Daily Archives: June 24, 2026

Audited books showing sufficient cash-in-hand invalidate Section 68 additions for demonetization bank deposits.

By | June 24, 2026
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Audited books showing sufficient cash-in-hand invalidate Section 68 additions for demonetization bank deposits. Issue Whether the Assessing Officer can legally reject a taxpayer’s explanation and make an addition under Section 68 for cash deposited during the demonetization period, when the taxpayer establishes that the deposits originated from cash-in-hand recorded in its regularly maintained, unblemished, and… Read More »

Dismissal of writ appeal upheld as no mandamus lies to compel time-barred reassessment action.

By | June 24, 2026
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Dismissal of writ appeal upheld as no mandamus lies to compel time-barred reassessment action. Issue Whether a writ of mandamus under Article 226 of the Constitution of India can be issued to compel the Income Tax authorities to act on a Tax Evasion Petition and initiate reassessment proceedings when the statutory limitation period under Section… Read More »

Reassessment additions are legally unsustainable if the original issue triggering the reopening is entirely dropped.

By | June 24, 2026
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Reassessment additions are legally unsustainable if the original issue triggering the reopening is entirely dropped. Issue Whether the Assessing Officer can legally disallow a Section 54 capital gains deduction and make a new addition in a reassessment order if no addition is ultimately made on the primary issue for which the Section 147 reopening was… Read More »

Tax authorities cannot dispute a company’s commercial wisdom in securing loans to repay prior debt obligations.

By | June 24, 2026
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Tax authorities cannot dispute a company’s commercial wisdom in securing loans to repay prior debt obligations. Issue Whether the Assessing Officer can disallow finance costs under Section 37(1) by questioning the commercial wisdom or business acumen of an assessee who takes out a new loan to repay an existing bank loan. Whether the finance costs… Read More »

Disallowance under Section 36(1)(iii) must reflect actual interest paid, while verified loans defeat Section 68 additions.

By | June 24, 2026
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Disallowance under Section 36(1)(iii) must reflect actual interest paid, while verified loans defeat Section 68 additions. Issue Whether the lower authorities were justified in making a massive interest disallowance under Section 36(1)(iii) without correlating the disallowance to the actual interest expenditure incurred on loans diverted for interest-free advances. Whether an addition under Section 68 for… Read More »

DSIR-certified R&D qualifies for weighted deduction, and uncertified capital expenditure is allowed as normal deduction.

By | June 24, 2026
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DSIR-certified R&D qualifies for weighted deduction, and uncertified capital expenditure is allowed as normal deduction. Issue Whether the Assessing Officer is required to grant the full 200% weighted deduction under Section 35(2AB) on the capital R&D expenditure certified by the DSIR in Form 3CL, rather than limiting it to 100%. Whether scientific research capital expenditure… Read More »

Assessing Officer directed to exclude Mutual Funds and Tax Free Bonds from Section 14A calculations.

By | June 24, 2026
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Assessing Officer directed to exclude Mutual Funds and Tax Free Bonds from Section 14A calculations. Issue Whether the Assessing Officer, while computing the indirect expense disallowance under Section 14A read with Rule 8D(2)(ii), must exclude investments made in Mutual Funds and Tax Free Bonds from the average value of investments. Whether any further disallowance can… Read More »

CIT(E) cannot reject trust registration renewal over past amendments; matters remanded for verification.

By | June 24, 2026
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CIT(E) cannot reject trust registration renewal over past amendments; matters remanded for verification. Issue Whether the CIT(E) is justified in rejecting a trust’s Section 12A registration renewal application based on non-registration under a State Trust Act, historical object amendments, and financial advances when these details were already on record during its previous 2021 re-registration. Whether… Read More »

DTAA Rates Do Not Apply to Dividend Distribution Tax, and Discount on ESOP is Allowed as Business Expenditure

By | June 24, 2026
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DTAA Rates Do Not Apply to Dividend Distribution Tax, and Discount on ESOP is Allowed as Business Expenditure Issue Whether Double Taxation Avoidance Agreement (DTAA) provisions are triggered when a domestic company pays Dividend Distribution Tax (DDT) under Section 115-O, thereby allowing a refund of DDT paid in excess of DTAA rates. Whether the discount… Read More »