Analysis of Recent Tax Ruling: Employee Incentives, Transfer Pricing (BPO vs. KPO), and SEZ Cost Allocation 1. Deduction of Employee Incentives (Section 43B vs. Severance) Issue: The assessee claimed a deduction of Rs. 8.99 crore for an “executive gain sharing plan” (incentive/bonus). The AO disallowed it entirely as a “non-crystallized liability.” The CIT(A) allowed the… Read More »
Retention Money Taxable Only on Receipt; IBC Liquidation Noted by Supreme Court Issue Whether “Retention Money” withheld by a contractee (Power Grid Corporation) pending satisfactory completion of a project accrues as income in the year it is retained, or if it is taxable only in the year it is actually received, especially when the… Read More »
TDS Credit Follows Legal Ownership & Registered Deeds; Unregistered Family Arrangement Rejected Issue Whether an assessee can claim credit for Tax Deducted at Source (TDS) on the sale of a property based on an unregistered family arrangement, when the registered sale deed and the TDS certificates are in the names of his wife and… Read More »
IMPORTANT INCOME TAX CASE LAWS 21.01.2026 Relevant Act Section Case Law Title Brief Summary Citation Income-tax Act, 1961 Section 192 / 194A DCIT(TDS) v. Novartis Healthcare (P.) Ltd. • ESOP: TDS liability arises at the time of exercise, not grant. • MSME Interest: Interest paid for delayed payments to MSMEs is penal/compensatory and not “interest”… Read More »
Section 80G Approval Denied: Outsourcing Hospital & Low Charitable Spend is Not “Charity” Issue Whether a trust is entitled to approval under Section 80G if it outsources its primary medical facility to a third party in exchange for a percentage of turnover, and its actual spending on charitable relief is disproportionately low compared to… Read More »
ITR Utility Cannot Restrict Assessee’s Right to Choose Beneficial Set-Off of Losses Issue Whether an online Income Tax Return (ITR) utility can prevent an assessee from choosing the order of setting off losses (specifically Short-Term Capital Loss) against gains, resulting in a higher tax liability, when Section 70 of the Income-tax Act permits such… Read More »
Tribunal cannot reverse CIT(A)’s relief without proving “Perversity”; Section 68 Addition Deleted Issue Whether the Income Tax Appellate Tribunal (ITAT) can reverse a relief granted by the Commissioner (Appeals) regarding unexplained cash credits (Section 68) without demonstrating that the Commissioner’s appreciation of evidence was perverse, legally erroneous, or based on a misreading of facts.… Read More »
Parallel Books from Seized Pen Drive Valid for Taxing “On-Money”; No Sec 65B Certificate needed if Data Admitted Issue Estimation vs. Actuals (Section 145): Whether income from “on-money” (cash) receipts found in seized digital records should be taxed based on the actual cash receipts/payments reflected in the data (receipt basis) or by estimating a… Read More »
TDS Not Applicable on Trade Discounts, ESOP Grants, and Delayed Payment Interest to Suppliers Issue The central theme across these three rulings involves the applicability of Tax Deducted at Source (TDS) on specific business transactions: Trade Discounts vs. Commission (Sec 194H): Whether margins/discounts given to pharmaceutical stockists attract TDS as “commission” or are exempt… Read More »
Second Reassessment on Same Transaction Quashed; Change of Opinion Permissible? Issue Whether the Revenue can initiate a second reassessment proceeding against an assessee for the same transaction (receipt of loan) under a different legal provision (Section 2(24)(iv)), when the specific issue was already examined and accepted in a previous reassessment proceeding (under Section 2(22)(e)).… Read More »