#double taxation

The ITAT Delhi has ruled that cash deposits made during demonetization, if fully supported by genuine, audited cash sales recorded in the books of account and already taxed as turnover, cannot be reclassified as unexplained income under Section 68. This protects businesses with transparent cash-based operations from double taxation and reinforces that proper bookkeeping is a valid defense against presumptive tax additions.

Kerala High Court holds that work contracts executed after the GST rollout (1.7.2017) cannot be subjected to both Kerala Value Added Tax (KVAT) and GST, preventing double taxation. The ruling mandates re-examination of disputed bill calculations for government contractors, ensuring compliance with the single-tax regime under GST.

The ITAT Delhi has ruled that tax authorities cannot impute notional interest on loans extended by a company to its subsidiaries if those loans are financed entirely from the company’s own interest-free surplus funds. This clarifies that Section 36(1)(iii) applies only to interest on borrowed capital, not internal fund allocation - a critical relief for corporate groups with strong internal liquidity.

CESTAT Chennai rules that service tax cannot be imposed on a recipient when the service provider has already paid the tax, invalidating departmental demands even under extended limitation periods unless wilful evasion is proven. This clarifies Cenvat credit eligibility and protects businesses from cascading tax liability where input tax has been fully discharged by suppliers.

CESTAT Chennai rules that reimbursable expenses like terminal handling and demurrage charges cannot be taxed if recovered on actual cost basis without a consignment note, aligning with Supreme Court precedent. This shields logistics and forwarding agents from double taxation on pass-through costs, clarifying the scope of reverse charge liability under GTA services prior to May 2015.

ITAT Ahmedabad ruled that the Transactional Net Margin Method (TNMM) remains the most appropriate transfer pricing method where functional profiles remain unchanged, deleting a ₹3.88 crore adjustment. The decision reinforces judicial precedent, binding tax authorities to prior rulings for identical facts, offering relief to multinational enterprises facing repetitive TP disputes.

ITAT Ahmedabad ruled that cash deposits made during demonetization cannot be taxed as unexplained income under Section 69A if the assessee proves the funds arose from genuine, recorded sales with supporting documentation, and the corresponding profits were already offered to tax. This prevents double taxation and affirms that proper bookkeeping overrides suspicion, offering critical relief to cash-intensive businesses like jewellery retailers.

CESTAT Ahmedabad rules that sub-contractors remain liable for service tax even if the main contractor has discharged the liability, but directs recomputation under Section 67(2) of the Finance Act, 1994 to avoid double taxation. The ruling clarifies that CENVAT credit must be applied to prevent unjust enrichment, impacting sub-contractors and tax practitioners dealing with service tax disputes.

ITAT Mumbai rules that cash deposits derived from disclosed sales, already offered for taxation, cannot be reclassified as unexplained income under Section 68 of the IT Act. The ruling prevents double taxation and reinforces the principle that only unverified or undisclosed sources can be taxed as unexplained credits.

ITAT Mumbai rules that while disallowance of commission expenditure under Section 37(1) of the IT Act is valid on merits, the same amount cannot be taxed again in a subsequent assessment year, reinforcing the bar on double taxation. This holding protects taxpayers from punitive reassessments where income was already disclosed and taxed.

CESTAT Chennai quashed a service tax demand on training services, ruling that double taxation on the same transaction under a franchisee agreement violates legal principles. The tribunal held the show cause notice defective for failing to specify the statutory basis, setting a precedent for franchisee-based service providers against dual tax liabilities.

ITAT Ahmedabad clarifies that notional interest entries found in seized diaries do not constitute taxable income under Section 56 of the Income Tax Act, preventing double taxation. The ruling reinforces that only real accrual of income, not hypothetical accounting entries, can be taxed, offering relief to assessees facing arbitrary additions based on seized documents.

ITAT Delhi rules that contractual receipts and interest credited to a surviving partner's proprietorship after firm dissolution cannot be taxed in the dissolved firm's hands, preventing double taxation. The tribunal emphasized substance over form, directing tax liability to follow the actual recipient of income.

ITAT Ahmedabad rules that creditor confirmation and documentary proof linking funds to legitimate transactions (e.g., property purchase) effectively rebut the presumption of unexplained income under Section 68. The ruling clarifies that tax authorities cannot disregard corroborative evidence merely on suspicion, offering relief to assessees facing arbitrary additions.