Section 10(3) of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10(3) 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(3) is East India Housing and Land Development Trust Ltd. v. CIT (42 ITR 49), cited in 147 of the 54 judgments on BharatTax that turn on this section.
Leading authorities on Section 10(3)
Rental income from immovable property owned by an assessee must be assessed under the head 'Income from House Property' (Section 22), even if the assessee is engaged in the business of real estate or property development and leasing. This emphasizes the mandatory classification of income under its specific statutory head.
Surrender of tenancy rights is a transfer of a capital asset, and the consideration received is a capital receipt subject to capital gains tax. If the cost of acquisition cannot be determined, the transfer of such an asset was not taxable under capital gains prior to the amendment of Section 55(2) in 1995.
The heads of income specified in the Income Tax Act are mutually exclusive, requiring any item of income to be charged and computed solely under its specific statutory head, with Section 56 (Income from Other Sources) serving as a residuary provision.
The cost of acquiring leasehold rights can be determined, and the transfer of such rights, including mining leases, constitutes a transfer of a capital asset, making any surplus on such transfer taxable as capital gains.
When a taxpayer's sole source of income is from the letting out of properties, such rental income is to be assessed under the head 'Income from House Property'.
A transaction is not chargeable to capital gains tax if the computation provisions under Section 48 of the Income-tax Act, 1961, cannot be applied to it, meaning it was never intended by Section 45 to be subject to the charge.
If the cost of acquisition for tenancy rights cannot be determined, the consideration received from the surrender of such tenancy rights is not subject to capital gains tax.
An assessment or addition to income cannot be made solely based on a retracted statement, especially when it is not corroborated by seized material or other concrete evidence. The revenue must produce evidence to establish claims like understatement of sale consideration or 'on-money'.
If the cost of acquiring tenancy rights cannot be determined, the consideration received from the surrender of those rights is not subject to capital gains tax.
Consideration received for the surrender of tenancy rights is not subject to capital gains tax if the cost of acquisition of such rights cannot be determined.
