Income Tax Weekly Flashback for the period 9 to 15 March 2025.

Delhi High Court

Existence Of ‘International Transaction’ Must Be Established Before Transfer Pricing Benchmarking: Delhi High Court

The Delhi High Court has held that the existence of ‘international transaction’ must be established before transfer pricing benchmarking.

The bench of Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar has observed that unless the expenditure pertained to a transaction as defined by Section 92F of the Income Tax and the same meeting the thresholds prescribed therein, it would be wholly impermissible for an international transaction being presumed to exist and a benchmarking analysis being undertaken.

Bad Debt Deduction Under Income Tax Act Allowed Only For Banking or Money-Lending Businesses: Delhi High Court

The Delhi High Court has held that bad debt deduction under Section 36 of the Income Tax Act allowed only for banking or money-lending businesses.

The bench of Justice Vibhu Bakhru and Justice Swarana Kanta Sharma has observed that the allowance in respect of bad debts is allowable only if the debt was taken into account for computing the income of the assessee in the previous year in which the amount is written of or prior previous years; or represents money lent in the ordinary course of business of banking or money lending.

Relief To Vodafone: Delhi High Court Allows Rs.5.10 Crores Claimed On Account Of Asset Reconstruction Cost

In a major relief to Vodafone, the Delhi High Court has allowed Rs.5,10,79,752 claimed on account of asset reconstruction cost (ARC).

The bench of Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar has observed that the provisioning for ARC qualified the prescriptions of AS 29 and the assessee was thus justified in accounting for the same. The ARC obligation clearly met the test of a positive obligation flowing from a past event, being a conceivable probability as well as being measurable. In any event, both the AO as well as the Tribunal appear to have proceeded on the basis that only an ascertained liability could have been provisioned for. That view is not only erroneous but also unsustainable in law.

Bombay High Court

Bombay High Court Orders RBI to Accept Old Demonetised Notes Seized in Income Tax Raid [READ JUDGEMENT]

The Bombay High Court has directed the Reserve Bank of India (RBI) to accept demonetised currency notes from a group of Kolhapur residents after their cash was seized by the Income Tax (IT) department during a raid in 2016. 

Kerala High Court

Income Tax | Disputed Question Of Fact In Respect Of Proper Notice Can’t Be Examined Under Article 226: Kerala High Court 

The Kerala High Court has held that the disputed question of fact in respect of proper notice under Income Tax Act cannot be examined under Article 226 of the Constitution of India.

Income Tax Principal Commissioner Can Cancel 12A Registration Without Waiting for Assessing Authority’s Decision: Kerala High Court

The Kerala High Court has held that the income tax principal commissioner can cancel registration under Section 12A of the Income Tax without waiting for assessing the authority’s decision.

The bench of Dr. Justice A.K.Jayasankaran Nambiar and Justice Easwaran S. has observed that the provisions of Section 12AA independently empower the Principal Commissioner to consider whether or not the circumstances mentioned in Section 12AA(3) and 12AA(4) of the Income Tax Act exist as a pre-condition for directing a cancellation of the registration that was granted to the Trust under Section 12A of the Income Tax Act.