IMPORTANT INCOME TAX CASE LAWS 29.12.2025

Relevant Act	Section	Case Law Title	Brief Summary	Citation
Income-tax Act, 1961	Section 2	ACIT v. KCT Papers Ltd.	In a tax-neutral amalgamation/demerger, the assessee is entitled to adopt the cost of acquisition of the previous owner (including FMV as on 1-4-1981 and indexation) for computing LTCG on share buyback, rather than the book value or a shorter holding period.	Click Here
Income-tax Act, 1961	Section 2(47)	Manohar Reddy Cheruku v. DCIT	Execution of a Joint Development Agreement (JDA) without receiving consideration, where possession is given only for development purposes (license) and not as part performance under Section 53A of the Transfer of Property Act, does not constitute a ‘transfer’, hence no capital gains accrued in that year.	Click Here
Income-tax Act, 1961	Section 4	DCIT v. Alembic Pharmaceuticals Ltd.	Export incentives received under the Merchandise Exports from India Scheme (MEIS) are held to be capital receipts (linked to capital/infrastructure costs) and are not taxable income under Section 2(24)(xviii).	Click Here
Income-tax Act, 1961	Section 10(38)	DCIT v. Chunibhai Haribhai Gajera	Long-term capital gains from the sale of shares cannot be treated as bogus (Section 68 addition) where the purchase was via banking channels, held as investment in the balance sheet, and sold through registered brokers, absent specific material proving a sham.	Click Here
Income-tax Act, 1961	Section 14A	Matrix Clothing (P.) Ltd. v. ACIT	Only dividend-bearing investments are to be considered for calculating disallowance under Section 14A read with Rule 8D; investments not yielding exempt income must be excluded.	Click Here
Income-tax Act, 1961	Section 32	Vermeiren India Rehab (P.) Ltd. v. DCIT	Claim for depreciation on a factory building was remanded for reconsideration due to conflicting evidence regarding the completion date (occupancy certificate vs. fire NOC/electricity bills).	Click Here
Income-tax Act, 1961	Section 35(2AB)	Matrix Clothing (P.) Ltd. v. ACIT	The AO cannot go beyond the certificate issued by the DSIR. If the DSIR approves the R&D activity and quantifies the expenditure, the AO must grant the deduction under Section 35(2AB).	Click Here
Income-tax Act, 1961	Section 35ABB / 37(1)	Bharti Telemedia Ltd. v. DCIT	Variable license fees paid by a DTH operator to the Ministry of I&B are for broadcasting services, not “telecommunication services.” Thus, Section 35ABB (amortization) does not apply, and the fee is fully allowable as revenue expenditure under Section 37(1).	Click Here
Income-tax Act, 1961	Section 36(1)(iii)	PCIT v. Lalitha Jewellery Mart (P.) Ltd.	Tribunal’s order remanding the issue of interest disallowance (on alleged diversion of funds for lease advance) was set aside because the Tribunal failed to record specific findings on the business purpose of the advance.	Click Here
Income-tax Act, 1961	Section 37(1)	Matrix Clothing (P.) Ltd. v. ACIT	Commission/brokerage paid for sale of leasehold industrial land (including coordination for SPICOT NOC) is wholly allowable as transfer expenses while computing Long Term Capital Gains.	Click Here
Income-tax Act, 1961	Section 37(1)	Bharti Telemedia Ltd. v. DCIT	Provision for interest on delayed license fees (AGR dispute) is an ascertained contractual liability and is allowable as revenue expenditure, even if the payment is delayed or the computation is under litigation.	Click Here
Income-tax Act, 1961	Section 37(1)	Fuji Electric India (P.) Ltd. v. DCIT	Year-end provisions for installation/warranty/commission are allowable deductions if created on a scientific basis and reversed in the succeeding year, even if not credited to individual party accounts.	Click Here
Income-tax Act, 1961	Section 54F	Ram Kishore Seth v. Income-tax Officer	Assessee who constructed three independent residential units (with separate kitchens) after demolishing one house was held to own “more than one residential house,” thereby disqualifying him from Section 54F exemption.	Click Here
Income-tax Act, 1961	Section 56(2)(viib)	PCIT v. Lalitha Jewellery Mart (P.) Ltd.	Addition for excess share premium is unjustified if the AO fails to record dissatisfaction with the assessee’s valuation or apply the prescribed methods under Rule 11UA.	Click Here
Income-tax Act, 1961	Section 68	PCIT v. Lalitha Jewellery Mart (P.) Ltd.	Addition for sham share capital cannot be based solely on a vague statement under Section 131 without material evidence showing cash was routed back to the assessee.	Click Here
Income-tax Act, 1961	Section 68	Matrix Clothing (P.) Ltd. v. ACIT	Section 68 addition on NBFC loan was deleted as the assessee proved identity, genuineness, and creditworthiness via PAN, bank statements, and audited financials; the lender also directly complied with the Section 133(6) notice.	Click Here
Income-tax Act, 1961	Section 69A	DCIT v. Anil Dhirajlal Ambani	Additions on foreign bank deposits (HSBC Geneva) were deleted as they were based solely on “Base Note” internal identifiers (BUP IDs) which were not separate accounts. The peak balance had already been assessed in the hands of the late father (Dhirubhai Ambani).	Click Here
Income-tax Act, 1961	Section 69A	Ram Kishore Seth v. Income-tax Officer	Cash deposited during demonetization was explained as sourced from earlier withdrawals, refundable security deposits, and JDA sale consideration; addition under Section 69A was deleted.	Click Here
Income-tax Act, 1961	Section 92C (TP)	DCIT v. Alembic Pharmaceuticals Ltd.	Corporate Guarantee Fees: No TP adjustment is required if the issue was settled in the assessee’s favor in previous years and there is no change in facts/law (Principle of Consistency).	Click Here
Income-tax Act, 1961	Section 92C (TP)	Fuji Electric India (P.) Ltd. v. DCIT	Pass-through Costs: Facilitating third-party vendor payments on behalf of an AE on a cost-to-cost basis (without value addition) does not require an arm’s length mark-up.	Click Here
Income-tax Act, 1961	Section 131	PCIT v. Lalitha Jewellery Mart (P.) Ltd.	Statements recorded under Section 131 (power of civil court) are admissible evidence even if the authority is not empowered to administer an oath.	Click Here
Income-tax Act, 1961	Section 269SS / 271D	Hari Krishna Leela Prasad Paladugu v. ITO	No Penalty under Section 271D for cash receipts from property sale if the agreement was entered into prior to the amendment of Section 269SS (w.e.f. 1-6-2015), as this constitutes a “reasonable cause.”	Click Here
Income-tax Act, 1961	Section 278B	Dr. Manoj Khanna v. Income-tax Officer	Prosecution proceedings against a Managing Director for delayed TDS deposit were upheld. Issues regarding reasonable cause and the specific role of the director are factual matters to be determined at trial, not at the summoning stage.	Click Here

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