INCOME TAX CASE LAW 18.6.2026

By | June 19, 2026
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INCOME TAX CASE LAW 18.6.26

Relevant Act Section Case Law Title Citation Brief Summary
Income Tax Act, 1961 Sec 5 Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Foreign exchange fluctuation gains on overseas branches credited to Foreign Currency Translation Reserve are taxable only to the extent they relate to revenue items; gains from capital items must be excluded.
Income Tax Act, 1961 Sec 5 Deputy Commissioner of Income-tax v. Shoppers Stop Ltd. Click Here Under the real income principle, deletion of notional interest addition on interest-free loans to a subsidiary is justified if supported by board resolutions due to discontinued operations, keeping up with past consistency.
Income Tax Act, 1961 Sec 10AA Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Profits from onsite software development/DTM projects are eligible for Sec 10AA deduction if a direct nexus with the SEZ undertaking is established based on past years.
Income Tax Act, 1961 Sec 10AA Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Interest expenditure must be allocated to units claiming Sec 10AA deduction even if no specific borrowings exist, following consistent rulings against the assessee in previous years.
Income Tax Act, 1961 Sec 10AA Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Sec 10AA deduction cannot be denied on vague allegations of “splitting up/reconstruction of existing business” without specific factual findings to prove it or to distinguish it from past favorable orders.
Income Tax Act, 1961 Sec 14A Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Disallowance under Sec 14A read with Rule 8D cannot be sustained if the assessee has not earned any exempt income during the relevant financial year.
Income Tax Act, 1961 Sec 14A DCIT v. Nobroker Technologies Solutions (P.) Ltd. Click Here In line with settled law, no disallowance under Sec 14A read with Rule 8D applies to a digital property broking business if no exempt income was earned.
Income Tax Act, 1961 Sec 32 Seyadu Beedi Company v. Assistant Commissioner of Income-tax Click Here Depreciation on immovable properties devolved from a deceased partner cannot be claimed without a written transfer agreement or registration in the firm’s name. Reliance on Sec 53A of the Transfer of Property Act is misconceived.
Income Tax Act, 1961 Sec 32 Honda R & D (India) (P.) Ltd. v. Addl./Jt./Dy./Asst. CIT/ITO Click Here Matter restored to the AO to reconsider whether computer software qualifies for 60% depreciation instead of the 25% intangible rate, in accordance with DRP directions.
Income Tax Act, 1961 Sec 32 Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Following the rule of judicial consistency, disallowance of depreciation on goodwill was deleted since 25% depreciation on WDV was allowed in earlier years.
Income Tax Act, 1961 Sec 32 Assistant Commissioner of Income-tax v. Gulbrandsen (P.) Ltd. Click Here Additional depreciation is not allowed on the mere replacement of spares and parts of existing plant and machinery as it doesn’t result in the acquisition of a new asset.
Income Tax Act, 1961 Sec 32 Assistant Commissioner of Income-tax v. Gulbrandsen (P.) Ltd. Click Here Additional depreciation on storage tanks (integral parts of plant and machinery) cannot be rejected simply due to the non-production of certain bills and vouchers.
Income Tax Act, 1961 Sec 35 Assistant Commissioner of Income-tax v. Gulbrandsen (P.) Ltd. Click Here Deduction under Sec 35(2AB) for in-house R&D expenditure incurred prior to 01-04-2016 cannot be restricted based on a subsequent DSIR report.
Income Tax Act, 1961 Sec 36(1)(iii) Devona Constructions Ltd. v. DCIT Click Here No interest disallowance can be made for advancing interest-free funds to group concerns if the builder possesses sufficient interest-free own funds exceeding the advances.
Income Tax Act, 1961 Sec 36(1)(iii) Assistant Commissioner of Income-tax v. Gulbrandsen (P.) Ltd. Click Here Capitalization of interest on ECB borrowings is invalid if the AO presumes asset utilization without establishing a clear nexus between the borrowings and capital assets.
Income Tax Act, 1961 Sec 37(1) Devona Constructions Ltd. v. DCIT Click Here Disallowing prior-period provisions that were already taxed in that respective year and not debited to current P&L is deleted to avoid impermissible double addition.
Income Tax Act, 1961 Sec 37(1) Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Deletion of disallowance on delisting expenses by CIT(A) was unjustified where the assessee failed to provide supporting details to prove it was wholly and exclusively for business.
Income Tax Act, 1961 Sec 37(1) Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Taxes paid in Japan, where no FTC (Foreign Tax Credit) was claimed or allowed under Sec 90/91, are allowable as business deductions in view of Explanation 1 to Sec 40(a)(ii).
Income Tax Act, 1961 Sec 37(1) DCIT v. HDFC Ergo General Insurance Company Click Here Payments routed to car dealers via service aggregators for KYC/AML cannot be disallowed as ‘prohibited by law’ unless a competent statutory authority establishes an offence.
Income Tax Act, 1961 Sec 37(1) DCIT v. Nobroker Technologies Solutions (P.) Ltd. Click Here Discount on the issuance of ESOPs is an ascertained liability, not a contingent one, making it fully eligible for deduction under Sec 37(1).
Income Tax Act, 1961 Sec 37(1) Baumer Technologies India (P.) Ltd. v. Dy. CIT Click Here An addition made by the AO on CSR expenses that the assessee had already suo motu disallowed in their computation is a double disallowance and must be deleted.
Income Tax Act, 1961 Sec 40(a)(ia) Honda R & D (India) (P.) Ltd. v. Addl./Jt./Dy./Asst. CIT/ITO Click Here Matter restored to the AO for verification of international travel expense tax deduction claims and deposit proofs before upholding a Sec 40(a)(ia) disallowance.
Income Tax Act, 1961 Sec 41(1) Devona Constructions Ltd. v. DCIT Click Here No addition for cessation of trading liability is sustainable if the bulk of the amount was either repaid or recognized as revenue in later years, with the rest remaining actively disputed.
Black Money Act, 2015 Sec 42 Arpit Gupta v. DDIT/ADIT (Inv.) Click Here Penalty is not warranted on a salaried employee who failed to file a return for foreign remittance maturity proceeds under a bona fide belief, where no concealment of income/asset exists.
Black Money Act, 2015 Sec 43 Shiva Shankar Mathur v. DDIT/ADIT (Inv.) Click Here Omission to disclose foreign bank accounts (funded via foreign salary) in ITR-1 due to structural limitations of the form was a bona fide mistake. Penalty under Sec 43 is not leviable.
Income Tax Act, 1961 Sec 44 DCIT v. HDFC Ergo General Insurance Company Click Here Since general insurance companies are governed by specific computation provisions under Sec 44 read with the First Schedule, standard disallowances under Sec 14A do not apply.
Income Tax Act, 1961 Sec 68 Seyadu Beedi Company v. Assistant Commissioner of Income-tax Click Here Treating an asset as an unexplained credit following scrutiny and an SCN for unexplained investment does not violate natural justice; it is a logical conclusion of the same process.
Income Tax Act, 1961 Sec 68 Seyadu Beedi Company v. Assistant Commissioner of Income-tax Click Here Writ petitions challenging additions on mixed questions of law and fact are not maintainable when an alternative, effective appellate remedy under Sec 246A is available.
Income Tax Act, 1961 Sec 69 Sameena Shamsuddin Sayed v. Income-tax Officer Click Here A homemaker’s property investment cannot be treated as unexplained merely due to the absence of a gift deed, provided the payment trail directly connects back to her father’s disclosed bank account.
Income Tax Act, 1961 Sec 69C Baumer Technologies India (P.) Ltd. v. Dy. CIT Click Here Sec 69C cannot be applied to foreign remittances made to AEs for royalties/technical services that are fully documented in audited books, comply with TDS, and lack evidence of being bogus.
Income Tax Act, 1961 Sec 80 Padmalochanan Radhakrishnan v. Union of India Click Here A negligible and bona fide delay of 7 days in filing a loss return should be condoned by authorities to evaluate the carry-forward claim fairly.
Income Tax Act, 1961 Sec 87A Basty Keshava Shenoy v. Income-tax Officer Click Here Individuals opting for the new tax regime under Sec 115BAC(1A) with total income below ₹7,00,000 are entitled to the Sec 87A rebate against entire income-tax, including tax on STCG under Sec 111A.
Income Tax Act, 1961 Sec 90 Dy. CIT v. Capegemini Technology Services India Ltd. Click Here The assessee is eligible for Foreign Tax Credit (FTC) on taxes paid in Japan as per Article 23 of the India-Japan DTAA.
Income Tax Act, 1961 Sec 90 Dy. CIT v. Capegemini Technology Services India Ltd. Click Here The AO cannot reduce FTC by applying a generic turnover proportion based on eligible Sec 10AA units. FTC must be recomputed country-wise per DTAA laws.
Income Tax Act, 1961 Sec 92C Honda R & D (India) (P.) Ltd. v. Addl./Jt./Dy./Asst. CIT/ITO Click Here For basic market research and testing services, companies engaged in pathology testing, radiology, and healthcare are functionally non-comparable.
Income Tax Act, 1961 Sec 92C Honda R & D (India) (P.) Ltd. v. Addl./Jt./Dy./Asst. CIT/ITO Click Here Excluding a comparable that has already been explicitly accepted in the assessee’s own case by the High Court in a prior year is unjustified.
Income Tax Act, 1961 Sec 92C Honda R & D (India) (P.) Ltd. v. Addl./Jt./Dy./Asst. CIT/ITO Click Here Entities engaged in software maintenance, development, data processing, and contact center operations are functionally distinct from market research/testing and must be excluded.
Income Tax Act, 1961 Sec 92C Honda R & D (India) (P.) Ltd. v. Addl./Jt./Dy./Asst. CIT/ITO Click Here Selective application of export-income and employee-cost filters, while disregarding DRP directions or past accepted comparables without fresh grounds, is unacceptable.
Income Tax Act, 1961 Sec 92C Assistant Commissioner of Income-tax v. Gulbrandsen (P.) Ltd. Click Here Where internal TNMM benchmarking was accepted for finished goods sales to AEs in previous years, the TPO cannot arbitrarily substitute the CUP method to force a TP adjustment.
Income Tax Act, 1961 Sec 92C Assistant Commissioner of Income-tax v. Gulbrandsen (P.) Ltd. Click Here A TP adjustment deletion is justified if the Revenue fails to provide fresh distinguishing facts to challenge identical sales promotion and marketing service payments accepted in earlier years.
Income Tax Act, 1961 Sec 115JB Dy. CIT v. Capegemini Technology Services India Ltd. Click Here Fringe Benefit Tax paid in Australia is liable to be excluded while computing book profits under Sec 115JB, in accordance with CBDT Circular No. 8/2015.
Income Tax Act, 1961 Sec 115JB Assistant Commissioner of Income-tax v. Gulbrandsen (P.) Ltd. Click Here The AO cannot make upward adjustments for prior-period expenses under MAT, as Explanation 1 to Sec 115JB contains no such legal provision.
Income Tax Act, 1961 Sec 145 Devona Constructions Ltd. v. DCIT Click Here If an option for the Project Completion Method has been consistently accepted by the Revenue across past and subsequent years, forcing an adjustment via the Percentage of Completion method for a single intervening year is invalid.
Income Tax Act, 1961 Sec 148 Mona Ashish Shah v. Office of the Income-tax Officer Click Here Reassessment notices issued under Sec 148 must be quashed if based solely on a third-party inquiry register that lacks any direct or indirect nexus to the petitioner.
Income Tax Act, 1961 Sec 220 Asa International India Microfinance Ltd. v. Deputy Commissioner of Income-tax Click Here Adjusting subsequent year refunds against a disputed demand (where >20% was already paid during appeal pendency) without prior Sec 245 intimation is illegal; refunds must be released with interest under Sec 244A.
Income Tax Act, 1961 Sec 263 Fortis Hospitals Ltd. v. Principal Commissioner of Income-tax Click Here A revisionary order under Sec 263 is invalid if the record shows the AO conducted active inquiries and exercised due diligence on bad debts, admin expenses, and depreciation before accepting the return.
Income Tax Act, 1961 Sec 270A Renil E K Kumar v. Deputy Commissioner of Income-tax Click Here