INCOME TAX CASE LAW 20.06.2026

Relevant Act	Section	Case Law Title	Brief Summary	Citation
Income Tax Act, 1961	Sec. 14A	Cadila Pharmaceuticals Ltd. v. DCIT	Disallowance under Section 14A read with Rule 8D cannot exceed the actual exempt income earned during the year; notional expenditure cannot be taxed.	Click Here
Income Tax Act, 1961	Sec. 28	Smt. Ranjana Kumari v. DCIT/ACIT (Central)	Gross profit addition is reasonable if physical stock deficiencies are not reconciled. Conversely, a protective gross profit addition based on a third-party salesman’s WhatsApp messages is unsustainable and must be deleted.	Click Here
Income Tax Act, 1961	Sec. 28(i)	Smt. Ranjana Kumari v. DCIT/ACIT (Central)	Estimation of gross profit on out-of-book sales is justified when physical stock is short during a search. For established unaccounted cash sales via WhatsApp, the GP estimation should be restricted to 3%.	Click Here
Income Tax Act, 1961	Sec. 35	Cadila Pharmaceuticals Ltd. v. DCIT	Weighted deduction under Sec. 35(2AB) for pre-01-07-2016 periods cannot be restricted strictly to Form 3CL quantifications. Reduction of contract research receipts is not required if the legal position and expenditure genuineness are consistent.	Click Here
Income Tax Act, 1961	Sec. 36(1)(iii)	Cadila Pharmaceuticals Ltd. v. DCIT	Disallowance of interest is unjustified where interest-free advances given to group entities are driven by commercial expediency and lack a direct nexus with borrowed funds.	Click Here
Income Tax Act, 1961	Sec. 36(1)(va)	Cadila Pharmaceuticals Ltd. v. DCIT	Employees’ contributions to welfare funds deposited beyond the timelines specified under respective welfare laws are treated as deemed income and are not deductible, even if paid before the Sec. 139(1) due date.	Click Here
Income Tax Act, 1961	Sec. 36(1)(va)	Gates India (P.) Ltd. v. Assessment Unit, ITD	Delayed deposits of employees’ PF or ESI contributions beyond the due dates prescribed under their respective Acts cannot be allowed as a deduction.	Click Here
Income Tax Act, 1961	Sec. 36(1)(vii)	TVS Supply Chain Solutions Ltd. v. DCIT	Post-01-04-1989, actual write-off of bad debts in the books of accounts is sufficient. The Assessing Officer cannot demand additional proof of irrecoverability.	Click Here
Income Tax Act, 1961	Sec. 37(1)	TVS Supply Chain Solutions Ltd. v. DCIT	Lease rentals consisting of principal and interest components paid for using assets without acquiring ownership rights are fully allowable as revenue expenditure.	Click Here
Income Tax Act, 1961	Sec. 37(1)	Cadila Pharmaceuticals Ltd. v. DCIT	Expenditure on medical practitioners (gifts, sponsorships, hospitality) is hit by Explanation 1 to Sec. 37(1) and is disallowed. However, regulatory overseas approval costs for exports do not create a capital asset and are allowable as revenue expenses.	Click Here
Income Tax Act, 1961	Sec. 37(1)	United India Insurance Co. Ltd. v. Pr. CIT	Sec. 263 revision is justified if the AO failed to verify CSR expenses and interest on delayed TDS/TCS. However, revisionary orders cannot be sustained on prior period expenses if the AO fully examined and accepted them during reassessment.	Click Here
Income Tax Act, 1961	Sec. 37(1)	Roquette India (P.) Ltd. v. ACIT/DCIT	Disallowance of intra-group IT service charges under Section 37(1) is unsustainable once the corresponding Transfer Pricing (TP) adjustment assumes the services were actually rendered and is deleted.	Click Here
Income Tax Act, 1961	Sec. 43(5)	Cadila Pharmaceuticals Ltd. v. DCIT	Forex fluctuation losses on derivative/forward contracts entered strictly to hedge genuine import-export exposures are non-speculative business losses.	Click Here
Income Tax Act, 1961	Sec. 43B	Cadila Pharmaceuticals Ltd. v. DCIT	Deduction for bonus payments is conditional upon the actual payment being conclusively established within the time limit prescribed under Section 43B read with Section 139(1).	Click Here
Income Tax Act, 1961	Sec. 45	Late Kalappa Shanthamma v. ITO	The CIT(A) cannot dismiss a capital gains appeal on limitation grounds without evaluating the accompanying condonation petition explaining the delay.	Click Here
Income Tax Act, 1961	Sec. 54B / 54EB	K. Devarajulu (HUF) v. DCIT	Rejecting a flawed Section 54B exemption without evaluating an alternate, explicit plea for Section 54EB relief on reinvested long-term capital gains reflects non-application of mind.	Click Here
Income Tax Act, 1961	Sec. 69 / 69A	Smt. Ranjana Kumari v. DCIT/ACIT (Central)	Additions based solely on third-party seized documents (excel sheets or loose papers) without direct corroboration, matching property profiles, or direct nexuses to the assessee must be deleted.	Click Here
Income Tax Act, 1961	Sec. 69A	Smt. Ranjana Kumari v. DCIT/ACIT (Central)	Rental income is taxable as individual income if the existence of the claimed HUF/PAN is unproven. Separate additions for unaccounted purchases cannot stand if they are linked with unaccounted sales and no stock discrepancies exist.	Click Here
Income Tax Act, 1961	Sec. 148 / 69A	Love Dharminkumar Patel v. ITO	Reopening an assessment based on an undated loose chit that lacks the assessee’s name, clear financial amounts, or a broker-established live link is invalid.	Click Here
Income Tax Act, 1961	Sec. 148 / 69A	Kantilal Parsotamdas Patel v. ITO	Section 148 reassessment notices alleging on-money receipts are unsustainable if based entirely on third-party papers and broker statements that lack contemporaneous dates or names.	Click Here
Income Tax Act, 1961	Sec. 69C	Smt. Ranjana Kumari v. DCIT/ACIT (Central)	Unexplained expenditure additions cannot be sustained if they are supported only by rough, undated jottings on loose papers devoid of specifics.	Click Here
Income Tax Act, 1961	Sec. 80P	Bramaramba Pattina Souharda Sahakari Sangha Niyamitha v. ITO	Interest income earned by a co-operative society from statutory/compulsory deposits with banks qualifies as eligible business income under Section 80P(2)(a)(i).	Click Here
Income Tax Act, 1961	Sec. 87A	Shevgoor Namratha Kamath v. ITO	Individuals under the new tax regime with total income under Rs. 7 lakhs are entitled to the full Section 87A rebate against long-term capital gains taxable under Section 112.	Click Here
Income Tax Act, 1961	Sec. 92C	Gates India (P.) Ltd. v. Assessment Unit, ITD	Interest on AE receivables shouldn’t receive separate TP adjustments if already factored into working capital adjustments. Arbitrary ‘Nil’ benchmarking of verified management fees under CUP is unwarranted.	Click Here
Income Tax Act, 1961	Sec. 92C	Roquette India (P.) Ltd. v. ACIT/DCIT	Setting the ALP of intra-group services to NIL purely via a subjective “benefit test” is invalid when the assessee provides clear documentation and the Revenue fails to disprove service delivery.	Click Here
Income Tax Act, 1961	Sec. 92C / 92B	Cadila Pharmaceuticals Ltd. v. DCIT	Providing a corporate bank guarantee to an overseas AE without incurring actual cost, outflow, or economic sacrifice is not an international transaction; no arm’s length commission can be imputed.	Click Here
Income Tax Act, 1961	Sec. 92C	TVS Supply Chain Solutions Ltd. v. DCIT	Applying an internal CUP of 1% for a corporate guarantee extended to a Singapore AE is justified if the assessee charged identical rates to its US and UK AEs.	Click Here
Income Tax Act, 1961	Sec. 92C	Imperial Jewels v. Assessment Unit, NFAC/Dy. CIT	Companies in severe financial distress (OTS with lenders, repayment defaults) are not operating under normal conditions and cannot be used as TNMM comparables.	Click Here
Income Tax Act, 1961	Sec. 115JB	Cadila Pharmaceuticals Ltd. v. DCIT	Section 14A disallowances cannot be automatically imported into book profit calculations under Section 115JB. Only direct expenditure debited to the P&L account is adjustable.	Click Here
Income Tax Act, 1961	Sec. 132B / 244A	Pradeep Misra v. Union of India	Delays in releasing physical savings instruments (KVPs/IVPs) after dues are deposited entitle the assessee to compensatory interest on the maturity value, plus 4% simple interest on the interest amount.	Click Here
Income Tax Act, 1961	Sec. 143	Brevo CRM Solutions (P.) Ltd. v. Assessment Unit, ITD	Final assessment orders issued in the name of a non-existent, amalgamated target entity—despite prior intimation to the revenue—are void of jurisdiction and invalid.	Click Here
Income Tax Act, 1961	Sec. 253	Late Kalappa Shanthamma v. ITO	A 252-day delay in filing an appeal by a legal heir must be condoned and heard on merits if it was backed by sufficient cause and lacked deliberate negligence or mala fide intent.	Click Here