I. Diversion of interest-bearing funds for commercial transactions is not disallowable if loans are for business purposes. II. Estimation of melting gain is unwarranted if proper books of account are maintained and not rejected. Issue I: Interest on Borrowed Capital – Commercial Expediency Whether interest on borrowed capital can be disallowed under Section 36(1)(iii) of… Read More »

Interest on unproven loan genuineness is disallowed, even for opening balances. Issue: Whether interest expenditure claimed on unsecured loans can be disallowed under Section 36(1)(iii) of the Income-tax Act, 1961, if the assessee fails to establish the genuineness, creditworthiness of the creditor, and repayment of the underlying loans, even if no new loans were received… Read More »

Hardship compensation received for displacement during redevelopment is a capital receipt, not revenue income. Issue: Whether “hardship compensation” received by a flat owner from a builder during the redevelopment of a housing society, intended to mitigate the inconvenience of displacement, constitutes a revenue receipt taxable under Section 2(24) of the Income-tax Act, 1961, or a… Read More »

Providing medical facilities at nominal charges in rural areas qualifies as charitable activity for 80G approval. Issue: Whether a trust operating a hospital and providing medical services and pharmacy sales at nominal charges in rural areas can be considered to be engaged in a “charitable purpose” under Section 2(15) of the Income-tax Act, 1961, specifically… Read More »

IMPORTANT INCOME TAX CASE LAWS 27.05.2025 Section/Rule Case Law Title Brief Summary Citation Relevant Act/Scheme 11, Rule 12A(1)(b) Cossimbazar Social Welfare and Development Trust v. Income – tax Officer Income of charitable trust assessed as nil as application of funds equaled gross receipts; AO failed to consider. Click Here Income-tax Act, 1961 11, Rule 12A(1)(b)… Read More »

Trust income from will, being the sole trust, is taxable at AOP rates, not MMR. Issue: Whether a trust created by a will for the benefit of specific family members, whose shares of income from the trust might be undetermined, should be taxed at the Maximum Marginal Rate (MMR) under Section 164 of the Income-tax… Read More »

Faceless assessment order passed without a granted personal hearing is a violation of natural justice. Issue: Whether a faceless assessment order passed without providing the requested personal hearing through video conferencing, especially when the revenue failed to appear for a scheduled hearing, violates the principles of natural justice and is therefore liable to be set… Read More »