Section 2(28A) of the Income Tax Act

The decision most relied on for Section 2(28A) is Merilyn Shipping & Transports v. Addl. CIT (136 ITD 23), cited in 139 of the 128 judgments on BharatTax that turn on this section.

Leading authorities on Section 2(28A)

Merilyn Shipping & Transports v. Addl. CIT
136 ITD 23 · 2012 · ITAT
139
citing judgments

Section 40(a)(ia) disallowance applies only to expenses that remain payable at the end of the financial year, not to expenses that have been actually paid during the previous year without deduction of tax at source.

American Express International Banking Corporation v. CIT
258 ITR 601 · 2002 · High Court
90
citing judgments

Interest paid by banks is allowable as a deduction in computing total income. The decision distinguished the Supreme Court's ruling in Vijaya Bank regarding the deductibility of such interest.

Punjab Stainless Steel Inds v. CIT
324 ITR 396 · 2010 · High Court
66
citing judgments

This case establishes that merely having sufficient interest-free own funds does not automatically prevent interest disallowance on interest-free advances; the assessee must affirmatively prove the business or commercial expediency of such advances.

Karnataka Power Transmission Corporation Ltd. v. DCIT
383 ITR 59 · 2016 · High Court
64
citing judgments

Tax must be deducted at source under Section 194A only on interest that ultimately partakes the character of income for the recipient. If interest does not qualify as income or falls outside the scope of Section 2(28A), there is no obligation to deduct TDS.

India Ltd. v. CIT (Supra). He
303 ITR 411 · 2008 · High Court
51
citing judgments

Interest received by an industrial undertaking for belated receipt of sale consideration for its products constitutes business income directly derived from the business and is not taxable as 'income from other sources'. This characterization makes such income eligible for business-related deductions.

Ltd. v. ACIT
21 Taxmann.com 138 · 2012 · Reported
49
citing judgments

The primary issue concerns the eligibility for deduction under Section 80IA(4) of the Income Tax Act, 1961, particularly concerning whether an assessee is a 'developer' or 'contractor' for infrastructure projects. The case appears to discuss the impact of subsequent amendments, such as the Explanation inserted by the Finance Act, 2007, on the classification of contracts and the availability of such deductions.

American Express International Banking Corpn v. CIT
125 Taxmann 488 · 2002 · High Court
33
citing judgments

Interest paid for the broken period on purchase of dated government securities and interest received for the broken period on sale of such securities, if treated as trading assets, can be claimed as revenue expenditure under section 28. Income falling under section 18 of the Income Tax Act cannot also fall under section 28.

Hyderabad Industries Ltd. v. ITO & Anr.
188 ITR 749 · 1991 · High Court
32
citing judgments

Amounts exempt under Section 10A of the Income-tax Act do not constitute 'income' for the purposes of Section 195, meaning no tax is deductible at source on such amounts.

ITO v. Dr. Willmar Schwabe India (P) Ltd.
95 TTJ 53 · 2005 · ITAT
27
citing judgments

Reimbursement of expenses that do not constitute income chargeable to tax under the Income Tax Act is not subject to withholding tax (TDS). Payments made solely for reimbursement of actual expenses incurred by a third party are not taxable income.

Karnataka Power Transmission Corporation Ltd. v. Dy. CIT
67 Taxmann.com 259 · 2016 · High Court
24
citing judgments

Tax is deductible at source under Section 194A only on interest that has 'partaken the character of income' in the hands of the recipient.

Judgments on Section 2(28A)

Naresh Kumar, Gurgaon, Haryana vs. PCIT, Jaipur

The appeal of the assessee is allowed

ITA 209/JPR/2024[2019-20]Status: DisposedITAT Jaipur28 Sept 2026AY 2019-20

Bench: Smt. Annapurna Gupta & Shri T. R. Senthil Kumarnaresh Kumar, Vs. Pcit Village Sikanderpur Jaipur (Badha), Vpo Sikanderpur, Tehsil Manesar, Gurgaon "थायीलेखासं./जीआइआरसं./Pan/Gir No:Aabtb 7344 K Appellant .. Respondent Appellant By : Sh. Rakesh Kumar (Thru V.C.) Respondent By : Sh. Shravan Kumar Meena, Cit Date Of Hearing 08.07.2026 Date Of Pronouncement 28.09.2026 O R D E R Per Annapurna Gupta, Am:- The Present Appeal Was Originally Heard By The Division Bench Consisting Of Hon’Ble, Sh. Rathod Kamlesh Jayantbhai & Hon’Ble, Sh. Narinder Kumar. On Account Of A Difference Of Opinion Between The Hon’Ble Members On P A G E | 2 Naresh Kumar Certain Issues Arising In The Appeal, The Following Point(S) Of Difference Were Framed & Referred To The Hon’Bleof The Tribunal Under Section 255(4) Of The Income Tax Act, 1961 (Hereinafter Referred To As “The Act”). “Whether Based On The Facts & Circumstances Of The Case When The Ld. Ao Has Verified The Issue Of Chargeability Of Interest In Hands Of The Assessee & Taken A Plausible View. Whether That View Taken By The Ld. Ao Which Is One Of The Plausible View Can Be Subjected To Revision As Per Provision Of Section 263 Of The Act Or Not”

For Appellant: Sh. Rakesh Kumar (thru V.C.)For Respondent: Sh. Shravan Kumar Meena, CIT
Section 143(3)Section 144BSection 145B(1)Section 255(4)Section 263Section 28Section 57