No Service Tax Exemption Where Overriding Commission Is Received In INR: Madras High Court

The Madras High Court held that travel agents acting as General Sales Agents (GSAs) for foreign airlines cannot claim service tax exemption as an export of services when their overriding commission is received in Indian Rupees rather than convertible foreign exchange, even if the services are provided to foreign principals. A Division Bench of Justice Anita Sumanth and Justice Mummineni Sudheer Kumar held that exemption notifications are to be strictly construed, and the condition requiring...

Income Tax Authority Must Record Prima Facie View On Taxability Before Issuing Withholding Certificate: Delhi High Court

The Delhi High Court has held that while issuing a certificate for lower deduction of tax at source under Section 197 of the Income Tax Act, 1961, the competent authority is required to record a prima facie view on the taxability of the receipts, and that such certificates cannot be issued mechanically or without reasons.A division bench of Justices Dinesh Mehta and Vinod Kumar made the observation while disposing of a writ petition filed by Ireland-based Workday Limited, which had challenged a...

GST Payable Separately On Municipal Works Contracts Unless Tender Includes It: Kerala High Court

The Kerala High Court, on 12 February, held that contractors executing works for local self-government institutions are entitled to payment of GST over and above the contract value, and that such tax cannot be treated as included in the quoted rates unless the tender conditions expressly so provide. Harisankar V. Menon stated that once government circulars categorically mandate that tendered rates for public works are to be quoted exclusive of GST, the municipality cannot subsequently treat GST...

No Disallowance Of Interest In Absence of Nexus Between Borrowed Funds And Advances: ITAT New Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 27 February, held that interest disallowance under Section 36(1)(iii) of the Income-tax Act, 1961 cannot be sustained in the absence of a nexus between borrowed funds and interest-free advances, particularly where such advances were granted in years preceding the borrowings and were supported by commercial expediency. A Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Amitabh Shukla deleted the addition of...

LiveLawBiz Direct Tax Monthly Digest: February 2026

SUPREME COURTSupreme Court Dismisses Revenue Plea Against Gujarat HC Order Quashing Adani Wilmar Income Tax ReassessmentCase Title : THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1)(1) Vs ADANI WILMAR LIMITED Case Number : SLP(C) 4944/2026 CITATION : 2026 LLBiz SC 35The Supreme Court on Monday refused to interfere with a Gujarat High Court judgment that had quashed the reopening of Adani Wilmar Limited's income tax assessment for the 2013–14 assessment year, dismissing a special leave...

Continuing Look Out Circular After Tax Proceedings Conclude Violates Fundamental Rights: Delhi High Court

The Delhi High Court has held that failure of tax authorities to obtain information about an assessee's assets in foreign jurisdictions cannot be used to keep a Look Out Circular (LOC) alive indefinitely, particularly when income tax proceedings have already concluded and no demand is outstanding against the assessee.A Division Bench of Justices Dinesh Mehta and Vinod Kumar thus allowed writ petitions filed by the assessees and observed,“If for one reason or the other, the respondents are not in...

Delhi High Court Directs 2% Withholding Tax Certificate For US Software Firm DocuSign

The Delhi High Court has directed the Income Tax Department to issue a withholding tax certificate at the rate of 2% in favour of a US-based software company, after finding that the transactions prima-facie look to be not exigible to tax.A division bench of Justices Dinesh Mehta and Vinod Kumar passed the order while hearing DocuSign's writ petition challenging a certificate issued under Section 197 of the Income Tax Act, 1961.DocuSign provides electronic signature and digital transaction...

Denial Of Cross-Examination Justified Under Excise Act When Statements Are Corroborated: Delhi High Court

The Delhi High Court has held that the right of cross-examination under Section 9D of the Central Excise Act, 1944 is not absolute, and may be lawfully denied in fact-specific circumstances, particularly where the witnesses are closely connected to the assessee and the allegations are supported by independent corroborative evidence.A Division Bench of Justices Nitin Wasudeo Sambre and Ajay Digpaul thus dismissed the appeal filed by an assessee, holding that neither the adjudicating authority nor...

Delhi High Court Quashes Draft IT Assessment Order Passed Before Upload Of Transfer Pricing Relief Order

The Delhi High Court has recently quashed a draft assessment order passed by the Faceless Assessing Officer (FAO) against Lindstrom Services India, after noting that it was issued without knowledge of the Court's order quashing transfer pricing, due to delay in uploading the High Court direction on its website.The division bench of Justices Dinesh Mehta and Vinod Kumar clarified that while the FAO could not be faulted personally, an assessment order passed in ignorance of a subsisting High Court...

Mere Presence Of Finance Ministry, CBIC In Delhi Doesn't Confer It Jurisdiction To Entertain Petition: Delhi High Court

The Delhi High Court has held that the mere presence of the Ministry of Finance and the Central Board of Indirect Taxes and Customs (CBIC) in Delhi does not, by itself, confer territorial jurisdiction on the High Court, when the cause of action arises from summons and demands issued by authorities located outside Delhi.The Division bench of Justices Nitin Wasudeo Sambre and Ajay Digpaul dismissed a writ petition filed by an exporter challenging summons issued by the Directorate of Revenue...

Delhi ITAT Deletes Rs 11.32 Lakh Addition On Payments Towards Credit Card Dues After Source Explained

The New Delhi Income Tax Appellate Tribunal (ITAT) has recently held that payments towards credit card dues cannot be added as unexplained expenditure under Section 69C of the Income Tax Act when the assessee is able to satisfactorily explain the source of such payments with supporting evidence.Section 69C of the Income Tax Act, 1961, deals with unexplained expenditure. If an assessee incurs expenses for which they cannot provide a satisfactory explanation regarding the source of funds to the...

Demonetisation Cash Sales Supported by Books and VAT Returns Cannot Be Treated as Unexplained Income: ITAT Delhi

The New Delhi Income Tax Appellate Tribunal (ITAT) has held that cash sales recorded during the demonetisation period cannot be treated as unexplained income merely on the basis of suspicion or human probabilities, when such sales are duly reflected in audited books of account and supported by stock records, invoices, and VAT returns.The bench consisting of Judicial Member Anubhav Sharma and Accountant Member Manish Agarwal, was dealing with an appeal filed by M/s KP Diamonds (P) Ltd.,...