Tax Weekly Round-Up: December 15 - December 21, 2025

SUPREME COURTIncome Tax | Foreign Companies' Head Office Expenses For Indian Business Subject To Deduction Limit Under S. 44C : Supreme CourtCause Title: DIRECTOR OF INCOME TAX (IT)-I, MUMBAI. VERSUS M/S. AMERICAN EXPRESS BANK LTD. (and connected case)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 set aside the Bombay High Court's judgment, which had upheld the grant of full deduction for “head office expenditure” incurred by the respondent non-resident assessees outside India in relation to their business operations in India.Non-Compete Fee Can Be Deducted As Revenue Expenditure Under Section 37(1) Income Tax Act: Supreme CourtCase Title – Sharp Business System Thr. Finance Director Mr. Yoshihisa Mizuno v. Commissioner Of Income Tax-III N.D.Case no. – Civil Appeal No. 4072 of 2014The 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 accretion to the profit earning apparatus of the payer. The enduring advantage, if any, by restricting a competitor in business, is not in the capital field”, the Court observed.HIGH COURTSAllahabad HCGST | Allahabad High Court Grants Stay On Composite Show Cause Notice For Multiple Assessment YearsCase Title: M/S S.D. Freshners Ltd. Through Its Director Shri Mahesh Prasad And Another Versus Union Of India And 5 OthersCase no.: WRIT TAX No. - 7500 of 2025Recently, the Allahabad High Court has granted stay on composite show cause notice issued by the Directorate General of GST Intelligence where multiple assessment years have been clubbed in one show cause notice.Petitioner approached the High Court against a single show cause notice issued by the Additional Director, Directorate General of GST Intelligence, Ghaziabad for tax period starting from August 2019 to September 2023. It was pleaded that the same could not be done as each tax period is a separate cause of action.Andhra Pradesh HCGST Not Leviable On Interest/Penalty Charged By Chit Fund Companies For Delayed Payment Of Monthly Subscriptions: AP High CourtCase Title: M/s Ushabala Chits Pvt. Ltd. v. The Commissioner of State TaxCase Number: WRIT PETITION No.14745 of 2021The Andhra Pradesh High Court held that interest and penalty collected by chit fund companies from defaulting subscribers for delayed payment of instalments are not taxable under GST.Justices R. Raghunandan Rao and T.C.D. Sekhar examined whether the interest/penalty collected for the delay in payment of the monthly subscription by the members forms a supply under GST.Bombay HCIncome Tax Act | Mechanical Approval U/S 153D Vitiates Proceedings; Bombay High Court Dismisses Revenue's AppealCase Title: Pr. Commissioner of Income Tax-1, Thane Vs. Vrushali Sanjay ShindeCase No.: ITA(L) No. 12683 of 2024The Bombay High Court has dismissed an income tax appeal filed by the Revenue, holding that an approval granted under Section 153D of the Act, which does not reflect even minimal application of mind, is vitiated in law and renders the consequential proceedings invalid.A Division Bench of Justice M.S. Sonak and Justice Advait M. Sethna, while deciding an appeal, answered the substantial question of law against the Revenue i.e. Whether an approval granted under Section 153D of the Income Tax Act, without recording reasons, can nevertheless be treated as mechanical and invalid for lack of application of mind and upheld the order of the Income Tax Appellate Tribunal (ITAT), which had quashed the proceedings under Section 153C of the Act.Bombay High Court Quashes Tax Notices Issued Against Mumbai Company After SVLDRS SettlementCase Title: Astute Valuers and Consultanta Pvt. Ltd. Vs. Union of India & Ors.Case Number: Writ Petition No. 74 of 2023The Bombay High Court has held that once a dispute is settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and a Discharge Certificate is issued, tax authorities cannot reopen the matter.A Division Bench of Justice M S Sonak and Justice Advait M Sethna set aside two show cause notices issued by officers of the Central GST Audit-II wing, Mumbai, after the dispute was settled under the Scheme.Income Tax Act | Bombay High Court Allows...

Tax Weekly Round-Up: December 15 - December 21, 2025

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