“Section 63(1)”
The decision most relied on for Section 63(1) is Smt. Sarifabibi Mohmed Ibrahim v. CIT (204 ITR 631), cited in 197 judgments on BharatTax.
Leading authorities on Section 63(1)
The determinative test for whether land is agricultural land or a capital asset is its actual user for agricultural purposes, not merely ownership. An explicit intention to stop cultivation or convert the land to non-agricultural use can cause it to lose its agricultural character, making its sale proceeds chargeable to capital gains tax.
The approval required from a higher authority under section 153D of the Income Tax Act is an administrative act, not a quasi-judicial one. Consequently, an opportunity of hearing is not required to be given to the assessee at the stage of obtaining such approval, provided the approving authority is competent.
The requirement to file an audit report along with the return of income for claiming specified deductions, such as under Section 80J or 80-IA, is directory and not mandatory. Such an audit report can be filed at any time before the assessment is framed or completed under Section 143(1).
The question of whether an amount claimed as an expenditure was laid out wholly and exclusively for business purposes must be decided based on the facts and circumstances of each case. The Income-tax Officer retains the discretion to determine the deductibility of an expense, and the mere existence of an agreement or actual payment does not bind the officer to allow the deduction under Section 37.
The purpose of income tax assessment is to correctly determine the taxable income of the assessee in accordance with the provisions of the Act. An admission made by an assessee, if based on an incorrect or erroneous impression, is relevant but not conclusive and can be clarified or withdrawn later.
The Assessing Officer cannot make a prima facie adjustment to the total income under Section 143(1)(a) if the adjustment involves a debatable issue.
If the issue that led to the reopening of an assessment does not sustain, an addition to income cannot be made on a different issue. This is especially true if an order under section 143(3) has already been passed and the reopening is based on a mere change of opinion.
An assessee cannot be treated as an Association of Persons (AOP) if the beneficiaries have not come together with a common purpose of earning income.
