#Income Tax

The Supreme Court ruled that unpaid excise duty on sugar stock lying in a bonded warehouse cannot be added to taxable income under Sections 43B and 145A where the assessee follows the exclusive accounting method, has not claimed any deduction for such duty, and the goods remain unremoved. The decision clarifies that no tax liability crystallises under excise law until goods are actually cleared from the bonded warehouse, protecting manufacturers from phantom income additions on stock they cannot legally sell.

The Calcutta High Court ruled that the first proviso to Section 36(1)(viia)(a) of the Income tax Act 1961 grants banks an option to claim additional provision for doubtful or loss assets, allowing cumulative deduction within statutory limits. This clarifies that the proviso is not an alternative to the main clause, benefitting banking assessees seeking higher tax deductions.

The ITAT Mumbai held that conditioning registration under Sections 12AB/80G on a pending SLP is ultra vires. It directed the Commissioner to issue an unconditional order 1 April 2026 for Trust, stating tax exemptions cannot depend on Supreme Court appeals.

The ITAT Agra held that ex gratia payments received under BSNLs Voluntary Retirement Scheme 2019 qualify for full exemption under section 10 10B of the Income Tax Act even if the exemption is claimed for the first time in appeal. The ruling benefits BSNL employees who opted for VRS 2019 clarifying that the fresh claim doctrine allows retrospective exemption claims.

The ITAT Surat ruled that for capital gains computation under Section 2(42A) of the Income Tax Act, the holding period commences on the date of the allotment letter, not the date of registration. This clarification enables purchasers of builder flats to qualify for long term capital gain treatment and claim exemption under Section 54.

ITAT Pune held that a retiring partner's receipt is not taxable under Section 45(4) unless there is an actual transfer of a capital asset, distinguishing Mansukh Dyeing on its facts. This affects partnerships and LLPs retiring partners, preventing tax on mere payment settlements.

The Chhattisgarh High Court held that reassessment under Section 147 IT Act requires fresh tangible material, not merely a change of opinion, upholding the Tribunal’s quash of the AY 2009-10 order. It guards taxpayers against arbitrary reopenings.

The ITAT Patna upheld a Rs.20.5 lakh penalty under Section 271D read with Section 269SS, holding that cash loans between spouses attract liability and familial ties do not constitute reasonable cause. The ruling impacts anyone relying on family relations to avoid cash-loan penalties under the Income Tax Act.

ITAT Ahmedabad ruled that bank credits alone do not prove unexplained investment under Section 69 without asset identification. It deleted the ₹1.28 crore addition and penalty, stressing that credits must be tied to specific assets.

ITAT Jaipur ruled the 2023 notification raising the Section 10(10AA) leave encashment limit to ₹25 lakh applies retrospectively to non-government employees retiring before its issuance, treating it as a remedial statutory discharge. The assessee retiring in AY 2020-21 secured full exemption on ₹13.81 lakh encashment. The decision benefits retirees whose payouts exceeded the old ₹3 lakh cap but fall within the revised limit.

The ITAT deleted a ₹34.85 million addition, holding that customer cash deposited in a business correspondent’s account is not the correspondent’s assessable income under section 69A. Only the correspondent’s commission is taxable, benefiting all BCs and their clients.

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.

The ITAT ruled that an assessment order issued under section 143(3) in the name of a deceased taxpayer is merely irregular and can be corrected, not a nullity. Consequently, the tax liability remains enforceable and the legal heir may seek rectification without the order being void.

The Kolkata ITAT ruled that the 10 % tolerance under Section 50C is retrospective, striking down the ₹9,94,312 addition for AY 2014-15 because the valuation gap was only 8.5 %. Taxpayers can therefore rely on the tolerance limit for past years, limiting exposure to Section 50C additions when the gap falls within the prescribed range.

The ITAT ruled that the ex-gratia payment received by a former BSNL employee is a capital receipt exempt under Sec 10(10B) of the Income-Tax Act. It also treated a 1578-day filing delay as ‘sufficient cause’ under Sec 249(3), allowing the appeal to proceed. This benefits taxpayers receiving VRS and facing procedural delays.