“Section 5(1)(2)(b)”
The decision most relied on for Section 5(1)(2)(b) is CIT v. Siemens Aktiongesellschaft (310 ITR 320), cited in 259 judgments on BharatTax.
Leading authorities on Section 5(1)(2)(b)
Reimbursements of actual expenses without any profit element are not taxable income. Additionally, mere amendments to the Income-tax Act do not override the provisions of Double Taxation Avoidance Agreements (DTAAs).
Exemption provisions under Chapter III, such as Section 10B(8), must be interpreted strictly, and any claim for such exemptions must be made in the return of income. The principles governing Chapter III (incomes not forming part of total income) differ from those for Chapter VIA (deductions in computing total income).
A trust's objects, even if based on religious tenets, can qualify as charitable for tax exemptions if its benefits are not exclusively restricted to a particular religious community or caste.
Subscription fees received by a non-resident for information access do not constitute 'royalty' for the use of copyright under the Income-tax Act, 1961. The case also elaborates on the scheme of taxability for non-residents under Section 5(2) of the Act, especially concerning income deemed to accrue or arise in India.
An intention to benefit a section of the public, as distinguished from a special individual, is sufficient for a trust to be considered for charitable registration and exemptions. This applies even if the beneficiaries belong to a specific caste, community, or professional group, allowing the trust to qualify as serving a general public utility under Section 2(15).
Additional amounts, solatium, and interest on excess compensation under the Land Acquisition Act form part of enhanced compensation under section 45(5) and are taxable in the year of receipt. If TDS is deducted, the Assessing Officer must determine the nature of the land acquired and the taxability of the compensation or enhanced compensation.
Expenditure or payments to related persons cannot be disallowed under Section 40A(2)(b) unless the Assessing Officer first establishes that the expenditure is excessive or unreasonable. The onus is on the revenue to prove such unreasonableness.
Once an Assessing Officer forms a reason to believe that income has escaped assessment and issues a notice under section 148, they can assess or reassess income related to other issues not originally included in the reasons recorded.
