Income Tax Act, 1961

The Supreme Court examined the cancellation of registration of Batanagar Education and Research Trust under section 12AA(3) of the Income Tax Act after the Trust admitted that many of its corpus donations were fictitious and were returned to donors through intermediaries, amounting to bogus donations and hawala transac…

Sakthi Trading Co., a partnership firm, was dissolved on the death of one partner but was immediately reconstituted with the remaining partners, so the business continued without interruption. The Income‑Tax Officer had valued the closing stock on the dissolution date at the usual "cost or market, whichever is lower" m…

The dispute concerned a Delhi property that had been sold at a public auction by the Income Tax Department in 1964 to V.N. Vasudeva. The respondents, grandchildren of the original owner, challenged the sale through a civil suit and a writ petition, while the appellants, heirs of the lawyer who bought the property, defe…

In Sundar Gupta & Ors. v. Sunil Vasudeva & Ors., a contempt petition (C) No. 1721 of 2017 was filed alleging contempt of the Supreme Court under Section 293 of the Income Tax Act, 1961. The petition arose from proceedings in I.A. No. 4 of 2017 and Civil Appeal No. 5140 of 2019, which were also the subject of Special Le…

The petitioners, including Common Cause, challenged the appointments of K.V. Chowdary as Central Vigilance Commissioner (CVC) and T.M. Bhasin as Vigilance Commissioner (VC) on the ground that the selections violated the constitutional principles of impeccable and institutional integrity. They alleged that Chowdary had …

The New Okhla Industrial Development Authority (NOIDA), created under the U.P. Industrial Area Development Act, 1976, challenged income‑tax notices on the ground that it qualified as a "local authority" and was therefore exempt under section 10(20) of the Income Tax Act, 1961 as amended by the Finance Act, 2002. The ce…

Canara Bank paid interest on fixed deposits to the New Okhla Industrial Development Authority (NOIDA) without deducting tax at source under Section 194A of the Income Tax Act, 1961. The Assessing Officer treated the bank as a defaulter and issued a demand notice, which the bank appealed, relying on Notification dated 2…

Rajesh Projects entered a 90‑year lease with the Greater Noida Industrial Development Authority (GNIDA) and paid an upfront lease premium plus annual lease rent. The Income‑Tax Department issued notices for non‑deduction of tax at source (TDS) under Section 194‑I on the lease rent, the company contending that GNIDA, be…

The Revenue (Commissioner of Income Tax, Chennai) conducted a search of the assessee S. Ajit Kumar’s premises on 17 July 2002 and, on the same day, a survey of the builder, Elegant Constructions and Interiors Ltd., whose premises revealed a cash payment of Rs 95.16 lakhs that had not been accounted for. The Assessing O…

The case concerned the assessment of M/s Saurashtra Cement for AY 1981-82. The Assessing Officer issued a draft assessment on 13‑03‑1984 and forwarded it to the Inspecting Assistant Commissioner (IAC) under Section 1448. The IAC gave directions on 31‑08‑1984, after which the final assessment order was passed on 01‑09‑1…

The Supreme Court examined whether the Election Commission could be directed to require candidates to disclose criminal cases, assets, liabilities and educational qualifications, as ordered by the Delhi High Court, despite the absence of a specific provision in the Representation of the People Act, 1951 or the Conduct …

Sundaram Clayton Ltd. issued 20,40,000 worth of bonus shares by capitalising its general reserves in the assessment year 1971-72 and claimed that the bonus issue should be proportionately added to its share capital for the purpose of computing capital under Rule 3 of Schedule II of the Companies (Profits) Surtax Act, 1…

The Commissioner of Income Tax, Jullundur issued notices under Section 139(2) of the Income Tax Act, 1961 to Ajanta Electricals and its partners, requiring them to file returns within 30 days. The assessees filed their returns and applications for extension of time after the due dates, leading the Income Tax Officer to…

Gujarat Travancore Agency, a registered firm, failed to file its income‑tax returns for assessment years 1965‑66 and 1966‑67 within the statutory time limits. After notices under section 139(2) were served, the firm filed the returns and the Income‑Tax Officer imposed penalties under section 271(1)(a) of the Income Tax…

Elel Hotels and Investments Ltd. and other hoteliers challenged the Hotel Receipts Tax Act, 1980, which imposed a 15% tax on the gross receipts of hotels whose room charges were Rs.75 or more per day per individual. The petitioners argued that the Act was beyond Union legislative competence, falling under the State Lis…

The deceased A.G. Merchant died in 1959 and the accountable persons filed estate duty returns, resulting in an assessment on 26 February 1960 under the Estate Duty Act, 1953. The Estate Duty (Amendment) Act, 1958 repealed sections 56‑65 and introduced a new Section 59, effective 1 July 1960, to allow reassessment of pr…

Electronics Corporation of India Ltd entered into an agreement with a Norwegian firm for technical services and sought a No Objection Certificate under s.195(2) of the Income Tax Act, 1961 to remit payments without tax deduction. The Commissioner rejected the application, holding that s.9(1)(vii) deemed the fees to acc…

The petitioner, Chuharmal, filed an income‑tax return for AY 1974‑75 showing a total income of Rs 3,113. During a customs search in May 1973, 565 foreign watches valued at Rs 87,455 were seized from his bedroom. The Income‑Tax Officer issued notices under s.69A of the Income Tax Act to treat the value of the watches as…

Vanaz Engineering (P) Ltd. introduced a gratuity scheme in mid‑1970 and, based on an actuarial report, provisioned Rs 2,11,305 as a liability as of 31 December 1970. The Income‑Tax Officer allowed only Rs 27,249, the difference between the provision and the liability for 1969, but the Appellate Assistant Commissioner a…

The appellant's father created three U.S. and two U.K. settlement trusts for family members and reported the trusts' income in his Indian tax returns from 1964‑65 to 1969‑70. After his death in 1969, the appellant filed returns for 1970‑71 including the same income and later contended that the trusts were discretionary…

The Supreme Court considered appeals concerning whether payments made by Indian residents to non-resident foreign software suppliers for computer software, under End User Licence Agreements (EULAs) and distribution agreements, constitute 'royalty' under the Income Tax Act, 1961 and Double Taxation Avoidance Agreements …

The Supreme Court examined whether employees who retired under the State Bank of India Voluntary Retirement Scheme (VRS) of 2000 and had completed fifteen years of service were entitled to a proportionate pension under the SBI Employees' Pension Fund Rules. The Court held that the Central Board of Directors' approval o…

The Ahmedabad Stock Exchange sought to dispose of the membership of its deceased member, Rajesh Shah, after his heirs declared they could not meet his liabilities. The Exchange declared him a deemed defaulter and exercised its right under the Exchange Rules to vest the membership in the Exchange and sell it. The Assist…

The Uttar Pradesh Forest Corporation claimed exemption from income tax on the ground that it was a "local authority" under Section 10(20) of the Income Tax Act, 1961, and alternatively that it was a charitable institution under Section 11(1). The assessing officer rejected the claim, the Commissioner of Income Tax (App…

Gujarat Urja Vikas Nigam Ltd (GUVNL) entered into a Power Purchase Agreement (PPA) with EMCO Ltd for a 5 MW solar project, the tariff being fixed by the Gujarat Electricity Regulatory Commission (GERC) in its first tariff order of 29 Jan 2010, which assumed the benefit of accelerated depreciation under Section 32 of th…

The Supreme Court examined whether a notice under Section 143(2) of the Income Tax Act, 1961 must be served within the prescribed time before a block assessment can be framed under Chapter XIV‑B for undisclosed income discovered through a search under Section 132. The Court held that the special provisions of Chapter X…

Vimal Kumar Surana, who had passed the Chartered Accountant examination but was not a member of the Institute, impersonated a chartered accountant, prepared audit reports and forged the Institute's seal before tax authorities. The Institute filed a criminal complaint alleging offences under the Chartered Accountants Ac…

The assessee, K. Govindan & Sons, filed a return for AY 1984‑85 in response to a notice under Section 148. The assessing officer levied interest under Section 139(8) and Section 217, which the assessee contested on the ground that the assessment was not a "regular assessment" within the meaning of Section 2(40) and the…

Mis. K. Lakshmanya & Co., a partnership, paid interest under Sections 234(A)-(C) for assessment years 1993-94 and 1994-95 and applied to the Settlement Commission to have that interest waived. The Commission, relying on a CBDT circular, partially waived the interest, after which the Assessing Officer refused to grant i…

The appellants, assessees under the Income Tax Act, were subjected to a raid that uncovered two separate sets of books of accounts, prompting the Deputy Commissioner to propose a special audit under Section 142(2A). The Commissioner approved the proposal without giving the appellants any notice or opportunity to be hea…

The Andhra Pradesh amendment of Section 73 of the Indian Stamp Act gave the Collector power to inspect, seize and impound any registers, books or documents, including those in banks, without any procedural safeguards. The High Court struck down this provision as unconstitutional, and the State appealed. The Supreme Cou…

Scientific Engineering House (P) Ltd. entered into two 1961 collaboration agreements with Metrimpex Hungarian Trading Company to obtain technical know‑how for manufacturing microscopes and theodolites. The foreign collaborator supplied a complete set of drawings, designs, charts, plans and related literature (the "docu…

B.M. Malani, a money‑lender who also traded in shares, had shares and a demand draft seized during a raid. He offered to pay his tax liability by selling the seized shares and requested the Income‑Tax Authority to dispose of them, but the request was ignored. The Department later levied interest under s.220(2) of the I…

The respondent‑assessee, Shatrusail Ya Digvijay Singh Jadeja, had tax assessments for years 1984‑85 to 1991‑92 under the Income Tax Act and the Wealth Tax Act, which were appealed but dismissed in 1992‑93 for failure to pre‑deposit tax. After the Finance (No.2) Act, 1998 introduced the Kar Vivad Samadhan Scheme (effect…

Mysore Minerals Ltd., a private limited company, purchased seven low‑income houses from the Karnataka Housing Board, made part payment, received allotment and possession, but the deed of conveyance was not executed. The company claimed depreciation under Section 32(1) of the Income‑Tax Act, 1961 for the assessment year…

The appellant, a Development Officer of Life Insurance Corporation of India, claimed a deduction of 40% of his incentive bonus in his income‑tax returns, arguing that the amount represented expenses incurred in canvassing business. The Income Tax authorities rejected the claim, holding that the bonus formed part of his…

The Supreme Court examined whether land and buildings owned by the International Airport Authority of India (IAAI), leased to the Indian Tourism Development Corporation (ITDC) for a hotel, were exempt from municipal property tax under Article 285(1) of the Constitution. The Court held that the IAAI is a distinct statut…

The Builders Associations of India filed a writ petition under Article 32 challenging the Supreme Court’s earlier decision in Commissioner of Income Tax v. N.C. Budharaja & Co., which held that the word “construction” in Section 32A(2)(b)(iii) of the Income‑Tax Act applies only to movable items such as ships and not to…

The Oil & Natural Gas Corporation Ltd (ONGC) challenged the assessment of surtax on its agreements with foreign companies, contending that the exemption notification GSR 307(E) dated 31‑03‑1983 under Section 24AA of the Companies (Profits) Surtax Act, 1964, covered both categories of foreign companies – those with dire…

The appellants entered into an agreement to sell their residential house on 27 December 2002 and purchased another house on 30 April 2003. A court order later restrained them from dealing with the property, preventing execution of the sale deed until the order was vacated in May 2004; the deed was finally registered on…

Distributors (Baroda) Ltd., an investment company, claimed a deduction under Section 80M of the Income Tax Act for inter‑corporate dividends based on the full amount of dividends received, contrary to the Revenue’s view that the deduction should be calculated on dividend income as computed under the Act. The Supreme Co…

The appellant, a licensed stamp vendor, was caught in a sting operation after demanding Rs 12 for a Rs 10 stamp paper and was convicted under Sections 7, 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988. The key issue was whether a licensed stamp vendor qualifies as a “public servant” under Section 2(c)(i) …

The assessees Ryatar Sahakari Sakkarre Karkhane Niyamit filed several appeals under Section 260-A of the Income Tax Act, which were dismissed by the Karnataka High Court without framing any substantial question of law as mandated by Section 260-A(3). The Supreme Court examined whether the High Court complied with the s…

The Supreme Court examined two questions arising from Mercantile Bank Ltd.'s assessment for AY 1978‑79. First, it held that interest on doubtful advances kept in a suspense account was not assessable income, as the 1952 Central Board of Direct Taxes circular exempted such interest when there was no real probability of …

The Bazpur Co-operative Sugar Factory Ltd., a cooperative society, required its producer‑shareholders to deposit amounts into a 'Loss Equalisation & Capital Redemption Reserve Fund' under a bye‑law. The deposits were used for the society’s business, including converting partly paid shares to fully paid shares and repay…

JEYAR Consultant & Investment Pvt. Ltd., which exported marine products and also earned domestic income from dividends, interest, brokerage and share transactions, claimed a deduction under Section 80HHC of the Income Tax Act for profits from its export business. The Assessing Officer denied the deduction because the e…

The Orissa State Warehousing Corporation, a statutory body under the Warehousing Corporation Act, 1962, earned interest on fixed deposits placed with banks. The Income‑Tax Officer added this interest to its total income, holding that it was not covered by the exemption in section 10(29) of the Income Tax Act, 1961. The…

M/s. Vijay Industries appealed against the Commissioner of Income Tax seeking a 20% deduction under Section 80HH for the assessment years 1979‑80 and 1980‑81. The dispute centered on whether the deduction should be calculated on gross profits and gains (before depreciation, unabsorbed depreciation and investment allowa…

GVK Industries Ltd. challenged a tax order that invoked sections 9(1)(i) and 9(1)(vii)(b) of the Income Tax Act, 1961, arguing that the provisions were unconstitutional for lacking a nexus with India. The High Court upheld the tax provision, relying on the ECIL judgment, prompting a Supreme Court reference to a Constit…

The petitioner filed a public interest litigation under Article 32 alleging that the Chief Minister of Uttar Pradesh, Mulayam Singh Yadav, and his family acquired assets disproportionate to their known sources of income, violating the Prevention of Corruption Act, 1988. The petition sought a writ of mandamus directing …

Ahmedabad Manufacturing and Calico Printing Co. Ltd. set up two new industrial undertakings – a polyester fibre plant (1975‑76) and a Sulzer plant (1976‑77) – and claimed relief under Section 80K of the Income Tax Act, 1961, together with a certificate under Section 197(3) for dividend exemption in the assessment year …

The appellant, owner of a plot in South Calcutta, entered into a sale agreement with the respondent for Rs 9 lakhs, requiring an initial payment of Rs 25,000 and a further Rs 4 lakhs within five months, the latter being essential for the appellant to obtain alternative accommodation. The respondent failed to pay the Rs…

The case concerned a main partnership engaged in abkari (liquor) business that had a partner, Ganga Goud, who held a 10% share. Ganga Goud and eleven other persons formed a sub‑partnership to provide the capital required for his share and to share the profits and losses arising from the main partnership. The Income‑Tax…

The appellants challenged the disallowance of certain expenditures under Sections 40(a)(v) and 40A(5) of the Income Tax Act, 1961, arguing that the ceiling on such expenditures should not apply to assets used by an employee unless the employee also received a benefit under clause (i). The Supreme Court examined the lan…

Mrs. Arundhati Balkrishna, a beneficiary of the Shrimati Arundhati Balkrishna Trust, claimed deductions for interest paid by the trust on amounts withdrawn from an estate account. The Income Tax Officer disallowed part of the interest, holding that some withdrawals were for personal expenses. The assessee appealed to t…

M/s Jupiter Capital Pvt. Ltd. held a 99.88% share in Asianet News Network Pvt. Ltd. which reduced its share capital from 15,35,05,750 to 10,000 shares, proportionately reducing Jupiter's holding to 9,988 shares and receiving Rs. 3,17,83,474 as consideration. The Revenue argued that this reduction did not constitute a "…