Section 49(1)(iii)(e) of the Income Tax Act
Income-tax Act, 2025: s.73
Section 49(1)(iii)(e) falls under section 49 of the Income-tax Act, 1961, which corresponds to section 73 (Cost with reference to certain modes of acquisition) of the Income-tax Act, 2025.
Read section 73 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 49(1)(iii)(e) is Marketing Pvt. Ltd. v. DCIT (122 Taxmann.com 40), cited in 41 of the 25 judgments on BharatTax that turn on this section.
Leading authorities on Section 49(1)(iii)(e)
Where goodwill is recorded pursuant to a merger based on purchase consideration determined by a valuation report, and no goodwill is transferred from the predecessor's books, the fifth proviso to section 32(1) of the Income-tax Act, 1961, is not applicable, and thus depreciation on such goodwill is not allowable.
The Assessing Officer can apply Rule 8D for disallowance under Section 14A only if they are not satisfied with the correctness of the assessee's claim regarding expenditure in relation to exempt income, after considering the assessee's accounts. Invocation of Rule 8D is not automatic.
An exchange is a mutual transfer of ownership of one thing for the ownership of another. This definition of exchange is consistent with the definition of 'transfer' under Section 2(47) of the Income Tax Act, 1961, which includes exchange or relinquishment of an asset.
A lease agreement where significant consideration is assigned to plant and machinery, with the intention to sell, may be construed as a transfer of those assets for capital gains purposes, even if the agreement purports to be a lease.
The levy of interest under Section 234-A of the Income Tax Act is statutory, mandatory, and automatic, meaning it cannot be a question of law that can be raised in appeal. The High Court's jurisdiction under Section 260A is limited to questions of law, and thus, observations on the levy of interest are generally outside its scope.
A competent legislature can validate an invalid law by removing the infirmities pointed out by a court, and such a validation can be retrospective. If the validation grants legislative competence, it can render a previous court judgment irrelevant without impermissibly overruling it.
Amalgamation, involving a compromise or arrangement sanctioned by the court, is a foundational basis for passing an order of amalgamation, and the subsequent acquisition of assets by the other undertaking signifies the loss of identity and ownership of the earlier concern.
