Karnataka High Court Sets Precedent: Capital Gains Income Determines Threshold Rs.50 Lakhs, Not Sale Consideration

The Karnataka High Court recently rendered a significant decision regarding the reassessment proceedings for the Assessment year 2016-17. The case involved the invocation of the extended limitation period under Section 149(1)(b), where the sale consideration exceeded Rs. 50,00,000. However, it was determined that the taxable capital gains income was well below the threshold. After carefully …

CBDT Revises Monetary Limits for Delayed Refund and Loss Carry Forward Claims

The Central Board of Direct Taxes (CBDT) has made significant revisions to the monetary limits for condoning delays in filing returns of income, specifically for claiming refunds or carrying forward losses. In Circular No.7 of 2023, dated 31.05.2023, the CBDT has partially modified its earlier Circular No.9/2015 to address this matter. Under the revised guidelines, …

Section 154 of Income Tax : An Essential Provision for Rectification of Mistakes in ITR

Introduction The Income Tax Act plays a vital role in establishing a fair and transparent taxation system. Among its provisions, Section 154 of income tax holds significant importance, as it enables taxpayers to rectify mistakes made in their tax filings or any other documents submitted to the tax authorities. In this article, we will delve …

CBDT Increases Leave Encashment Exemption From Rs.3 Lakhs to Rs.25 Lakhs

The Central Board of Direct Taxes (CBDT) has issued Notification No. 31/2023 on May 24, 2023, announcing a significant change in the exemption limit for leave encashment under Section 10(10AA) of the Income-tax Act, 1961. Non-government employees receiving leave encashment on retirement will now enjoy an exemption limit of Rs. 25,00,000 (twenty-five lakhs rupees), effective …

TDS Deduction of Wife is Allowed in the Hands of Husband if Income is Clubbed

In the case of Anil Ratanlal Bohra v. Assistant Commissioner of Income Tax (ACIT), the issue at hand revolved around the denial of credit for Tax Deducted at Source (TDS) to the taxpayer due to the non-furnishing of a declaration by the deductee to the deductor as required by the proviso to Rule 37BA(2). The …

Are You Worried About Your ITR Filing for FY 2022-23?

Introduction As the financial year has ended, many individuals and businesses find themselves concerned about filing their Income Tax Returns (ITRs) for the financial year 2022-23. Tax obligations can be complex and overwhelming, but understanding the process and taking proactive steps can alleviate much of the stress associated with ITR filing. This article aims to …

Income Tax Department Accepts Cash Deposits Reflected as Sales and Rejects Section 69A Addition

The Ahmedabad ITAT has upheld the order of the CIT(A), which resulted in the deletion of an addition of Rs. 86.75 crore under Section 69A as unexplained income for the assessee. The ITAT held that the cash deposited in the bank account cannot be considered unexplained since the revenue department itself accepted in the remand …

Challenging the Validity of Typographical Error: The Importance of Substantiating Claims in Tax Matters

The case at hand revolves around the applicability of Section 69C of the Income Tax Act, which deals with unexplained expenditure. The assessee-firm in question was involved in the import of rough diamonds, as well as the manufacturing and export of polished diamonds. The Assessing Officer (AO) noticed that there was an excess consumption of …

Understanding the Choice of Method in Accounting for Assessees: Importance of Regularly Followed Methods

The method of accounting that an assessee chooses to use can significantly impact the computation of their income under the heads of business or profession (Section 28) and income from other sources (Section 56). While the choice of method lies with the assessee, it is essential to note that they must demonstrate that they have …

Understanding the “Wholly and Exclusively” Condition for Expenditure Deduction in connection with transfer of Property

Any expenditure that is incurred solely and necessarily in relation to the transfer of a capital asset can be deducted from the full value of consideration. This means that only expenses that are directly connected to the transfer of the asset can be claimed as a deduction. It is important to note that the expenditure …

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