“Section 172(1)”
The decision most relied on for Section 172(1) is Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT (227 ITR 172), cited in 621 judgments on BharatTax.
Leading authorities on Section 172(1)
Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.
The expression 'income' under Section 69A of the Income-tax Act, 1961, has a wide meaning, encompassing anything that comes in or results in gain. Therefore, an assessee's unexplained investments, such as purchasing articles or depositing cash, can legitimately be inferred and deemed as income under this section.
An expenditure is classified as either capital or revenue; the 'enduring benefit' test is a key criterion for this distinction, and income tax law does not generally recognize deferred revenue expenditure unless specifically provided.
Income received by a trust from sources like extra fees can be taxed at the maximum marginal rate, while other income remains eligible for exemption under Section 11 of the Income Tax Act.
Payments to a non-resident agent for services rendered outside India, where the agent has no permanent establishment (PE) or business connection in India, are not chargeable to tax in India. Consequently, there is no obligation to deduct tax at source under Section 195, and no disallowance under Section 40(a)(i) can be made.
The ITAT Jaipur Bench, in the context of search and seizure action under section 132(1), refers to this case alongside other decisions, indicating its relevance in matters arising from search and seizure.
A litigant should not be made to suffer adverse consequences solely due to the bona fide mistake or negligence of their counsel, and they must be provided a fair and proper opportunity to present their case on its merits.
The interpretation of the term 'royalty' as defined in tax treaties is not influenced by India's subsequent changes in position to the OECD Commentary or by executive actions. A treaty between sovereign states cannot be unilaterally amended by domestic law or executive policy without incorporating such changes into the treaty itself.
