Stay informed about the latest case laws on Income Tax with this comprehensive overview as we delve into the latest cases reported in the Income Tax Reports (ITR), focusing on critical issues such as International Transactions, Assessment, Recovery of Tax, Reassessment, Appeal and Industrial Undertakings.
Income-tax — International transactions — Transfer pricing — Computation of arm’s length price — Selection of comparable — Transfer Pricing Officer including high brand value companies — Held, Being service provider compensated on cost-plus basis assessee objecting to inclusion of these comparable — Functional similarity alone not decisive factor — Exclusion of such comparable in subsequent assessment year — Direction to exclude the two comparable [Cadence Design Systems (India) v. CIT, (2025) 482 ITR 415]
Income-tax — Assessment — Principle of consistency — Income from house property or business income — Business income or capital gains — Rental income consistently assessed as income from house property in prior and subsequent assessment years — Sale of properties in two years cannot change nature of income when predominant activity remained same — Clauses in memorandum of association not sole factor to determine nature of income — Held, rental income taxable as income from house property and profits from sale of property as capital gains and not business income [Knowell Realtors (India) (P) Ltd. v. CIT, (2025) 482 ITR 423]
Income-tax — Recovery of tax — Application for waiver of pre-deposit of 20 per cent. of assessed tax — Discretion to waive pre-deposit — Effect of CBDT circular — Circular cannot override powers of appellate authority — Commissioner considering facts and rejecting application but granting facility of paying tax in instalments — Order valid [Shyam Oil Extractions (P) Ltd. v. CIT, (2025) 482 ITR 430]
Income-tax — Reassessment — Notice under section 148 — Change of opinion — Information regarding accommodation entry previously addressed and explanation accepted in first round of reassessment proceedings and order passed — Identical material related to issue of assessee being beneficiary of accommodation entry examined in earlier reassessment proceedings in 2013 — Second notice under section 148 in 2018 based on same alleged accommodation entry — Held, no fresh material discovered after first reassessment proceedings — Second reassessment notice on change of opinion — Absence of detailed reasoning in assessment order immaterial — Notice and reassessment proceedings for second round quashed [PMC Fincorp Ltd. v. CIT, (2025) 482 ITR 444]
Income-tax — Reassessment — Notice after four years — Notice issued for second round of reassessment proceedings — Remission amount from Board for Industrial and Financial Reconstruction — Held, assessing officer duly considering all material facts and forming an opinion on remission amount and not bringing it to tax — No failure to disclose all material facts attributable to assessee — Reopening of assessment on mere change of opinion — Notice and reasons recorded quashed [S.B. Packagings Ltd. v. CIT, (2025) 482 ITR 456]
Income-tax — Reassessment — Notice after four years — Validity — Failure to disclose material facts necessary for assessment — Duty of assessee to disclose material facts fully and truly — Finding that there had been no such disclosure — Notice valid [BDR Builders & Developers (P) Ltd. v. CIT, (2025) 482 ITR 477]
Income Tax — Reassessment — Notice after four years — Validity — Failure to disclose material facts necessary for assessment — Scrutiny assessment — Held, no evidence of failure to disclose material facts necessary for assessment — Notice not valid [Aashish Niranjan Shah v. Union of India, (2025) 482 ITR 492]
Income-tax — Income — Computation of income – Disallowance of Law laid down by Supreme expenditure incurred on income exempt from tax Court – Existence of exempt income sin qua non for invocation of section 14A — Section 14A not attracted where there is no income exempt from tax — Held, order of Tribunal that disallowance under section 14A liable to be restricted to extent of exempt income earned during relevant assessment year is proper [CIT v. Alchemist Ltd., (2025) 482 ITR 504 ]
Income-tax — Appeal to High Court — Maintainability — Condition precedent — Existence of substantial question of law — Undisclosed income — Order of Tribunal deleting addition under Section 69 on consideration of facts — No question of law arose [CIT v. Madras Pharmaceuticals, (2025) 482 ITR 522]
Income-tax — Industrial Undertakings — Special deduction — Industrial undertaking in backward area — Condition precedent for deduction – Profits derived from manufacture or production of article — Profits from repair and maintenance of manufactured article Not entitled to special deduction [Rajesh Kumar Drolia (HUF) v. CIT, (2025) 482 ITR 531]