IMPORTANT INCOME TAX CASE LAWS 10.12.2025
| Relevant Act | Section | Case Law Title | Brief Summary | Citation |
| Income-tax Act, 1961 | Section 2(15) (Charitable Purpose) | Malanadu Farmers Society v. DCIT, Exemption | Assessee’s dominant purpose was relief of poor, small, and marginal farmers. Milk procurement/processing activities were incidental and inseparable from this charitable objective, qualifying for exemption under section 11. | Click Here |
| Income-tax Act, 1961 | Section 14A (Expenditure relating to exempt income) | My Home Industries (P.) Ltd. v. Deputy Commissioner of Income-tax | Disallowance under section 14A was justified where the assessee (engaged in cement/power) failed to substantiate that no direct or indirect expenditure was incurred to earn exempt income. | Click Here |
| Income-tax Act, 1961 | Section 28(i) (Business Income) | Nikshep Infra Projects v. Income-tax Officer | Addition based on the difference between gross contract receipts and TDS credit claimed was deleted. The difference was due to the inclusion/exclusion of the GST amount by the Government department when deducting TDS, and there was no suppression of income. | Click Here |
| Income-tax Act, 1961 | Section 28(i) (Business Income) | Bhavani Iyer v. Income-tax Officer | Where assessment was completed ex parte and gross professional receipts were taxed without allowing expenses, and books were not rejected, the AO’s action was incorrect. Net profit was to be determined as per books (fixed at 68.19% of gross receipts). | Click Here |
| Income-tax Act, 1961 | Section 28(i) / Section 37(1) (Business Loss/Expenditure) | Assistant Commissioner of Income-tax v. DBS Bank Ltd. | Loss incurred by a bank when a term loan was converted into equity shares under a restructuring package to maximize recovery of a doubtful asset was held to be a genuine business loss (erosion of loan asset value) and was deductible under $\text{S. 28}$ or alternatively as business expenditure under $\text{S. 37(1)}$. | Click Here |
| Income-tax Act, 1961 | Section 37(1) (Business Expenditure) | Nikshep Infra Projects v. Income-tax Officer | Royalty deducted by the Government department from a contractor’s bill for the use of minerals (sand, stones, etc.) in civil works was an expense incurred wholly and exclusively for contract work and was allowable as a business expense. | Click Here |
| Income-tax Act, 1961 | Section 49 / Section 54F (Cost of Acquisition/Exemption) | Deputy Commissioner of Income-tax v. Archit Aggarwal | Assessee received shares as a gift from a relative who also received them as a genuine gift. Assessee was entitled to include the previous owners’ period of holding under $\text{S. 49(1)}$, treating the shares as a Long-Term Capital Asset and making the resulting gain eligible for $\text{S. 54F}$ deduction. | Click Here |
| Income-tax Act, 1961 | Section 54F (Exemption) | Kusum Sahgal v. ACIT | Joint ownership of the assessee in more than one residential property at the time of the sale of the original capital asset would not disentitle the assessee to claim the deduction under $\text{S. 54F}$. | Click Here |
| Income-tax Act, 1961 | Section 56(2)(vii) (Income from Other Sources – Gifts) | Dhruv Sanjay Gupta v. Joint Commissioner of Income-tax | Gifts received by cheque from a cousin and family friend, though credited to the account days after the wedding, were held to be received on the occasion of marriage and were covered by the exemption under the proviso to $\text{S. 56(2)(vii)}$, as a strict view of the credit date ignores practical realities. | Click Here |
| Income-tax Act, 1961 | Section 68 / Section 153C (Cash Credit/Search) | Sandhya Maulik Patel v. Assistant Commissioner of Income-tax | Where no incriminating material was found relating to the assessee in a third-party search, and the AO relied only on post-search public data without establishing a live nexus, the invocation of $\text{S. 153C}$ and notices were quashed. | Click Here |
| Income-tax Act, 1961 | Section 68 (Cash Credit) | Nikshep Infra Projects v. Income-tax Officer | Addition under $\text{S. 68}$ for outstanding sub-contract expenses was deleted as the assessee furnished complete details of sub-contractors, agreements, invoices, and payment details, proving the expenses were genuine. | Click Here |
| Income-tax Act, 1961 | Section 69 (Unexplained Investments) | Bhavani Iyer v. Income-tax Officer | Addition for unexplained investment in a flat in AY 2016-17 was unsustainable as the investment and payment occurred on or before 31-03-2015 (pertaining to an earlier assessment year) and the source was duly explained (loan and personal savings). | Click Here |
| Income-tax Act, 1961 | Section 69A (Unexplained Moneys) | Manubhai Dahyabhai Bhoi v. Income-tax Officer | Cash deposits explained by the assessee (teacher/contractor) with complete evidence (contract income, agricultural sale, wife’s withdrawals, wedding gifts) could not be treated as unexplained under $\text{S. 69A}$ in the absence of cogent rebuttal by the AO. | Click Here |
| Income-tax Act, 1961 | Section 69C (Unexplained Expenditure) | Rao Tradelink (P.) Ltd. v. Income-tax Officer | Reopening notice alleging purchases from RCL as bogus was unjustified as the purchases were duly recorded in audited books and the assessee furnished ledger details, contra ledger, and sample bills. | Click Here |
| Income-tax Act, 1961 | Section 80P(2)(d) (Co-operative Societies) | ACIT v. Kutch District Co-operative Milk Producers Union Ltd. | Addition related to $\text{S. 80P(2)(d)}$ was rightly deleted by CIT(A) as the Principal Commissioner’s revisionary order directing the denial of deduction had already been quashed by the Tribunal and affirmed by the High Court. | Click Here |
| Income-tax Act, 1961 | Section 80P(2)(d) (Co-operative Societies) | Deputy Commissioner of Income-tax v. Pursottam Farmers Co-op. Cotton Grnning and Pressing Soc. Ltd. | Deduction under $\text{S. 80P(2)(d)}$ on interest and dividend income from investments with Co-operative Banks was allowable, as a co-operative bank itself falls under the definition of a co-operative society. | Click Here |
| Income-tax Act, 1961 | Section 92C (Transfer Pricing) | My Home Industries (P.) Ltd. v. Deputy Commissioner of Income-tax | For benchmarking captive power transactions, the gross rate charged by the State Electricity Board constitutes the appropriate comparable rate for computing the Arm’s Length Price (ALP). | Click Here |
| Income-tax Act, 1961 | Section 92D / Section 271G (TP Documentation) | Thyssenkrupp Industrial Solutions AG v. Deputy Commissioner of Income-tax | Penalty levied under $\text{S. 271G}$ was not justified as the foreign company furnished all relevant documentation and additional details within the stipulated time, and the Revenue did not identify any specific shortcoming that hindered ALP determination. | [2025] 180 taxmann.com 600 (Mumbai – Trib.) Not Found |
| Income-tax Act, 1961 | Section 115QA (Tax on Distributed Income) | Updater Services Ltd. v. Deputy Commissioner of Income-tax | Matter was remanded for de novo assessment as authorities failed to properly examine detailed NAV computations, financial statements, and judicial precedents to distinguish the High Court-approved Scheme of Arrangement buy-back from a $\text{S. 77A}$ buy-back, concerning the levy under $\text{S. 115QA}$. | Click Here |
| Income-tax Act, 1961 | Section 151 (Sanction for Reopening) | Income-tax Officer v. Quality Steel Shoppe (P.) Ltd. | Reopening notice issued beyond three years on the ground of fraudulent ITC (fake GST invoices) required approval from the authority specified under $\text{S. 151(ii)}$ (as amended w.e.f. 1-4-2021). Since the AO obtained approval from the wrong authority (Pr. Commissioner instead of the specified higher authority), the assessment was liable to be quashed. | Click Here |
| Income-tax Act, 1961 | Section 159 (Legal Representatives) | Shini Shajan v. Principal Commissioner of Income-tax | Where the assessee died during assessment proceedings, and the AO completed the assessment in the name of the deceased without issuing notice to the legal representative, the assessment was held null and void. | Click Here |
| Income-tax Act, 1961 | Section 263 (Revision) | Mridul Shashikant Khandelwal v. PCIT (Central) | Principal Commissioner’s invocation of $\text{S. 263}$ was not justified as he failed to clearly spell out how the original assessment order, which was passed after due verification, was erroneous and prejudicial to the interest of the revenue. | Click Here |
| Income-tax Act, 1961 | Section 270A (Penalty for Under-reporting) | Subbalakshmamma Pinnama v. Income-tax Officer | Penalty under $\text{S. 270A}$ for under-reporting of income could not be levied where the assessee, who had not filed a return under $\text{S. 139(1)}$, furnished a return in response to a $\text{S. 148}$ notice admitting total income, which the AO accepted without any addition, and had also paid self-assessment tax before the $\text{S. 148}$ notice. | Click Here |
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