Section 10(23G) of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10(23G) 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(23G) is CIT v. Gold Coin Health Food Pvt. Ltd. (304 ITR 308), cited in 229 of the 72 judgments on BharatTax that turn on this section.
Leading authorities on Section 10(23G)
A clarificatory or declaratory amendment to a statutory provision has retrospective effect from the date the original provision came into force, as its purpose is to clarify existing law rather than introduce new law.
The Bombay High Court holds that for deduction under Section 80IB(10), the minimum plot area of one acre refers to the aggregate area of the land on which housing projects are developed, not necessarily to each individual project if multiple projects are undertaken on a larger single plot. This means the deduction is allowable even if a sub-block within the overall project is less than one acre, provided the total plot size meets the minimum.
This case is authority for the principle that deductions under section 36(1)(viii) of the Income-tax Act may be granted in respect of certain categories of receipts. The court's decision in this case is relied upon when interpreting the scope of business activities for tax purposes.
A transaction involving the sale and lease-back of assets is not considered a colourable device if the assessee derives substantial benefit and manages its tax affairs to attract a lesser tax as permitted by law.
A company is not required to prove that a debt has become bad to claim a deduction; writing off the debt as irrecoverable in the company's accounts is sufficient, especially after the amendment of Section 36(1)(vii) from April 1, 1989.
Interest earned on debentures is considered income in the nature of interest on loans, and its eligibility for deduction under Section 36(1)(viii) depends on whether the loan is for long-term finance of infrastructure development.
State taxes paid overseas cannot be allowed as a deduction in view of Section 40(a)(ii) of the Income Tax Act, 1961. However, subsequent judicial pronouncements may alter this position.
The Supreme Court case CIT v. United Provinces Electric Supply Co. is not applicable when the dispute concerns taxation of income in a subsequent year based on an interpretation of the Electricity Act and Section 41, if the facts are distinguishable.
