Posts

Case Law (SC) – Once the shares of the amalgamating company kept in stock-in-trade ceased to exist and were substituted by shares of the amalgamated company, there was a cession of the old trading stock and its replacement by a new commodity of ascertainable market value. On this footing, it is realisation of business profit and taxable under Section 28.

Jindal Equipment Leasing Consultancy Services Ltd. & Anr v. CIT & Ors. [2026 INSC 46] dated 09.01.2026. ISSUE BEFORE COURT ARE: - A.    Whether an amalgamation – though, in company law, it operates as a statutory substitution of rights – nonetheless gives rise to taxable business profits under Section 28 of the I.T. Act . B.    Whether the substitution of shares kept in stock-in-trade results in real commercial profits, having accrued or arisen in the course of business, so as to be chargeable as business income under Section 28. DECISION: - “ 27.2. In this context, the substitution of one trading asset by another, such as the receipt of shares in an amalgamated company in lieu of shares held as stock-in-trade in the amalgamating company, cannot be equated with a mere continuation of an investment. It represents a commercial realisation in kind, for the new shares are distinct assets with a definite and presently realisable market value. 27.3. If...
Post a Comment
Read more

Case Law (SC) – When a coordinate Bench of a High Court has already determined a question of law, a subsequent Bench of equal strength is bound to follow that view; if it doubts its correctness, the only permissible course is to refer the matter to a larger Bench.

  Ad ani Power Ltd. & Anr v. Union Of India & Ors. [2026 INSC 1] dated 05.01.2026. ISSUE BEFORE COURT ARE: - 38. From the rival submissions and the record before us, the following questions arise for consideration: I. Firstly, what, in law, did the Gujarat High Court decide in its judgment dated 15 July 2015, and what is the true scope of that decision? II. Secondly, whether, in the period subsequent to 15 September 2010 and prior to 16 February 2016, there was any material changes in the statutory position or factual footing that would justify a different result from that arrived at in 2015 judgment? III. Thirdly, whether the High Court, in its impugned judgment of 28 June 2019, was justified in holding that no relief could be granted to the appellant in the absence of a specific and fresh challenge to Notification Nos. 91/2010-Cus. and 26/2012-Cus? IV. Fourthly, whether, in view of the 2015 declaration of law and its affirmation, the High Court in 2019 was a...
Post a Comment
Read more

Case Law (SC) – Non-compete fee only seeks to protect or enhance the profitability of the business, thereby facilitating the carrying on of the business more efficiently and profitably leaving the fixed assets untouched, the payment made to secure such advantage would be an allowable business expenditure, irrespective of the period over which the advantage may accrue to the payer (assessee) by incurring of such expenditure.

  Sharp Business System v. CIT [2025 INSC 1481] dated 19.12.2025 ISSUE BEFORE COURT ARE: - (I). Whether non-compete fee paid by the assessee was a revenue expenditure or capital expenditure? (II). Whether non-compete fee was an intangible asset and hence entitled to depreciation? (III). Whether interest on borrowed fund is allowable expenditure where the assessee had advanced such amount to its sister concern as a measure of commercial expediency? DECISION: - “First and Second issue: “25. Having adverted to the relevant case laws, we may now examine the nature and character of non-compete fee; whether payment of non-compete fee is revenue expenditure or capital expenditure. Non-compete fee is paid by one party to another to restrain the latter from competing with the payer in the same line of business. It may be by way of a written agreement or by an oral understanding. The restriction may be limited to a specified territory or otherwise; similarly, it can be for a spec...
Post a Comment
Read more

Case Law (SC) – Section 44C applies to ‘head office expenditure’ regardless of whether it is common expenditure or expenditure incurred exclusively for the Indian branches. Accordingly, the allowable deduction is restricted to the least of the following two amounts: (i) an amount equal to 5% of the adjusted total income; or (ii) the amount of head office expenditure specifically attributable to the business or profession of the assessee in India.

  DIT v. American Express Bank Ltd. [2025 INSC 1431] dated 15.12.2025. ISSUE BEFORE COURT IS: - Whether Section 44C of the Income Tax Act merely covers ‘ common expenditure ’ incurred by the head office attributable to an assessee’s business in India or would also include ‘ exclusive expenditure ’ incurred by the head office for the Indian branches . DECISION: - “ 86. A conspectus of our legal discussion regarding Section 44C of the Act, 1961, is as under: a) Section 44C is a special provision that exclusively governs the quantum of allowable deduction for any expenditure incurred by a non-resident assessee that qualifies as ‘head office expenditure’. b) For an expenditure to be brought within the ambit of Section 44C, two broad conditions must be satisfied: (i) The assessee claiming the deduction must be a non-resident; and (ii) The expenditure in question must strictly fall within the definition of ‘head office expenditure’ as provided in the Explanation to the Sect...
Post a Comment
Read more

Case Law (SC) – Deduction u/s 36(1)(viii) of the Act on Dividend, Interest on short-term deposits in banks and Service Charge are not allowable by employing the narrowest possible connective verb "derived from" and coupling it with an exhaustive definition of "long-term finance" in the Explanation where the Legislature has explicitly excluded ancillary, incidental, or second-degree sources of income.

  National Cooperative Development Corporation v. ACIT [2025 INSC 1414] dated 10.12.2025. ISSUE BEFORE COURT ARE: - A. Re: Section 36(1)(viii) of the Income Tax Act, 1961, and the objective of the 1995 Finance Act amendment . ............................................................7  B. Re: Interpretation of the phrase “derived from” ................................10  C. Re: Dividend received on redeemable preference shares................14  D. Re: Interest on short-term deposits in banks....................................16  E. Re: Service Charge on Sugar Development Fund loans ..................19  IV. Conclusion.........................................................................................20 DECISION: - “First issue: “12. The Memorandum explaining the Finance Bill, 1995, as delineated above, explicitly states that the objective of such amendment was to limit the deduction of 40% only to the income derived from providing long-term...
Post a Comment
Read more

Case Law (SC) – The Tribunal Reforms Act, 2021 is a replica of the struck down Ordinance; old wine in a new bottle, the wine whets not the judicial palette, but the bottle merely dazzle. The repeated reenactment of the same provisions, which have been struck down by the judiciary, shows that the “form of the administration” is being made “inconsistent” with the spirit of the Constitution.

  Madras Bar Association v. Union Of India and Another [2025 INSC 1330] dated 19.11.2025. ISSUE BEFORE COURT ARE: - i.       Whether Parliament possesses the authority to disregard a judicial pronouncement and to enact a statute in any manner it deems appropriate? ii.                Can the Court compel Parliament to legislate in a particular manner? iii.           Can the constitutionality of legislation be tested on the touchstone of what the Union describes as “abstract principles,” such as separation of powers or judicial independence? iv.             Constitutional validity of the Tribunal Reforms Act, 2021? DECISION: - “ First issue: 117. Parliament, like every other institution under our constitutional scheme, must operate within the bounds of the Constitution. Its discretion is broad but not absolute. It must respe...
Post a Comment
Read more

Case Law (SC) – For invocation of extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, the department was required to prove deliberate suppression and concealment of the material facts on the part of the assessee to evade the tax liability. In the absence of fraud, collusion, wilful mis-statement, or suppression of facts with an intent to evade payment of service tax, the invocation of the extended period of limitation under section 73 of the Finance Act, 1994 is wholly unwarranted.

  Commissioner Of Service Tax v. Elegant Developers [2025 INSC 1299] dated 10.11.2025. ISSUE BEFORE COURT ARE: - i.                 Whether the respondent rendered services falling within the category of ‘ Real Estate Agent ’, taxable under Section 65(105)(v) read with Section 65(88) of the Finance Act, 1994 , during the period from 1st October, 2004 to 31st March, 2007? ii.           Whether the appellant has established that the respondent deliberately suppressed facts, thereby justifying the invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994? DECISION: - “ 40. In the present case, admittedly, the respondent was not engaged by the SICCL for any such service. The terms of MoUs (supra) which we have carefully examined, do not indicate that there existed any relationship of principal and agent betwe...
Post a Comment
Read more