ITAT Weekly Roundup

This weekly round-up encapsulates the key stories related to the Income Tax Appellate Tribunal

(ITAT) reported at Taxscan, from May 9, 2026 to May 16, 2026.

TPO Wrongly Recharacterised Boeing India as Full-Risk Service Provider Despite AE Assuming Entire Contractual Risks: ITAT Boeing India D efense PrivateLimited vs DCIT, Circle 4 (2), New Delhi CITATION : 2026 TAXSCAN (ITAT) 496

The Income Tax Appellate Tribunal(ITAT) Delhi Bench held that the Transfer Pricing Officer (TPO) had wrongly recharacterised Boeing India Defense Private Limited as a full-risk service provider despite the Associated Enterprise (AE) assuming the entire contractual and operational risks relating to defence support services rendered to the Indian Air Force (IAF).

Based on the above considerations, the Tribunal held that there was no basis for re-characterization and directed the revenue department to accept the benchmarking made by the assessee.

ITAT Reduces Estimated Profit Rate from 8% to 5%; Upholds 8% Profit Estimation Excessive for Infrastructure Sub-Contractor Operating in Remote Areas

ENVISTA ENGINEERING &CONSTRUCTION PRIVATE LIMITED vs ACIT

CITATION : 2026 TAXSCAN (ITAT) 497

The Income Tax Appellate Tribunal (ITAT) Chennai Bench has reduced the estimated profit rate of an infrastructure contractor from 8% to 5%, holding that the Assessing Officer’s estimation was excessive considering the assessee’s status as a sub-contractor operating in remote and difficult terrains.

The Bench observed that the comparables relied upon by the Revenue were not functionally similar and Section 44AD could not be mechanically applied where turnover exceeded statutory limits.

Registered Sale Value and Stamp Duty Valuation Alone Cannot Prove Unaccounted Cash Payment in Property Purchase: ITAT Deletes ₹1 Crore Addition Mayuri Hitendra Shah vsAssessing Officer

CITATION : 2026 TAXSCAN (ITAT) 498

The Income Tax Appellate Tribunal [ITAT] Mumbai Bench has held that the registered sale value of a property and stamp duty valuation by themselves cannot be treated as conclusive proof of unaccounted cash payment in a property transaction. The Tribunal set aside the addition of ₹1 crore made against the assessee and remanded the matter for fresh adjudication after directing the Assessing Officer (AO) to provide an opportunity for cross-examination of witnesses.

The Bench comprising Narender Kumar Choudhry (Judicial Member) and Prabhash Shankar (Accountant Member) observed that the AO had heavily relied on the investigation report and third-party statements without conducting any independent enquiry or providing the assessee an effective opportunity to challenge the evidence. Referring to judicial precedents including Andaman Timber Industries v Commissioner of Central Excise the Tribunal held that denial of cross-examination in such circumstances amounted to violation of principles of natural justice.

Denial of Section 54F Exemption and Property Value Enhancement Cannot Be Sustained Without Considering Evidence: ITAT Sets Aside ₹13.06 Lakh Addition Nirmal Kishore Jain vsddl./Joint/ Dy. /Asstt. Commissioner of Income Tax

CITATION : 2026 TAXSCAN (ITAT) 499

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that denial of exemption under Section 54F of the Income TaxAct, 1961 and enhancement of property valuation cannot be sustained where the documentary evidence furnished by the assessee was not properly examined by the lower authorities. The Tribunal set aside the impugned orders and remanded the matter for fresh adjudication.

The Bench comprising Yogesh Kumar [Judicial Member], and Krinwant Sahay [Accountant Member], emphasized that tax authorities are duty-bound to decide matters based on evidence and merits.

Minimum Alternate Tax (MAT) Provisions Inapplicable Once Concessional Tax Regime Option Exercised: ITAT Deletes ₹36.67 Cr Addition INCOME TAX OFFICER, Ward 27(1)vs WESTERN DEVELOPERS PRIVATE LIMITED CITATION : 2026 TAXSCAN (ITAT) 500

The Income TaxAppellate Tribunal (ITAT) Delhi Bench has held that the provisions relating to Minimum Alternate Tax (MAT) under Section 115JB of the Income Tax Act, 1961 are not applicable once an assessee opts for the concessional tax regime. The Tribunal accordingly upheld the deletion of an addition of ₹36.67 crore made by the Central Processing Centre (CPC).

The Tribunal observed that the appellate authority had correctly interpreted the statutory provisions. The Bench further noted that the assessee’s claim under the concessional regime had already been accepted by the CPC in earlier years thereby supporting the principle of consistency.

Small HUF Lender’s Cash Deposits During Demonetization Explained through Loan Recoveries: ITAT Deletes Rs. 9.4L Addition u/s 69A CSV Renraj (HUF) vs The IncomeTax Officer CITATION : 2026 TAXSCAN (ITAT) 502

“An addition under section 69A of the Act cannot be sustained merely on suspicion when a plausible explanation supported by available material is furnished”, ruled the Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ) while deleting the addition of Small HinduUndivided Family (HUF).

The ITAT said that an addition under Section 69A cannot be sustained based on mere suspicion or just because the records are not formal enough. It held that since the HUF provided a reasonable explanation that aligned with the available evidence, the source of the ₹9.4 lakh was satisfactorily explained.

Cash deposits during Demonetization alleged to be Unexplained Sufficiently Evidenced: ITAT reduces Addition to 10%   Dineshbhai Nagjibhai Viradiya vsThe Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 503

The Income Tax Appellate Tribunal (ITAT), Rajkot Bench, reduced addition to income to 10% as the cash deposits during demonetization alleged to be unexplained were sufficiently evidenced.

ITAT observed that while some of the documents are self-serving documents and therefore, there is a possibility of leakage of revenue. The bench of Dr. Arjun Lal Saini found that the entire relief cannot be permitted and thus directed the AO to make an addition of INR 68,000/- by applying the normal rate of income tax. The appeal was partly allowed.

Jewellery already Disclosed Before Income Tax Settlement Commission: ITAT Deletes ₹73.84L Addition DCIT, CC-30 vs SMT. ASHU ASHOK CITATION : 2026 TAXSCAN (ITAT) 504

The Delhi Bench of theIncome Tax Appellate Tribunal (ITAT) has deleted an addition of ₹73.84 lakh made towards alleged unexplained jewellery, after finding that the jewellery had already been disclosed before the Income Tax Settlement Commission (ITSC) by the assessee’s husband and accepted during settlement proceedings.

Since the Settlement Commission had already accepted the disclosure without recommending any further addition, the Tribunal held that the addition of ₹73.84 lakh towards unexplained jewellery could not survive.

AO Cannot Estimate Expenses Once Income Above 8% Is Declared Under Presumptive Taxation u/s 44AD: ITAT DCIT, CC-30 vs SMT. ASHU ASHOK CITATION : 2026 TAXSCAN (ITAT) 504

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that once an assessee declares income above the prescribed 8% threshold under Section 44AD of Income Tax Act 1961, the Assessing Officer cannot proceed to estimate expenses or demand detailed proof of expenditure for computing additional income.

The order of the CIT(A) deleting the addition was upheld, and the Revenue’s grounds on this issue were dismissed.

Alleged involvement in Money Laundering of Beneficiary of Bogus Entities with undeclared Income u/s 68: ITAT grants Final Opportunity Manbhawan Exim Pvt. Ltd vs ITO CITATION : 2026 TAXSCAN (ITAT) 505

The Income Tax Appellate Tribunal (ITAT), Surat Bench, granted a final opportunity of being heard in a case where the assessee had been allegedly involved in money laundering. It had also been decided that the assessee was a beneficiary of bogus entities with undeclared income under Section 68 of the Income Tax Act, 1961.

ITAT noted the partial compliance and appropriated a cost of Rs. 5000 for each of the three Financial Years in consideration. The bench of Narendra Prasan Sinha (Accountant Member) and T. R. Senthil Kumar (Judicial Member) restored the appeals to the file of the CIT(A) stating that the final opportunity should be given to the assessee to produce all necessary details and evidences.

Disallowance Computed under Rule 8D(2)(ii) of Income Tax Rules should not Exceed Exempt Income so Earned: ITAT Rohit Real Estates Pvt Ltd vsAsstt. Commissioner of Income Tax Circle-2(3)(1 CITATION : 2026 TAXSCAN (ITAT) 506

The Income Tax Appellate Tribunal (ITAT), Lucknow Bench, held that the disallowance computed under Rule 8D(2)(ii) of the Income Tax Rules , 1962 should not exceed exempt income so earned.

The bench of Anadee Nath Misshra (Accountant Member) and Kul Bharat (Vice President) directed the Assessing Officer to restrict the disallowance to the extent of the exempt income, i.e., INR 31,070/-. The appeal was partly allowed.

Issue of Benefits obtained through Bogus Purchase Bills by Rice Millers is sub-judice before the High Court: ITAT remands matter Maa Chandi Rice Industries vsThe Assistant Commissioner of Income Tax CITATION : 2026 TAXSCAN (ITAT) 507

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, remanded a matter as the issue of benefits obtained through bogus purchase bills by rice millers is sub-judice before the High Court.

The bench of Avdhesh Kumar Mishra (Accountant Member) and Partha Sarathi Chaudhary (Judicial Member) followed the pronouncement in M/s Gindlani Rice Mill v. ITO-1(2), Raipur (2026) and held that on the same parity of reasoning and maintaining rule of consistency, the order is to be set aside. The tribunal remanded the matter and allowed the appeal.

Outstanding Liability Not Deemed Ceased Solely Due to Absence of Creditor Confirmation: ITAT Deletes ₹7.07 Lakh Addition Jasmeet Singh Bhasin vs TheDeputy Commissioner of Income Ta CITATION : 2026 TAXSCAN (ITAT) 508

The Income Tax AppellateTribunal (ITAT) Raipur Bench held that the outstanding liabilities cannot be treated as ceased where the assessee failed to furnish confirmations from creditors, as a result deleted an addition of ₹7.07 lakh made under Section 41(1)of the Income Tax Act 1961.

The Bench comprising Partha Sarathi Chaudhury and Avdhesh Kumar Mishra observed that the Revenue authorities proceeded merely on suspicion and failed to conduct any independent inquiry despite the assessee furnishing substantial documentary evidence establishing the existence of liabilities.

Bilateral Advance Pricing Agreement Cannot be Restricted to Specific Country if FAR Profile is Identical: ITAT Directs to Apply US-BAPA Rates for Non-US Transactions

Synchrony International ServicesPrivate Limited vs Assistant Commissioner of Income Tax CITATION : 2026 TAXSCAN (ITAT) 509

The Income Tax Appellate Tribunal (ITAT) Hyderabad Bench held that the profit margin determined under a Bilateral Advance Pricing Agreement (BAPA) for the US cannot be restricted to that country alone if the Functions, Assets and Risk (FAR) profile of transactions with other non-covered Associated Enterprises (AEs) remains identical.

​The Tribunal noted that the TPO had not carried out separate benchmarking for non-US AEs and had applied a uniform approach for all international transactions. The Bench held that while BAPA is not strictly binding for non-covered countries, the margin agreed upon being a result of detailed analysis by tax authorities serves as a reliable and persuasive benchmark.

Industrial Power Tariff Can Be Adopted as Comparable Uncontrolled Price for Captive Power Transfer Pricing: ITAT Dismisses ₹28.22 Cr Adjustment Dy, CIT, Central Circle-2(2) vsGopani Iron and Power(India) Pvt. Ltd. CITATION : 2026 TAXSCAN (ITAT) 510

The Income Tax Appellate Tribunal has held that the industrial tariff charged by a State Electricity Distribution Company can be adopted as the Comparable Uncontrolled Price (CUP) for benchmarking inter-unit transfer of electricity from a captive power plant (CPP). The Tribunal upheld deletion of a ₹28.22 crore transfer pricing adjustment.

The Bench comprising Pawan Singh and Khettra Mohan Roy relied on the Supreme Court’s decision in Jindal Steel & Power Ltd. and the Bombay High Court ruling in CIT v. Reliance Industries Ltd., holding that the tariff charged by the State Electricity Board to industrial consumers represents the true market value of electricity.

Revision u/s 263 Unsustainable Where Discrepancy Between GST Portal Data and Assessment Records Fails to Establish Lack of Inquiry: ITAT NJ India Invest Private Limitedvs Principal Commissioner of Income-tax-1 CITATION : 2026 TAXSCAN (ITAT) 511

The Income Tax Appellate Tribunal ( ITAT ) Surat Bench quashed a revision order passed under Section 263 of the Income Tax Act, 1961 and held that the discrepancy between GST ( Goods and Services Tax) Portal data and assessment records cannot establish lack of inquiry by the Assessing Officer (AO).

The two-member bench comprising Dr. B.R.R. Kumar and Suchitra Kamble held that the both conditions necessary for invoking Section 263 were not satisfied in the present case. Accordingly, the revision order passed by the PCIT was quashed and the appeal of the assessee was allowed.

TPO Must Follow DRP Directions on Comparable Selection and Working Capital Adjustment: ITAT Grants ₹72.7 Lakh Relief to Extreme Labs India Ltd. Extreme Labs India PrivateLimited vs National Faceless Assessment Centre

CITATION : 2026 TAXSCAN (ITAT) 512

The Income Tax Appellate Tribunal (ITAT) DelhiBench held that the Transfer Pricing Officer (TPO) and Assessing Officer (AO) are bound to comply with the directions issued by the Dispute Resolution Panel (DRP) while finalising the assessment, hence granted relief of ₹72.74 lakh.

The Bench comprising Vikas Awasthy (Judicial Member) and Sanjay Awasthi (Accountant Member) also directed the TPO to verify the correct operating margin of Compass IT Solutions and Services Pvt. Ltd., noting that the TPO had adopted 6.93% instead of the correct 2.80%. Further, it ordered a grant of working capital adjustment in line with the DRP’s directions.

Unsold Flats Held as Stock in Trade Not Taxable as House Property: ITAT Deletes ₹46.48 Lakh Notional Rent Addition

Khinvasara Chavan vs ACIT CITATION : 2026 TAXSCAN (ITAT) 513

The Income Tax Appellate Tribunal (ITAT) Pune Bench has held that unsold flats held as stock-in-trade cannot be subjected to notional rental income under the Income from House Property deleting an addition of ₹46.48 lakh made by the AssessingOfficer.

The bench comprising R. K. Panda and Astha Chandra observed that flats held by a builder as stock-in-trade form part of business inventory and cannot be treated as house property for the purpose of taxing deemed rental income.On the issue involving ₹7.33 lakh interest earned on fixed deposits linked to maintenance funds collected from flat purchasers, the Tribunal restored the matter to the CIT(A) for fresh adjudication after giving the assessee an opportunity to furnish supporting evidence.

TDS Disallowance on Digital Advertisement Payments made to Facebook Unsustainable without Proper Adjudication: ITAT Remands ₹16.82 Lakh Addition MJVS FASHIONS PRIVATE LIMITED vsIncome Tax Officer

CITATION : 2026 TAXSCAN (ITAT) 514

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has remanded a disallowance of ₹16.82 lakh relating to digital advertisement payments made to Facebook after observing that the Commissioner of Income Tax (Appeals) [CIT(A)] failed to adjudicate the matter on merits as mandated under the Income Tax Act, 1961.

The two-member bench comprising Sandeep Singh Karhail and Jagadish observed that Section 250(6) of the Income Tax Act obligates the appellate authority to pass a reasoned order on merits. The Tribunal noted that the CIT(A) merely dismissed the appeal for non-prosecution without addressing the substantive issues involved in the TDS disallowance.

Striking Off of Shareholder Company by RoC Cannot Justify Addition u/s 68 in Absence of Fresh Credit Entry: ITAT Deletes ₹56.70 Lakh Addition Deputy Commissioner of Income vsDeputy Commissioner of Income Tax Circle 7(1)(1)

CITATION : 2026 TAXSCAN (ITAT) 515

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench deleted an addition of ₹56.70 lakh made under Section 68 of the Income Tax Act, holding that mere striking off of a shareholder company by the Registrar of Companies (RoC) cannot justify treating existing share capital as unexplained cash credit in the absence of any fresh credit entry during the relevant assessment year.

The bench comprising Justice (Retd.) C V Bhadang (President) and Girish Agrawal (Accountant Member) held that in the absence of any fresh receipt or credit entry during the year under consideration, invocation of Section 68 was unsustainable in law.

Reopening of Fringe Benefit Tax (FBT) Held Valid as Telephone and Travel Expenses Escaped The Assessment: ITAT Saj Flight Services Pvt. Ltd. vsThe Deputy Commissioner of Income Ta CITATION : 2026 TAXSCAN (ITAT) 516

The Income Tax Appellate Tribunal (ITAT) Chennai Bench has upheld the reopening of Fringe Benefit Tax (FBT) assessment against the assessee holding that telephone and travelling expenses which escaped assessment constituted valid grounds for reassessment under Section 115WG of the Income Tax Act 1961.

The two-member bench comprising George George K and S.R. Raghunatha dismissed the appeal filed by the assessee and affirmed the validity of the reassessment proceedings initiated by the Assessing Officer (AO).Further, the Tribunal also held that telephone and travelling expenses were liable to FBT at prescribed rates irrespective of whether they were incurred for business purposes.

Disallowance of Share Trading Loss Held Unsustainable as AO Failed to Examine Contract Notes and Broker Confirmations: ITAT Orders Review of ₹3.26 Cr Addition Aarken Advisors Private Limitedvs ITO CITATION : 2026 TAXSCAN (ITAT) 517

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has held that disallowance of share trading loss cannot be sustained where the Assessing Officer (AO) failed to examine crucial documentary evidence including contract notes, Securities Transaction Tax (STT) payments, and broker confirmations. The Tribunal consequently directed a fresh review of the ₹3.26 crore addition.

The Bench comprising Yogesh Kumar U.S. and Krinwant Sahay held that the matter required reconsideration by the AO.Further, the Bench directed the AO to conduct a de novo assessment after verifying all evidence and submissions produced by the assessee and after granting adequate opportunity of hearing.

CPC Cannot Suo Motu Reclassify Apartment Owners Association as Co-operative Society while Processing ITR: ITAT Deletes ₹97,690 Deman Kailash Appartment Flat OwnersAssociation vs Income Tax Office CITATION : 2026 TAXSCAN (ITAT) 518

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has held that the Centralized Processing Centre (CPC) cannot suo motu change the status of an assessee from an Association of Persons/Body of Individuals AOP to a Co-operative Society while processing the return underSection 143(1) of the Income Tax Act, 1961. The Tribunal consequently quashed the tax demand of ₹97,690.

The Tribunal held that changing the status of the assessee required detailed examination and could not be undertaken as part of automated processing under Section 143(1).

Partner Cannot Be Taxed for Partnership Firm’s Bogus Purchases on Protective Basis: ITAT Deletes ₹1.92 Cr Addition Income Tax Officer vs NishantAgrawal CITATION : 2026 TAXSCAN (ITAT) 519

The Income Tax Appellate Tribunal (ITAT) Raipur Bench held that alleged bogus purchases attributable to a partnership firm cannot be brought to tax on a protective basis in the hands of one of its partners. As a result, the ITAT deleted an addition of ₹1.92 crore made by the Assessing Officer (AO).

The bench comprising Partha Sarathi Chaudhury and Avdhesh Kumar Mishra found no legal or factual basis for selecting only one partner for protective taxation when the transactions pertained to the partnership firm. The bench observed that the assessee was not directly linked to the impugned purchases and that protective addition in his hands was unjustified.

Clerical Error in Return Filing Does not Discredit Income Tax Exemption to Educational Institution: ITAT Directs Rectification of₹3.84 Cr Tax Demand National P.G. College Bhongaonvs Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 520

The Income Tax Appellate Tribunal (ITAT) Agra Bench has held that an educational institution cannot be denied exemption under Section 10(23C)(iiiab) of the Income-tax Act merely due to a clerical error in the income tax return, granting relief against a tax demand of ₹3.84 crore.

The Tribunal comprising S. Rifaur Rahman and Sunil Kumar Singh observed that the mistake was apparent from record and that substantive exemption rights could not be denied on account of an inadvertent reporting error.

Satisfaction Note Must Clearly Show Bearing of Seized Material on Income: ITAT Quashes S. 153C Assessment Holding Proper Satisfaction is Mandatory Sharpi Agarwal vs DeputyCommissioner of Income tax CITATION : 2026 TAXSCAN (ITAT) 521

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, quashed assessment proceedings initiated under Section 153C after finding that the satisfaction note did not clearly show what bearing the seized material had on determining the assessees’ income.

Referring to the decision in Saksham Commodities Ltd., the Tribunal held that recording satisfaction under Section 153C is not a mere mechanical exercise and the defect in the satisfaction note went to the root of the assessment proceedings.

Gift from Mother added as Cash Credit u/s 68 of Income Tax Act: ITAT grants Opportunity to Submit Additional Evidence to Explain

Bankim Harrai Vashi vs DCIT CITATION : 2026 TAXSCAN (ITAT) 522

The Income Tax Appellate Tribunal (ITAT), Surat Bench, granted an opportunity to the appellant to submit additional evidence to explain why the gift from mother should not be added as cash credit under Section 68 of the Income Tax Act, 1961.

The tribunal set aside the order passed by the lower authorities and directed the JAO to grant one more opportunity of hearing to explain the additional evidence filed. The bench of Dr. A. L. Saini (Accountant Member) and T. R. Senthil Kumar (Judicial Member) therefore allowed the appeal filed for statistical purposes on 06.05.2026. The order was pronounced under Rule 34 of the ITAT Rules, 1963.

Agricultural Land Cannot Be Treated as Capital Asset u/s 2(14) Due to Subsequent Commercial Use by Purchaser: ITAT Madhavi Farms Private Limited vsThe Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 523

The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, deleted the long-term capital gains addition on sale of agricultural land after holding that subsequent commercial use by the purchaser cannot alter the agricultural character of the land in the hands of the seller.

The Tribunal deleted the long-term capital gains addition and allowed the appeal of the assessee.

₹5.51 Cr Transfer Pricing Adjustment Disputed: ITAT Grants Fresh Opportunity to DRP to Examine COVID‑19 Costs and Evidence

TGS MINMET PRIVATE LIMITED vsDEPUTY COMMISSIONER OF INCOME TAX CITATION : 2026 TAXSCAN (ITAT) 524

In a recent ruling, the Income Tax Appellate Tribunal has directed the Dispute Resolution Panel (DRP) to re‑examine the ₹5.51 crore transfer‑pricing adjustment, observing that the earlier order lacked clarity on the company’s functional profile and treatment of pandemic‑related costs.

The tribunal noted that arm’s‑length price (ALP) adjustments must be based on functionally comparable companies, and set aside the matter to the DRP. It directed the panel to re‑examine the product profile and business activities of the comparables, provide the assessee an effective opportunity of hearing, and then arrive at a fresh decision.

Education Cess @3% Not Includable while Computing Tax Effect: ITAT Dismisses Appeal under ₹60L Threshold Income Tax Officer vs RainbowDiamonds Pvt.Ltd. CITATION : 2026 TAXSCAN (ITAT) 525

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently dismissed an appeal filed by the Revenue after noting that the tax effect involved in the matter fell below the ₹60 lakh monetary threshold prescribed under the Central Board of Direct Taxes (CBDT) circular, once the Education Cess @3% was excluded from the computation of tax.

The Tribunal Bench of Mahavir Singh, Vice President and Manish Agarwal, Accountant Member observed that CBDT Circular No.09/2024 had indeed revised the monetary limit for filing appeals before the Tribunal to ₹60 Lakhs and further clarified that the Circular would be applicable to all pending appeals.

ITAT Remands Assessment of Mitsubishi Corp to AO for Fresh Consideration on Branch Office Taxability DDIT vs Mitsubishi Corporation CITATION : 2026 TAXSCAN (ITAT) 526

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has disposed of cross appeals filed by Mitsubishi Corporation and the Deputy Director of Income Tax (DDIT) for Assessment Year 2009-10, restoring the matter of taxability of the branch office to the file of the Assessing Officer (AO) for fresh consideration.

The ITAT allowed both cross appeals for statistical purposes. The matter was restored to the file of the AO with a direction to pass a fresh assessment order after duly considering the assessee’s submission that the BO was catering only to the Machinery Division and not all divisions of the Head Office.

Non-Deduction of TDS on LTC Covering Foreign Travel During Subsistence of Interim HC Orders: ITAT Holds SBI Not Assessee in Default u/s 201 State Bank of India CurrencyAdministration Cell Gandhinagar vs Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 527

The Income Tax Appellate Tribunal (ITAT),Ahmedabad Bench, held that failure to deduct tax at source on LTC payments involving a foreign leg could not be treated as default under Sections 201(1) and 201(1A) when the assessee was acting when the assessee was acting in compliance with interim directions issued by the High Court.

It held that the assessee was legally bound to comply with the interim orders of the Madras High Court and that failure to deduct tax during such period could not be treated as default under Section 201(1). The Tribunal further observed that the subsequent Supreme Court ruling could not retrospectively fasten liability for a period when the assessee had acted in compliance with binding judicial directions.

Bogus LTCG Claim Through Sunrise Asian Shares Taxable as Unexplained Income: ITAT Upholds ₹70.33 Lakh Addition

Rameshkumar Karsanbhai Patel vsIncome Tax Officer CITATION : 2026 TAXSCAN (ITAT) 528

The Income Tax Appellate Tribunal (ITAT) Surat Bench has upheld an addition of ₹70.33 lakh under Section 68 of the Income Tax Act, holding that the alleged Long-Term Capital Gain (LTCG) earned through trading in shares of Sunrise Asian Ltd. was a sham transaction designed to convert unaccounted money into exempt income.

The bench comprising Dr. B.R.R. Kumar, (Vice-President) and Ms. Suchitra Kamble (Judicial Member) also observed that the assessee was not a regular investor and had no knowledge of the company’s business or stock market operations.

Diversified Publishing and Platform Business Makes Company Functionally Incomparable to Captive ITES Provider: ITAT Deletes ₹18.80 Cr TP Adjustment Clarivate Analytics (India)Private Limited vs ADDITIONAL/ JT/DY/ASSTT/CIT/ITO, NFAC, Delhi CITATION : 2026 TAXSCAN (ITAT) 529

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has deleted a transfer pricing adjustment of ₹18.80 crore after holding that a company engaged in diversified publishing and platform-based solutions could not be treated as a valid comparable for benchmarking a captive IT-enabled services (ITES) provider.

The bench comprising Beena Pillai and Girish Agrawal held that the company was functionally incomparable and directed its exclusion from the final set of comparables. Thus, the assessee’s margin fell within the arm’s length range resulting in deletion of the transfer pricing adjustment.

Additions u/s 68 held Unsustainable as Withdrawn Statement and Denial of Cross-Examination are sufficient Grounds: ITAT

M.K. Sons Fine Jewels Pvt. Ltd.vs Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 530

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, held that the additions under Section 68 were unsustainable as withdrawn statements and denial of cross-examination are sufficient grounds.

Relying on a plethora of cases, the tribunal reiterated that once identity, genuineness and capacity are established, addition cannot be made merely on suspicion regarding share premium. The bench of Pawan Singh (Judicial Member) and Makarand Vasant Mahadeokar (Accountant Member) held that the addition of INR 3,00,00,000/- made under Section was unsustainable in law and on facts, it was directed to be deleted and the appeal was ultimately allowed.

Amalgamated Company Cannot Claim Income Tax Deductions u/s 80 After Business Transfer Through Amalgamation: ITAT

Deputy Commissioner of Income-tax vs M/s. Facets Gems Polishing Works Pvt. Ltd. CITATION : 2026 TAXSCAN (ITAT) 531

The Income Tax Appellate Tribunal has held that an amalgamated company cannot claim deductions under Sections 80IA and 80JJAA of the Income Tax Act after acquisition of eligible business through amalgamation effected after 01.04.2007.

The bench comprising Dr. B.R.R. Kumar and Suchitra Kamble held that amalgamation amounted to business reorganisation within the meaning of Section 80JJAA(2)(b) thereby disentitling the assessee from claiming deduction for additional employee cost.

Addition on Entire Bank Credits Unsustainable Once Transactions Accepted as Cheque Discounting Business Receipts: ITAT Deletes ₹3.15 Cr Addition Income Tax Officer Ward -3(3)(1)vs Nileshkumar Jayantilal Patel CITATION : 2026 TAXSCAN (ITAT) 532

The Income Tax Appellate Tribunal (ITAT) Surat Bench has held that addition of entire bank credits under Section 68 of the Income Tax Act, 1961 was unsustainable after the transactions were accepted as part of the assessee’s cheque discounting business thereby deleting an addition of ₹3.15 crore.

The Tribunal observed that the bank statements and transaction patterns clearly demonstrated that the assessee was engaged in cheque discounting activities and earning commission income therefrom. As a result upholding the findings of the CIT(A), the Tribunal held that no interference was warranted and dismissed both appeals filed by the Revenue.

Foreign Agency Commission Expenditure u/s 254 disallowed based Lack of Evidence such as Agreements and Invoices: ITAT partly allows appeal Ritu Sanjay Toshniwal vs ACIT21(3) CITATION : 2026 TAXSCAN (ITAT) 533

The Income Tax Appellate Tribunal (ITAT),Mumbai Bench, partly allowed an appeal and held that the foreign agencycommission expenditure under Section 254 was disallowed based on lack of evidence such as agreements and invoices.

ITAT observed that the claim is vitiated by the absence of credible evidence of services rendered, lack of clarity regarding actual payments, non-compliance with statutory requirements and accordingly, the disallowance of such expenditure was upheld on merits. The bench of Pawan Singh (Judicial Member) and Makarand Vasant Mahadeokar (Accountant Member) affirmed the disallowance of commission expenditure and directed the additions stand reduced so as to obviate double taxation of the same income. The appeal was partly allowed.

Weighted Income Tax Deduction u/s 35 cannot be Restricted to DSIR-Certified Quantum for Pre-Amendment Years: ITAT

The DCIT vs M/s. Rane BrakeLining Ltd CITATION : 2026 TAXSCAN (ITAT) 534

The Income Tax Appellate Tribunal (ITAT) Chennai Bench has recently held that weighted deduction under Section 35(2AB) of the Income Tax Act, 1961 cannot be restricted to the expenditure quantum certified by the Department of Scientific and Industrial Research (DSIR) in Form 3CL for years prior to the amendment of Rule 6(7A).

​The Tribunal held that once the R&D facility is approved the expenditure audited and certified by statutory auditors qualifies for deduction irrespective of the DSIR's quantification. The Bench dismissed the Revenue’s appeal and held that the AO lacked the authority to curtail the deduction for AY 2011-12.

TDS Disallowance Unsustainable on Inter-Branch Adjustment Entries & Partner Remuneration: ITAT Grants ₹12.79 Lakh Relief to CA Firm RSVA & Co vs ITO CITATION : 2026 TAXSCAN (ITAT) 535

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench deleted a disallowance of ₹12.79 lakh made under Section 40(a)(ia) of the Income Tax Act 1961 holding that inter-branch adjustment entries and remuneration paid to working partners of a Chartered Accountant firm could not be subjected to Tax Deducted at Source (TDS) provisions.

The Tribunal observed that the Ahmedabad branch was substantiated through records of the Institute of Chartered Accountants of India (ICAI). The bench held that mere inter branch transfers within the same firm could not attract TDS liability.

AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation: ITAT restores appeal to JAO

Kimplas Piping Systems Pvt. Ltdvs Deputy Commissioner of Income Tax CITATION : 2026 TAXSCAN (ITAT) 536

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, restored an appeal to the Jurisdictional Assessing Officer (JAO) because the Assessing Officer (AO) failed to provide Import-Export data from the Director General of Foreign Trade (DGFT) to the assessee for reconciliation.

The tribunal made note of the fact that the assessee was able to reconcile with the information as provided by the DGFT and thus the addition was restricted. The bench of Vikram Singh Yadav (Accountant Member) and Sandeep Singh Karhail (Judicial Member) held that the issue is to be restored to the file of the JAO with a direction to provide complete details from the DGFT. The appeal was allowed for statistical purposes.

Brand Promotion and Trade Incentive Expenses Cannot Be Treated as Capital Expenditure: ITAT Deletes ₹6.66 Cr Addition

Procter & Gamble HomeProducts Ltd. vs Addl CIT RG 8(2) Mumbai CITATION : 2026 TAXSCAN (ITAT) 537

The Income Tax Appellate Tribunal (ITAT)Mumbai Bench has deleted a disallowance of ₹6.66 crore made towards trade incentive and brand promotion expenditure and held that such expenses are revenue in nature and allowable as business expenditure.

The Tribunal comprising Pawan Singh and Arun Khodpia observed that trade incentives and brand promotion expenses were integral to the assessee’s business model and directly linked to product promotion and sales generation. The bench held that the mere existence of some enduring commercial advantage does not automatically convert such expenditure into capital expenditure.

Notional Rent on Shared Office Premises Cannot Be Taxed Without Actual Receipt Despite “Other Sources” Classification: ITAT

Procter & Gamble HomeProducts Ltd. vs Addl CIT RG 8(2) Mumbai CITATION : 2026 TAXSCAN (ITAT) 537

The Income Tax Appellate Tribunal (ITAT)Mumbai Bench has held that notional rent on office premises shared with group companies cannot be brought to tax in the absence of actual receipt or accrual of income, even where such receipts are assessable under the head “Income from Other Sources.”

The two-member bench comprising Pawan Singh and Arun Khodpia held that consequential disallowances relating to repairs, maintenance, service charges and depreciation on the shared premises were unsustainable. Accordingly, the additions towards notional rent and related disallowances were deleted.

SEBI Clearance on Scrip Manipulation Invalidates Bogus Loss Addition on Genuine Share Trading Transactions: ITAT Deletes ₹72.28 Lakh Addition Income Tax Officer Ward 12(1),Kolkata vs Mayukh Construction Private Limited

CITATION : 2026 TAXSCAN (ITAT) 538

The Income Tax Appellate Tribunal (ITAT) Kolkata Bench has held that genuine share trading loss arising from transactions in India Infotech & Software Ltd. cannot be treated as bogus merely on the basis of allegations relating to penny stock transactions, especially when the Securities Appellate Tribunal (SAT) and SEBI proceedings had cleared the company of price manipulation charges.

The Tribunal comprising Rajesh Kumar and Pradip Kumar Choubey observed that there was no material on record establishing collusion between the assessee and any alleged entry operator. The bench further noted that all transactions were executed through recognised stock exchanges and supported by documentary evidence.

Share Premium Received Through Verified Investors Cannot Be Treated as Bogus Cash Credit: ITAT Deletes ₹45 Lakh Addition

Saffron Groceries Pvt. Ltd. vsITO CITATION : 2026 TAXSCAN (ITAT) 539

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has deleted an addition of ₹45 lakh made under Section 68 of the Income Tax Act 1961 holding that share premium and share capital received from verified investor companies could not be treated as bogus cash credits in the absence of contrary evidence.

The Tribunal held that once the identities of shareholders are established, any inquiry regarding alleged bogus investments must be conducted in the hands of such shareholders and not the assessee company.

Missing PAN Details of Donors No Ground to Treat Nominal Donations as Non-Voluntary Contributions: ITAT Directs Final S. 12AB Registration Shri Gajanan Maharaj ShikshanSanstha vs CIT (Exemptions), Pune

CITATION : 2026 TAXSCAN (ITAT) 540

The Income Tax AppellateTribunal (ITAT), Nagpur Bench, has held that nominal donations received cannot be treated as non-voluntary contributions merely on account of missing PAN and address details of some donors and directed final registration under Section12AB of the Income Tax Act, 1961.

The Tribunal held that cancellation of provisional registration without identifying a specified violation under Section 12AB(4) and without such non-compliance having attained finality under clause (f) of the Explanation was unsustainable.

Massive Cash Deposits and GSTR-3B Turnover Disclosure Lead to Reassessment: ITAT Restores ₹41.98 Lakh Deduction Claim

O.831, The TuticorinAgricultural Producers Co-Op Marketing Society Limited vs The Commissioner ofIncome Tax (Appeals)

CITATION : 2026 TAXSCAN (ITAT) 541

The Income Tax Appellate Tribunal (ITAT) Chennai Bench has restored the dispute relating to deduction claimed under Section 80P of the Income Tax Act, 1961, after observing that the assessee pending condonation petition under Section 119(2)(b) had a direct bearing on the claim.

The Bench comprising Shri George George K, (Vice President) and Shri Balakrishnan S (Accountant Member) observed that if the competent authority condones the delay the deduction claim would necessarily require examination on merits.

Interest earned from investment in Nationalized Banks to be granted Benefit of Deduction u/s 80P(2): ITAT

Pahalampur Samabay KrishiUnnayan Samity Ltd. vs ITO, Ward-23(1), Hooghly CITATION : 2026 TAXSCAN (ITAT) 542

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, held that interest earned from investment in Nationalized Banks are to be granted benefit of deduction under Section 80P(2) of the Income Tax Act, 1961.

The ITAT found merit in the contentions put forth by the assessee and directed the Assessing Officer to grant the benefit of deduction under Section 80P(2) on the interest earned from nationalized banks. The appeals of the assessee were accordingly allowed by the bench of George Mathan (Judicial Member).

Suppressed Turnover Cannot Automatically Attract 8% Profit Estimation: ITAT Restricts Addition to 2.5%

Niranjan Lal Jindal vs ITO, Ward-47(2), Kolkata CITATION : 2026 TAXSCAN (ITAT) 543

The Income Tax Appellate Tribunal (ITAT)Kolkata Bench has held that suppressed business turnover cannot automatically justify application of an 8% profit rate and accordingly restricted the addition to 2.5% of the undisclosed turnover.

The Tribunal observed that the undisclosed turnover in the present case was more than double the disclosed turnover. The Bench further noted that generation of unaccounted turnover would naturally result in savings of fixed expenses such as rent, salary and other operational costs, thereby increasing the actual profit margin.

Rs. 7.5 Cr Seized Cash Allegedly Meant for Inter-Branch Transfer Not Satisfactorily Explained: ITAT Upholds S. 69A Addition

ACIT vs Shiv Shakti Traders CITATION : 2026 TAXSCAN (ITAT) 544

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, upheld an addition of Rs. 7.5 crore under Section 69A of the Income Tax Act after finding that the assessee failed to satisfactorily explain the source and transportation of the seized cash.

The Tribunal, comprising Madhumita Roy (Judicial Member) and Naveen Chandra (Accountant Member), noted that the assessee had taken inconsistent stands regarding the source of the cash and failed to produce documentary evidence supporting the alleged inter-branch transfer. It further observed that transportation of Rs. 7.5 crore in cash despite availability of banking and cash pickup facilities was commercially indefensible and that the assessee had failed to furnish records relating to the individual liquor vends from which the cash was allegedly collected.

Agricultural Income Supported by Revenue Records and Bank Receipts Cannot Justify Revision: ITAT Quashes Action Against ₹41.63 Lakh Claim Kamdar Kiritkumar Chandulal HUFvs The Pr. Commissioner of Income Tax CITATION : 2026 TAXSCAN (ITAT) 545

The Income Tax Appellate Tribunal (ITAT)Rajkot Bench has quashed revision proceedings initiated under Section 263 ofthe Income Tax Act 1961 holding that agricultural income supported by revenue records, crop details, bank receipts and independent verification by the Assessing Officer (AO) could not justify revisionary action merely because the Principal Commissioner of Income Tax (PCIT) desired deeper inquiry.

The Tribunal held that merely because the PCIT considered the inquiry inadequate the assessment order could not be termed erroneous and prejudicial to the interests of the Revenue.Thus, the bench quashed the revision proceedings and allowed the assessee’s appeal.

Assessable Value Under Customs Act Is for Levy of Duty Only, Cannot Substitute Proof of Actual Expenditure for Addition u/s 69C: ITAT DEPUTY COMMISSIONER OF INCOMETAX vs AZURE POWER (RAJ) PVT LTD CITATION : 2026 TAXSCAN (ITAT) 546

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, upheld deletion of addition made under Section 69C of the IncomeTax Act, after observing that mere difference between customs assessable value and invoice value of imported goods could not establish unexplained expenditure.

The Tribunal, comprising Sudhir Kumar (Judicial Member) and Manish Agarwal (Accountant Member), observed that no material had been brought on record to establish that the assessee had actually incurred any unexplained expenditure and agreed with the findings of the CIT(A).

Penalty Proceedings Cannot Be Decided Before Disposal of Quantum Appeal: ITAT Restores Matter for Fresh Adjudication

ACIT vs Basti Sugar Mills Co.Ltd CITATION : 2026 TAXSCAN (ITAT) 547

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, restored the penalty appeal to the file of the CIT(A) after noting that the related quantum appeal was still pending adjudication.

The Tribunal, comprising Yogesh Kumar U.S. (Judicial Member) and Manish Agarwal (Accountant Member), observed that the penalty appeal could not be independently decided before adjudication of the connected quantum appeal.

₹6.83 Lakh Net Profit Declared at 0.33% Margin: ITAT Restores NFAC Appeal on Unexplained Expenditure & Cash Credits

M/s Medway EducationalConsultant Private Limited vs AO Ward17(1) Delhi CITATION : 2026 TAXSCAN (ITAT) 548

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Delhi Bench remanded an appeal to the National Faceless Appeal Centre (NFAC) after finding that the lower authority dismissed the case ex parte without granting a proper hearing. The company had declared a net profit of ₹ 6.83 lakh at a margin of 0.33 % for A.Y. 2020‑21, prompting scrutiny of its business expenses.

The Tribunal held that the appeal should have been decided on the merits rather than dismissed for non‑appearance. The tribunal observed that “considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. NFAC with a direction to grant one final opportunity to the assessee to substantiate its claim and decide the issue as per fact and law”.

No "Change of Opinion" to Reopen Scrutinized Assessment: ITAT Quashes Reassessment Beyond 4 Years

M/s. Lorgan Lifestyle Limited vsDCIT CITATION : 2026 TAXSCAN (ITAT) 549

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reassessment made beyond 4 years, citing no "Change of Opinion" to reopen the scrutinised assessment.

The Tribunal cited the Supreme Court’s decision in Lupin Ltd. v. R.B. Wadkar (2015) 10 SCC 718), which holds that in the absence of independent investigation or new material, a reassessment based merely on a "change of opinion" is not valid.

Foreign Service Payments Not Liable for TDS as No Technical Knowledge Made Available: ITAT Upholds Deletion of Disallowance u/s 40 The DCIT vs M/s. Alten GlobalTechnologies Private Limited CITATION : 2026 TAXSCAN (ITAT) 550

The Income Tax Appellate Tribunal [ITAT] Bangalore Bench upheld the deletion of disallowance of ₹1.32 crore made under Section 40(a)(i) of the Income Tax Act1961 and held that payments made to foreign entities were not liable for TDS under Section 195 as no technical knowledge was made available to the assessee.

The bench comprising Prashant Maharishi and Soundararajan K. ultimately dismissed the Revenue appeal as well as also observed that the department had failed to provide sufficient justification for the delay in filing the appeal noting that routine official workload and time-barring matters could not constitute sufficient cause for condonation of delay.Thus, the appeal of the Revenue was dismissed.

ITAT Deletes ₹90 Lakh Inflated Purchase Addition Made without Issuing Specific Show-Cause Notice Crystal Quinone Pvt. Ltd vs DCIT CITATION : 2026 TAXSCAN (ITAT) 551

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has deleted an addition of ₹90 lakh made towards alleged inflated purchases after observing that the Assessing Officer (AO) failed to issue any specific show-cause notice before making the addition. The Tribunal also held that reassessment proceedings initiated under Section 147 of the Income Tax Act, 1961 were unsustainable in law.

The bench comprising Dr. B.R.R. Kumar and Suchitra R. Kamble passed the order in favour of the assessee and held that the AO failed to establish any live nexus between the investigation material and escapement of income in the hands of the assessee. The bench also found that no speaking order had been passed for disposal of objections against reopening.

Housing Co-operative Society Providing Loans to Members Entitled to Income Tax Deduction u/s 80P: ITAT M/s. B U E H B Co-op. SocietyLtd vs The Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 552

The Income Tax Appellate Tribunal (ITAT) Bangalore Bench has held that a housing co-operative society advancing loans to its members cannot be denied deduction under Section 80P of the Income Tax Act merely because it functions as a housing society.

The Bench comprising Prashant Maharishi and Soundararajan K. held that the Income Tax Act 1961 does not create any distinction between different categories of co-operative societies for the purpose of Section 80P benefits. It observed that once the assessee is recognized as a co-operative society advancing credit facilities to its members, deduction cannot be denied merely because it is a housing society.

Switching Reopening Grounds from Accommodation Loans to Bogus LTCG Invalidates Reassessment: ITAT Quashes Addition Pinkal Rajeshbhai Patel vsIncome Tax Officer CITATION : 2026 TAXSCAN (ITAT) 553

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has quashed a reassessment order after finding that theAssessing Officer (AO) shifted the basis of reopening from alleged fictitious loan transactions to bogus Long Term Capital Gain (LTCG) arising from penny stock dealings.

The bench comprising Dr. B.R.R. Kumar and Suchitra R. Kamble allowed the appeal filed by assessee against the reassessment order passed under Section 147 of the Income Tax Act for Assessment Year 2015-16 and held that such a shift in the foundation of reassessment was impermissible in law.

No Income Tax Addition on Demonetization Cash Deposits Already Recorded as Cash Sales Turnover: ITAT Deletes ₹82.40 Lakh Addition

Income Tax Officer vs GreylineKnitwear CITATION : 2026 TAXSCAN (ITAT) 554

The Income Tax Appellate Tribunal (ITAT) Chandigarh Bench has deleted an addition of ₹82.40 lakh made towards cash deposits during the demonetization period, holding that cash sales already recorded as turnover in the books of account cannot again be treated as unexplained cash credits under Section 68 of the Income Tax Act 1961.

The bench comprising Rajpal Yadav and Manoj Kumar Aggarwal held that the impugned cash deposits represented business sale proceeds already accounted for as turnover. The bench observed that once the sales were accepted and reflected in the books and VAT returns, taxing the same amount again as unexplained cash credit would amount to impermissible double taxation.

Bank Quotations Sufficient to Benchmark Corporate Guarantee Commission at 0.25% as ALP : ITAT Deletes TP Adjustment Based on 0.50% Rate SRF Limited vs Assistant orDeputy Commissioner of Income CITATION : 2026 TAXSCAN (ITAT) 555

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, deleted the transfer pricing adjustment relating to corporate guarantee commission after holding that the TPO was not justified in increasing the commission rate from 0.25% to 0.50%, observing that the assessee had benchmarked the transaction on the basis of bank quotations for similar transactions.

The Tribunal, comprising Ramit Kochar (Accountant Member) and Vimal Kumar (Judicial Member), observed that the assessee had furnished quotations obtained from HDFC Bank and Yes Bank in support of the guarantee commission charged to its associated enterprises. The Tribunal further noted that identical corporate guarantee transactions in the assessee’s own case for earlier assessment years had already been accepted at 0.25% as arm’s length. Following the earlier decisions in the assessee’s own case, the Tribunal deleted the transfer pricing adjustment of Rs. 2.74 crore.

Software Cost Reimbursement to Foreign AEs Cannot Be Treated as Profit-Making Service: ITAT SRF Limited vs Assistant or Deputy Commissioner of Income CITATION : 2026 TAXSCAN (ITAT) 555

The Income Tax AppellateTribunal (ITAT), Delhi Bench, deleted the TPA relating to software cost reimbursement after holding that allocation of software expenses among group entities could not be treated as a profit-making intra-group service transaction.

The Tribunal, comprising Ramit Kochar (Accountant Member) and Vimal Kumar (Judicial Member), noted that the assessee had furnished pricing policy documents, invoices and debit notes relating to allocation of software costs to its associated enterprises. The Tribunal further noted that similar issues in the assessee’s own case for earlier assessment years had already been decided in its favour.

SEB Rates Preferred Over IEX Rates for Captive Power Benchmarking: ITAT Holds SEB Tariff Reflects True Consumer Purchase Price SRF Limited vs Assistant orDeputy Commissioner of Income CITATION : 2026 TAXSCAN (ITAT)  555

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, set aside transfer pricing adjustments made in respect of inter-unit transfer of electricity after holding that State Electricity Boards tariff rates reflected the actual market price at which industrial consumers purchase electricity.

The Tribunal observed that electricity supplied through IEX could not be treated as comparable with regular supply of electricity by SEBs due to material differences in pricing mechanism and supply conditions.

No Addition can be made on Basis of Mere Projections of Future Earnings without Actual Receipt or Accrual: ITAT Rakesh Aggarwal C/o CS Anand, vsDCIT, Central Circle-1 Income Tax Department

CITATION : 2026 TAXSCAN (ITAT) 556

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that no addition could be made merely on the basis of projected future earnings where there was neither actual receipt nor accrual of income in favour of the assessee.

The Tribunal held that the alleged amount merely represented hypothetical estimations and not "real income" chargeable to tax, and accordingly upheld the deletion of the addition of Rs. 3.17 crore.

Mere Label of ‘Afterthought’ Insufficient to Reject Explanation for Cash Found During Search: ITAT Rakesh Aggarwal vs DCITCITATION : 2026 TAXSCAN (ITAT) 557

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that an explanation furnished by an assessee regarding cash found during search proceedings cannot be rejected merely by asserting it as an “afterthought” when supporting evidences and third party confirmations remain unrebutted.

The Tribunal noted that the assessee had only stated during recording of statement under Section 132(4) that he would explain the source of cash after checking books and financial records, and therefore the explanation could not be rejected merely as an afterthought without rebutting the supporting evidence.

Occupancy Certificates and JDAs Disclosed Prior to Income Tax Search Do Not Constitute Incriminating Material: ITAT

The Assistant Commissioner of Income Tax vs Lakkanna Durgappa CITATION : 2026 TAXSCAN (ITAT) 558

The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, held that occupancy certificates and Joint DevelopmentAgreements (JDAs) disclosed by the assessee prior to the search proceedings could not be regarded as incriminating material for making additions under Section 153A of the Income Tax Act.

Relying upon the SC ruling in PCIT v. Abhisar Buildwell Pvt. Ltd., the Tribunal held that in the absence of incriminating material discovered during the course of search, additions under Section 153A could not be sustained for concluded assessment years and therefore deleted the additions made by the Assessing Officer.

S. 45(5A) of Income Tax Has No Retrospective Application to JDAs Executed Before 01.04.2018: ITAT The Assistant Commissioner ofIncome Tax vs Lakkanna Durgappa CITATION : 2026 TAXSCAN (ITAT) 558

The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, held that Section 45(5A) of the Income Tax Act, introduced with effect from 01.04.2018, applies prospectively and cannot govern Joint Development Agreements (JDAs) executed prior to the said date.

The Tribunal comprising Prashant Maharishi (Vice-President) and Keshav Dubey (Judicial Member) observed that the JDA had been executed and possession had been handed over during FY 2012-13 itself, and therefore transfer within the meaning of Section 2(47)(v) had already taken place in that year.

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