Section 139(5) of the Income Tax Act

Income-tax Act, 2025: s.263

Section 139(5) falls under section 139 of the Income-tax Act, 1961, which corresponds to section 263 (Return of income) of the Income-tax Act, 2025.

Read section 263 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 139(5) is CIT v. Yokogawa India Ltd. (391 ITR 274), cited in 290 of the 830 judgments on BharatTax that turn on this section.

Leading authorities on Section 139(5)

CIT v. Yokogawa India Ltd.
391 ITR 274 · 2017 · Supreme Court
290
citing judgments

Deduction under Section 10A or 10AA of the Income-tax Act is computed on the profits of the eligible unit without first setting off losses from other units or non-eligible units. Conversely, losses incurred by an eligible unit are allowed to be set off against the assessee's other taxable business profits.

Shree Balaji Alloys v. CIT
333 ITR 335 · 2011 · Reported
249
citing judgments
PCIT v. Wipro Ltd.
140 Taxmann.com 223 · 2022 · Supreme Court
192
citing judgments

Exemption provisions under Chapter III, such as Section 10B(8), must be interpreted strictly, and any claim for such exemptions must be made in the return of income. The principles governing Chapter III (incomes not forming part of total income) differ from those for Chapter VIA (deductions in computing total income).

DCIT v. Reliance Industries Ltd.
88 ITD 273 · 2004 · ITAT
169
citing judgments

Interest, sales tax, and purchase tax subsidies received by an assessee are generally considered capital receipts, not revenue income, for income tax purposes.

CIT v. Torrent Power Ltd.
354 ITR 630 · 2013 · High Court
166
citing judgments

If an assessee possesses sufficient interest-free own funds to cover investments yielding exempt income, it is presumed that such investments are made from these own funds, precluding any disallowance of interest expenditure under Section 14A, even when borrowed funds are also available.

Lissie Medical Institutions v. CIT
348 ITR 344 · 2012 · High Court
164
citing judgments

The Kerala High Court held that charitable institutions claiming exemption under Section 11 are not entitled to claim depreciation on assets used for charitable purposes, taking a view contrary to most other High Courts.

CIT v. ITI Ltd.
313 ITR 1 · 2009 · Supreme Court
142
citing judgments

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.

CIT v. Chaphalkar Brothers
400 ITR 279 · 2018 · Supreme Court
136
citing judgments

A subsidy is classified as a capital receipt if its object is to enable the assessee to set up or expand a new or existing unit. Conversely, it is a revenue receipt if its purpose is to help the assessee run the business more profitably.

CIT v. Sitex Industries Ltd.
82 Taxmann.com 171 · 2017 · High Court
117
citing judgments

No disallowance for investments made out of surplus funds can be made if tax-free dividends are earned on such investments.

Chicago Pneumatic India Ltd. v. DCIT
15 SOT 252 · 2007 · ITAT
111
citing judgments

The Assessing Officer must grant the correct deduction after due verification of claims made by the assessee, even if not perfectly articulated initially. This principle applies in assessment proceedings, including those involving specific deductions like those for export-oriented units under Section 10B.

Judgments on Section 139(5)

Raheja Sherwood Cooperative Housing Society Ltd, Mumbai vs. ITO Ward 41(4)(3), Mumbai

Appeal is allowed for statistical purposes

ITA 5228/MUM/2025[2020-21]Status: DisposedITAT Mumbai17 Nov 2025AY 2020-21

Bench: Shri Narender Kumar Choudhryassessment Year: 2020-21 M/S. Raheja Sherwood Ito Ward 41 (4) (3), Cooperative Housing Society C41-43, G Block Bkc, Ltd., Gilban Area, Nirlon Compound, Vs. Bandra Kurla Complex, Western Express Highway, Bandra East, Goregaon East, Mumbai - 400051 Mumbai – 400063. Pan: Aabtr1763L (Appellant) (Respondent) Present For: Assessee By : Shri Kinjal Bhuta, Ld. A.R. Revenue By : Shri Praveen K. Srivastav, Ld. Sr. D.R. Date Of Hearing : 17.11.2025 Date Of Pronouncement : 17.11.2025 O R D E R Per : Narender Kumar Choudhry: This Appeal Has Been Preferred By The Assessee Against The Order Dated 27.06.2025, Impugned Herein, Passed By The National Faceless Appeal Center (Nfac)/ Ld. Commissioner Of Income Tax (Appeals) (In Short Ld. Commissioner) U/S 250 Of The Income Tax Act, 1961 (In Short ‘The Act’) For The A.Y. 2020-21. 2. In This Case, The Assessee Had Declared Its Total Income At Rs.38,15,171/- & Claimed The Deduction Of Rs. Rs.35,10,843/- U/S 80P(2)(D) Of The Act, By Filing Its Return Of Income For The A.Y Under Consideration On Dated 09/01/2021, Which Was Subsequently Selected For Complete Scrutiny Under Cass & Resulted Into Assessing The Income Of The Assessee To The Rs.17,16,067/- While Disallowing Of Deduction Claimed U/S 2 M/S. Raheja Sherwood Cooperative Housing Society Ltd.

For Appellant: Shri Kinjal Bhuta, Ld. A.RFor Respondent: Shri Praveen K. Srivastav, Ld. Sr. D.R
Section 139(5)Section 143Section 2Section 250Section 80P(2)(D)