Section 43A of the Income Tax Act
The decision most relied on for Section 43A is ONGC v. CIT (376 ITR 306), cited in 241 of the 59 judgments on BharatTax that turn on this section.
Leading authorities on Section 43A
Income derived by a non-resident for services related to mineral oil operations, falling under the presumptive taxation regime of Section 44BB, cannot simultaneously be treated as fees for technical services under Section 9(1)(vii). The specific presumptive provisions override the general FTS definition, particularly when DTAA applies.
When the addition made in the assessment order, on the basis of which a penalty for concealment under section 271(1)(c) is levied, is subsequently deleted, the penalty has no basis and must be cancelled.
Disallowance under Section 14A for expenditure incurred to earn exempt dividend income (under Section 10(34)) is permissible. The assessee bears the burden to show the source of funds for acquiring shares, regardless of whether those shares are old or recently acquired.
The actual cost of an asset is distinct from the cost of borrowing money for its purchase. Foreign exchange fluctuations on loan repayment do not alter the asset's actual cost and are not covered by Section 43A.
The Supreme Court's dismissal of the department's SLP upholds the Delhi High Court's decision that additional depreciation can be claimed on plant and machinery acquired on or after April 1, 2005, provided conditions in Section 32(1)(iia) are met. This decision is relevant for the second and subsequent years of claim.
A difference between a forward contract rate and the exchange rate on the date of entering the contract, when recognized as a deduction, is an ascertained and definite liability eligible for deduction, not a contingent liability.
Expenditures are revenue in nature and deserve to be allowed as deductions if they are for commercial expediency.
Judgments on Section 43A
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