INCOME TAX CASE LAWS 07.10.2026

Relevant Act	Section	Case Law Title	Citation	Brief Summary
Income-tax Act, 1961	Section 2(22)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Where the assessee-firm, acting as an agent for SIFCL, carried payables in its books pending remittance in the ordinary course of business, such trade balances did not constitute loans/advances and could not be taxed as deemed dividend under Section 2(22)(e).
Income-tax Act, 1961	Section 5	Goel Flexible Packaging (P.) Ltd. v. Income-tax Officer	Click Here	70% of sale consideration diverted to a collaborator by overriding obligation under a collaboration agreement could not be assessed as the builder’s income; addition of the entire consideration was deleted.
Income-tax Act, 1961	Section 9	DCIT v. State Bank of India	Click Here	Income attributable to foreign branches constituting permanent establishments (PEs) outside India could not be taxed in India pursuant to Article 7(1) of the relevant DTAA.
Income-tax Act, 1961	Section 12AB	St. John The Evangelist Church v. Commissioner of Income-tax Exemptions	Click Here	Rejection of a Section 12AB renewal application for a long-standing public trust merely due to the absence of a formal trust deed/scheme was unjustified when alternate creation and registration records were produced.
Income-tax Act, 1961	Section 12AB	St. John The Evangelist Church v. Commissioner of Income-tax Exemptions	Click Here	Rejection of a renewal application under Section 12AB at the threshold without evaluating statutory parameters (objects, genuineness of activities, compliances) was held improper.
Income-tax Act, 1961	Section 14A	DCIT v. State Bank of India	Click Here	Where Rule 8D was not applicable for the relevant years, disallowance under Section 14A was restricted to 1% of the exempt interest income rather than a proportionate percentage applied by the AO/CIT(A).
Income-tax Act, 1961	Section 31	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Printing & stationery and replacement of UPS batteries are revenue in nature since they are replenishable, periodic outlays that do not extend the life of machinery or provide enduring benefits.
Income-tax Act, 1961	Section 32	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Disallowance of unabsorbed depreciation carry-forward due to figure discrepancies was restored to the AO for factual verification of actual losses and depreciation set-off as per law.
Income-tax Act, 1961	Section 37(1)	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Foreign exchange fluctuation loss claim on revenue/trade account required restoration to the AO for factual examination of supporting underlying documents.
Income-tax Act, 1961	Section 37(1)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Business expenses supported by vouchers and shared per group resolutions were allowable, except for capital booking of communication equipment, which was disallowed.
Income-tax Act, 1961	Section 37(1)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Expenses incurred in running a council (‘Kartavya Council’) to handle depositor and stakeholder grievances were allowable as wholly and exclusively for business purposes.
Income-tax Act, 1961	Section 37(1)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Business promotion and employee welfare expenses for mega events (Bharat Parv/Silver Jubilee) were commercially expedient; ad hoc disallowance was restricted to 10%.
Income-tax Act, 1961	Section 37(1)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Prior period expenses recorded on crystallization during the relevant year under the mercantile system were allowable without disturbing the CIT(A)’s limited disallowance reconciliation.
Income-tax Act, 1961	Section 37(1)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Commission and collection charges for deposit mobilization by a firm (exempt from NBFC/Companies rules) with PAN details provided could not be arbitrarily restricted to 2%.
Income-tax Act, 1961	Section 37(1)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Allocation of shared expenses recovered from group entities under service agreements using a scientific, consistently accepted method was valid and non-disallowable.
Income-tax Act, 1961	Section 37(1)	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	Partial disallowance of 10% on corporate gift expenses for business promotion was upheld as reasonable, and remaining expenses were held fully allowable.
Income-tax Act, 1961	Section 41(4)	DCIT v. State Bank of India	Click Here	Bad debt recoveries are taxable as deemed income under Section 41(4) only to the extent deduction was actually allowed under Section 36(1)(vii) in prior assessment years.
Income-tax Act, 1961	Section 43D	DCIT v. State Bank of India	Click Here	Reversal of unrealized interest on sticky assets in subsequent years per RBI prudential norms entitled the bank to tax adjustments for amounts previously taxed.
Income-tax Act, 1961	Section 50CA	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Substitution of actual sale consideration with Fair Market Value (FMV) for transfer of shares of an overseas subsidiary was improper in the absence of enabling statutory provisions for the relevant year.
Income-tax Act, 1961	Section 54B	Sushil Tiwari v. Income-tax Officer	Click Here	Section 54B exemption cannot be denied merely due to urban location of the acquired property without positive proof negating its agricultural character.
Income-tax Act, 1961	Section 54F	Sushil Tiwari v. Income-tax Officer	Click Here	Ownership of an additional commercial property does not disqualify an assessee from claiming exemption under Section 54F for investment in a residential house.
Income-tax Act, 1961	Section 68	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Discrepancies between Form 26AS receipts and P&L account were restored to the AO to verify reconciliation and prevent double taxation where income had already been offered.
Income-tax Act, 1961	Section 68	Shukla Bholanath Rajpati v. Deputy Commissioner of Income-tax	Click Here	Unexplained cash credits and disallowed expenses were restored to the AO for de-novo consideration to provide a final opportunity to produce supporting evidence, subject to costs.
Income-tax Act, 1961	Section 69	Goel Flexible Packaging (P.) Ltd. v. Income-tax Officer	Click Here	Addition for unexplained land acquisition cost under Section 69 was deleted as the transaction and source were duly recorded in the books of account and purchase deed.
Income-tax Act, 1961	Section 72	Nipro India Corporation (P.) Ltd. v. Deputy Commissioner of Income-tax	Click Here	Set-off of brought forward business losses and unabsorbed depreciation is a mandatory statutory right and must be allowed by the AO subject to verification.
Income-tax Act, 1961	Section 92C	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Imputing notional interest on non-interest-bearing advances to an AE was unsustainable under transfer pricing rules where no real income accrued due to recovery uncertainty and cessation of AE.
Income-tax Act, 1961	Section 92C	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Payments made to banks on invocation of corporate guarantees for a bankrupt AE could not be recharacterized as loans to impute notional interest income.
Income-tax Act, 1961	Section 92C	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Benchmarking corporate guarantee commission at commercial bank guarantee rates is improper; the guarantee fee was restricted to a standard 0.5%.
Income-tax Act, 1961	Section 92C	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Subscription to optionally fully convertible debentures (OFCDs) of an AE is in the nature of quasi-equity; imputing notional loan interest is unjustified.
Income-tax Act, 1961	Section 92C	Nipro India Corporation (P.) Ltd. v. Deputy Commissioner of Income-tax	Click Here	PBDIT (Profit Before Depreciation, Interest, and Taxes) is the appropriate PLI under TNMM when heavy fixed asset investments create high depreciation distortion.
Income-tax Act, 1961	Section 92C	Nipro India Corporation (P.) Ltd. v. Deputy Commissioner of Income-tax	Click Here	TPO was directed to grant working capital adjustment to eliminate capital cost differences while determining the Arm’s Length Price (ALP).
Income-tax Act, 1961	Section 145	Deputy Commissioner of Income Tax v. Sahara India (Firm)	Click Here	No addition for short recognition of income is warranted when reimbursement entries follow agreed MoU formulas under the mercantile system, despite divergent accounting by the counterparty.
Income-tax Act, 1961	Section 145A	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Valuing closing inventory at Net Realizable Value (NRV) due to quality deterioration is valid; substitution of purchase cost by AO without disproving NRV is unsustainable.
Income-tax Act, 1961	Section 148	Principal Commissioner of Income-tax v. Surender Singh Deswal	Click Here	Section 148 reassessment notice issued by a Jurisdictional Assessing Officer (JAO) instead of through the faceless mechanism is invalid and liable to be quashed.
Income-tax Act, 1961	Section 148	Principal Commissioner of Income-tax v. Tayal Sons (P.) Ltd.	Click Here	Reassessment notices issued outside the automated, randomized faceless allocation procedure mandated under Section 151A are void for lack of jurisdiction.
Income-tax Act, 1961	Section 151	Jainco Transmission Ltd. v. Assistant Commissioner of Income-tax	Click Here	Sanction for Section 148 notice granted mechanically without evaluating the taxpayer’s objections submitted under Section 148A(b) vitiates the reassessment order.
Income-tax Act, 1961	Section 153C	Principal Commissioner of Income-tax v. 3D Tradex (P.) Ltd.	Click Here	Section 153C proceedings across multiple years are invalid if the satisfaction note fails to nexus the seized incriminating material to specific assessment years.
Income-tax Act, 1961	Section 199	Siva Industries and Holdings Ltd. v. Deputy Commissioner of Income-tax	Click Here	Denying TDS credit when corresponding income is already offered to tax causes double taxation; credit must be granted under Section 199 read with Rule 37BA.
Income-tax Act, 1961	Section 244A	DCIT v. State Bank of India	Click Here	While computing Section 244A interest on delayed refunds, prior partial refund payments must first be adjusted against the interest component and then against principal tax.
Income-tax Act, 1961	Section 249	Rijwan v. Income-tax Officer	Click Here	High Court will not disturb concurrent factual findings of CIT(A) and ITAT refusing condonation of a 441-day delay in filing an appeal due to lack of sufficient cause.
Income-tax Act, 1961	Section 254	Synechron Technologies (P.) Ltd. v. Deputy Commissioner of Income-tax	Click Here	Where an entire appeal was mistakenly recorded as withdrawn instead of only MAP-settled grounds, the Tribunal should recall its order via Miscellaneous Application and restore the remaining grounds.
Income-tax Act, 1961	Section 276C	Vijay Kumar v. State of Punjab	Click Here	Criminal prosecution under Sections 276C/277 for tax evasion cannot stand once the underlying assessment order forming the foundation of the complaint is set aside.