Section 96(1)(b) — the law in short
What the courts have decided on section 96(1)(b), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Hinduja Global Solutions Ltd v PCIT — Chapter X-A invoked on an NCLT-sanctioned demerger: Rule issued because no appeal lies, and the s.144BA reference, the directions and the assessments stayed
High CourtHelps taxpayerValidity unconfirmed
The department has invoked GAAR on a demerger that the NCLT sanctioned after notice to the income-tax authorities, and s.72A(4) expressly allowed the loss to move with the undertaking. I have no right of appeal against the reference or the directions. What can I actually do?
You go to the High Court under Article 226, and the Bombay High Court has said in terms that the absence of an appeal is itself a reason to entertain the writ. On 19 December 2025 it issued Rule on a petition challenging a s.144BA reference dated 31 March 2025 and directions dated 30 October 2025 invoking Chapter X-A on an NCLT-sanctioned demerger, recording that it was "mindful of the fact that there is no provisions for an Appeal for impugning the reference ... or the directions ... invoking the provisions of Chapter X-A of the IT Act". It found a strong prima facie case and granted interim relief staying the reference, the directions and the assessment proceedings for AYs 2022-23 and 2023-24. Two arguments carried that interim finding: that Chapter X-A could never have been invoked once a competent authority, the NCLT, had sanctioned the demerger after notice to the income-tax authorities who raised no objection; and that s.72A(4) expressly permits the transfer of accumulated loss and unabsorbed depreciation of the demerged undertaking, so that what the Act itself allows cannot be an impermissible avoidance arrangement.
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.