Supreme Court Quashes Gujarat HC Order To Modify Income Tax Software To Prevent TDS-Default Demands Against Deductee

The Supreme Court on January 12, 2026, set aside directions issued by the Gujarat High Court requiring the Central Board of Direct Taxes (CBDT) to modify the income-tax department's software. The court, however, left untouched the relief granted to the taxpayer on merits. A bench of Justices Rajesh Bindal and Vijay Bishnoi was hearing an appeal filed by the Income Tax Department against a Gujarat High Court order passed in favour of Shobhan Shantilal Doshi, an individual taxpayer. The Court...

Income Tax | Shares Received On Amalgamation Can Be Taxed as Business Income If Held As Stock-in-Trade: Supreme Court

The Supreme Court has held that when shares held as stock-in-trade are replaced with shares of another company under an amalgamation scheme, the allotment can result in taxable business income, provided the new shares can be realised in money and have a definite value. The bench, consisting of Justices J B Pardiwala and R Mahadevan, opined that "where the shares of an amalgamating company, held as stock-in-trade, are substituted by shares of the amalgamated company pursuant to a scheme of...

Non-Compete Fee Can Be Deducted As Revenue Expenditure Under Section 37(1) Income Tax Act: Supreme Court

The Supreme Court has held that payment of non-compete fee does not result in acquisition of a capital asset or alteration of the profit-making structure of the business, and is allowable as revenue expenditure under Section 37(1) of the Income Tax Act, 1961.“Thus non-compete fee only seeks to protect or enhance the profitability of the business, thereby facilitating the carrying on of the business more efficiently and profitably. Such payment neither results in creation of any new asset nor...

Income Tax | Foreign Companies' Head Office Expenses For Indian Business Subject To Deduction Limit Under S. 44C : Supreme Court

In a set-back to foreign companies doing business operations in India, the Supreme Court on Monday (December 15) held that all head office expenditure incurred by them outside India, whether common or exclusively for their Indian business operations, must be subjected to the statutory ceiling prescribed under Section 44C of the Income Tax Act, 1961, thereby ruling out any claim for full deduction.A Bench comprising Justice JB Pardiwala and Justice KV Viswanathan allowed the Revenue's appeal and...

Income Tax | Statutory Corporation Can Claim Deduction Under S 36(1)(viii) Only For Income Directly Derived From Long-Term Finance : Supreme Court

The Supreme Court on Wednesday (December 10) held that any income earned by a statutory corporation outside its core activity of providing long-term finance for industrial, agricultural, or infrastructure development in India cannot qualify for the 40% deduction available under Section 36(1)(viii) of the Income Tax Act, 1961 (“Act”). A bench of Justice P.S. Narasimha and Justice Atul S. Chandurkar dismissed National Cooperation Development Corporation's appeal, reiterating that only profits...

'Frivolous Cases Waste Judicial Time' : Supreme Court Raps Income Tax Dept For Filing SLP On Settled Issue

The Supreme Court on Friday pulled up the Income Tax Department for filing yet another Special Leave Petition (SLP) in a matter already settled by the Court, calling it a frivolous exercise that contributes to mounting pendency.A Bench of Justice BV Nagarathna and Justice R Mahadevan was hearing an SLP challenging a Karnataka High Court order on tax deduction at source (TDS) liability, an issue the Supreme Court had already decided last year in a case involving Vodafone Idea, holding that...

'Seems Tax Department Has Not Trusted Even Its Lawyers' : Supreme Court Flags Procedural Delays In IT Dept's Petition Filings

The Supreme Court recently criticised the Income Tax Department for filing its Special Leave Petition after a delay of 524 days, observing that the Department, despite having an entire team of legal experts, failed to act on its own lawyers' advice and instead allowed time to be wasted in unnecessary and prolonged litigation. A bench comprising Justices Pankaj Mithal and Prasanna B. Varale expressed strong dissatisfaction with the Department's explanation for the massive delay, noting that "no...

Income Tax Act | Rejection Of Settlement Application Does Not Affect Assessee's Right To Contest Assessment Order On Merits : Supreme Court

Rejection of an assessee's settlement application by the Income Tax Settlement Commission without offering settlement terms does not bar the assessee's right to challenge the assessment order on merits under the Income Tax Act, observed the Supreme Court. "The stand of the Revenue that the assessee must give up his right to contest the assessment order on merits, if the settlement application is rejected without providing for terms of settlement, is misconceived and must be rejected.", a bench...

Income Tax Act | Supreme Court To Examine If S.12AA Registration Alone Entitles Trusts To 80G Benefits To Donors

The Supreme Court is set to examine whether the registration of a trust under Section 12AA of the Income Tax Act, 1961, which recognizes it as a charitable institution for income tax exemption purposes, is sufficient to entitle its donors to claim tax deduction benefits under Section 80G of the Act. A bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan has issued notice on a petition filed by the Income Tax Department challenging the Chhattisgarh High Court's ruling that once a...

Non-Resident Company Need Not Have Permanent Office In India To Be Taxed On Income Accruing Here : Supreme Court

The Supreme Court has clarified that under the Income Tax Act, a non-resident company can be taxed in India on income that accrues or arises from a business connection within the country, even if it does not maintain a permanent office or physical establishment here.A Bench of Justice Manoj Misra and Justice Joymalya Bagchi, in its judgment examined the scope of Sections 4, 5(2), and 9(1)(i) of the Income Tax Act, 1961, and held that the statute does not make it mandatory for a non-resident...

Supreme Court Pulls Up Income Tax Dept For Launching Prosecution For Tax Evasion Without ITAT Confirmation, Imposes Rs 2 Lakh Cost

The Supreme Court on Thursday (Aug. 28) imposed Rs. 2 Lakhs cost on Income Tax Department for 'grossly abusing its position' to continue a prosecution against an assessee alleging willful tax evasion.The bench comprising Justices JK Maheshwari and Vijay Bishnoi set aside the Madras High Court's decision, which refused to quash the prosecution case initiated by the department. The Court criticized the department's action of launching the prosecution against the assessee in contrast to its own...

Is Merchant Navy Officer's Salary Credited In Indian Bank Account Exempt From Income Tax? Supreme Court To Decide

The Supreme Court on Monday (Aug. 18) agreed to decide whether the income credited in an Indian bank account while working with a Foreign Entity would be exempted from the payment of Income Tax under the Income Tax Act, 1961.. The issue arose before the bench of Justices Pankaj Mithal and Prasanna B. Varale while hearing the appeal filed against the Punjab & Haryana High Court's decision upholding the Motor Accident Claims Tribunal (“MACT”) decision to deduct 30% towards tax liability while...