Bombay High Court Annual Tax Digest: 2025

Direct TaxNotice Issued To Non-Existing Entity Post-Merger Is Substantive Illegality, Dept Cannot Cite Technical Glitch: Bombay High CourtCase Title: City Corporation Limited v. Assistant Commissioner of Income Tax CircleCase Number: WRIT PETITION NO. 6076 OF 2023The Bombay High Court stated that notice issued to a non-existing entity post-merger is a substantive illegality and not some procedural violation.“we cannot condone the fundamental error in issuing the impugned notices against a non-existing company despite full knowledge of the merger. The impugned notices, which are non-est cannot be treated as “good” as urged on behalf of the department” stated the Division Bench of Justices M.S. Sonak and Jitendra Jain.ITAT Cannot Overstep Its Authority By Deciding On Merits When It Had Already Concluded Appeal Was Not Maintainable: Bombay High CourtCase Title: The Board of Control for Cricket in India v. The Assistant Commissioner of Income TaxCase Number: INCOME TAX APPEAL NO.1041 OF 2012The Bombay High Court stated that ITAT cannot overstep its authority by deciding on merits when it has already concluded an appeal was not maintainable.The Division Bench of Justices M.S. Sonak and Jitendra Jain observed that “Once the ITAT concluded that the Appeal before it against the impugned communication/order was not “maintainable”, there was no question of the ITAT evaluating the impugned communication/order on its merits or making any observations or recording any findings regarding its validity or otherwise. Therefore, such observations and findings are without jurisdiction and should not have been made.”Change In Tax Rate In Future AYs Not Ground For Reassessment Without Fulfilling Jurisdictional Parameters U/S 148 Income Tax Act: Bombay HCCase title: Oxford University Press v. DCIT, Int. Tax Circle 3 (2)(2) & Ors.Case no.: WRIT PETITION NO.1894 OF 2022The Bombay High Court has made it clear that merely because the tax rate which is applicable on an assessee changes in future assessment years (AYs), is not a ground to initiate reassessment action against it for previous AYs, unless the 'jurisdictional parameters' of Section 148 of the Income Tax Act, 1961 are fulfilled.A division bench of Justices MS Sonak and Jitendra Jain thus quashed the reassessment order passed against Oxford University Press, merely because its tax status was changed from 'resident' to 'non-resident', making it subject to a 40% tax rate instead of 30%.ITAT Cannot Perpetuate Ex-Parte Order: Bombay High Court Orders Tribunal To Grant Opportunity Of Hearing To Assessee Before Proceeding On MeritsCase title: Vijay Shrinivasrao Kulkarni v. ITAT Pune Bench & Ors.Case no.: WRIT PETITION NO. 17572 OF 2024The Bombay High Court has disapproved of the Income Tax Appellate Tribunal dismissing the appeal against an ex-parte order passed against a former employee of Pfizer Healthcare without providing him an opportunity of hearing.Stating that ITAT cannot “perpetuate” the ex-parte order, a division bench of Justices GS Kulkarni and Advait M. Sethna directed the Tribunal to hear the employee de novo, so far as his prayer for the grant of exemption under section 89 of the Income Tax Act, 1961 is concerned.Amalgamated Company Can Adjust Written Down Assets Of Constituent Companies & Claim Depreciation Without Central Govt Approval: Bombay HCCase Title: Technova Imaging Systems Limited v. Deputy Commissioner of Income TaxCase Number: INCOME TAX APPEAL NO. 405 OF 2003The Bombay High Court stated that amalgamated company can adjust written down of assets of amalgamating companies and claim depreciation without central government's approval. The Division Bench of Chief Justice Alok Aradhe and Justice M.S. Karnik stated,“The Tribunal was not justified in law in holding that in view of insertion of Section 72A in the Income Tax Act, 1961, the assessee (being the amalgamated company) not having obtained approval of the Central Government was not entitled to adjust the written down value of the assets of the amalgamating companies on the basis of depreciation actually allowed to them and to claim depreciation on such adjusted written down value of the assets of the amalgamating companies.”Routing Of Funds Through Tax Havens Not Disclosed During Original Proceedings: Bombay HC Confirms ReassessmentCase Title: Macrotech Developers Limited vs Dy Commissioner of Income TaxCase Number: Writ Petition No. 2545 of 2016Finding that the Petitioner had failed to disclose all material facts necessary for assessment of tax, the Bombay High Court ruled that the circuitous movement of funds through various companies located in tax havens had not been disclosed in the course of the original proceedings. The High Court therefore confirmed the reopening proceedings initiated against the petitioner.A division bench of Justice Jitendra Jain and Justice M.S Sonak observed that “if based on subsequent information, there is a prima-facie material suggesting that the transaction of loan is ...

Bombay High Court Annual Tax Digest: 2025

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