Section 10(20) of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10(20) falls under section 10 of the Income-tax Act, 1961, which corresponds to section 11 (Incomes not included in total income) of the Income-tax Act, 2025.
Read section 11 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 10(20) is Exide Industries Ltd. v. Union of India (292 ITR 470), cited in 320 of the 163 judgments on BharatTax that turn on this section.
Leading authorities on Section 10(20)
The Calcutta High Court held that restricting deduction for leave encashment via Section 43B(f) was arbitrary and contrary to Supreme Court decisions. However, this judgment was later stayed by the Supreme Court.
The provision for leave encashment is allowable as a deduction only on an actual payment basis under Section 43B(f) of the Income Tax Act, 1961. The Supreme Court upheld the constitutional validity of Section 43B(f).
The High Court explains the scope and conditions for exercising revisional power under Section 263, emphasizing that an assessment order can be revised only if it is both erroneous and prejudicial to the interest of the revenue.
The income of a charitable trust, particularly income from property held under trust, for the purpose of claiming exemption under Section 11, must be computed in a normal commercial manner, without strict reference to the computation provisions for different heads of income like Section 14 or Section 24(a). This approach ensures that the income available for application or accumulation is assessed on commercial principles.
The true test to determine the character of a levy is the primary object and essential purpose intended to be achieved by it.
A state road transport corporation, though state-owned, is a separate legal entity from the State. Its income is distinct from the income of the State and is not exempt from income tax under Article 289 of the Constitution of India.
Section 139(4) of the Income-tax Act, which allows for filing a belated return, acts as a proviso to Section 139(1). Consequently, the time limit for depositing amounts or utilizing funds to claim exemptions, such as under Section 54, extends up to the due date for filing a return under Section 139(4).
A return of income filed within the period allowed under Section 139(4) is valid for claiming exemptions and deductions, including those under Sections 54, 54F, and 80AC. However, depositing the unutilized capital gains in the Capital Gains Account Scheme is a statutory and mandatory requirement for claiming exemption under Section 54F.
Penalty under Section 271C for failure to deduct tax at source is not leviable unless contumacious conduct on the part of the assessee is established. Where such conduct is not proven, the High Court upholds the deletion of the penalty.
Penalty under Section 271C for failure to deduct tax is not leviable if the assessee acted under a bona fide belief and without contumacious conduct.
