LiveLawBiz Direct Tax Weekly Round-Up: August 03 - August 09, 2026
Kapil Dhyani
10 Aug 2026 6:17 PM IST
SUPREME COURT
Case Title : THE DIRECTOR OF INCOME TAX,(INTERNATIONAL TAXATION) VS M/S STAR CRUISES (INDIA) P. LTD.
Case Number : Civil Appeal Nos. 3334-3336/2012
CITATION : 2026 LLBiz SC 259
The Supreme Court has recently ruled that hospitality and entertainment offered on board a cruise do not alter the essential nature of the activity as the carriage of passengers under the Income Tax Act. Ruling on the applicability of the presumptive taxation regime for non-resident shipping companies under Section 44B, the court observed that ancillary services provided during a voyage do not take the operation outside the scope of the provision. A bench of Justices S.V.N. Bhatti and N.V. Anjaria was hearing the revenue's challenge to the Bombay High Court's ruling extending the benefit of Section 44B to the foreign cruise operator Superstar Libra Ltd. (SLL).
HIGH COURTS
Bombay HC
Bombay High Court Pulls Up ITAT Over Failure To Pronounce Reserved Judgments Within 90-Day Deadline
Case Title : Rajesh R. Hemrajani v. Income Tax Appellate Tribunal & Anr.
Case Number : WRIT PETITION (L) NO. 10271 OF 2026
CITATION : 2026 LLBiz HC(BOM) 428
The Bombay High Court has pulled up the Income Tax Appellate Tribunal (ITAT) over the repeated practice of releasing matters reserved for judgment without pronouncing orders. A Division Bench of Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad observed that Rule 34(5)(c) of the Income Tax (Appellate Tribunal) Rules, 1963, requires the tribunal to pronounce its judgment within 60 days of concluding the hearing and, in exceptional circumstances, within a further period of 30 days.
Co-Operative Banks Need Not Deduct TDS On Interest Paid To Co-Operative Societies: Bombay High Court
Case Title : Citizen Credit Co-operative Bank Ltd. (Borivali) Vs The Income Tax Officer, TDS Ward, Mumbai
Case Number : INCOME TAX APPEAL (L) NO. 2533 OF 2026
CITATION : 2026 LLBiz HC(BOM) 438
The Bombay High Court has ruled that co-operative banks are not required to deduct Tax Deducted at Source (TDS) on interest paid on fixed deposits held by another co-operative society, holding that the exemption for such payments continues to apply. A Division Bench of Justice G.S. Kulkarni and Justice Aarti Sathe interpreted Section 194A(3)(v) of the Income Tax Act, which exempts certain categories of interest payments from TDS. The dispute before the bench was whether the exemption available when one co-operative society pays interest to another continues to apply even where the payer is a cooperative bank.
Delhi HC
Case Title : Commissioner of Income Tax (International Taxation) v. Red Bull Racing Limited (and batch)
Case Number : W.P.(C) 8366/2017
CITATION : 2026 LLBiz HC (DEL) 778
The Delhi High Court has framed an additional question for consideration in a batch of income tax petitions involving Formula One racing teams, including Red Bull Racing Limited and Atlassian Williams. A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta would examine "Whether the Authority for Advance Ruling, which is enjoined upon to decide questions of law, as provided under Section 245N of the Income Tax Act of 1961, can decide as to whether an entity is having a permanent establishment in India, given that the fact about the existence of permanent establishment is a transaction based fact-finding exercise?"
Case Title : S.C.Sehgal v. UoI & Ors.
Case Number : W.P.(C) 4297/2007
CITATION : 2026 LLBiz HC (DEL) 781
The Delhi High Court has closed a 19-year-old writ petition challenging an order directing a special audit under Section 142(2A) of the Income Tax Act, holding that the proceedings had become infructuous since the audit had already been completed. Petitioner had challenged an order dated March 30, 2006, by which the assessing officer had directed a special audit. The writ petition was instituted in 2007, and notices were issued on May 30 that year, without any interim stay.
Delhi High Court Asks Income Tax Department To Explain 13-Year Delay In Releasing Seized Jewellery
Case Title : Shally Thapar v. Assistant Commissioner Of Income Tax & Ors.
Case Number : W.P.(C) 10592/2026
CITATION : 2026 LLBiz HC (DEL) 790
The Delhi High Court has directed the Income Tax Department to file a “comprehensive affidavit” explaining the 13-year delay in releasing jewellery seized from an assessee. The Department informed the Court that the jewellery had now been released and assured that the balance refundable amount, along with applicable interest, would be paid within four weeks. However, the Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta sought to know from the Assessing Officer, the reasons for the delay not only from the date when he joined office (21.05.2025) but also for the period prior thereto.
Case Title : Aakash Goel v. Union of India & Ors.
The Delhi High Court on Wednesday sought the response of the Union Government and the Central Board of Direct Taxes (CBDT) on a public interest litigation seeking an automatic mechanism to refund Tax Deducted at Source (TDS) to individuals whose income falls below the taxable limit without requiring them to file income tax returns (ITRs). A division bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela issued notice on the petition filed by petitioner-in-person Aakash Goel and directed the respondents to file their reply. The matter will next be heard in October.
Madras HC
Madras High Court Quashes Reassessment Against Stock Broker Over Misreading Client Funds As Income
Case Title : The Principal Commissioner of Income Tax v. Aryan Share And Stock Brokers Ltd
Case Number : TCA No.127 of 2026
CITATION : 2026 LLBiz HC(MAD) 217
The Madras High Court on 31 July held that reassessment proceedings cannot be initiated merely on the basis of suspicion arising from a misunderstanding of a stock broker's business model, ruling that client funds received by a broker in a fiduciary capacity cannot be treated as the broker's own income without tangible material. A Division Bench comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan dismissed the Revenue's appeal against the Income Tax Appellate Tribunal's (ITAT) order quashing reassessment proceedings against Aryan Share and Stock Brokers Ltd., holding that no substantial question of law arose from the Tribunal's decision.
Case Title : M/s. Grace Infrastructure Private Limited v. The Principal Commissioner of Income Tax
Case Number : W.P.No.18451 of 2025
CITATION : 2026 LLBiz HC(MAD) 220
The Madras High Court on 20 July held that tax authorities must consider the impact of a court-approved demerger before revising an assessment and set aside a revision order passed without examining the effect of the restructuring on Grace Infrastructure Private Limited's financial statements. Justice C. Saravanan remitted the matter to the Principal Commissioner of Income Tax for fresh adjudication, directing it to reconsider the assessment after allowing the company to file a revised return based on its post-demerger audited financial statements.
Rajasthan HC
Income Tax Findings Have Evidentiary Value In Benami Proceedings: Rajasthan High Court
Case Title : M/s Alishan Complex Private Limited v. The Initiating Officer
Case Number : D.B. Civil Miscellaneous Appeal No. 1595 of 2026
CITATION : 2026 LLBiz HC(RAJ) 33
On 3 August, the Rajasthan High Court held that findings under the Income Tax Act, though not conclusive in proceedings under the Prohibition of Benami Property Transactions (PBPT) Act, have evidentiary value and must be considered by authorities deciding benami proceedings. A Division Bench of Justices Arun Monga and Sandeep Shah allowed an appeal filed by Alishan Complex Private Limited against orders passed by the Appellate Tribunal, Adjudicating Authority and Initiating Officer, which had declared 79 properties purchased by the company as benami properties under the PBPT Act.
ITAT
TPO Can't Treat Goodwill Amortisation As Operating Expense In Transfer Pricing: ITAT Delhi
Case Title : Janes Defense India LLP v. DCIT, Circle 28(1), Delhi
Case Number : ITA No. 5387/Del/2024
CITATION : 2026 LLBiz ITAT(DEL) 259
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that amortisation of goodwill arising from acquisition of a business cannot be treated as an operating expenditure while computing the Profit Level Indicator (PLI) under the Transactional Net Margin Method (TNMM) for calculating transfer pricing. Observing that such amortisation is "an abnormal item arising out of acquisition of business and not a regular operating expenditure", the tribunal ruled that the Transfer Pricing Officer (TPO) could not include it in operating expenditure for determining the arm's length price.
ITAT Mumbai Quashes PCIT Revision Against Mumbai Trader As 'Larger Issue' Was Already Under Appeal
Case Title : M P Trading Company v. PCIT, Mumbai-20
Case Number : ITA No. 1107/MUM/2026
CITATION : 2026 LLBiz ITAT(MUM) 260
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has refused to uphold the Principal Commissioner of Income Tax's (PCIT) attempt to revise the assessment of a Mumbai-based trading company over alleged bogus purchases, ruling that the dispute was already pending before the Commissioner of Income Tax (Appeals) [CIT(A)]. A coram of Judicial Member Challa Nagendra Prasad and Accountant Member Prabhash Shankar observed, "The larger issue as to whether the purchases made by the assessee from Mahadev Enterprises and Tirupati Traders were genuine or not, or whether the profit element embedded therein should be estimated at 25%, was already the subject matter of appeal before the Ld. CIT(A). Therefore, since the larger issue was pending before the Ld. CIT(A), we hold that the Ld. PCIT was barred from invoking revisional jurisdiction by virtue of clause (c) of Explanation 1 to section 263 of the Act. Therefore, we hold that to the extent of treating the assessment order as erroneous and prejudicial to the interests of the Revenue in respect of purchases made from Mahadev Enterprises and Tirupati Traders, the order of the Ld. PCIT is bad in law."
Case Title : Honda Trading Asia Company Ltd. v. DCIT (International Taxation), Noida
Case Number : ITA Nos. 876/Del/2021, 2367/Del/2022, 2368/Del/2022 and 888/Del/2023
CITATION : 2026 LLBiz ITAT(DEL) 261
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that a mere presumption that employees of a parent company deputed to an Indian group entity rendered services on behalf of a non-resident assessee, without any cogent material to support it, is insufficient to establish a Permanent Establishment (PE) in India. A coram of Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman observed that the Revenue had failed to establish that Honda Trading Asia Company Ltd. had a fixed place of business or any employees deputed by it in India.