“Section 2(31)”
The decision most relied on for Section 2(31) is CIT v. Saravana Spinning Mills Ltd. (293 ITR 201), cited in 109 judgments on BharatTax.
Leading authorities on Section 2(31)
Expenditure for replacement of machinery parts qualifies as 'current repairs' under Section 31(i) of the Income-tax Act if it does not result in a new asset or substantially enhance the existing asset's life. For Section 31(i), the critical factor is whether the expense constitutes current repairs, making the general revenue vs. capital distinction less relevant for that specific section.
The phrase 'prejudicial to the interests of the Revenue' under the Income Tax Act includes instances where there is a loss of tax.
Upon amalgamation, the amalgamating company ceases to exist in the eyes of the law. Therefore, any assessment or proceeding initiated against a non-existent amalgamating company is invalid as it is no longer considered a 'person' under the Income-tax Act.
Interest received as income on delayed payment of compensation under Sections 28 or 31 of the Land Acquisition Act is a taxable revenue receipt, chargeable to income tax under the head 'income from other sources'.
An Association of Persons (AOP) is formed when two or more persons voluntarily join for a common purpose to produce income, profits, or gains, and it is the AOP itself that is taxed.
When an amalgamating company ceases to exist due to a scheme of arrangement or merger, any subsequent assessment or action under the Income-tax Act initiated against that non-existent entity is void ab initio, as it is not a 'person' under Section 2(31).
The Delhi Tribunal, in citing Boston Consulting Group, examines the taxability of fees for services, particularly concerning whether such fees constitute 'fees for technical services' under Indian domestic law or are covered by a tax treaty. The decision likely clarifies the application of treaty provisions over domestic law for certain service fees when determining the taxability of a foreign enterprise in India.
Beneficial provisions in tax law should be interpreted strictly, with the burden of proof on the assessee. Ambiguous beneficial provisions are interpreted in favour of the Revenue.
