Tax Weekly Round-Up: June 16 - June 22, 2025

HIGH COURTSBombay HCAmount Of Subsidy Received By Assessee From RBI Cannot Be Treated As 'Interest' Chargeable U/S 4 Of Income Tax Act: Bombay High CourtCase Title: Bank of India v. Deputy Commissioner of Income Tax, Special Range-15, MumbaiCase Number: INCOME TAX APPEAL NO.425 OF 2003The Bombay High Court held that the amount of subsidy received by the Assessee from RBI cannot be treated as 'interest' chargeable under Section 4 of Income Tax Act.The Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne stated that “the amount of subsidy received by the Assessee is not relatable in loan or advance given by the assessee to the RBI and therefore, the amount of subsidy can neither be treated as commitment charges nor discount on promissory notes on bill of exchange drawn or made in India.”Cash Credit Account Cannot Be Treated As Property Of Account Holder Which Can Be Considered U/S 83 Of GST Act: Bombay High CourtCase Title: Skytech Rolling Mill Pvt. Ltd. v. Joint Commissioner of State Tax Nodal 1 Raigad DivisionCase Number: WRIT PETITION NO.1928 OF 2025The Bombay High Court stated that cash credit account cannot be treated as property of account holder which can be consider under Section 83 of GST Act.The Division Bench of Justices M.S. Sonak and Jitendra Jain observed that the phrase 'including bank account' following the phrase, “any property” would mean a non-cash-credit bank account. Therefore, a “cash credit account” would not be governed by Section 83 of the MGST Act.Treaty Provisions Don't Override Customs Law: Bombay High Court Upholds SCN Issued For Alleged Misuse Of Import ExemptionsCase Title: Purple Products Private Limited v. Union of IndiaCase Number: WRIT PETITION NO. 2831 OF 2018The Bombay High Court stated that treaty provisions don't override customs law and upheld the show cause notices issued for alleged misuse of import exemptions.The Bench consists of Justices M.S. Sonak and Jitendra Jain observed that based on a treaty provision that is not transformed or incorporated into the national law or statute, the provisions of the existing Customs Act cannot be undermined, or the powers and jurisdiction of the customs authorities questioned.Does Payment For Transponder Services Constitute 'Royalty' U/S 9(1)(vi) Of Income Tax Act? Bombay High Court Asks CIT To DecideCase Title: Viacom 18 Media Pvt. Ltd. v. Deputy Commissioner of Income TaxCase Number: INCOME TAX APPEAL NO.1378 OF 2018The Bombay High Court has asked the Commissioner of Income Tax to decide whether payment for transponder services constitutes 'royalty' under Section 9(1)(Vi) of Income Tax Act.The Division Bench of Justices M.S. Sonak and Jitendra Jain observed that “the authorities have held the payment to constitute 'royalty' under the domestic law as well as under the Treaty, but by holding the said payment is towards 'royalty' under the Treaty, the revenue has relied upon the definition of 'process' under the domestic law. Therefore, to say that the revenue has only held against the Assessee on the ground of domestic law and not the Treaty is not correct.”[Income Tax] Breach Of Article 265 Cannot Be Alleged Based On Inconclusive Opinion By Assessing Officer: Bombay High CourtCase Title: Fcbulka Advertising Pvt Ltd. v. Assistant Commissioner of Income Tax Circle 16(1)Case Number: WRIT PETITION NO.3442 OF 2022The Bombay High Court stated that a breach of Article 265 of the constitution cannot be alleged or sustained based upon a tentative or inconclusive opinion formed by assessing officer.The Division Bench consists of Justices M.S. Sonak and Jitendra Jain stated that “If the communication dated 29 November 2018 is an order, it being like a preliminary, prima facie, or interlocutory order and not a final order, the Petitioner cannot base their claim on this communication to allege breach of Article 265 of the Constitution. The communication dated 29 November 2018 is based on preliminary verification and is subject to processing, and therefore, it is in the nature of a preliminary/prima facie/interlocutory order.”AO Cannot Alter Net Profit In Profit & Loss Account Except Under Explanation To S.115J Of Income Tax Act: Bombay High CourtCase Title: M/s. Mahindra & Mahindra Ltd. v. Commissioner of Income-taxCase Number: INCOME TAX APPEAL NO. 416 OF 2003The Bombay High Court stated that assessing officer do not have the jurisdiction to go behind net profit in profit and loss account except as per explanation to Section 115J Of Income Tax Act.The Division Bench consists of Chief Justice Alok Aradhe and Justice M.S. Karnik observed that “Section 115J of the 1961 Act mandates that in case of a company whose total income as computed under the provisions of the Act 1961 is less than 30% of the book profit, the total income chargeable to tax will be 30% of the book profit, as shown in the profit and loss account prepared in accordance with the provisions of Part II and III of Schedule VI of the Companies Act 1956, after...

Tax Weekly Round-Up: June 16 - June 22, 2025

Kapil Dhyani

Tags