INCOME TAX CASE LAWS 23.06.2026

Relevant Act	Section	Case Law Title	Citation	Brief Summary
Income-tax Act, 1961	Section 9	Commissioner of Income-tax (International Taxation)-1 v. Ernst and Young U.S. LLP	$2026$ Click Here	1. Matter remanded to Tribunal to properly evaluate whether advisory/consultancy services qualify as FTS or are exempt under Article 15 of India-USA DTAA. 2. Salary reimbursements for seconded personnel keeping their lien with the US entity satisfy the ‘make available’ test and are taxable as FTS.
Income-tax Act, 1961	Section 10AA	Portescap India (P.) Ltd. v. Deputy Commissioner of Income-tax	$2026$ Click Here	Disallowance of a valid Section 10AA deduction via a Section 154 rectification order without an apparent mistake or fresh material is unsustainable.
Income-tax Act, 1961	Section 12AB	Dawat-e-Islami Hind (Jammu) Jamiatul Madina Faizan E Makhdoom Ashraf v. CIT, Exemption	$2026$ Click Here	Rejection of a trust registration by blindly invoking Section 13(1)(b) without recording specific findings of a violation is bad in law; remanded for fresh adjudication.
Income-tax Act, 1961	Section 32	CIE Automotive India Ltd. v. DCIT	$2026$ Click Here	1. Only CENVAT credit relating to capital goods should reduce the asset block’s cost for depreciation, not the credit on tools/stores. 2. To claim depreciation on new additions, satisfying the “put to use” criteria for business purposes is essential; matter remanded for evidence verification.
Income-tax Act, 1961	Section 32	Principal Commissioner of Income-tax v. India Medtronic (P.) Ltd.	$2026$ Click Here	Depreciation on a block of assets cannot be denied merely because manufacturing activities were discontinued, keeping in line with consistent past cycles.
Income-tax Act, 1961	Section 37(1)	Franklin Templeton International Services (India) (P.) Ltd. v. DCIT	$2026$ Click Here	Repairs and maintenance claims involving year-end provisions require factual verification of supporting evidence by the AO as per DRP directions.
Income-tax Act, 1961	Section 37(1)	CIE Automotive India Ltd. v. DCIT	$2026$ Click Here	1. Ad hoc disallowances of staff welfare expenses are invalid without pointing out specific un-genuine/personal elements. 2. Performance incentives paid before the return due date or suo motu adjusted represent crystallized liabilities and cannot be disallowed. 3. Scrap value passed to customers via commercial credit notes is an allowable business expenditure. 4. Ad hoc 5% disallowance of direct expenses without rejecting books or spotting inflated costs is impermissible.
Income-tax Act, 1961	Section 40(a)(ia)	Pr. Commissioner of Income-tax v. Kamraz Rural Bank	$2026$ Click Here	Remanded because the CIT(A) admitted additional evidence under Rule 46A and reduced the TDS disallowance without issuing a speaking order or letting the AO rebut.
Income-tax Act, 1961	Section 43B	CIE Automotive India Ltd. v. DCIT	$2026$ Click Here	Excise duty provisions on closing stock are allowable deductions under Section 43B if the payment is verified to be discharged prior to the return filing deadline.
Income-tax Act, 1961	Section 50CA	Rajasehar Buvaneswari v. Income-tax Officer	$2026$ Click Here	1. Unrealizable assets or those lacking beneficial ownership due to NCLT liquidation cannot be added to FMV calculations under Rule 11UA. 2. The valuation fixed by an IRP in an NCLT-supervised auction carries strong evidentiary value and represents the true commercial FMV for capital gains.
Income-tax Act, 1961	Section 68	CIE Automotive India Ltd. v. DCIT	$2026$ Click Here	Additions cannot be sustained purely based on partial mismatches between TDS certificates and book turnover if the assessee submits a comprehensive reconciliation.
Income-tax Act, 1961	Section 69	AgaraPasala Reddy Prasanna v. Assistant Commissioner of Income-tax	$2026$ Click Here	Best judgment additions for unexplained property purchases and cash deposits were remanded to the AO to allow the assessee a fair chance to present sources.
Income-tax Act, 1961	Section 72	Renault India (P.) Ltd. v. Deputy Commissioner of Income-tax	$2026$ Click Here	Deletion of a Transfer Pricing adjustment on AMP expenses automatically entitles the assessee to the consequential set-off of brought-forward business losses.
Income-tax Act, 1961	Section 92C	Renault India (P.) Ltd. v. Deputy Commissioner of Income-tax	$2026$ Click Here	AMP expenses do not constitute an international transaction warranting a TP adjustment if there is no explicit agreement with the AE and the benefit is merely incidental.
Income-tax Act, 1961	Section 92C	Franklin Templeton International Services (India) (P.) Ltd. v. DCIT	$2026$ Click Here	Transfer Pricing Comparables Criteria: • Exclude companies using heavily outsourced/sub-contracting models. • Exclude entities lacking segmental breakdown for product vs. training/service divisions. • Exclude entities with high brand value, IPs, or corporate restructuring. • Retain comparables with different financial years if quarterly data matches. • Exclude full-fledged risk-bearing entrepreneurs when evaluating captive service units. • Include profit-making years; do not label a company “persistent loss-making” if it profited in 1 out of 3 years. • Apply the export revenue filter strictly (e.g., exclude if below the 75% threshold).
Income-tax Act, 1961	Section 92C	Ericsson India (P.) Ltd. v. Joint Commissioner of Income-tax	$2026$ Click Here	A valid Advance Pricing Agreement (APA) under Section 92CC is conclusive evidence of the commercial purpose of intra-group services, blocking Section 37(1) disallowances.
Income-tax Act, 1961	Section 143	Paliwal Diagnostics (P.) Ltd. v. Deputy Commissioner of Income-tax	$2026$ Click Here	CIT(A) must adjudicate an intimation adjustment on its true merits if it is carried forward into the final assessment order; technical rejections are barred.
Income-tax Act, 1961	Section 147A	AgaraPasala Reddy Prasanna v. Assistant Commissioner of Income-tax	$2026$ Click Here	A faceless reassessment order passed by the NFAC on 26-03-2022 is valid if the initial Section 148 notice was issued before the Faceless Reassessment Scheme’s operational date.
Income-tax Act, 1961	Section 220	Saurav Chachra v. Central Board of Direct Taxes (CBDT)	$2026$ Click Here	Adjusting a subsequent year’s tax refund against a disputed demand that has already been stayed by an interim court order is illegal; immediate refund with interest ordered.
Income-tax Act, 1961	Section 245F	Dhanalakshmi Srinivasan Sugars (P.) Ltd. v. DCIT	$2026$ Click Here	Assessing Officers hold the complete jurisdiction to execute assessments if settlement applications filed post 01-02-2021 were merely received without exclusive vesting.
Income-tax Act, 1961	Section 245HA	Dhanalakshmi Srinivasan Sugars (P.) Ltd. v. DCIT	$2026$ Click Here	If settlement applications are rejected by the IBS after assessment orders are already passed and communicated, no fresh de novo assessment rounds are required.
Income-tax Act, 1961	Section 251	Income-tax Officer v. Vijay Kumar Thakral	$2026$ Click Here	Utilizing powers under Section 251(1)(a) (amended by Finance Act, 2024) to set aside an ex-parte faceless assessment and remanding it for fresh review is legally valid.