Income Tax Act, 1961

The Supreme Court examined the dismissal of an assistant of Hindustan Steel Ltd. who was removed from service under Standing Order 32 on the ground that his continued employment was "inexpedient". The employer dispensed with the disciplinary enquiry prescribed in Standing Order 31 and did not record any specific reason…

The Union of India challenged the Allahabad High Court's order quashing a search and seizure conducted under Section 132(1) of the Income Tax Act at the premises of M/s Agarwal Iron Industries. The High Court had held that the search warrant was issued mechanically without a reasonable basis. The Supreme Court examined…

MIS. India Cine Agencies appealed against the Commissioner of Income Tax, Madras, contending that the conversion of jumbo rolls of photographic film into smaller rolls constituted manufacture/production under Sections 32AB, 80HH and 80I of the Income Tax Act, 1961, and therefore qualified for a permissible deduction. T…

The respondents, steel rolling mills manufacturing mild steel rods, bars and rounds, claimed a higher development rebate under s.33(1)(b)(B)(i)(a) and relief under s.80‑I of the Income‑Tax Act, 1961, arguing that their products fell within item 1 of the Fifth Schedule (“Iron and steel (metal)”). The Income‑Tax Officer …

The appellants, including Checkmate Services Pvt. Ltd., deposited employees' EPF and ESI contributions after the statutory due dates and claimed deductions under s.36(1)(va) of the Income Tax Act, 1961. The Assessing Officer disallowed the deduction, holding that the amounts constituted "income" under s.2(24)(x) and we…

The Urban Improvement Trust (UIT) of Kota, created under the Rajasthan Urban Improvement Act, 1959, claimed exemption from income tax under Section 10(20) of the Income Tax Act, 1961, asserting that it qualified as a "local authority" within the meaning of clause (iii) of the explanation – i.e., a Municipal Committee. …

Virmani Industries Pvt. Ltd. manufactured soap and oil in AY 1956-57, incurred depreciation exceeding its profits and left a balance of unabsorbed depreciation. After a ten‑year hiatus during which it earned only property income, it resumed business in AY 1965-66 manufacturing steel pipes, using some of the old machine…

The Supreme Court considered an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator to resolve a tax‑related dispute arising from a consultancy contract that had been completed. DHV BV, a foreign sub‑consultant, claimed that the client (TNPWD) had failed to…

The appellants, owners of land acquired compulsorily, received a notice demanding income‑tax on interest accrued due to delayed payment of compensation under the Land Acquisition Act, 1894. They challenged the notice through writ petitions, which the Punjab & Haryana High Court dismissed, holding that such interest is …

Mahadeo Prasad Bais, as Karta of a Hindu Undivided Family, was assessed as a HUF up to AY 1948‑49 and thereafter filed individual returns claiming total or partial partition. The Tribunal and the High Court later accepted a partial partition, making certain family income assessable to him individually. The original ass…

The State of Maharashtra appointed Justice B. Lentin as a one‑man Commission of Inquiry to investigate the death of 14 patients at J.J. Hospital. The Commission found the appellant, Dr. Baliram Waman Hiray, gave contradictory evidence and issued a show‑cause notice for perjury under s.193 IPC read with s.340 CrPC, dire…

The respondent, an Income Tax Inspector, was alleged to have demanded Rs.25,000 as illegal gratification to refrain from reopening a tax assessment. A trap was laid using chemically treated currency notes that turned pink on the respondent's hands, leading to his conviction by the trial court under Sections 7, 13(1)(d)…

Madras Auto Service (P) Ltd. obtained a 39‑year lease on premises and, under the lease terms, demolished the existing structure and constructed a new building at its own cost, which legally belonged to the lessor. The company claimed the construction costs (Rs 1,62,835 and Rs 50,937) as deductible business expenditure …

Uttar Pradesh Power Transmission Corporation Ltd (UPPTCL) entered into four separate contracts with CG Power and Industrial Solutions Ltd for the construction of 765/400 KV substations, the first being a pure supply contract. After a CAG audit, UPPTCL issued letters demanding a 1% labour cess on the supply contract, wi…

Mis GTC Industries Ltd., a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985, was placed under a BIFR‑sanctioned rehabilitation scheme (SS‑02) that provided, among other reliefs, a provision to "consider" waiving interest and penalty. The scheme ran from 31 Mar 2003 to 31 Mar 2011, but the…

Rotork Controls India (P) Ltd., a manufacturer of valve actuators, provided a standard warranty on its products and made a provision of 1.5% of turnover for anticipated warranty claims. The assessee claimed a deduction for the net provision under Section 37 of the Income Tax Act, 1961, which was disallowed by the Asses…

M/s. Seema Silk & Sarees, a partnership firm, and its partner were penalised under Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 for failing to repatriate export proceeds within the prescribed period. They challenged the constitutional validity of these provisions, arguing that the reverse burde…

The assessee, Mis Anand Theatres, claimed a 15% depreciation on its theatre building by treating it as "plant" under the Income Tax Act, 1961. The Assessing Officer allowed only the standard 5% rate for buildings, leading to an appeal that was initially allowed by the Commissioner of Income Tax (Appeals) and the Income…

Wipro Finance Ltd. borrowed a foreign‑currency loan to finance its leasing and hire‑purchase business and incurred a loss due to exchange‑rate fluctuations while repaying the loan. The company claimed a deduction for this loss under section 37 of the Income Tax Act, 1961, and also sought to treat a sum previously capit…

The Income Tax Department appealed an assessment order, but the Rajasthan High Court dismissed the appeal as infructuous after learning that the assessee company, Gopal Shri Scrips Pvt. Ltd., had been struck off the register under Section 560(5) of the Companies Act, 1956. The question before the Supreme Court was whet…

The Supreme Court examined whether receipts such as non‑occupancy charges, transfer charges and common‑amenity‑fund contributions received by a premises cooperative society from its members are taxable as business income or exempt under the doctrine of mutuality. The Court held that the doctrine of mutuality, based on …

The case concerned a search under Section 132 of the Income Tax Act on two premises of the Bhatia Group, which led the assessing officer to record a satisfaction note under Section 15880 on 15 July 2005, after the block assessment of the searched person was completed on 30 March 2005. The respondent, M/s Calcutta Knitw…

The assessee, Kerala Road Lines, entered into an agreement to purchase land with buildings, demolished the structures and sold the scrap as business income. Because the purchase price was delayed, the assessee paid Rs 4 lakh interest under the contract and claimed it as a revenue expenditure under s.37(1) of the Income…

The assessee, M/s Mafatlal Gangabhai & Co. (P) Ltd., paid cash amounts to its employees as house‑rent allowance, conveyance allowance and medical reimbursement and claimed these as deductions. The Income Tax Officer disallowed the deductions, treating the cash payments as perquisites under Section 40(a)(v) and Section …

Indo‑Aden Salt Manufacturing & Trading Co. Ltd. had taken over a partnership business and claimed depreciation on assets assuming they were masonry works. Later it was discovered that the majority of the assets were earth works, making the claimed 6% depreciation inappropriate. The Income Tax Officer reopened the asses…

The appellant, K. Krishnamurthy, was searched under Section 132 of the Income Tax Act in November 2010, during which he disclosed an income of Rs.2,27,65,580 for AY 2011-12 and later, during assessment proceedings, disclosed an additional Rs.2,49,90,000 arising from land transactions. The Assessing Officer levied a pen…

The Delhi Development Authority (DDA) auctioned a lease‑hold residential plot that had been acquired by the Income Tax Department under Section 269UD of the Income Tax Act, which had already paid the unearned increase to DDA. M/s. Karamdeep Finance & Investment (I) Pvt. Ltd. purchased the plot at auction, later applied…

The Supreme Court examined whether interest expenditure incurred by Maxopp Investment Ltd. on shares held to acquire controlling interest, or held as stock‑in‑trade, could be deducted when the dividend income from those shares is exempt under Section 10. The Court held that the dominant‑purpose test is irrelevant; Sect…

The assessee, a lessor of soft‑drink bottles, claimed depreciation under Section 32(1)(ii) of the Income‑Tax Act for two lease transactions dated 15‑Feb‑1991 and 15‑Mar‑1991. The Assessing Officer (AO) allowed depreciation only for 42,000 bottles out of 5,46,000 for the first transaction and disallowed depreciation for…

The Supreme Court considered appeals by certificate from the Kerala High Court concerning the assessment year 1978-79. The issue was whether the statutory deduction under Section 36(1)(viii) of the Income Tax Act, 1961, should be calculated on the total income before allowing that deduction. The Court examined earlier …

The Supreme Court examined whether cooperative societies registered as primary agricultural credit societies under the Kerala Co‑operative Societies Act could claim deduction under section 80P(2)(a)(i) of the Income‑Tax Act after the insertion of section 80P(4) by the Finance Act, 2006. The Court held that the deductio…

Delhi Safe Deposit Co. Ltd., a partner in a managing‑agency firm, paid Rs. 9,500 towards a loss incurred by the firm when a loan advanced by the managed company defaulted. The company claimed a deduction under section 37 of the Income‑Tax Act, but the Assessing Officer disallowed it, holding the payment was not a busin…

The Hindu Undivided Family (HUF) Kalloomal Tapeshwari Prasad derived income from various sources and claimed that a partial oral partition in 1963 had divided eighteen immovable properties among ten coparceners, who then maintained separate accounts. The Income‑Tax Officer rejected the claim, holding that the propertie…

The respondents, Atchaiah and Kondal Reddy, bought land that was later acquired by the government and received compensation, part of which was treated as capital gain and taxed individually in assessment years 1965-66 and 1968-69. In 1972 the Income Tax Officer (ITO) issued a notice under s.148 alleging unassessed inco…

The appellant, Yudhishter, had been in possession of a residential premises since 1962. The respondent landlord, Ashok Kumar, purchased the premises in 1971 and later filed an eviction petition in 1974 under the Haryana Urban (Control of Rent and Eviction) Act, 1973, claiming a bona‑fide requirement for his own occupat…

Maya Rani, the assessee for assessment year 1961-62, failed to file her income‑tax return by the due date of 28 September 1961 and eventually filed it on 3 May 1962, after the Income Tax Act, 1961 had come into force on 1 April 1962. The Income Tax Officer imposed a penalty of Rs 4,060 under section 27(1)(a) of the 196…

B.M. Malani invested Rs 65 lakhs in a Unit Trust of India (UTI) monthly‑income scheme in 1998, seeking exemption under Sec. 54AE. The scheme stipulated a five‑year lock‑in and that units could be redeemed only at face value (Rs 10) after the lock‑in, with repurchase option exercisable by the investor from 1 Sept 2001. …

The appellant, K. Basavarajappa, had entered into an agreement to purchase land from a tax defaulter, Y.S. Devendra Murthy, and filed a suit for specific performance. The land was attached and auctioned by the Tax Recovery Officer under the Income Tax Act. Within 30 days of the auction, the appellant filed an applicati…

A. Kumar filed several writ petitions challenging a customs show‑cause notice under Section 124 of the Customs Act, a seizure order under Section 132‑A of the Income Tax Act, and the demurrage rates of the Madras Port Trust. The customs authorities had found that the imported stainless‑steel circles, declared as "defec…

Smt. P. Srideramma gifted Rs 90,000 to her minor son in FY 1956‑57, which was immediately used to buy a house that she employed for her mica‑mining business. Eight years later the house was sold, yielding a capital gain of Rs 58,000. The Assessing Officer included the gain in Srideramma’s total income under Section 64(…

The National Co‑operative Development Corporation (NCDC) earned interest on surplus funds held in its statutory fund and used that interest to make non‑refundable grants to state and national cooperative societies. The Assessing Officer disallowed the grants as capital expenditure, but the Commissioner of Income Tax (A…

The New Delhi Municipal Committee (NDMC) assessed property tax on a basement owned by Satish Chand, who argued that the basement was unusable due to water ingress and therefore had no rateable value. Chand filed a civil suit seeking a permanent injunction against the tax demand. NDMC raised a preliminary objection, inv…

M/s T.V. Sundaram Iyengar & Sons Ltd. received deposits from customers in the ordinary course of its trade. The deposits were initially recorded as capital receipts (security deposits). When a portion of these deposits remained unclaimed for a long period, the company wrote them off to its profit and loss account. The …

M.M. Aqua Technologies Ltd., unable to meet interest obligations on loans, entered a rehabilitation plan and issued convertible debentures to financial institutions in lieu of the interest due. The company claimed a deduction under Section 43B(d) of the Income Tax Act, 1961, arguing that the issuance of debentures cons…

M/s Fibre Boards (P) Ltd. sold its industrial undertaking in Thane (a notified urban area) and earned a capital gain of Rs 1,08,33,044. It paid advances of Rs 1,11,42,973 for purchase of land, plant, machinery and construction of a new factory in a non‑urban area and claimed exemption under s. 54G of the Income‑Tax Act…

The assessee, Wipro Ltd., filed its original return for AY 2001-02 claiming exemption under Section 10B of the Income Tax Act and stating that no loss would be carried forward. Later it submitted a declaration to the Assessing Officer opting out of the Section 10B benefit and filed a revised return claiming carry‑forwa…

The dispute arose from an auction sale of two immovable properties attached under a recovery certificate issued by IndusInd Bank. The judgment debtor (borrower) filed an application under Rule 60 of the Second Schedule of the Income Tax Act, 1961, depositing the amount specified in the sale proclamation along with pena…

The Revenue (Commissioner of Income Tax, Mumbai) challenged the orders of the Income Tax Appellate Tribunal and the Bombay High Court that set aside a suo motu revision order passed by the Commissioner under section 263 of the Income Tax Act, 1961. The issues were whether a show‑cause notice is a condition precedent to…

The Development Credit Bank sought the Reserve Bank of India's (RBI) permission to write off Rs 120 crore of non‑performing assets (NPAs) from its reserves. The RBI approved the request, and a shareholder of the bank filed a writ petition alleging that the RBI acted ultra vires by not following the procedures prescribe…

Hindustan Aeronautics Ltd. filed its income‑tax return for AY 1970‑71, which was disallowed in part by the Assessing Officer. The company appealed to the Appellate Assistant Commissioner, whose order was partly favourable, and both parties filed second appeals before the Income Tax Appellate Tribunal (ITAT). The assess…

The appellant, a marine engineer employed abroad, claimed "not ordinarily resident" status for AY 1982‑83 under s.6(6)(a) of the Income Tax Act, 1961 to exclude his foreign income under s.5(1)(c). The Assessing Officer rejected the claim, holding that the appellant had been resident in India for more than 730 days in t…

The Supreme Court examined whether a pre‑decisional hearing must be afforded before an Assessing Officer orders a special audit under Section 142(2A) of the Income Tax Act, 1961. The Court held that, although the provision is silent, the order has civil consequences and therefore the principles of natural justice, part…

The assessee, Sudarshan Silks & Sarees, was found to be maintaining double books and concealing income, leading to a search that uncovered undisclosed assets. The assessee subsequently filed revised returns disclosing additional income, after which the Assessing Officer levied the maximum penalty under section 271(1)(c…

K.M. Sharma received compensation and interest for land acquired under the Land Acquisition Act. The Income Tax Department issued reassessment notices under Section 148 for assessment years 1968-69 to 1971-72 and 1981-82, alleging tax on the interest received. Sharma contended that the reassessments were barred by the …

The U.P. State Industrial Development Corporation, a state undertaking, underwrites shares of companies and, when the public does not subscribe, purchases the shares itself, receiving underwriting commission and brokerage. It adjusts the commission against the cost of those shares, treating it as a reduction in share c…

The Supreme Court had earlier declared the Electoral Bond Scheme unconstitutional and directed the State Bank of India (SBI), as the authorized bank, to furnish the Election Commission of India (ECI) with details of each bond purchased and redeemed between 12 April 2019 and 15 February 2024. SBI filed a Miscellaneous A…

IPCA Laboratory Ltd., an export house, exported self‑manufactured goods (earning a profit of Rs 3.78 crore) and trading goods (incurring a loss of Rs 6.86 crore). It claimed a deduction under Section 80HHC of the Income Tax Act for the profit, having issued disclaimer certificates to supporting manufacturers for the tr…

Relish Goods bought raw shrimps, peeled and froze them, and claimed a deduction under Section 80HH of the Income‑Tax Act, 1961, asserting that its activity amounted to production by an industrial undertaking. The Income‑Tax Officer rejected the claim, but the Commissioner (Appeals) and the Income‑Tax Appellate Tribunal…

East India Pharmaceutical Works Ltd. had an overdraft facility and paid its income tax out of that overdraft, claiming the interest of Rs. 28,488 as a deduction under Section 37(1) of the Income Tax Act, 1961. The Assessing Officer disallowed the claim, the Tribunal upheld the disallowance, and the Calcutta High Court …

The deceased businessman Prem Narain's sole proprietorship, Mis Meera & Co., was continued after his death by his widow Krishna Gupta on behalf of herself and their three minor children. The Income Tax Officer treated the business as a "body of individuals" and assessed the income accordingly, which the Appellate Assis…

The Commissioner of Income Tax, Calcutta appealed against the Settlement Commission’s order that dropped penalty proceedings for assessment years 1970-71 to 1974-75. The assessee, Paharpar Cooling Towers Pvt. Ltd., had filed a settlement application under Section 245‑C of the Income Tax Act for assessment year 1975-76,…

Bhuna Co-operative Sugar Mills Ltd. filed income tax returns for AY 1992‑93 and 1993‑94 claiming a loss and seeking deduction of interest payable on loans to creditors. The Assessing Officer disallowed the deduction under Section 43B(d) and levied penal tax under Section 141(1)(A). The Commissioner of Income Tax (Appea…

Jonas Woodhead & Sons Ltd., a Indian automobile spring manufacturer, entered into a collaboration with a UK firm to obtain technical know‑how and plant set‑up services, agreeing to pay a royalty calculated as a percentage of gross turnover. The Income‑Tax Officer disallowed one‑quarter of the royalty as capital expendi…

Maharani Raj Laxmi Devi, after adopting a minor son and the death of her husband, claimed HUF status and excluded the minor's one‑sixth share—acquired under Section 6 of the Hindu Succession Act—from the HUF's taxable income for AY 1966‑67 to 1970‑71. The Income Tax Officer held that, absent a partition order under Sec…

Bhagwan Dass Jain, an assessee under the Income‑Tax Act, 1961, challenged the inclusion of a notional amount under section 23(2) for his self‑occupied house, arguing that no real income was derived and that the levy was in substance a tax on the building falling under Entry 49 of List II, which Parliament could not imp…

The petitioners, Common Cause and others, sought a court‑ordered Special Investigation Team to probe alleged hawala transactions and cash seizures involving the Aditya Birla and Sahara groups, relying on documents seized in raids such as loose sheets, pen‑drives and laptop data. The respondents opposed, contending that…

The appellant, a landlord, owned agricultural land that was acquired by the Kerala government under the Land Acquisition Act, 1894 for a techno‑park project. After the award fixed compensation, the appellant negotiated a higher amount with the acquiring authority and executed a sale deed, receiving the agreed sum. The …

Navin Jindal, a shareholder of Jindal Iron and Steel Co., was entitled to subscribe to partly convertible debentures (PCDs) issued on a rights basis. He renounced this right for Rs 56,250, which caused a fall in the value of his original 1,500 equity shares by Rs 200 per share, resulting in a net loss of Rs 2,43,750. J…

The case concerned whether a Non‑Banking Financial Company (NBFC) could treat the "Provision for NPA" debited to its profit‑and‑loss account, as required by RBI Directions 1998, as income under s.2(24) of the Income Tax Act or claim a deduction under s.36(1)(vii). The Supreme Court held that the RBI Directions are mere…

The appellant, a businessman, handed blank cheques to his former power‑of‑attorney partner and later disputed a loan of Rs 1.5 lakh allegedly advanced by the partner's brother‑in‑law, repaying it by an account‑payee cheque that later bounced. He was convicted under Section 138 of the Negotiable Instruments Act, with th…

The Supreme Court considered applications filed by the revenue challenging certain observations made in its earlier judgment in the appeals of Kerala Financial Corporation and others. The contested observations (paras 9‑15) held that when advances are written off and become bad debts, the assessee could claim a refund …

The appellant, the Commissioner of Income Tax, challenged the Bombay High Court’s order quashing a notice issued under s.263 of the Income Tax Act against Chowgule & Co. Ltd., an exporter of iron ore whose export proceeds were credited in rupees by an Indian bank. The issue was whether Rule 115 of the Income Tax Rules,…

Express Newspaper Ltd. claimed large losses in its returns for AY 1985-86, which the Assessing Officer rejected as fabricated and assessed a huge income. While the appeal against this assessment was pending, the company filed an application under Section 245‑C of the Income‑Tax Act seeking settlement for four assessmen…

The case concerned Micro Labs Ltd., which claimed deductions under Sections 80‑IA/80‑IB (infrastructure development) and also under Section 80‑HHC (export profits). The Revenue argued that Section 80‑IA(9) bars any further deduction under heading "C" of Chapter VI‑A, which includes 80‑HHC, for the same profits, while t…

Sunil J. Kinariwala, a partner in a firm, created a trust and assigned fifty percent of his ten percent partnership share to the trust, claiming that the income was diverted at source and therefore not assessable in his total income. The Income Tax Officer held the assignment to be an application of income and included…

The Maharashtra State Electricity Board (MSEB) was challenged by two trade unions for allegedly failing to pay statutory bonus to their workmen for the accounting years 1965‑66 to 1969‑70 under the Payment of Bonus Act, 1965. The Industrial Tribunal held that after deducting certain items from gross profits, no allocab…

The appellant, a partnership firm, paid interest to a partner who was also the Karta representing his Hindu Undivided Family (HUF) on deposits made in his individual capacity. The Income Tax Officer added this interest back to the firm's income under Section 40(b) of the Income Tax Act, 1961, treating it as a disallowe…

Kuldeep Industrial Corporation, a partnership firm, claimed to be a manufacturer of stainless steel utensils and filed tax returns showing losses for AY 1977-78 and 1978-79 and a small profit for AY 1979-80. The Income Tax Officer (ITO) discovered that no manufacturing activity took place, issued notices adding income,…

Arvind Mills Ltd. imported plant and machinery from abroad and financed the purchase with a foreign loan. After the 1966 devaluation of the rupee, the rupee liability on the loan increased. The assessee claimed a development rebate under Section 33 of the Income‑Tax Act on the revised (higher) cost of the asset, while …

The Appropriate Authority, exercising powers under Section 269‑UD of the Income Tax Act, 1961, concluded that a property in Bangalore was undervalued by more than 15% in an agreement of sale and ordered its compulsory purchase by the Central Government for the consideration stated in the agreement. A single judge of th…

The case concerned two registered partnership firms in which a partner died during the previous year. In the first firm, the partnership deed expressly provided that the firm would not dissolve on a partner's death, and the deceased partner's son was admitted as a new partner without executing a fresh deed. The Supreme…

A.M. Moosa, an export house, claimed a deduction under Section 80‑HHC of the Income Tax Act, 1961 for the assessment year 1992‑93. The Assessing Officer disallowed the claim on the ground that the computed "profits of the business" were negative. The disallowance was upheld by the Commissioner of Income Tax (Appeals), …

The petitioners challenged the demand for court fees on appeals filed under Section 260A of the Income Tax Act, 1961, arguing that the right of appeal vested on the date of assessment (or the date the demand was negatived) and that the amendment inserting Section 52A in the Kerala Court Fees and Suits Valuation Act, 19…

Mis Saravana Spinning Mills, a textile mill, claimed deductions of Rs. 97.95 lakh and Rs. 77.84 lakh for "modernisation and replacement expenses" as "current repairs" under Section 31(i) of the Income Tax Act for the years ending 31‑03‑1993 and 31‑03‑1994. The Revenue challenged the claim, arguing that the expenditure …

The Income Tax Department discovered that directors of Century Building Industries Pvt Ltd had taken loans in their own names but routed the proceeds and repayments through the company. The company paid interest on these loans without deducting tax at source (TDS) as required under Section 194A(1) of the Income Tax Act…

The Union of India sought to acquire a Delhi property sold for Rs 1.75 crore by invoking Section 269UD of the Income Tax Act, 1961. The Appropriate Authority valued the fair market value at about 160% above the consideration and ordered acquisition without a prior show‑cause notice; a later notice disclosed the valuati…

The petitioner, Nitin Gunwant Shah, claimed to be a monthly tenant of a flat in Mumbai based on a 1989 "Leave and Licence" agreement and sought a declaration to that effect. The Indian Bank, holding a mortgage over the same property, obtained a decree for recovery of dues and sought to sell the flat, also asking the co…

K.R. Sadayappan, a film distributor, purchased a plot of land in his son's name for a total consideration of Rs.1,40,000, but his wealth statement omitted this investment and his return showed only Rs.80,000. The Income Tax Officer treated the unaccounted Rs.18,750 as undisclosed income and imposed a penalty under sect…

Saurashtra Chemicals Ltd imported two generator sets, one of which was received on 24 Oct 1998 but not installed until after 1 Apr 2000. At the time of receipt Rule 57Q(3) of the Central Excise Rules applied, allowing up to 75% credit, but the Rules were amended on 1 Apr 2000 by Rule 57AC which limits CENVAT credit on …

M/S. Saraf Exports, a partnership engaged in manufacturing and exporting wooden handicrafts, claimed deductions under s.80‑IB of the Income Tax Act, 1961 for amounts received under the Duty Entitlement Pass Book (DEPB) and Duty Drawback schemes for AY 2008‑09. The Deputy Commissioner disallowed the deductions, a decisi…

The appellant, M/s US Technologies International Pvt. Ltd., had deducted tax at source (TDS) but remitted it to the government after a delay of up to ten months. The Revenue levied a penalty equal to the amount of TDS under Section 271C of the Income Tax Act, 1961, which the High Court upheld. The appellant contended t…

The appellants, five companies incorporated under the Sikkim Companies Act, claimed to be residents of Sikkim and argued that their income from cardamom commissions for assessment years 1987-88 to 1989-90 was taxable only under the Sikkim State Income‑Tax Manual, 1948, as the Income Tax Act, 1961 had not yet been exten…

Malayala Manorama Co. Ltd. consistently claimed depreciation in its profit and loss account at the rates prescribed by the Income‑Tax Rules, not at the rates in Schedule XIV of the Companies Act. The Assessing Officer, invoking section 115J of the Income‑Tax Act, recomputed the company’s book profit by substituting the…

The Income Tax Department searched MKSEPL and seized a diary showing that Mukundra Y.K. Shah invested Rs.26.35 crore in RBI relief bonds. The Assessing Officer concluded that MKSEPL paid Rs.5.99 crore to two firms (MKF and MKI), which then routed the money to Shah, enabling the bond purchase; the payment was treated as…

The Supreme Court examined whether interest not charged by a company on loans advanced to its directors could be treated as a perquisite under Sections 17(2) and 40A(5) of the Income‑Tax Act. The Income‑Tax Officer had disallowed a sum equal to 15% of the directors' debit balances, but the Appellate Tribunal held that …

Waterfall Estates Ltd., a public limited company engaged in tea and coffee estates, incurred a managing agency commission. Until AY 1963-64 it allocated head‑office expenses, including the commission, proportionally among wholly taxable, partially taxable and wholly exempt income. From AY 1964-65 it treated all activit…

The assessee, T.I. & M. Sales Ltd., was assessed as a representative assessee for ten non‑resident companies and the Revenue claimed a "business connection" under Section 9 of the Income‑Tax Act, 1961, making the Indian company an agent under Section 163(1)(b). The assessee contended that no such connection existed, re…

Murari Mohan Deb, a Class IV forester of the Tripura Government, was compulsorily retired in 1962 by the Chief Forest Officer. He challenged the order, alleging denial of a fair hearing and violation of natural‑justice principles. The respondents contended that compulsory retirement is not a dismissal under Art. 311(2)…

Premier Breweries Ltd., a manufacturer of alcoholic beverages, claimed deductions under Section 37 of the Income Tax Act for commissions paid to agents for securing supply orders from state marketing corporations. The Assessing Officer disallowed the claim, which was upheld by the Commissioner (Appeals) but reversed by…

Oberoi Hotel Pvt. Ltd. managed several hotels for owners and, under its principal agreement, held an option to purchase the hotel if the owner chose to transfer it. A supplemental agreement in 1975 waived this purchase/right, entitling Oberoi to a fixed compensation upon the hotel's sale. The company received Rs 29,47,…

The appellant, a Hindu Undivided Family (HUF), was assessed for several years on the ground that remuneration and commission received by its Karta, K.S. Subbiah Pillai, were income of the HUF. The Madras High Court held the amounts were assessable to the HUF, while the Andhra Pradesh High Court had decided otherwise. T…

Allied Motors (P) Ltd. claimed a deduction for sales‑tax collected in the last quarter of its accounting year 1983‑84, which was paid to the treasury in the next year but before the filing deadline. The Income‑Tax Officer disallowed the deduction under Section 43B of the Income Tax Act, 1961. The petitioner argued that…

The assessee firm, whose partners were Karta of their respective Hindu Undivided Families, advanced personal funds to the firm and received interest on those deposits. The firm claimed a deduction for this interest under Explanation 2 to Section 40(b) of the Income Tax Act, 1961, but the Income Tax Officer disallowed i…

Larson & Toubro Ltd. established a polytechnic institute for the children of its employees, charging no fees and admitting students solely on merit with reservation as per government rules. After the Supreme Court's Unnikrishnan judgment, AICTE framed regulations governing admissions to technical institutions, but the …

The case concerned the sale of a mortgaged property by a bank under the SARFAESI Act. The Supreme Court examined whether the bank, as a secured creditor, had complied with Section 13(8) of the Act and Rules 8 and 9, which require a 30‑day individual notice and a public notice before any sale. It held that the sale effe…

The appellant, Malabar Industrial Co. Ltd., sold a rubber plantation estate and, after the purchaser defaulted on instalments, agreed to receive Rs. 3,66,649 as compensation for loss of agricultural income. The amount was recorded as such in the return and the Income‑Tax Officer gave a nil assessment. The Commissioner,…

The respondents had executed a usufructuary mortgage in favour of the appellant and later claimed to be "debtors" under the Tamil Nadu Debt Relief Act, 1979. The dispute turned on the meaning of the expression "not less than Rs. 1200" in the proviso to Section 3(3) of the Act, which exempts persons whose property renta…

The U.P. Cooperative Federation Ltd., an apex cooperative society, received interest of Rs.9,000 on a cash security of Rs.2 lakh furnished to a cooperative sugar factory under an agency agreement, and interest of Rs.51,295 on loans advanced to its member societies for sugar distribution. The Revenue challenged the soci…

The appellants, a body of individuals, bought two parcels of land in 1966 and in 1970 granted a ten‑year mining lease to an allied private company for a premium of Rs.5 lakh. The Income‑Tax Officer treated the lease‑hold interest as a transfer of a capital asset and levied long‑term capital gains on the premium, valuin…

The Income‑Tax Officer issued a notice under section 148 of the Income‑Tax Act, 1961, alleging that three cash‑credit entries totalling Rs 1 lakh had escaped assessment for the year 1965‑66. The assessee challenged the notice, arguing that it was issued more than seven years after the original assessment and beyond the…

The appellant, who owned a cinema theatre converted from a former ginning factory, incurred large expenditures in 1960‑61 for new machinery, furniture, sanitary and electrical fittings, and extensive structural repairs. The assessee claimed a deduction under Section 10(2)(v) of the Income Tax Act, 1922, arguing the out…

The Institute of Chartered Accountants of India (ICAI) filed transfer petitions under Article 139-A(1) seeking to move nine writ petitions from the Kerala, Madras and Calcutta High Courts to the Supreme Court. The writ petitions challenge Chapter VI of ICAI's Guidelines dated 08‑08‑2008, which caps the number of tax au…

Sodexo Service India Private Ltd issues paper‑based meal vouchers to corporate customers, who distribute them to their employees for redemption at affiliated restaurants. The vouchers are redeemed for food, with Sodexo receiving a service fee and reimbursing affiliates for the face value. The issue before the Supreme C…

P. Sarada, a substantial shareholder of Messrs Universal Radiators Pvt. Ltd., withdrew Rs 93,027 from the company between 3 July 1972 and 22 March 1973 while her running account was overdrawn and had no credit balance. The Income Tax Officer treated the excess withdrawals as deemed dividend under Section 2(22)(e) of th…

The Supreme Court examined whether a partnership firm could claim a tax deduction for a commission of Rs. 28,579 paid to Rashiklal, who was a partner in the firm but also the Karta of a Hindu Undivided Family (HUF). The firm argued that Rashiklal acted only as a nominee of the HUF, so the payment should not fall within…

Plastiblends India Ltd., an industrial undertaking, claimed a 100% deduction under Section 80‑IA of the Income Tax Act for assessment years 1997‑98 to 2000‑01, having elected not to claim depreciation under Section 32. The Assessing Officer reduced the profits by depreciation when computing the deduction, leading to a …

The assessee, Poonjabhai Varmalidas, had written off certain debts as bad under Section 10(2)(xi) of the Income Tax Act, 1922 in 1959‑60. His business ceased before the amounts were later recovered in the assessment years 1964‑65, 1965‑66 and 1967‑68, after the 1961 Act had repealed the 1922 Act. The Revenue taxed the …

South Indian Bank Ltd. and other scheduled banks earned tax‑free income from bonds, securities and shares. The Assessing Officer, unable to identify the exact funds used for these investments, proportionately disallowed interest expense under Section 14A of the Income Tax Act. The banks argued that they had sufficient …

GE India Technology Centre Private Ltd. imported software and paid the foreign supplier for a licence. The Income Tax Officer held the payment to be a royalty deemed to accrue in India, requiring tax deduction at source (TDS) under Section 195 of the Income Tax Act, 1961. The Commissioner upheld this view, but the Inco…

Ajanta Pharma Ltd., a Minimum Alternate Tax (MAT) company, claimed a 100% reduction of export profits while computing "book profits" under Section 115JB of the Income Tax Act for AY 2001-02, invoking Section 80HHC. The Assessing Officer allowed only an 80% reduction based on Section 80HHC(1B). Both the Commissioner of …

M/s. Techno Shares & Stocks Ltd. claimed depreciation on the cost of its Bombay Stock Exchange (BSE) membership card for assessment years 1999-2003, invoking Section 32(1)(ii) of the Income Tax Act, 1961. The Assessing Officer rejected the claim, holding that the membership card was a personal, non‑transferable privile…

The Supreme Court examined a public‑interest writ filed by Padma challenging CIDCO's bulk sale of developable land in Aurangabad. The High Court had held that the allotments to several private entities were made without Board approval, at prices below the reserve price, and in violation of Section 115 of the Maharashtr…

Gujarat Urja Vikas Nigam Ltd. (GUVNL) appealed against the Appellate Tribunal for Electricity’s order that Essar Power Ltd. (EPL) had no contractual duty to declare its generating capacity on a 300 MW : 215 MW (58 % : 42 %) basis. The Supreme Court examined the Power Purchase Agreement (PPA) and held that the agreement…

K. Ramullan, an Indian-origin Malaysian citizen, owned a Non‑Resident (External) Account in an Indian bank and stayed in India with his wife for medical treatment from June 1982 to April 1985. He claimed exemption from tax on the interest earned under Section 10(4A) of the Income Tax Act, arguing that he was a "person …

Bharat Earth Movers created a fund to meet its liability for encashment of earned and vacation leave of its employees and claimed a deduction of Rs 62,25,483 under Section 37(1) of the Income‑Tax Act for AY 1978‑79. The Karnataka High Court held the provision to be a contingent liability and disallowed the deduction, w…

K.C.P. Ltd., a sugar manufacturer, challenged a government notification fixing the levy price of sugar and obtained an interim order allowing it to sell at the pre‑notification price. During the assessment year 1972‑73 it collected Rs 14,96,130 in excess of the levy price. The Income‑Tax Officer treated this amount as …

Peerless General Finance and Investment Co. Ltd. floated collective investment schemes where subscribers deposited money that was to be repaid with interest and could be forfeited under certain clauses. For assessment years 1985-86 and 1986-87 no forfeiture occurred, yet the company recorded the subscription receipts a…

The Supreme Court examined whether the Government of NCT of Delhi could impose a condition requiring private charitable hospitals that received land at concessional rates to provide free treatment to economically weaker sections. The Court held that such a condition is a valid exercise of executive power under Article …

M/s Saurashtra Cement Ltd., a cement manufacturer, entered into a contract to purchase a new cement plant. The supplier failed to deliver the plant on time, and under a liquidated damages clause the assessee received Rs.8,50,000 as compensation. The Revenue argued that the amount was a revenue receipt and should be tax…

The Commissioner of Income Tax, Kerala appealed against the High Court’s order allowing Tara Agencies to claim a weighted deduction under Section 35B(IA) of the Income Tax Act for export‑related expenses. Tara Agencies purchased various grades of tea, blended them, and exported the blended product. The issue was whethe…

Morgan Stanley & Co. (MSCo) sought an advance ruling on whether it had a permanent establishment (PE) in India through its Indian subsidiary, Morgan Stanley Advantage Services Pvt Ltd (MSAS), and on the appropriate transfer pricing method for the services rendered. The Authority for Advance Rulings (AAR) held that MSCo…

R.M. Arunachalam inherited immovable properties from his adoptive mother, who had received them by will from her husband Ramanathan Chettiar. The assessee sold these properties during assessment years 1966-67 to 1972-73 and claimed that the estate duty paid under the Estate Duty Act, 1953, should be allowed as "cost of…

Mis Sundaram Spinning Mills appealed against a Madras High Court order that denied its claim for an extra shift allowance on machinery added in the previous year, on the basis that the entire concern worked double and triple shifts. The assessee argued that the additional shifts justified an extra allowance under the I…

South India Viscose Ltd., a public limited company engaged in rayon yarn and wood pulp manufacturing, claimed extra shift depreciation allowance for AY 1971-72 on the basis of the number of days the entire concern worked double or triple shift, rather than on a per‑machinery basis. The Income Tax Officer limited the al…

The Supreme Court examined whether the lump‑sum technical fee and royalty paid by Honda Siel Cars India Ltd. under a Technical Collaboration Agreement with Honda Motors Company Ltd., Japan, should be treated as capital or revenue expenditure under the Income‑Tax Act. The joint venture was created to set up a new automo…

The petitioners, a group of public‑spirited individuals, challenged the constitutionality of Section 139AA of the Income Tax Act, 1961, which makes it mandatory for income‑tax assessees to quote their Aadhaar number while applying for a PAN or filing returns. They argued that the provision violated Articles 14 and 19(1…

The appellant, a male descendant of the original founder trustee, sought declaration that he was entitled to the office of founder trustee of M/s. P.S. Govindaswamy Naidu & Sons’ Charities, asserting that he satisfied the residence requirement under the Scheme of Administration. The respondents contended that his U.S. …

The appellant, a partnership firm, obtained lease‑hold rights to a stilt portion of a municipal market through auction and constructed a shopping centre, sub‑licensing shops to traders. The Assessing Officer re‑assessed the income from these sub‑licences under the head "Income from House Property" on the basis that the…

M/s. Lisie Medical Institutions, a charitable trust running a hospital, sought exemption from building tax under the Kerala Building Tax Act, 1975, claiming its premises were used for charitable purposes. The High Court, relying on S.H. Medical Centre Hospital v. State of Kerala, rejected the exemption, holding that "c…

The Supreme Court examined petitions seeking to shift investigation of the multi‑state chit‑fund (Ponzi) scam, which defrauded lakhs of depositors of roughly Rs 10,000 crore, from the State Police to the Central Bureau of Investigation (CBI). The scam involved companies operating across West Bengal, Tripura, Assam and …

The American Hotel & Lodging Association Educational Institute (AH&L) – a US non‑profit educational institution – had enjoyed exemption under Section 10(22) of the Income‑Tax Act until 31‑Mar‑1998. After the Finance Act, 1998 omitted Section 10(22), AH&L applied on 7‑Apr‑1999 for initial approval under the newly insert…

The Supreme Court examined whether income from the sale of green tea leaves by Belgachi Tea Co. Ltd. should be taxed as business income under the Income Tax Act, 1961, or as agricultural income under the Bengal Agricultural Income Tax Act, 1944. The Court held that the mixed income from tea grown and manufactured must …

The Supreme Court examined the implementation of welfare measures for Archakas and other temple employees under the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. It upheld the constitutional validity of the Act and held that the abolition of hereditary rights of Archakas is not un…

Patel Brothers & Co. Ltd. claimed kitchen expenses for providing ordinary meals to its employees and out‑station customers for the assessment years 1969‑70, 1970‑71 and 1971‑72. The Income‑Tax Officer disallowed the portion relating to customers, classifying it as "entertainment expenditure" under Section 37(2‑A) of th…

The Supreme Court examined whether the tax authorities could choose to assess tax on either the trustees or the beneficiaries of a discretionary trust when the trust's income was distributed and actually received by the beneficiaries during the accounting year. The respondent, a beneficiary of six discretionary trusts,…

The assessee, Biju Patnaik, claimed deductions for interest on loans from the Kalinga Foundation Trust and dividends from shares of Kalinga Tubes Ltd. The Income‑Tax Officer treated the cash credits and dividends as income from undisclosed sources, concluding that the trust was a camouflage for the assessee’s unaccount…

Chennai Properties & Investments Ltd., a company whose memorandum of association states that its main object is to acquire and let out properties, earned rental income from two properties and disclosed it as business income. The assessing officer treated the same income as "income from house property" and taxed it acco…

Two loaders, Sant Raj and Itwari Lal Sherya, were terminated by their employer, a foreign air‑transport company. The Labour Court held the termination to be retrenchment and illegal because the employer had not complied with Section 25F of the Industrial Disputes Act, 1947, and awarded them one year's wages as compensa…

The appellant, a liquidator of Mahamudabad Properties Ltd., owned a building at 3 Gun Foundry Road that had been released by the Government in December 1960 in a dilapidated condition. In its 1962-63 return it claimed an annual value of Rs.1,23,672, a vacancy remission, and deductions for insurance premium and municipa…

McDowell & Co Ltd acquired the sick company Hindustan Polymers Ltd (HPL) by amalgamation effective 1 April 1977. HPL’s banks waived interest on loans, which under Section 41(1) of the Income‑Tax Act would normally be taxable income. The assessee claimed the benefit of Section 72A, allowing it to set off HPL’s accumulat…

The appellant, the Commissioner of Income Tax, challenged the deduction claimed by M/s. Meghalaya Steels Ltd. of Rs.2,74,09,386 as subsidies (transport, interest, power, insurance) under Sections 80‑IB and 80‑IC of the Income Tax Act. The issue was whether such subsidies constitute "profits and gains derived from busin…

Eastern Chemical and Minerals exported ferro‑silicon under a barter arrangement and, in return, received import licences for pesticides which it later assigned to users for consideration. The company claimed exemption from additional tax under Section 104(1) of the Income‑Tax Act, 1961, relying on Notification No. S.O.…

Prem Dass was convicted under Sections 276C and 277 of the Income Tax Act for filing an incorrect return and allegedly withholding books of account. The Sessions Judge acquitted him, finding the prosecution evidence insufficient to prove the requisite mens rea and noting that the penalty imposed earlier had been reduce…

The appellants, investment companies of the Jindal Group, held shares of Jindal Ferro Alloys Ltd (JFAL) as stock-in-trade and, following a court‑sanctioned scheme of amalgamation, were allotted shares of Jindal Strips Ltd (JSL) in exchange. The Assessing Officer treated the JSL shares as taxable business income under s…

The appellants purchased a mortgaged property at a public auction conducted by a Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act). The auction was later set aside by the Debt Recovery Appellate Tribunal on the ground that the appellants were not bona‑fide purchas…

Sea Pearl Industries, a processor of seafood, entered into an agreement with an eligible export house to export its processed products. The export house opened a Letter of Credit in its own name, which was later endorsed to Sea Pearl and the foreign exchange credited to its account. Sea Pearl claimed a deduction under …

Induflex Products (P) Ltd, an export house, claimed a deduction under Section 80HHC of the Income Tax Act, 1961 despite declaring a loss on its export of trading goods. The Assessing Officer allowed the deduction, but the Commissioner ordered its withdrawal. The Income Tax Appellate Tribunal reinstated the benefit, and…

The appellant, representing Income Tax Practitioners, challenged the constitutional validity of Section 44(AB) of the Income Tax Act, 1961, which mandates that the accounts of businesses with turnover exceeding Rs 40 lakh and professionals with receipts exceeding Rs 10 lakh be audited only by a Chartered Accountant. Th…

East India Hotels Ltd., an approved hotel, claimed both the extra depreciation allowance under clause (iii) and the extra shift depreciation allowance under clause (iv) of Item III of Appendix I to the Income Tax Rules for AY 1977-78. The Revenue argued that an approved hotel could claim only the extra depreciation all…

The Commissioner of Income Tax appealed against M/s Excel Industries Ltd., contending that the value of advance licence and duty‑entitlement pass‑book benefits under the import‑export policy should be taxed in the year they were received under s.28(iv) of the Income Tax Act. The assessee argued that such benefits are o…

The Supreme Court examined whether sugar bags pledged by two cooperative sugar mills to Maharashtra State Co‑operative Bank Ltd. could be attached and sold to satisfy the employer's liabilities under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The Court held that Section 11(2) of the Act crea…

Sajjian Mills Ltd, a public limited company, incurred a statutory liability to pay gratuity under the Payment of Gratuity Act, 1972 and actuarially determined its total liability of Rs 48,59,431 for the assessment year 1973‑74. It made a provision of Rs 20 lakhs in its books, added it back in its return, and claimed a …

The Bangalore Club, a social club, challenged an assessment that it was liable to wealth tax under Section 21AA of the Wealth Tax Act, 1957. The Assessing Officer and the CIT (Appeals) held the club liable, but the Appellate Tribunal set aside those orders. The Supreme Court examined the meaning of "association of pers…

The case concerned several Maharashtra sugar‑co‑operative societies that deducted amounts from the cane price payable to their farmer members as non‑refundable and refundable deposits and as contributions to various funds. The Income Tax Department treated these deductions as trading receipts and taxed them under the I…

The appellants, a partnership firm, were searched under section 132 of the Income‑Tax Act on 28 October 1975 and cash, jewellery, diamonds and books of account were seized. On 31 December 1975 they filed a declaration of concealed income under section 3(1) of the Voluntary Disclosure of Income and Wealth Ordinance/Act …

The case concerned four life‑insurance policies taken by G.V. Ranade and assigned in 1969 to his wife, Kamalabai Ranade. The Income‑Tax Officer issued a notice under Section 226(3) of the Income Tax Act directing the LIC to pay the policy proceeds to satisfy Ranade’s tax arrears. The LIC delayed making the statutory st…

The Supreme Court examined the interplay between Section 144C, which provides a special dispute‑resolution procedure for eligible assessees, and Section 153(3) of the Income Tax Act, which prescribes a twelve‑month limitation for fresh assessments. The Court held that the limitation under Section 153 applies only to th…

The Citizen Co-operative Society Ltd., a multi‑state cooperative credit society, claimed deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Officer, CIT(A) and ITAT held that the society’s activities amounted to a finance business involving "nominal members" and were not confined to its mem…

The petitioners – Indian Hotels Co. Ltd., Hotel & Allied Traders Pvt. Ltd. and Hotel Shashi Pvt. Ltd. – claimed that their hotel‑related activities, including a large‑scale flight kitchen, qualified as a "newly established industrial undertaking" and therefore entitled them to deductions under Section 80J and investmen…

Mysore Sales International Ltd., a Karnataka government undertaking that manufactures and bottles arrack, was directed by the Income Tax Deputy Commissioner to collect TDS from liquor vendors (excise contractors) under Section 206C of the Income Tax Act, treating the vendors as "buyers". The vendors obtained retail ven…

The Supreme Court examined the forfeiture proceedings initiated against the relatives of Iqbal Mohammed Memon (alias Iqbal Mirchi) under Chapter VA of the Narcotic Drugs and Psychotropic Substances Act, 1985. The appellants challenged the validity of the show‑cause notices, contending that the Competent Authority had n…

M/s Tuticorin Alkali Chemicals and Fertilizers Ltd., a newly incorporated heavy‑chemical manufacturer, raised term loans for setting up its plant and invested surplus funds in short‑term bank deposits before commercial production began. The company earned interest on these deposits and claimed that, under accepted acco…

The assessee, a charitable trust created in 1942, amended its deed in 1971 to require that surplus funds be invested in a company in which the trustees had a substantial interest. It claimed exemption of the interest earned on those investments under Section 11 of the Income Tax Act, relying on the first proviso to Sec…

The Supreme Court examined a transfer of a partnership's business as a going concern to a limited company for Rs 8 lakhs. The Revenue had taxed the depreciation claimed by the firm under Section 41(2) of the Income‑Tax Act and also taxed capital gains. The High Court had held that Section 41(2) did not apply, that the …

The assessee partnership firm was granted registration under Section 184(7) of the Income Tax Act for the 1967-68 assessment year and was treated as registered for subsequent years. The Commissioner, invoking Section 263, cancelled the renewal of registration for 1972-73 and 1973-74, alleging discrepancies between the …

The Vellore Electric Corporation Ltd., a licensee under the Electricity Supply Act, claimed deductions for amounts transferred to its Contingencies, Development and Tariffs‑and‑Dividend Control reserves for assessment years 1967‑68 to 1970‑71, and also sought relief under Section 80‑1 for interest earned on securities …

The partnership firm Artex Manufacturing sold its entire business as a going concern to a newly formed private limited company for Rs 11,50,400, paid by allotment of shares. The issue was whether the surplus arising from the difference between the re‑valued value of plant, machinery and dead‑stock (Rs 15,87,296) and th…

The appellant, the Commissioner of Income Tax, challenged the deduction claimed by the assessee, a partnership that had taken over the business, assets and liabilities of a predecessor firm, including a debt of Rs.23,577. The assessee had paid tax on interest earned on that debt in AY 1963-64, later settled part of the…

Godrej & Boyce Manufacturing Co. Ltd. claimed that interest expenditure incurred to earn dividend income (exempt under s.10(33) because tax is paid by the dividend‑paying company under s.115‑0) could not be disallowed under s.14A of the Income‑Tax Act. The Revenue argued that s.14A barred deduction of any expenditure i…

The case involved McDowell & Co. Ltd. challenging the revenue's disallowance of deductions under Section 438 of the Income Tax Act, 1961, relating to unpaid bottling fees and interest secured by a bank guarantee, and other claims such as depreciation on R&D assets, transformer purchase, and technical service charges. T…

The Supreme Court considered whether advance tax and self‑assessment tax paid by Shelly Products could be refunded merely because the earlier assessment was annulled and the revenue could not pass a fresh assessment. The Court held that the liability to pay advance tax and self‑assessment tax arises under the Income Ta…

The Supreme Court examined whether receipts received by several members' clubs, including Bankipur Club Ltd., for drinks, refreshments, rent, admission fees and subscriptions constitute taxable income under the Income‑Tax Act. The clubs, registered as non‑profit companies under Section 25 of the Companies Act, claimed …

The Indian Oil Corporation, a UK‑incorporated company with its principal place of business in India, claimed large deductions for London management expenses incurred by its parent company, Burmah Oil Co. Ltd., in its income‑tax returns for the years 1957‑58 to 1959‑60. The Assessing Officer, relying on a 1963‑64 audito…

The assessee, a partnership firm, was found to have cash credits of Rs.46,250 in its books in the names of five minor sons of the managing partner. The Income Tax Officer treated these as unexplained cash credits and added them to the firm's income under section 68 of the Income Tax Act, 1961. The firm argued that the …

The petitioners challenged a complaint filed by the Directorate of Enforcement under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002 (PMLA), arguing that the offences alleged, except for IPC Section 120B, were not "scheduled offences" as required by clause (y) of Section 2(1) of the PMLA. The Supreme C…

The Assessing Officer issued a notice under section 148 of the Income Tax Act for the assessment year 1999-2000, which the assessee (Nokia India) contested on the ground that it was based merely on a change of opinion. The ITAT upheld the assessee's objections, declaring the notice bad in law, and the Revenue appealed …

The Commissioner of Income Tax appealed against the Delhi High Court’s order allowing M/s Woodward Governor India Ltd. to deduct unrealised foreign‑exchange losses on loans taken for revenue purposes. The Court examined whether such losses could be claimed under section 37(1) in the year the exchange rate fluctuated or…

L.M. Mahurkar, a sales tax practitioner with only a matriculation qualification, was denied enrollment as an advocate by the Bar Council of Maharashtra after the Advocates Act, 1961 came into force. He claimed that his prior right to appear before the Bombay Sales Tax Authority, exercised under the Bombay Sales Tax Act…

The Hindu Undivided Family (M.C. Jain) leased its premises to Jain Glass Works Ltd for an annual rent of Rs 21,000, of which Rs 10,000 was contractually payable directly to a college run by a charitable trust. The Court held that this arrangement is merely a self‑imposed application of income and does not divert the re…

The Supreme Court entertained miscellaneous applications seeking correction of certain phrases in paragraphs 10(a) and 77 of Justice B.V. Nagarathna's judgment in W.P. (C) No.59/2013, filed by the Association of Old Settlers of Sikkim. The Court observed that substantial amendments to the original writ petition had not…

The Supreme Court examined whether the deduction under Explanation (baa) to Section 80HHC of the Income‑Tax Act, 1961 should be computed on the basis of gross receipts or the net amount of receipts such as interest and rent that are actually included in the profit‑and‑gain calculation. The Court held that only ninety p…

The appellant, an exporter, claimed deductions under Section 80HHC for profits retained for export business, arguing that the face value of the Duty Entitlement Pass Book (DEPB) is "cash assistance" and should be excluded from profit under Section 28(iiib). The Assessing Officer treated the entire sale value of the DEP…

Mis Topman Exports sold its Duty Entitlement Pass Book (DEPB) and claimed a deduction under section 80HHC of the Income Tax Act for the assessment year 2002-03. The Assessing Officer treated the entire sale proceeds as profit on transfer under section 28(iiid), denying the deduction. The Tribunal held that DEPB is cash…

The State of Punjab appealed against an order of the Executing Court that allowed the respondents, whose land had been acquired, to claim the additional amount under Section 23(1A) of the Land Acquisition Act, 1894 on both the market value of the land and the solatium payable under Section 23(2). The respondents sought…

The Totgars' Cooperative Sale Society Ltd., a cooperative credit society, invested surplus funds in short‑term bank deposits and government securities and earned interest. It claimed that this interest was business income eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Offic…

M/s Kurian Abraham Pvt. Ltd. purchased raw field latex in Kerala, processed it into centrifuged latex in Tamil Nadu and sold the product. For assessment years 1997‑98 and 1998‑99 the assessee relied on Circular No. 16/98 issued by the Kerala Board of Revenue under s.3(1A)(c) of the Kerala General Sales Tax Act, 1963, w…

The Department appealed against the assessment of Arvind Polycot Ltd., contending that interest paid on borrowings for capital assets that were not put to use during the financial year could not be claimed as a deduction under Section 36(1)(iii) of the Income‑Tax Act, 1961. The Court examined the statutory language and…

The Department of Income Tax appealed against a Gujarat High Court order favoring Ishwar Bhuvan Hotels Ltd. concerning the deductibility of interest on borrowings used to acquire capital assets that were not put to use in the relevant financial year. The central issue was whether such interest could be allowed as a ded…

Gujarat Alkalis & Chemicals Ltd borrowed Rs 30 crore from IDBI, which was refinanced by the foreign company COFACE. COFACE levied interest, commitment charges and insurance charges. The assessee claimed the commitment charges as a deduction under section 36(1)(iii) of the Income‑Tax Act, 1961, while the tax department …