Section 17 — the law in short
What the courts have decided on section 17, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
-
Emil Webber v CIT
Supreme CourtHelps department
My Indian contract says my pay is free of Indian tax and the Indian company pays the tax for me. Is that tax itself taxable in my hands?
Yes. The Supreme Court held that tax paid by an Indian company on an expatriate's salary, under an obligation to pay him free of Indian tax, is itself income of the expatriate. The definition in section 2(24) is inclusive and does not rob income of its natural meaning; anything properly described as income is taxable unless exempted. The payment was made for and on behalf of the assessee, was not gratuitous, and had an integral connection with the salary he received. Since he was not an employee of the company that paid, it fell under section 56 as income from other sources. The appeals were dismissed.
-
ACIT v Subhodh Menon
ITATHelps taxpayer
I subscribed for less than my share of a rights issue. Can the AO still tax the discount?
No. Section 56(2)(vii) bites only where a shareholder receives more than his proportionate allotment. It is a counter-evasion provision aimed at money laundering of unaccounted income and does not reach a bona fide business transaction driven by business exigency.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.