Section 3 of the Income Tax Act
The decision most relied on for Section 3 is Dhoomketu Builders & Development (P.) Ltd. v. ACIT (368 ITR 680), cited in 41 of the 288 judgments on BharatTax that turn on this section.
Leading authorities on Section 3
A real estate development business is considered 'set up' when the assessee is in a position to undertake activities for the acquisition, development, and exploitation of real estate. Expenses incurred between the setting up and commencement of such a business are allowable, even if no revenue is generated or land is classified as a non-current investment.
Interest earned on surplus funds deposited in short-term deposits is chargeable under section 56 as income from other sources. This interest cannot be treated as business income unless it is inextricably linked with the business operations.
Reassessment notices issued under section 148 are valid if issued in compliance with the directions of the Supreme Court in Ashish Agarwal, including providing information and granting time for response, even if the original notice was under the old regime.
