| Service Matter – Pay Scales and Pay Parity |
ITGOA v. Union of India |
Where Private Secretaries and Senior Private Secretaries sought pay parity with Central Secretariat counterparts, common recruitment and similar duties did not establish a legal basis for parity, as distinction was recognized by the 6th CPC and pay fixation falls under expert bodies; denial of parity was upheld. |
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Service Law / Pay Commission Recommendations |
| Section 4 |
ACIT v. Jayant Shamji Chheda |
Where assessee was taxed on unreconciled receipts based on Form 26AS entries in proprietors’ names while books reflected them under proprietary concerns, reconciliation proved receipts were already offered with only a nomenclature difference, making the addition unjustified. |
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Income-tax Act, 1961 |
| Section 9 |
Royal Bank of Scotland, N.V. v. Director of Income-tax, International Taxation, Kolkata |
Interest received by the Indian PE of a Netherlands entity from its overseas head office/branches must be included in taxable profits in India, as PE and head office are distinct enterprises under Article 7 of the India-Netherlands DTAA, and cannot be excluded on mutuality grounds. |
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Income-tax Act, 1961 / India-Netherlands DTAA |
| Section 9 |
Royal Bank of Scotland, N.V. v. Director of Income-tax, International Taxation, Kolkata |
Interest paid by an Indian PE to its overseas head office/branches is generally deductible under Article 7(3) of India-Netherlands DTAA provided domestic TDS laws are complied with; failure to deduct tax at source triggers disallowance under section 40(a)(i). |
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Income-tax Act, 1961 / India-Netherlands DTAA |
| Section 9 |
DCIT v. Aquapharm Chemicals (P.) Ltd. |
Commission payments to non-resident agents with no PE in India for securing overseas orders were for earning income from sources outside India under section 9(1)(vii)(b) exception, so disallowance under section 40(a)(i) was rightly deleted. |
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Income-tax Act, 1961 |
| Section 9 |
DCIT v. Aquapharm Chemicals (P.) Ltd. |
For legal compliance and consultancy payments to non-residents (categorized as FTS), a determination was required on whether payments were for earning income from a source outside India to decide the applicability of the section 9(1)(vii)(b) exception. |
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Income-tax Act, 1961 |
| Section 9 |
DCIT v. Aquapharm Chemicals (P.) Ltd. |
Payments to non-residents for import inspection services classified as FTS were not for earning income outside India, so the exception under section 9(1)(vii)(b) was not attracted, triggering disallowance under section 40(a)(i) for non-deduction of TDS. |
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Income-tax Act, 1961 |
| Section 12AB |
CSI Chennai Chapter v. CIT(Exemption) |
Rejection of section 12AB registration on grounds of mutual benefit/commercial activities was unjustified because Section 14 of the Societies Registration Act prohibits asset distribution to members and CIT can only verify charitable objects and activity genuineness at the registration stage. |
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Income-tax Act, 1961 / Societies Registration Act |
| Section 14A |
DCIT v. Aquapharm Chemicals (P.) Ltd. |
Where CIT(A) deleted section 14A/Rule 8D disallowance without fully examining AO’s findings on interest-free funds and Rule 8D provisions, the matter was restored to CIT(A) for comprehensive re-examination of interest and other expenditure disallowances. |
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Income-tax Act, 1961 |
| Section 14A |
ACIT v. Jayant Shamji Chheda |
Where assessee made suo motu disallowance and AO applied Rule 8D without recording dissatisfaction or identifying investments yielding exempt income, Rule 8D could not be invoked automatically; disallowance should consider only yield-bearing investments after factual examination. |
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Income-tax Act, 1961 |
| Section 14A |
ACIT v. Jayant Shamji Chheda |
For section 14A disallowance on investments in firms/PPF, only capital in firms actually generating exempt income should be considered, and disallowance could not be restricted to net exempt income after firm-wise loss set-off. |
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Income-tax Act, 1961 |
| Section 14A |
ACIT v. Jayant Shamji Chheda |
Due to AO’s failure to record dissatisfaction under section 14A(2) regarding the assessee’s accounts/suo motu disallowance, the additional disallowance was to be reconsidered limiting it strictly to investments yielding exempt income during the year. |
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Income-tax Act, 1961 |
| Section 22 |
Maninder Singh v. ITO Circle 61(1), Delhi |
Absence of ALV addition for properties used by a Senior Advocate for legal professional activities was justified; section 263 revision was vitiated as AO conducted necessary inquiries and professional use was undisputed. |
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Income-tax Act, 1961 |
| Section 32 |
Royal Bank of Scotland, N.V. v. Director of Income-tax, International Taxation, Kolkata |
Automated Teller Machines (ATMs) share functional parity with computers and warrant inclusion under ‘computers’ (Appendix I, Item 2B), making them eligible for the higher depreciation rate. |
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Income-tax Act, 1961 |
| Section 32 |
Maninder Singh v. ITO Circle 61(1), Delhi |
Where properties were acquired for composite consideration without land/building bifurcation in sale deeds, depreciation was allowable on entire consideration as examined by AO; section 263 revision was unsustainable. |
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Income-tax Act, 1961 |
| Section 36(1)(iii) |
ACIT v. Jayant Shamji Chheda |
Where interest/loan processing fees were incurred to repay a prior business loan and interest-free funds exceeded alleged non-business deployment, presumption arose that advances came from interest-free funds, making disallowance unsustainable. |
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Income-tax Act, 1961 |
| Section 36(1)(iii) |
ACIT v. Jayant Shamji Chheda |
Interest disallowance could not be sustained solely based on prior section 68 additions to loan amounts that were subsequently deleted, without independent evidence showing interest was not paid or incurred for business. |
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Income-tax Act, 1961 |
| Section 36(1)(iii) |
ACIT v. Jayant Shamji Chheda |
Disallowance of interest by notionally attributing it to non-business assets without establishing direct nexus with borrowed funds (when interest-free funds were sufficient) was unsustainable. |
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Income-tax Act, 1961 |
| Section 36(1)(iii) |
ACIT v. Jayant Shamji Chheda |
Presumption that deployment came from sufficient interest-free funds cannot be displaced by an aggregate arithmetical comparison without establishing direct nexus between borrowed funds and non-business applications. |
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Income-tax Act, 1961 |
| Section 37(1) |
ACIT v. Jayant Shamji Chheda |
Mechanical 18% ad hoc disallowance of brokerage, commission, and professional fees based on presumed non-business use was unsustainable as no specific non-business expense was proved and sufficient interest-free funds existed. |
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Income-tax Act, 1961 |
| Section 37(1) |
ACIT v. Jayant Shamji Chheda |
Ad hoc proportionate disallowance of 37% of brokerage, commission, and loan-processing charges could not be sustained without identifying specific non-business linked expenditure or disputing genuine incurrence. |
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Income-tax Act, 1961 |
| Section 43B |
Lakshmi Sugar Mills co. Ltd. v. Commissioner of Income-tax |
Section 43B disallowance of unpaid excise duty based solely on a tax audit report was invalid where liability was neither paid nor recorded as payable in accounts and arose only upon removal of goods. |
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Income-tax Act, 1961 |
| Section 68 |
ACIT v. Jayant Shamji Chheda |
Section 68 addition for loan from Blacksoil Capital Pvt Ltd was unwarranted as MCA master data, financials, confirmations, and banking channels established lender’s active status and transaction genuineness. |
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Income-tax Act, 1961 |
| Section 68 |
ACIT v. Jayant Shamji Chheda |
Non-response of 2 out of 38 creditors within assessment time did not justify section 68 addition where confirmations, ledger accounts, and bank statements proved loan routing and repayment through banking channels. |
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Income-tax Act, 1961 |
| Section 68 |
Principal Commissioner of Income-tax v. Superdeal Resources (P.) Ltd. |
Addition of unlisted share sale proceeds under section 68 could not be supported merely on suspicion or general allegations where sale was fully substantiated via documents, bank records, and purchaser confirmations. |
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Income-tax Act, 1961 |
| Section 69A |
Drr aims properties (P.) Ltd. v. Income-tax Officer |
Reassessment under section 147 completed without issuing section 143(2) notice was invalid for returns filed under section 148 notices issued before 01.04.2023, as issuance of section 143(2) notice remains mandatory. |
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Income-tax Act, 1961 |
| Section 69C |
ACIT v. Jayant Shamji Chheda |
Disallowance of related interest and legal/professional charges as unexplained expenditure under section 69C was unsustainable once the underlying loan under section 68 was held genuine. |
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Income-tax Act, 1961 |
| Section 69C |
Kalpataru Retail Ventures Ltd. v. Deputy Commissioner of Income-tax, Central |
Where assessment was framed based on search material and statements, pending scrutiny could not be validly continued under section 143(3), making the resulting assessment legally unsustainable. |
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Income-tax Act, 1961 |
| Section 80HH |
Arkema Peroxides India (P.) Ltd. v. Deputy Commissioner of Income-tax |
Section 80HH deduction for industrial undertaking at Cuddalore was not allowable because Cuddalore was de-notified as a backward area from 1983 and not specified in Schedule VIII during the relevant period. |
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Income-tax Act, 1961 |
| Section 90 |
Royal Bank of Scotland, N.V. v. Director of Income-tax, International Taxation, Kolkata |
Higher tax rate on foreign banking companies (taxed only on Indian-sourced income) compared to domestic companies (taxed on global income) is non-discriminatory under Article 24(2) of India-Netherlands DTAA per Explanation to Section 90. |
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Income-tax Act, 1961 / India-Netherlands DTAA |
| Section 144 |
Kadungaparanbil Manuel George Joseph v. Income-tax Officer |
Assessment orders under sections 143/147 determining net profit at ~2.4% (vs 0.7% returned) were valid and not bad for want of prior rejection of returns, even if not explicit best judgment assessments under section 144. |
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Income-tax Act, 1961 |
| Section 145 |
Kadungaparanbil Manuel George Joseph v. Income-tax Officer |
Adoption of an industry-standard profit rate at 2.4% of turnover was justified due to non-production of books lost in floods and disproportionate claimed expenses. |
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Income-tax Act, 1961 |
| Section 145 |
Adishwar Oils and Fats Ltd. v. Assistant Commissioner of Income-tax, Central Circle-1 |
Valuation of closing stock of vegetable oils at prevailing market price on/around balance sheet date (cost or net realizable value, whichever is lower) was justified over average annual price to prevent distorted results. |
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Income-tax Act, 1961 |
| Section 145 |
Adishwar Oils and Fats Ltd. v. Assistant Commissioner of Income-tax, Central Circle-1 |
Primary production records and audited balance sheets prevail over Form 3CD mismatch details to delete reassessment addition for closing stock undervaluation of Acid Oil. |
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Income-tax Act, 1961 |
| Section 148B |
Kalpataru Retail Ventures Ltd. v. Deputy Commissioner of Income-tax, Central |
Assessment passed based on approval under a CBDT Instruction instead of mandatory express statutory approval under section 148B suffered from an incurable procedural defect and was vitiated. |
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Income-tax Act, 1961 |
| Section 149 |
NAG Projects (P.) Ltd. v. Deputy Commissioner of Income-tax |
Notice under section 148 for AY 2015-16 issued on 30.07.2022 was barred by limitation under the first proviso to section 149, rendering the reassessment order liable to be quashed. |
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Income-tax Act, 1961 |
