Section 10(2) of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10(2) 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(2) is Western India Vegetable Products Ltd. v. CIT (26 ITR 151), cited in 108 of the 37 judgments on BharatTax that turn on this section.
Leading authorities on Section 10(2)
Revenue expenditure incurred after a business is set up and ready to commence, but before its actual commencement, is allowable as a deduction even if no income is earned in that period. The previous year for a business begins from the date it is set up.
Income realised in excess of the levy price for sugar is not a trading receipt and therefore not taxable, when the assessee's right to realise such excess price is under dispute.
The provision of section 36(1)(vii) prior to April 1, 1989, and post amendment does not require an assessee to prove that a debt has become irrecoverable; mere write-off in accounts is sufficient.
Expenses incurred prior to business commencement but after business setup are deductible as revenue expenses, as the setting up and commencement dates of a business are not necessarily the same.
The setting up of a business and the commencement of a business are distinct events and do not necessarily occur on the same date. Expenses incurred before the commencement of business but after the setting up of business may be considered for determining profits.
If the Tribunal finds that a transaction is genuine based on the facts, that finding is a finding of fact, and no substantial question of law arises, particularly regarding penalties under Section 271D or 271E.
Advances given to employees that become unrecoverable are treated as a business loss deductible under Section 28 of the Income-tax Act. Ex-gratia payments to staff can also be deductible under Section 37(1).
