Section 10 of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10 of the Income-tax Act, 1961 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 is CIT v. Society of the Sisters of St. Anne (146 ITR 28), cited in 195 of the 591 judgments on BharatTax that turn on this section.
Leading authorities on Section 10
Depreciation claimed by a charitable trust on its assets is an allowable application of income for computing exemption under Section 11, and this does not constitute a double deduction.
A charitable trust is allowed to claim depreciation on its assets for computing its income, even if the capital expenditure incurred on acquiring those assets was treated as an application of income in the year of acquisition.
The Supreme Court affirmed that lower authorities are bound by decisions of higher authorities due to judicial discipline. It also clarified that the Commissioner, in exercising revisional power under Section 263, can conduct necessary inquiries to determine if an assessment is prejudicial to the Revenue.
Section 2(22)(e) of the Income Tax Act, which addresses deemed dividends, does not apply to loans or advances provided by a company to its shareholders if these transactions occur in the normal course of business, are driven by business expediency, or are made in consideration of a benefit conferred upon the company by the shareholder. Conversely, gratuitous loans or advances given to shareholders fall within the purview of this section.
Tax laws must be interpreted reasonably and in consonance with justice, even though equitable considerations are generally irrelevant in their interpretation.
No disallowance under Section 14A can be made when no exempt income has been earned by the assessee, and investments made for business purposes in subsidiaries do not warrant disallowance under Section 14A, even if no dividend income is earned.
Where the Assessing Officer performs an elaborate analysis to determine disallowance under Section 14A, the mere absence of a specific record of dissatisfaction with the assessee's calculation does not nullify the disallowance, provided the statutory steps are followed.
The burden of proving that a particular income is exempt from taxation, or is not taxable, lies on the assessee. To claim an exemption or a deduction, the assessee must provide proper materials to establish eligibility.
The true test to determine the character of a levy is the primary object and essential purpose intended to be achieved by it.
Depreciation is deductible when computing the income of a charitable trust under Section 11, and treating both depreciation and capital expenditure as an application of income for charitable purposes does not amount to a double deduction.
