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“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
89
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
89
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

M/S M/S Goyal Construction Company, Raipur, Raipur (Cg) vs. The Income Tax Officer, 3(1), Raipur, Raipur (Cg)

In the result, appeal of the assessee is partly allowed for statistical purposes in terms of my aforesaid observations

ITA 17/BIL/2017[2012-13]Status: DisposedITAT Raipur24 Jan 2023AY 2012-13

Bench: Shri Ravish Soodआयकर अपील सं./ Ita No. 17/Rpr/2017 "नधा"रण वष" / Assessment Year : 2012-13 M/S. Goyal Construction Company Shop No.213-214, Ii Floor, Crystal Arcade, Lodhipara Chowk, Raipur (C.G.) Pan : Aaffg9964N .......अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer-3(1), Raipur (C.G.). ……""यथ" / Respondent

For Appellant: Shri Sunil Kumar Agrawal &For Respondent: Shri Piyush Tripathi, Sr. DR
Section 143(2)Section 143(3)Section 4Section 80I

assessable by DCIT/ACIT 2(1), Raipur whose total income includes : (a) Salaries and /or (b) Income from house property and/or, (c) profits and gains of business or profession and/or; (d) Capital gain and/or (e) income from other sources; And who fall within the territorial jurisdiction of following Municipal wards ... other than those assessable by 3 DCIT/ACIT-1(1) Raipur] whose total income includes (a) Income from house property and/or, (b) profits and gains of business or profession and/or; (c) Capital gain and/or (d) income from other sources; And who fall within the territorial jurisdiction of the Raipur District beyond

Assistant Commissioner of Income Tax, Circle, Korba vs. M/S. Dee Vee Project Ltd., Korba

In the result, appeal of the revenue is allowed/partly allowed for statistical purposes in terms of our aforesaid observations

ITA 69/RPR/2018[2014-15]Status: DisposedITAT Raipur23 Jan 2023AY 2014-15

Bench: Shri Ravish Sood & Shri G D Padmahshaliआयकर अपील सं. / Ita No.69/Rpr/2018 "नधा"रण वष" / Assessment Year : 2014-15 The Assistant Commissioner Of Income-Tax, Circle, Korba (C.G.) .......अपीलाथ" / Appellant बनाम / V/S. M/S. Dee Vee Project Ltd. First Floor, Vikas Complex, P.H. Road, Korba (C.G.) Pan : Aaecd4619B ……""यथ" / Respondent

For Appellant: Shri Prakash Chand Agrawal, CAFor Respondent: Shri G.N Singh, Sr. DR
Section 143(2)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.” 36. Significantly, the same Finance Act, 1987 also introduced provisos to Section

Retina Forum, Delhi vs. CIT Exemption, Delhi

The appeal of the assessee is partly allowed for statistical purposes

ITA 1050/DEL/2022[-]Status: DisposedITAT Delhi20 Jan 2023

Bench: Shri R.S. Syal & Smt Suchitra Kamble

Section 142(1)Section 143(2)Section 68

wholly and exclusively for the purposes of business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”. Here, the words “not being expenditure of the assessee nature described in Sections 30 to 36 are important. The claim

Retina Forum, Delhi vs. CIT Exemption, Delhi

The appeal of the assessee is partly allowed for statistical purposes

ITA 1049/DEL/2022[-]Status: DisposedITAT Delhi20 Jan 2023

Bench: Shri R.S. Syal & Smt Suchitra Kamble

Section 142(1)Section 143(2)Section 68

wholly and exclusively for the purposes of business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”. Here, the words “not being expenditure of the assessee nature described in Sections 30 to 36 are important. The claim

Sulphi Sainudeen Sunju, Alappuzha vs. The ITO Ward 1 & Tps, Alappuzha

In the result, the assessee’s appeal is dismissed

ITA 701/COCH/2022[2017-2018]Status: DisposedITAT Cochin20 Jan 2023AY 2017-2018

Bench: Smt. Beena Pillai & Ms. Padmavathy S.Assessment Year : 2017-18

For Appellant: Shri R. Krishna, CAFor Respondent: Shri M. Rajasekhar, CIT(DR)
Section 115BSection 263Section 68

assessee submitted that the AO had treated the credits to the capital account as income under the head 'Profits and Gains of Business or Profession' and hence this income is not liable to be taxed under provisions of Section 115BBE. Further, the additions made by the AO, as stated

Hi-Lite Builders Private Limited, Kozhikode vs. DCIT, Central Circle-1, Kozhikode

In the result, the appeal by the assessee is allowed

ITA 620/COCH/2022[2009-2010]Status: DisposedITAT Cochin20 Jan 2023AY 2009-2010

Bench: Smt. Beena Pillai & Ms. Padmavathy S.Assessment Year : 2009-10

For Appellant: Mr. Shameem Ahamed, AdvocateFor Respondent: Smt. J M Jamuna Devi, Sr. AR
Section 139Section 143(3)Section 263Section 40

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 ... contrary in Sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "profit and gains of business or profession Page 10 of 16 (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable

Taxila Gurukul P.Ltd, New Delhi vs. ACIT, Circle-25(1), New Delhi

The appeal of the assessee is partly allowed

ITA 7707/DEL/2018[2014-15]Status: DisposedITAT Delhi18 Jan 2023AY 2014-15

Bench: Sh. N. K. Billaiya & Sh. Anubhav Sharmaassessment Year: 2014-15

Section 201Section 24Section 40Section 4o

erred on facts and in law in holding that income of the appellant is chargeable under the head “Income from Profits and Gains of Business and Profession” as against the income offered to tax under the heacj “Income from House Property” by the appellant. 3. That ... Supreme court in the case of Chennai Properties & Investments Limited proposed to treat the rental income as profit and gains of business or profession and asked the assessee to show cause why the income should not be taxed under the head profit and gains of business or profession. The assessee

Sana Shah, Panipat vs. ITO, Ward-1, Panipat

Appeal stands dismissed

ITA 1702/DEL/2022[2018=-19]Status: DisposedITAT Delhi17 Jan 2023

Bench: Shri N.K. Billaiya & Shri Anubhav Sharmasana Shah, Vs. Ito, 744-745, Model Town, Ward-1, Panipat, Haryana Panipat (Appellant) (Respondent) Pan: Bopps2855R

For Appellant: Ms. Aditi S. Mann, AdvFor Respondent: Ms. Kajal Singh, Sr. DR
Section 10Section 10(37)Section 143(3)Section 145BSection 28Section 5Section 54(4)Section 56Section 56(2)(viii)

delayed compensation or on enhanced compensation. 46.1 The existing provisions of Income-tax Act provide that income chargeable under the head "Profits and gains of business or profession" or "Income from other sources", shall be computed in accordance with either cash or mercantile system of accounting regularly employed

Raj Abhishek Corporation, Surat vs. Pr. CIT-1, Surat

In the result, appeal filed by the assessee is dismissed

ITA 117/SRT/2022[2017-18]Status: DisposedITAT Surat16 Jan 2023AY 2017-18

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकरअपीलसं./Ita No.117/Srt/2022 ("नधा"रणवष" / Assessment Year: (2017-18) (Physical Court Hearing) Raj Abhishek Corporation Principal Commissioner Of Income 501,Kohinoortextiles Market, Tax, Surat-1, Room No.123, Aaykar Vs. Ring Road, Surat-395002 Bhavan, Majura Gate, Surat—395002 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aajfr 6297 D (Appellant) (Respondent) िनधा"रती की ओर से /Assessee By : Shri Ketan Jagirdar, C.A राज"व क" ओर से /Respondent By : Shri Ashok B. Koli, Cit-D.R

For Appellant: Shri Ketan Jagirdar, C.AFor Respondent: Shri Ashok B. Koli, CIT-D.R
Section 143(3)Section 263Section 80Section 80I

receipts which is not directly related to the export of goods out of India has to be reduced from the „profits and gains of business or profession to arrive at „profit of business for computation of deduction u/s 80HHC. Since sale of quota is only incidental to export and source

DCIT, Central Circle-1, Udipur vs. M/S. Wagad Constrution Company, Udaipur

In the result, appeals of the Revenue are dismissed

ITA 30/JODH/2020[2014-15]Status: DisposedITAT Jodhpur12 Jan 2023AY 2014-15
For Appellant: Shri S.L. Poddar (Advocate)For Respondent: Shri Venkatesh V. (JCIT-Sr.DR)
Section 143(1)

cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to Income-tax as the income of that previous year, whether the business or profession in respect of which ... being in the nature of capital expenditure or personal expenses is allowable in computing the income chargeable under the head "profits and gains" of business or profession. The onus lies on the assessee to substantiate by documentary evidences when called upon to the effect that all expenditures claimed

Shri Dharmendra Hirubhai Patel, Surat vs. Dy. Commissioner of Income Tax, CPC, Bangluru, Surat

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

ITA 139/SRT/2021[2018-19]Status: DisposedITAT Surat10 Jan 2023AY 2018-19

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita No.139/Srt/2021 Assessment Year: (2018-19) (Physical Court Hearing) Dharmendra Hirubhai Patel, Vs. The Dcit, Cpc, Motawada Steet, At & Po. Hazira, Bangluru. Tal: Choryasi, Surat – 394270. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Amhpp6575A (Appellant) (Respondent) Assessee By Shri Deven Kapadia, Ar Respondent By Shri Vinod Kumar, Sr. Dr Date Of Hearing 04/01/2023 10/01/2023 Date Of Pronouncement

Section 143(1)Section 2(24)Section 3Section 36Section 36(1)(va)Section 40Section 40A(2)Section 41Section 43Section 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.” ITA No.139/SRT/2021/AY.2018-19 Dharmendra Hirubhai Patel 36. Significantly, the same Finance

ACIT, Circle-49(1), Delhi vs. Aero Club, Delhi

In the result, all the three captioned appeals of the

ITA 2293/DEL/2022[2019-20]Status: DisposedITAT Delhi09 Jan 2023AY 2019-20

Bench: Shri N.K. Billaiya & Shri Kul Bharat

For Appellant: Shri Sandeep Jain, CAFor Respondent: Ms. Maninder Kaur, Sr. DR
Section 143Section 143(1)Section 143(1)(a)

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.” XXXXXX 44. There is no doubt that in Alom Extrusions, this court

Krishan Pal, New Delhi vs. ITO, Ward-34(1), Delhi

In the result, all the three captioned appeals of the

ITA 2250/DEL/2022[2017-18]Status: DisposedITAT Delhi09 Jan 2023AY 2017-18

Bench: Shri N.K. Billaiya & Shri Kul Bharat

For Appellant: Shri Sandeep Jain, CAFor Respondent: Ms. Maninder Kaur, Sr. DR
Section 143Section 143(1)Section 143(1)(a)

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.” XXXXXX 44. There is no doubt that in Alom Extrusions, this court

Savleen Kaur, New Delhi vs. ITO, Ward-54 (4), Delhi

In the result, all the three captioned appeals of the

ITA 2249/DEL/2022[2018-19]Status: DisposedITAT Delhi09 Jan 2023AY 2018-19

Bench: Shri N.K. Billaiya & Shri Kul Bharat

For Appellant: Shri Sandeep Jain, CAFor Respondent: Ms. Maninder Kaur, Sr. DR
Section 143Section 143(1)Section 143(1)(a)

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.” XXXXXX 44. There is no doubt that in Alom Extrusions, this court

B4S Solutions P.Ltd, New Delhi vs. ACIT, Circle-4(2), New Delhi

In the result, all the three captioned appeals of the

ITA 2197/DEL/2022[2019-20]Status: DisposedITAT Delhi09 Jan 2023AY 2019-20

Bench: Shri N.K. Billaiya & Shri Kul Bharat

For Appellant: Shri Sandeep Jain, CAFor Respondent: Ms. Maninder Kaur, Sr. DR
Section 143Section 143(1)Section 143(1)(a)

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.” XXXXXX 44. There is no doubt that in Alom Extrusions, this court

A.C.Strips Private Limited, Raipur vs. Assistant Commissioner of Income Tax, Circle-2(1), Raipur

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

ITA 53/RPR/2020[2013-14]Status: DisposedITAT Raipur06 Jan 2023AY 2013-14

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita No. 53/Rpr/2020 "नधा"रण वष" / Assessment Year : 2013-14 A.C Strips Pvt. Ltd. 20, New Cloth Market, Pandri, Raipur (C.G.) Pan : Aacca0568N .......अपीलाथ" / Appellant बनाम / V/S. The Assistant Commissioner Of Income Tax-3(1) Raipur (C.G.) ……""यथ" / Respondent

For Appellant: Shri R.B Doshi, CAFor Respondent: Shri Choudhary N.C. Roy, Sr. DR
Section 143(2)Section 143(3)Section 41(1)

cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which ... cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which

Assam Supari Traders, New Delhi vs. ACIT, Circle-48(1), New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 8717/DEL/2019[2016-17]Status: DisposedITAT Delhi05 Jan 2023AY 2016-17

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Usita No. 8717/Del/2019 : Asstt. Year : 2016-17 Assam Supari Traders, Vs Acit, 611, Surya Kiran Building, 19, Circle-48(1), K.G. Marg, New Delhi-110001 New Delhi (Appellant) (Respondent) Pan No. Aaofa7566M Assessee By : Sh. Anil Jain, Ca Revenue By : Sh. Kanav Bali, Sr. Dr Date Of Hearing: 18.10.2022 Date Of Pronouncement: 05.01.2023

For Appellant: Sh. Anil Jain, CAFor Respondent: Sh. Kanav Bali, Sr. DR
Section 143(3)Section 234BSection 271(1)(c)Section 41(1)

trading liability by way of remission or cessation thereof, the value of benefit accruing to him shall be deemed to be profit and gain of business or profession and accordingly chargeable 5 Assam Supari Traders to income tax as income of that previous year. It was argued that ... cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, 6 Assam Supari Traders whether the business or profession

Universal Energies Ltd., New Delhi vs. DCIT, Circle- 18(1), New Delhi

In the result, the appeal of the assessee stands allowed

ITA 5298/DEL/2018[2014-15]Status: DisposedITAT Delhi05 Jan 2023AY 2014-15

Bench: The Ld. Cit (A).

For Appellant: NoneFor Respondent: Shri Abhishek Kumar, Sr. DR
Section 201Section 30Section 37(1)Section 40

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'. It shows that when an expenditure is laid out wholly and exclusively for the purpose of business it can be deducted in computing

Raju Kashyap, Delhi vs. ACIT Circle-42(1), Delhi

In the result, appeal of the assessee stands allowed

ITA 905/DEL/2022[2016-17]Status: DisposedITAT Delhi02 Jan 2023AY 2016-17

Bench: Shri Kul Bharat

Section 143(3)Section 234BSection 40ASection 40A(3)

prescribed rules for the purpose. “Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under subsection (3) and this sub-section where a payment or aggregate of payments made to a person in a day, otherwise

C.U. Inspections & Certifications India Pvt. Ltd, Mumbai vs. ACIT 15(1) (2), Mumbai

In the result, all the appeals of the assessee are allowed

ITA 1633/MUM/2022[2014-15]Status: DisposedITAT Mumbai29 Dec 2022AY 2014-15

Bench: Shri Aby T. Varkey, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.1633/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2014-15) & आयकर अपील सं/ I.T.A. No.1634/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2015-16) Cu Inspections & बिधम/ Acit-15(1)(2) Certifications India Pvt. Ltd. Room No. 483, Aayakar Vs. 2201, 2205,2206, 22Nd Bhavan, Maharshi Karve Floor, 2301 To 2306 23Rd Road, Mumbai-400020. Floor, B Wing, Arihant Aura, Plot No. 13/1, Ttc, Opp Turbhe Railway Station, Thane Belapur Road, Midc Side, Turbhe Navi Mumbai-400705. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaecc7885N (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri H. N. Motiwala Revenue By: Shri Hiren Bhatt (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 31/10/2022 घोषणा की तारीख /Date Of Pronouncement: 29/12/2022 आदेश / O R D E R Per Aby T. Varkey, Jm: These Are Appeals Preferred By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax (Appeals)/(Nfac), Delhi Dated 18.05.2022 & For Ay. 2014-15 Respectively.

For Appellant: Shri H. N. MotiwalaFor Respondent: Shri Hiren Bhatt (Sr. AR)
Section 143(3)

court inter alia observed - 8. The material provisions in regard to the computation of income of an assessee under the head Profits and gains of business or profession' are to be found in sections 28(i), 29 and 145(1) of the Act but these have to be read subject ... after making allowances and deductions mentioned in those sections Section 145(1) provides that income chargeable under the head Profits and gains of business or profession' shall be computed in accordance with the method of accounting regularly employed by the assessee, provided that, in any case where the accounts