Section 7 of the Income Tax Act
Income-tax Act, 2025: s.7
Section 7 of the Income-tax Act, 1961 corresponds to section 7 (Income deemed to be received and dividend deemed to be income in a tax year) of the Income-tax Act, 2025.
Read section 7 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 7 is CIT v. Shree Rajasthan Syntex Ltd. (313 ITR 231), cited in 55 of the 296 judgments on BharatTax that turn on this section.
Leading authorities on Section 7
This case establishes principles for distinguishing operating leases from finance leases and determining if leased equipment constitutes a Permanent Establishment (PE). It also clarifies that reassessment proceedings initiated on borrowed satisfaction without independent application of mind are invalid.
Payment for human intervention to install or put equipment in place, distinct from human intervention involved in the transportation of calls between networks, does not constitute Fee for Technical Services (FTS) under section 9(1)(vii) of the Income-tax Act.
Expenses incurred and reimbursed for seconded employees under a secondment agreement are not liable to tax deduction at source and do not constitute 'fees for technical services'. The secondment agreement itself forms an independent arrangement for securing services.
Performing the job of grading diamonds in a laboratory and issuing a grading certificate does not constitute the transfer of technical skill, knowledge, or commercial experience to the customer. Such activities do not amount to the provision of technical services under Section 9(1)(vi) or Article 12 of a DTAA.
Income tax proceedings initiated against a corporate debtor under section 148 for assessment years prior to the approval of a resolution plan under the Insolvency and Bankruptcy Code (IBC) are invalid, as the IBC aims to provide certainty by extinguishing all claims not part of the resolution plan.
