“Section 205(2)”
The decision most relied on for Section 205(2) is CIT v. Sophia Finance Ltd. (205 ITR 98), cited in 295 judgments on BharatTax.
Leading authorities on Section 205(2)
To discharge the burden of proof under Section 68 for share capital or share application money, an assessee must establish the identity of the shareholders and the genuineness of the transaction, confirming that the payment was truly made by them.
Payments for strategic counselling and advisory services are not royalty if they do not involve imparting information concerning industrial, commercial, or scientific experience, but rather are for business promotion, marketing, publicity, or financial advisory services.
The Income Tax Appellate Tribunal's primary obligation is to dispose of appeals on their merits, with the power to remand being an exceptional tool that must be used sparingly. Remands are permissible only when absolutely necessary due to a lack of relevant evidence, findings, or investigation, and are prohibited if casual, used as a shortcut, or to grant a litigant a 'second innings'.
The essential condition for carrying on business, trade, or commerce is the making of a profit. Business is defined as repeated activity in the nature of trade, commerce, or service with a profit motive, distinguishing it from liberal arts, professions, or agriculture.
If an assessee provides evidence of the identity, creditworthiness, and genuineness of share applicants, including bank details and IT returns, then additions under Section 68 for cash credits are to be deleted as the initial burden has been discharged.
Explanation 2 to Section 263 of the Income Tax Act does not grant the Commissioner unfettered power to revise every order. It does not override the preconditions stipulated in Section 263(1).
