Interest on Borrowed Capital for Unused Asset Disallowed as Business Expense but Deductible Under House Property Issue Whether interest paid on capital borrowed to acquire a commercial property constitutes an allowable deduction under Section 36(1)(iii) as business expenditure prior to the asset being put to use, or if it constitutes a deduction under Section 24(b)… Read More »
Section 14A Disallowance Cannot Exceed Exempt Income Earned; Finance Act 2022 Amendment Clarified as Prospective in Nature ISSUES Quantum of Disallowance: Whether the disallowance of expenditure under Section 14A read with Rule 8D can exceed the actual amount of exempt income earned by the assessee during the relevant previous year. Retrospectivity of FA 2022:… Read More »
Educational Trusts: Payments to Related Parties (Royalty, Services) Allowed in Absence of Market Comparables Proving Excessiveness; Hostel Activity Integral to Education ISSUES Section 13(1)(c) (Related Party Payments): Whether payments made to related parties for Advertisement, Services, and Royalty (4% of fees) can be disallowed as “undue benefit” merely due to common management, without the AO… Read More »
Accrual of Income: Notional Interest Cannot Be Taxed on Interest-Free Advances Without Contractual Right to Receive; RBI MCLR Benchmark Held Untenable ISSUES Accrual of Notional Interest: Whether the Assessing Officer (AO) can tax “notional interest” on interest-free loans/advances given by the assessee to other companies, in the absence of any contractual stipulation or legal… Read More »
IMPORTANT INCOME TAX CASE LAWS 03.01.2026 Relevant Act Section Case Law Title Brief Summary Citation Income-tax Act, 1961 Section 4 Vishnu Trimbak Thakur v. PCIT-1 Self-assessment tax paid on undisclosed income under the Income Declaration Scheme (IDS), 2016 (which was deemed rejected) is “inextricably linked” to that income. Credit for such tax must be given… Read More »
Reassessment Against Deceased Assessee Set Aside: Department Cannot Continue Proceedings Against Dead Person After Receiving Intimation of Death; Liberty Granted to Issue Fresh Notice to Legal Heirs ISSUE Whether an assessment order passed in the name of a deceased assessee is valid when the Assessing Officer (AO) was informed of the death during the… Read More »
Rejection of Section 132B Application Void for Want of Jurisdiction: High Court Quashes Order Passed in Contravention of MP High Court Directions and Remands Matter to Jurisdictional AO in Mumbai ISSUE Whether an order rejecting an application for the release of seized jewellery under Section 132B is valid if passed by an Assessing Officer… Read More »
Co-operative Societies: Interest on Statutory Compulsory Deposits Qualifies for 80P Deduction; Section 80P(4) Not Applicable to Societies Without RBI License ISSUES Statutory Deposits: Whether interest income earned by a co-operative society from bank investments made under statutory compulsion (Karnataka Co-operative Societies Act) qualifies for deduction under Section 80P(2)(a)(i) as operational income, or is it taxable… Read More »
Reassessment Remanded: Addition for Unexplained Investment in Securities Set Aside for Verification of Duplicate Reporting (NSE vs. NSDL/Bank Data) ISSUE Whether the Assessing Officer (AO) was justified in making separate additions under Section 69 for “purchase of securities” based on NSE data and “transactions reported in Form 61B” (Statement of Reportable Account) without verifying… Read More »
Date of Issuance Prevails Over Date of Signing: Section 148 Notice Issued on 01-04-2021 Without Following New Section 148A Procedure is Invalid ISSUE Whether a reassessment notice under Section 148, which was digitally signed by the Assessing Officer on 31.03.2021 (under the old regime) but was actually issued/emailed via the ITBA portal on 01.04.2021 (when… Read More »