFor Respondent: Shri Kiran D., Addl. CIT-DR

Section 132Section 153ASection 68Section 69C

total turnover will be deemed to be the profit and gains of such business chargeable to tax under the head ‘profits and gains of business or profession’. If we consider the above said provision, the estimated profit made by the AO at 37% is very much on a higher side

Shri Rampriya Developers Private Limited, Hyderabad vs. Deputy Commissioner of Incometax, Circle-3(1), Hyderabad

In the result, appeal filed by the assessee is dismissed

ITA 1946/HYD/2017[1999-2000]Status: DisposedITAT Hyderabad14 Aug 2024AY 1999-2000

Bench: Shri Laliet Kumar & Shri Manjunatha, G.आ.अपी.सं /Ita No.1946/Hyd/2017 (िनधा"रण वष"/Assessment Year: 1999-2000) Shri Rampriya Developers Vs. Dy. C. I. T. (P) Ltd Circle 3(1) Hyderabad Hyderabad Pan:Aajcs6629P (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri A.V. Raghuram, Advocate राज" व "ारा/Revenue By:: Shri Shakeer Ahmed, Dr सुनवाई की तारीख/Date Of Hearing: 09/07/2024 घोषणा की तारीख/Pronouncement: 14/08/2024 आदेश/Order

For Appellant: Shri A.V. Raghuram, AdvocateFor Respondent: : Shri Shakeer Ahmed, DR

Section 143(3)Section 14A

exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “profits and gains of business or profession”. Explanation - for the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which

M/S Tcg Lifesciences Pvt. Ltd., Kolkata vs. A.O. Cir. 11(1), Kolkata

In the result, the appeal of the assessee is dismissed

ITA 126/KOL/2024[2019-20]Status: DisposedITAT Kolkata14 Aug 2024AY 2019-20

Bench: Dr. Manish Borad (Accountant Member), Shri Sonjoy Sarma (Judicial Member)

Section 143(1)Section 143(1)(a)Section 145Section 145ASection 250Section 438Section 43B

I.T.A. No. 126/Kol/2024 A Y: 2019-20, TCG Lifesciences P. Ltd. purpose of determining of income chargeable under the head profits and gains or business or profession. For better understanding, we would like to go through the provisions of section 145A of the Act, which reads as under: “145A. Method ... accounting in certain cases.—For the purpose of determining the income chargeable under the head “Profits and gains of business or profession”,–– (i) the valuation of inventory shall be made at lower of actual cost or net realisable value computed in accordance with the income computation and disclosure standards notified

Dy. Commissioner of Income Tax, Chennai vs. Napc Pvt. Ltd., Chennai

ITA 623/CHNY/2024[2018-19]Status: DisposedITAT Chennai14 Aug 2024AY 2018-19

Bench: Shri Manu Kumar Giri, Hon'Ble & Shri S. R. Raghunatha, Hon'Bleआयकरअपीलसं./Ita No.: 623/Chny/2024 निर्धारणवर्ष / Assessment Year: 2018-19 Dy. Commissioner Of Income Tax, Central Circle-2(1) No. 46, M.G. Road, Nungambakkam, Chennai - 600 034. (अपीलार्थी/Appellant) अपीलार्थी की ओर से/Appellant By प्रत्यर्थी की ओर से/Respondent By सुनवाईकीतारीख/Date Of Hearing घोषणाकीतारीख/Date Of Pronouncement : V. : Shri. : Shri. : 01.07.2024 : 14.08.2024 Napc Pvt Ltd., No.3, 6Th Floor, Apex Plaza, Nungambakkam High Road, Nungambakkam – 600 034. [Pan: Aaccn-3625-P] (प्रत्यर्थी/Respondent) V. Nandakumar, Cit T. Banusekar, Advocate & Shri. Suraj Nahar, Ca आदेश /Order Per S. R. Raghunatha: This Appeal By The Revenue Is Filed Against The Order Of The Commissioner Of Income Tax (Appeals), Chennai-19, For The

Section 143(1)Section 143(3)Section 145(3)Section 36(1)(va)Section 41(1)Section 43C

assessee and (c) Added a sum of Rs.23,91,28,611/- as waiver of loan amount as income under the head profits and gains of business or profession and (d) Disallowed a sum of Rs.2,06,27,491/- u/s.2(24)(x) r.w.s.36(1)(va). 5. In the meanwhile, a rectification ... section 3 of Section 145, which are as under: 145. Method of accounting (1) Income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system

Federal Bank Ltd, Kochi vs. ACIT Corp. Circle-1(1 ), Kochi

ITA 399/COCH/2023[2017-18]Status: DisposedITAT Cochin13 Aug 2024AY 2017-18

Bench: Shri Satbeer Singh Godara & Shri Amarjit Singh

For Appellant: Sri.Gopi, CAFor Respondent: Sri.Sanjit Kumar Das, CIT-DR

Section 143(3)Section 144Section 147Section 14ASection 36Section 36(1)(viii)

business or banking. Therefore, the income arises from such investment is attributable to business of banking falling under the head 'profits and gains of business and profession'. On that basis, the Circular contains the decision of the that no appeal would be filed on this ground by the officers ... Limited. be chargeable to income tax under the head 'income from other sources' or it is to fall under the head 'profits and gains of business and profession'. The Board, going by the decision of this Court in Nawanshahar case, clarified that it has to be treated as income falling