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2026 (10) TMI 1517
Case Laws Income Tax
Superseded assessment appeals become infructuous, while fresh assessments preserve independent challenges to additions on merits.
Setting aside an assessment in revision and directing a fresh assessment renders the original assessment non-operative. An appeal founded solely on that superseded assessment becomes infructuous because it lacks a surviving basis, and parallel consideration could create conflicting findings or overlapping consequences. The fresh assessment is separately appealable and creates an independent cause of action. The assessee may therefore raise factual and legal challenges to additions, including the alleged cash-receipts addition, only in appellate proceedings concerning the operative fresh assessment, where the merits must be determined independently.

2026 (10) TMI 1518
Case Laws Income Tax
Resolution plan extinguishment prevents reassessment from reviving pre-resolution tax liabilities, requiring annulment of the resulting tax demand.
Approved resolution plans bind all stakeholders, including government authorities, and extinguish statutory dues for pre-cut-off periods where not provided for in the plan. Tax liabilities for assessment year 2014-15 fell within the plan's extinguished period. Reassessment under the Income-tax Act cannot revive such pre-resolution claims, because later quantification through an assessment order does not create a new enforceable liability. The reassessment order was therefore annulled and the consequential tax demand quashed.

2026 (10) TMI 1519
Case Laws Income Tax
Bank investment valuation losses and standard-asset debt provisions qualify for tax deductions under sector-specific accounting and statutory rules.
Mark-to-market depreciation on a bank's available-for-sale securities, valued at lower of cost or market value under prudential guidelines, is deductible where the bank-specific securities accounting framework applies; a general mark-to-market clarification does not displace that framework. Eligible banks may deduct provisions for bad and doubtful debts within statutory limits without restricting eligibility to advances already classified as bad or doubtful. Provisions on standard assets representing anticipated credit-risk losses may therefore qualify. Minor filing delay may be condoned where sufficient cause is shown, applying a liberal approach that advances substantial justice.

2026 (10) TMI 1520
Case Laws Income Tax
Mutual-fund redemptions are not share alienations, while treaty relief requires scrutiny of commercial substance and alleged abuse.
Equity-oriented mutual-fund units are legally distinct from shares; their redemption therefore falls outside gains from alienation of shares under Article 13(3A) and may receive residual treatment under Article 13(4), subject to treaty entitlement. A Tax Residence Certificate satisfies an eligibility condition but does not conclusively establish entitlement where statutory anti-abuse rules apply. Revenue must identify and establish treaty abuse before invoking substance over form. Treaty relief and Article 27A require factual scrutiny of control, decision-making, regulatory compliance and commercial substance, with an effective opportunity to respond to adverse material.

2026 (10) TMI 1521
Case Laws Income Tax
Treaty allocation of capital gains prevents India taxing US-company share transfers and standard software receipts
India-Ireland DTAA provisions on software receipts and capital gains prevent Indian taxation where standard software and related support do not constitute royalty or fees for technical services. Article 13(5) covers only shares of a company resident in a contracting State; transfer of shares in a US company holding an Indian subsidiary instead falls within Article 13(6), allocating taxation to Ireland. Domestic definitions of transfer and the indirect-transfer deeming rule cannot enlarge treaty taxing rights absent genuine ambiguity or express incorporation. Domestic law may be consulted only to resolve treaty ambiguity; no treaty abuse or Multilateral Instrument application arises.

2026 (10) TMI 1522
Case Laws Income Tax
Revision jurisdiction fails where exemption follows adequate enquiry despite delayed audit reporting and later condonation rejection.
Revisionary jurisdiction requires an assessment order to be both erroneous and prejudicial to Revenue interests. Exemption for charitable purposes may remain supportable where the required audit report is furnished before reassessment is completed and the Assessing Officer has undertaken enquiries through scrutiny notices and supporting records. A legally plausible view reached after enquiry cannot be displaced merely because the revisional authority prefers another view. Subsequent rejection of condonation for delayed filing does not retrospectively make the assessment unsustainable. Where no complete lack of enquiry or identified factual or legal error exists, revision is not justified.

2026 (10) TMI 1523
Case Laws Income Tax
Cost-of-acquisition proof determines capital-gains liability when ledgers alone cannot substantiate the cost of shares sold.
Capital gains computation requires the taxpayer to substantiate the cost of acquisition for the specific shares sold. Ledger extracts and accounting reconciliations, without transfer forms, share certificates, acquisition records, sale agreements, valuation details, or a scrip-wise reconciliation, do not establish that cost. Where sale consideration is undisputed but acquisition cost is unproved, the consideration cannot be treated as mere recovery of cost and may be assessed as long-term capital gain. Purchasers' identity or creditworthiness is irrelevant where the addition rests on failure to prove acquisition cost rather than unexplained credits.

2026 (10) TMI 1524
Case Laws Income Tax
Full trademark ownership transfers generate capital gains, not royalty, under India-Switzerland treaty allocation rules for assignors.
Trademark assignments that permanently transfer all rights, title, enforcement rights and embedded goodwill constitute an alienation of intellectual property rather than a grant of use rights. Under the India-Switzerland treaty, consideration for use or the right to use intellectual property is royalty, while gains from alienation fall under the applicable capital-gains provisions unless consideration depends on profits, productivity or use. Territorial limitations and brand-protection obligations may operate as protective covenants without preventing a full ownership transfer. Fixed consideration for self-generated trademarks may therefore be capital gains. In the absence of an Indian permanent establishment nexus, such gains are taxable only in Switzerland.

2026 (10) TMI 1525
Case Laws Income Tax
Unexplained investment additions require proof of actual excess consideration, not merely a higher share valuation.
Section 69B permits a deeming fiction for unexplained investment only when evidence establishes that actual investment exceeded the amount recorded in the books. A higher fair market value determined by a valuation report, without proof of payment beyond the contracted and recorded price, does not meet that burden. Valuation based on treating franchise fees as capital assets is defective where they are revenue expenditure, and the royalty-relief method is unsuitable where the brand cannot be sublicensed. Section 56(2)(viia) operates prospectively from 1 June 2010 and is inapplicable to an earlier assessment year. These principles supported deletion of the Section 69B addition.

2026 (10) TMI 1526
Case Laws Income Tax
Post-dissolution bank transactions require assessment in the former partner's hands, precluding return-filing penalties against the erstwhile firm.
Unexplained-money assessment under section 69A requires attribution to the person who owns and accounts for the deposits; section 115BBE then governs tax treatment. Where a partnership has been dissolved and its assets, liabilities, business and bank transactions have passed to a former partner's proprietorship, continuation of a bank account previously used by the firm alone does not attribute post-dissolution credits to the firm. Evidence such as the dissolution deed, PAN-linked bank records, return disclosures and balance-sheet entries establishes the proper assessee. A dissolved firm with no assessable income for the relevant year is not liable to penalty under section 271F for failure to furnish a return.

2026 (10) TMI 1527
Case Laws Income Tax
Educational institution exclusion protects structured online executive courses from treaty taxation as Fees for Included Services in India.
Article 12(5)(c) of the India-USA tax treaty excludes payments for teaching in or by an educational institution from Fees for Included Services, notwithstanding the provision covering technical or consultancy services. Structured online executive and professional courses retain their character as teaching where they cover recognised academic or professional disciplines, even if delivered to working professionals, funded by employers, tailored for corporate cohorts, conducted off campus, short-term, or non-credit. The educational exclusion also extends to technically or professionally useful instruction for employees of commercial enterprises. Equalisation Levy treatment does not determine the receipts' treaty character or taxability; qualifying course receipts are excluded from Indian taxation as Fees for Included Services.

2026 (10) TMI 1528
Case Laws Income Tax
Trustee remuneration and exemption require verified evidence, services and reasonableness; an original audit report alone cannot justify denial.
Sections 13(1)(c), 13(2)(c) and 13(3) require separate assessment of whether a founder or trustee is a specified person, whether remuneration was actually paid or credited, and whether it exceeded reasonable payment for services rendered. Founder or trustee status alone does not establish a violation, and section 13(3) imposes no general salary ceiling. An original Form No. 10B and a revised report must be tested against ledgers, financial statements, bank records, vouchers, payroll and TDS records, and the auditor's explanation. Any effect on exemption under sections 11 and 12 requires verification of payment, its nature, services and reasonableness.

2026 (10) TMI 1529
Case Laws Income Tax
Cash receipt aggregation under Section 269ST fails where separate partner contributions lack a single transaction or event.
Separate cash capital contributions from the same partner cannot be aggregated under Section 269ST merely because they are credited to the partner's capital account. Aggregation requires cash receipts of at least Rs. 2 lakh in a single day, for a single transaction, or for transactions relating to one event or occasion. Contributions received on different dates, each below the threshold, do not satisfy these conditions where no evidence establishes a common transaction or event. Consequently, penalty under Section 271DA is not sustainable.

2026 (10) TMI 1530
Case Laws Income Tax
Cash-credit proof requires genuine creditworthiness beyond banking records, while rejected books support income estimation at consistent rates.
Cash-credit additions require the assessee to establish both creditor creditworthiness and transaction genuineness; banking transfers, confirmations, tax returns and repayment records may establish only a paper trail. Where creditors ignore summons, their directors identify the entities as accommodation-entry providers, and the assessee cannot produce them, the burden of proof and human-probabilities test support treating unsecured loans as unexplained credits. Separately, after rejection of books, income for the relevant assessment years is computed at 2% of sales to maintain consistency with the prior assessment approach and substantially similar preceding-year facts. Related interest disallowance remains unaffected.

2026 (10) TMI 1531
Case Laws Income Tax
Reason to believe requires independent verification before third-party information can support reassessment and consequential additions.
Reassessment under the Income-tax Act requires the Assessing Officer to form a legally sustainable reason to believe that income has escaped assessment. Third-party information from a departmental authority may be relevant material, but cannot alone establish that belief without independent inquiry, verification, and application of mind linking it to the assessee's alleged income escapement. Recorded reasons reflecting only unverified third-party information amount to a reason to suspect, not a reason to believe. Reassessment initiated on that basis is unsustainable, and consequential additions cannot survive.

2026 (10) TMI 1532
Case Laws Income Tax
Unexplained intangible investment requires record verification before depreciation disallowance and duplicated return adjustments can be resolved.
Unexplained investment in intangible assets under section 69, and consequential depreciation disallowance, require verification of books, invoices, agreements, ledgers, payment records, salary records, and evidence of software customisation and development to establish asset cost and source. Section 115BBE governs taxation where an investment's nature and source remain unexplained. Assessed-income computations based on return-processing adjustments also require comparison of original and revised returns, the intimation, tax audit report, income computation, and assessment order to identify duplicate expense disallowances. Fresh adjudication must follow after a reasonable opportunity to provide supporting evidence and explanations.

2026 (10) TMI 1533
Case Laws Income Tax
Recorded cash receipts cannot be treated as unexplained money without evidence disproving identified debtor collections and regular business records.
Section 69A applies only where money is established to be unexplained. Cash receipts recorded in regular books as collections from identified business debtors are supported where party-wise ledgers, debtor details, audited accounts, sales and purchase registers, stock records and VAT returns substantiate them. Absence of debtor confirmations alone does not displace such documentary evidence, particularly where books are not rejected, no defects are identified and no independent party verification is undertaken. Acceptance of Specified Bank Notes during demonetisation does not establish an undisclosed source without contrary material. Suspicion cannot substitute proof.

2026 (10) TMI 1534
Case Laws Income Tax
Characterisation of share investments requires a holistic assessment, preserving capital-gains treatment despite portfolio-manager transaction frequency.
Share and securities gains, including short-term gains from transactions through a portfolio management service, are taxable as capital gains rather than business income when the overall circumstances show investment holdings. Classification depends on the investor's conduct, the nature of holdings, transaction frequency and volume, and whether securities were held as investments or stock-in-trade. Portfolio-manager execution does not itself establish a share-trading business because the investor retains direct ownership; transaction numbers alone are not determinative.

2026 (10) TMI 1535
Case Laws Income Tax
Inherent jurisdiction to quash FIRs applies where allegations disclose no cognizable offence and prosecution abuses process.
Section 482 of the Code of Criminal Procedure, corresponding to Section 528 of the Bharatiya Nagarik Suraksha Sanhita, permits FIR quashing where allegations taken at face value disclose no prima facie cognizable offence or continued prosecution abuses process. A delay in filing the revised audit report, supported by an explanation, did not establish criminal breach of trust, cheating, extortion, or another alleged offence. The FIR and criminal proceeding therefore warranted quashing.

2026 (10) TMI 1536
Case Laws Income Tax
Search-based reassessment requires Section 153C satisfaction and cannot rely solely on seized material under Sections 147 and 148.
Search-based assessment of a person other than the searched person must proceed under Section 153C where reassessment rests exclusively on material seized during a Section 132 search. A satisfaction note regarding that material is a jurisdictional precondition. Sections 147 and 148 may be invoked only where independent material, apart from the search material, supports a belief that income escaped assessment. Reassessment initiated solely on search material without a satisfaction note or independent supporting material is therefore impermissible and without jurisdiction.

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