IMPORTANT INCOME TAX CASE LAWS 04.01.2026

Relevant Act	Section	Case Law Title	Brief Summary	Citation
Income-tax Act, 1961	Section 5	Robust Transportation (P.) Ltd. v. ITO	No notional interest can be taxed on interest-free loans advanced for proposed acquisitions where the business had not commenced and there was no contractual stipulation to charge interest.	Click Here
Income-tax Act, 1961	Section 11	DCIT, Exemption v. Maharana Pratap Education Centre	Hostel facilities provided by an educational institution are an integral part of educational activity. Treating them as commercial activity and making additions based on incorrect figures was held unsustainable.	Click Here
Income-tax Act, 1961	Section 13	DCIT, Exemption v. Maharana Pratap Education Centre	Ad-hoc disallowance of payments to related parties (service fees, royalty @ 4%, advertisement) was deleted as the AO failed to dispute the genuineness of services or prove the payments were excessive or unreasonable.	Click Here
Income-tax Act, 1961	Section 14A	PCIT v. R.J. Corp. Ltd.	Disallowance under Section 14A (expenditure related to exempt income) is to be restricted to the extent of exempt income actually earned during the year.	Click Here
Income-tax Act, 1961	Section 24(b)	Rup Kumar Ramchandani v. ITO	Interest on funds borrowed for a commercial property not occupied for business purposes is deductible under Section 24(b) (Income from House Property).	Click Here
Income-tax Act, 1961	Section 28(i)	DCIT v. Jainam Investments	Loss on trading in BSE equity derivatives by a partnership firm was allowed as a genuine business loss where contract notes showed no reversal/matched trades and no evidence of price manipulation was found.	Click Here
Income-tax Act, 1961	Section 28(i)	PCIT-1 v. Madhya Gujarat Vij Company Ltd.	Interest earned on staff loans and advances by an electricity distribution company is taxable as Business Income, not Income from Other Sources, as it arises from essential business activities.	Click Here
Income-tax Act, 1961	Section 32	Gera Developments (P.) Ltd. v. PCIT	Revision under Section 263 was upheld where the AO allowed depreciation on goodwill without verification, despite the goodwill being fully impaired and written off to nil in the books.	Click Here
Income-tax Act, 1961	Section 36(1)(iii)	Rup Kumar Ramchandani v. ITO	Interest on borrowed funds for a commercial property was disallowed as business deduction under Section 36(1)(iii) because the assessee failed to prove the asset was put to use for business during the year.	Click Here
Income-tax Act, 1961	Section 37	DCIT v. Eris Lifesciences Ltd.	Disallowance of 7.5% of sales promotion expenses (channel partner/conference meets) was upheld as the pharma company failed to prove the expenses were not incurred for medical practitioners (which would be disallowed).	Click Here
Income-tax Act, 1961	Section 37(1)	DCIT v. Tata AIG General Insurance Company Ltd.	Expenditure on computer consumables (pen drives, cables, hard disks) by an insurance company is revenue in nature, not capital.	Click Here
Income-tax Act, 1961	Section 40(a)(ia)	DCIT v. Tata AIG General Insurance Company Ltd.	Co-insurance administration fees paid without TDS were allowed. The AO’s treatment of such fees as “commission” (requiring TDS) was rejected based on prior precedents.	Click Here
Income-tax Act, 1961	Section 69A	Subhash Kumar Aahi v. ACIT	Additions for excess cash and gold stock found during a survey were deleted. The assessee successfully explained the sources (bank withdrawals, customer jewelry for repair) with corroborative evidence (registers, vouchers).	Click Here
Income-tax Act, 1961	Section 80-IE	DCIT v. Eris Lifesciences Ltd.	Division-wise allocation of employee expenses to claim Section 80-IE deduction for a specific unit (Guwahati) was accepted as it was based on audited records and distinct operations.	Click Here
Income-tax Act, 1961	Section 115JB	DCIT v. Eris Lifesciences Ltd.	[Key Ruling] While computing Book Profit for MAT, the assessee is entitled to deduct the indexed cost of acquisition for Long Term Capital Gains credited to the P&L account, to prevent taxing “artificial” inflationary income.	Click Here
Income-tax Act, 1961	Section 115JB	DCIT v. Eris Lifesciences Ltd.	Excise/GST refunds received by the unit are “income” under Section 2(24)(xviii) and are includible in Book Profit for MAT purposes; they cannot be excluded as capital receipts.	Click Here
Income-tax Act, 1961	Section 145	DCIT v. MKF Logistics (P.) Ltd.	For a freight forwarder, addition cannot be made solely because gross receipts in Form 26AS exceed declared income. Only the service charge retained (not the gross amount collected for remittance to airlines) is taxable.	Click Here
Income-tax Act, 1961	Section 153	ADP (P.) Ltd. v. DCIT	Final assessment order passed beyond the time limit prescribed under Section 153(4) (after DRP directions) is barred by limitation and liable to be quashed.	Click Here
Income-tax Act, 1961	Section 244A	Suzlon Gujarat Wind Park Ltd. v. DCIT	Interest on refund is payable from the beginning of the Assessment Year on the amount claimed in the original return, even if a revised return was filed later for an additional claim.	Click Here
Income-tax Act, 1961	Section 279	K.M. Mammen v. PCIT	Compounding fees must be determined based on the Guidelines applicable at the time of the application (2008 Guidelines), not the stricter revised ones (2024 Guidelines) issued later.	Click Here

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