#Tax / Corporate & Commercial Law

The ITAT Delhi has ruled that Common Area Maintenance charges collected by mall owners from tenants constitute service payments under Section 194C, not rent under Section 194I, reversing the TDS demand at 10%. This clarifies a critical distinction for commercial property managers, mall operators, and deductors who must now apply 2% TDS on such service fees instead of 10% on rent, reducing compliance risk and tax liability.

The ITAT Kolkata has ruled that invoking Section 263 to revise a previously scrutinized assessment is impermissible unless the revenue demonstrates actual prejudice, not just a technical error. This clarifies that scrutiny under Section 143(3) does not waive the twin-condition test, protecting taxpayers from arbitrary revisionary orders and reinforcing procedural fairness in income tax administration.

The ITAT Delhi has ruled that airlines may claim tax deductions for provisions made toward repairing unserviceable aircraft spares, provided the estimate is reasonable and grounded in operational data. This overturns blanket disallowances and affirms that contingent liabilities in capital-intensive industries are not automatically non-deductible under Section 37, setting a critical precedent for aviation and manufacturing sectors.

Supreme Court rules that mere cutting and grooving of aluminum composite panels does not qualify as 'manufacture' under Section 2(f) of the Central Excise Act, 1944, unless the process results in a distinct, marketable product. The ruling clarifies the jurisdictional limits of excise duty and sets a precedent for similar disputes in tax and corporate law.

The ITAT Delhi has ruled that charitable hospitals receiving payments from insurance companies remain eligible for tax exemption under Section 2(15) if their primary purpose is medical relief. This clarifies a critical ambiguity for nonprofit healthcare providers relying on third-party reimbursements, affirming that revenue source does not override charitable intent when services remain non-profit and publicly oriented.

The ITAT Ahmedabad has struck down a Rs. 17.11 crore transfer pricing adjustment, ruling that tax authorities cannot impose a nil arm's length price for intra-group services without applying prescribed benchmarking methods or demonstrating the absence of real economic benefit. This sets a vital precedent for multinational enterprises relying on shared services, forcing tax departments to move beyond presumption and demand substantiated analysis under Section 92C.

ITAT Agra struck down an ad hoc disallowance of nearly Rs 98 lakh, holding that the Assessing Officer cannot estimate expenses under Section 37 without first rejecting the assessee’s books of account. This reinforces a critical procedural safeguard for businesses, ensuring estimation is a last resort-not a shortcut-protecting taxpayers from arbitrary adjustments.

ITAT Mumbai rules that education cess is not allowable as a deduction under Section 37 of the Income Tax Act post the retrospective insertion of Explanation 3 to Section 40(a)(ii). The ruling clarifies that cess payments, even if termed as tax, cannot be claimed as business expenditure, impacting corporate tax computations for prior assessment years.