Section 40A(5) — the law in short
What the courts have decided on section 40A(5), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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V.M. Salgaocar & Bros P Ltd v CIT
Supreme CourtHelps taxpayerSuperseded by amendment
For old years, was an interest-free loan from my employer taxable as a perquisite?
No - but only for years before the charge was specifically provided for. The Supreme Court held that granting an interest-free or concessional loan to an employee does not result in a taxable benefit or perquisite 'unless specifically so provided', reading the 1984 insertion and 1985 omission as Parliament declining to tax it.
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CIT v Emirates Commercial Bank Ltd
High CourtCuts both waysOverruled
Our head office sent staff to work on the Indian branch and debited us the cost. Does the s.44C five per cent ceiling apply to it?
No. Section 44C imposes a ceiling on head office expenditure of a common nature — expenditure incurred for various branches, or for the head office and the branch — that has to be allocated. Expenditure incurred exclusively for the Indian branch is outside s.44C altogether, even where the head office paid it first and recovered it by debit note.
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.
