Section 28 of the Income Tax Act
Income-tax Act, 2025: s.26
Section 28 of the Income-tax Act, 1961 corresponds to section 26 (Income under head “Profits and gains of business or profession") of the Income-tax Act, 2025.
Read section 26 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 28 is CIT v. Tata Elxsi Ltd. (349 ITR 98), cited in 818 of the 1,686 judgments on BharatTax that turn on this section.
Leading authorities on Section 28
When computing deduction under Section 10A, if communication or telecommunication expenses are excluded from export turnover, they must also be excluded from total turnover to maintain consistency and apply the ordinary meaning of 'turnover' in context.
Employees' contributions to provident fund and ESI are allowable as a deduction under Section 36(1)(va) read with Section 2(24)(x) if deposited by the assessee before the due date for filing the income tax return.
Expenditure incurred for increasing a company's share capital or expanding its capital base, such as expenses related to the issue of shares, constitutes capital expenditure. Such expenses are not deductible as revenue expenditure under Section 37(1) of the Income-tax Act, 1961, even if they incidentally benefit the business.
Interest on enhanced compensation received under Section 28 of the Land Acquisition Act, 1894, is considered part of the compensation, not merely interest income, and is exigible to tax on a receipt basis.
A loss incurred by a businessman, such as money lost or advances written off, if it arises in the ordinary course of business, is a deductible trading loss. Such a loss is allowable as it is inherent or incidental to the business operations.
Interest received as enhanced compensation under Section 28 of the Land Acquisition Act, 1894, for compulsory acquisition of land is taxable as "income from other sources" under Sections 56(2)(viii) and 57(iv) of the Income-tax Act, 1961, and is not exempt under Section 10(37).
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.
An assessment order cannot be revised under Section 263 for being erroneous due to a perceived lack of enquiry if the Assessing Officer has already conducted an enquiry, applied their mind, and accepted the assessee's explanation.
Interest paid on compensation or enhanced compensation for compulsory acquisition of land forms part of the compensation itself and is not taxable as interest income under section 56(2)(viii) or section 145A.
Export incentives, such as DEPB (Duty Entitlement Pass Book) and advance license benefits, constitute income taxable on an accrual basis under Section 28 of the Income-tax Act. Profit arising on the transfer of DEPB is not eligible for deduction under Section 80HHC.
