Section 28(i) of the Income Tax Act
Income-tax Act, 2025: s.26
Section 28(i) falls under section 28 of the Income-tax Act, 1961, which 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(i) is Radhasoami Satsang v. CIT (244 ITR 734), cited in 168 of the 55 judgments on BharatTax that turn on this section.
Leading authorities on Section 28(i)
The Revenue is bound by the rule of consistency and cannot adopt a divergent position in a subsequent assessment year unless there is a change in facts or law.
Income derived from leasing a business asset is considered business income under Section 28 of the Income-tax Act, 1961.
When computing eligible profits for deduction under section 80-IA, earlier losses that were set off against other income must be notionally considered and set off against the profits of the eligible business.
Debt forgiveness constituting a monetary benefit does not attract Section 28(iv) of the Income Tax Act. Such a benefit is not income arising from business or profession.
A wrong decision, even if followed in earlier years, cannot be perpetuated on the basis of the principle of consistency if it contravenes the correct law and facts.
The setting up of a business and the commencement of a business are distinct events and do not necessarily occur on the same date. Expenses incurred before the commencement of business but after the setting up of business may be considered for determining profits.
Rental income from letting out a commercial complex is assessed as income from house property, not business income, where the assessee is not engaged in any business activity.
Profits of other businesses cannot be notionally brought forward and set off against profits of an eligible business under Section 80-IA(5) as the Income-Tax Act does not provide for such a mandate.
Losses incurred on advances made to a company that subsequently went into liquidation are considered trading losses and are allowable as a deduction when computing the assessee's total income.
