“Section 261(3)”
The decision most relied on for Section 261(3) is Sassoon J. David & Co. Pvt. Ltd. v. CIT (118 ITR 261), cited in 323 judgments on BharatTax.
Leading authorities on Section 261(3)
An expense incurred by an assessee for its own business, such as advertising, marketing, and promotional (AMP) expenses, cannot be disallowed merely because it incidentally or indirectly benefits the assessee's sister concerns or associated enterprises.
If an issue has been decided by a competent court or bench, and that decision remains undisturbed by a higher court, subsequent appeals on the same issue can be dismissed as being covered by the earlier judgment, underscoring judicial discipline.
A liability recognized in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India (ICAI) is an allowable expense for income tax purposes.
Section 41(1) of the Income-tax Act cannot be invoked if the assessee has not been granted a deduction for the relevant liability in earlier years.
An adverse inference cannot be drawn against an assessee solely based on uncorroborated loose papers found during a search or on a statement made during the search that is later retracted, unless the Assessing Officer conducts independent enquiry to establish the facts.
A receipt for loss of capital is a capital receipt, while a receipt as profit from a trading transaction constitutes taxable income. This case provides a foundational test for distinguishing between capital and revenue receipts.
The assessee bears the initial burden to maintain and produce authentic documentation under Section 92D and Rule 10D to justify transactions with related parties, especially concerning the arm's length price for such transactions under Section 40A(2)(b). The discharge of this statutory obligation to maintain accurate data is a mandatory requirement of law.
Capital gains arising from the transfer of equity shares and equity-oriented mutual funds are exempt if the shares are long-term capital assets, transferred on the stock exchange, and the sale transaction is subject to levy. The case also relates to the application of beneficial provisions and the rejection of claims under Double Taxation Avoidance Agreements (DTAA).
