Interest on Borrowed Capital for Unused Asset Disallowed as Business Expense but Deductible Under House Property Issue Whether interest paid on capital borrowed to acquire a commercial property constitutes an allowable deduction under Section 36(1)(iii) as business expenditure prior to the asset being put to use, or if it constitutes a deduction under Section 24(b)… Read More »
Section 14A Disallowance Cannot Exceed Exempt Income Earned; Finance Act 2022 Amendment Clarified as Prospective in Nature ISSUES Quantum of Disallowance: Whether the disallowance of expenditure under Section 14A read with Rule 8D can exceed the actual amount of exempt income earned by the assessee during the relevant previous year. Retrospectivity of FA 2022:… Read More »
Educational Trusts: Payments to Related Parties (Royalty, Services) Allowed in Absence of Market Comparables Proving Excessiveness; Hostel Activity Integral to Education ISSUES Section 13(1)(c) (Related Party Payments): Whether payments made to related parties for Advertisement, Services, and Royalty (4% of fees) can be disallowed as “undue benefit” merely due to common management, without the AO… Read More »
Accrual of Income: Notional Interest Cannot Be Taxed on Interest-Free Advances Without Contractual Right to Receive; RBI MCLR Benchmark Held Untenable ISSUES Accrual of Notional Interest: Whether the Assessing Officer (AO) can tax “notional interest” on interest-free loans/advances given by the assessee to other companies, in the absence of any contractual stipulation or legal… Read More »
IMPORTANT INCOME TAX CASE LAWS 03.01.2026 Relevant Act Section Case Law Title Brief Summary Citation Income-tax Act, 1961 Section 4 Vishnu Trimbak Thakur v. PCIT-1 Self-assessment tax paid on undisclosed income under the Income Declaration Scheme (IDS), 2016 (which was deemed rejected) is “inextricably linked” to that income. Credit for such tax must be given… Read More »
Limitation Period is Sacrosanct: Section 148 Notice for AY 2013-14 Issued on 31.07.2022 Held Invalid as Issued Beyond ‘Surviving Time’ Under Reassessment Scheme ISSUE Whether a notice under Section 148 dated 31.07.2022, issued for Assessment Year 2013-14 pursuant to the procedure under Section 148A (following the Supreme Court’s Ashish Agarwal directions), is valid, or… Read More »
Reassessment Against Deceased Assessee Set Aside: Department Cannot Continue Proceedings Against Dead Person After Receiving Intimation of Death; Liberty Granted to Issue Fresh Notice to Legal Heirs ISSUE Whether an assessment order passed in the name of a deceased assessee is valid when the Assessing Officer (AO) was informed of the death during the… Read More »
Reassessment Invalid Where AO Relies Solely on Suspicious Transaction Report (STR) and Ignores Assessee’s Detailed Reply and Evidence Regarding Related Party Transactions ISSUE Whether the Assessing Officer (AO) can validly pass an order under Section 148A and issue a reopening notice under Section 148 solely based on inputs from a Suspicious Transaction Report (STR)… Read More »
Rejection of Section 132B Application Void for Want of Jurisdiction: High Court Quashes Order Passed in Contravention of MP High Court Directions and Remands Matter to Jurisdictional AO in Mumbai ISSUE Whether an order rejecting an application for the release of seized jewellery under Section 132B is valid if passed by an Assessing Officer… Read More »
Co-operative Societies: Interest on Statutory Compulsory Deposits Qualifies for 80P Deduction; Section 80P(4) Not Applicable to Societies Without RBI License ISSUES Statutory Deposits: Whether interest income earned by a co-operative society from bank investments made under statutory compulsion (Karnataka Co-operative Societies Act) qualifies for deduction under Section 80P(2)(a)(i) as operational income, or is it taxable… Read More »