Section 25B

Section 25B — the law in short

What the courts have decided on section 25B, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Uberoi Sons (Machines) Ltd High CourtHelps taxpayerValidity unconfirmed
  My tenant overstayed, I sued, and years later the court decreed mesne profits at a much higher rate. The Assessing Officer has reopened the earlier years and taxed the enhanced figure as annual value in each of them. Can he?
  No. The Delhi High Court held that until the decree the assessee's right to the arrears was a contingent and inchoate right, that the arrears received as mesne profits could not be brought to tax for the previous years when they fell due and could be brought to tax only in the year of receipt, and that the reopening under section 147 beyond four years was not sustainable because there was no failure to disclose material facts.
• Swayam Prabha Jain v ACIT ITATHelps taxpayerSuperseded by amendment
  My tenant deposited the disputed rent in court and the TDS was deducted then, but the money only reached me two years later when the suit was settled. The officer has taxed it in the earlier year. Which year is it taxable in, and what happens to the TDS credit?
  The rent is taxable in the year it is actually received, not the year it was deposited in court, and the addition made in the earlier year was deleted. The TDS, however, does not simply follow the money: under Rule 37BA(3)(ii) the credit is allowed across the years in the same proportion in which the income is assessable, so the officer was directed to give proportionate credit in both years.

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.