Section 268A of the Income Tax Act
The decision most relied on for Section 268A is Seth R. Dalmia v. CIT (110 ITR 644), cited in 40 of the 56 judgments on BharatTax that turn on this section.
Leading authorities on Section 268A
An indirect connection between expenditure and income can be sufficient to establish the required nexus for deductibility under Section 57(iii). The connection need not be direct.
The burden of proving a transaction to be benami, or that the apparent owner is not the real owner, rests strictly on the party asserting it, requiring definite evidence or circumstances that reasonably infer the fact, not mere suspicion.
The connection between an expenditure and the earning of income need not be direct; an indirect connection can establish the nexus between the expenditure incurred and the income earned for the purpose of Section 57(iii).
Expenditure is deductible under Section 57(iii) if it has a proximate and relevant connection to the earning of income, even if the income arises as a by-product of other activities.
Where no undisclosed income or incriminating material is found during a search, penalty under section 271AAB cannot be imposed. Additions based on alleged receivables from seized papers require direct material to establish undeclared income.
Expenditure is deductible under section 57(iii) of the Income Tax Act only if it is incurred solely for the purpose of making or earning dividend income.
Judgments on Section 268A
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