September 2025

In this landmark judgment, the Supreme Court of India decisively ruled on the priority of statutory tax charges over secured creditors. The case involved a conflict between a bank’s mortgage claim and sales tax dues under the Rajasthan Sales Tax Act. The Court interpreted Section 11AAAA, which creates a ‘first charge’ on a dealer’s property for tax dues. It held that such a statutory charge is paramount and overrides earlier mortgages, attaching to the entire property, including the mortgagee’s interest. This reinforces the principle that statutory charges for tax recovery have superior status, ensuring state revenues are protected even against prior secured transactions. The decision has significant implications for lenders, emphasizing the risk of statutory charges in credit assessments.

In this landmark ITAT Delhi decision, the Tribunal comprehensively dismissed the Revenue’s appeal, upholding the CIT(A)’s order in favor of Sharpedge Ltd. for AY 1983-84. The judgment reinforces key principles in Indian tax jurisprudence: cash allowances are part of salary for disallowance purposes; commitment charges on unutilized loans are deductible revenue expenditure; post-fire repair costs are revenue in nature; food provided to employees during work conferences is not entertainment expenditure; businesses can change accounting methods for export incentives based on practical exigencies; provisional insurance receipts are not taxable until final settlement; and various depreciation and investment allowances must be computed liberally to support industrial growth. The Tribunal consistently applied stare decisis, following its own precedents and higher court rulings, emphasizing factual and commercial reality over technical interpretations.

In this landmark ITAT Jaipur ruling, the Tribunal reinforced that statutory deductions cannot be barred by taxpayer admissions made under misconception. For contractors assessed under Section 145(3) via a net profit method, depreciation, interest on borrowed capital, and partner remuneration remain allowable as separate deductions, irrespective of any prior agreement to forgo expenses. The decision underscores that admissions during surveys are not binding if retracted with reasonable explanation, and the principle that equitable doctrines like estoppel do not override specific provisions of the Income Tax Act. This provides crucial relief for businesses facing estimated assessments.

In this appeal under s. 260A of the Income-tax Act, 1961, the Bombay High Court dismissed the Revenue’s challenge to the Tribunal’s order for AY 2005-06. The Revenue raised issues regarding deduction under s. 10B, procedural matters before the Tribunal, and treatment of deferred sales tax liability under s. 41(1). The Court, referencing its prior dismissal of identical questions for AY 2004-05, held that no substantial questions of law were presented, emphasizing consistency in judicial decisions and the absence of legal error warranting appellate intervention.

In Western India Plywood Ltd. vs. CIT, the Kerala High Court ruled that expenses incurred to issue debentures for raising working capital are capital expenditure and not deductible under Section 10(2)(xv) of the Income Tax Act, 1922. The Court affirmed that borrowing via debentures enhances capital structure, distinguishing it from temporary trade facilities. The decision reinforces that capital-raising costs are non-deductible, regardless of the funds’ eventual use for revenue purposes like purchasing stock-in-trade.

In this landmark Supreme Court judgment, the Court definitively settled the legal position regarding registration of arbitration awards involving partnership dissolution. The core issue was whether an award allocating partnership assets, including immovable properties valued over Rs. 100, mandates registration under Section 17(1) of the Registration Act, 1908, to be enforceable as a court decree. Analyzing the Partnership Act, 1932, the Court held that a partner’s interest in the firm is a share in the partnership, which constitutes movable property, irrespective of the nature of the underlying assets. Consequently, upon dissolution and distribution of assets as per the award, there is no transfer, assignment, or extinguishment of rights in immovable property that would trigger compulsory registration. The Court reversed the Division Bench’s decision, reinforcing that such awards are enforceable without registration, thereby streamlining arbitration enforcement in partnership disputes involving immovable assets.

In this landmark judgment, the Supreme Court of India established crucial principles for distinguishing between employment and business activities in tax law. The Court held that a company acting as managing agent under a comprehensive agreement with broad managerial powers is carrying on a ‘business,’ making its commission-based remuneration taxable as business income under excess profits tax regulations. The decision clarified that: (1) the agent-servant distinction hinges on control over work methods, not just outcomes; (2) business activities can exist even when services are rendered to a single principal; (3) incorporated companies cannot exercise ‘personal qualifications’ for professional exclusion; and (4) the nature and scope of activities determine business character, not the volume of operations. This precedent remains foundational for determining business income characterization in agency relationships.

In this landmark constitutional judgment, the Supreme Court of India decisively upheld the validity of the Emergency Proclamations of 1971 and 1975, reinforcing parliamentary sovereignty and the non-justiciability of executive satisfaction under Article 352. The Court ruled that the Proclamations, duly approved by Parliament, remained operative despite the non-publication of approval resolutions in the Official Gazette, as the Constitution imposes no such requirement. This validation extended to the House of the People (Extension of Duration) Act 1976 and the Finance Act 1976, thereby legitimizing the tax rates imposed during the extended parliamentary term. The judgment underscores a strict textual interpretation of constitutional provisions, limiting judicial intervention in matters of emergency proclamation and emphasizing that publication in parliamentary debates suffices for public knowledge. For tax professionals, this case solidifies the legal foundation for tax legislation enacted during emergency periods, ensuring revenue stability and affirming the supremacy of constitutional processes in fiscal governance.