Section 5 of the Income Tax Act

Income-tax Act, 2025: s.5

Section 5 of the Income-tax Act, 1961 corresponds to section 5 (Scope of total income) of the Income-tax Act, 2025.

Read section 5 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 5 is Balakrishnan v. M. Krishnamurthy (7 SCC 123), cited in 368 of the 847 judgments on BharatTax that turn on this section.

Leading authorities on Section 5

Balakrishnan v. M. Krishnamurthy
7 SCC 123 · 1998 · Supreme Court
368
citing judgments

The Supreme Court outlines the principles for condoning delay in filing appeals, stating that a litigant's lapse is not always a bar if the explanation is bona fide and not a dilatory strategy. Courts should show utmost consideration to suitors and prioritize substantial justice unless the delay is deliberately to gain time.

DIT v. Morgan Stanley & Co.
292 ITR 416 · 2007 · Supreme Court
360
citing judgments

A Permanent Establishment (PE) signifies a foreign enterprise's virtual projection into another country, with a fixed place PE existing where an MNE's business is wholly or partly carried on. A dependent agent PE requires the agent to act as such and/or have the authority to conclude contracts for the foreign enterprise under DTAA provisions.

Smt. Tarulata Shyam v. CIT
108 ITR 345 · 1977 · Supreme Court
209
citing judgments

Taxing statutes must be interpreted strictly, assuming that the law-making authority does not commit a mistake or make an omission. There is no room for purposive interpretation under direct tax laws.

CIT v. Lakhani Marketing Inc.
49 Taxmann.com 257 · 2014 · High Court
145
citing judgments

Disallowance under Section 14A of the Income Tax Act, 1961, cannot exceed the actual tax-exempt income earned by the assessee during the relevant year. If no tax-exempt income is earned, no disallowance under Section 14A is warranted.

Parimisetti Seetharamamma v. CIT
57 ITR 532 · 1965 · Supreme Court
142
citing judgments

Not all receipts constitute income chargeable to tax. An Assessing Officer cannot reject a prima facie reasonable explanation on mere probabilities or arbitrary grounds, but must disprove facts.

CIT v. Holcim India (P.) Ltd.
57 Taxmann.com 28 · 2015 · High Court
138
citing judgments

Disallowance under Section 14A applies only when exempt income is actually received or receivable during the relevant previous year. The provision does not trigger merely upon incurring expenditure if no exempt income materialized in that year.

CIT v. Maharashtra Sugar Mills Ltd.
82 ITR 452 · 1971 · Supreme Court
109
citing judgments

Expenditure incurred by an assessee carrying on a composite business giving rise to both taxable and non-taxable income is allowable in its entirety without apportionment. This principle led to the subsequent introduction of Section 14A of the Income-tax Act.

Keshav Mills Ltd. v. CIT
23 ITR 230 · 1953 · Supreme Court
86
citing judgments

Income taxability depends on the real nature of the receipt and actual or constructive receipt of income, not merely on book entries. An amount is only "deemed to be received" if explicitly provided by the Income Tax Act, not by an assessee's unilateral intention.

Vaijayantabai Baburao Patil v. Shantaram Baburao Patil
122 Taxmann 114 · 2002 · Supreme Court
63
citing judgments
Nortel Networks India International Inc. v. DIT
386 ITR 353 · 2016 · High Court
61
citing judgments

The burden of proving the existence of a Permanent Establishment (PE) under a Double Taxation Avoidance Agreement (DTAA) rests squarely on the Income Tax Department.

Judgments on Section 5

Uthaan Foundation, Kolkata vs. A.D.I.T., CPC, Bengaluru

In the result, both appeals of the assessee are allowed for statistical purposes

ITA 949/KOL/2025[2020-2021]Status: DisposedITAT Kolkata04 Sept 2025AY 2020-2021

Bench: Shri Rajesh Kumar & Shri Pradip Kumar Choubeyआयकर अपील सं/Ita Nos.948 & 949/Kol/2025 (निर्धारण वर्ा / Assessment Year : 2018-2019 & 2020-2021) Uthaan Foundation, Vs Adit, Cpc, Bengaluru C/O M/S Salarpuria Jajodia & Co 7, C.R.Avenue, 3Rd Floor, Kolkata-700072 Pan No. :Aaatu 6596 R (अपीलधर्थी /Appellant) (प्रत्यर्थी / Respondent) .. निर्धाररती की ओर से /Assessee By Shri S. Jhajharai, Ar रधजस्व की ओर से /Revenue By : Shri S.B.Chakraborthy, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 02/09/2025 घोषणा की तारीख/Date Of Pronouncement : 04/09/2025 आदेश / O R D E R Per Pradip Kumar Choubey, Jm : The Assessee Has Filed Both The Appeals Against The Separate Orders Both Dated 14.02.2025, Passed By The Ld.Addl./Jcit(A)-1, Mumbai For The Assessment Years 2018-2019 & 2020-2021. 2. The Ld.Ar Has Only Prayed That The Matter Be Remitted Back To The File Of Ld.Cit(A) As The Ld. Cit(A) Has Passed The Order Not On Merit Rather He Dismissed The Appeal Of The Assessee On The Point Of Limitation By Not Condoning The Delay. Ld.Ar By Filing An Affidavit Has Explained The Reason For Delay & Submitted That The Reason Explained By The Assessee Is Plausible & Satisfactory & In The Interest Of Justice The Delay Should Be Condoned & Appeal Be Remitted Back To The File Of Cit(A) For Fresh Order On Merit. 3. Contrary To That, Ld.Sr. Dr Supported The Impugned Order Thereby Submitting That There Is A Long Delay As In One Case The Delay Was Of 1743 Explanation. 4. Upon Hearing The Submission Of The Counsel For The Respective Parties, We Have Perused The Orders Of The Lower Authorities In Both The Cases & Find That The Appeal Of The Assessee Has Been Dismissed As The Ld.Cit(A) Did Not Find The Reason For Delay Being Plausible & Satisfactory. Ld.Ar Has Filed An Affidavit Before Us Which Is Essential To Be Produced Hereinbelow :-

For Respondent: Shri S.B.Chakraborthy, Sr. DR
Section 5

Uthaan Foundation, Kolkata vs. A.D.I.T., CPC, Bengaluru

In the result, both appeals of the assessee are allowed for statistical purposes

ITA 948/KOL/2025[2018-2019]Status: DisposedITAT Kolkata04 Sept 2025AY 2018-2019

Bench: Shri Rajesh Kumar & Shri Pradip Kumar Choubeyआयकर अपील सं/Ita Nos.948 & 949/Kol/2025 (निर्धारण वर्ा / Assessment Year : 2018-2019 & 2020-2021) Uthaan Foundation, Vs Adit, Cpc, Bengaluru C/O M/S Salarpuria Jajodia & Co 7, C.R.Avenue, 3Rd Floor, Kolkata-700072 Pan No. :Aaatu 6596 R (अपीलधर्थी /Appellant) (प्रत्यर्थी / Respondent) .. निर्धाररती की ओर से /Assessee By Shri S. Jhajharai, Ar रधजस्व की ओर से /Revenue By : Shri S.B.Chakraborthy, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 02/09/2025 घोषणा की तारीख/Date Of Pronouncement : 04/09/2025 आदेश / O R D E R Per Pradip Kumar Choubey, Jm : The Assessee Has Filed Both The Appeals Against The Separate Orders Both Dated 14.02.2025, Passed By The Ld.Addl./Jcit(A)-1, Mumbai For The Assessment Years 2018-2019 & 2020-2021. 2. The Ld.Ar Has Only Prayed That The Matter Be Remitted Back To The File Of Ld.Cit(A) As The Ld. Cit(A) Has Passed The Order Not On Merit Rather He Dismissed The Appeal Of The Assessee On The Point Of Limitation By Not Condoning The Delay. Ld.Ar By Filing An Affidavit Has Explained The Reason For Delay & Submitted That The Reason Explained By The Assessee Is Plausible & Satisfactory & In The Interest Of Justice The Delay Should Be Condoned & Appeal Be Remitted Back To The File Of Cit(A) For Fresh Order On Merit. 3. Contrary To That, Ld.Sr. Dr Supported The Impugned Order Thereby Submitting That There Is A Long Delay As In One Case The Delay Was Of 1743 Explanation. 4. Upon Hearing The Submission Of The Counsel For The Respective Parties, We Have Perused The Orders Of The Lower Authorities In Both The Cases & Find That The Appeal Of The Assessee Has Been Dismissed As The Ld.Cit(A) Did Not Find The Reason For Delay Being Plausible & Satisfactory. Ld.Ar Has Filed An Affidavit Before Us Which Is Essential To Be Produced Hereinbelow :-

For Respondent: Shri S.B.Chakraborthy, Sr. DR
Section 5