Unique Identification Number rules govern Form No. 121 declarations, digitization, and quarterly filing obligations for payers.
Procedure, formats and standards are prescribed for generation and allotment of a Unique Identification Number (UIN) for Part A of Form No. 121 and for quarterly furnishing of Part B by the payer. The UIN is a 26-character code made up of a sequence number, the relevant tax year, and the payer’s TAN, with paper declarations to be digitized and numbered in continuation of the electronic sequence. Part B must be filed on the Income-tax e-filing portal within prescribed timelines, and quarterly statements must include the declaration particulars and UIN even where no tax has been deducted.
Condonation of delay in Form 10A filings clarified for trust registration under the income tax law.
Power to condone delay in filing Form No. 10A for registration under section 12A(1)(ac)(i) is clarified to rest with the jurisdictional Principal Commissioner of Income-tax or Commissioner of Income-tax. Although the Director of Income-tax (Centralized Processing Centre), Bengaluru remains the statutory authority to issue registration upon applications in Form 10A, the authority to condone delay in filing such applications lies with the jurisdictional Principal Commissioner or Commissioner.
TDS certificate timeline extended for portal-related delays, with certificates issued in the extended period treated as timely.
Section 119 of the Income-tax Act, 1961 extends the due date for issuance of TDS certificates under section 203 read with rule 31 for the quarter ending 31 December 2025. The extension is granted because deductors faced delays caused by technical glitches on the e-filing portal, which impeded timely generation and issue of certificates within the prescribed period. The revised due date is extended to 31 March 2026, and any TDS certificate issued within the extended period is to be treated as having been issued within the prescribed time.
ITR Notified for Financial Year 2025-26 ( Assessment Year 2026-27)
The Central Board of Direct Taxes has notified ITR Forms 1 to 7 along with ITR-V and ITR-U for Assessment Year 2026-27, relating to income earned during the Previous Year 2025-26. The forms have been notified on time this year. Set out below are the key changes incorporated in the revised forms.
Turnover and income from Futures and Options trading to be separately reported.
ITR 3, 5 and 6 now include specific columns in Schedule Part A – Trading Account to disclose turnover from F&O trading and the income or loss from such trading credited or debited to the profit and loss account.
Disallowance of interest payable to Micro and Small Enterprises under Section 43B(h) requires specific disclosure.
A new column has been introduced in Part A – OI (Other Information) in ITR 3, 5 and 6 requiring taxpayers to report the amount of interest that is non-deductible by reason of delayed payment to Micro or Small Enterprises beyond the time limits prescribed under Section 15 of the MSMED Act. Section 23 of the MSMED Act separately disallows deduction of such interest under the Income-tax Act, 1961.
Partners in firms to disclose interest and remuneration received or due from the firm.
Schedule IF in ITR 3, 5 and 6, which captures information about partnership firms in which the assessee holds a partner’s interest, now additionally requires disclosure of (a) the amount of interest due or received from the firm, and (b) the amount of remuneration due or received from the firm during the relevant previous year.
Fee paid under Section 234-I for filing a revised return to be reported in all ITR forms.
The Finance Act 2026 extended the time limit for filing a revised return from 9 months to 12 months from the end of the relevant tax year, subject to payment of an additional fee under Section 234-I. The fee is Rs. 1,000 where total income does not exceed Rs. 5 lakh and Rs. 5,000 in other cases. All ITR forms now incorporate a column to report the fee paid under this provision.
Name and PAN of the political party now required under Schedule 80GGC; transaction reference and IFSC added to Schedule 80G.
In ITR forms 1 to 6, Schedule 80GGC now requires disclosure of the name of the political party and its PAN in addition to existing particulars. Schedule 80G has been similarly enhanced to require the transaction reference number for UPI, IMPS, NEFT or RTGS transfers and the IFSC code of the bank through which the donation was made.
Due date for filing return by non-audit business or profession cases and non-audit firm partners extended to 31 August.
The Finance Act 2026 extended the due date for filing the return of income for taxpayers engaged in business or profession whose accounts are not required to be audited, and for partners of non-audit firms, from 31 July to 31 August. ITR-3 for AY 2026-27 incorporates this change in Part A – General.
Presumptive taxation scheme assessees under ITR-4 to disclose investments made in the business.
ITR-4 now contains a new column under Financial Particulars of the Business requiring the assessee to disclose the amount of investments made. This is an additional reporting obligation for persons opting for the presumptive taxation scheme, where detailed financial disclosures are otherwise minimal.
Bifurcated reporting of capital gains before and after 23 July 2024 removed from ITR 2, 3, 5, 6 and 7.
For AY 2025-26, the ITR forms required separate disclosure of capital gains arising before 23 July 2024 and on or after that date, as different tax rates applied based on the Finance (No. 2) Act 2024 amendments. Since no mid-year rate change applies to the Previous Year 2025-26, this dual reporting requirement has been removed, simplifying the schedule for AY 2026-27.
Schedule BBS removed from ITR-6 following the shift in buyback taxation to shareholders with effect from 1 October 2024.
Prior to 1 October 2024, companies were liable to pay tax on distributed income from share buybacks and such income was exempt in shareholders’ hands under Section 10(34A). This mechanism was reversed with effect from 1 October 2024, shifting the tax liability to shareholders. Schedule BBS, which was used to report buyback transactions in ITR-6, has accordingly been removed for AY 2026-27.
New presumptive taxation scheme under Section 44BBD for non-residents in electronics manufacturing services incorporated in ITR 3, 5 and 6.
Section 44BBD, introduced by the Finance Act 2025, provides a presumptive taxation scheme for non-residents engaged in supplying services or technology for setting up electronics manufacturing facilities in India, applicable from AY 2026-27. The deemed income is 25% of specified receipts. The ITR forms have been updated to capture declarations under this section in Part A – GEN and to report such deemed profits in Schedule BP, in line with the treatment of other presumptive provisions.
Interest income from companies, NBFCs and HFCs to be reported under the Other column in Schedule OS.
ITR 2, 3, 5 and 7 now clarify that interest earned from companies, Non-Banking Financial Companies and Housing Finance Companies – including income from fixed deposits and debentures with such entities – is to be reported under the Other column of Schedule OS, provided the assessee is not in the business of money lending. A separate column has also been introduced in Schedule OS across ITR 2, 3, 5, 6 and 7 to capture interest income taxable at the concessional rate of 9% under Section 194LC on long-term bonds or rupee-denominated bonds listed on a recognised stock exchange in an IFSC.
Auditor details in ITR 3, 5, 6 and 7 rationalised; fields reduced to date of furnishing, acknowledgement number, name and PAN of the firm.
The earlier requirement to furnish individual membership number, UDIN, Aadhaar of the signing partner and date of audit report separately has been removed. The revised format requires only the date of furnishing the audit report, the acknowledgement number of the report, the name of the auditing firm or proprietorship, and its PAN.
ITR-7 changes: total value of investment replaces nominal value; validity period of external registrations to be disclosed; substantial contributor threshold revised.
Three notable amendments apply to ITR-7. First, in Schedule J, the expression “nominal value of investment” has been replaced with “total value of investment” in respect of investments in concerns where specified persons have a substantial interest, potentially widening the scope of the five per cent threshold test under Section 13(2)(h). Second, Clause A20 of Part A – General now additionally requires disclosure of the date up to which registration under any law other than the Income-tax Act remains valid, enabling cross-verification of regulatory compliance. Third, following the Finance Act 2025 amendment to Section 13(3)(b), the threshold for reporting substantial contributors has been revised upward – a person is now a substantial contributor if the contribution exceeds Rs. 1,00,000 during the relevant previous year or Rs. 10,00,000 in aggregate up to the end of that year, replacing the earlier aggregate threshold of Rs. 50,000.
Secondary address field introduced in all ITR forms; contact details redesignated as primary and secondary.
Part A – General in all ITR forms has been expanded to allow disclosure of a secondary address in addition to the existing primary address. The fields for two mobile numbers and two email IDs have been redesignated as primary and secondary contact details. Additionally, the requirement to furnish details of a representative assessee has been rationalised – only the name, email ID and contact number of the representative are now required, as against the earlier requirement of address and PAN or Aadhaar.
Income Tax Case Laws
1. Condonation of delay in tax audit filing upheld; remand for reassessment and consideration of charitable exemption.
Case: ISA Children’s Home Trust, Represented by its Managing Trustee Edwin Isaac Vs Commissioner of Income Tax (Exemptions), Chennai
Court: MADRAS HIGH COURT
Verdict Date: 2 March 2026
Issues: Whether the delay in filing Tax Audit Report in Form 10B for Assessment Year 2023-24 should be condoned and the impugned order rejecting the application for condonation under Section 119(2) of the Income-tax Act, 1961 quashed.
Analysis: The Court considered the statutory framework including Section 12A, Section 139(4A) and Section 119(2) of the Income-tax Act, 1961 and Circular No.2/2020 dated 03-01-2020 which authorises Commissioners to admit belated applications of condonation of delay up to 365 days subject to satisfaction that the assessee was prevented by reasonable cause. The petitioner filed the return within the due date but filed Form 10B belatedly and later filed a revised Form 10B; the petitioner explained that trustees and the managing trustee were preoccupied with a visit by foreign donors and that the managing trustee was unavailable to coordinate the audit before the due date, and supporting material was placed on record. The Court found the petitioner’s activities charitable in nature and the reasons for delay to be reasonable. The Court noted its consistent approach in similar cases and observed that, in the circumstances, the impugned order did not properly appreciate the reasonable cause justification and the discretionary power under the cited circular and statute.
Conclusion: The impugned order rejecting the application for condonation of delay is quashed and the matter is remitted to the Assessing Officer to re-exercise jurisdiction under Section 143 of the Income-tax Act, 1961 and to extend the benefit of exemption under Section 11 of the Income-tax Act, 1961 to the petitioner if otherwise eligible.
2. Unexplained credits under section 68 unsupported by specific investigative linkage are unsustainable; additions deleted where records remained uncontradicted.
Case: Vijaya Devi Malu Versus ACIT Central Circle-30, Delhi
Court: ITAT DELHI
Verdict Date: 2 March 2026
Issues: Whether the additions of Rs. 3,50,00,000/- made under section 68 of the Income-tax Act, 1961 treating unsecured loans as unexplained credits and the enhancement of Rs. 7,00,000/- as commission for alleged accommodation entries were sustainable in view of the material on record and the procedure followed by the tax authorities.
Analysis: The authorities relied primarily on statements recorded during search proceedings and on a report of the Investigation Wing which identified paper companies and accommodation entry providers in relation to the Kuber Group. The material relied upon did not specifically identify the lender company as an accommodation entry provider, and the Investigation Wing’s report did not list that company by name. Relevant statements were recorded prior to the search in the assessee’s case and the assessing authority did not conduct independent inquiries to establish the lender’s involvement beyond its presence at an address used by other suspected paper companies. Documentary material furnished by the assessee, including lender return of income, audited financials, bank statements and confirmations, remained uncontradicted by specific evidence proving that the loans were accommodation entries. The appellate bench followed a coordinate decision which reached the same conclusion where additions based on identical reliance were deleted.
Conclusion: Addition of Rs. 3,50,00,000/- under section 68 and the enhancement of Rs. 7,00,000/- for alleged commission are deleted; the appeal is allowed in favour of the assessee.
3. Additional depreciation for new plant and machinery can be carried forward to the next year when first-year use is under 180 days.
Case: M/s. Wheels India Limited Padi, Chennai Versus The Assistant Commissioner of Income Tax (LTU Appeals), Chennai
Court: Madras High Court
Verdict Date: 2 March 2026
Issues: Whether an assessee is entitled to claim the balance 50% of additional depreciation in the subsequent assessment year in respect of new plant and machinery acquired in the previous year and put to use for less than 180 days, notwithstanding the proviso to Section 32(1) restricting deduction to 50% in the previous year.
Analysis: The Court examined Section 32(1) and clause (iia) which grant additional depreciation for new plant and machinery and the proviso which restricts the deduction to fifty per cent where the asset is put to use for less than 180 days in the previous year. The Court relied on prior Division Bench decisions of this Court and the explanatory memorandum to the Finance Act, 2015, which indicate the legislative intent to avoid discrimination and to incentivise investment in new plant and machinery. Applying that statutory framework and precedent, the Court held that the proviso limits the quantum allowable in the first year but does not extinguish the remaining entitlement; the balance fifty per cent can be carried forward and allowed in the subsequent assessment year to ensure parity and effectuate the incentive.
Conclusion: The assessee is entitled to claim the balance 50% of the additional depreciation in the subsequent assessment year; the appeal is allowed in favour of the assessee.
4. Succession under tax law: reassessment notices in the name of a dissolved predecessor are invalid and quashed.
Case: Surya Medi Tech Ltd. Versus DCIT/ACIT Central Circle, Uttar Pradesh
Court: ITAT DELHI
Verdict Date: 3 March 2026
Issues: Whether notices issued under section 148 of the Income-tax Act, 1961 and consequent reassessment orders passed in the name of an erstwhile company which stood amalgamated and ceased to exist are valid, and whether such reassessment proceedings and assessment orders are to be quashed.
Analysis: Section 170 of the Income-tax Act, 1961 governs succession to a business otherwise than on death and provides that where a predecessor cannot be found the successor is to be assessed in like manner and to the same extent; by amalgamation the amalgamating company ceases to exist and the amalgamated company succeeds to the business. The record shows the amalgamation order was placed on company records and the MCA master data reflected the status as “Amalgamated” prior to issuance of notices dated 27.07.2022. Binding authority establishes that issuance of jurisdictional notices and assessment orders in the name of a non-existent entity is a substantive illegality (referenced precedent of the Hon’ble Supreme Court in Pr. CIT vs. Maruti Suzuki India Ltd. and consistent decisions of coordinate benches and High Court), and assessments made on entities that have ceased to exist are void ab initio. Applying section 170(2) and the cited precedents to the facts, notices issued and reassessment proceedings initiated in the name of the non-existent amalgamating company are invalid.
Conclusion: Notices issued under section 148 of the Income-tax Act, 1961 and the consequent reassessment orders passed in the name of the erstwhile company are invalid and are quashed; decision is in favour of the assessee.
5. Reassessment notice limitation under the first proviso to section 149(1) barred a late reopening and the reassessment was quashed.
Case: Srinivasa Rao Sirivuri Versus Income Tax Officer, Andhra Pradesh
Court: ITAT VISAKHAPATNAM
Verdict Date: 4 March 2026
Issues: (i) Whether the notice dated 03.04.2022 issued under section 148 of the Income-tax Act, 1961 for A.Y. 2015-16 was barred by limitation under the first proviso to section 149(1) of the Income-tax Act, 1961 and consequently whether the assessment framed under section 147 r.w.s. 144 r.w.s. 144B of the Income-tax Act, 1961 dated 21.02.2024 is liable to be quashed.
Analysis: The issued notice under section 148 was dated 03.04.2022 and the un-amended time limit under clause (b) of sub-section (1) of section 149 of the Income-tax Act, 1961 permitted issuance of a notice for A.Y.2015-16 only up to 31.03.2022. The first proviso to section 149(1) (as enacted by Finance Act, 2021) prohibits issuance of a notice under section 148 for assessment years beginning on or before 01.04.2021 if such a notice could not have been issued at that time because it was beyond the time limit specified under clause (b) of sub-section (1) of section 149 as it stood immediately before the commencement of the Finance Act, 2021. The provisions in the amended section 149 that exclude periods (fifth and sixth provisos) qualify the amended substantive section and cannot be read into the pre-amendment limitation governed by the first proviso; thus exclusion under the fifth and sixth provisos cannot validate a notice that is already barred by the first proviso. Reliance on relevant authoritative decisions applying the first proviso to section 149(1) supports the conclusion that notices issued after the expiry of the pre-amendment six-year period are invalid where the first proviso applies.
Conclusion: The notice dated 03.04.2022 issued under section 148 of the Income-tax Act, 1961 for A.Y. 2015-16 was barred by limitation under the first proviso to section 149(1) of the Income-tax Act, 1961; consequently the assessment order dated 21.02.2024 passed under section 147 r.w.s. 144 r.w.s. 144B of the Income-tax Act, 1961 is quashed and the appeal is allowed in favour of the assessee.
6. Long-term capital gains exemption upheld where stock-exchange trades with STT and contemporaneous records show genuineness.
Case: Jayshree Haresh Shah Versus Income Tax Officer, Ward-19 (2) (1), Mumbai
Court: ITAT MUMBAI
Verdict Date: 5 March 2026
Issues: Whether the addition by treating long-term capital gains from sale of Sunrise Asian Ltd. shares as bogus and denying exemption under Section 10(38) of the Income-tax Act, 1961 is sustainable in the absence of cogent material demonstrating the assessee’s involvement in price rigging, accommodation entries, or routing back of unaccounted money.
Analysis: Legal framework: Section 10(38) of the Income-tax Act, 1961 provides exemption for long-term capital gains on transfer of listed shares where applicable conditions including payment of security transaction tax are met. Revenue bears the onus of proving that transactions are sham, bogus, or accommodation entries and must establish a direct nexus between the assessee and any alleged entry operators or price manipulation. Documentary proof of purchase and sale, payment through banking channels, demat records, contract notes and payment of STT are relevant primary evidence to substantiate genuineness. Where suspicion or general investigation reports alone exist without specific evidence linking the assessee to manipulation or routing back of funds, such suspicion cannot substitute for cogent proof. The authorities and coordinate benches cited involved similar factual matrices where transactions executed through recognized stock exchange with supporting documentation and no adverse material were held genuine, and jurisdictional precedent gives weight to such findings.
Conclusion: The addition disallowing exemption under Section 10(38) is unsustainable; the exemption is allowable and the addition is to be deleted. The appeal is allowed in favour of the assessee.
7. Applicability of Section 56(2)(x): subsequent registration does not attract levy if provision was not in force when agreement made.
Case: Rinki Singh Versus I.T.O., Ward 2 (1), Jamshedpur.
Court: ITAT RANCHI
Verdict Date: 5 March 2026
Issues: (i) Whether addition under Section 56(2)(x) of the Income-tax Act, 1961 could be levied in respect of a property transaction where the original agreement for sale was executed in 2010 but the sale deed was registered in 2018, and whether the reassessment and addition under Section 56(2)(x) should be deleted.
Analysis: The facts establish that the agreement for sale was entered into in 2010 and substantial payment and possession occurred pursuant to that agreement. The provision now embodied in Section 56(2)(x) was not in force at the time the original agreement was executed. Application of Section 56(2)(x) based solely on subsequent registration in 2018 would impose liability under a provision that did not govern the parties’ transaction when the agreement was made. The requirement under Section 249 regarding advance tax and the procedural grounds relied upon by the lower authority do not negate the substantive point that the statutory provision relied upon for the addition did not apply to the transaction as originally contracted in 2010. The addition under Section 56(2)(x) was therefore not maintainable on merits given the temporal non-applicability of that provision to the original agreement.
Conclusion: The addition made under Section 56(2)(x) is deleted and the appeal is allowed in favour of the assessee.
8. Relief under Section 89(1) can be claimed alongside tax-free retirement exemption; AO directed to verify and recalculate.
Case: Sanjay Baban Nikam, Sunil Dinkar Bhambure Versus Income Tax Officer, Ward-10 (1), Pune
Court: ITAT PUNE
Verdict Date: 5 March 2026
Issues: Whether the assessee is entitled to relief under section 89(1) of the Income-tax Act, 1961 in addition to exemption under section 10(10C) of the Income-tax Act, 1961, and whether the matter should be restored to the Assessing Officer for verification and recalculation of the relief.
Analysis: The appeals arise from orders under section 250 of the Income-tax Act, 1961 challenging assessment orders passed under section 143(3) read with section 144B. The assessees took voluntary retirement and received retirement benefits including gratuity, leave encashment, voluntary retirement compensation and arrears of salary. The Tribunal examined whether relief under section 89(1) is available in addition to the exemption limit provided by section 10(10C). The Tribunal noted precedents establishing that exemption under section 10(10C) is available to the extent provided by that section and that relief under section 89(1) may additionally be available for taxable arrears and similar receipts. The record indicated calculation discrepancies in the computation of relief under section 89(1), and the Tribunal considered the limited purpose of verifying and recalculating the relief in light of settled judicial precedents. The Tribunal directed that the Assessing Officer undertake the recalculation exercise and accord reasonable opportunity to the assessee, permitting the assessee to file necessary details.
Conclusion: The issue is restored to the file of the Jurisdictional Assessing Officer for the limited purpose of verifying and recalculating the relief under section 89(1) in light of settled precedents; the appeals are allowed for statistical purposes and the relief claim is adjudicated in favour of the assessee to the extent that the matter is remitted for computation.
9. Limitation under Section 201(3) is computed quarter-wise, rendering three quarter orders time-barred and the fourth valid.
Case: The Commissioner of Income Tax (TDS), Pune Versus Vodafone Cellular Ltd.,
Court: BOMBAY HIGH COURT
Verdict Date: 5 March 2026
Issues: Whether the limitation under Section 201(3) of the Income-tax Act, 1961 for issuing an order under Section 201(1) is to be computed on a quarter-wise basis (linked to quarterly TDS statement filings) or on an annual/cumulative basis.
Analysis: Section 201(3) prescribes that no order under Section 201(1) shall be made after two years from the end of the financial year in which the statement referred to in Section 200 has been filed. Rule 31A requires TDS statements to be filed quarterly with distinct due dates for each quarter. The filing of each quarterly TDS statement therefore constitutes the statutory event from which the two-year limitation period prescribed by Section 201(3) commences for that particular quarter. The statutory language links commencement of limitation to the financial year in which the relevant statement is filed and does not prescribe an annual cumulative computation. Treating each quarter as a separate compliance period aligns with the scheme of the Act and Rules and with the requirement that limitation provisions in fiscal statutes be strictly construed.
Conclusion: The limitation under Section 201(3) is to be computed quarter-wise linked to filing of the respective quarterly TDS statements under Rule 31A; the orders in respect of the first three quarters are time-barred and deleted, while the order in respect of the fourth quarter is within limitation. The decision is in favour of the assessee.
10. Certified hypothecation statements can support taxable additions where substantial unexplained discrepancies exist, and inflated declarations justify adjustments.
Case: Ajay Food Products Versus Income Tax Officer
Court: Jammu And Kashmir And Ladakh High Court
Verdict Date: 11 March 2026
Issues:
- (i) Whether a notional addition to returned income can be sustained where the Assessing Officer has relied upon a hypothecation statement furnished to a bank which certified quantities and values as true and in conformity with books of account;
- (ii) Whether the impugned order of the Tribunal is perverse or based on no evidence.
Analysis:
- (i) The factual record shows that the hypothecation statement contained specific quantities and values and carried a certification that the stocks represented the true and accurate stock position and conformed with the permanent books of account. The discrepancy between the bank statement and the books of account was substantial and remained unexplained except by the appellant’s generalized claim of furnishing estimates to obtain higher credit. Prior decisions distinguishing cases where only rough estimates or values (without quantities) were furnished were examined and found inapplicable. The practice of declaring inflated stock to obtain higher bank credit was treated as amounting to commercial immorality and not acceptable as fiscal discipline. Reliance upon the certified hypothecation statement was therefore held to be justified to make the addition.
- (ii) No material was shown to demonstrate perversity or absence of evidence. The Tribunal’s findings of substantial unexplained discrepancies were based on the record, including the certified hypothecation statement and comparison with books of account. No jurisdictional or legal error warranting interference was established.
Conclusion: Issue (i) is answered against the appellant and in favour of the respondents; the addition to taxable income based on the hypothecation statement is sustained. Issue (ii) is answered against the appellant and in favour of the respondents; the Tribunal’s order is not perverse or unsupported by evidence.
Final Conclusion: The appellate challenge succeeds on neither substantial question; the impugned orders of the authorities below are upheld and the appeal is dismissed.
11. Royalty taxation: notional imputation rejected; only contractual entitlement taxed, and no PE attribution-interest recomputation remanded.
Case: Oracle Systems Corporation, C/o Oracle India Private limited Versus Addl. Director of Income-tax, Range-2, International Taxation, New Delhi.
Court: ITAT DELHI
Verdict Date: 2 March 2026
Issues:
- (i) Whether notional royalty on revenue transfers under the Software Support Services Agreement (SSSA) is taxable in the hands of the assessee;
- (ii) Whether Oracle India Private Limited (OIPL) constitutes a permanent establishment (PE) of the assessee in India under Article 5(1), 5(2), 5(4) and 5(5) of the India USA DTAA and whether profits are attributable to such PE;
- (iii) Whether interest under section 234B is chargeable and requires recomputation in light of deductible/collectible tax at source principles.
Analysis:
- (i) The assessment years before the Tribunal share the same factual matrix as earlier years decided by the Tribunal in its common order dated 02.01.2026. The earlier order examined the SSSA, relevant contractual terms, the nature of receipts (duplication/sub licensing versus global deals), applicable exchange control/regulatory position, and precedent on the meaning of royalty under the DTAA. That decision found no contractual entitlement to receive royalty on global revenue transfers (no duplication in India, regulatory constraints), that amounts actually received and offered to tax by the assessee (56% royalty) were distinct from the notional imputation to 100%, and relied on treaty and domestic law tests distinguishing use/right to use from mere license/support.
- (ii) The Tribunal’s earlier common order (02.01.2026) analysed Article 5 and applied established tests: disposal/control for a fixed place PE, the 90 day/service furnishing threshold for service PE, and the dependent/independent agent criteria for agency PE. That reasoning addressed ownership/lease of premises, control/disposal, whether services were furnished by the non resident’s own employees in India, whether OIPL habitually exercised authority to conclude contracts or maintained stock or habitually secured orders, and whether remuneration was at arm’s length. The earlier order found insufficient evidence of disposal/control, no demonstration of employees of the non resident furnishing services in India for the requisite period, and that OIPL operated as a separate, independent local entity remunerated at arm’s length; transfer pricing examination for services performed by OIPL was also considered.
- (iii) The Tribunal’s prior order applied the Supreme Court ratio in Director of Income tax v. Mitsubishi Corporation and directed that, for years prior to FY 2012 13, amounts deductible/collectible at source may be reduced while computing advance tax for section 234B purposes. The parties agreed facts are similar and the earlier reasoning is applicable.
Conclusion:
- (i) Issue decided in favour of the assessee. The notional royalty imputed by the authorities in excess of the royalty actually payable/received under contract is deleted; receipts taxed by OIPL and the 56% royalty actually offered by the assessee are not liable to further tax as notional royalty in the hands of the assessee.
- (ii) Issue decided in favour of the assessee. OIPL is not a PE of the assessee under the cited treaty provisions; consequently, no business profits are attributable to a PE in India for these assessment years and related profit attribution additions are deleted.
- (iii) Issue partly decided in favour of the assessee. The matter of interest under section 234B is restored to the file of the Assessing Officer for recomputation in accordance with the cited Supreme Court ratio; direction given for recomputation (ground allowed for statistical purposes where applicable)
Final Conclusion: The Tribunal applied its earlier reasoned decision in the assessee’s own case (02.01.2026) and consistent legal principles to the assessment years 2006 07 to 2012 13, resulting in deletion of notional royalty impositions and of PE based profit attributions, with limited remand for recomputation of interest under section 234B where applicable; the appeals are therefore partly allowed overall.
12. Validity of reopening of assessment – sanction under section 151 – Approval by competent specified authority – reassessment initiated beyond three years from the end of the relevant assessment.
Case: ACIT, Circle-34 (1), Delhi Versus Nirbhay Goyal And (Vice-Versa).
Court: ITAT DELHI
Verdict Date: 27th March 2026
Issues: Whether the reassessment proceedings were vitiated because approval for issuance of notice under section 148 was obtained from an authority other than the competent authority prescribed under section 151 of the Income-tax Act, 1961.
Analysis: The reassessment for the relevant assessment year had been initiated beyond three years from the end of the assessment year, and therefore the approval contemplated by section 151 had to be obtained from the specified higher authority. The record showed inconsistency in the sanction noted in the order under section 148A(d) and in the notice under section 148, and the approval was not traced to the competent authority required by law. Since sanction by the proper authority is a jurisdictional precondition for valid reopening, approval by an incorrect authority vitiates the reassessment.
Conclusion: The reopening and consequent reassessment proceedings were invalid and were quashed, in favour of the assessee.
13. Retrenchment compensation received – eligibility of tax exemption u/s 10(10B) – amount received under Voluntary Retirement Scheme (VRS).
Case: Jayendra Bipinchandra Patel Versus The ITO, Ward-7 (2) (1), Ahmedabad.
Court: ITAT AHMEDABAD
Verdict Date: 27th March 2026
Issues: Whether compensation received under the BSNL voluntary retirement scheme was exempt as retrenchment compensation under section 10(10B) of the Income-tax Act, 1961.
Analysis: The Tribunal noted that the assessee had received compensation under the BSNL VRS and had claimed exemption in respect of the amount. It followed the coordinate bench decision on the same scheme and factual matrix, which had held such compensation to be exempt under section 10(10B). The Tribunal found no change in the legal position or in the facts warranting a different view.
Conclusion: The compensation was held to be exempt under section 10(10B) of the Income-tax Act, 1961, and the assessee succeeded.
14. Denial of TDS credit pertaining to services rendered – year of assessability of income – deductor depositing the tax and reflecting the credit in Form 26AS in the subsequent year.
Case: R.K. Distilleries Private Limited Versus Income Tax Officer, Ward-3 (1), Hyderabad.
Court: ITAT HYDERABAD
Verdict Date: 27th March 2026
Issues: Whether the assessee was entitled to TDS credit in the assessment year in which the corresponding income was offered to tax, despite the deductor depositing the tax and reflecting the credit in Form 26AS in the subsequent year.
Analysis: Section 199 of the Income-tax Act, 1961 and Rule 37BA(3) of the Income-tax Rules, 1962 provide that credit for tax deducted at source shall be given for the assessment year for which the income is assessable, and where income is assessable over more than one year, the credit is to be allowed in the same proportion. The assessee had accounted for the service income in the relevant year, while the deductor accounted for the expenditure and deducted tax in the next year, causing a mismatch in Form 26AS. The Tribunal applied the statutory rule that TDS credit follows the year of assessability of the related income, and the mere fact that the deductor reported the tax in a later year could not defeat the assessee’s substantive entitlement.
Conclusion: The assessee was entitled to the TDS credit in the year in which the corresponding income was assessable, and the denial of credit on the basis of the Form 26AS mismatch was not sustainable.
Ratio Decidendi: Credit for tax deducted at source must be granted in the assessment year in which the related income is assessable, and it cannot be shifted to a different year merely because the deductor reported or deposited the tax later.
15. Addition u/s 69A r.w.s. 115BBE – Estimation of income/profit – assessee failed to explain the nature and source of credit entries in the bank account.
Case: Sahebrao Godaji Bhand Versus ITO, Ward-2, Ahilyanagar.
Court: ITAT PUNE
Verdict Date: 27th March 2026
Issues: Whether the entire cash deposits in the assessee’s bank account could be treated as unexplained money under section 69A and taxed under section 115BBE, or whether only a reasonable profit element should be brought to tax.
Analysis: The assessee’s account showed continuous deposits and withdrawals, and the explanation that the deposits represented business receipts was not accepted by the lower authorities for want of supporting evidence. The Tribunal noted, however, that the record did not show any corresponding lavish expenditure or investment by the assessee, and that in similar matters involving the same banking channel, a percentage-based estimation of income had been adopted. Following the comparable reasoning already applied in connected facts, the Tribunal held that the entire deposits could not be taxed as income and that only a reasonable profit element was liable to be assessed.
Conclusion: The addition of the whole deposit amount was not sustained; the Assessing Officer was directed to estimate income at 2% of the deposits, resulting in partial relief to the assessee.
16. Ad hoc disallowance of business expenditure – Suspicion vis-a-vis proof of bogus expenditure – whether Suspicion can substitute proof?
Case: Hitesh Ugamraj Mehta Versus ACIT 23 (1) () 6, Mumbai.
Court: ITAT MUMBAI
Verdict Date: 30th March 2026
Issues: Disallowance of labour charges paid to five parties was justified on an ad hoc basis.
Analysis: The assessee produced labour bills, confirmations, issue and receipt vouchers, bank records, and replies from the labour contractors to notices issued under Section 133(6) of the Income-tax Act, 1961. The books were not rejected under Section 145(3) of the Income-tax Act, 1961, and no discrepancy was found in the stock records. Labour charges were found to be an integral part of the jewellery manufacturing business, and there was no evidence that the cash withdrawals by the contractors were returned to the assessee. The field verification reports were found to be flawed and could not, by themselves, sustain a conclusion of bogus expenditure. An ad hoc percentage disallowance, unsupported by a specific finding of inflated or non-business expenditure, was held to be arbitrary.
Conclusion: The disallowance of Rs. 16,71,940 was deleted and the assessee succeeded on the merits of the labour-charge issue.
