In this landmark judgment, the Delhi High Court clarifies the distinction between capital and revenue expenditure in the context of brick-kiln operations. The Court held that lease payments for land to excavate earth over a fixed period constitute revenue expenditure, as they secure raw material without conferring an enduring interest in the land, aligning with the principle that such payments are for stock-in-trade. Conversely, expenditure on constructing a chimney is capital in nature, as it creates a permanent asset. The decision reinforces the application of the ‘enduring benefit’ test and emphasizes fact-specific analysis, favoring the assessee on the lease issue but upholding the revenue’s position on the chimney.

In this landmark wealth tax judgment, the Calcutta High Court established crucial principles for computing net wealth of companies. The court affirmed that balance-sheet asset values, including revaluations, are prima facie acceptable for wealth tax purposes unless shown incorrect. It clarified that proposed dividends become deductible debts only upon formal declaration, not when merely proposed by directors. Most significantly, the court held that provisions for income-tax/super-tax do not constitute ‘debts owed’ under section 2(m) of the Wealth Tax Act until liability crystallizes through assessment and demand. This decision provides important guidance on the temporal aspects of tax liabilities and the evidentiary value of company financial statements in wealth tax assessments.

In this landmark ruling by the ITAT Mumbai, the Tribunal overturned the CIT(A)’s dismissal of appeals by Royal Western India Turf Club Ltd., emphasizing procedural fairness and substantive justice. The case centered on the condonation of delay in filing appeals, with the assessee alleging non-receipt of assessment orders. The Tribunal meticulously examined affidavits and found the Revenue’s evidence of service inadequate, highlighting the AO’s use of an unauthorized postal acknowledgement. It condoned the delay, applying a liberal interpretation from Supreme Court precedents, and criticized the CIT(A) for ex parte dismissal without admitting evidence or providing a hearing, a clear breach of natural justice. The decision reinforces the principle that technicalities should not override merit-based adjudication, setting a precedent for similar disputes involving service issues and appellate procedures.

In a landmark ruling on the scope of tax treaty exemptions for international air transport, the Mumbai ITAT held that Delta Airlines Inc.’s income from security screening and third party charter handling services provided to other airlines is exempt under Article 8 of the Indo-US DTAA. The Tribunal rejected the Revenue’s restrictive interpretation, emphasizing that Article 8(2)(b) explicitly covers ‘other activity directly connected with such transportation.’ It found these services are ancillary and integral to Delta’s core air transport operations, utilizing shared infrastructure without constituting a separate business. The decision reinforces a purposive interpretation of tax treaties, considering OECD Commentaries where applicable, and sets a precedent for treating integrated ancillary services as part of exempt international transport profits. This provides clarity for airlines on the tax treatment of ancillary revenues under DTAA provisions.

In this landmark judgment, the Income Tax Appellate Tribunal, Bombay Bench, comprehensively addressed the taxability of various allowances and perquisites received by a government employee. The Tribunal firmly established that dearness allowance and compensatory city allowance, being periodic payments received as consideration for services rendered, constitute taxable salary income under the Income Tax Act 1961, as they are not covered by any exemption under section 10. The decision clarifies that definitions of ‘salary’ in other labor statutes are irrelevant for income tax purposes. Regarding house rent allowance, the Tribunal interpreted section 10(13A) strictly, denying exemption to employees deemed owners of property under section 27(iii). The ruling also confirms that encashment of earned leave during service is taxable as ‘profits in lieu of salary’, and professional tax is not deductible from salary income. This judgment provides authoritative guidance on the scope of salary income and the limited nature of exemptions under the Act.

In Krishna Oberoi vs. Union of India & Ors., the Andhra Pradesh High Court ruled decisively that room charges paid by corporate clients to hotels constitute ‘rent’ under section 194-I of the Income Tax Act, 1961, mandating tax deduction at source (TDS). The Court rejected the hotel’s argument that such transactions are mere licenses, emphasizing the broad statutory definition of ‘rent’ that includes payments under ‘any agreement or arrangement’ for use of buildings. This judgment reinforces the Revenue’s stance on TDS compliance in the hospitality sector, clarifying that contractual labels do not override tax obligations. Financial hardships pleaded by the hotel were deemed irrelevant to statutory interpretation. The ruling underscores the expansive scope of section 194-I, ensuring wider tax net coverage for rental-like payments.

In this landmark judgment, the Karnataka High Court’s Division Bench decisively upheld the constitutional validity of Section 269SS of the Income Tax Act, 1961, which prohibits cash loans or deposits of Rs. 20,000 or more. The Court rejected arguments that the provision violates Article 14 by discriminating against borrowers, emphasizing that the classification between borrowers and lenders is based on intelligible differentia aimed at curbing tax evasion through fictitious entries. It also affirmed Parliament’s legislative competence under Entry 82, ruling that preventing tax evasion is ancillary to the power to tax income. The judgment reinforces the judiciary’s support for anti-evasion measures, aligning with precedents from multiple High Courts and Supreme Court rulings on analogous provisions. While the penalty’s quantum was not adjudicated, the appellant was directed to pursue statutory remedies, underscoring the procedural integrity of tax enforcement.

In this landmark transfer pricing ruling, the Visakhapatnam ITAT dismissed the Revenue’s appeal and upheld the deletion of a Rs.66.4 million adjustment for notional interest on receivables from Associated Enterprises. The Tribunal reinforced the critical principle that for debt-free companies with robust capital reserves, where the Profit Level Indicator (PLI) already exceeds comparable benchmarks and is accepted as at arm’s length, no separate imputation of interest on delayed trade receivables is permissible. The decision underscores that higher pricing to AEs inherently compensates for extended credit, and the Revenue must demonstrate systematic undue credit extension or use of interest-bearing funds—neither of which was established here. This judgment provides significant clarity and relief for multinational enterprises on the treatment of trade credit in transfer pricing, aligning with judicial precedents that prevent double adjustments.