Tax Weekly Round-Up: June 23 - June 29, 2025

HIGH COURTSBombay HCBenefit Of Cash Compensatory Scheme Cannot Be Denied On Castor Oil Exports Based On Subsequent Test Change: Bombay High CourtCase Title: Sanjay Kumar Agarwal v. Union of IndiaCase Number: WRIT PETITION NO.872 OF 1994The Bombay High Court stated that benefit of cash compensatory scheme benefit cannot be denied on castor oil exports based on subsequent test change.The Division Bench of Justices M.S. Sonak and Jitendra Jain has observed that contracts executed prior to the cutoff day would not be governed by the subsequent change in the scheme granting the benefit.Assessee Cannot Be Penalised U/S 271(1)(c) Of Income Tax Act For Merely Raising A Plausible Claim: Bombay High CourtCase Title: M/s. Carona Limited v. Deputy Commissioner of Income TaxCase Number: INCOME TAX APPEAL NO. 512 OF 2003The Bombay High Court stated that the assessee cannot be penalised under Section 271(1) (c) of income tax act for merely raising a plausible claim.The Division Bench consists of Chief Justice Alok Aradhe and Justice Sandeep V. Marne opined that “the claim raised by the Assessee for claiming deduction in respect of the crystalised liability towards additional bonus was a plausible claim. Whether such claim is tenable in law or not is an altogether different issue. What is relevant to note is the position that the claim made by the Assessee can, by no stretch of imagination, be treated as malafide act of concealment of income so as to attract the provisions of Section 271(1)(c) of the I.T. Act.”Calcutta HCEden Gardens Not A 'Public Street', Imposing Ad Tax Without Regulations Violates Rule Of Law: Calcutta High Court Quashes Demand NoticeCase Title: THE CALCUTTA MUNICIPAL CORPORATION & ORS. VS THE CRICKET ASSOCIATION OF BENGAL & ORS.Case Number: APO/248/2016 WITH WPO/2662/1996 IA NO: GA/2/2021The Calcutta High Court bench of Justices Arijit Banerjee and Justice Kausik Chanda has held that without framing Regulations or without the budget estimate prescribing the rates at which advertisement tax may be levied by Kolkata Municipal Corporation (KMC), computation and imposition of such tax would be arbitrary. It would have no rational basis. It would then be open to KMC to quantify such tax as per its sweet will, which cannot be countenanced under the rule of law.Assessee Can Seek Refund Of Unutilised ITC In Personal Bank Account If Business Is Shut Down: Calcutta High CourtCase title: Edelweiss Rural & Corporate Services Limited & Anr. v. The Deputy Commissioner of Revenue, Taltala Charge, WBGST & Ors.Case no.: WPA 3033 OF 2025Calcutta High Court recently directed the proper officer under the GST Act to consider ordering refund of the unutilised ITC of an Assessee to his personal bank account, as his business was closed and its GST registration stood cancelled.The Petitioner was aggrieved by a direction of the proper officer, though allowing the refund sanction to the tune of Rs. 68,66,238/- but, directing the amount to be paid to the bank account of the business— Edelweiss Rural & Corporate Services Limited.Delhi HCValuation Of Company's Unquoted Equity Shares By 'Discounted Cash Flow' Method Permissible Under Income Tax Rules: Delhi High CourtCase title: Principal Chief Commissioner Of Income Tax-1 v. A.H. Multisoft Pvt. Ltd.Case no.: ITA 9/2025The Delhi High Court recently rejected the appeal preferred by the Income Tax Department against an ITAT order allowing the valuation of a software company's unquoted equity shares by discounted cash flow [DCF] method.In doing so, a division bench of Justices Vibhu Bakhru and Tejas Karia held that DCF method “is one of the methods that can be adopted by the Assessee under Rule 11UA(2)(b) of the [Income Tax] Rules for determining the FMV of unquoted equity shares in a company in which public are not substantially interested.”Reassessment Notice Can't Be Based On 'General Information' From Investigation Wing Of Income Tax Dept: Delhi High CourtCase title: Sanjay Kaul v. The Income Tax Officer Ward 24 (4), New Delhi & Ors.Case no.: W.P.(C) 11198/2019The Delhi High Court has made it clear that the Income Tax Department cannot issue reassessment notice to an assessee based on general information shared by its Investigation Wing, until the Assessing Officer forms definite 'reason to believe' escapement of income.A division bench of Justices Vibhu Bakhru and Tejas Karia observed, “It is clear from the information received from the Investigation Wing…that the same was general in nature and did not point towards the involvement of the Petitioner in the arrangement of providing accommodation entry by contriving bogus short term capital loss. From the aforementioned information, it cannot be concluded that all the transactions…were sham in nature.”Once AO Scrutinises Identity & Creditworthiness Of Shareholders, No Reassessment Action Without 'Additional Info' About Income Escapement: Delhi HCCase title: Pr. Commissioner Of Income Tax (Central)-2 v. M/S K.R. Pulp And Papers...

Tax Weekly Round-Up: June 23 - June 29, 2025

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Tax Weekly Round-Up: June 23 - June 29, 2025

Kapil Dhyani

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