IMPORTANT INCOME TAX CASE LAWS 17.01.2026

Relevant Act	Section	Case Law Title	Brief Summary	Citation
Income-tax Act, 1961	Section 4	Dharmapuri District Co-operative Milk Producers Union Ltd. v. DCIT	Government grant-in-aid received for the specific purpose of rehabilitation and clearing liabilities is a Capital Receipt (purpose test applied) and not a revenue receipt taxable as income.	Click Here
Income-tax Act, 1961	Section 36(1)(ii)	DCIT v. Nutricraft India (P.) Ltd.	Bonus paid to directors requires scrutiny to ensure it is not in lieu of dividends. The matter was remanded to verify the directors’ shareholding and the link between payment and ownership.	Click Here
Income-tax Act, 1961	Section 40(a)(ia)	DCIT v. Nutricraft India (P.) Ltd.	Non-filing of Form under Section 194C(7) is a procedural lapse. If the assessee obtained valid declarations under Section 194C(6) from transporters, disallowance under Section 40(a)(ia) for non-deduction of TDS is not warranted.	Click Here
Income-tax Act, 1961	Section 68	DCIT v. Balmukund Sponge and Iron (P.) Ltd.	Circular Trading: Where sales/purchases are fictitious (entry operator driven) but routed through books to inflate turnover, and the profit is already offered to tax, no further ad hoc profit estimation is justified.	Click Here
Income-tax Act, 1961	Section 69A	DCIT v. Balmukund Sponge and Iron (P.) Ltd.	WhatsApp Chats: Additions based solely on WhatsApp chats retrieved from directors without corroborative material (proving actual receipts/payments) are unsustainable.	Click Here
Income-tax Act, 1961	Section 148A	Chetak Nandkumar Gandhi v. ITO	[Procedural Strictness] A notice issued under Section 148A(b) (Show Cause) which effectively conducts an inquiry (calling for details) mixes up the distinct stages of 148A(a) and (b). Such a notice is bad in law and quashed.	Click Here
Income-tax Act, 1961	Section 164	Rahulkumar Bajaj Charitable Trust v. DCIT	Surcharge on MMR: For a trust taxed at the Maximum Marginal Rate (30%), the surcharge must follow the slab-based rates (e.g., 10%, 15%) prescribed in the Finance Act, not a uniform flat rate of 37%.	Click Here
Income-tax Act, 1961	Section 199	Nisar Ebrahim Ookabhoy v. ITO	TDS Credit: An assessee is entitled to TDS credit even if it doesn’t appear in Form 26AS, provided they can prove tax was actually deducted (but not deposited by the tenant/deductor).	Click Here
Income-tax Act, 1961	Section 244A	Shree Renuka Sugars Ltd. v. ACIT	[VSV Refund] Interest under Section 244A is applicable to refunds arising from the Vivad Se Vishwas Act if delayed (35 months here). The taxpayer is also entitled to “Interest on Interest” as the interest became part of the refund corpus.	Click Here

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