“Section 2(47)(vii)”
The decision most relied on for Section 2(47)(vii) is CIT v. Asahi India Safety Glass Ltd. (346 ITR 329), cited in 129 judgments on BharatTax.
Leading authorities on Section 2(47)(vii)
Expenses incurred for software license purchase, development of miscellaneous software, and maintenance of websites are considered revenue in nature. Such expenses are deductible in the year they are incurred.
For a share broker, the unrealised value of shares from clients or other trade balances written off is deductible as a bad debt under section 36(1)(vii) if the corresponding income was previously recognized. This principle applies to bad debts arising from revenue transactions, not capital loans.
Initiation of reassessment proceedings after four years is valid where an assessee, holding shares in an amalgamating company, is allotted shares in the amalgamated company and sells these, disclosing the market price at amalgamation as the cost of acquisition without considering the cost of acquisition in the amalgamating company, contrary to section 49(2) read with section 47(vii).
The principal amount written off is allowable as a deduction under Section 36(1)(vii) read with Section 36(2) of the Income Tax Act, even if the company is not engaged in the money lending business.
An exchange is a mutual transfer of ownership of one thing for the ownership of another. This definition of exchange is consistent with the definition of 'transfer' under Section 2(47) of the Income Tax Act, 1961, which includes exchange or relinquishment of an asset.
The levy of interest under Section 234-A of the Income Tax Act is statutory, mandatory, and automatic, meaning it cannot be a question of law that can be raised in appeal. The High Court's jurisdiction under Section 260A is limited to questions of law, and thus, observations on the levy of interest are generally outside its scope.
Deductions under section 36(1)(vii) read with section 36(2) are allowable even if the company is not in the money lending business, provided the interest income from inter-corporate deposits is assessed as business income.
Amalgamation, involving a compromise or arrangement sanctioned by the court, is a foundational basis for passing an order of amalgamation, and the subsequent acquisition of assets by the other undertaking signifies the loss of identity and ownership of the earlier concern.
