Daily Archives: January 18, 2025

Transfer Pricing Adjustment for Interest on Outstanding Receivables: Matter Remanded for Working Capital Adjustment Consideration Summary in Key Points: Issue: The Transfer Pricing Officer (TPO) made an adjustment for interest on outstanding receivables from Associated Enterprises (AEs), arguing that the assessee failed to prove these were closely linked to normal sales transactions. Facts: The assessee,… Read More »

Additions under Section 68 Deleted for Loans from Directors Used for Business Purposes Summary in Key Points: Issue: The Assessing Officer (AO) reopened the assessment and made additions under Section 68 (cash credit) for loans received from directors, alleging that the assessee-company failed to establish the creditworthiness of the directors. Facts: The assessee-company received unsecured… Read More »

Reopening Notice Upheld for Accommodation Entries During Demonetisation Period Summary in Key Points: Issue: The assessee challenged a reopening notice issued under Section 148 of the Income Tax Act, alleging that the addition of Rs. 6.39 crores as “unexplained cash credit” under Section 68 was based on insufficient evidence. Facts: The reopening was based on… Read More »

LTCG on Sale of Shares Allowed as Exempt Under Section 10(38): Addition Under Section 68 Deleted Due to Lack of Evidence Summary in Key Points: Issue: The Assessing Officer (AO) added the entire sale consideration from the assessee’s sale of shares under Section 68 (cash credit), alleging that the transaction was an accommodation entry to… Read More »

Recording Fair Market Value of Gifted Property Not Unexplained Cash Credit: Tax Implications Arise Upon Sale or Transfer Summary in Key Points: Issue: The Assessing Officer (AO) treated the fair market value of a gifted property recorded in the assessee’s books as “unexplained cash credit” under Section 68, citing potential future tax benefits. Facts: The… Read More »

Employer’s contribution to EPF should be allowed within the limit prescribed by Rule 87, even if it exceeds 27% of salary. Case Law I Sections: 36(1)(iv), 263 of the Income-tax Act, 1961 and Rule 87 of the Income-tax Rules, 1962 Title: PCIT’s Revision Order on Provident Fund Contribution Set Aside for Being Cryptic and Non-Speaking… Read More »

Reduction in Share Capital of Subsidiary Company Considered Transfer for Capital Gains Purposes Summary in Key Points: Issue: Whether a reduction in the share capital of a subsidiary company, leading to a proportionate reduction in the assessee’s shareholding, qualifies as a “transfer” for capital gains tax purposes under Section 2(47) of the Income Tax Act.… Read More »