Section 112 of the Income Tax Act
Income-tax Act, 2025: s.197
Section 112 of the Income-tax Act, 1961 corresponds to section 197 (Tax on long-term capital gains) of the Income-tax Act, 2025.
Read section 197 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 112 is CIT v. Ace Builders (P) Ltd. (281 ITR 210), cited in 88 of the 158 judgments on BharatTax that turn on this section.
Leading authorities on Section 112
The deeming fiction in Section 50, which treats capital gains from depreciable assets as short-term, applies only for the purpose of computing capital gains under that section. For other provisions, such as set-off of losses under Section 74 or deductions under Section 54E/54EC, the asset's original character (long-term or short-term) is to be considered.
Guidelines issued by the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act, which relax the rigour of law, are binding on all income tax officers responsible for implementing the Act, who must follow these orders and instructions.
A person entering into a works contract with an enterprise eligible for deduction under Section 80-IA is not entitled to claim the tax benefit under Section 80-IA of the Act.
A statute prescribing a procedure using negative language (e.g., 'in no other manner') imposes absolute requirements, and failure to comply will invalidate the entire proceeding.
Income must be charged only once, preventing double taxation. If income is mistakenly assessed in the hands of individual members instead of the Association of Persons or Hindu Undivided Family, or vice versa, the Income Tax Officer must make appropriate adjustments for the tax already realized.
The eligibility for an assessee to carry forward and set off losses, including capital losses, against future income is determined by the Assessing Officer in the year the set-off is claimed, not in the year the loss was incurred.
A word, clause, or sentence from a court judgment, when taken out of context, does not represent a complete exposition of the law on a question that the judgment did not explicitly address.
The selection of cases for scrutiny must be completed within the time prescribed by CBDT instructions. The department is bound by its own standards and cannot act with discrimination or selectively apply them.
Additions made as undisclosed income following a search and seizure cannot be sustained if there is no incriminating evidence found during the search to establish such undisclosed income. The purpose of section 158BC is to tax income detected as a result of a search.
Capital gains are computed on the full price realized from the sale of an asset, even if certain dues are deducted from that price by a third party before payment to the assessee. Deductions for such dues are not permissible when calculating capital gains.
