Section 260A

Section 260A — the law in short

What the courts have decided on section 260A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Jindal Equipment Leasing Consultancy Services Ltd v CIT Supreme CourtCuts both ways
  My client held shares of the amalgamating company as stock-in-trade and received shares of the amalgamated company under the court-sanctioned scheme. Is there business income at that point, or only when those shares are sold?
  It depends. Section 28 does not require a sale, an exchange or a transfer - business profit can be realised in kind - so the substitution of shares on an amalgamation can be charged as business income where shares held as stock-in-trade are replaced by shares that are freely realisable and capable of definite valuation. It is not automatic: the Court laid down a fact-sensitive test of commercial realisability, put the burden of establishing it on the Revenue, and held that the charge is attracted only on allotment of the new shares and not on the appointed date or the date the scheme is sanctioned. The Delhi High Court's judgment was affirmed and the matter remitted to the Tribunal to decide, on the facts, whether the shares were stock-in-trade at all and whether what was received was freely realisable.
• PCIT v Ramesh Chandra Rai Supreme CourtHelps taxpayer
  The AO has added my share of the syndicate's profit straight to my own return. Can he do that without assessing the syndicate?
  No. An association of persons is a separate person under s.2(31) and its income has to be assessed in its own hands. The Assessing Officer cannot bypass that and club the member's share, and the disallowances he thinks the syndicate should have suffered, into the member's individual assessment. Section 86 then decides what, if anything, the member includes.
• PCIT v M P Entertainment and Developers P Ltd Supreme CourtHelps taxpayerNo later treatment found
  We run a shopping mall. Is the income business income or income from house property?
  Business income, on these facts. Applying Sultan Brothers, the Supreme Court dismissed the revenue's SLP: the company's objects covered constructing, owning, developing, managing, running, hiring, letting out and leasing malls and multiplexes, and its actual activity matched them, so the letting was the doing of business under s.28.
• Pathapati Subba Reddy v Special Deputy Collector (LA) — the Supreme Court's current summary on condonation: section 5 is construed liberally, section 3 strictly, and even sufficient cause need not be excused Supreme CourtHelps department
  The other side says every day's delay must be explained; my client says the courts take a liberal view. Which line does the Supreme Court now apply?
  Both, in a stated order. The Court held that s.5 of the Limitation Act is to be construed liberally but s.3, being mandatory and substantive, strictly; that a liberal or justice-oriented approach cannot be used to defeat the law of limitation and revive stale or dead matters; that the existence of sufficient cause is a condition precedent to the discretion; and that even where sufficient cause is established the discretion may still be refused for inordinate delay, negligence or want of due diligence. A delay of 5,659 days was not condoned and the special leave petition was dismissed.
• CIT v Jasjit Singh Supreme CourtHelps taxpayer
  A search was made on someone else and my papers were found. From which date are my six years counted - the search, or when my Assessing Officer got the papers?
  From the date your Assessing Officer received the material. The Supreme Court held that the proviso to section 153C(1) does not deal only with abatement: it also fixes the date from which the six year period is reckoned for the person who was not searched. The Revenue's argument that the proviso is confined to abatement, so that the period relates back to the date of the search on the other person, was held insubstantial and without merit. The Court approved the Delhi High Court's reasoning in SSP Aviation and dismissed the Revenue's appeals.
• SAP Labs India P Ltd v ITO Supreme CourtHelps department
  The Tribunal fixed my arm's length price and the department has gone to the High Court — can the High Court reopen the comparables, or is the Tribunal's finding final?
  No, the Tribunal's determination is not final. The Supreme Court held on 19 April 2023 that there is no absolute rule that an arm's length price fixed by the Tribunal cannot be examined under section 260A. Chapter X and Rules 10A to 10E lay down guidelines; a determination made in disregard of them is perverse, and perversity is itself a substantial question of law. The High Court may therefore examine comparability of companies, the selection of filters and whether non-comparable transactions were treated as comparable. The Karnataka High Court's contrary view in Softbrands India was rejected and the whole batch was remitted.
• Mansarovar Commercial P Ltd v CIT Supreme CourtHelps department
  My company is registered outside the taxable territory but run from Delhi. Where is it resident?
  Where it is actually run. The Supreme Court held that the residence of a company turns on de facto control and management, not on the place of registration: five companies incorporated under the Registration of Companies (Sikkim) Act, 1961 were resident in India because the management and control of all five was wholly situated in Delhi, at the office of a chartered accountant. The appeals were dismissed and the Delhi High Court's decision affirmed.
• PCIT v ABC Papers Ltd Supreme CourtCuts both ways
  My case was transferred under section 127 to an Assessing Officer in another state — which High Court now hears the appeal against the Tribunal's order?
  The High Court where the Assessing Officer who passed the assessment order sits. The Supreme Court held on 18 August 2022 that an appeal under section 260A lies only to that High Court, and that a transfer of the case under section 127 does not shift appellate jurisdiction — even a transfer for the same assessment year. The Delhi High Court's contrary decisions in CIT v. Sahara India Financial Corporation Ltd. and CIT v. Aar Bee Industries Ltd. were overruled. Nor does the location of the Tribunal decide the forum, since a Bench of the Tribunal often covers several states.
• CIT v Reliance Telecom Ltd Supreme CourtHelps department
  The Tribunal recalled its whole order on my miscellaneous application. Will that recall survive?
  No, where the recall amounts to rehearing the appeal on merits. Section 254(2) is a rectification power limited to a mistake apparent from the record; a Tribunal that reconsiders its own conclusions is sitting in appeal over itself. The remedy against an order said to be wrong on merits is an appeal to the High Court.
• CIT (Exemption) v Batanagar Education and Research Trust Supreme CourtHelps department
  The Commissioner has cancelled my trust's registration because some corpus donations are said to be bogus — can he do that when the money was actually spent on the trust's objects?
  Yes. The Supreme Court held on 2 August 2021 that a trust which takes donations by cheque and returns the money in cash is misusing its section 12AA status and cannot keep it. The Managing Trustee had admitted in a survey that a major part of the corpus donations were accommodation entries, that part of each donation went back to the donors through named intermediaries by RTGS, and that those payments were booked as building capital expenditure. On that material the Commissioner and the Tribunal were right to cancel registration under section 12AA(3) and the consequent 80G approval, and the Calcutta High Court should not have interfered under section 260A.
• Shiv Raj Gupta v CIT Supreme CourtHelps taxpayer
  I sold my controlling stake and separately took a large non-compete fee. Can the department call the covenant a sham and tax the fee?
  Not on these facts, and not for the year in question. The Supreme Court allowed the assessee's appeal and set aside the Delhi High Court's judgment. It held the High Court had gone outside the substantial question of law it framed, contrary to section 260A(4), by taxing the Rs 6.6 crore as capital gain when the only question framed was taxability under section 28(ii)(a). On the merits, the revenue has no business to second guess the commercial expediency of what parties at arm's length decide, and following Guffic Chem, a receipt under a negative covenant was a capital receipt not taxable before section 28(va) took effect on 1 April 2003.
• Snowtex Investment Ltd v PCIT Supreme CourtHelps department
  Can I set my share trading loss off against my F&O profits?
  No, for years up to AY 2014-15. Where a company's principal business is dealing in shares, the Explanation to s.73 deems that loss to be speculative, while derivatives profits on a recognised exchange are non-speculative under s.43(5)(d) — so the two cannot be set off. The 2014 amendment to the Explanation is prospective and does not help earlier years.
• Sanjeev Lal v CIT Supreme CourtHelps taxpayer
  A court order delayed my sale deed. Does my s.54 exemption run from the agreement to sell?
  Yes. Executing the agreement to sell itself extinguished rights in the property and created rights in the vendee, which answers the definition of transfer in s.2(47), so that date governs. Section 54 relief could not be denied where a court restraint the assessee could not violate delayed the registered deed, and the new house had been bought within a year of the agreement.
• Vijay Kumar Talwar v CIT — when a finding of fact does and does not raise a substantial question of law under section 260A Supreme CourtHelps departmentNo later treatment found
  The Tribunal has decided against my client on the evidence. Is there any route into the High Court under section 260A, and what exactly must I show?
  Only by showing that the finding is perverse in a defined sense. The Supreme Court held that an appeal to the High Court lies only where a substantial question of law is involved, and that a finding of fact gives rise to such a question only where it is based on no evidence, or where relevant admissible evidence was not taken into account, or inadmissible evidence was taken into account, or legal principles were not applied in appreciating the evidence, or the evidence was misread. Finding none of that, the Court upheld the Delhi High Court's dismissal and dismissed the assessee's appeals with costs of Rs 20,000.
• CIT, Dibrugarh v Doom Dooma India Ltd Supreme CourtHelps taxpayer
  I grow and manufacture tea, so only part of my income is taxed under the Income-tax Act. When I carry the written down value forward, does the Assessing Officer deduct the whole year's depreciation or only the taxable proportion?
  Only the taxable proportion. Under s.10(1) read with rule 8 of the Income-tax Rules, 1962, 40 per cent of the income from the sale of tea grown and manufactured in India is the part liable to tax, and the Supreme Court held that in a rule 8 case the depreciation 'actually allowed' within s.43(6)(b) is the proportionate depreciation only. The Department's appeals, which sought to reduce the written down value by 100 per cent of the depreciation computed at the prescribed rate, were dismissed.
• Sree Ayyanar Spinning & Weaving Mills Ltd v Commissioner of Income Tax Supreme CourtHelps taxpayer
  I filed my rectification application to the Tribunal within four years but it took years to decide it. Can the order be set aside because it was passed after the four years were up?
  No. The Supreme Court held that section 254(2) has two parts. The first is the Tribunal's own power to rectify at any time within four years of its order. The second deals with rectification on an application by the assessee or the Assessing Officer pointing out a mistake apparent from the record. Where the application is made within four years, the Tribunal is bound to decide it on the merits, and the fact that it took its own time to dispose of it does not make the order bad. The High Court had erred in holding the application could not be entertained beyond four years. The Court agreed with the Rajasthan High Court in Harshvardhan Chemicals and Minerals Ltd.
• CIT v P. Mohanakala Supreme CourtHelps department
  You gave particulars, paid by cheque and got a confirmation. Has the burden shifted?
  Not by itself. Furnishing particulars, payment by account payee cheque, or a confirmatory letter from the creditor is not enough on its own to shift the onus onto the Revenue under s.68.
• CIT v Mukundray K. Shah Supreme CourtHelps department
  The company and I have a mutual, open and current account with money moving both ways. Is the deemed dividend the closing debit balance, the highest debit balance during the year, or something else? And can the Department tax money that reached me through a firm rather than directly?
  Neither the closing balance nor the peak. The Supreme Court, adopting the Bombay High Court's reasoning in P.K. Badiani, held that the position must be ascertained at the date of each payment: every debit is examined individually, it is a loan only to the extent it exceeds the company's existing debt to the shareholder, and it is taxable only to the extent of accumulated profits existing on that date. The Court also upheld the taxing of money routed to the shareholder through partnership firms used as conduits, as a payment for his individual benefit.
• M. Janardhana Rao v JCIT Supreme CourtHelps taxpayer
  The High Court admitted my appeal without framing any question of law, heard it, and then formulated questions in the judgment itself. Is that a good disposal under section 260A?
  No. The Supreme Court held that an appeal lies to the High Court only where a substantial question of law is involved, that it is essential for the High Court to first formulate the question and thereafter proceed, and that without insisting on the statement of the question in the memorandum of appeal and formulating it at the time of admission the High Court is not empowered to decide the appeal generally. Framing the questions after arguments had concluded, for the purpose of writing the judgment, was clearly against the scheme of the section. The judgment was set aside and the appeals remitted.
• Sir Chunilal V. Mehta and Sons Ltd v Century Spinning and Manufacturing Co Ltd Supreme CourtCuts both ways
  The High Court says my appeal raises no substantial question of law because the principles are settled and only their application is in dispute. What actually makes a question of law substantial?
  The test the Supreme Court laid down is whether the question is of general public importance, or directly and substantially affects the rights of the parties, and if so whether it is an open question in the sense that it has not been finally settled by the Supreme Court, the Privy Council or the Federal Court, or is not free from difficulty, or calls for discussion of alternative views. A question settled by the highest court, or one where settled general principles have merely to be applied, or a plea that is palpably absurd, is not substantial. This is a contract case, not a tax case.
• CIT v Scindia Steam Navigation Co Ltd Supreme CourtHelps taxpayer
  Can I argue a point in the High Court that was never taken before the Tribunal, if it arises on the facts the Tribunal found?
  Not as a new question, but you may take a new contention within the question referred. The Supreme Court held that only a question raised before or decided by the Tribunal arises out of its order. A question neither raised before nor considered by the Tribunal is not one arising out of its order, even though it arises on the findings. But where the question referred is itself wide enough, a fresh contention within its framework may be advanced. Here the referred question - whether Rs 9,26,532 was properly included in the 1946-47 assessment - covered the argument that the charging proviso was not yet in force.
• Citizen Credit Co-operative Bank Ltd v ITO (TDS Ward), Mumbai High CourtHelps taxpayerNo later treatment found
  We are a co-operative bank. The TDS officer says we should have deducted tax under s.194A on fixed deposit interest paid to co-operative housing societies that are not our members, and has treated us as an assessee in default. Is he right?
  No, on the Bombay High Court's reading. Clause (v) of s.194A(3) has two limbs, and the words 'other than a co-operative bank' appear only in the first limb, which deals with interest paid by a society to its members; the second limb — interest 'credited or paid by a co-operative society to any other co-operative society' — carries no such exclusion, so a co-operative bank, which remains a co-operative society, is not obliged to deduct tax on interest paid to non-member co-operative societies. Paragraph 42.7 of CBDT Circular No. 19 of 2015 says the same thing in terms.
• Public Political Party v Deputy Commissioner of Income Tax High CourtHelps departmentNo later treatment found
  My client's s.80GGC deduction has been disallowed because the recipient party is alleged to be an entry provider. Has any High Court decided what the party's own position is, and does that finding bind my client?
  Yes as to the party, no as to your client. The Delhi High Court dismissed the party's own appeals, holding that the Tribunal's finding that it issued bogus donation receipts to enable donors to claim deductions under s.80GGB and s.80GGC, and paid the money back to the persons from whom it was purportedly received, is a finding of fact not open to interference under s.260A. The party also lost its s.13A exemption for failing to file the report required by the second proviso to s.13A. The Court decided nothing about any identified donor: the finding is that this party issued bogus receipts and paid the money back, not that any particular donor received a refund.
• CIT (International Taxation) v Nidra Hospitality Gujarat Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The officer says I am in default under s.201 for not deducting under s.195 on payments abroad, although I have a Form 15CB from my chartered accountant for every remittance. Is that enough?
  On these facts, yes. The Gujarat High Court declined to admit the Revenue's appeal, holding that once the assessee had filed its TDS returns and submitted Form 15CB — the accountant's certificate on liability to deduct under Chapter XVII-B prescribed by Rule 37BB — for each remittance, and the Assessing Officer had not disputed those, the assessee could not be treated as an assessee in default under s.201. The Court also held that commission paid to travel agents and on hotel bookings made through websites and subsidiaries was not a sum covered by s.195.
• K.K. Builders v DCIT High CourtHelps taxpayerNo later treatment found
  I argued before the Tribunal that the s.153D approval was mechanical and its order says nothing about it. Can I take that straight to the High Court?
  Not usefully. The Kerala High Court declined to answer any issue affirmatively, set aside the Tribunal's order and remitted the appeal for fresh consideration, because the Tribunal had recorded the s.153D ground as one of three issues before it and had not specifically answered it. Every relevant issue must receive the Tribunal's attention before the High Court can adjudicate on it as an appellate forum.
• Ambalal Sarabhai Enterprises Ltd v DCIT High CourtHelps taxpayerNo later treatment found
  The Assessing Officer has swept my gratuity and leave encashment payments into the s.35DDA five-year spread along with the VRS compensation. Must terminal benefits be amortised too?
  No. The Gujarat High Court held that gratuity and leave encashment are post-retirement benefits accruing from actual service rendered, payable whether retirement is voluntary or on superannuation, and are ancillary to — not part of — the voluntary retirement scheme. Only the VRS compensation component falls into the one-fifth spread under s.35DDA; the terminal benefits are deductible in full.
• Bannanje Grahakara Vividhoddesha Sahakara Sangha Ltd v CIT (Appeals), NFAC High CourtCuts both ways
  The Tribunal remanded the nominal member issue to the Assessing Officer but recorded findings on the merits while doing so, leaving the officer nothing to decide. Is there anything I can do about that in the High Court?
  Yes. The Karnataka High Court declined to interfere with the order of remand itself, but accepted that the Tribunal's observations on the merits might prejudice the assessee and clarified that the remand proceedings are to be considered independently, uninfluenced by any observations or findings recorded by the Tribunal on merits, strictly in accordance with Mavilayi Service Co-operative Bank and having regard to the relevant provisions of the Karnataka Co-operative Societies Act.
• PCIT v Agroha Fincap Ltd — an accommodation-entry case falls within exception (h) of the CBDT circular, so the monetary limit does not save the assessee High CourtHelps departmentNo later treatment found
  The tax effect in the department's High Court appeal is below the circular limit. My client says the appeal must go. Is that the end of it?
  Not if the case is within one of the circular's exceptions. The Delhi High Court, on a review petition, held that where the case of the Revenue before the Assessing Officer and the Commissioner (Appeals) was one of accommodation entries, it falls within exception (h) of the circular dated 15 March 2024 — 'cases involving organised tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries' — and the appeal is maintainable without regard to the tax effect. The review petition was dismissed.
• CIT v Eastman Exports Global Clothing Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The Commissioner has issued a s.263 notice saying the transferor companies had not been in business for three years, so the losses we took over cannot be carried forward. Our arrangement was a demerger, not an amalgamation. Does the three-year condition apply?
  No. The three-year condition is in s.72A(2), which governs amalgamation. A demerger is governed by s.72A(4), which contains no such condition. The Madras High Court held that a revision order built on the wrong sub-section, and which merely remitted the matter to the assessing officer for enquiry, did not satisfy the requirement that the order sought to be revised be erroneous.
• Nagendra Choudhary v Union of India High CourtHelps taxpayer
  The Tribunal deleted the penalty, but the department has filed an appeal under s.260A and it has been admitted. Can they keep the s.276C prosecution alive until that appeal is decided?
  Not without a stay. The Rajasthan High Court quashed a s.276C(1)(i) prosecution after the Tribunal had deleted the s.271AAB penalty, holding that the mere pendency of the department's s.260A appeal, even one admitted on substantial questions of law, does not resurrect factual findings that have been set aside. The Court expressly preserved the department's liberty to seek revival if the Tribunal's exoneration is reversed.
• M/s Atlantic Shipping Pvt Ltd v ITO (International Taxation) High CourtHelps taxpayerNo later treatment found
  Our principal's freight was exempt under Article 8, but the officer says Article 24 applies because the freight went to a London account. Who wins?
  The shipowner wins on these facts. The Gujarat High Court held that the assessee is entitled to the benefit of Article 8 of the India-Singapore treaty and that Article 24, the limitation of relief clause, does not apply, quashing the Tribunal's direction to send the matter back to the Assessing Officer to verify the Singapore tax authority's certificate.
• Jaykumar B. Patil v JCIT High CourtHelps departmentNo later treatment found
  The company advanced money to me against pending job-work orders and I repaid the whole of it within two months, in the same year. The Assessing Officer has still treated it as deemed dividend. I have a running account with the company and I am relying on Circular 19/2017 — is that enough?
  No. The Bombay High Court held that a trade advance escapes s.2(22)(e) only if the money is actually applied to the business transaction it was said to be for; the stated purpose is not the test, the actual utilisation is. Neither the existence of a running account nor repayment within the same financial year makes any difference.
• PCIT v Rajesh Suresh Chopra High CourtHelps taxpayerNo later treatment found
  If an estimate on the disputed purchases cannot be avoided, is there a High Court figure I can point to?
  Yes, on these facts. The Gujarat High Court dismissed the department's appeal against a Tribunal order that had confined the addition on roughly Rs 116.50 crore of alleged accommodation-entry purchases to 6 per cent, holding that no substantial question of law arose because the questions proposed were already answered by a coordinate bench, which had held 6 per cent of bogus purchases to be fair and reasonable. It is a percentage a High Court has let stand, not a rule — the figure follows the facts, and the department's contrary line on whole-invoice additions is unaffected.
• PCIT v Praveen Sawhney High CourtHelps taxpayerNo later treatment found
  The Department says my search assessment is in time because it made a reference to a foreign tax authority and gets a year excluded under s.153B. The reference was for years the treaty did not cover. Does the exclusion still apply?
  No. Clause (ix) of the Explanation to s.153B excludes the time taken on a reference for exchange of information only where the reference is made in terms of the agreement under s.90 or s.90A. A request made outside what the treaty permitted is not such a reference, gives no exclusion, and the assessments were time-barred. Twenty-nine Revenue appeals were dismissed.
• Coromondel Cabeles P Ltd v ACIT High CourtCuts both ways
  The Department has taxed my housing project income as business profit. Can I claim the section 80-IB(10) deduction now, in appeal, when I never claimed it in my return?
  Not for years governed by section 80AC. The Madras High Court held that where section 80AC applies, the deduction cannot be allowed unless the return was filed by the due date and the claim was made in it. The assessee had made no claim under section 80-IB in its return, so for assessment years 2007-08 to 2011-12 the benefit was refused, section 80AC having been inserted by the Finance Act 2006 with effect from 1 April 2006. For assessment year 2006-07 the question was answered in the assessee's favour. The Court recorded a prima facie view that the requirement may be directory, but held it could say so only under Article 226 and not in a section 260A appeal.
• PCIT-1, Chennai v M/s. British Agro Products (India) Pvt. Ltd. High CourtHelps departmentNo later treatment found
  I grow button mushrooms in trays under controlled temperature in a shed and claim the income as agricultural income under s.10(1). The Assessing Officer says it is business income. Where does that stand?
  Against you, in the Madras High Court. The Court held that income from the sale of white button mushrooms grown in a factory under controlled conditions does not fall within any of the three limbs of s.2(1A) and so is not exempt under s.10(1), allowed the Revenue's appeals and answered both substantial questions against the assessee. That result is squarely opposed to the Hyderabad Special Bench in DCIT v. Inventaa Industries Pvt. Ltd., which the Tribunal below had followed, and appeals against Inventaa were recorded as still pending before the Telangana High Court.
• Raj Kumar Bothra v DCIT High CourtHelps taxpayer
  CPC disallowed my late-deposited PF and ESI under 143(1)(a). Was a summary adjustment even open to them?
  No, not for an intimation issued in December 2021. The Chhattisgarh High Court held the issue was genuinely debatable on that date, with conflicting High Court authority and the matter pending in the Supreme Court, so the officer had to take scrutiny under s.143(3) rather than adjust summarily.
• Tamal Kundu v Additional/Joint/Deputy/Assistant Commissioner of Income Tax High CourtHelps taxpayer
  I paid the whole price and took possession of a factory under an agreement for sale in December 2016, but the sale deed was only registered in March 2018. Can the department tax the stamp-value difference under section 56(2)(x) in the later year?
  No. The Calcutta High Court held that where the entire consideration is paid on the date of the agreement for sale, possession of the property is handed over, and the buyer starts running the business on it, the transfer takes place then and not on the later registration of the sale deed. Section 2(47)(ii) covers extinguishment of the vendor's rights, and section 2(47)(vi) covers any transaction that has the effect of enabling the enjoyment of immovable property. So the purchase of the rice mill fell in the previous year relevant to assessment year 2017-18, and the section 56(2)(x) addition made in assessment year 2018-19 could not stand. The Tribunal's order was set aside.
• PCIT v Drisha Impex (P) Ltd High CourtHelps department
  The Tribunal gave me a small percentage addition on disputed purchases. Can the department get the whole disallowance back on appeal?
  Yes, where the file is empty. The Bombay High Court set aside the Tribunal's 3% estimate and restored the Assessing Officer's disallowance of the whole of the disputed purchases under s.69C, and the assessee's SLP was dismissed. What decided it was a list of documents that were not produced: no evidence of actual delivery of material, no supplier confirmations, no audited accounts, no quantitative details and no correlation between the purchases and the sales.
• PCIT v Kanak Impex (India) Ltd High CourtHelps department
  The officer says my purchases are accommodation entries. Can he add the whole purchase, or only a percentage?
  The whole of it, if you cannot show the purchases were real. The Bombay High Court set aside the Tribunal's order restricting the addition to a 12.5% profit estimate and restored the Assessing Officer's disallowance of the entire Rs 20.06 crore under s.69C, and the Supreme Court dismissed the assessee's SLP. The profit-element line only runs where the purchases themselves are accepted as having happened.
• Shivani Madan v PCIT High CourtHelps taxpayerNo later treatment found
  My husband and I are both on the sale deed. Must half the annual value be taxed on me?
  No. The Delhi High Court held that merely signing the instrument of conveyance raises no presumption that the income is to be assessed in that person's hands; taxability must reflect who actually obtained the benefit of the property, so an equal share cannot be assumed where the deed is silent.
• Williamson Financial Services Ltd v CIT High CourtHelps taxpayer
  The officer says the 2022 Explanation to s.14A is clarificatory and applies to my old years. Is there High Court authority against that?
  Yes, and from a Court joining a settled line. The Gauhati High Court held that the Explanation inserted in s.14A by the Finance Act 2022 is prospective, set aside the Guwahati Tribunal's view that it was clarificatory and therefore retrospective, and affirmed the Commissioner (Appeals), whose orders had capped the disallowance under s.14A read with Rule 8D at the income claimed as exempt. It reached that result by following six earlier decisions of the Delhi, Calcutta and Madhya Pradesh High Courts, and the revenue's counsel conceded the point before it.
• PCIT v MDLR Hotels Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The Additional Commissioner approved my search assessment along with hundreds of others in a single letter that says nothing but 'approved'. Is that enough under s.153D?
  No. Where the approving authority accorded approval to 246 proposed assessments by one letter that merely directed that the orders be passed before limitation and copies sent for record, the Delhi High Court held there was no substantial question of law in the Tribunal's conclusion that the approval was mechanical, and dismissed eighteen Revenue appeals. Approval that neither mentions the seized material nor shows that the draft orders were examined is a ritual, not the safeguard s.153D creates.
• Pr. Commissioner of Income Tax v Mahabir Jute Mills Ltd High CourtHelps taxpayer
  The Assessing Officer rejected my books because of a section 40A(3) cash disallowance and an ad hoc disallowance, then raised my gross profit rate. If those two go, can the gross profit addition survive?
  No. The Allahabad High Court held that where the only findings casting doubt on the books were a section 40A(3) disallowance and an ad hoc consignment-sale disallowance, and both fell away, there was nothing left on which to reject the books. Once the books stand accepted there is no intrinsic evidence to enhance the gross profit rate, and the officer must leave it alone, because gross profit is the result of book entries and not an original entry. The officer's jurisdiction is to examine the correctness and completeness of the accounts, not to step into the assessee's shoes and infer more profit. The Revenue's appeal was dismissed.
• PCIT v Keti Construction Ltd High CourtHelps taxpayer
  Does the 2022 Explanation to s.14A help the department on an old year outside Delhi?
  Not in Madhya Pradesh either. The High Court held that because the assessment before it was for AY 2013-14, the amendment made to s.14A would not be applicable and the Revenue's contention founded on it was not relevant. The Revenue's appeal was dismissed.
• CIT (Exemptions), Kolkata v West Bengal Welfare Society High CourtHelps taxpayerNo later treatment found
  My Form 10AB was rejected before April 2024 because it was late or filed under the wrong section code. Is that rejection the end of the matter?
  No. The Calcutta High Court, dismissing the Revenue's appeal, recorded that clause 4.1 of CBDT Circular No. 7 of 2024 dated 25 April 2024 allows a trust whose Form 10AB was rejected on or before the issue of that circular solely because it was furnished after the due date or under the wrong section code to furnish a fresh Form 10AB within the extended time in paragraph 3(ii), namely 30 June 2024. The Court also approved the Tribunal's construction that a trust becomes eligible to apply for final registration only after the grant of provisional approval, so the clause (iii) time limit must be read in that light.
• PCIT v Inderjit Singh Sodhi (HUF) — interest on compensation and enhanced compensation is income from other sources after the 2010 amendment High CourtHelps departmentHigh Courts differ
  My client received interest on enhanced compensation for compulsorily acquired land. Ghanshyam says it is part of compensation. Does that still hold?
  Not in the Delhi High Court. It held that on a conjoint reading of s.56(2)(viii) and s.145B, interest received on compensation or on enhanced compensation is chargeable under the head 'income from other sources', and that the conclusions drawn from CIT v Ghanshyam (HUF), decided in 2009, are unsustainable because the position as it exists today came into being only in 2010. The Tribunal was held to have erred in following Ghanshyam and ignoring the changes made by the Finance (No.2) Act 2009 with effect from 1 April 2010.
• PCIT v Ojjus Medicare P Ltd High CourtCuts both ways
  How do I count the six and the ten assessment years for a s.153C notice, and does the Rs 50 lakh figure have to be met year by year?
  Count them from different points, and no. For a person who was not searched, the first proviso to section 153C moves the starting point: the date on which the seized books, documents or assets are handed to his own Assessing Officer stands in place of the date of the search. From that point the six assessment years are the six that immediately precede the assessment year relevant to that previous year - the year of the handing over is excluded and treated as the zero year. The further block of 'relevant assessment years' under Explanation 1 to section 153A is not counted the same way: it runs backwards from the END of that assessment year, that is from the 31st of March, and the tenth year is the terminal point. On the money threshold, the Rs 50 lakh in clause (a) of the fourth proviso is satisfied if the escaped income meets the benchmark cumulatively or in the aggregate; it does not have to be reached in each year separately.
• PCIT v Forum Sales Pvt Ltd — an estimate cannot be made without first rejecting the books under s.145(3) High CourtHelps taxpayer
  The Assessing Officer has disallowed forty per cent of my client's purchases on an estimate, but has not rejected the books. Is that open to him?
  No. The Delhi High Court held that it is the settled position of law that the books of account have to be necessarily rejected before the Assessing Officer proceeds to a best judgment assessment on fulfilment of the conditions in the Act, and that any pick and choose method of rejecting certain entries while accepting others, without appropriate justification, is arbitrary. Since the additions in question had been made on an estimate basis without rejecting the books, no substantial question of law arose and the Revenue's appeals were dismissed.
• Godaddy.Com LLC v ACIT High CourtHelps taxpayer
  We pay a foreign registrar to register our domain names. Is that royalty, and must we withhold?
  No, it is not royalty. A registrar has no proprietorship rights in the domain name it registers for a customer, so it cannot confer or transfer a right to use that name — and without a right to use there is nothing to characterise as royalty under s.9(1)(vi) or Article 12(3)(a) of the India-US treaty. The Delhi High Court allowed the assessee's appeal, reversing the Tribunal, which had held the receipts were royalty because a domain name is an intangible similar to a trademark.
• PCIT v Burda Druck India Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The assessment order for the loss year ends with a line saying the brought forward losses will not be allowed to be carried forward because our shareholding changed. Am I stuck with that when I claim the set-off later?
  No. The assessing officer of the loss year has only to notify the amount of the loss he has computed; whether that loss can be carried forward and set off is for the officer who deals with the year in which the set-off is claimed. The Delhi High Court upheld the Tribunal's direction to expunge the remark, and added that unabsorbed depreciation and capital losses do not fall within s.79 at all.
• PCIT v DSG Papers (P) Ltd High CourtHelps taxpayer
  The addition rests on statements of ex-employees and third parties I was never allowed to question. Is the assessment good?
  The additions were deleted, but read the High Court decision for what it is. The Chandigarh Tribunal directed deletion of the additions in all five years, holding that the assessee had not been allowed to cross-examine the persons on whose statements the Assessing Officer relied and that the evidence was internally contradictory - invoices said to have been destroyed were recovered from the residence of an ex-president against whom the company had filed an FIR before the search. The Punjab and Haryana High Court dismissed the revenue's appeal, but its order is two sentences long and gives no reasons of its own: it adopts a detailed judgment of even date in a companion appeal, ITA-38-2023, which is not on indiankanoon and is not available in a subscription case-law database.
• Pr. CIT v Gujarat Industries Power Co. Ltd — where the accounts depart from the company's own accounting policy, the book profit can be altered High CourtCuts both waysNo later treatment found
  I have always understood that under Apollo Tyres the Assessing Officer cannot touch audited accounts. He says s.115JB is wider than s.115J and that our profit and loss account was not drawn in accordance with our own stated revenue recognition policy. Is there anything in that?
  There is, but note at once how the point comes down: the High Court dismissed the Revenue's appeal holding that no substantial question of law arose, so the proposition below is the reasoning of the CIT(A), confirmed by the Tribunal and left undisturbed, and not the High Court's own. The Apollo Tyres bar is not absolute under s.115JB: the net profit can be altered where the profit and loss account was not drawn up in accordance with Parts II and III of Schedule VI to the Companies Act, and where the accounting policies and accounting standards were not correctly adopted for the accounts laid before the annual general meeting. On these facts the amount actually recovered had to be recognised as revenue under the company's own stated policy, and Rs.16.01 crores was rightly added to book profit — but the balance of Rs.78.1 crores, not being recovered, was not.
• PCIT v Maahi Milk Producer Co Ltd High CourtHelps taxpayerNo later treatment found
  I pay a dairy to process my milk. Do I deduct 2% under 194C or 10% under 194J?
  2% under s.194C. Processing of milk by a dairy is job work, not technical services — the Gujarat High Court approved the Tribunal's reliance on CBDT Circular No. 13/2006 dated 13 December 2006 to that effect, and the s.40(a)(ia) disallowance fell with the characterisation.
• PCIT v Jai Maa Jagdamba Flour Private Limited High CourtHelps taxpayer
  After a search on or after 1 July 2012, can the officer levy penalty under s.271(1)(c) instead of s.271AAB?
  No, not for the specified previous year. The Jharkhand High Court held that s.271AAB opens with a non obstante clause and excludes s.271(1)(c) where the undisclosed income relates to the specified previous year. Where the search was on 3 September 2014 the penalty, if any, had to be levied under s.271AAB, and because the assessee had admitted nothing in a s.132(4) statement and paid no tax on admitted income, the case fell under clause (c) of s.271AAB(1). The penalty actually levied under s.271(1)(c) could not stand. The Court also held it immaterial that no incriminating document had been found, because the statute keys the choice of section to the date of the search.
• Kamal Nayan Singh v DCIT High CourtHelps taxpayerNo later treatment found
  I filed my section 254(2) application in 2014 when four years were allowed. The Tribunal dismissed it in 2017 applying the new six months. Can it do that?
  No, on the Jharkhand High Court's view. The Tribunal must apply the law prevailing on the date the miscellaneous application was FILED, not the law prevailing on the date it happens to hear it. An application filed before 1 June 2016, within the then four-year period, cannot be thrown out by applying the six-month period substituted by the Finance Act 2016.
• M/s Ashok Leyland Finance Ltd v DCIT (Madras High Court) — a non-banking financial company cannot claim a deduction for a provision against non-performing assets beyond the amount the statute recognises High CourtHelps departmentNo later treatment found
  My client is an NBFC that has made a provision against non-performing assets in accordance with the Reserve Bank of India's directions. Can it deduct that provision, or claim it as a business loss if it is not a bad debt?
  The Madras High Court held it cannot claim beyond the statutory limit and dismissed the appeal. It reasoned that section 36(1)(viia) provides a special dispensation for named institutions, that a non-banking financial company within the meaning of section 45-I of the Reserve Bank of India Act 1934 is included in that list, and that the provision for bad and doubtful debts made by such a company cannot exceed five per cent of the total income computed before any deduction under section 36 and Chapter VI-A. Its conclusion is stated in one sentence: the appellant cannot claim a deduction beyond the amount that is statutorily recognised. It also answered against the assessee the questions on diminution in the value of investments and on diminution in the value of repossessed stock of vehicles, the latter by reference to a separate order passed the same day in a connected appeal.
• PCIT v Sri Venkatesh Granites Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The s.271AAB penalty order never says which limb of the definition of undisclosed income is satisfied. Can the penalty survive?
  No. The Tribunal held that the Assessing Officer's penalty order had nowhere specified whether the alleged undisclosed income satisfied the statutory parameters in the Explanation to s.271AAB, and cancelled the penalty for that reason alone. The Telangana High Court agreed and concurred that the penalty, whether at 30 per cent or at the 10 per cent the CIT (Appeals) had substituted, could not be sustained, and held that no question of law arose.
• PCIT-4, Kolkata v M/s Maco Corporation India Pvt Ltd High CourtHelps taxpayer
  Is there any High Court authority that a donor keeps his s.35(1)(ii) weighted deduction when the donee's approval is cancelled with retrospective effect after the payment?
  Yes. The Calcutta High Court dismissed the Revenue's appeal and answered the questions on s.35(1)(ii) against it, holding that under the Explanation in s.35(1) a deduction shall not be denied merely because the approval granted to the research organisation has been withdrawn after the payment, and applying the Supreme Court's decision in CIT v Chotatingrai Tea. The Tribunal's finding that nothing on record showed the assessee had connived in the arrangement was held not to be perverse.
• Pr. Commissioner of Income Tax v Shree Madhi Surali Vibhag Nagarik Sahakari Dhiran Mandli Ltd High CourtHelps taxpayer
  Our credit society takes and repays members' money in cash across the counter like a bank. The officer has levied penalty under sections 271D and 271E on the whole turnover. Can it stand?
  No, on these facts. The Gujarat High Court upheld the deletion of penalties of Rs 28,66,93,898 under section 271D and Rs 27,12,01,825 under section 271E. Section 273B says no penalty is imposable if the person proves reasonable cause, and that gives the authority a discretion to be exercised justly on the record. The Commissioner (Appeals) and the Tribunal found on the facts that the society, whose members' accounts work like savings accounts repayable on demand, acted on a bona fide belief that sections 269SS and 269T did not apply, that the deposits were accepted as genuine with no addition made, and that its auditor had never reported a contravention. The Court found no legal infirmity and dismissed the Revenue's appeal, holding that no substantial question of law arose.

The 60 strongest entries are summarised here. The other 88 entries are listed in full below, and each has its own page.

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.