Section 41 of the Income Tax Act

Section 44BB, which provides for presumptive taxation of profits and gains of business in the case of exploration of mineral oils, does not override the provisions of Sections 5, 9, or 90 of the Income-tax Act, 1961. For business profits to be taxed in India, the existence of a Permanent Establishment (PE) in India must be established by the Revenue.

When assessing expenses under Section 40A(2), tax authorities must consider the entire position judiciously from the viewpoint of a prudent businessman, not arbitrarily or capriciously. The revenue must demonstrate tax evasion and cannot disallow expenses if the recipient is taxed at the same or higher rate.

Banks can claim tax deductions for broken period interest on Held to Maturity (HTM) government securities if classified as stock-in-trade, treating it as revenue expenditure, not capital expenditure.

The ITAT Mumbai in M/S Novozymes South Asia Put Ltd. v. ACIT (2018) has allowed employee stock option plans (ESOPs) as a deduction, recognizing them as an effective tool for employee reward and retention.

For a revision under Section 263 to be valid, the Commissioner must independently apply their mind to the material placed before them and be satisfied that the assessment order was erroneous and prejudicial to the revenue, even if the Assessing Officer brought the material to their notice.

Revision proceedings under section 263 are valid even when the Commissioner acts on records placed before him, rather than calling for them himself.