“Section 2(1)(h)”
The decision most relied on for Section 2(1)(h) is Indian Molasses Co. Pvt. Ltd. v. CIT (37 ITR 66), cited in 206 judgments on BharatTax.
Leading authorities on Section 2(1)(h)
Expenditure is defined as money paid out or away, which is gone irretrievably. To be deductible under Section 37(1), expenditure must be wholly and exclusively for business, not capital or personal, and not fall under specific provisions of Sections 30 to 36, often justifiable on grounds of commercial expediency.
A charitable trust can claim exemption for specific income streams under Section 10, such as dividend income under Section 10(34), independently of the provisions of Section 11. Income exempted under Section 10 is not restricted or overridden by Section 11 for trusts.
A loan advanced by a charitable trust to another charitable trust can be treated as an application of income for the purpose of availing exemption under Section 11 of the Income-tax Act.
No interest disallowance can be made if interest-free funds available are sufficient for interest-free loans and advances.
Shares held as corpus by a trust, which were a precondition for notification under Section 10(23C), cannot be deemed to forfeit exemption under Section 13(1)(d) and Section 13(2)(h).
A trust is entitled to the benefit of Section 11(2) of the Act if the notice of accumulation is furnished before the completion of assessment.
For income applied by a donor trust to another charitable organization to be considered application of income by the donor trust, the recipient organization must advance the same cause as the donor trust. This is particularly relevant when there are common trustees.
An assessment order directing the initiation of penalty proceedings under section 271(1)(c) is deemed to constitute the Assessing Officer's satisfaction for initiating penalty proceedings under section 271(1B). This applies even after amendments to the law.
