Topic
Income from Other Sources under the Income Tax Act, 1961 covers taxable receipts not classified as salary, business, or capital gains, such as interest, dividends, and certain cooperative society incomes.
ITAT Delhi clarifies that Section 56(2)(viib) of the Income Tax Act operates on a receipt basis, not issuance basis. The tribunal upholds the Discounted Cash Flow (DCF) valuation method but limits tax additions to the excess premium over fair market value (FMV), providing relief to companies issuing shares post-2012-13.
The ITAT Delhi has ruled that interest earned on non-convertible debentures during the broken period between purchase and sale-paid by the buyer, not the issuer-constitutes interest income under 'Income from Other Sources', not capital gains. This clarifies a critical tax treatment for institutional investors trading NCDs in secondary markets, preventing misclassification that could distort tax liability and compliance strategies.
ITAT Mumbai rules that co-operative societies earning interest from deposits with co-operative banks qualify for deduction under Section 80P(2)(d), reinforcing the co-operative character of such banks under tax law. The decision clarifies eligibility for co-operative societies, impacting tax assessments for similar entities.
ITAT Ahmedabad rules that a ₹8.16 crore whistleblower reward from the US SEC is taxable under Section 56(1) as 'income from other sources', rejecting the assessee's claim of it being a windfall or capital receipt. The ruling clarifies that rewards arising from conscious whistleblowing efforts-even if unanticipated-are taxable income, impacting whistleblowers and tax practitioners.
The ITAT Mumbai has ruled that a cooperative housing society cannot be taxed on the notional value of a redevelopment agreement unless there is actual receipt of consideration, transfer of ownership, or performance of contractual obligations. This clarifies that enhanced amenities, savings on construction costs, or stamp duty payment alone do not constitute taxable income under 'Income from Other Sources', offering critical relief to societies nationwide undergoing redevelopment.
ITAT Bangalore rules that interest earned on statutorily mandated deposits by cooperative societies is attributable to their business and qualifies for deduction under Section 80P(2)(a)(i). This clarifies that such income is not taxable as 'other income' but as part of the society's core operations, impacting cooperative societies' tax liability.
ITAT Mumbai rules that surrender of tenancy rights qualifies as a capital receipt, not taxable under 'Income from Other Sources' if the assessee fails to prove the cost of acquisition. The ruling reinforces that capital gains computation must precede taxation under Section 56, impacting property owners and tax practitioners dealing with tenancy rights transactions.
ITAT Delhi rules that interest expenses are deductible under Section 57(iii) if a direct nexus with interest income is established, distinguishing prior precedents. The ruling clarifies that pre-operative interest expenses linked to borrowed funds generating taxable income qualify for deduction, impacting real estate and capital-intensive businesses.
ITAT Delhi rules that RERA-mandated compensation for delayed possession constitutes a transfer of capital asset, not interest income, and must be taxed as long-term capital gains. This precedent clarifies tax treatment for homebuyers receiving compensation under RERA, impacting real estate transactions and tax filings.
ITAT Mumbai holds that deduction under Section 57(iii) cannot be denied solely due to ex parte assessment if nexus between interest paid and earned is proven through documentary evidence.