Daily Archives: December 19, 2025

NO INTEREST DISALLOWANCE U/S 36(1)(iii) IF PARTNERS’ DRAWINGS ARE COVERED BY INTEREST-FREE FUNDS   ISSUE Whether the Assessing Officer is justified in disallowing interest expenditure under Section 36(1)(iii) on the ground that interest-bearing overdraft funds were diverted for partners’ drawings (resulting in negative capital balances), even when the assessee-LLP possessed ample interest-free funds to cover… Read More »

LIMITATION FOR RECTIFICATION APPLICATION STARTS FROM DATE OF SERVICE OF ORDER   ISSUE Whether the limitation period (currently 6 months) for filing a rectification application before the Tribunal under Section 254(2) commences from the date of the passing of the order or from the date on which the order is actually served upon the assessee.… Read More »

CUSTOMER ADVANCES ADJUSTED AGAINST SALES ARE NOT UNEXPLAINED CASH CREDITS (SECTION 68)   ISSUE Whether advances received from customers for the sale of jewelry can be treated as “unexplained cash credits” (loan creditors) under Section 68 merely because the assessee did not furnish detailed creditworthiness proof like a loan creditor, even though the advances were… Read More »

REASSESSMENT NOTICE TIME-BARRED: AO MUST ISSUE FINAL NOTICE WITHIN 7 DAYS OF REPLY IF LIMITATION EXPIRED   ISSUE Whether a reassessment notice issued under Section 148 (New Regime) is time-barred if the Assessing Officer fails to issue it within 7 days of receiving the assessee’s reply to the Section 148A(b) notice, specifically in cases where… Read More »

REVISED FORM 10 FILED DURING SEARCH ASSESSMENT RELATES BACK TO ORIGINAL; ACCUMULATION ALLOWED   ISSUE Whether a charitable trust, having filed its original Form 10 (for accumulation of income) within the due date under Section 139(1), can subsequently file a Revised Form 10 claiming a higher accumulation during search assessment proceedings under Section 153A, and… Read More »

TRANSFER PRICING: GUARANTEE COMMISSION & INTEREST ON LOANS A. Corporate Guarantee Fee: 0.25% Accepted over Bank Rate ISSUE: Whether the TPO was justified in benchmarking the corporate guarantee fee at 2.02% (based on bank guarantee rates), rejecting the assessee’s internal rate of 0.25%. DECISION: Bank Rate Inappropriate: A corporate guarantee provided to a subsidiary is… Read More »

FAQs related to Section 80G – NUDGE CAMPAIGN 1. What is Section 80G of the Income Tax Act, 1961? Section 80G provides for a deduction in computing the total income of an assessee in respect of donations to certain funds, charitable institutions, etc. A broad structure of this section is given below :- FAQs_80G_Section_mentioned

IMPORTANT INCOME TAX CASE LAWS 18.11.2025 Relevant Act Section Case Law Title Brief Summary Citation Income-tax Act, 1961 Section 2(47) (Transfer) DCIT v. Mathikere Ramaiah Seetharam Entering into a Joint Development Agreement (JDA) where the owner receives a revenue share does not convert the asset into stock-in-trade. No transfer of property occurs under   2(47)(v) or  (vi)… Read More »

DENIAL OF CROSS-EXAMINATION OF WITNESS ‘H’ VIOLATES NATURAL JUSTICE; 153C ASSESSMENT SET ASIDE ISSUE Whether the denial of the assessee’s request to cross-examine a third party (‘H’), whose statement (recorded under Section 132(4)) and seized material were used as the basis for assessments under Section 153C read with Section 153A, amounts to a violation of… Read More »

SECTION 148 NOTICE AFTER 3 YEARS INVALID WITHOUT SANCTION FROM PRINCIPAL CHIEF COMMISSIONER   ISSUEWhether a reassessment notice issued under Section 148 after the expiry of three years from the end of the relevant assessment year is valid if the sanction under Section 151 was obtained from the Principal Commissioner (PCIT) instead of the Principal… Read More »