INCOME TAX CASE LAW 25.06.2026

Relevant Act	Section	Case Law Title	Citation	Brief Summary
Income-tax Act, 1961	Sec. 11	Gahoi Vaishya Kalyan Samiti v. Income-tax Officer (Exemption)	$2026$ Click Here	Where a trust utilized deemed application income to buy immovable property, a mere clerical omission to disclose this in Schedule-I of ITR-7 (which meant for Sec 11(2) accumulation) does not justify an addition.
Income-tax Act, 1961	Sec. 12AB	Reliance Foundation Institution of Education and Research v. CIT (Exemption)	$2026$ Click Here	Rejection of renewal registration under Sec 12AB is unsustainable when an educational institution simply amended its objects and had already secured approval under Sec 12A.
Income-tax Act, 1961	Sec. 32	Commissioner of Income Tax v. Vijay Shanthi Builders Ltd.	$2026$ Click Here	Depreciation is allowable on cinematograph films acquired and immediately leased back to the seller; a sale-and-leaseback arrangement cannot automatically be treated as a sham or colorable device.
Income-tax Act, 1961	Sec. 36(1)(iii)	L.K. Trust v. Commissioner of Income-tax	$2026$ Click Here	Interest on funds borrowed to acquire a controlling interest through a group concern is deductible based on commercial expediency. Direct profit generation is not required as long as the borrowing serves business purposes.
Income-tax Act, 1961	Sec. 37	Director of Income-tax (International Taxation) v. Vedanta Ltd.	$2026$ Click Here	A contractual provision for site restoration expenses under a petroleum production sharing contract is a valid business deduction under Sec 37(1) and is not restricted only to Sec 115JA calculations.
Income-tax Act, 1961	Sec. 37(1)	Vedanta Ltd. v. ADIT (International Taxation)	$2026$ Click Here	Provision for site restoration under a mandatory contract is an ascertained liability. It is fully deductible under Sec 37(1) even if the actual expenditure has not yet been physically incurred in the relevant previous years.
Income-tax Act, 1961	Sec. 54F	Mrs. Kaziyur Narayanan Godha v. Income-tax Officer	$2026$ Click Here	Sec 54F benefits cannot be denied for investing capital gains into the construction/improvement of an earlier purchased house, provided it occurs within the statutory period. Beneficial provisions must be construed liberally.
Income-tax Act, 1961	Sec. 68	Nivaya Resources (P.) Ltd. v. DCIT	$2026$ Click Here	No addition is warranted for an unsecured loan from a director if the assessee proves identity, genuineness, and creditworthiness up to the “source of source”, and no adverse findings exist in the lender’s file.
Income-tax Act, 1961	Sec. 69A	Naveenchandra Prahladbhai Patel v. Income Tax Officer	$2026$ Click Here	Reopening under Sec 148 is invalid and quashed if it relies solely on third-party loose papers containing illegible data with no established nexus or link to the assessee.
Income-tax Act, 1961	Sec. 80-IB	Baashyam Constructions (P.) Ltd. v. ITO	$2026$ Click Here	An CIT(A) order directing the substitution of actual land cost with construction cost or market value based on an erroneous assumption is a mistake apparent from the record rectifiable under Sec 154.
Income-tax Act, 1961	Sec. 92C	Nivaya Resources (P.) Ltd. v. DCIT	$2026$ Click Here	(1) Interest adjustment on foreign AE receivables must be set aside if the assessee charges no interest to unrelated clients. (2) TP matters remanded where the TPO failed to follow DRP directions on tested parties, COVID adjustments, or accounting for sales commission/freight differentials.
Income-tax Act, 1961	Sec. 115JA	Director of Income-tax (International Taxation) v. Vedanta Ltd.	$2026$ Click Here	A contractual provision for site restoration is an ascertained liability, meaning no upward book profit adjustment can be made under clause (c) of the Explanation to Sec 115JA for MAT.
Income-tax Act, 1961	Sec. 115JB	Vedanta Ltd. v. ADIT (International Taxation)	$2026$ Click Here	A mandatory contractual site restoration provision debited to the P&L is an ascertained liability. It cannot be treated as an unascertained liability to be added back when computing book profits for Sec 115JB.
Income-tax Act, 1961	Sec. 145	Commissioner of Income Tax v. Vijay Shanthi Builders Ltd.	$2026$ Click Here	Accounting for land development expenses under WIP/current assets instead of debiting P&L satisfies the “matching concept” under a hybrid method. Expenses are deductible on an accrual basis.
Income-tax Act, 1961	Sec. 147	Director of Income-tax (International Taxation) v. Vedanta Ltd.	$2026$ Click Here	Reassessment undertaken after four years is liable to be set aside if the Revenue fails to establish or furnish any valid, statutorily sound reason for reopening beyond the limitation period.
Income-tax Act, 1961	Sec. 148A	Rishva Infrastructures v. Income-tax Officer	$2026$ Click Here	Issuing a Sec 148 notice/order without factoring in an acknowledged, timely adjournment request violates the principles of natural justice, rendering the subsequent actions unsustainable.
Income-tax Act, 1961	Sec. 149	BKR Capital (P.) Ltd. v. Income-tax Officer	$2026$ Click Here	A Sec 148 notice is within limitation if the initial Sec 148A(b) notice was inside the 6-year window, and subsequent delays were caused by the assessee’s own adjournment requests (excluded via the 5th proviso).
Income-tax Act, 1961	Sec. 249	Saint Gurmeet Ram Rahim Singh Insan v. DCIT/ACIT	$2026$ Click Here	A 227-day appeal delay caused by the assessee being incarcerated and unable to secure a digital signature represents a reasonable cause. Condonation should be granted liberally in the absence of mala fides.
Income-tax Act, 1961	Sec. 253	Paradise Food Court (P.) Ltd. v. DCIT	$2026$ Click Here	A writ petition filed 5 years late against a dismissed CIT(A) order is not maintainable due to laches, especially when the alternative, efficacious remedy of appealing to the ITAT under Sec 253 was ignored.
Income-tax Act, 1961	Sec. 270A	Wellknown Polysters Ltd. v. DCIT (IT)	$2026$ Click Here	Penalty for under-reporting/misreporting cannot be sustained where a bona fide claim for education cess was disallowed solely due to a subsequent retrospective amendment and a missing recomputation form.
Income-tax Act, 1961	Sec. 271(1)(c)	Ms. Sarita Jain v. Assistant Commissioner of Income-tax	$2026$ Click Here	Penalty for concealment is leviable where an assessee paid advance tax on share-sale gains but completely left the transaction out of the return while making a baseless, un-bona fide claim for exemption.