Software Receipts Can't Be Taxed On PE Assumption Already Rejected By ITAT: Delhi High Court

The Delhi High Court has held that software receipts cannot be subjected to tax deduction at source (TDS) on the assumption of a Permanent Establishment (PE) when such an assumption has already been rejected by ITAT, setting aside a withholding certificate issued under Section 197 of the Income Tax Act.A division bench of Justices V. Kameswar Rao and Vinod Kumar was dealing with a petition filed by Zscaler Inc, a US-based software company, challenging the Assessing Officer's order granting TDS...

Income Tax | Revised 2024 Compounding Guidelines Cannot Be Applied After Case Attains Finality: Madras High Court

The Madras High Court held that once the assessee's entitlement to compounding had attained finality through earlier orders, then the Income Tax Department could not apply the revised Compounding Guidelines. Justice C. Saravanan referred to the Explanation to Section 279(6) of the Income Tax Act, 1961 and noted that the new compounding Guidelines dated 17.10.2024 bearing reference F.No.285/08/2014-IT (Inv.V) would apply, only if a new application is/was filed in terms of paragraph 3.2...

'Did Not Apply Mind': Gujarat High Court Quashes Tax Authority's Order Refusing To Condone Delay In Filing Return Due To COVID Pandemic

The Gujarat High Court quashed an order of the tax authorities rejecting a partnership firm's application seeking condonation of 13 day delay in filing income tax return on account of Covid pandemic, observing that authority "did not apply its mind" to the reasons given by the firm. The petitioner partnership firm engaged in real estate development business had challenged a 27.10.2023 rejecting its application for condonation of delay in filing income tax return for Assessment Year 2021-22 under...

Income Tax Act | No Addition U/S 153A Without Incriminating Material Found During Search: Bombay High Court

The Bombay High Court has held that no income addition can be made under Section 153A of the Income Tax Act, 1961 unless incriminating material is found during a search, even if the Revenue relies on information received from foreign authorities. A Division Bench of Justice G.S. Kulkarni and Justice Aarti Sathe dismissed an income tax appeal filed by the Revenue and upheld the order of the Income Tax Appellate Tribunal (ITAT), Mumbai, which had deleted additions of nearly ₹28 crore made...

Income Tax Return Must Be Accepted For Assessing Victim's Income In Motor Accident Claims: Calcutta High Court Grants ₹39 Lakh Compensation

The Calcutta High Court held that when a victim's income tax return is filed, it is a reliable and authentic basis for assessing income in motor accident claims. The bench granted compensation of Rs. 39 Lakh to the claimants (mother and father) of the victim. Justice Biswaroop Chowdhury stated that once an Income Tax Return is accepted by the Income Tax Authority, it becomes an authentic document with regard to the income of the victim. When Income Tax Return is not filed it...

Internal Dispute Among Directors Of Company Not 'Genuine Hardship' Preventing Timely Filing Of ITR: Delhi High Court

The Delhi High Court has held that internal disputes between the Directors of a company is not 'genuine hardship' under Section 119(2)(b) of the Income Tax Act 1961, preventing timely filing of its Income Tax Return, particularly in absence of convincing evidence.A division bench of Justices V. Kameswar Rao and Madhu Jain observed,“The internal dispute among the Directors of the company is not a genuine hardship, which can be the ground on which the delay can be condoned. Even otherwise, we are...

Delhi High Court Dismisses Revenue's Appeal In Avery Dennison Transfer Pricing Case, Upholds ITAT Order On Intra-Group Services

The Delhi High Court has dismissed the Income Tax Department's appeal against M/s Avery Dennison (India) Pvt. Ltd., reaffirming that no substantial question of law arises where the Transfer Pricing Officer's (TPO) conclusions are unsupported by cogent evidence and the issue stands settled in favour of the assessee in earlier years. A Division Bench comprising Justice V. Kameswar Rao and Justice Mini Pushkarna was hearing an appeal filed by the Revenue for AY. 2012-2013, stated that that...

ITAT Cannot Re-Adjudicate Issues Under Guise Of Rectification U/S 254(2) Income Tax Act: Madras High Court

The Madras High Court has held that the rectification power under Section 254(2) of the Income Tax Act is akin to the review power under Order 47 Rule 1 CPC and is limited to rectifying any mistake apparent on the face of the record. The Tribunal cannot re-adjudicate issues or modify its original order under the guise of rectification. Section 254(2) of the Indian Income Tax Act, 1961, grants the Income Tax Appellate Tribunal (ITAT) the authority to amend its orders to rectify any...

Income Tax Act | CIT(A) Can't Remand Matter Back To AO Without Deciding Jurisdictional Validity Of S.144 Order: Delhi High Court

The Delhi High Court has made it clear that the Commissioner of Income Tax Appeals cannot remand assessment back to the Assessing Officer, unless it decides the jurisdictional validity of AO's order passed under Section 144 of the Income Tax Act 1961.Section 144 empowers the deals with the assessment of a taxpayer that is carried out by the Assessing Officer (AO) as per his best judgement and based on all relevant information gathered.In the case at hand, the Appellant-assessee argued that the...

Income Tax Act | No Error In Issuing Successive Reassessment Notices On Same 'Reasons To Believe': Delhi High Court

The Delhi High Court has refused to interfere with income reassessment action initiated by the tax authorities merely on the ground that two successive notices under Section 148A(1) of the Income Tax Act 1961 were issued to the assessee.A division bench of Justices V. Kameswar Rao and Vinod Kumar observed,“as the fresh notice dated 13.06.2025 was issued with the same contents, the previous notice automatically becomes infructuous. Thus, no jurisdictional issue arises.”Briefly put, the Department...

Income Tax Appeal Cannot Be Rejected Solely For Assessee's Non-Appearance Before CIT(A): Kerala High Court

The Kerala High Court has held that an Income Tax Appeal cannot be rejected solely for the assessee's non-appearance before the Commissioner of Income Tax (Appeals). Justice Ziyad Rahman A.A. stated that none of the provisions in Section 250 of the Income Tax Act permit the appellate authority to reject the appeal on the ground of non-appearance of the assessee/appellant, without going into the merits of the case. In this case, the assessee/petitioner had filed an appeal,...

Interest On Delayed Agricultural Income Tax Not Deductible U/S 37 Income Tax Act: Kerala High Court

The Kerala High Court has held that interest on delayed agricultural income tax is not deductible under Section 37 Income Tax Act. Section 37 of the Income Tax Act provides deductions on expenses which are directly related to a business's operations. Justices A. Muhamed Mustaque and Harisankar V. Menon examined whether the interest paid on account of the delayed payment of Agricultural Income Tax is eligible for deduction under Section 37 of the Income Tax Act, 1961. The ...