LiveLawBiz Direct Tax Weekly Round-Up: May 11 - May 17, 2026
Kapil Dhyani
18 May 2026 2:09 PM IST
SUPREME COURT
Supreme Court Dismisses Income Tax Appeal Against IDBI Bank Over Delay Of 275 Days
Case Title : DEPUTY COMMISSIONER OF INCOME TAX AND ORS. Versus IDBI BANK LTD
Case Number : Diary No. 19495-2026
The Supreme Court on Monday dismissed the Income Tax Department's plea against IDBI Bank Ltd over a 275-day delay, refusing to interfere with the Bombay High Court's decision quashing reassessment proceedings for AY 2016-17. The High Court, in its order dated March 24, 2025 held that the reasons recorded by the Assessing Officer were factually incorrect, reflected non-application of mind, and amounted to an impermissible review based on change of opinion.
Case Title : Sanand Properties Pvt. Ltd. v. Joint Commissioner of Income Tax, Range 6 & Ors.
Case Number : Civil Appeal No. 9107 of 2012 with Civil Appeal No. 744 of 2013 and Civil Appeal No. 19487 of 2017
CITATION : 2026 LLBiz SC 186
The Supreme Court has held that the 35% share of gross sale proceeds received by Sanand Properties Pvt Ltd from an Association of Persons (AOP) formed for a Pune housing project was taxable business income and not an exempt share of profit, holding that the payment was insulated from project expenses and therefore bore the character of revenue rather than profit. A bench led by Justice J.B. Pardiwala and Justice K V Viswanathan delivered the ruling in a dispute arising out of a joint development arrangement through an AOP named Fortaleza Developers.
ITAT
ITAT Mumbai Upholds Deletion Of ₹11.11 Crore Disallowance On Related-Party Business Expenses
Case Title : DCIT-3(1)(1), Mumbai v. Riverside Industries Private Limited
Case Number : ITA No. 9523/MUM/2025
CITATION : 2026 LLBiz ITAT(MUM) 130
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 7 May upheld deletion of a disallowance of Rs. 11.11 crore towards business development and business promotion expenses paid by a pharmaceutical company to related parties. A Bench of Judicial Member Pawan Singh and Accountant Member Makarand Vasant Mahadeokar dismissed the Revenue's appeal against Riverside Industries Private Limited for Assessment Year 2017-18, holding that it could not adopt an inconsistent stand when it had accepted similar expenses and agreements in subsequent assessment years on identical facts.
Case Title : Ultramarine & Pigments Ltd. v. Assistant Commissioner of Income Tax
Case Number : ITA No. 5996/Mum./2025
CITATION : 2026 LLBiz ITAT(MUM) 131
Today, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that a taxpayer cannot be denied deduction for research and development (R&D) expenditure under Section 35(2AB) of the Income Tax Act merely for not separately filing Form 3CL during assessment proceedings, where the approval had already been transmitted to and was available with the Assessing Officer. Judicial Member Justice Sandeep Singh Karhai and Accountant Member Bijayananda Pruseth allowed the appeal filed by Ultramarine & Pigments Ltd. and set aside the earlier orders, remanding the matter to the Assessing Officer for recomputation of the deduction in accordance with the DSIR-approved figures.
ITAT Mumbai Upholds Denial Of Tax Deduction On ₹25 Lakh Donation To Kisan Party Of India
Case Title : Mihir Bipinbhai Parekh v. Deputy Commissioner of Income Tax
Case Number : ITA No. 1173/MUM/2026 (Assessment Year 2019-20)
CITATION : 2026 LLBiz ITAT(MUM) 132
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the denial of a tax deduction claimed by a Mumbai chemical trader for a ₹25 lakh donation to the Kisan Party of India. The tribunal found several circumstances that cast doubt on whether the contribution was genuine. A bench of Judicial Member Sandeep Singh Karhail and Accountant Member Bijayananda Pruseth noted that the taxpayer was a chemical trader with no apparent connection to a Bihar-registered political party claiming to work for agriculturists.
Genuine Sales Bar Full Disallowance Of Purchases From Entry Provider: ITAT Mumbai
Case Title : Hemantkumar Sumermal Bhansali v/s Deputy Commissioner of Income Tax
Case Number : ITA No. 1568/MUM/2026
CITATION : 2026 LLBiz ITAT(MUM) 133
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 7 May held that where sales are accepted as genuine and supported by invoices and delivery challans, the entire purchase amount cannot be treated as bogus merely because the supplier was found to be an accommodation entry provider. Judicial Member Sandeep Singh Karhail and Accountant Member Vikram Singh Yadav held that only the profit element embedded in such purchases can be brought to tax and partly allowed an appeal filed by Mumbai-based steel trader Hemantkumar Sumermal Bhansali, proprietor of Pushpak Steel and Engineering Co.
Cash Deposits From Recorded Sales Cannot Be Taxed Again As Unexplained: ITAT Mumbai
Case Title : Raju Samsurat Yadav Vs. ITO Ward 1(1), Kalyan
Case Number : ITA No. 6866/Mum/2025
CITATION : 2026 LLBiz ITAT(MUM) 134
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 7 May observed that once sales are recorded in the books of account and offered as business turnover, the same amount cannot again be taxed as unexplained cash credit under Section 68 of the Income Tax Act. Judicial Member Amit Shukla and Accountant Member Makarand Vasant Mahadeokar were hearing an appeal filed by Raju Samsurat Yadav, an electronics trader operating through proprietary concerns SKS Enterprises and Omega Marketing.
Case Title : Lodha Developers Limited v. DCIT
Case Number : ITA No. 7695/Mum/2025 & ITA No. 7875/Mum/2025
CITATION : 2026 LLBiz ITAT(MUM) 136
On 13 May, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that Section 43CA of the Income Tax Act does not apply to flats booked and allotted before the provision came into force, even if the sale deed is registered later. The provision deems stamp duty value as sale consideration for taxing real estate business transfers when it exceeds the declared price. Accountant Member Om Prakash Kant and Judicial Member Anikesh Banerjee deleted an addition of Rs. 2.05 crore made by the Income Tax Department on Lodha Developers Limited.
Case Title : Catwalk Worldwide Limited v. Assistant Commissioner of Income Tax
Case Number : I.T.A. No. 6291/Mum/2025
CITATION : 2026 LLBiz ITAT(MUM) 135
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has recently deleted a ₹36.54 crore tax addition made on share premium received by footwear company Catwalk Worldwide Ltd, holding that the tax department wrongly rejected the company's share valuation by comparing business projections with actual later performance “The Assessing Officer ought not to have disturbed the method adopted by assessee or cannot adopt the figures by replacing the projections with actual financials.”
OTHER DEVELOPMENTS
Income Tax Dept. Releases ITR-1, ITR-4 Utilities 45 Days After Court Indicated April 1 Timeline
Despite a judicial direction that income tax return filing utilities be made available from April 1 every year, the Income Tax Department on Friday (May 15) released the ITR-1 and ITR-4 utilities for Assessment Year 2026-27, formally opening the return filing season for salaried taxpayers and small businesses. The utilities for ITR-1 (Sahaj) and ITR-4 (Sugam) were made available on the Income Tax Department's e-filing portal, allowing eligible taxpayers to begin preparing and filing returns for income earned during Financial Year 2025-26 corresponding to Assessment Year 2026-27.