IMPORTANT INCOME TAX CASE LAWS 25.03.2026 Relevant Act Section Case Law Title / Authority Brief Summary Citation PBPT Act, 1988 Sec 2(9) DCIT (BPU) v. Sara Company Sharing business premises and accounting staff between entities for “convenience” is not Benami if there is no evidence of fictitious consideration passing. Click Here Income Tax Act Sec… Read More »
Capital Losses Expire After Eight Years and Cannot Be Set Off Beyond the Statutory Limit. Facts The Claim: For AY 2016-17, the assessee sought to set off a carried-forward capital loss against current year capital gains. The Origin: The capital loss in question pertained to Assessment Year 2007-08. The Dispute: The Revenue argued that the… Read More »
Section 43CB Mandates Straight-Line Revenue Recognition for Time-Bound Service Contracts. Facts The Assessee: A company manufacturing, installing, and maintaining elevators and escalators. The Transaction: The company enters into Annual Maintenance Contracts (AMCs) with customers for periods of 1 to 2 years. The Accounting: The assessee recognized revenue on a straight-line basis over the tenure of… Read More »
Deduction for Logo Royalty Upheld Based on Unrebutted Additional Evidence and Valid Agreements. The Facts: For AYs 2010-11 to 2012-13, the assessee claimed a deduction for royalty paid for the use of a brand/logo. The AO disallowed the portion attributable to the logo. The Decision: The assessee provided additional evidence, including relevant agreements, to support… Read More »
Interest on Borrowed Capital: Own Funds vs. Interest-Bearing Loans (Section 36(1)(iii)) Presumption of Own Funds for Business Advances The Facts: For AY 2017-18, the assessee had an outstanding advance of Rs. 80 lakhs given to A.M. Enterprises. The Assessing Officer (AO) disallowed interest of Rs. 9.60 lakhs (calculated at 12%) under Section 36(1)(iii), assuming that… Read More »
Airport Infrastructure: Rights, Depreciation, and Capital Receipts under Income Tax I. Procedure of CIT(A) – Duty to Adjudicate All Grounds Assessee-Airport Operator’s Right to Merits-Based Adjudication The Facts: The assessee raised additional grounds before the Commissioner (Appeals) regarding bogus accommodation entries and investment write-offs (under normal provisions and Section 115JB). The CIT(A) ignored these grounds… Read More »
Rejection of Benami Allegations Based on Business Arrangements and Consideration Tests Facts The Allegation: The Initiating Officer (IO) provisionally attached a property, alleging a benami transaction. The IO pointed to several “suspicious” factors: The Benamidar (the legal owner) operated their business from the premises of the alleged Beneficial Owner. There was no formal lease agreement… Read More »
Anti-Profiteering: Failure to Pass on ITC Benefits in Construction Contracts (Section 171) Facts The Complaint: NTPC filed a complaint with the Standing Committee alleging that the Respondent (the contractor) had failed to pass on the benefits of the GST transition in a construction contract for the period July 2017 to October 2023. The Transition: Before… Read More »
Invalidity of Bypassing Detention Proceedings for Premature Confiscation (Section 130) Facts The Interception: The Petitioner, a registered dealer in metal scrap, was transporting goods that were intercepted in transit at Aslali by the State Tax Officer. The Procedure: The Department initiated proceedings under Section 129 (Detention, seizure, and release of goods and conveyances in transit)… Read More »
Admissibility of Advance Ruling for Past Supplies and Completed Projects (Section 95/97) Facts The Applicant: A pharmaceutical company manufacturing APIs and formulations that set up a new plant in Udaipur. The Transaction: The company issued purchase orders to contractors for civil works, specifically RCC foundations and steel structural supports required for installing machinery. The Tax… Read More »