Issue No. 288 / May 03rd, 2025
Dear Professionals,
We are glad to present to you the 288th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 131010+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’
Journals Current Status
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ITR Vol No. 473 PART 1 |
04th April 2025 |
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ITR Trib Vol NO. 121 Part 5 |
03rd Feb 2025 |
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CTR Vol No. 342 Issue 6 |
07th Feb 2025 |
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DTR Vol No. 248 Issue 64 |
08th April 2025 |
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TAXMAN Vol No.. 302 Part 3 |
18th Jan 2024 |
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ITD Vol No. 210 Issue 4 |
22nd Jan 2025 |
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TTJ Vol No. 234 Issue 11 |
18th March 2025 |
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Key Takeaways from Handpicked Rulings
1) SC: Issues notice on admissibility of assessee’s delayed cross-objections in revenue appeals. SC issued notice in a case where the HC admitted Revenue's appeals on certain substantial questions of law but declined to condone the delay in filing cross-objections by the assessee (filed 461 days late). SC is now seeking Revenue’s opinion if it has any objection on considering assessee's cross-objections by the HC, given that the Revenue’s appeals were admitted on substantial legal grounds.
Click here to read and download SC order
2) SC: Affirms HC decision quashing CBDT's search proceedings and consequential actions under section 132(1). SC dismisses the Revenue's Special Leave Petition (SLP), upholding the Bombay HC decision to quash the CBDT-authorized search under Section 132(1), citing that the grounds for the search were irrelevant and the reasons recorded amounted to a mere pretence. While the SC chose not to interfere with the HC judgment, it kept the question of law open; HC observed that the reasons recorded in the file were extremely general in nature (and not disclosed), and that the satisfaction note did not reflect any process of forming a reasonable belief………..
Click here to read and download SC order
3) HC: Admits UK tax resident appeal despite being a non-filer, to address key issues on reclassification of Income as FTS. HC has admitted an appeal by a UK tax resident against the ITAT order, wherein it was held that the Assessee, providing technical services and receiving payments sourced from India, is liable to tax under Section 9(1)(vii) of the Income Tax Act. Despite the Revenue's objection that the appeal is invalid due to the Assessee’s failure to file a return (and the Income Tax Act’s stipulation that a non-filer cannot maintain an appeal), the HC disagreed. The Court ruled that an appeal can be filed under Section 260A of the Income Tax Act if it raises a substantial question of law, irrespective of the Assessee's filing status. The Assessee has raised several legal questions, with the Court focusing on two issues: 1) whether the Appellant's income of Rs. 3.31 crore is taxable under Indian law or the India-UK Double Taxation Avoidance Agreement (DTAA), and 2) whether the ITAT was correct in reclassifying the income as Fees for Technical Services. The next hearing is scheduled for May 13, 2025.
Click here to read and download HC Order
4) HC: Interest on delayed compensation forms part of Capital Gains; Section 56 inapplicable unless clearly separated. HC allowed the assessee’s appeal for Assessment Year (AY) 2015–16 and ruled that compensation received for compulsory land acquisition—including interest on delayed payments under Sections 28 and 34 of the Land Acquisition Act, 1894 (LAA)—is to be treated as capital gains under the Income Tax Act (I.T. Act). In cases involving agricultural land, both the compensation and the interest form part of the exempt income under Section 10(37). HC clarified that since the interest awarded under Sections 28 and 34 of the LAA is compensatory in nature and forms an integral part of the compensation, it cannot be classified as standard "interest" under Section 2(28A) of the I.T. Act. Consequently, such interest does not fall under the purview of Section 56, including Section 56(2)(viii). The assessee had challenged two orders of the ITAT. The first, dated 30.03.2023, held that 9% interest was exempt as capital gains under Section 10(37), while 15% interest was taxable under Section 56(2)(viii). The second, dated 19.04.2024, ruled that all interest on delayed compensation (post the 2010 amendment to the LAA) is taxable under Section 56(2)(viii) and not exempt under Section 10(37), even where the land acquired was agricultural. The assessee contended that interest awarded under Section 28 of the LAA is ……..
Click here to read and download HC Judgment
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5. HC: Interest on delayed compensation forms part of Capital Gains; Section 56 inapplicable unless clearly separated. HC allowed the assessee’s appeal for Assessment Year (AY) 2015–16 and ruled that compensation received for compulsory land acquisition—including interest on delayed payments under Sections 28 and 34 of the Land Acquisition Act, 1894 (LAA)—is to be treated as capital gains under the Income Tax Act (I.T. Act). In cases involving agricultural land, both the compensation and the interest form part of the exempt income under Section 10(37). HC clarified that since the interest awarded under Sections 28 and 34 of the LAA is compensatory in nature and forms an integral part of the compensation, it cannot be classified as standard "interest"……..
Click here to read and download HC Judgment
6. ITAT: Successor AO cannot reopen case on same grounds already examined; Reassessment quashed as void. ITAT quashed 23 reassessment orders pertaining to Assessment Years (AYs) 2012–13 and 2013–14, based on a survey conducted on the charitable trust. ITAT held the reassessments to be void ab initio, citing that they were based solely on a change of opinion and lacked any new or tangible material, thereby violating the provisions of Sections 147 and 143(3) of the Income Tax Act. The reassessment proceedings originated from a survey that uncovered unaccounted cash payments related to land acquisitions and college construction. During the course of the survey, trustees admitted to unaccounted payments amounting to Rs. 2.25 crores in AY 2013-14. Taxes were duly paid on this amount, and the original assessments were completed without any further claims or discrepancies. Years later, however, reassessment notices were issued. The Assessing Officer (AO) alleged underreporting of land and construction costs totaling Rs. 4.90 crores across AYs 2012–13 and 2013–14, which were assessed in the hands of individual trustees. The CIT(A) upheld the reassessment proceedings, leading to the current appeals before the ITAT. In the case of Shri S. Aravind’s appeal for AY 2012–13, the assessee contended that the AO had access to the relevant survey material well before the deadline for issuing a scrutiny notice under Section 143(2) but opted not to initiate scrutiny proceedings.……..
Click here to read and download ITAT order
7. ITAT: Allows Section 80P(2)(d) deduction on Interest from Co-op Bank deposits, subject to gross total Income limit. ITAT ruled that a co-operative society earning interest from deposits with a co-operative bank is eligible to claim a deduction under Section 80P(2)(d) of the Income Tax Act, subject to the gross total income limit. The ITAT instructed the Assessing Officer to allow the deduction under Section 80P(2)(d) based on the interest income included in the gross total income. It also clarified that such deductions under Chapter VIA should be limited to the amount of the gross total income.
Click here to read and download ITAT order
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About Taxsutra Database!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 131010+ Income Tax Rulings reported across ITR, CTR, Taxman, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
a) Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;
b) Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;
c) Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.
d) Judicial “forward & backward reference”
The Taxsutra Database comes at a very special Annual Subscription price of 4200+ GST AND includes an annual license to the Taxsutra Library.
T: +91 95952 18026 | C:+91 93200 54016 | E: sales@taxsutra.com
Copyright © TAXSUTRA. All Rights Reserved
Dear Professionals,
On February 1, 2025, Finance Minister Smt. Nirmala Sitharaman presented the Union Budget 2025 in Parliament, along with the Finance Bill 2025, which proposes amendments to tax and corporate laws. The Budget primarily focuses on boosting consumption by reducing income taxes, allowing more money to remain in the hands of average Indians. Starting April 1, individuals earning up to Rs 12 lakh will be exempt from tax, and tax slabs for various income levels have been revised. The new tax regime aims to encourage more people to shift from the old system, which had numerous exemptions. Whether taxes increase or decrease will depend on one's previous tax slab and the number of exemptions claimed. Overall, the Budget intends to leave more income in people's pockets for either spending or investing.
Click here to read and download, "The key policy changes in Direct Tax Laws and the rulings affected by the Finance Bill, 2025."
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About Taxsutra Database!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 130196+ Income Tax Rulings reported across ITR, CTR, Taxman, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
a) Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;
b) Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;
c) Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.
d) Judicial “forward & backward reference”
The Taxsutra Database comes at a very special Annual Subscription price of 4200+ GST AND includes an annual license to the Taxsutra Library.
T: +91 95952 18026 | C:+91 93200 54016 | E: sales@taxsutra.com
Copyright © TAXSUTRA. All Rights Reserved
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Dear Professionals,
We are glad to present to you the 284th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 127520+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’
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Key Takeaways from Handpicked Rulings
1) HC: Holds mere incorrect mention of provisions cannot amount to discarding the addition; Confirms Sec. 68 addition - HC upholds the ITAT order confirming the addition under Section 68 towards unexplained cash deposits in the bank account; Points out that, although, the bank pass book itself cannot be treated as books of accounts, however, in the instant case, as the Assesssee already had submitted documents such as balance-sheet, profit and loss account, computation of income etc. and certainly had also maintained his own books of account in his ledger; Thus rejects Assessee’s contention that the addition made under Section 68 on the basis of bank account is not sustainable as it was made only on the basis of bank account and not on the basis of books of accounts; Notes that the Assessee failed to prove the source of income or identity / creditworthiness / genuineness of the creditors, from whom the cash loan was claimed to be obtained; Reiterates the….……. Click here to read and download HC Judgment copy
2. HC: Holds Sec. 153C notice valid, despite the satisfaction being in verbatim with searched entity’s satisfaction. HC dismisses Assessee’s writ petitions challenging Section 153C proceedings for AY 2014-15, and the order rejecting Assessee’s objections; Rejects Assessee’s contention that the satisfaction note in case of the searched person and in case of the Assessee (non-searched person) are verbatim, thus the Revenue did not apply his mind independently and merely proceeded on the satisfaction note recorded by the AO of the searched person, thus, the notice under Section 153C fails to fulfill the legal and jurisdictional requirement under Section 153C(1); Observed that, in light of the amendment in Section 153C with effect from Jun 1, 2015, the requirement is that even an information contained in the documents seized, if pertains to or relates to a person other than the searched person, the requirement of Section 153C(1) can be held to be fulfilled; Opined that, “In view of the categorical statement in the satisfaction note of the searched person forwarded by the Assessing Officer of the searched person to the Assessing Officer of the petitioner assessee, it cannot be assumed that no prima facie satisfaction of the seized material being “pertain to” the petitioner assessee could be recorded”; Thus holds that the satisfaction….……. Click here to read and download HC Judgment copy
3. ITAT: Refuses to delete Sec. 69 addition solely for erroneously mentioning wrong Section; Remits the issue. ITAT remits the issue of addition under Section 69, to the CIT(A) for consideration of the issue afresh; Opines that, “the addition cannot be deleted for the sole reason that the section under which the addition is made is mentioned erroneously and that it is necessary to look into the merits of the case”; Notes that the Revenue called upon the Assessee to submit various details to establish the source for purchase of immovable property, however as the Assessee did not furnish the requisite details such as loan confirmation, income tax returns and copy of bank account etc., Revenue treated the loan as non-genuine and made the addition under Section 69 towards the entire loan; Further notes that the CIT(A) dismisses Assessee’s appeal on the ground that the Assessee did not appear nor furnish any details to prove the genuineness of the transaction; Observes that the addition is made primarily for the reason that the assessee has not furnished details to substantiate the genuineness of the impugned transactions thereby not discharging the onus; Thus remits the issue in the interest of natural justice and fair play..….……. Click here to read and download ITAT Order
4. ITAT : Remits the issue of capital gains and Sec. 54F exemption over the dispute of quantum of jewellery sold - ITAT sets aside the CIT(A) order granting Assessee the exemption under Section 54F against the long term capital gains on sale of jewellery acquired through inheritance from her late mother-in-law; Notes that the Revenue rejected Assessee’s claim of deduction under Section 54F against the long term capital gains on sale of jewellery acquired through inheritance on the ground that there is a mismatch in the description of jewellery sold as per the wealth tax disclosure and bill of purchase obtained from the purchaser, i.e. Navarathan Jewellers; Opines that, “CIT(A) is not justified in giving the findings with regard to existence of long term capital assets in the form of jewellery acquired through the Will from Late Kasturi Shoury and consequently granting the relief which is incorrect without reconciling the quantity of jewels mentioned in the Will vis-à-vis Valuation Certificate issued by the Navarathan Jewellers”.; Thus, remits the issue of capital gains on sale of salary and exemption thereon under Section 54F to the file of CIT(A) to decide afresh; Directs the Assessee to reconcile the quantum of jewellery inherited through the will along with valuation report issued by the purchaser jewellers..….……. Click here to read and download ITAT Order
5) ITAT: Compensation received on pre-mature termination to be treated as capital receipt, not liable to tax. Followed SC in the case of Kettlewell Bullen and Delhi HC in Khanna and Annadhanam. ITAT opines that, the pre-mature termination of the assessee's agreements due to Iraq's invasion of Kuwait and the subsequent sanctions on Iraq by the United Nations which resulted in the assessee receiving compensation from the United Nations Compensation Commission cannot be said to have occurred in the normal course of the assessee's business hence considered as capital in nature. ..….……. Click here to read and download ITAT Order
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Expert Column
The Protocol signed between India and Mauritius on March 7, 2024 to amend the DTAA to include the Principal Purpose Test (PPT) clause and also to amend the preamble which is yet to be ratified and notified. The Protocol has been a subject of heated discussions due to the huge ramifications that emerge and further vindicated by the jurisprudence on treaty abuse, treaty shopping and GAAR.
Mr. Mukund Madhusudhan (Director, Taxation, Harman India) discusses the implications of the said Protocol to India – Mauritius DTAA and the amended preamble especially its interplay with the Blackstone judgment of Delhi HC, which is subjudice before Supreme Court, from a dividend perspective. The amended DTAA strives to eliminate double taxation and prevent non-taxation. Delhi HC held that benefit allowed under India-Singapore DTAA with respect to capital gains based on TRC of Blackstone and held that Revenue cannot go behind TRC to deny treaty benefits as the TRC issued by the other tax jurisdiction is sufficient evidence for claiming eligibility for DTAA benefit, residency and legal ownership. The author discusses the implications under both the scenarios – (i) if SC upholds the Delhi HC judgment (ii) if SC reverses the Delhi HC judgment. The author emphasises the all pervasiveness of PPT as it does not spare any stream of income including dividend income. Author opines that a plain reading of Article 3 of the said Protocol indicates that the amendment could be retroactive.
The author concludes, “one could ponder if the Blackstone ruling would lend any support to the taxability of dividend income at the lower rates in the hands of Mauritius entities as per the treaty, if the taxman decides to invoke the PPT (amended preamble would support this as well). In other words, is the SC’s verdict as to whether TRC is conclusive for beneficial ownership, only theoretical? Not only from a Mauritius perspective, but in the case of all treaties where a PPT has been included?"
Click here to read the article, “Blackstone Decision and Mauritius PPT – Dividend Perspective!”
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About Taxsutra Database!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 127520+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
a) Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;
b) Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;
c) Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.
d) Judicial “forward & backward reference”
The Taxsutra Database comes at a very special Annual Subscription price of 4200+ GST AND includes an annual license to the Taxsutra Library.
T: +91 95952 18026 | C:+91 93200 54016 | E: sales@taxsutra.com
Copyright © TAXSUTRA. All Rights Reserved