“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

Shri Sachin Kapur, Jalandhar vs. Income Tax Officer Ward 3 (2), Jalandhar

In the result, ITA No. 261/Asr/2022 is dismissed and ITA No

ITA 261/ASR/2022[2018-19]Status: DisposedITAT Amritsar10 Apr 2023AY 2018-19

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 139(1)Section 143Section 143(1)Section 154Section 250oSection 36Section 36(1)(va)Section 43B

with a non-obstante clause overriding Sections 30-38), deals with what cannot be deducted in computing income under the head "Profits and Gains of Business and Profession". Likewise, section 40A(2) opens with a non-obstante clause and spells out what expenses and payments are not deductible in certain ... employee in the relevant fund by the due date. Where such income is not chargeable to tax under the head "profits and gains of business or profession" it will be assessed under the head "income from other sources." 36. Significantly, the same Finance Act, 1987 also introduced provisos to section

M/S. Ramco Engg Works, Jalandhar vs. Income Tax Officer Ward- 1 (1), Jalandhar

In the result, ITA No. 261/Asr/2022 is dismissed and ITA No

ITA 253/ASR/2022[2019-20]Status: DisposedITAT Amritsar10 Apr 2023AY 2019-20

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 139(1)Section 143Section 143(1)Section 154Section 250oSection 36Section 36(1)(va)Section 43B

Nalini Mahajan, Delhi vs. ACIT, Circle-61(1), New Delhi

In the result, this appeal of the assessee stands allowed

ITA 3130/DEL/2018[2014-15]Status: DisposedITAT Delhi06 Apr 2023AY 2014-15

Bench: Shri Shamim Yahya & Ms. Astha Chandra[Assessment Year: 2014-15]

Section 28Section 28(1)Section 55(2)

because the assessee has transferred her practice and associated goodwill to the company which cannot be taxed as profits and gains of business or profession. However, the AO was not in agreement and he held that the said amount is taxable in the hands of the assessee ... Pulse IVF Clinic Pvt. Ltd. during the relevant assessment year, is added to the total taxable income of the assessee, as profits and gains of business of profession w/s 28(iv) of the IT Act.” 4. Upon assessee’s appeal, the Ld. CIT(A) confirmed the action

Picric Ltd vs. ITO Ward 14 (4)

In the result, the appeal of the assessee is allowed with directions contained in para 22 above

ITA 4115/DEL/2007[2004-2005]Status: DisposedITAT Delhi06 Apr 2023AY 2004-2005

Bench: Shri G.S. Pannu, Hon’Ble & Ms. Astha Chandra

For Appellant: Shri Neeraj Jain,AdvocateFor Respondent: Shri H.K. Chaudhary, CIT(DR)

Section 10BSection 143(1)Section 143(3)Section 80H

Section 28 of the Act introduced vide Taxation Laws (Second Amendment) Act, 2005, includes the following income under the head of ‘profits and gains of business of profession’ chargeable to income-tax: "(iiid) any profit on the transfer of the Duty Entitlement Pass Book Scheme being Duty Remission Scheme, under ... mandate of section 10B(4) is that the profits of the eligible Export Oriented Unit (EOU) as assessed under the head “profits and gains of business or profession” are required to be apportioned in the ratio of export turnover to total turnover of that unit to arrive at the amount

Pacific Crest Pte Ltd, Noida vs. DCIT Circle-2(2)(2) International Taxation, New Delhi

In the result, the appeal is partly allowed

ITA 661/DEL/2021[2012-13]Status: DisposedITAT Delhi31 Mar 2023AY 2012-13

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2012-13

Section 115ASection 144Section 144(1)(b)Section 144CSection 147Section 148Section 195Section 44BSection 44DSection 9(1)(vi)

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": Provided that this sub-section shall not apply in a case where the provisions of secti6h 42 or section 44D or section 115A

Kalubhai Dulabhai Golaviya, Surat vs. The Deputy Commissioner of Income Tax, Circle-2, Surat

In the result, ground raised by the assessee is allowed

ITA 619/SRT/2018[2014-15]Status: DisposedITAT Surat30 Mar 2023AY 2014-15

Bench: Shri Pawan Singh, Jm &Dr. A.L.Saini, Am आयकर अपीलसं./It(Ss)A No.15 & Ita No.619/Srt/2018 (िनधा"रणवष" / Assessment Years: (2011-12 &2014-15) (Virtual Court Hearing) Shri Kalubhai Dulabhai Golaviya Deputy Commissioner Of Income-Tax, B/1-2, Jalaram Society, B/H. Central Circle-2, Aaykar Bhavan, Vs. Gurunagar Society, Varachha Majura Gate, Surat-395001 Road, Surat "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Ablpp 5116 A (अपीलाथ" /Appellant) (""थ" /Respondent)

For Appellant: Shri Ashwin K Parekh, C.AFor Respondent: Shri Ashok B.Koli, CIT-DR &

Section 132Section 143(2)Section 143(3)Section 153ASection 45(3)Section 54F

hearing before us that the Assessee being a firm the income was required to be brought to tax under the head "Profits and gains of business or profession" and not under the head "capital gains". The thrust of the arguments in this respect is that the firm is essentially constituted ... head capital gain and where the transfer is of a trading asset such receipts are to be considered under the head "Profits and gains of business or profession. What is, therefore, required to be determined in the instant case is not as to whether the land in question

Guildart Unit 2, Moradabad vs. ACIT-1, Moradabad

In the result, the appeal filed by the Assessee stands allowed

ITA 1188/DEL/2021[2018-19]Status: DisposedITAT Delhi29 Mar 2023AY 2018-19

Bench: Shri Anil Chaturvedi & Shri N.K. Choudhryassessment Year: 2018-19

For Appellant: Sh. K. Sampath, Ld. Adv. &For Respondent: Sh. Anuj Garg, Ld. Sr. DR

Section 115JSection 250Section 40

rate of twelve per cent simple interest per annum, shall not be deducted in computing the income chargeable under the head profits and gains of business or profession. We have already held that as per clause-8 of the original partnership deed, the interest is allowable

Shri Shri Sushil Kumar Agrawal, Korba, Korba(Cg) vs. The Joint Commissioner of Income Tax, Range Korba, Korba(Cg)

In the result, appeal of the assesee in ITA No

ITA 94/BIL/2017[2011-12]Status: DisposedITAT Raipur27 Mar 2023AY 2011-12

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita Nos. 93 & 94/Rpr/2017 "नधा"रण वष" / Assessment Years: 2010-11 & 2011-12 Shri Sushil Kumar Agrawal, Prop. Of M/S. Shrikishan & Co., T.P Nagar, Korba (C.G.) Pan : Acgpa4350B .......अपीलाथ"/Appellant बनाम / V/S. The Joint Commissioner Of Income Tax, Korba (C.G.) ……""यथ" / Respondent

For Appellant: Shri Y.K Mishra, AdvocateFor Respondent: Shri Choudhary N.C Roy, Sr. DR

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 234BSection 40Section 68

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- 13 Shri Sushil Kumar Agrawal Vs. Joint Commissioner of Income Tax, Range, Korba ... 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- *** *** *** (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees

Shri Shri Sushil Kumar Agrawal, Korba, Korba(Cg) vs. The Joint Commissioner of Income Tax, Range Korba, Korba(Cg)

In the result, appeal of the assesee in ITA No

ITA 93/BIL/2017[2010-11]Status: DisposedITAT Raipur27 Mar 2023AY 2010-11

For Appellant: Shri Y.K Mishra, AdvocateFor Respondent: Shri Choudhary N.C Roy, Sr. DR

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 234BSection 40Section 68

M/S. P R Jangid Education Society, Jodhpur vs. PCIT/CIT, Jodhpur

In the result, appeal of the assessee is allowed

ITA 67/JODH/2021[2021-22]Status: DisposedITAT Jodhpur22 Mar 2023AY 2021-22

Bench: Shri Kul Bharatshri Manish Boradvs Pcit/Cit, M/S. P R Jangid Education Society, J-16, M/S. Mgb & Co., Llp, Jodhpur Lal Kothi Yojana, Sahakar Marg, Jaipur (Appellant) (Respondent) Pan No. Aabap0800H Assessee By Shri Sandeep Jhanwar, Ca Revenue By Shri O.P.Meena,Cit Dr Date Of Hearing 21/03/2023 Date Of 22/03/2023 Pronouncement

Section 10Section 115TSection 2Section 92F

otherwise does not accrue or arise in India or any income from a securitisation trust which is chargeable under the head "profits and gains of business or profession", to the extent such income accrued or arisen to, or is received, is attributable to units held by non-resident (not being

Shri Shashikant Bhagvanjibhai Rajpara, Rajkot vs. The Pr. CIT-1, Rajkot

In the result, the appeal of the assessee is allowed

ITA 59/RJT/2022[2017-18]Status: DisposedITAT Rajkot22 Mar 2023AY 2017-18

Bench: Smt.Annapurna Gupta & Shri T.R. Senthil Kumarassessment Year :2017-18 Shashikant Bhavajjibhai Rajpara Vs. The Pr.Cit-1 409, Aadarsh Plaza, Rajkot. 150 Ft. Ring Road Rajkot. Pan : Abipr 9935 Q अपीलाथ"/ (Appellant) "" यथ"/(Respondent) Assessee By : Shri D.M. Rindani, Ld.Ar Revenue By : Shri Shramdeep Sinha, Ld.Cit(Dr) सुनवाई क" तार"ख/Date Of Hearing : 13/03/2023 घोषणा क" तार"ख /Date Of Pronouncement: 22/03/2023 आदेश/O R D E R Per Annapurna Guptapresent Appeal Has Been Filed By The Assessee Against Order Passed By The Ld.Pr.Commissioner Of Income Tax-I, Rajkot [Hereinafter Referred To As “Ld.Pr.Cit Under Section 263 Of The Income Tax Act, 1961 ("The Act" For Short) Dated 7.2.2022 Pertaining To The Asst.Year2017-18. 2. The Grounds Raised By The Assessee In Appeal Are As Under: “1. The Learned Principal Commissioner Of Income-Tax - Rajkot -1, Rajkot Erred In Assuming Jurisdiction U/S 263 Of The Act, Particularly In The Light Of Reasons Stated By Him In The Show Cause Notice & In The Order Passed U/S 263 Of The Act & Hence The Impugned Order Is Bad In Law. 2. The Learned Principal Commissioner Of Income-Tax, Rajkot - 1, Rajkot Erred In Setting Aside The Assessment Order Framed U/S 143(3)Of The Act By Holding That The Ao Has Not Properly Examined The Facts Of The Case In 2

For Appellant: Shri D.M. Rindani, ld.ARFor Respondent: Shri Shramdeep Sinha, Ld.CIT(DR)

Section 115BSection 143Section 143(3)Section 263Section 69C

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". 6. The ld.DR however supported the order of the ld.Pr.CIT. 7. We have considered the above contentions made by the ld.counsel

Constructora Sanjose Sa, Haryana vs. DCIT/ACIT-Int-Tax, Haryana

ITA 582/DEL/2022[2018-19]Status: DisposedITAT Delhi21 Mar 2023AY 2018-19

Bench: Shri N. K. Billaiya & Shri Anubhav Sharmaconstructora Sanjose Sa, Vs. Dcit/ Acit-Int-Tax, Unit No. 602, Global Foywer Haryana Building Gold Course Road, Gurgaon -122002 (Appellant) (Respondent) Pan: Aafcc6553Q

For Appellant: Shri Ved Jain, AdvFor Respondent: Shri Sukesh Kumar Jain, CIT-DR

Section 143(3)Section 144C(13)Section 234A

foreign currency (loss)/ gain arising on such reinstatement is claimed/ booked in the profit & loss account while computing income under head Profits and gains of business or profession'. Accordingly, in order to adhere to the provisions of section 145 and AS- 11, the balance outstanding as on 31.03.2018 was reinstated ... same was claimed by the assessee in its P&L A/c while computing income under the head 'Profits and gains of business or profession. 7. It was submitted that during the course of assessment proceedings, the Ld. AO issued notices u/s 142(1) of the Act dated

M/S Beltex Rubber India, Jalandhar vs. Income Tax Officer Ward- 1 (1), Jalandhar

In the result, the appeal of the assessee bearing ITA 192/Asr/2022 is dismissed

ITA 9/ASR/2023[2019-20]Status: DisposedITAT Amritsar17 Mar 2023AY 2019-20

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 143(1)Section 250o

M/S Beltex Rubber India, Jalandhar vs. Income Tax Officer Ward - 1 (1), Jalandhar

In the result, the appeal of the assessee bearing ITA 192/Asr/2022 is dismissed

ITA 8/ASR/2023[2018-19]Status: DisposedITAT Amritsar17 Mar 2023AY 2018-19

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 143(1)Section 250o

Assistant Commissioner of Income-Tax, Central Circle - 1, Visakhapatnam vs. M/S. Nekkanti Sea Foods Ltd., Visakhapatnam

In the result, appeal of the Revenue is dismissed

ITA 158/VIZ/2022[2018-19]Status: DisposedITAT Visakhapatnam17 Mar 2023AY 2018-19

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकरअपीलसं./ I.T.A. No.158/Viz/2022 ("नधा"रणवष"/ Assessment Year: 2018-19) Assistant Commissioner Of Vs. Nekkanti Sea Foods Income Tax, Limited, Central Circle-1, Visakhapatnam. Visakhapatnam. Pan: Aaacn 46664 J (अपीलाथ"/ Appellant) (""यथ"/ Respondent) अपीलाथ"क"ओरसे/ Assessee By : Sri Pawan Chakrapani ""याथ"क"ओरसे/ Revenue By : Sri Mn Murthy Naik, Cit- Dr सुनवाईक"तार"ख/ Date Of Hearing : 08/03/2023 घोषणाक"तार"ख/Date Of : 17/03/2023 Pronouncement O R D E R

For Appellant: Sri Pawan ChakrapaniFor Respondent: Sri MN Murthy Naik, CIT-

Section 127Section 143(1)Section 143(2)Section 143(3)Section 28Section 80I

receivable by any person against exports under any scheme of Government of India shall be treated as income under the head “profits and gains of business or profession” and not under the head “income from other sources”. 7. Since the issue revolves around the provisions of section 80IB ... person against exports under any scheme of the Government of India, will be income chargeable to income tax under the head “profits and gains of business or profession”. If cash assistance received or receivable against exports schemes are included as being income under the head “profits and gains of business

Delhivery Pvt. Ltd., New Delhi vs. Pr, CIT-3, New Delhi

In the result, the appeal of the assessee is allowed

ITA 1036/DEL/2021[2015-16]Status: DisposedITAT Delhi16 Mar 2023AY 2015-16

Bench: Sh. C. N. Prasaddr. B. R. R. Kumarita No. 1036/Del/2021 : Asstt. Year : 2015-16 Delhivery Pvt. Ltd., Vs Pr. Cit-3, Plot No. 5, Sector-44, Central Revenue Building, Gurugram, Haryana-122002 New Delhi (Appellant) (Respondent) Pan No. Aapcs9575E Assessee By : Sh. K. M. Gupta, Adv. & Sh. Shruti Khimta, Ar Revenue By : Sh. M. Baranwal, Cit Dr Date Of Hearing: 05.01.2023 Date Of Pronouncement: 16.03.2023

For Appellant: Sh. K. M. Gupta, Adv. &For Respondent: Sh. M. Baranwal, CIT DR

Section 143(3)Section 14ASection 201Section 263Section 37Section 37(1)

holding that discount on issue of Employee Stock Options is allowable as deduction in computing the income under the head 'Profits and gains of business or profession'.” 6 Delhivery Pvt. Ltd. 9. The decision of the Hon’ble Special Bench has been affirmed by the Hon’ble Karnataka High Court ... facts and circumstances and the position of law, the aforesaid expenses are an allowable deduction under the Act while computing the profit and gains of business and profession & that the AO has correctly appreciated the said position while passing the assessment order. Hence, we hold that the directions given

K M Automobiles, Korba vs. Income Tax Officer -1, Korba

In the result, appeal of the assessee is dismissed in terms of our aforesaid observations

ITA 100/RPR/2021[2015-16]Status: DisposedITAT Raipur06 Mar 2023AY 2015-16

Bench: Shri Ravish Sood & Dr. Dipak P. Ripoteआयकर अपील सं. / Ita No. 100/Rpr/2021 "नधा"रण वष" / Assessment Year : 2015-16 K M Automobiles Plot No.187, Transport Nagar, Korba, Chhatisgarh-495 677 Pan: Aanfk0386L .......अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer-1, Korba (C.G.) ……""यथ" / Respondent

For Appellant: NoneFor Respondent: Shri Piyush Tripathi, Sr. DR

Section 143(3)Section 36(1)(va)

with a non- obstante clause overriding Sections 30-38), deals with what cannot be deducted in computing income under the head “Profits and Gains of Business and Profession”. Likewise, Section 40A(2) opens with a non-obstante clause and spells out what expenses and payments are not deductible in certain ... employee in the relevant fund by the due date. Where such income is not chargeable to tax under the head “profits and gains of business or profession” it will be assessed under the head “income from other sources.” 7 K M Automobiles Vs. ITO-1, Korba 36. Significantly, the same

Merlin Land & Housing Pvt. Ltd., Delhi vs. ITO Ward-16(4), New Delhi

In the result, the appeal of the assessee is allowed for statistical purpose

ITA 8948/DEL/2019[2017-18]Status: DisposedITAT Delhi03 Mar 2023AY 2017-18

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Us

For Appellant: Sh. Anan Choudhary, AdvFor Respondent: Sh. Ajay Kumar, Sr. DR

Section 139Section 14Section 142Section 143(1)(a)Section 71

challenges the not allowing of set-off of current year business loss, of Rs. 89,83,253/- under the head "Profits and gains of business or profession" from income under the head "Income from other sources" in accordance with the provisions of section 71. 4.1.1. I have considered the impugned ... interest expenditure of Rs. 89,84,549/- has not been allowed as a deduction in computing the income under the head "Profits and gains of business or profession". Since the same has not been allowed as deduction, the question of allowing set off as per the provisions of section

M/S. K.K Abraham and Company, Kochi vs. The ITO, Non Corporate Ward 1(3), Kochi

In the result, the appeals filed by the assessee are allowed

ITA 854/COCH/2022[2014-2015]Status: DisposedITAT Cochin03 Mar 2023AY 2014-2015

Bench: Shri George George K. & Ms. Padmavathy S.

For Appellant: Shri Narayanan P. Potty, AdvocateFor Respondent: Smt. J.M. Jamuna Devi, Sr. DR

Section 29Section 30Section 40Section 5

nowhere provides that the net profit as shown in the profit and loss account, not the profit computed under the head 'profits and gains of business or profession'. 5. The Appellant is relied on the decision of the Hon'ble Gujarat High Court in the case of Commissioner of Income

M/S. K.K Abraham and Company, Kochi vs. The ITO, Non Corporate Ward 1(3), Kochi

In the result, the appeals filed by the assessee are allowed

ITA 853/COCH/2022[2013-2014]Status: DisposedITAT Cochin03 Mar 2023AY 2013-2014

Bench: Shri George George K. & Ms. Padmavathy S.

For Appellant: Shri Narayanan P. Potty, AdvocateFor Respondent: Smt. J.M. Jamuna Devi, Sr. DR

Section 29Section 30Section 40Section 5