Section 29 of the Income Tax Act
Income-tax Act, 2025: s.27
Section 29 of the Income-tax Act, 1961 corresponds to section 27 (Manner of computing profits and gains of business or profession) of the Income-tax Act, 2025.
Read section 27 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 29 is Saharanpur Electric Supply Co. Ltd. v. CIT (194 ITR 294), cited in 35 of the 150 judgments on BharatTax that turn on this section.
Leading authorities on Section 29
If the actual cost of an asset was wrongly assessed in earlier years, it can be recomputed and corrected in subsequent assessment years. Interest incurred before production on borrowed money for plant construction can be capitalized and added to the cost of fixed assets.
The 'written down value' (WDV) under Section 43(6)(b) is determined by depreciation that has been 'actually allowed', meaning it has been taken into account or granted and given effect to by the Income-tax Officer in computing taxable income.
Section 43B of the Income Tax Act, 1961, which requires certain statutory liabilities to be paid by a specific due date for allowability of deduction, does not apply to service tax if the service tax has not become payable due to non-receipt of payments from the service recipient. This is because section 43B refers to a "sum payable by the assessee".
Only the profit embedded in on-money receipts, not the entire receipts, can be brought to tax.
The 'written-down value' of an asset for depreciation purposes is determined by subtracting the depreciation 'actually allowed' in previous years from the actual cost. The word 'actually' signifies a real, not speculative, allowance.
The principles applied in CIT v. Williamson Financial Services [2008] 297 ITR 17 (SC) are not applicable to the present cases as the former dealt with deductions under Section 80HHC, which is part of Chapter VI-A (special deductions), distinct from deductions under Sections 30 to 43D.
A partition of family property does not constitute a transfer, and therefore, no gift tax liability arises from an unequal partition where consideration is given in recognition of pre-existing rights.
A consortium may not be treated as an Association of Persons (AOP) depending on the facts and circumstances of the case, and if the income has been assessed in the hands of the assessee with corresponding TDS credit, the assessee may not have an obligation to deduct tax at source.
The Assessing Officer must conclude that the assessee's books of account are incorrect, incomplete, or unreliable, and formally reject them, before proceeding to make an assessment based on their own estimation.
