IT Act

Reassessing the sanctity of CA certificates: Evidentiary standards in quasi-judicial proceedings

Summary: CA certificates are governed by the relevant statutory provisions. CAs must issue them in accordance with the professionalism outlined in the ICAI’s code of conduct. Across tax frameworks, such certificates substantiate positions and claims. However, a certificate cannot, on its own, discharge the burden of proof, where the underlying records are not produced. Strict evidentiary rules do not govern tax proceedings, foundational principles do. In this environment, a certificate that is adequately documented, and issued in strict conformity with ICAI standards shall withstand scrutiny from the revenue and will be preferred compared to one that is devoid of such safeguards.

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Mumbai ITAT holds that commercial and charitable activities can co-exist

Summary: Mumbai ITAT in Reliance Foundation Hospital Trust has held that a charitable organisation’s registration cannot be denied merely because of the scale of its operations, sophisticated infrastructure, or substantial receipts. The ITAT examined the scope of enquiry and emphasised that renewal of charitable registration should be decided as per the law and evidence available on record.

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Buy-Back within Group is not a Taxable Exit: The Huntsman Verdict

Summary: The Delhi ITAT in the Huntsman Investment case ruled that intra-group share buy-backs can qualify as “corporate reorganisation” under Article 13(5) of the India-Netherlands DTAA, shielding capital gains from Indian taxation. The Tribunal emphasized substance over technicality, noting that Huntsman BV’s ownership percentage in its Indian subsidiary remained unchanged despite the buy-back. It relied on professional guidance and comparable treaty protocols to interpret “reorganisation.”

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Telangana High Court clarifies GAAR in relation to market-based transactions

Summary: In a recent case, the Telangana High Court has frowned upon the Revenue’s attempt to invoke GAAR in respect of a transaction that was carried out by the taxpayer through the stock exchange. By rejecting the stance adopted by the Revenue, the High Court categorically held that not every tax planning is bad, and it cannot be brought within the purview of GAAR. Only if a taxpayer colludes or connives to bypass statutory provisions, by entering into transactions that defy commercial logic, can it be examined.

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Foreign taxes cannot be allowed as tax deductible expenditure: Chennai ITAT

The Income Tax Appellate Tribunal’s (“ITAT”) Chennai bench in Zoho Corporation Pvt. Ltd. v. Deputy Commissioner of Income Tax,[1] determined that foreign taxes paid by an assessee, which do not qualify for relief under Sections 90 or 91 of the Income Tax Act, 1961 (“IT Act”), cannot be claimed as business expense deduction under Section 37(1).

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Debunking taxation of cloud services as royalty 

Businesses are increasingly integrating cloud computing models into their operations, necessitating unambiguity regarding the position of tax leviable on such transactions under the Income-Tax Act, 1961 (“IT Act”), and tax treaties. Uniformity in the tax treatment of cross-border cloud computing models has become crucial for these businesses to plan their operations and tax costs effectively. A long-standing subject of scrutiny has been whether to consider the taxation of payment for cross-border cloud services as “royalties” or “fee for technical services” (“FTS”)/ “fee for included services” (“FIS”). However, in recent rulings, Indian courts have affirmed that such standardised services would not be liable to income tax in India.

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AMT: Does It Impose Additional Taxes Under Income Tax Bill, 2025?

Background

The Alternate Minimum Tax (“AMT”) has its genesis in the Minimum Alternate Tax (“MAT”), which was introduced to ensure that taxes were paid by even those companies that intended to avoid payment of taxes by engaging in ingenuous tax planning methods despite having earned significant amount of book profits. These companies, called “zero-tax companies”, while reporting significant book profits, paid minimal or no income tax by leveraging various exemptions and deductions available under the Income Tax Act, 1961 (“IT Act”).

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Crypto Sales Prior to AY 2022–23: Taxable as Capital Gains?

The Raunaq Prakash Jain v. Income Tax Officer case addresses a significant cryptocurrency transaction-related taxation issue in India, i.e., whether gains arising from cryptocurrency sales should be taxed as “capital gains” or “income from other sources”. This decision is particularly important because it clarifies the tax treatment of cryptocurrency gains before the introduction of the specific tax regime for virtual digital assets (“VDA”) with effect from April 1, 2022.

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Tax reassessment proceedings: Supreme Court puts TOLA controversy to rest

The Supreme Court (“SC”) recently addressed the validity of reassessment notices in Rajeev Bansal[1], issued under Section 148 of the Income Tax Act, 1961 (“IT Act”), from April 1, 2021, to June 30, 2021, even though the reassessment regime had been overhauled with effect from April 1, 2021. The Revenue argued that these notices fell under the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (“TOLA”), which relaxed the time limits for reassessment due to the COVID-19 pandemic (“Pandemic”). However, several High Courts, including the Allahabad and Gujarat High Courts,[2] had ruled that such notices were subject to the new reassessment provisions introduced by the Finance Act, 2021, and hence, without the applicability of TOLA, were time-barred. The SC, in this landmark decision, ruled in favour of the Revenue, by upholding the validity of TOLA and laid down several jurisprudential observations in its judgement.

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First judgment on GAAR holds bonus-stripping to be an impermissible tax-avoidance arrangement

The provisions of General Anti-Avoidance Rules (“GAAR”) were implemented into Income Tax Act, 1961 (“IT Act”), for the first time with effect from the financial year 2017–18. The GAAR provisions provide the Indian Revenue Authorities (“IRA”) with wide powers, including even recharacterising a transaction, ignoring a part or the whole of a series of transactions, disallowing expenses incurred, etc., if the main purpose of the transaction was to obtain tax benefits. Considering the aggressive nature in which the IRA generally scrutinises the GAAR cases, the industry is always apprehensive that these GAAR provisions could be invoked in a wide-spread manner. However, much to the relief of the taxpayers, the IRA have rarely invoked these provisions.

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