INCOME TAX CASE LAWS 03.07.2026

Relevant Act	Section	Case Law Title	Citation	Brief Summary
Income-tax Act, 1961	Sec 2(15)	Reliance Foundation Hospital Trust v. CIT (Exemptions)	$2026$ Click Here	Offering premium rooms/high tariffs does not wipe out a hospital’s charitable nature as long as the generated surplus is devoted back to charitable purposes.
Income-tax Act, 1961	Sec 9	Bank of Nova Scotia v. ACIT	$2026$ Click Here	Interest earned on overseas placements with non-resident banks is not taxable in India on a deemed accrual basis under Sec 9(1)(v)(c).
Income-tax Act, 1961	Sec 9	Bank of Nova Scotia v. ACIT	$2026$ Click Here	Interest received by an Indian branch from its foreign HQ/branches is non-taxable under the mutuality principle; correspondingly, interest paid to the HQ is non-deductible.
Income-tax Act, 1961	Sec 10(10C)	Hosur Bata Employees Union v. Pr. CIT	$2026$ Click Here	The employer is not at fault for deducting TDS on VRS arrears if employees fail to file Form 10E; employees must claim refunds for non-taxable sums via their tax returns.
Income-tax Act, 1961	Sec 12A	Alloy Steel Producers Association of India v. CIT(E)	$2026$ Click Here	A registration renewal application cannot be rejected solely due to an inadvertent clerical selection of a wrong statutory clause in e-filed Form 10AB.
Income-tax Act, 1961	Sec 12AB	Reliance Foundation Hospital Trust v. CIT (Exemptions)	$2026$ Click Here	CIT(E) cannot independently cancel registration over alleged regulatory violations (like Indigent Patient Fund rules) without an adverse order from the competent authority.
Income-tax Act, 1961	Sec 12AB	Reliance Foundation Hospital Trust v. CIT (Exemptions)	$2026$ Click Here	Retrospective cancellation of a trust’s registration based entirely on data from subsequent years is illegal unless fraud, misrepresentation, or basic character shift is found.
Income-tax Act, 1961	Sec 14A	ESAB India Ltd. v. Dy. CIT	$2026$ Click Here	The AO cannot blindly invoke Sec 14A read with Rule 8D without thoroughly checking the assessee’s records and issuing a specific show-cause notice.
Income-tax Act, 1961	Sec 14A	Bank of Nova Scotia v. ACIT	$2026$ Click Here	No disallowance is warranted under Sec 14A if exempt income was earned via tax-free bonds funded completely through old, interest-free proprietary funds.
Income-tax Act, 1961	Sec 14A	Bank of Nova Scotia v. ACIT	$2026$ Click Here	Where inter-branch transactions are excluded based on the doctrine of mutuality, Sec 14A cannot be applied to disallow expenses connected to that non-taxable setup.
Income-tax Act, 1961	Sec 28(i)	DCIT v. Advant IT Park (P.) Ltd.	$2026$ Click Here	No addition for notional interest on interest-free advances to a WOS can stand once the revenue accepts the assessee’s business explanation in a remand report.
Income-tax Act, 1961	Sec 37	ESAB India Ltd. v. Dy. CIT	$2026$ Click Here	One-time settlement payments to business contractors during structural reorganization are fully deductible under Sec 37 and cannot be limited under Sec 35DDA.
Income-tax Act, 1961	Sec 37(1)	Bank of Nova Scotia v. ACIT	$2026$ Click Here	Interest paid to the RBI for a shortfall in maintaining the Statutory Liquidity Ratio (SLR) is compensatory, not penal, and is therefore deductible.
Income-tax Act, 1961	Sec 37(1)	Bank of Nova Scotia v. ACIT	$2026$ Click Here	Broken period interest paid on securities held as stock-in-trade forms part of closing stock and is allowable as revenue business expenditure.
Income-tax Act, 1961	Sec 37(1)	DCIT v. Advant IT Park (P.) Ltd.	$2026$ Click Here	Ad-hoc business disallowances must be deleted if the revenue accepts the assessee’s factual documentation without adverse remarks in a subsequent remand report.
Income-tax Act, 1961	Sec 57	Sara Sae (P.) Ltd. v. Addl. CIT	$2026$ Click Here	Interest paid on an ECB is deductible under Sec 57 against interest earned from a subsidiary loan, even if a part of that ECB was invested in non-dividend equity.
Income-tax Act, 1961	Sec 68	Ojaswini Retailers (P.) Ltd. v. UOI	$2026$ Click Here	Orders passed under Sec 148A(3) without evaluating the assessee’s responses or recording distinct findings on the genuineness of cash credits are void.
Income-tax Act, 1961	Sec 68	DCIT v. Advant IT Park (P.) Ltd.	$2026$ Click Here	Trade payables cannot be held as unexplained cash credits once the AO accepts the transaction trail and supplier details in a remand report.
Income-tax Act, 1961	Sec 69A	Dinesh Kumar v. ITO	$2026$ Click Here	Cash deposit additions under Sec 69A are unsustainable when partially backed by real estate advances (accepted in a relative’s case) and matched bank withdrawals.
Income-tax Act, 1961	Sec 69A	Maharana Pratap Polytechnic Society v. DCIT (Exemption)	$2026$ Click Here	Passing a quick reassessment order without detailing what further proof is needed for student fee collections constitutes a breach of natural justice.
Income-tax Act, 1961	Sec 69A	Maharana Pratap Polytechnic Society v. DCIT (Exemption)	$2026$ Click Here	Reopening a concluded assessment to track bank deposits that were already documented, verified, and accepted as student fees is an invalid change of opinion.
Income-tax Act, 1961	Sec 74	ACIT v. Reliance Infrastructure Ltd.	$2026$ Click Here	The deeming fiction of Sec 50 applies only to the computation mechanism; it does not change the asset’s capital nature, allowing set-off of long-term losses against it.
Income-tax Act, 1961	Sec 80-IA	Brakes India Ltd. v. ACIT	$2026$ Click Here	Concurrent claims under Sec 80-IA and Sec 80HHC must match the computing mechanics set out by the Supreme Court in the case of Shital Fibers Ltd.
Income-tax Act, 1961	Sec 80-IB	Brakes India Ltd. v. ACIT	$2026$ Click Here	Income derived from export incentive schemes like DEPB and duty drawbacks cannot be categorized as profits ‘derived from’ an industrial undertaking under Sec 80-IB.
Income-tax Act, 1961	Sec 80-IB	Limitex v. ACIT	$2026$ Click Here	Restriction of Sec 80-HHC deductions by deducting Sec 80-IB benefits under Sec 80-IA(9) requires fresh verification under the Shital Fibres SC ruling guidelines.
Income-tax Act, 1961	Sec 92C	Sara Sae (P.) Ltd. v. Addl. CIT	$2026$ Click Here	A company cannot be removed from a comparable set as a “persistent loss-maker” unless it has recorded losses across all three consecutive tracking years.
Income-tax Act, 1961	Sec 92C	Sara Sae (P.) Ltd. v. Addl. CIT	$2026$ Click Here	The TPO cannot discard comparable manufacturing entities that exhibit clear functional similarity and matching production profiles during transfer pricing evaluation.
Income-tax Act, 1961	Sec 92C	Sara Sae (P.) Ltd. v. Addl. CIT	$2026$ Click Here	Foreign exchange gains arising out of standard operational export sales must be pooled as operational income when evaluating PLI margins under TNMM.
Income-tax Act, 1961	Sec 92C	Sara Sae (P.) Ltd. v. Addl. CIT	$2026$ Click Here	Reallocating shared overhead administrative expenses across divisional units based on gross profit margins is preferable to allocation based on sales turnover under TNMM.
Income-tax Act, 1961	Sec 115A	Bank of Nova Scotia v. ACIT	$2026$ Click Here	Foreign currency loans extended by a foreign bank to Indian businesses are taxable on a gross basis at 20% under Sec 115A without any deduction for expenses.
Income-tax Act, 1961	Sec 115JA	Bank of Nova Scotia v. ACIT	$2026$ Click Here	Foreign banking companies regulated under the Banking Regulation Act are exempt from MAT computations under Sec 115JA since Schedule VI rules don’t apply.
Income-tax Act, 1961	Sec 115-O	ESAB India Ltd. v. Dy. CIT	$2026$ Click Here	DTAA treaty caps on Dividend Distribution Tax (DDT) under Sec 115-O require fresh determination by the AO based on upcoming landmark Supreme Court rulings.
Income-tax Act, 1961	Sec 153C	Parvesh Kumar v. Dy. CIT	$2026$ Click Here	If the satisfaction note for an ‘other person’ is recorded after 01-04-2021, old block rules cannot apply, making assessments issued under old provisions void.
Income-tax Act, 1961	Sec 153C	Rishi Pal v. DCIT	$2026$ Click Here	Protective tax additions under Sec 153C are completely unsustainable for unabated assessment years if no new incriminating material was found during searches.
Income-tax Act, 1961	Sec 153C	Rishi Pal v. DCIT	$2026$ Click Here	The assessment window under Sec 153C is calculated backwards from the specific date the satisfaction note is written, not from the initial date the third party was searched.
Income-tax Act, 1961	Sec 153C	Shivdham Buildtech (P.) Ltd. v. JCIT	$2026$ Click Here	Assessment years falling outside the strict 6-year period calculated from the actual year the satisfaction note was recorded are outside the jurisdiction of Sec 153C.
Income-tax Act, 1961	Sec 153C	Shivdham Buildtech (P.) Ltd. v. JCIT	$2026$ Click Here	Search proceedings under Sec 153C initiated after 1-4-2021 are legally void for want of jurisdiction under the sunset clause embedded in Sec 153C(3).

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