Section 62 of the Income Tax Act
Income-tax Act, 2025: s.97
Section 62 of the Income-tax Act, 1961 corresponds to section 97 (Chargeability of income in transfer of assets) of the Income-tax Act, 2025.
Read section 97 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 62 is CIT v. Malayalam Plantations Ltd. (53 ITR 140), cited in 201 of the 32 judgments on BharatTax that turn on this section.
Leading authorities on Section 62
The expression "for the purpose of business" is wider in scope than "for the purpose of earning profits" and encompasses expenditures made for commercial expediency, business preservation, administration, and modernization.
Income tax authorities cannot deduce the nature of a document from purported intention, go behind the document, consider the substance over form, or rewrite it merely to suit the revenue's purpose.
Taxing authorities must respect the legal character of a transaction, even if it appears to be a device to reduce tax, unless the transaction is a sham or conceals the true legal relationship.
Tax authorities must assess business expenditure from the perspective of a prudent businessman, not their own viewpoint, when determining if it was wholly and exclusively for business purposes.
