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Supply Affording Charges and Electrification Charges recovered by an electricity distribution company are capital receipts, as they contribute to creating enduring infrastructure, and should reduce the cost of relevant assets. Issue: Whether “Supply Affording Charges” and “Electrification Charges” recovered by an electricity distribution company from consumers, intended to cover the cost of laying power lines… Read More »

Withdrawals by a partner from a partnership firm, where the company holds an investment, cannot be deemed a dividend under Section 2(22)(e). Issue: Whether an amount withdrawn by an assessee (who is a partner in a partnership firm) from that partnership firm can be treated as a “loan or advance” from a company and consequently… Read More »

IMPORTANT INCOME TAX CASE LAW 30.05.25 Section Case Law Title Brief Summary Citation Relevant Act 2(14) Dharampal Saghera v. Income-tax Officer Compensation received in family settlement for relinquishing possession and claim of property is capital gain, not income from other sources. Click Here Income-tax Act, 1961 10(23C) Institute Management Committee ITI Jhalawar v. Income-tax Officer… Read More »

I. Section 50C Inapplicable if Actual Sale Price Exceeds Stamp Duty Value. Issue: Whether Section 50C of the Income-tax Act, 1961, applies to make an addition based on a Valuation Officer’s determination, when the actual sale consideration declared by the assessee for a residential flat already exceeds the stamp duty value. Facts: For Assessment Year… Read More »

Section 43CA’s 10% tolerance band applies retrospectively, being a beneficial and curative amendment, thus no addition warranted if the difference between DVO and sale consideration is within 10%. Issue: Whether the proviso to Section 43CA of the Income-tax Act, 1961, which introduces a tolerance band (initially 5%, later 10%) for the difference between the sale… Read More »

Donation for scientific research auditorium is deductible under Section 35(1)(ii), even if capital in nature or named after a director’s father. Issue: Whether a donation made by an assessee-company to an approved scientific research association (Indian Institute of Science) for the construction of a state-of-the-art auditorium can be denied deduction under Section 35(1)(ii) of the… Read More »

Rectification application for tax credits and interest calculation not decided within six months is remanded, with AO directed to complete rectification within one month. Issue: When an assessee files a rectification application under Section 154 of the Income-tax Act, 1961, providing relevant information regarding tax payments, interest calculations, and TDS credits, but the Assessing Officer… Read More »

Reopening notice beyond 3 years is invalid if the escaped income for the specific year is below Rs. 50 lakhs, even if cumulative undercharging across multiple years exceeds the threshold. Issue: Whether an Assessing Officer (AO) can issue a notice for reassessment under Section 148 of the Income-tax Act, 1961, for Assessment Year 2018-19, beyond… Read More »

Reassessment order under Section 69 quashed due to AO’s failure to dispose of assessee’s objections to reopening with a speaking order, violating natural justice. Issue: Whether a reassessment order passed by the Assessing Officer (AO) under Section 147 of the Income-tax Act, 1961, making an addition under Section 69 (unexplained investments), is valid if the… Read More »

I. PCIT cannot revise depreciation on goodwill under Section 263 if it was allowed in prior years, accepted by the Tribunal, and no factual/legal changes occurred. II. PCIT cannot revise Section 80-IA deduction under Section 263 if the AO made inquiries and accepted the claim based on furnished reconciliation, without clear findings of error or… Read More »