Section 10(5) of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10(5) 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(5) is DIT (E) v. Apparel Export Promotion Council (245 ITR 492), cited in 193 of the 285 judgments on BharatTax that turn on this section.
Leading authorities on Section 10(5)
The rule of consistency applies when facts or legal positions remain unchanged in earlier assessment years, preventing the Revenue from adopting a divergent stance in subsequent years without new material. This ensures stability and predictability in tax assessments.
An employer is not in default under section 201 if they have made a bona fide estimate of employee income and deducted tax at source based on that estimate.
An employer making a bona fide estimate of taxable salary income is acting in accordance with established legal precedent.
An employer is not statutorily obligated to collect evidence from employees regarding the actual utilization of amounts paid towards leave travel concession or conveyance allowance, unless specific requirements are mandated by law or a CBDT circular.
An assessee is required to deduct tax at source on reimbursements, even if the assessee acted under a bona fide belief that such reimbursements were exempt.
The Transfer Pricing Officer (TPO) lacks jurisdiction to propose adjustments on transactions with unrelated third parties, as Chapter X provisions apply only to specified domestic transactions.
Payments for sponsorship rights, such as title sponsorship or being an "Official Partner" of an event, are not considered royalty income for the use of trademarks or brand names under Section 9(1)(vi). Consequently, withholding tax obligations under Section 195 may not apply to such payments.
An assessee cannot be held in default for non-deduction of TDS if they held a bona fide belief that tax was not deductible on certain reimbursements, especially when the issue concerns LFC reimbursements to employees.
Orders passed under section 201(1)/201(1A) of the Income-tax Act are only applicable for financial year 2014-15 onwards and not for any prior financial year, as they are time-barred. Consequently, proceedings flowing from invalid orders are annulled.