Section 115AD of the Income Tax Act
Income-tax Act, 2025: s.210
Section 115AD of the Income-tax Act, 1961 corresponds to section 210 (Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer) of the Income-tax Act, 2025.
Read section 210 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 115AD is CIT v. Atul Kumar Swami (362 ITR 693), cited in 57 of the 52 judgments on BharatTax that turn on this section.
Leading authorities on Section 115AD
Reassessment proceedings initiated under section 147/148 are invalid if based on material already disclosed in the original return or without fresh, tangible material. The Assessing Officer must apply their mind and cannot mechanically reopen an assessment.
The principle of consistency requires that the Assessing Officer or First Appellate Authority must follow decisions made in earlier years, unless there are good and sufficient reasons to deviate. An assessee's status should not be altered arbitrarily without assigning reasons or distinguishing facts.
The Assessing Officer must state in the reasons recorded for reopening an assessment that the appellant failed to disclose all material facts, that the AO had reasons to believe income had escaped assessment, and that there was fresh tangible material justifying the belief.
Each transaction can be considered a separate source of income, allowing taxpayers to choose between the Income-tax Act and a Double Taxation Avoidance Agreement (DTAA) for each transaction. Section 70(2) of the Act does not prescribe an order for setting off specific short-term capital losses against specific short-term capital gains, favouring the taxpayer in interpretation.
Interest paid on debentures until their conversion into shares is considered interest on borrowed money and is subject to TDS provisions. Such interest cannot be treated as dividend.
The decision in CIT v. Jyoti Prakash Dutta stands for the proposition that if sales tax department findings have not been provided to the assessee, and the assessee has not been given an opportunity to cross-examine parties, and the assessee's books have not been rejected with sales and declared profits being reasonable, then no addition to income is liable to be made.
Interest paid on debentures, whether fully, partly, or optionally convertible, is deductible as a business expense, as debentures are considered debt until the date of conversion.
The phrase 'under similar computation' in Section 70(2) refers to the computation of capital gains as per Sections 45-55 of the Income Tax Act, not the tax rate applicable. Therefore, short-term capital losses can be set off against short-term capital gains taxed at different rates.
