Section 9 of the Income Tax Act
The decision most relied on for Section 9 is Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd. (342 ITR 169), cited in 653 of the 104 judgments on BharatTax that turn on this section.
Leading authorities on Section 9
To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.
Section 195 requires tax deduction at source on the gross sum paid to a non-resident even if no part of the income is chargeable in India, particularly if no application under Section 195(2) or 195(3) is filed.
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.
Before the 2010 amendment to the Explanation to Section 9(2) of the Income-tax Act, income was deemed to accrue or arise to non-residents only if the services were actually rendered in India, consequently removing the obligation for tax deduction at source.
The obligation to deduct tax at source under Section 195 for payments to non-residents arises only when the sum is chargeable to tax in India. If the income is not assessable to tax in India, there is no requirement to deduct tax at source.
An assessee cannot reduce the amount of income-tax that should have been deducted or collected by a payer but was paid directly without deduction, while computing their advance tax liability under Section 209(1)(d). Failure to include such amounts in advance tax computations makes the assessee liable for interest under Section 234B.
The tax liability under the Income-tax Act is civil in nature. To establish such a liability, evidence need not be "beyond doubt" as required for criminal liability; it can be proven on the basis of preponderance of probabilities.
An Assessing Officer may reject the genuineness of a transaction if the evidence provided by the assessee is not trustworthy, even if the transaction appears to be conducted through cheques or other formal means. The burden of proving the genuineness of a transaction lies primarily on the assessee.
Judgments on Section 9
Showing 1–20 of 104 · Page 1 of 6
