Section 143(3A) of the Income Tax Act
The decision most relied on for Section 143(3A) is 319 ITR 306 (SC); CIT v. Vinay Cement Ltd. (84 Taxmann.com 185), cited in 300 of the 447 judgments on BharatTax that turn on this section.
Leading authorities on Section 143(3A)
Employee and employer contributions towards Provident Fund (PF) and Employees' State Insurance (ESI) are allowable deductions under sections 36(1)(va) and 43B, respectively, if deposited on or before the due date for filing the return of income under section 139(1), even if paid after the due date prescribed under the respective welfare legislation.
An expense related to a prior year's transaction becomes a deductible liability only when it is determined and crystallised, not merely because the underlying transaction occurred in an earlier year.
A new industrial undertaking is not considered a reconstruction of an existing business for tax deduction purposes if it is a separate, independent production unit manufacturing commercially tangible products that can operate without losing its identity in the old business. The transfer and substantial use of assets and manpower from an old business to a new one may indicate reconstruction.
Incentive provisions in the Income-tax Act, particularly those granting deductions for new industrial undertakings, must be construed liberally to achieve their legislative purpose. This principle guides the interpretation of conditions such as what constitutes a 'new undertaking' versus a 'splitting up or reconstruction' of an existing business for claiming deductions.
The Department cannot take a different view in a subsequent assessment year if the facts and circumstances remain the same and the finding in an earlier year's assessment was not challenged. This establishes the rule of consistency in income tax proceedings.
A right to purchase property under an agreement to sell is a capital asset as defined under Section 2(14) of the Income-tax Act. The relinquishment or extinguishment of such a right constitutes a transfer of a capital asset, the consideration for which is taxable as capital gains.
Expenditure incurred for a purpose prohibited by law or in violation of another statute is not deductible as business expenditure under Section 37(1) as it is against public policy. The Explanation to Section 37 reinforces that such expenditure is deemed not for business.
An assessment order is erroneous and prejudicial to the revenue, justifying revision under Section 263, if the Assessing Officer fails to make necessary inquiries or examine materials provided by the assessee, leading to a routine assessment.
Payment of commission to doctors for referring patients to diagnostic centers or providing gifts, freebies, or hospitality to medical practitioners by pharmaceutical companies is against public policy and cannot be allowed as a business expenditure under Section 37(1). Demanding such benefits is unethical on the part of doctors, and paying them is equally unethical on the part of companies.
Interest paid on borrowed funds is not allowable as a deduction under Section 36(1)(iii) of the Income-tax Act to the extent such funds are diverted to provide interest-free advances for non-business purposes, such as to sister concerns or promoter companies.
Judgments on Section 143(3A)
Showing 1–20 of 447 · Page 1 of 23
