2025

In this landmark transfer pricing dispute, the Income Tax Appellate Tribunal, Bengaluru, delved into the intricacies of comparable selection for benchmarking international transactions. The case involved Logitech Engineering & Design India P. Ltd., a captive service provider, challenging adjustments made by the TPO and DRP for software development and market support services. The Tribunal’s ruling reinforces critical transfer pricing principles: functional comparability overrides mere numerical benchmarking; turnover filters are essential to ensure parity between large diversified entities and niche captive units; and consistency in applying filters (like RPT and export thresholds) is mandatory. By meticulously analyzing each contested comparable and citing a robust body of case law, the Tribunal provided clarity on excluding giants like Infosys and including functionally aligned SMEs, setting a precedent for similar disputes in the IT/ITES sector. The decision underscores the judiciary’s role in curbing arbitrary adjustments and promoting equitable transfer pricing practices.

In this writ petition, the Madhya Pradesh High Court dismissed the assessee’s challenge to a penalty show cause notice under Sections 271D/271E, ruling it was not time-barred. The Court clarified that penalty proceedings for violations of Sections 269SS/269T are independent of assessment proceedings and can only be initiated by the Joint Commissioner of Income Tax. The earlier notice issued by the Deputy Commissioner during assessment was merely investigatory and did not constitute valid initiation of penalty proceedings. Therefore, the limitation period under Section 275(1)(C) began only when the Joint Commissioner issued the notice on 22.9.2017, rendering it valid. This judgment reinforces the exclusive jurisdictional authority under penalty provisions and distinguishes between assessment and penalty proceedings.

In this landmark judgment by the Income Tax Appellate Tribunal, Kolkata, the Revenue’s appeal against deletion of an addition under section 68 was dismissed. The Tribunal meticulously examined the evidence, affirming that the assessee, Zimkele Commodeal Pvt. Ltd., had conclusively proven the identity, creditworthiness, and genuineness of share application money received from eight companies. Key documents included PAN details, tax returns, audited financials, and bank statements, with investments duly reflected in the applicants’ books. The AO’s allegations of paper companies were deemed unsubstantiated, lacking empirical support. The decision reinforces the judicial precedent that once the tripartite test under section 68 is satisfied, additions cannot be upheld, providing clarity for taxpayers on compliance standards in share capital transactions.

In this landmark judgment, the Allahabad High Court clarified the scope of section 40(b) of the Income Tax Act 1961, which disallows deductions for payments (interest, salary, etc.) made by a firm to its partners. The Court held that the prohibition is absolute and applies irrespective of the capacity (e.g., as an individual or as a Karta of an HUF) in which a partner receives the payment or the source of funds (personal or HUF) on which interest is paid. The decision reinforces that the legal identity of the partner under partnership law governs section 40(b), and beneficial ownership considerations are separate for assessment purposes. This prevents firms from circumventing disallowance by routing payments through different capacities of the same partner.

In a landmark judgment by a Constitution Bench, the Supreme Court has authoritatively settled a long-standing controversy regarding the limitation period for issuing a declaration under section 6 of the Land Acquisition Act, 1894. The Court held that the prescribed period—three years or one year from the date of the section 4(1) notification—is mandatory and peremptory. Crucially, it ruled that if a section 6 declaration is quashed by a court, the State Government does not get a fresh or extended limitation period to issue a new declaration. The only exclusion permitted by the statute (Explanation 1) is for periods when proceedings are formally stayed by a court. The judgment overrules prior conflicting decisions that had allowed a new period to run from the date of the court’s quashing order, clarifying that such an interpretation impermissibly rewrites the statute. The decision reinforces strict adherence to statutory text in limitation matters and limits judicial expansion of statutory timelines. However, applying principles of prospective overruling and finality, the Court protected acquisitions where awards have been made and compensation paid.

In this landmark 1937 judgment, the Lahore High Court established crucial principles for taxing maintenance allowances from impartible estates. The Court allowed exemption for Rs. 6,000 received annually by Kunwar Kartar Singh from his brother’s jagir, ruling it constituted agricultural income under Section 4(3)(viii) as it was a direct apportionment of the revenue assignment mandated by the Government. However, the Court dismissed the alternative claim under Section 14(1), holding the allowance wasn’t received as a HUF member but as a statutory beneficiary under the Descent of Jagirs Act. The judgment clarifies that exemptions depend on the allowance’s source character rather than mere familial relationships, setting precedent for distinguishing between agricultural income derivations and HUF receipts.