Case Studies of Landmark Income Tax Judgments | TaxPundit

In a significant ruling, the ITAT Ahmedabad quashed a reassessment order for A.Y. 2017-18 on the ground of limitation. The Tribunal, following the Supreme Court’s judgment in Union of India vs. Rajeev Bansal, held that the notice u/s. 148 issued on 28-07-2022 was time-barred as it was issued after the surviving period of limitation expired on 17-06-2022. The reassessment proceedings were thus invalid, and the addition on merits was not adjudicated. This decision reinforces the strict adherence to limitation periods in reassessment cases.

In a significant ruling, the Income Tax Appellate Tribunal, Bangalore Bench, quashed the reassessment proceedings against the assessee for AY 2016-17. The Tribunal held that the notice under section 148 issued on 13.07.2022 was time-barred as it was issued beyond the ‘surviving period’ prescribed by the Supreme Court in Rajeev Bansal. The Tribunal meticulously computed the surviving period based on the date of the original notice under TOLA and the date of the assessee’s response, finding that the notice was delayed by 28 days. Furthermore, the Tribunal found that the approval for the notice was obtained from an authority not competent under the amended section 151, as more than three years had elapsed from the end of the assessment year, requiring approval from higher authorities. Consequently, the reassessment order was quashed as void ab initio. This decision reinforces the strict timelines for reassessment under the new regime and the mandatory requirement of valid approval under section 151.

In a significant ruling, the ITAT Ahmedabad quashed a reassessment proceeding initiated under section 147 of the Income Tax Act, 1961, for AY 2013-14. The core issue was the validity of a notice under section 148 dated 31.03.2021, which was actually issued on 01.04.2021. The Tribunal, relying on the Supreme Court’s decisions in Union of India v. Ashish Agarwal and Rajeev Bansal, held that the notice, though within the extended limitation period under TOLA, was deemed to be a notice under section 148A(b) of the amended Act. The Assessing Officer was obligated to follow the new reassessment procedure, including providing materials to the assessee and passing an order under section 148A(d), within the surviving period of 89 days. As the AO failed to comply, the notice was declared invalid, and the consequential assessment order was quashed. The appeal was allowed, and other grounds were not adjudicated.

In a significant international tax ruling under the India-China DTAA, the Income Tax Appellate Tribunal, Delhi Bench, held that management and technical service fees received by a Chinese tax resident from its Indian group company for services rendered wholly from China are not taxable in India as Fees for Technical Services under Article 12(4) of the India-China DTAA. The Tribunal emphasised that Article 12(4) requires the managerial, technical or consultancy services to be rendered in the other Contracting State, i.e. India, and that since the assessee had no Permanent Establishment in India and rendered the services from China through emails, conference calls and video conferencing, the Revenue’s attempt to treat virtual rendition as physical rendition in India was unsustainable. Following the Bombay High Court’s judgment in the assessee’s own case, which had rejected reliance on Ashapura Minichem and the AAR ruling in Guangzhou Usha International, the Tribunal allowed all three appeals for AYs 2015-16, 2016-17 and 2017-18. The decision reinforces the source-based limitation on FTS taxation under the India-China treaty and rejects a place-of-utilisation-only approach for such services.

In WPA 2036 of 2020, the Court granted relief to Ultra Tech Cement Limited and another. The petitioners challenged adjustment of income tax refunds for A.Y. 2019-20 against pre-CIRP/pre-transfer demands and notices proposing fresh proceedings for periods up to A.Y. 2019-20. The Court held that after approval of the resolution plan for Binani Cement Ltd. by NCLAT on 14.11.2018 and affirmation by the Supreme Court, all claims stood frozen. The Income Tax Department, as an operational creditor whose claim was not part of the approved plan, could not adjust refunds or initiate reassessment for the pre-transfer period. Relying on Ghanashyam Mishra, JSW Steel, Srishtri Hotel, Vaibhav Goyal and Essar Steel, the Court applied Section 238 of the IBC and held that income tax dues, as crown debts, have no priority and stand extinguished if not included in the resolution plan. The impugned notices and orders were quashed. The Department was directed to refund adjusted amounts with interest, permit carry forward of unabsorbed depreciation and accumulated losses, accept pre-transfer returns, and not initiate reassessment or other proceedings for the pre-transfer period. The writ petition was disposed of with directions.

The Punjab & Haryana High Court examined the interplay between Section 80AC(ii) of the Income-tax Act, 1961 and CBDT circulars governing condonation of delay in filing returns by co-operative societies claiming deduction under Section 80P. The petitioner co-operative society filed its ITR for AY 2020-21 after the extended due date, delayed by 34 days, citing COVID-19 disruption and delayed audit report. Its Section 80P deduction was denied by the assessment order, and the appellate authorities upheld the denial, though the ITAT gave liberty to seek condonation. The CCIT rejected the condonation application relying on CBDT Circular No.09/2015 dated 09.06.2015. The High Court held that the specific CBDT Circular No.13/2023 dated 26.07.2023, which expressly covers condonation of delay for co-operative societies claiming Section 80P deduction for AY 2018-19 to 2022-23, governed the case. The Court found Circular No.09/2015 inapplicable because it concerns refund and carry-forward loss claims. Consequently, the CCIT’s order was held unsustainable. This decision clarifies that specialized circulars for Section 80P delay condonation prevail over general circulars.

Taxpundit 926Taxpundit467: In a common order dated 28.10.2025, the High Court (Division Bench of Justices Battu Devanand and A. Hari Haranadha Sarma) allowed a large batch of writ petitions concerning faceless reassessment under the Income Tax Act, 1961. The petitioners challenged notices/orders under Sections 148-A(b), 148-A(d) and 148 issued by the Jurisdictional Assessing Officer. The Court held that after the insertion of Section 151A and the notification of the E-Assessment Scheme of Income Escaping Assessment Scheme, 2022 dated 29.03.2022, reassessment and issuance of notice under Section 148 must be through the mandatory faceless mechanism. The JAO could not issue the impugned notices/orders. The Court relied on Hexaware Technologies and Prakash Pandurang Patil (upheld by the Supreme Court) and held the notices/orders bad and illegal. All writ petitions were allowed; the impugned notices/orders and consequential orders were set aside. No costs.

ITAT Mumbai (Saktijit Dey, VP and Bijayananda Pruseth, AM) held that subscription fees received by Slack Technologies Limited, an Irish tax resident, from Indian customers for access to its online communication/collaboration platform are not royalty under Section 9(1)(vi) of the Income Tax Act, 1961 or Article 12(3) of the India-Ireland DTAA. The Tribunal rejected the Revenue’s case that the fees were for use or right to use a copyright/process. The assessee had not transferred the source code, copyright or embedded processes; subscribers received only a limited, non-exclusive right to use the platform while the IP remained vested in the assessee. The DRP’s own finding that the assessee used the processes to provide services was fatal to the royalty characterisation. The Tribunal applied the law in Engineering Analysis Centre of Excellence (SC) and Delhi Tribunal/HC precedents in MOL Corporation, Salesforce.com, GoTo Technologies, Microsoft Regional Sales, etc. Consequently, the royalty additions for A.Y. 2021-22 and 2022-23 were deleted, and since the receipts were business receipts and the assessee had no PE in India, they were not taxable in India. The appeals were partly allowed; the TDS credit short-grant ground was restored to the AO for verification, while other grounds were kept open or dismissed.