Author: inavatiq

Case Details: Sunil Surendrabhai Kakkad vs. Samir Ganeshbhai Marathe - [2026] 183 taxmann.com 461 (NCLT-Ahmedabad)

Judiciary and Counsel Details

• Mrs Chitra Hankare, Judicial Member & Dr Velamur G. Venkata Chalapathy, Technical Member
• Saurabh Soparkar, Sr. Adv. & Mohit Gupta, Adv. for the Applicant.
• Nipun Singhavi, Ms Nalini Lodha & Rahul Bhavasar, Advs. for the Respondent.

Facts of the Case

In the present case, the applicant was declared bankrupt and was directed to submit his statement of financial position to the bankruptcy trustee in the prescribed form. He was also restrained from travelling abroad without prior permission of the Adjudicating Authority. The applicant filed an application seeking permission to travel to the UAE for exploring business opportunities.

Further, the Committee of Creditors was of the view that there was a high risk of non return, considering the applicant’s exposure of over Rs. 2,500 crores, coupled with minimal income and negligible realisable assets.

It was unanimously decided not to permit the applicant to travel abroad in view of the substantial debt exposure and negligible net worth. It was also noted that the applicant had not fully complied with the requirement of submitting complete statements of his financial position.

Upon verification, the process relating to the bankrupt’s assets and liabilities remained incomplete. Certain financial records, including bank statements and confirmations, were still pending submission and verification. The regular presence of the bankrupt was considered essential to facilitate examination and cooperation as mandated under sections 132, 133 and 138 of the Insolvency and Bankruptcy Code, 2016.

NCLT Held

The National Company Law Tribunal observed that the bankruptcy process is time-bound and cannot be extended beyond the prescribed limits. Therefore, the applicant’s presence was necessary for further inquiry and day to day progress of the proceedings. The Tribunal noted that if the applicant remained unavailable for more than fifteen days in a month, it would be difficult to continue the process smoothly within the statutory timelines.

The Tribunal further observed that the applicant had not provided his residential address in the UAE.

Accordingly, the application seeking permission to travel abroad was rejected.

List of Cases Reviewed

• Zankarsinh Kishorsinh Solanki v. Kanhaiyalal Salawat [2025] 181 taxmann.com 101 (NCLT-Ahd.)/[2026] 191 SCL 295 (NCLT-Ahd.) [Para 10] followed

List of Cases Referred to

• Zankarsinh Kishorsinh Solanki v. Kanhaiyalal Salawat [2025] 181 taxmann.com 101 (NCLT-Ahd.)/[2026] 191 SCL 295 (NCLT-Ahd.) (para 14).

The post NCLT Rejects Bankrupt’s Foreign Travel Plea Over Non-Return Risk appeared first on Taxmann Blog.

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Aman Garg & Anshi Bhatia – [2026] 183 taxmann.com 581 (Article)

1. Executive Summary

The concept of Permanent Establishment (PE) is the bedrock for the taxation of foreign enterprises’ business profits in India. It functions as the critical threshold of economic nexus that grants India, as a source country, the right to tax income generated within its borders. Historically rooted in physical presence, the definition and interpretation of PE have become exceptionally dynamic and subjective, leading to significant litigation and creating a landscape of uncertainty for foreign investors and multinational corporations.

This white paper provides an exhaustive analysis of the PE concept under Indian tax law, detailing two transformative shifts that are fundamentally reshaping this landscape.

First is the judicial evolution towards a “substance over form” doctrine. The Indian Supreme Court, in a series of landmark rulings culminating in Formula One World Championship Ltd. and, most recently, Hyatt International Southwest Asia Ltd., has decisively moved beyond contractual formalities. It now prioritises functional control and economic reality in its PE analysis. This means that foreign enterprises can no longer rely on the mere absence of a formal office or carefully worded contracts to avoid a taxable presence in India.

Second is the parallel evolution in legislative and global policy. India has been at the forefront of adopting global anti-avoidance measures under the Base Erosion and Profit Shifting (BEPS) project, primarily through the Multilateral Instrument (MLI). Concurrently, it has unilaterally expanded its domestic law nexus to address the challenges of the digital economy by introducing the concept of “Significant Economic Presence” (SEP).

The core message of this report is unequivocal: a holistic, substance-based assessment of Indian operations is now critical for effective tax risk management. This paper is structured to guide foreign investors and tax professionals with a structured understanding of this evolving terrain. The paper opens with the conceptual foundations of PE, exploring its various forms and the determination tests applied by Indian Courts. It then examines the complex interplay between India’s domestic tax legislation and its extensive network of tax treaties, before delving into the landmark judicial precedents that are defining the new PE paradigm in India. The report further dissects the principles of profit attribution and the impact of emerging global tax trends. The report concludes by presenting the practical compliance considerations and offering insights into the policy trajectory and future outlook of this rapidly evolving domain.

2. Conceptual Foundation

2.1 Global Taxation Principles

International taxation operates on two primary principles: residence-based taxation, where a country taxes its residents on their worldwide income, and source-based taxation, where a country taxes income generated within its borders, regardless of the recipient’s residence. India employs a hybrid model, taxing its residents on their global income while taxing non-residents on income sourced or deemed to be sourced in India. Within this framework, the PE concept is the principal mechanism under Double Taxation Avoidance Agreements (DTAAs) for establishing a country’s right to tax the active business income of a foreign enterprise.

2.2 Definition and Philosophy of PE

The modern definition of PE is primarily derived from Article 5 of the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN) Model Tax Conventions. Both models define a PE as a “fixed place of business through which the business of an enterprise is wholly or partly carried on”. The existence of a PE is the prerequisite for the application of Article 7, which governs the taxation of business profits in the source state.

India’s tax treaty policy has historically and consistently shown a preference for the UN Model Convention. The fundamental geopolitical tension in international tax policy lies between the interests of capital-exporting nations (typically developed countries favoring residence-based taxation) and capital-importing nations (typically developing countries favoring source-based taxation). The OECD Model has been largely influenced by its member countries, which are predominantly capital exporters. In contrast, the UN Model grants more expansive taxing rights to the source country, reflecting the priorities of developing, capital-importing nations. As a major capital-importing economy, India’s alignment with the UN Model is a deliberate policy choice aimed at securing taxing rights over income generated from its vast consumer market and economic activities. Consequently, the unique and broader PE clauses found in many of India’s DTAAs—such as comprehensive Service PE provisions or limited “Force of Attraction” rules—are not anomalies but direct expressions of this foundational economic and policy stance.

2.3 The Shift to Economic Nexus

The traditional PE concept, anchored in physical presence, is proving increasingly insufficient in the context of the digital economy. Modern business models enable companies to achieve “scale without mass,” generating substantial revenue from a market jurisdiction without a significant physical footprint. This has catalysed a global policy shift toward establishing a taxable nexus based on “significant and sustained engagement” with a country’s economy, regardless of physical presence.

This paradigm shift is centered on the principle of taxing profits where economic activities are performed and value is created. This philosophy, which gained significant momentum through the OECD’s BEPS project, underpins India’s legislative push for the SEP concept and its assertive posture in international tax forums, advocating for a greater share of taxing rights for market jurisdictions.

Click Here To Read The Full Article

The post [Opinion] Navigating the Nexus | A White Paper on Permanent Establishment in Indian Taxation appeared first on Taxmann Blog.

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Taxmann presents Practical Insights on Ind AS and SAs, a weekly series exclusively for Accounts and Audit Module subscribers of Taxmann.com, focusing on the practical application of Ind AS and Standards on Auditing through structured, issue-based analysis.

Each week features a focused topic with real-world illustrations. This week’s edition explores practical challenges non-financial listed companies face while implementing Ind AS across various group structures and entity forms.

Introduction

The applicability of Indian Accounting Standards (Ind AS) under the Companies (Indian Accounting Standards) Rules, 2015 is not confined merely to companies that independently satisfy the prescribed listing or net worth thresholds. The notified roadmap adopts a relationship-based approach, extending the requirement to holding, subsidiary, associate and joint venture companies in order to ensure consistency in financial reporting and facilitate preparation of consolidated financial statements.

In practice, this framework gives rise to several interpretational issues. Questions commonly arise regarding the treatment of indirect or step-down subsidiaries, fellow subsidiaries, investor companies, foreign subsidiaries, branch offices, newly acquired or divested entities, and non-company structures such as LLPs and partnership firms. Further, clarity is often required on the cascading effect of voluntary adoption and the position after cessation of group relationships.

This document examines these practical issues in a structured manner, analysing the scope and boundaries of the Ind AS roadmap with reference to the statutory rules, relevant definitions under Ind AS, and interpretative guidance. The objective is to provide clarity on how Ind AS applicability operates across different group structures and entity forms, and to illustrate the principles through practical scenarios.

1. Structural Changes Impacting Ind AS Applicability Across Group Entities and Foreign Operations

This section examines how Ind AS applicability operates in special situations involving foreign entities, structural changes, delisting events, and shifts in group relationships.

1.1 Applicability of Ind AS to Foreign Subsidiaries, Associates, Joint Ventures, and Branch Offices

The applicability of Indian Accounting Standards (Ind AS) to various entities such as foreign subsidiaries, associates, joint ventures, and branch offices is specified in the roadmap for convergence to Ind AS. As per the rules, any Indian company that is a subsidiary, associate, joint venture, or similar entity of a foreign company must prepare its financial statements in accordance with Ind AS, provided it meets the applicability criteria.

The relevant question arises whether an Indian company, which has a foreign subsidiary, associate, or joint venture, is required to prepare consolidated financial statements as per Ind AS. Similarly, whether a foreign company that is a subsidiary, associate, or joint venture of an Indian company is required to prepare Ind AS financial statements.

The analysis indicates that the Indian company is not required to prepare consolidated financial statements or SFS as per Ind AS for foreign subsidiaries or joint ventures unless those entities themselves meet the applicability criteria for Ind AS. For instance, an Indian company with a foreign subsidiary that meets the net worth threshold will be required to prepare its financial statements as per Ind AS, whereas the foreign subsidiary does not need to follow Ind AS unless it is explicitly mandated by the criteria outlined.

Further, the applicability of Ind AS to branch offices is clarified in the roadmap. A branch office of a foreign company established in India is not required to comply with Ind AS if it does not meet the threshold for applicability. The branch office is simply an extension of the foreign company in India and is not considered a separate entity. Therefore, the branch office is not covered under the rule for compliance with Ind AS unless specifically mandated.

In summary, the applicability of Ind AS is determined by the Indian company’s financial structure and the net worth of foreign subsidiaries or branch offices, with adherence to prescribed criteria.

1.2 Applicability of Ind AS After Cessation of Subsidiary Relationship

Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 prescribes the classes of companies required to comply with Ind AS based on listing status and net worth thresholds. The requirement also extends to holding, subsidiary, joint venture and associate companies of such entities.

Further, Rule 4 provides that once a company starts applying Ind AS, whether voluntarily or mandatorily, it shall be required to follow Ind AS for all subsequent financial statements, even if any of the criteria specified in Rule 4 no longer apply to it.

For Example, a company was a subsidiary of another company that satisfied the prescribed net worth criteria as on the relevant reference date. As a result, Ind AS became applicable to the parent company from the notified date and, by virtue of the parent–subsidiary relationship, also became applicable to the subsidiary from the same date. Accordingly, the subsidiary adopted Ind AS in compliance with the roadmap.

Subsequently, the subsidiary ceases to be a subsidiary of the parent company, for instance due to sale of shares or restructuring of ownership. The question then arises whether the company can revert to Accounting Standards (AS) notified under the Companies (Accounting Standards) Rules, 2006.

In this situation, the subsidiary was originally covered under the roadmap because of its relationship with the parent at the time Ind AS became applicable. Once it adopted Ind AS, Rule 4 requires that it continue to comply with Ind AS in all subsequent financial statements. Therefore, even after it ceases to be a subsidiary, it is not permitted to revert to the earlier Accounting Standards framework. Ind AS compliance must continue in future periods.

Thus, where a company has adopted Ind AS (mandatorily or voluntarily), it must continue to apply Ind AS in all subsequent accounting periods, even if it later ceases to be a subsidiary (or otherwise ceases to meet the original applicability criteria).

1.3 Application of Ind AS to a Newly Classified Subsidiary, Associate or Joint Venture

Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 provides that Ind AS shall apply not only to companies meeting the prescribed listing or net worth criteria, but also to their holding, subsidiary, joint venture and associate companies.

Accordingly, where a company becomes a subsidiary, associate or joint venture of a company already covered under Ind AS, the requirement to apply Ind AS extends to such company by virtue of the relationship.

For Example, During the financial year, a listed company that is already required to comply with Ind AS acquires more than 50% of the equity shares of another company, thereby making that company its subsidiary. Prior to this acquisition, this subsidiary company (hereinafter referred to as “the company”) was not covered under the Ind AS roadmap.

From the date the subsidiary relationship is established, the company comes within the scope of Rule 4, as it becomes a subsidiary of a company to which Ind AS is mandatorily applicable. Consequently, it is required to prepare its financial statements in accordance with Ind AS from the accounting period in which it becomes a subsidiary. Ind AS would apply for the entire financial year in which the relationship is created, along with presentation of comparative information in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards.

However, if the subsidiary relationship is established after the end of the financial year but before the approval of the financial statements, Ind AS would not apply for that completed financial year. In such a case, the requirement to comply with Ind AS would arise from the following financial year.

Thus, a company that newly becomes a subsidiary, associate or joint venture of an Ind AS-compliant company is required to adopt Ind AS from the relevant financial year in which such status is obtained.

1.4 Applicability of Ind AS to a Company Which is Delisted Before the Mandatory Adoption Phase

Under the Companies (Indian Accounting Standards) Rules, 2015, the requirement to apply Ind AS is determined with reference to a company’s listing status and net worth as on the specified reference date (initially 31 March 2014). If the prescribed threshold was not met on that date, the assessment is required to be made on subsequent balance sheet dates.

Under the implementation roadmap, Ind AS was first made mandatory for listed companies (other than those listed on SME exchanges) and for certain unlisted companies meeting the higher net worth threshold. In the next stage, it was extended to unlisted companies having a net worth of ₹250 crore or more but less than ₹500 crore.

In a situation where a company is delisted before the effective date from which Ind AS becomes mandatorily applicable to listed companies, its applicability is assessed in the capacity of an unlisted company. Accordingly, if it meets the prescribed net worth threshold as on the relevant reference date, Ind AS would become applicable to it from the financial year specified under the corresponding phase of the roadmap.

1.5 Non-applicability of Ind AS to Indian Branch Offices of Foreign Entities

The applicability of Ind AS under the Companies (Indian Accounting Standards) Rules, 2015 is confined to specified classes of companies as defined under the Companies Act, 2013. The starting point for determining applicability is the definition of a “company” under section 2(20) of the Companies Act, 2013, which refers to a company incorporated under the Act or under any previous company law. Thus, Ind AS applies only to entities that are incorporated as companies in India.

An Indian branch office of a foreign entity, such as a US LLC, is not incorporated under the Companies Act, 2013. It is merely an extension of the foreign entity operating in India and does not constitute a separate company under Indian company law.

Accordingly, even if the branch has net assets exceeding ₹250 crore, is subject to Indian taxation, and is regulated by the Reserve Bank of India, it is not required to adopt Ind AS. Since it is not a “company” within the meaning of the Companies Act, 2013, it falls outside the scope of the Ind AS roadmap.

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The post Ind AS Applicability Across Group Structures | Structural Changes | Non-Company Entities appeared first on Taxmann Blog.

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Case Details: Power Trust vs. Bhuvan Madan [2026] 183 taxmann.com 568 (SC)

Judiciary and Counsel Details

• Surya Kant, CJI, Joymalya Bagchi & Vipul M. Pancholi, JJ.
• Joy Saha, Sr. Adv., Pranjit Bhattacharya, Ms Salonee Shukla, Sachin Jain, Advs. & Vaibhav Niti, AOR for the Appellant.
• Arvind Nayar, Sanjay Sen, Sr. Advs., Madhav Kanoria, Ms Srideepa Bhattacharyya, Ms Neha Shivhare, Aditya Tanay Pandey, Vikash Kumar Jha, Avinash B. Amarnath, Ms Aakanksha Bhola, Sayandeep Chakraborty, Shivansh Baghel, Advs., Mrs S.S. Shroff & Ms Mandakini Ghosh, AORs for the Respondent.

Facts of the Case

In the instant case, a financial creditor filed an application under section 7 for initiation of CIRP against the corporate debtor on the ground that the corporate debtor had defaulted under a common loan agreement dated 19-6-2013.

The corporate debtor contended that the common loan agreement had been subsequently restructured vide the first restructuring proposal dated 21-2-2020, whereby the first instalment became payable on 31-12-2020, attracting the prohibition under section 10A of the IBC.

It was further submitted that the restructuring proposals dated 21-2-2020 and 29-9-2020 were final and binding between the parties and had novated the earlier common loan agreement dated 19-6-2013. The Adjudicating Authority dismissed the application of the corporate debtor and admitted the section 7 application initiating CIRP.

The Adjudicating Authority dismissed the application of the corporate debtor and admitted the section 7 application initiating CIRP. The NCLAT upheld the order passed by the Adjudicating Authority. Then, an appeal was made before the Supreme Court.

Supreme Court Held

The Supreme Court noted that, as an ameliorative measure, section 10A was incorporated into the IBC, which barred the initiation of CIRP against a corporate debtor in the event of default arising on or after 25-3-2020, for a period of 6 months or such period not exceeding one year as may be notified.

The Supreme Court held that the plea of bar under section 10A was a non-starter as restructuring proposals had not fructified into valid agreements novating original contract and pre-implementation conditions were not complied with – Held, yes – Whether therefore, default date would relate to 31-3-2018 as per section 7 application, and proceeding could not be held to be barred in light of Explanation to section 10A of the IBC.

List of Cases Reviewed

• Order of National Company Law Appellate Tribunal, New Delhi in CAAT(I)-81-2024 order dated 25.01.2024 (para 27) affirmed
• Innoventive Industries Ltd. v. ICICI Bank Ltd. [2017] 84 taxmann.com 320/[2017] 143 SCL 625 (SC)/(2018) 1 SCC 407
• M. Suresh Kumar Reddy v. Canara Bank [2023] 150 taxmann.com 256 (SC)/[2023] 178 SCL 517 (SC)/(2023) 8 SCC 387 (para 38) followed
• Vidarbha Industries Power Ltd. v. Axis Bank Ltd. [2022] 140 taxmann.com 252 (SC)/[2022] 173 SCL 355 (SC)/(2022) 8 SCC 352 (para 38) distinguished

List of Cases Referred to

• Vidarbha Industries Power Ltd. v. Axis Bank Ltd. [2022] 140 taxmann.com 252 (SC)/[2022] 173 SCL 355 (SC) (para 17)
• Innoventive Industries Ltd. v. ICICI Bank Ltd. [2017] 84 taxmann.com 320/[2017] 143 SCL 625 (SC) (para 21)
• M. Suresh Kumar Reddy v. Canara Bank [2023] 150 taxmann.com 256 (SC)/[2023] 178 SCL 517 (SC) (para 21)
• Swiss Ribbons (P) Ltd. v. Union of India [2019] 101 taxmann.com 389 (SC)/[2019] 152 SCL 365 (SC) (para 31)
• E S Krishnamurthy v. Bharath Hi Tech Builders (P.) Ltd. [2021] 133 taxmann.com 159 (SC)/[2022] 169 SCL 644 (SC) (para 33)
• Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta [2019] 111 taxmann.com 234 (SC) (para 42)
• Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited [2021] 130 taxmann.com 208 (SC) (para 42)
• Uttara Foods & Feeds (P.) Ltd. v. Mona Pharmachem [2018] 92 taxmann.com 185 (SC) (para 43)
• Lokhandwala Kataria Construction (P.) Ltd. v. Nisus Finance & Investment Managers LLP [2018] 92 taxmann.com 207 (SC) (para 43)
• GLAS Trust Company LLC v. BYJU Raveendran [2024] 167 taxmann.com 619 (SC)/[2025] 187 SCL 14 (SC) (para 43).

The post CIRP Not Barred by Section 10A Where Restructuring Failed to Materialise | SC appeared first on Taxmann Blog.

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Case Details: Pawan Kumar vs. Union of India [2026] 183 taxmann.com 497 (SC)

Judiciary and Counsel Details

• Atul S. Chandurkar & J.K. Maheshwari, JJ.
• Prashant Shukla, Ms Anushree Shukla & Kartik Kumar, Advs. for the Petitioner.
• K. Parameshwaran, Sr. Adv., Mrs Archana Pathak Dave, A.S.G., Mrs Sunita Sharma, Ms Vimla Sinha, Santosh Kr., Ishaan Sharma, Advs., Sudarshan Lamba & Raj Bahadur Yadav, AORs for the Respondent.

Facts of the Case

In the instant case, the appellants were engaged as casual/daily-wage workers with the Income Tax Department. They sought the regularisation of their services on a parity with similarly situated employees whose services were regularised pursuant to this Court’s decisions.

However, their prayer for regularisation was refused by the Tribunal and the High Court on the ground that they did not satisfy the criterion of having rendered ten years of regular service as on 10.04.2006 in terms of Secretary, State of Karnataka v. Umadevi [2006] taxmann.com 2495 (SC).

It was noted that since the appellants were similarly situated as the appellants in Ravi Verma v. Union of India [2018] 92 taxmann.com 373/255 Taxman 73 (SC) and Raman Kumar v. Union of India [Civil Appeal No. 4146 of 2023, they could not be discriminated from the appellants in the aforesaid two appeals.

Supreme Court Held

The Supreme Court observed that since the nature of work performed by the appellants was perennial and fundamental to the functioning of offices, the recurring nature of these duties necessitated their classification as regular posts, irrespective of how their initial engagements were labelled.

The Supreme Court held that since the appellants were engaged in duly sanctioned posts and had served continuously for more than ten years, they were to be considered for regularisation as a one-time measure. Thus, appellants were entitled to the same reliefs granted by this Court in Ravi Verma as well as in Raman Kumar, and, therefore, their services were to be regularised from 01.07.2006.

List of Cases Reviewed

• Order of High Court of Madhya Pradesh in M.P. No.3460/2018, dated 26.08.2019 (para 11) set aside
• Jaggo v. Union of India 2024 INSC 1034 (para 9)
• Ravi Verma v. Union of India [2018] 92 taxmann.com 373/255 Taxman 73 (SC)/Civil Appeal Nos. 2795-2796 of 2018
• Raman Kumar v. Union of India [Civil Appeal No. 4146 of 2023, dated 3-7-2023] (para 10) followed
• Secretary, State of Karnataka v. Umadevi 2006 taxmann.com 2495 (SC) /2006 INSC 216 (para 10) distinguished

List of Cases Referred to

• Secretary, State of Karnataka v. Umadevi 2006 taxmann.com 2495 (SC) (para 2)
• Ravi Verma v. Union of India [2018] 92 taxmann.com 373/255 Taxman 73 (SC) (para 3)
• Jaggo v. Union of India 2024 INSC 1034 (para 3)
• Raman Kumar v. Union of India [Civil Appeal No. 4146 of 2023, dated 3-7-2023] (para 8).

The post Casual Workers in Income Tax Department Entitled to Regularisation on Parity | SC appeared first on Taxmann Blog.

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Case Details: Dheeraj Tolaram Talreja vs. Income-tax Officer [2026] 183 taxmann.com 551 (Mumbai-Trib.)

Judiciary and Counsel Details

• Amit Shukla, Judicial Member & Girish Agrawal, Accountant Member
• Nikhil Tiwari for the Appellant.
• Krishna Kumar, Sr. DR for the Respondent.

Facts of the Case

The assessee’s appeal for the relevant assessment year was disposed of by the Tribunal, wherein issues relating to the determination of residential status, taxability of income from house property situated in Singapore and proportionate Singapore salary income, and allowability of foreign tax credit were considered in the course of recording facts, submissions, and legal contentions.

However, the Tribunal did not render a categorical finding on residential status, and consequently, the grounds for the taxability of house property income and proportionate salary income also remained unadjudicated. Further, although the Tribunal recorded observations regarding the inadmissibility of denying foreign tax credit merely for delay in filing Form No. 67, the matter was remanded to the Assessing Officer without clear and consistent findings in principle.

In these circumstances, the assessee filed a Miscellaneous Application under section 254(2) seeking rectification of mistakes apparent from the record in the Tribunal’s earlier order for the said assessment year.

ITAT Held

The Mumbai Tribunal held that the power of rectification conferred upon the Tribunal is a limited power, intended to correct mistakes which are patent, manifest and apparent from the record, and does not extend to review of the order or reappreciation of evidence on merits.

At the same time, it is equally well-settled that failure to adjudicate a ground raised before the Tribunal, or inconsistency between the findings recorded and the operative directions issued, constitutes a mistake apparent from the record, amenable to rectification under section 254(2).In the present case, it is evident that the Tribunal has elaborately recorded the factual background relating to the residential status of the assessee, including the period of stay in India, the applicability of section 6(6), and the assessee’s contention that he qualifies as a Resident but Not Ordinarily Resident (RNOR).

The Tribunal has also taken note of the fact that the assessee had initially filed the return treating himself as Resident and Ordinarily Resident (ROR), which was subsequently revised upon discovering the error, and that relevant documentary evidence, including passport copies and a summary of stay days, formed part of the record. However, despite recording the aforesaid factual matrix and submissions, no categorical finding has been rendered by the Tribunal on the ground relating to the determination of the correct residential status of the assessee for the assessment year under consideration.

Once the facts and legal submissions on an issue are noticed in the order, the absence of a finding thereon results in a clear omission apparent from the record. The Tribunal is duty-bound to adjudicate each ground raised before it, and non-adjudication of a ground constitutes a rectifiable mistake within the meaning of section 254(2).

Consequently, Grounds raised by the assessee, which pertain to the non-chargeability of income from house property situated in Singapore and the proportionate salary income from Singapore, also remain unadjudicated. These grounds are intrinsically and inseparably linked to the determination of residential status and were specifically raised, argued and supported by material on record, including detailed computations forming part of the factual paper book. The omission to render findings on these consequential grounds, which flow directly from earlier Ground, is equally apparent from the record and requires rectification.

Further, the matter was remanded to the Assessing Officer without recording a clear and consistent finding on the nature of Form No. 67 or the allowability of foreign tax credit in principle. This has resulted in an internal inconsistency between the reasoning recorded in the body of the order and the operative directions issued. Such inconsistency, being manifest on the face of the record, constitutes a mistake apparent from the record and is amenable to rectification under section 254(2).

The post Non-Adjudication of Grounds Is Rectifiable Mistake Under Section 254(2) | ITAT appeared first on Taxmann Blog.

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Case Details: P. B. Sethi Plastics vs. State of U.P. [2026] 183 taxmann.com 402 (Allahabad)

Judiciary and Counsel Details

• Vikas Budhwar, J.
• Pooja Talwar for the Petitioner.

Facts of the Case

The sole proprietor of a firm died on July 2020 and Post his death, the legal heirs of the deceased applied for the cancellation of the firm’s registration and the same was cancelled in October 2020. However, the department issued a show cause notice under Section 73 in 2023 and later passed an adjudication order in the name of the deceased proprietor. Aggrieved by the order, the legal heir preferred an appeal to the appropriate authority. However, the appeal was rejected on the ground that it was barred by limitation. The legal heir filed a writ petition to the Allahabad High Court against the rejection of the appeal by the authority.

High Court Held

The High Court held that proceedings initiated and concluded against a dead person are void ab initio since Section 93 only deals with the liability of legal representatives and does not authorise determination against a deceased person without issuing notice to the legal heir. Accordingly, both the adjudication order and the appellate order were set aside with liberty to the department to proceed afresh in accordance with law.

List of Cases Referred to

• Amit Kumar Sethia v. State of U.P. [2025] 173 taxmann.com 370 (Allahabad) (para 6).

The post GST Proceedings Against Deceased Person Without Notice to Legal Heirs Void | HC appeared first on Taxmann Blog.

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Case Details: MCR Marketing vs. Assistant Commissioner of Central Tax [2026] 183 taxmann.com 326 (Karnataka)

Judiciary and Counsel Details

• S. Sunil Dutt Yadav, J.
• Rajeev Channappa Nulvi, Adv. for the Petitioner.
• Shishira Amarnath, Adv. for the Respondent.

Facts of the Case

In the instant case, the petitioner was issued a single show cause notice for the tax periods spanning from 2017-18 to 2021-22. The petitioner contended that a single show cause notice for multiple tax periods is impermissible.

High Court Held

The Karnataka High Court held that the issue in controversy relating to clubbing/consolidation/bunching/combining of multiple tax periods in a single/composite show cause notice has already been settled by the co-ordinate Bench in Pramur Homes and Shelters v. Union of India [2025] 181 taxmann.com 541 (Karnataka). The order of adjudication is passed for a year. The tax period in the instant case spanned from 2017-2018 to 2021-2022. In light of the decision in Pramur Homes and Shelters (supra), the show cause notice issued was defective.

List of Cases Reviewed

• Pramur Homes and Shelters v. Union of India [2025] 181 taxmann.com 541 (Karnataka) (para 5), followed

List of Cases Referred to

• Lakshmi Venkateshwara Traders MS Scrap v. Deputy Commissioner of Central Tax [W.P. No. 22726 of 2025, dated 17-12-2025] (para 3)
• Pramur Homes and Shelters v. Union of India [2025] 181 taxmann.com 541 (Karnataka) (para 3).

The post Single SCN for Multiple Tax Periods Invalid Under GST Law | HC appeared first on Taxmann Blog.

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Editorial Team – [2026] 183 taxmann.com 580 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. European Commission Seeks Input on Simplifying the EU Direct Taxation Framework

The European Commission has issued a call for evidence inviting stakeholders to submit their views on measures to simplify EU law and reduce regulatory burdens for businesses. The initiative seeks to enhance competitiveness and improve the effectiveness of the EU corporate taxation framework, including rules on parent–subsidiary arrangements, interest and royalties, mergers, anti-tax avoidance, and dispute-resolution mechanisms. Comments may be submitted until 16 March 2026.

The initiative’s overarching objective is to simplify the existing EU legal framework on direct taxation and strengthen competitiveness within the internal market, without compromising the key policy goals of the relevant Directives. These goals include eliminating double taxation of cross-border profits, interest and royalty payments; ensuring tax neutrality in cross-border corporate reorganisations; safeguarding the internal market from aggressive tax planning; and facilitating effective resolution of cross-border tax disputes. To achieve this, the initiative proposes:

• reducing unnecessary reporting and compliance burdens;
• removing outdated and overlapping tax provisions;
• simplifying tax legislation to improve internal market competitiveness;
• clarifying concepts within the tax framework; and
• streamlining and enhancing the application of tax rules, procedures, and reporting requirements.

The policy options under consideration may entail legislative amendments to the following instruments:

(a) Controlled Foreign Company (CFC) Rules under the Anti-Tax Avoidance Directive (ATAD) – to remove overlaps with Pillar Two and address inconsistencies arising from varied implementation choices across Member States.

(b) Interest Limitation Rules under ATAD – to mitigate procyclical effects, account for inflation, and consider concerns of sectors with structurally high but legitimate leverage, as well as the needs of small and medium enterprises, including possible rule simplification.

(c) Scope of the Parent-Subsidiary Directive, Interest and Royalty Directive, and Tax Merger Directive – to enhance the effectiveness of these Directives and, consequently, the functioning of the internal market.

(d) Procedural Requirements for Accessing Benefits under the Parent-Subsidiary and Interest and Royalty Directives – to reduce administrative and compliance burdens for businesses and improve the overall operation of these frameworks.

(e) Targeted Amendments to the Tax Dispute Resolution Mechanisms Directive – particularly concerning the admission stage, to remove ambiguities, promote consistent application across Member States, and facilitate usability for both taxpayers and tax authorities.

Source – Consultation

2. Tax Authority of Chile confirms no foreign tax credit where foreign operations result in a loss

The Chilean tax authority, Servicio de Impuestos Internos (SII), has issued Letter Ruling No. 286 dated 4 February 2026 addressing the availability of a foreign tax credit where a taxpayer’s net foreign-source income is zero or negative (i.e., a loss). The ruling responds to a taxpayer’s request seeking (i) allowance of a foreign tax credit in such circumstances and (ii) a refund of excess foreign tax paid due to non-utilisation of the credit.

In the ruling, the SII reiterates consistent with the Tax Code and its interpretative guidance in Circular No. 31 of 2021 that a foreign tax credit is available only in respect of foreign income that is also taxable in Chile. The credit may be set off solely against First Category Tax (Impuesto de Primera Categoría), Second Category Tax (Impuesto Único de Segunda Categoría), Complementary Global Tax (Impuesto Global Complementario), and Additional Tax (Impuesto Adicional). A prerequisite for claiming the credit is that the relevant foreign income must be subject to double taxation.

Accordingly, the SII clarifies that no foreign tax credit can arise where the taxpayer’s determined net foreign income is nil or reflects a foreign loss, since in such cases there is no taxable income in Chile that could give rise to double taxation. The authority further confirms that no refund of foreign tax paid is permissible in these circumstances.

Source – Servicio de Impuestos Internos (SII)

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Case Details: Rupesh Kumar Meena vs. Union of India [2026] 183 taxmann.com 177 (SC)

Judiciary and Counsel Details

• Rajesh Bindal & Atul S. Chandurkar, JJ.

Facts of the Case

In the instant case, the appellant was an IPS Officer of the Tamil Nadu Cadre. He was selected against a vacancy meant for the Scheduled Tribe (ST) category. The appellant was third in the merit list for an insider vacancy in the Rajasthan cadre in the 2004 examination batch. The moment the first two candidates declined to join the Rajasthan cadre, which was offered based on an ‘insider’ vacancy, the appellant staked his claim to be considered for appointment to the same.

He filed O.A. No.2326 of 2010 before the Tribunal, which was dismissed vide order dated 08.03.2011. The High Court upheld the same, vide the order dated 26.08.2011. Even the review application was also dismissed vide order dated 21.10.2011.

The appellant submitted that two other candidates, senior to him in the merit list, had not joined the Rajasthan cadre against that vacancy and, thus, he should be offered an ‘insider’ vacancy in the State of Rajasthan.

It was noted that, in dispute, the appellant was not the next candidate in order of merit to be offered an ‘insider’ vacancy in the State of Rajasthan, in case the first one had not joined; rather, his case was that if the second candidate did not join, he should be offered that vacancy.

Supreme Court Held

The Supreme Court held that such a process of cadre change could not be adopted, and that finality had to be attached to the selection process. Thus, the instant appeal against the order of the High Court upholding the order of the Tribunal dismissing the application filed by the appellant was to be dismissed.

List of Cases Reviewed

• Orders of Delhi High Court in W.P.(C) No.6215 of 2011, Dated 26.08.2011 and in Review Petition No.612 of 2011, dated 21.10.2011[ Para 13] affirmed

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