INCOME TAX CASE LAW 29.05.2026

Relevant Act	Section	Case Law Title	Citation	Brief Summary
Income-tax Act, 1961	Section 5	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Interest on a bank’s securities portfolio (treated as stock-in-trade) is taxable on an accrual basis, not a due basis, as covered by earlier Tribunal orders.
Income-tax Act, 1961	Section 14A	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	No disallowance under Rule 8D(2)(ii) is warranted if the assessee has sufficient own interest-free funds; only investments yielding exempt income should be considered under Rule 8D(2)(iii). Remanded for recomputation.
Income-tax Act, 1961	Section 28(i)	Assistant Commissioner of Income-tax v. Tatyasaheb Kore Warana Sahakari Sakhar Karkhana Ltd.	Click Here	Matter remanded to verify if a cooperative sugar factory’s practice of selling sugar at concessional rates had the support of industry customs or State Government resolutions per Supreme Court mandates.
Income-tax Act, 1961	Section 28(i)	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	A bank is entitled to value its AFS/HFT securities on a scrip-wise lower of cost or market value basis for tax purposes (even if books follow RBI norms) to ensure taxation of real income.
Income-tax Act, 1961	Section 32	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Depreciation is not allowable on lease and sale-and-leaseback transactions that are, in substance, financing arrangements where the assessee didn’t assume ownership risks and rewards.
Income-tax Act, 1961	Section 36	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	1. Appellate authorities can entertain an additional claim for bad debts written off (non-rural) made via a note, notwithstanding deductions under Sec 36(1)(viia). 2. An additional claim for bad debts under the write-off method is allowable subject to verification, even if the AO alleged the provision method was followed. 3. Provision for standard assets forms part of the provision for bad and doubtful debts under Sec 36(1)(viia); restored for quantification. 4. Additional deduction under Sec 36(1)(viia) up to the statutory limit claimed via a note was restored to the AO to verify eligibility and prevent double deduction.
Income-tax Act, 1961	Section 37 / 37(1)	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	1. Disallowed: One-time insurance premium under Special Home Loan Scheme due to lack of documentary evidence. 2. Allowed: Provisions for LTC/HTC, Sick Leave, and Casual Leave on an actuarial basis (Sec 43B(f) applies strictly to leave encashment, not these liabilities). 3. Remanded: Provision for wage revision computed on a scientific/actuarial basis to verify if it is an ascertained liability or contingent. 4. Allowed: Contribution to Retired Employees Medical Benefit Scheme as bona fide business expenditure (Sec 40A(9) disallowance overturned). 5. Disallowed: Provisions created for a student merit incentive corpus where no actual expenditure occurred (actual payments made during the year are allowable subject to verification). 6. Allowed: Depreciation/provision on matured securities where redemption proceeds were delayed on due dates, adhering to consistency. 7. Allowed: Provision for pension liability on actuarial valuation basis as per AS-15 as it represents an ascertained liability. 8. Allowed: Education cess and secondary and higher education cess were held to be deductible business expenditures.
Income-tax Act, 1961	Section 40(a)(ia)	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Case remanded to evaluate whether disallowance is warranted in cases of short-deduction of TDS vs. non-deduction, based on judicial precedents.
Income-tax Act, 1961	Section 41	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Recovery of bad debts written off is taxable only if a corresponding deduction was actually allowed in earlier years; restored to the AO for factual verification.
Black Money Act, 2015	Section 43	Kumar Ramanathan v. DDIT/ADIT (Inv.)	Click Here	Penalty under Section 43 is unsustainable for an inadvertent failure to report foreign security investments in Schedule FA of the ITR, provided the investments were made using tax-paid funds through banking channels in legal compliance.
Income-tax Act, 1961	Section 43B	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	1. Claims for bonus, leave encashment, and employee liabilities were restored to the AO to check if payments were made before the ITR filing due date. 2. Deduction for privilege leave encashment provision is governed strictly by actual payment terms under Sec 43B(f).
Income-tax Act, 1961	Section 43D	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Taxing notional interest on NPAs by applying Rule 6EA (contrary to RBI prudential norms) violates the principle of real income; addition deleted.
Income-tax Act, 1961	Section 68	Miraj Products (P.) Ltd. v. ACIT	Click Here	Framing a post-01.04.2021 search assessment under Section 143 instead of the mandatory reassessment route (Sec 147 r.w.s 148) is void ab initio for want of jurisdiction. This defect is not curable under Section 292BB.
Income-tax Act, 1961	Section 69A / 69C	Miraj Products (P.) Ltd. v. ACIT	Click Here	1. Separate addition for unexplained expenditure (Sec 69C) based on a ratio method alongside a best-judgment profit estimation amounts to double taxation. 2. Additions based on third-party diaries projecting unaccounted sales/purchases through reverse engineering are unsustainable without direct corroborative evidence. 3. Additions under Sec 69A for cash sales cannot stand if the assessment order fails to anchor upon cash discovery, utilization patterns, or unexplained assets. 4. Use of third-party evidence found during searches requires strict safeguards; additions fail if the AO does not establish direct nexus or record mandatory satisfaction with prior approval. 5. Where the AO makes additions under Sec 69A without a trading addition, the CIT(A) cannot independently reject books and estimate profits under Sec 251 (such action is ultra vires).
Income-tax Act, 1961	Section 69C	Principal Commissioner of Income-tax 1 v. Prathana Gems	Click Here	SLP dismissed; where the AO made a 100% addition for non-genuine purchase bills from the Bhanwarlal Jain group, restricting the disallowance to 6% of purchases was justified in line with past Tribunal benchmarks.
Income-tax Act, 1961	Section 80G	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Donation made to an association public school lacked a direct business nexus for a Section 37(1) claim, but the AO was directed to verify its eligibility for deduction under Section 80G.
Income-tax Act, 1961	Section 80-IA	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Claim for deduction regarding income derived from windmills was restored to the AO for verification of statutory conditions, following consistency with past years.
Income-tax Act, 1961	Section 90	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Profits of foreign branches in treaty countries are taxable in India in view of Section 90(3) and Notification No. 91/2008; the assessee is restricted to Foreign Tax Credit (FTC) relief.
Income-tax Act, 1961	Section 115-O	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Claim for refund of excess Dividend Distribution Tax (DDT) was restored to the AO for verification of supporting documents and fresh adjudication.
Income-tax Act, 1961	Section 145	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Deferring interest income recognition on non-performing investments (NPIs) until actual realization (per RBI norms) is valid. Taxing them on accrual equals taxing notional income.
Income-tax Act, 1961	Section 148	Income-tax Officer v. Ashok Singh Gautam HUF	Click Here	SLP disposed of; reassessment notices issued by an authority lacking jurisdiction (instead of the NFAC as mandated by CBDT notification) are unsustainable. Revenue granted liberty to proceed using the correct procedure.
Income-tax Act, 1961	Section 220	Capegemini Technology Services India Ltd v. Deputy Commissioner of Income-tax	Click Here	Tax recovery notices issued in the name of an erstwhile entity post-amalgamation cannot be sustained if the Revenue fails to produce underlying rectification orders or proof of service.
Income-tax Act, 1961	Section 244A	State Bank of India v. Assistant Commissioner of Income-tax	Click Here	Merely filing a revised return does not automatically justify excluding the entire intervening period for computing interest on refund. Restored for factual verification.
Income-tax Act, 1961	Section 270A	Ratna Show Reddy Singareddy v. Deputy Commissioner of Income-tax	Click Here	Penalty under Section 270A is not sustainable and must be deleted if the assessee voluntarily discloses and pays tax on STCG with a bona fide explanation upon receiving a Sec 148 notice, and the AO accepts the returned income without variation.
Income-tax Act, 1961	Section 276B	Vrindavan Pathak v. Union of India	Click Here	Quashing of prosecution proceedings is not warranted at a preliminary stage if a prima facie case of wilful default exists due to continued non-compliance with served notices under Sections 221(1) and 201(1A).