The two-member bench comprising Arun Khopdia (Accountant Member) and Amit Shukla( Judicial Member) observed that in the present case, the explanation offered by the assessee demonstrates a reasonable and bona fide cause for the delay in filing Form No.10AB.

It was held that in such circumstances, denial of registration without allowing the assessee to place the amended trust deed on record would be contrary to the principles of natural justice and the settled jurisprudence governing the grant of registration under section 12AB.

The Bench comprising Partha Sarathi Chaudhury, Judicial Member, and Arun Khodpia, Accountant Member, held that the procedure adopted by the CIT(A) was contrary to law. The Tribunal observed that once additional evidence is admitted, Rule 46A(3) of the Income Tax Rules, 1962, mandatorily requires the AO to be given an effective opportunity to examine such evidence and furnish a remand report.

Further, held that deciding the appeal without such verification also runs contrary to Section 250(4) and Section 250(6) of the Income Tax Act, 1961, which obligate the appellate authority to make proper inquiries and pass a reasoned order.

The Bench, comprising Vikram Singh Yadav (Accountant Member) and Sandeep Singh Karhail (Judicial Member), held that when the genuineness of the transaction is not in dispute, the TPO cannot question the commercial expediency of the expenditure or determine its arm’s length price at nil merely on the ground that the assessee did not derive benefit. The Tribunal accordingly set aside the royalty adjustment, which had been made by determining the arm’s length price at nil.

The Tribunal further dealt with the issue of aggregation versus segregation of international transactions and held that where transactions are closely linked and form part of a business arrangement, they should be aggregated to determine the arm’s length price.

Manufacturing Entity Fails to Qualify 75% Trading Turnover Filter: ITAT Orders Deletion of Comparable

B & R Industrial Automation Pvt. Ltd. vs Additional / Joint/Deputy /Assistant Commissioner of Income Tax /Income Tax Officer CITATION: 2026 TAXSCAN (ITAT) 128

The Income Tax Appellate Tribunal (ITAT) Pune Bench has ordered the deletion of a comparable company on the reason that it fell in the ambit of an entity carrying out manufacturing business and had also failed to qualify the 75% of trading turnover filter.

The bench consisting of Dr. Dipak P. Ripote (Accountant Member) and Vinay Bhamore (Judicial Member) found merit in one of the previously mentioned grounds which stated that the DRP has erred in reducing the filter only for a particular comparable, this is not permissible. And thus, partly allowed the appeal.

Home Loan used Entirely for Business: ITAT orders Fresh Adjudication on Interest Expense Disallowance after Additional Evidence

Prakash Katariya vs ITO CITATION: 2026 TAXSCAN (ITAT) 129

The Income Tax Appellate Tribunal (ITAT) Pune Bench has ordered the Commissioner of Income Tax (CITA) (Appeals)/NationalFaceless Appeal Centre (NFAC), Delhi to admit new evidence in the matter of disallowance of loan interest expenditure. The contention that the home loan was used entirely for business purposes to be re-examined, to set the facts straight.

The Vice President R. K. Panda held that the case should be brought back to the CIT(A) with this additional evidence in the interest of principles of natural justice after which the facts would be set clear. Additionally, the ground contended by the assessee that he was unable to establish that the loan was utilized for the purpose of construction of business was observed with merit. Conclusively, the appeal was allowed for statistical purposes on 07.10.2025.

TOLA cannot Revive Reassessment Bar After 6 Years: ITAT Sets Aside ₹1.09 Cr Demand

Swami Vivekanand College vs Income Tax Officer, Ward-4(4) CITATION: 2026 TAXSCAN (ITAT) 130

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) cannot revive reassessment proceedings initiated after the expiry of the six-year statutory limitation period, and consequently set aside a tax demand of ₹1.09 crore raised through reassessment proceedings under the Income Tax Act, 1961.

The Bench of Saktijit Dey, Vice President, and Jagadish, Accountant Member, held that the reassessment proceedings were barred by limitation and therefore invalid. The Tribunal observed that the notice under Section 148 of the Income Tax Act, 1961 had been issued on 13.04.2022, which was beyond six years from the end of Assessment Year 2015-16.

Relying on the Supreme Court’s decision in Union of India v. Rajeev Bansal, the Tribunal held that the TOLA could not be applied to extend the limitation period for reassessment for Assessment Year 2015-16.

Reversal of Interest u/s 23 of MSMED Act Cannot Attract Addition In Absence of Deduction Claim: ITAT Directs AO to Verify

Siemens Limited vs Asst. DIT CITATION: 2026 TAXSCAN (ITAT) 131

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that the reversal of interest provided under Section 23 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), cannot attract any addition to income where the assessee had not claimed such interest as a deduction while computing taxable income. Therefore, the Tribunal directed the Assessing Officer (AO) to verify whether any deduction had in fact been claimed and if not then to delete the addition.

The Bench comprising Saktijit Dey, Vice President, and Jagadish, Accountant Member, noted that the assessee’s specific claim was that although a provision for interest was created in the books, no deduction was claimed while computing taxable income under the Income Tax Act, 1961. The ITAT held that if such a factual position is verified and found to be correct, the reversal of the provision cannot give rise to any taxable addition.

Mistaken Self-Disallowance u/S.36 in Income tax Return Can Be Rectified: ITAT Orders Fresh Review

Sapphire Fintech vs Deputy Commissioner of Income Tax CITATION: 2026 TAXSCAN (ITAT) 132

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) observed an inadvertent self-disallowance made by a taxpayer in the return of income cannot be treated as final if it does not reflect the correct tax liability, thereby inadvertent disallowances under Section 36 of the Income TaxAct, 1961 cannot be rejected solely on procedural grounds. Thus, the Tribunal ordered a fresh examination of disputed issues.

The Bench comprising Sandeep Singh Karhail, Judicial Member and Prabhash Shankar, Accountant Member held that since the issue of the genuineness of loans had already been restored for de novo adjudication in earlier years, the disallowance of interest expenditure for the year under consideration could not be sustained without fresh examination. Accordingly, the issue was restored to the AO for re-consideration.

On the issue of the inadvertent disallowance of ₹9 lakh, the Tribunal affirmed that appellate authorities are empowered to entertain fresh claims. The Tribunal clarified that assessment proceedings are meant to assess the correct tax liability and noted that the nature of the ad hoc disallowance required proper examination.

ITAT Grants Relief on Unexplained Income in ₹94-Lakh Property Sale Despite Invalid Income Tax Return

Shalaka Chandrahas Chavan vs Income Tax Officer CITATION: 2026 TAXSCAN (ITAT) 133

The Income Tax Appellate Tribunal ( ITAT ) has held that the assessing officer cannot ignore the examination of source of funds merely because of the error in income tax return ( ITR ) due to technical issues.

The bench of Girish Agarwal (Accountant member) and Amit Shukla (Judicial member) observed that “The statutory mandate under section 69A requires that where the explanation furnished by the assessee is supported by credible evidence and is not shown to be false, no addition is warranted.”

Therefore, the tribunal declared that addition Rs.13,00,500 under section 69A is wholly unsustainable. The bench noted that there is record to suggest that the assessee possessed any source of income other than the sale consideration in question.

Schedule BP Adjustment Ignored: ITAT Sets Aside ₹33.83 Cr Disallowance u/s. 37 & MAT Addition u/s. 115JB

Syntel Private Limited vs Assistant Commissioner of Income Tax Circle11(2)(2), Mumbai CITATION: 2026 TAXSCAN (ITAT) 134

The Tribunal set aside a disallowance of ₹33.83 crore made under Section 37 of the Income TaxAct, 1961, along with the corresponding addition to book profits under Section 115JB, after noting that the Assessing Officer (AO) failed to consider the assessee’s Schedule BP adjustments reflecting a neutral tax impact.

Rahul Chaudhary, Judicial Member and Jagadish, Accountant Member, comprising the bench noted that the AO failed to take into account the corresponding deduction claimed by the assessee while making the disallowance under Section 37 of the Income Tax Act, 1961. Since the Revenue contended that the claim required verification, the Tribunal deemed it appropriate to remit the matter back to the AO for de novo adjudication.

STT-Paid STCL Set-Off allowed against 30% STCG Despite 15% Rate: ITAT Quashes Denial

iShares Core MSCI Emerging Markets ETF vs Deputy Commissioner of IncomeTax CITATION: 2026 TAXSCAN (ITAT) 135

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) set aside denial of set-off ruling that short-term capital loss (STCL) arising from transactions on which Securities Transaction Tax (STT) was paid cannot be denied set-off against short-term capital gains (STCG) taxable at a higher rate merely due to different rates of tax.

The Bench of Vikram Singh Yadav, Accountant Member and Sandeep Singh Karhail, Judicial Member allowed the appeal of the appellant, holding that the Income Tax Act, 1961 does not recognise tax rate as a criterion for denying or restricting set-off of losses. The Tribunal observed that Sections 111A and 115AD only determine the rate at which the resultant income is taxed and do not carve out separate classes of STCG for computation purposes.

The Bench ruled that the AO’s denial of set-off solely on the ground of differential tax rates was contrary to the express provisions of the Act and unsupported by law.

Date of Share Transfer Determines “Holding Period”, Not Allotment Date: ITAT allows LTCG Exemption

Chintan Harshad Kanakia vs ITO Ward 42 (1)(1) Room No. 703 CITATION: 2026 TAXSCAN (ITAT) 136

The Mumbai Bench, Income Tax Appellate Tribunal (ITAT) held that for the purpose of determining the “holding period” of shares concerning eligibility for long-term capital gains (LTCG) exemption, the decisive date is the date of transfer of shares to the assessee and not the date on which the shares were originally allotted to the previous holder.

The Bench comprising Pawan Singh, Judicial Member and Renu Jauhri, Accountant Member held that the approach adopted by the lower authorities was legally unsustainable. The Tribunal observed that for determining the holding period under the Income Tax Act, 1961, what is material is the date on which the assessee acquired ownership of the shares.

AO Cannot make Additions on Issues Unrelated to Recorded Reopening Reasons: ITAT

Chintan Harshad Kanakia vs ITO Ward 42 (1)(1) Room No. 703 CITATION: 2026 TAXSCAN (ITAT) 136

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that a reassessment cannot be sustained where the Assessing Officer (AO) makes additions on issues completely unrelated to the reasons recorded for reopening the assessment, whereas, no addition is ultimately made on the very ground that formed the basis of reopening.

The Bench comprising Pawan Singh, Judicial Member and Renu Jauhri, Accountant Member, allowed the appeal, holding that the reassessment was unsustainable as no addition was made on the issue that formed the very foundation of the reopening.

Relying on the decision of the Bombay High Court in Commissioner of Income Tax v. Jet Airways (India) Limited and similar precedents, the Bench observed that where the AO accepts that the income referred to in the recorded reasons has not escaped assessment, he cannot proceed to assess some other income without issuing a fresh notice under Section 148 of the Income Tax Act, 1961.

No Profit in Intra-Group Sales, Not Liable for Commission Income: ITAT Rules in Avance Technologies Appeal

Avance Technologies Limited vs ACIT CITATION: 2026 TAXSCAN (ITAT) 137

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that commission income cannot be assessed on circular intra-group transactions, upholding that no entity can earn profit from dealings within its own controlled group, and partly allowed the appeal by deleting additions arising from such sales.

The bench of Pawan Singh, Judicial Member, and Renu Jauhri, Accountant Member, allowed the appeal, ruling that the AO was incorrect in treating Mobile Telecommunication Limited as a non-group entity, when the same entity had been accepted as a group company in related cases. Relying on earlier decisions in the appellant’s own case and in connected group matters, the Tribunal reiterated that no commission income can arise from circular transactions within a group, as no one can earn profit from transactions with oneself.

Accordingly, the addition of commission income on intra-group sales was deleted.

Interest Income Earned by Co-Operative Society from Deposits With Co-Op Banks & Nationalised Bank Eligible for S. 80P Deduction: ITAT

The Sangli Salary Earners Co Op Society Ltd vs The Income Tax Officer CITATION: 2026 TAXSCAN (ITAT) 138

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) held that interest income earned by a co-operative credit society from deposits with co-operative banks and a nationalised bank was eligible for deduction under Section 80P of the Income Tax Act, 1961, and that the Revenue Authorities cannot deviate from its earlier stand in the absence of any change in facts, in view of the rule of consistency.

The Bench comprising Vinay Bhamore, Judicial Member, and Dr. Dipak P. Ripote, Accountant Member, allowed the appeal of the assessee, observing that the appellant is a co-operative credit society and that its interest income arose from deposits made in the course of its regulated business activities. The Tribunal noted that in the appellant’s own case for earlier assessment years, the Commissioner of Income Tax (Appeals) had allowed the deduction under Section 80P the Income Tax Act, 1961 on identical facts, and those findings had not been disturbed.

Applying the rule of consistency, the Tribunal held that in the absence of any change in facts or law, the authorities were bound to follow the view taken in earlier years.

General Insurance Companies Entitled to S. 10(38) Income Tax Exemption on Equity Gains: ITAT

United India Insurance Co. Ltd vs The Principal Commissioner of IncomeTax CITATION: 2026 TAXSCAN (ITAT) 139

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) ruled that general insurance companies can claim income tax exemption under Section 10(38) on long-term capital gains from sale of equity investments.

The two-member bench comprising S.S. Viswanethra Ravi (Judicial Member) and Jagadish (Accountant Member) observed that coordinate benches had consistently allowed exemption under Section 10(38) to general insurance companies even after the amendment to Rule 5. The tribunal observed that Rule 5(b)(i) applies only where gains or losses on investments are not credited to the profit and loss account, which was not the case here.

The tribunal also observed that the Assessing Officer had examined the issue in detail, and revision could not be based on a mere change of opinion. The tribunal partly allowed the appeals, and set aside the revision orders on the Section 10(38) issue.

Income Tax Consultant died during COVID-19: ITAT condones 848 days' delay

Subodh Adhikary vs ITO Ward 51(1), Kolkata CITATION: 2026 TAXSCAN (ITAT) 140

In a recent ruling, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) showed a compassionate approach in condoning a delay of 848 days in filing an appeal, where the appellant’s Income Tax Consultant had tragically passed away during the COVID-19 pandemic.

The Division Bench of Shri Rajesh Kumar (Accountant Member) and Shri Pradip Kumar Choubey (Judicial Member) observed that the AO had started enquiries into other issues before the conversion order was passed. The Tribunal held that such action was contrary to CBDT’s binding instructions and amounted to a fishing and roving enquiry. It further noted that the approval for conversion was mechanical and lacked cogent material.

The Tribunal found that the assessee had duly explained the source of cash deposits with bank statements and replies, but the authorities had failed to appreciate the evidence.

Penalty Invalid as Notice did not specify sub-clause of S.270: ITAT Rules in Favour of Bajaj Housing Finance Ltd

Bajaj Housing Finance Limited vs Income Tax Officer CITATION: 2026 TAXSCAN (ITAT) 141

The Income Tax Appellate Tribunal (ITAT) Bench at Pune has set aside the penalty against Bajaj Housing Finance, holding that such a penalty will be invalid as the notice for the same did not specify a sub-clause of Section 270 of the Income Tax Act, 1961.

The bench comprising Dr. Manish Borad (Accountant Member) held that re-classification of income cannot be considered as under-reporting income or misreporting income. The relevant case of Jaypee Cement Corporation v. ACIT (2023) had been mentioned and relied upon in their order which had similar issues. As a result, the penalty was deleted and the appeal was allowed.

Penalty under Income Tax cannot be Sustained Independently when Additions are Deleted: ITAT

ACIT, Central Circle vs Saurabh Gupta, A-185/4, Kamla CITATION: 2026 TAXSCAN (ITAT) 142

The Income Tax Appellate Tribunal ( ITAT ), Agra Bench held that penalties under the Income Tax Act, 1961 cannot survive independently when the additions forming their basis have already been deleted.

The bench of S. Rifaur Rahman (Accountant member) and Sunil Kumar Singh ( Judicial member) noted that in the case of K.C. Builders vs. ACIT, the apex court held that “ the additions in the assessment order, on the basis of which penalty was levied, are deleted, there remains no basis at all for levying the penalty.”

Accordingly, the bench upheld the order of the CIT(A). It dismissed the two appeals filed by the revenue.