Section 32 of the Income Tax Act

Income-tax Act, 2025: s.33

Section 32 of the Income-tax Act, 1961 corresponds to section 33 (Deduction for depreciation) of the Income-tax Act, 2025.

Read section 33 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 32 is CIT v. Smifs Securities Ltd. (348 ITR 302), cited in 540 of the 2,762 judgments on BharatTax that turn on this section.

Leading authorities on Section 32

CIT v. Smifs Securities Ltd.
348 ITR 302 · 2012 · Supreme Court
540
citing judgments

Goodwill, whether arising from an amalgamation or a slump sale, is an intangible asset eligible for depreciation under Section 32(1) of the Income-tax Act. While the assessee must prove the existence and valuation of such goodwill, it is recognized as a depreciable asset.

Sahney Steel and Press Works Ltd. v. CIT
228 ITR 253 · 1997 · Supreme Court
429
citing judgments

A subsidy is treated as a revenue receipt if the assessee is free to use the money in its business as it likes and is not obligated to spend it for a specific capital purpose, such as acquiring assets or repaying loans.

Sutlej Cotton Mills Ltd. v. CIT
116 ITR 1 · 1979 · Supreme Court
409
citing judgments

A gain arising from the cancellation of a forward exchange contract entered into for the acquisition of a capital asset constitutes a capital receipt. Income-tax liability for such transactions is determined by the specific provisions of the Income Tax Act, independent of the accounting treatment in the books of account.

Chennai Properties & Investments Ltd. v. CIT
373 ITR 673 · 2015 · Supreme Court
381
citing judgments

Income from immovable property, such as unsold flats or shops, held by an assessee as stock-in-trade in their business of acquiring and holding properties is taxable as 'business income' and not 'income from house property'. Consequently, notional annual letting value under Section 23 cannot be attributed to such stock-in-trade.

CIT v. Bokaro Steel Ltd.
236 ITR 315 · 1999 · Supreme Court
370
citing judgments

Interest earned during the pre-commencement period of a project, on advances made to contractors or on unutilized borrowed funds, if inextricably linked to the setting up of the plant, constitutes a capital receipt. Such interest is not taxable as income but can be reduced from the capital work-in-progress.

Alembic Chemical Works Co. Ltd. v. CIT
177 ITR 377 · 1989 · Supreme Court
275
citing judgments

Expenditure that provides a commercial advantage of an enduring nature may still be classified as revenue expenditure if its purpose is to facilitate existing trading operations, improve business efficiency, or upgrade existing products, depending on the specific context and objective.

Mysore Minerals Ltd. v. CIT
239 ITR 775 · 1999 · Supreme Court
215
citing judgments

For income tax purposes, the 'owner' of a property is the person who is entitled to receive income in their own right, bears the risks incidental to ownership, and utilizes the asset, even if the sale deed is not formally registered. This beneficial ownership is sufficient for claiming depreciation or capital gains exemption under relevant sections.

CIT v. Infosys Technologies Ltd.
341 ITR 293 · 2012 · High Court
205
citing judgments

A Commissioner can revise an assessment order under Section 263 if it is erroneous and prejudicial to the interests of the revenue. This includes cases where the Assessing Officer fails to make further inquiries before accepting the assessee's statements in the return.

Assam Bengal Cement Co. Ltd. v. CIT
27 ITR 34 · 1955 · Supreme Court
174
citing judgments

The Supreme Court established the foundational test for distinguishing between capital and revenue expenditure, holding that the aim and object of the expenditure and whether it brings into existence an asset or an advantage of an enduring nature determines its character, irrespective of the payment method. An advantage lasting five years or more can be considered enduring.

CIT v. P.J. Chemicals Ltd.
210 ITR 830 · 1994 · Supreme Court
158
citing judgments

This Supreme Court decision clarifies the conditions under which a capital subsidy received by an assessee should be reduced from the 'actual cost' of an asset for computing depreciation under Section 43(1) of the Income-tax Act, depending on whether the subsidy directly meets the cost of the asset.

Judgments on Section 32

Taxman Publications Pvt Ltd, New Delhi vs. ACIT Circle-25(1), New Delhi

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

ITA 2762/DEL/2019[2015-16]Status: DisposedITAT Delhi08 Jul 2020AY 2015-16

Bench: Ms Sushma Chowla & Sh. Anil Chaturvedi(Through Video Conferencing) Assessment Year: 2015-16 Taxman Publications Pvt. Vs. Acit Ltd., 21/35, New Rohtak Circle- 25 (1) Road, West Punjabi Bagh, New Delhi New Delhi – 110 026 Pan No. Aaact 2774 P (Appellant) (Respondent) Appellant By Shri Gaurav Jain & Ms. Manisha Sharma, Adv. Respondent By Shri Saras Kumar, Sr. D.R. Date Of Hearing: 01/07/2020 Date Of Pronouncement: 08/07/2020 Order Per Anil Chaturvedi, Am: This Appeal Filed By The Assessee Is Directed Against The Order Dated 08.02.2019 Of The Commission Of Income Tax (A)-27, New Delhi Relating To Assessment Year 2015-16. 2. The Relevant Facts As Culled From The Material On Records Are As Under: Taxman Publications Pvt. Ltd. Vs. Acit A.Y. 2015-16 2 3. Assessee Is A Company Which Is Stated To Be Engaged In The Business Of Publication Of Books On Taxation Corporate Laws & Trading In Software. Assessee Electronically Filed Its Return Of Income For A.Y. 2015-16 On 27.11.2015 Declaring Total Income Of Rs.69,03,560/-. The Case Was Selected For Scrutiny & Thereafter Assessment Was Framed U/S 143(3) Of The Income Tax Act, 1961, Vide Order Dated 14.11.2017 & The Total Income Was Determined At Rs.1,14,53,530/-. Aggrieved By The Order Of Ao, Assessee Carried The Matter Before The Cit(A) Who Vide Order Dated 08.02.2019 (In Appeal No.339/18-19) Dismissed The Appeal Of Assessee. Aggrieved By The Order Of Cit(A), Assessee Is Now Before Us & Has Raised The Following Grounds :-

Section 143(3)Section 154Section 32Section 37(1)