“Section 127(2)(a)”
The decision most relied on for Section 127(2)(a) is CIT v. Gem Plus Jewellery India Ltd. (330 ITR 175), cited in 207 judgments on BharatTax.
Leading authorities on Section 127(2)(a)
Disallowances made under various sections, such as for PF/ESIC contributions, result in an increase in business profits, and these enhanced profits are eligible for deduction under Sections 10A and 10AA. Similarly, gains from foreign exchange fluctuations directly linked to export sales are also eligible for deduction under Section 10A.
The lack of jurisdiction to initiate reassessment proceedings under Section 147/148 cannot be waived and can be challenged at a later stage, even if not raised initially. An invalid reassessment due to such jurisdictional defects cannot sustain subsequent penalty proceedings.
Income of a charitable trust, other than from a business undertaking covered by Section 11(4), is determined based on its books of account. Payments of income tax and wealth tax by the trust are considered an application of income for charitable purposes under Section 11.
An assessee who participates in assessment proceedings without challenging the Assessing Officer's jurisdiction, particularly concerning a Section 148 notice for reassessment, cannot subsequently dispute that jurisdiction.
Additions to income based solely on a third party's statement are invalid, particularly when the assessee is not given an opportunity to cross-examine that third party.
The Income Tax Department should not expend significant time and energy on tax-neutral issues that do not affect the overall tax collection, particularly when determining the year of taxability of income where tax rates remain constant.
Expenditure incurred for a purpose prohibited by law or in violation of another statute is not deductible as business expenditure under Section 37(1) as it is against public policy. The Explanation to Section 37 reinforces that such expenditure is deemed not for business.
The issuance of a notice under Section 143(2) is mandatory, and its non-service or invalidity is not a curable procedural irregularity, rendering subsequent assessment proceedings void. Objections regarding non-service of notice, being a jurisdictional issue, can be raised for the first time before the Tribunal.
