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

CIT v. Tata Elxsi Ltd.
349 ITR 98 · 2012 · High Court
818
citing judgments

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.

CIT v. Vinay Cements Ltd.
213 CTR 268 · 2007 · Supreme Court
422
citing judgments

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.

Brooke Bond India Ltd. v. CIT
225 ITR 798 · 1997 · Supreme Court
228
citing judgments

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.

CIT v. Govindbhai Mamaiya
91 Taxmann.com 20 · 2018 · Supreme Court
205
citing judgments

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.

Badridas Daga v. CIT
34 ITR 10 · 1958 · Supreme Court
181
citing judgments

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.

Mahender Pal Narang v. CBDT
161 Taxmann.com 301 · 2024 · High Court
178
citing judgments

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).

Lissie Medical Institutions v. CIT
348 ITR 344 · 2012 · High Court
164
citing judgments

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.

CIT v. Ganpat Ram Bisnoi
296 ITR 292 · 2008 · High Court
145
citing judgments

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.

Movaliya Bhikhubhai Balabhai v. ITO TDS
388 ITR 343 · 2016 · High Court
128
citing judgments

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.

Topman Exports v. CIT
342 ITR 49 · 2012 · Supreme Court
121
citing judgments

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.

Judgments on Section 28

Akhilesh Bansal, Gurgaon vs. ITO, Gurgaon

In the result, the appeal filed by the assessee is allowed

ITA 2394/DEL/2026[2018-19]Status: DisposedITAT Delhi27 Jul 2026AY 2018-19

Bench: Shri S.Rifaur Rahman & Shri Sunil Kumar Singhakhilesh Bansal, Vs. Ito, Ward 1 (1), 47, Raj Niwas, Sector 5, Gurgaon. Gurgaon - 122 001 (Haryana). (Pan : Ahfpb1275J) (Appellant) (Respondent) Assessee By : Shri R.S. Singhvi, Ca Shri Satyajeet Goyal, Ca Revenue By : Shri G.P. Singh, Sr. Dr Date Of Hearing : 01.07.2026 Date Of Pronouncement : 27.07.2026 O R D E R Per S.Rifaur Rahman,Am: 1. This Appeal Is Filed By The Assessee Against The Order Passed By The Ld. Commissioner Of Income-Tax (Appeals)/National Faceless Appeal Centre (Nfac) Dated 02.01.2026 For The Ay 2018-19. 2. Brief Facts Of The Case Are, In The Year Under Consideration, The Assessee Received Enhanced Compensation Amounting To Rs.2,15,77,773/- Together With Interest Of Rs.2,23,78,473/- Consequent To Compulsory Acquisition Of Land Situated In Village Badha, Tehsil Manesar, District Gurugram By 2 Huda. The Land Was Originally Purchased In The Year 2007. The Assessee Claimed The Enhanced Compensation & Damages In The Form Of Interest U/S 28 Of The Land Acquisition Act As Exempt On The Ground That The Land Acquired Was Rural Agricultural Land Situated Beyond The Prescribed Municipal Limits And, Therefore, Did Not Constitute A "Capital Asset" Within The Meaning Of Section 2(14)(Iii) Of The Income-Tax Act, 1961 (For Short ‘The Act’). The Assessing Officer, However, Rejected The Claim & Treated The Enhanced Compensation As Taxable Under Section 45(5) & The Interest As Taxable Under The Head "Income From Other Sources".

For Appellant: Shri R.S. Singhvi, CAFor Respondent: Shri G.P. Singh, Sr. DR
Section 2(14)Section 2(14)(iii)Section 28Section 45(5)

Rajesh Kumar, Gurgoan vs. DCIT, Circle 3(1), Gurgaon

In the result, appeal of the assessee is allowed

ITA 678/DEL/2026[2020-21]Status: DisposedITAT Delhi10 Jul 2026AY 2020-21

Bench: Shri Satbeer Singh Godara & Shri Krinwant Sahayassessment Year: 2020-21 Rajesh Kumar, Vs. Dcit, 4/178, Shivaji Nagar, Circle-3(1), Gurgaon, Haryana Gurgaon Pan: Avepr2117E (Appellant) (Respondent) Assessee By Ms. Airik Singla, Adv. Department By Sh. Sudip Majumdar, Sr. Dr Date Of Hearing 09.07.2026 Date Of Pronouncement 09.07.2026 Order Per Satbeer Singh Godara, Jm This Assessee’S Appeal For Assessment Year 2020-21, Arises Against The Commissioner Of Income Tax (Appeals)/National Faceless Appeal Centre [In Short, The “Cit(A)/Nfac”], Delhi’S Din & Order No. Itba/Nfac/S/250/2025-26/1083175750(1), Dated 01.12.2025 Involving Proceedings Under Section 147 Of The Income- Tax Act, 1961 (Hereinafter Referred To As ‘The Act’). Heard Both The Parties. Case File Perused. 2. It Emerges During The Course Of Hearing That The Sole Substantive Issue Between The Parties Is That Of Correctness Of The Learned Lower Authorities’ Action Assessing The Assessee’S Interest Component Of Land Acquisition Compensation U/S 28 Of The Land Acquisition Act, 1894, While Invoking Section 57(Iv) R.W.S. 56(1)(A) R.W.S. 145A(B) Of The Act. 3. Learned Sr. Dr Representing The Department Vehemently Argued That The Instant Issue Is No More Res Integra In Light Of Mahender Pal Narang Vs. Cbdt (2020) 423 Itr 13 (P&H) As Well As Pcit Vs. Inderjit Singh Sodhi Huf (2024) 161 Taxmann.Com 301 (Del.) Wherein The Department Has Succeeded Before Their Lordships That The Impugned Interest Component Ought To Be Assessed As Income From “Other” Sources Only. 4. We Have Given Our Thoughtful Consideration To The Assessee’S Pleadings & Revenue’S Foregoing Vehement Contention. It Emerges That This Tribunal’S Recent Decision In Pawan Kumar Vs. Pcit (2024) 159 Taxmann.Com 61 (Del.-Trib.) Has Distinguished The Said Case Law As Under:

Section 10(37)Section 142(1)Section 143Section 143(1)(a)Section 143(2)Section 143(3)Section 147Section 263Section 28Section 56(2)(viii)

Marappan Jayalakshmi, Dharmapuri vs. ITO, Ward-1, Dharmapuri

In the result, the ground no

ITA 4031/CHNY/2025[2017-18]Status: DisposedITAT Chennai09 Jul 2026AY 2017-18

Bench: Honourable George George K & Shri Gagan Goyalआयकर अपील सं./Ita No. 4031/Chny/2025 ननिाजरण वर्ज /Assessment Years: 2017-18 Marappan Jayalakshmi V. Income Tax Officer, No.2/7A, Bye Pass Road, Ward-1, Karimangalam (Po & Tk), Dharmapuri. Dharmapuri (Dist.) Tamil Nadu-635 111. [Pan: Alcpj1361Q] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee By : Mr. T.S. Lakshmi Venkataraman, F.C.A (Virtual), Ld. Ar प्रत्यर्थी की ओर से /Revenue By : Mr. Beesam Narasing Rao, Jcit Ld. Dr सुनवाईकीतारीख/Date Of Hearing : 24.06.2026 घोषणाकीतारीख /Date Of Pronouncement : 09.07.2026 आदेश / O R D E R Per Gagan Goyal, Am: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax (A) / Nfac (Hereinafter Referred As The ‘Ld.Cit(A)’), Dated 27.05.2025 For The Assessment Year (Hereinafter Referred As The ‘Ay’) 2017-18. Grounds Of Appeal 1. On The Facts & Circumstances Of The Case The Order Of First Appellate Authority Dated 27.05.2025 In Dismissing The Appeal Of The Appellant Is Bad In Law & Is Not Legally Justified. 2. On The Facts & Circumstances Of The Case, The First Appellate Authority Is Not Justified In Sustaining The Order Of The Ao, Where The Ao Has Made A Legal Error In Issuance Of Notice U/S. 143(2) Of The Act Dated 30.06.2021. The Notice U/S 143(2) Of The Act Has Been Issued In An Invalid Format In Violation To The Cbdt Instruction No. F. No. 225/157/2017/Ita-Ii Dated Marappan Jayalakshmi 23.06.2017 & Accordingly, The Assessment Order Passed Consequently Is Void-Ab-Initio & Bad In Law.

For Appellant: Mr. T.S. Lakshmi VenkataramanFor Respondent: Mr. Beesam Narasing Rao, JCIT
Section 139Section 143(2)Section 194DSection 194HSection 194JSection 250