Section 2(22)(d) of the Income Tax Act
The decision most relied on for Section 2(22)(d) is CIT v. Veekay Lal Investments Co. Pvt. Ltd. (249 ITR 597), cited in 99 of the 30 judgments on BharatTax that turn on this section.
Leading authorities on Section 2(22)(d)
Book profits under Section 115JB must include income by way of capital gains, similar to how total income is calculated under Section 45.
A reserve set apart to meet a known liability is not a reserve for the purposes of accounting, but rather a provision for a liability. This means it cannot be considered a reserve for tax purposes.
Expenditure claimed by an assessee-company is deductible if it is considered in light of commercial expediency, ordinary commercial trading principles, and whether it was part of the profit-making process.
Accumulated profits for the purpose of deemed dividend under section 2(22)(e) are to be computed in accordance with the Income Computation and Disclosure Standards (ICDS) rather than opening balances as per Indian GAAP. This case also touches upon the definition of 'transfer' under section 2(47).
Interest expenses should be allowed as a deduction under the head 'income from other sources' if the corresponding interest income is taxed under the same head. This applies even if the interest income and expenses are already factored into tonnage income calculations.
Section 115JB(1) of the Income Tax Act, read with Explanation 1(i), governs the computation of book profits for Minimum Alternate Tax (MAT) purposes.
