#CBDT circular

Under Section 263 ITA, the Supreme Court held that the CIT’s revisional jurisdiction requires an order to be both erroneous and prejudicial to revenue, and that circulars cannot override the statute, thus limiting authority and protecting assessees.

ITAT Ahmedabad ruled that the Section 87A rebate cannot be denied on short-term capital gains taxed at the special rate under Section 111A for AY 2025-26, overturning the Addl. CIT’s reliance on CBDT circular 13/2025. Taxpayers with STCG can now claim the full ₹25,000 rebate, extending relief beyond other income sources.

Co-operative banks are not liable to deduct TDS on interest they pay to non-member co-operative societies under Section 194A(3)(v). The Bombay High Court set aside the ITAT order that treated the banks as assessee-in-default, confirming the statutory exemption. The ruling relieves all co-operative banks and their non-member society borrowers from TDS obligations.

ITAT Pune holds that reassessment notices under Section 148 of the Income Tax Act, 1961, relying solely on unverified Insight Portal data without independent verification, are invalid. The ruling reinforces CBDT Circular compliance, mandating AO scrutiny beyond automated alerts to protect taxpayers from arbitrary proceedings.

ITAT Delhi rules that charitable trusts not claiming benefits under Section 11 are not subject to the Maximum Marginal Rate, even if structured as AOPs, and must be taxed at individual slab rates - affirming CBDT Circular No. 320 of 1982. This clarifies a critical tax liability distinction for non-exempt trusts receiving dividend income, impacting compliance strategies for trusts with substantial passive earnings.

The ITAT Jodhpur has dismissed a revenue appeal under Assessment Year 2018-19 because the tax effect of ₹12.90 lakh fell below the ₹60 lakh minimum mandated by CBDT Circular No. 09/24, reinforcing that procedural thresholds override substantive disputes. This sets a clear precedent for departments to prioritize appeals only where financial stakes meet the prescribed limit, curbing frivolous litigation across income tax adjudication.

The ITAT Delhi has ruled that unexplained investment additions under Section 69 cannot be sustained if the taxpayer proves the funds originated from legitimate family holdings and align with CBDT Circular 1916/1994, which permits such sources during search and seizure proceedings. This sets a critical precedent for taxpayers with joint family assets, requiring tax authorities to verify familial financial patterns before imposing additions.

Delhi High Court rules that CBDT Circular No. 11 of 2024 cannot restrict the statutory discretion under Section 119(2)(b) to condone minor delays in return filing for loss carry forward. The court held that a 7-day delay, if justified, must be condoned to prevent denial of rights under Section 80, reinforcing judicial discretion over administrative circulars.

ITAT Ahmedabad ruled that borrowing funds alone cannot reclassify share sales as business income; the decisive factors are the assessee's investment intent, holding duration, and consistent accounting treatment. This clarifies a critical boundary for individual investors and traders, protecting genuine long-term gains from being wrongly taxed as business profits.

ITAT Mumbai ruled that TDS credit must be granted based on Form 16A issued by a deductor, even if the amount is not reflected in Form 26AS due to non-filing of TDS returns. The decision reinforces CBDT Circular 5/2013, ensuring taxpayers receive credit for taxes deducted at source, regardless of administrative lapses by the deductor.

ITAT Delhi rules that bona fide disclosure of foreign contributions under Sections 11/12 of the Income Tax Act cannot be invalidated merely due to clerical errors in return schedules. The tribunal deleted a Rs. 10.3 lakh addition, reinforcing that inadvertent misplacement does not negate substantive compliance, provided the income is duly accounted for in books and computation.