October 2025

In this consolidated order, the Income Tax Appellate Tribunal, Chennai ‘B’ Bench, dismissed cross appeals for AY 2014-15 involving Shriram City Union Finance Ltd. Key rulings: (1) Transfer to statutory reserve under RBI Act s. 45IC is an appropriation of profit, not deductible for business income or book profit u/s 115JB. (2) Disallowance u/s 14A cannot apply if no exempt income is earned, following Supreme Court precedent. (3) Royalty paid for logo usage is revenue expenditure, deductible. (4) Commission disallowance u/s 40(a)(ia) for TDS default under s. 194H is limited to payments exceeding Rs. 5000 per recipient, with Supreme Court overriding earlier High Court leniency. (5) Disallowance u/s 14A r.w.r. 8D cannot be added to book profit u/s 115JB. The Tribunal consistently applied precedents, emphasizing factual findings and legal principles on deductions, TDS compliance, and MAT computations.

In this landmark ITAT Mumbai ruling, the Tribunal upheld the addition of Rs.96 lakhs under Section 68 as unexplained cash credits, emphasizing the stringent three-fold test for share application money: identity, creditworthiness, and genuineness. The assessee’s failure to produce credible evidence despite detailed investigations led to the confirmation of the addition. Concurrently, the Tribunal dismissed the department’s appeal, affirming the treatment of share sale profits as capital gains, not business income, based on transaction intent and holding patterns. This judgment reinforces the Revenue’s authority to scrutinize corporate share subscriptions and clarifies the applicability of Section 68 to companies, rejecting blanket exemptions.

In this landmark Chapter XX-C case, the Supreme Court upheld the High Court’s intervention in quashing a pre-emptive purchase order, reinforcing that the Appropriate Authority’s valuation must be rational and consistent. The judgment establishes that while courts show deference to administrative valuations, they will interfere where methods are arbitrary, assumptions are unfounded, or similar properties are treated disparately. This decision serves as a critical check on the Authority’s discretion, ensuring fairness in compulsory acquisition proceedings under the Income Tax Act.

In this landmark ruling, the Hyderabad ITAT reinforced critical principles in Indian tax jurisprudence. It affirmed that ancillary incomes like scrap sales and insurance recoveries are eligible for Section 80IB deductions, broadening the scope of ‘profits derived from industrial undertakings.’ The decision also provides clarity on business expenditure, allowing forfeited advances for expansion as deductible under Section 37(1), distinguishing capital vs. revenue outlays. Significantly, it curtailed the scope of Section 153A assessments, ruling they cannot be used to rehash concluded issues without incriminating evidence from searches. This judgment offers strategic insights for taxpayers navigating deductions, expenditure claims, and search-related assessments.

In this landmark judgment, the Supreme Court clarifies the non-retrospective application of Section 4 of the Benami Transactions (Prohibition) Act, 1988, in execution proceedings. The case involved a property dispute where the appellant, as transferee from the heiress of the real owner, sought restoration of possession under Section 144 CPC against the respondent benamidar. The Court held that Section 4 does not bar claims pending before the Act’s enforcement, emphasizing that the appellant’s application under Section 144 CPC, filed prior to the Act, was a pending claim. This decision reinforces the principle that statutory prohibitions must be expressly made retrospective to affect existing rights, providing critical guidance for legal professionals in benami and civil procedure matters.

In Commissioner of Income Tax vs. Chetak Enterprises Pvt. Ltd., the Supreme Court upheld the entitlement of a company, formed by statutory conversion of a partnership firm under Part IX of the Companies Act 1956, to claim deduction under Section 80-IA of the Income Tax Act 1961 for infrastructure development. The Court ruled that the statutory vesting under Section 575 of the Companies Act ensures the company inherits all rights and obligations of the firm, including the government agreement. The agreement’s ‘successors and assigns’ clause and prior governmental acknowledgment of the conversion satisfied the condition under Section 80-IA(4)(i)(b). This judgment reinforces that statutory conversions under company law facilitate continuity in tax benefits, emphasizing substance over form in interpreting eligibility criteria for deductions.

In this landmark judgment, the Income Tax Appellate Tribunal, Ahmedabad, overturned the lower authorities’ denial of charitable status to Gujarat Maritime Board. The Tribunal meticulously dissected the Board’s statutory framework under the Gujarat Maritime Board Act, 1981, concluding that its core mission—developing and managing minor ports—serves a public utility purpose without profit intent. By invoking binding precedents, including a Supreme Court ruling in the Board’s favor, the Tribunal reinforced that fee-based services incidental to charitable objectives do not trigger the restrictive proviso to Section 2(15) of the Income Tax Act. This decision underscores the principle that governmental or quasi-governmental bodies engaged in infrastructure development can qualify for tax exemptions under Sections 11 and 12, provided their activities align with charitable definitions and lack commercial profit motives.

In this landmark judgment, the Supreme Court clarified a critical aspect of Section 80HHC deductions for export businesses. The Court held that the term ‘profits’ in Section 80HHC unequivocally means positive profit, and an assessee cannot claim deduction if the export of trading goods results in a loss (negative profit). This decision reinforces the principle that tax incentives under Chapter VI-A are contingent upon actual profit generation, ensuring that deductions align with the legislative intent of promoting profitable export activities. The Court remanded the matter to the High Court for fresh consideration on whether the assessee had shown positive profit, underscoring the necessity of factual verification in applying this legal principle.