Author: inavatiq

Case Details: Arup Kumar Chatterjee vs. Assistant Commissioner of State Tax, Bureau of Investigation (South Bengal) [2025] 181 taxmann.com 359 (Calcutta)

Judiciary and Counsel Details

• Om Narayan Rai, J.
• Akshat Agarwal & Ms Doyel Dey for the Petitioner.
• Nilotpal Chatterjee, Tanoy Chakraborty & Saptak Sanyal for the Respondent.

Facts of the Case

The petitioner, filed a writ petition challenging the dismissal of statutory appeal for failure to comply with the mandatory pre-deposit requirement. It was contended that the demand was illegal, on which basis waiver of the pre-deposit was sought. It was further submitted that the Appellate Authority dismissed the appeal solely on the ground of non-payment of pre-deposit, notwithstanding that an amount exceeding 10 per cent of the disputed tax had already been recovered by the Department. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the Appellate Authority has no power to waive the mandatory statutory requirement of pre-deposit prescribed under Section 107(6) of the CGST Act and the West Bengal GST Act. The Court held that the statutory pre-deposit is a condition precedent for maintainability of an appeal and cannot be relaxed by the Appellate Authority. It further held that since an amount exceeding 10 per cent of the disputed tax had already been recovered by the Department of Revenue, the statutory requirement of pre-deposit stood satisfied. The Court therefore quashed the impugned order and remanded the matter to the Appellate Authority with a direction to hear and decide the appeal on merits without insisting on any further pre-deposit.

The post No Power to Waive Mandatory GST Pre-Deposit for Appeals | HC appeared first on Taxmann Blog.

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Editorial Team – [2025] 181 taxmann.com 519 (Article)

World Corporate Law News provides a weekly snapshot of corporate law developments from around the globe. Here’s a glimpse of the key corporate law update this week.

1. Securities Law

1.1 CSA and CIRO provide guidance for finfluencers and firms on how to work with them and protect investors

On December 11, 2025, the Canadian Securities Administrators (CSA) and Canadian Investment Regulatory Organisation (CIRO) released new guidance for financial content creators or influencers known as “finfluencers.” The guidance aims to help them, and the firms they work with, understand and follow securities laws when posting information about investing online.

Social media is increasingly a source of financial information for Canadians, with finfluencers shaping these conversations. Some finfluencers’ activities can introduce new risks to investors.

The CSA and CIRO want to help those creating content and posting about investing to do so transparently, honestly and legally, including identifying conflicts of interest. The guidance in the staff notice offers concrete examples of how both registrants and finfluencers can understand and comply with the requirements set by securities regulators.

“Finfluencers can have an impact on how people make investment decisions, and this comes with substantial responsibilities,”

said Stan Magidson, CSA Chair and CEO of the Alberta Securities Commission.

“This guidance helps content creators protect themselves and their followers by making sure their content complies with securities laws.”

“Social media is changing how Canadians learn about investing, and that brings new risks,”

said Andrew Kriegler, CIRO President and CEO.

“We want finfluencers to understand that compliance isn’t just about rules, it’s about protecting your reputation and your audience. Requiring finfluencers to follow this guidance helps investors make better, safer financial decisions.”

The CSA and CIRO expect finfluencers, as well as registrants and issuers who work with finfluencers, to become familiar with and follow the rules set out in the guidance. Breaking securities laws can lead to serious penalties and other enforcement actions.

The CSA, the council of the securities regulators of Canada’s provinces and territories, coordinates and harmonises regulation for the Canadian capital markets.

The Canadian Investment Regulatory Organisation (CIRO) is the pan-Canadian self-regulatory organisation that oversees all investment dealers, mutual fund dealers, and trading activity on Canada’s debt and equity marketplaces. CIRO is committed to protecting investors, providing efficient and consistent regulation, and building Canadians’ trust in financial regulation and the people who manage their investments.

Source – Official Guidance

1.2 SC seeks feedback as part of Malaysia’s Corporate Governance Framework Review

On December 12, 2025, the Securities Commission Malaysia (SC) published a Discussion Paper seeking public feedback as part of its review of Malaysia’s corporate governance framework.

The Key areas under review include reinforcing the roles of boards and management in driving long-term value creation and strengthening overall board effectiveness.

This encompasses driving necessary behavioural shifts, enhancing agility in managing emerging risks and adopting new technologies, continuous strengthening of board composition and independence, and building stakeholder trust through timely engagement and access to information.

The review aligns with the upcoming Capital Market Master Plan 4 (CMP4), which positions corporate governance as a key enabler of a resilient, inclusive, and sustainable capital market.

The feedback will guide the upcoming revision of the Malaysian Code on Corporate Governance (MCCG) and the relevant corporate governance framework, ensuring the framework remains forward-looking, relevant and aligned with global best practices.

This Discussion Paper is open for feedback from 12 December 2025 to 6 February 2026.

Source – Official Guidance

Click Here To Read The Full Article

The post [World Corporate Law News] CSA and CIRO Issue Guidance for Finfluencers to Protect Investors appeared first on Taxmann Blog.

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Case Details: Director of Income-tax (IT)-I, Mumbai vs. American Express Bank Ltd. [2025] 181 taxmann.com 433 (SC)

Judiciary and Counsel Details

• J.B. Pardiwala & K.V. Viswanathan, JJ.
• Raghavendra P Shankar, A.S.G., Ms Madhulika Upadhyay, AOR, Karan Lahiri, Navanjay Mahapatra, Sarthak Karol, V C Bharathi & Ms Priyanka Terdal, Advs. for the Appellant.
• Aniruddha A Joshi, Percy Pardiwala, Sr. Advs., Rajeev Maheshwaranand Roy, Kishore Kunal, AORs, Rajeev Kumar Panday, Nishant Thakkar, Hiten Thakkar & Nikhil Ranjan, Advs. for the Respondent.

Facts of the Case

The assessee, a non-resident banking company, filed its return of income for the relevant assessment year. While computing the income, the assessee claimed a deduction for expenses incurred at the head office directly related to the Indian branches.

The Assessing Officer (AO) contended that the expenses in question should be subject to the ceiling specified in Section 44C. The assessee claimed that the expenses in question could not have been classified as head office expenditure for the reason that Section 44C presupposes that at least a part of the expenditure is attributable to the business outside India. If this presumption does not hold, and the entire expenditure is incurred solely for the business in India, Section 44C would not apply.

The AO passed an assessment order limiting the deduction under Section 44C to 5% of the gross total income. The matter reached before the Supreme Court.

Supreme Court Held

The Supreme Court held that to be brought within the ambit of Section 44C, two broad conditions must be satisfied:

(i) The assessee claiming the deduction must be a non-resident; and

(ii) The expenditure in question must strictly fall within the definition of ‘head office expenditure’ as provided in the Explanation to the Section.

The Explanation prescribes a tripartite test to determine if an expense qualifies as ‘head office expenditure’:

(i) The expenditure was incurred outside India;

(ii) The expenditure is in the nature of ‘executive and general administration’ expenses; and

(iii) The said executive and general administration expenditure is of the specific kind enumerated in clauses (a), (b), or (c) respectively of the Explanation, or is of the kind prescribed under clause (d).

This means that even if such head office expenditure can be allowed as a deduction under Section 37(1), it would not be permitted if it exceeds the ceiling limit set under Section 44C. Section 44C of the Income Tax Act does not create a distinction between common and exclusive head office expenditure. It applies to ‘head office expenditure’ regardless of whether it is common expenditure or expenditure incurred exclusively for the Indian branches. The term ‘attributable’ in Clause (c) does not create a statutory distinction between ‘common’ and ‘exclusive’ expenditure.

Thus, the question of law is answered in favour of the Revenue, and it was held that Section 44C applies to ‘head office expenditure’ regardless of whether it is common expenditure or expenditure incurred exclusively for the Indian branches.

List of Cases Reviewed

• CIT v. Emirates Commercial Bank Ltd. [2003] 262 ITR 55/[2004] 134 Taxman 682 (Bombay) (para 71) disapproved.
• Order of Bombay High Court in DIT (IT) v. American Express Bank Ltd. [IT Appeal No. 1294 of 2013, dated 1-4-2015][Para 91] set aside

List of Cases Referred to

• CIT v. Emirates Commercial Bank Ltd. [2003] 262 ITR 55/[2004] 134 Taxman 682 (Bombay) (para 8)
• Rupanjuli Tea Co. Ltd. v. CIT [1990] 186 ITR 301/[1991] 54 Taxman 269 (Calcutta) (para 21)
• DIT, Delhi v. Ravva Oil (Singapore) (P.) Ltd. [2008] 300 ITR 53/167 Taxman 177 (Delhi) (para 23)
• CIT vs. Emirates Commercial Bank Ltd. [Civil Appeal No. 1527 of 2006, dated 27-08-2004] (para 23)
• CIT v. Deutsche Bank A.G. [Civil Appeal No. 1544 of 2006, dated 26.08.2008] (para 23)
• CIT v. Kasturi & Sons Ltd. [1999] 237 ITR 24/103 Taxman 342 (SC) (para 28)
• A.V. Fernandez v. State of Kerala 1957 SCC OnLine SC 23 (para 29)
• Commissioner of Sales Tax, U.P v. Modi Sugar Mills Ltd. 1960 SCC OnLine SC 118 (para 29)
• Godrej & Boyce Manufacturing Company Ltd. v. Dy. CIT [2017] 81 taxmann.com 111/394 ITR 449/247 Taxman 361 (SC) (para 30)
• State of Uttar Pradesh v. Dr. Vijay Anand Maharaj [1962] 45 ITR 414 (SC) (para 30)
• M.V. Joshi v. M.U. Shimpi 1961 SCC OnLine SC 56 (para 30)
• Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. & Ors (1987) 1 SCC 424 (para 33)
• Commissioner of Gift-tax v. N.S. Getti Chettiar [1971] 82 ITR 599 (SC) (para 33)
• CIT Kerala v. Tara Agencies [2007] 292 ITR 444/162 Taxman 337 (SC) (para 34)
• Dadi Jagannadham v. Jammulu Ramulu (2001) 7 SCC 71 (para 34)
• Ram Narain Medhi v. State of Bombay 1958 SCC OnLine SC 53 (para 34)
• Shashikant Laxman Kale v. UOI [1990] 185 ITR 104/52 Taxman 352 (SC) (para 36)
• Bengal Immunity Company Ltd. v. State of Bihar (1955) 1 SCC 763 (para 37)
• CIT v. Sodra Devi [1957] 32 ITR 615 (SC) (para 38)
• Kanai Lal Sur v. Paramnidhi Sadhukhan 1957 SCC OnLine SC 8 (para 38)
• CIT v. Deutsche Bank A.G. [2006] 284 ITR 463/[2007] 158 Taxman 37 (Bombay) (para 53)
• CIT v. Meghalaya Steels Ltd. [2016] 67 taxmann.com 158/383 ITR 217/238 Taxman 559 (SC) (para 62)

The post Section 44C Applies to All Head Office Expenses – Common or Exclusive | SC appeared first on Taxmann Blog.

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Case Details: Shivakar Singh vs. State of U.P. [2025] 181 taxmann.com 236 (HC-Allahabad)

Judiciary and Counsel Details

• Ajay Bhanot, J.
• Akash Khare & Hari Om for the Petitioner.
• Abhishek Srivastava & Baleshwar Chaturvedi, C.S.C. for the Respondent.

Facts of the Case

In the instant case, a government employee was imprisoned from 23-1-2015 to 18-12-2018 after a criminal case was registered against him under section 13(1)(b) of the Prevention of Corruption Act.

During the said period, he did not discharge his duties. Criminal case was not instituted at the behest of the respondent–corporation (employer). The employer did not create any hindrance or prevent the petitioner from working, and no departmental proceedings were initiated against him.

Later, the petitioner claimed back wages and arrears for the said period. The Respondent refused to pay on the application of the principle of ‘no work no pay’.

It was noted that the principle of ‘no work no pay’ is a salutary principle of general application in service jurisprudence and is accepted only in rare instances, such as when an employer prevents an employee from discharging his duties or creates impediments in regard thereof.

High Court Held

The High Court held that since the petitioner was not kept from his duties by his employer, relaxation of the principle of ‘no work no pay’ could not be countenanced in the instant case. Further, the petitioner did not have any lawful entitlement to a period of back wages during the period of his imprisonment. However, the petitioner would be entitled to continuity in service for the aforesaid period for the purposes of pension.

List of Cases Reviewed

• Raj Narain v. Union of India [2019] 4 taxmann.com 1893 (SC) (para 9)
• Anil Kumar Singh v. State of U.P. 2024 (6) ADJ 223 (para 10) distinguished

List of Cases Referred to

• MANAGEMENT OF RESERVE BANK OF INDIA v. Bhopal Singh Panchal [1994] 1993 taxmann.com 1218 (SC) (para 6)
• Ranchhodji Chaturji Thakore v. Superintendent Engineer, Gujarat Electricity Board [1997] 1996 taxmann.com 1668 (SC) (para 7)
• Union of India v. Jaipal Singh 2003 taxmann.com 4066 (SC) (para 8)
• Raj Narain v. Union of India [2019] 4 taxmann.com 1893 (SC) (para 9)
• Anil Kumar Singh v. State of U.P. 2024 (6) ADJ 223 (para 10).

The post No Back Wages During Imprisonment Service Counts for Pension | HC appeared first on Taxmann Blog.

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Case Details: Chandra Enterprises vs. Deputy State Tax Officer [2025] 181 taxmann.com 355 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• K.A. Parthasarathy for the Petitioner.
• V. Prashanth Kiran, Govt. Adv. for the Respondent.

Facts of the Case

The petitioner challenged the demand proceedings initiated by the jurisdictional officer, asserting that the outward supplies were wrongly reported in Form GSTR-3B due to which there was a difference in the Form GSTR-1 and Form GSTR-3B. It was contended that the disputed tax was credited to the electronic credit ledger and applicable interest was paid. Despite such payment, a notice in Form DRC-01 was issued for the relevant period, and on account of non-response, an order was passed confirming tax, interest, and penalty, while the statutory appeal was dismissed on the ground of limitation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the return filed prima facie reflected evasion, followed by subsequent remittance of tax along with interest, which warranted closer examination under Section 73 of the CGST Act and the Tamil Nadu GST Act. The Court examined the scope of proceedings where tax and interest had been paid prior to issuance of notice and noted that such payment was a relevant factor requiring due consideration by the original authority. It held that confirmation of demand without examining the effect of pre-notice payment and the explanation offered by the petitioner was unsustainable.

The post Pre-Notice Tax and Interest Payment Bars Demand – Matter Remanded | HC appeared first on Taxmann Blog.

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Circular no. HO/17/11/18(1)2025-DDHS-POD1/I/342/2025; Dated: 16.12.2025

1. Regulatory Background

SEBI has issued a circular mandating enhanced periodic disclosure requirements for Special Purpose Distinct Entities (SPDEs) and trustees associated with Securitised Debt Instruments (SDIs).

The move is aimed at strengthening transparency, ongoing monitoring, and investor protection in the securitisation market.

2. Entities Covered

The disclosure requirements apply to:

• Special Purpose Distinct Entities (SPDEs) created for securitisation transactions, and
• Trustees appointed in relation to SDIs

These entities play a critical role in holding, administering, and safeguarding securitised assets on behalf of investors.

3. Frequency and Timeline of Disclosures

• Disclosures must be made on a half-yearly basis
• Reporting periods:

1. 1. Half-year ending March
   2. Half-year ending September

• Disclosures must be submitted within 30 days from the end of the respective half-year

This ensures timely availability of information to regulators and market participants.

4. Recipients of Disclosures

The required disclosures must be submitted to:

• SEBI (the Board), and
• The concerned stock exchange(s) where the securitised debt instruments are listed

This dual reporting mechanism enhances both regulatory oversight and market transparency.

5. Nature of Disclosures

While the circular mandates “detailed disclosures,” the intent is to ensure comprehensive visibility into aspects such as:

• Performance and status of the underlying securitised assets
• Cash flow collections and payouts
• Credit enhancements and structural safeguards
• Compliance with transaction documents and regulatory conditions
• Any material events, deviations, or risks impacting SDIs

These disclosures enable investors and regulators to assess ongoing risk and performance, beyond initial issuance disclosures.

6. Effective Date

The provisions of the circular will be effective from March 31, 2026.

Accordingly:

• The first mandatory half-yearly disclosure cycle will commence post-March 31, 2026
• SPDEs and trustees must ensure systems, processes, and data readiness well in advance

7. Regulatory Intent

SEBI’s initiative seeks to:

• Enhance post-issuance transparency in securitised products
• Strengthen continuous disclosure norms for SDIs
• Improve investor confidence in the securitisation framework
• Enable proactive regulatory supervision and early risk identification

The move aligns SDI disclosure standards more closely with those applicable to other listed debt instruments.

8. Compliance Takeaways

SPDEs and trustees should:

• Establish robust half-yearly reporting mechanisms
• Define internal data collection and validation workflows
• Coordinate with originators, servicers, and auditors for timely inputs
• Ensure disclosures are accurate, complete, and submitted within statutory timelines
• Align disclosure formats with stock exchange and SEBI requirements

Non-compliance may result in regulatory observations, penalties, or market-related consequences.

Click Here To Read The Full Circular

The post SEBI Mandates Half-Yearly Disclosures by SPDE Trustees for SDIs appeared first on Taxmann Blog.

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1. Introduction

The research committee of the Institute of Chartered Accountants of India (ICAI) has issued a report on “Accounting for Digital Assets”. Accounting for digital assets has emerged as a critical area in contemporary financial reporting, driven by the rapid growth of cryptocurrencies, Non Fungible Tokens (NFTs), and other block chain based instruments. In the absence of uniform accounting guidance, significant challenges arise in relation to their recognition, measurement, valuation and disclosure.

The report issued by ICAI, provides an overview of the global accounting landscape for digital assets by analysing prevailing practices under International Financial Reporting Standard (IFRS), Financial Accounting Standard Board (FASB), and Ind AS, while also considering the evolving regulatory framework in India. It addresses key classification and valuation issues, disclosure requirements, and policy considerations, supported by expert insights and survey findings.

2. Background

At present, there is no standalone accounting standard that specifically addresses the accounting of digital assets. Accordingly, digital asset transactions are accounted for by applying existing Generally Accepted Accounting Principle (GAAP) standards, such as Ind AS 2, Inventory, Ind AS 32, Financial Instruments, and Ind AS 38 Intangible Assets. However, these standards do not comprehensively capture the unique characteristics of digital assets.

Broadly, two accounting approaches are evident. The first allows entities to exercise discretion in formulating accounting policies, typically classifying digital assets as inventory or intangible assets. This approach, however, results in limited disclosures, potentially restricting user’s understanding of an entity’s exposure to digital assets. The second approach involves amending or clarifying existing standards to enhance disclosure requirements. While this may improve transparency, it remains uncertain whether such amendments would ensure consistent application across entities, given the diversity of accounting treatments currently permitted.

Further, the option ICAI is looking forward is to develop a specific accounting standard for the accounting of digital assets and liabilities. The introduction of a separate standard would promote consistency in accounting treatment across entities and mandate enhanced and more rigorous disclosure requirements.

3. Objective of Research Committee

The study of research committee aims to address the significant ambiguities and inconsistencies in the current recognition, measurement, and disclosure requirements prescribed under the existing financial reporting standards. Further, it aims to recommend a policy for developing a comprehensive and robust framework for digital asset accounting. The overall objective of research committee is discussed herewith:

(a) Analyse the limitations of existing accounting standard to identify the unique characteristics and economic substance of diverse digital assets

(b) Identify the key challenges faced by accounting professionals and entities in defining, classifying, measuring, and disclosing digital assets

(c) Evaluate the global regulatory and accounting landscape for digital assets

(d) Provide solutions and tailored approach for the accounting treatment of digital assets to standard-setting bodies, regulators and businesses.

Click Here To Read The Full Story

The post ICAI Flags Need for Accounting Framework for Digital Assets appeared first on Taxmann Blog.

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Notification No. S.O. 5807(E); Dated: 16.12.2025

1. Regulatory Background

The Central Government has notified amendments to the territorial jurisdiction of Debt Recovery Tribunals (DRTs) constituted under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act). The amendment revises the geographical jurisdiction of certain DRTs to ensure better administrative efficiency, clearer jurisdictional demarcation, and smoother adjudication of recovery proceedings.

2. Nature of the Amendment

The notification substitutes the existing entries relating to territorial jurisdiction of specified DRTs. The changes primarily relate to:

• Reorganisation of districts in the State of West Bengal
• Detailed specification of police station–wise jurisdiction in Kolkata city
• Revised allocation of districts among DRTs
• Updated territorial coverage for the Union Territory of Andaman and Nicobar Islands

These substitutions replace earlier jurisdictional descriptions, which were often broad or outdated.

3. Key Changes in West Bengal

3.1 Kolkata City

The amendment now provides granular, police station–wise territorial jurisdiction for DRTs operating in Kolkata city. This removes ambiguity in determining the correct forum for filing recovery applications arising from:

• Loan accounts linked to specific police station areas
• Borrower or secured asset locations within Kolkata

3.2 District-Level Reallocation

Several districts within West Bengal have been:

• Reassigned between DRTs, or
• Brought under revised territorial coverage

This redistribution is intended to:

• Balance caseloads across tribunals
• Improve accessibility for litigants
• Reduce procedural delays caused by jurisdictional objections

4. Coverage of Andaman and Nicobar Islands

The notification also revises and clearly specifies the Debt Recovery Tribunal having jurisdiction over the Union Territory of Andaman and Nicobar Islands, ensuring:

• Clear forum identification for banks and financial institutions
• Certainty for borrowers and guarantors located in the UT
• Elimination of ambiguity regarding filing and transfer of cases

5. Regulatory Intent

The amendment seeks to:

• Provide certainty and precision in determining the appropriate DRT
• Reduce litigation over territorial jurisdiction disputes
• Improve case management and administrative efficiency
• Align tribunal jurisdictions with current district and policing boundaries
• Facilitate faster adjudication of recovery and enforcement proceedings

6. Implications for Stakeholders

6.1 For Banks and Financial Institutions

• Recovery applications must be filed before the correctly designated DRT as per revised jurisdiction
• Existing and proposed filings must be reviewed to avoid jurisdictional defects

6.2 For Borrowers and Guarantors

• Greater clarity on the forum of adjudication
• Reduced risk of proceedings being transferred or challenged on jurisdictional grounds

6.3 For Legal Practitioners

• Jurisdiction mapping must be updated for West Bengal and Andaman & Nicobar Islands
• Pending cases may require review or transfer, if impacted by the revised jurisdiction

7. Compliance Takeaways

Stakeholders should:

• Update internal jurisdiction matrices and litigation SOPs
• Reassess pending and future DRT filings for correct territorial alignment
• Train recovery and legal teams on revised police station and district mappings
• Monitor any transfer directions issued pursuant to the amendment

Failure to adhere to revised jurisdiction may lead to procedural objections, transfer delays, or dismissal of applications.

Click Here To Read The Full Notification

The post Centre Revises DRT Territorial Jurisdiction in West Bengal and A&N Islands appeared first on Taxmann Blog.

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CA Naresh Kumar Kabra & Asmi Jain – [2025] 181 taxmann.com 476 (Article)

1. Introduction

The Income-tax Act, 2025 is a modern and comprehensive revision of the 60-year-old Income-tax Act, 1961. It aims to make India’s direct tax system simpler, clearer, and more in line with current needs.

This article will discuss key reforms in the taxation of charitable trusts, including the introduction of a new category called Registered Non-Profit Organisation (NPO). This change combines the previous categories like trusts, societies, Section 8 companies, and other similar institutions, with all related rules now brought together for easier understanding and compliance.

Overall, the Act reduces redundancy, streamlines administration, and makes tax rules more accessible to both taxpayers and authorities. The Income Tax Act, 2025 will be applicable from the tax year 2026–27 (i.e., 1 April 2026).

2. Definition of Registered Non-Profit Organisation

Under the Income Tax Act, 2025, a single consolidated term “Registered Non-Profit Organisation” (Registered NPO) has been introduced to encompass a wide range of entities such as public trusts, societies, Section 8 companies, universities and other government-recognised educational institutions.

Section 355(g) of the Act of 2025 states that

“registered non-profit organisation” means any person having a valid registration under any specified provision and such registration has not been cancelled”.

Now the question arises what is the meaning of a valid registration?, which is explained in Section 355(f) which states that

“”registration” includes provisional registration, provisional approval or approval, as referred to in the second proviso to section 10(23C) or 12AB (1) of the Income-tax Act, 1961 and under section 332, but shall not include approval under the second proviso to section 80G(5) of the said Act or section 354”.

Thus, “Registered NPO” refers to any entity holding a valid registration under these specified provisions, as long as the registration has not been cancelled.

3. Comparative Analysis of Changes Proposed by the Income Tax Bill, 2025 Vs The Income Tax Act, 2025

The table below presents a comparative overview of the proposed changes in the Income Tax Bill, 2025, highlighting the differences from the old Act and outlining the implementation status of these changes in the new Act:

S. No.	Particulars	Section as per Income Tax Act,1961	Proposed in Income Tax Bill,2025	Section as per Income Tax Act, 2025
1.	Deemed application	Section 11(1) explanation (1) and (2)	Proposed to be omitted.	Section 341(5),(6) ,(7),(8)
2.	Capital Gain	11(1A)	Proposed to be omitted.	341(9),(10)
3.	Taxation of Deemed Application	11(1B)	Proposed to be omitted.	337, S. No. 13 of the Table
4.	Registration 10(23C)	10(23C)(iv),(v), (vi), (via)	Proposed to be omitted.	Omitted

As shown in the table above, of the four provisions initially proposed for omission, three were reinstated in the Act of 2025, and only section 10(23C)(iv),(v),(vi) and (via) were ultimately omitted.

Click Here To Read The Full Article

The post [Opinion] No Policy Changes in Trust Taxation | Old Income Tax Law v/s New Income Tax Law appeared first on Taxmann Blog.

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Case Details: National Cooperative Development Corporation vs. Assistant Commissioner of Income-tax - [2025] 181 taxmann.com 333 (SC)

Judiciary and Counsel Details

• Pamidighantam Sri Narasimha & Atul S. Chandurkar, JJ.

Facts of the Case

The assessee, National Cooperative Development Corporation (NCDC), a statutory corporation engaged in providing long-term finance for agricultural and industrial development, claimed deduction under section 36(1)(viii) of the Income-tax Act, 1961 in respect of:

(i) dividend income on investments in shares,

(ii) interest earned on short-term bank deposits, and

(iii) service charges received for monitoring loans under the Sugar Development Fund.

The Assessing Officer, during the scrutiny assessment, disallowed the claim, holding that the receipts lacked a direct nexus with the business of providing long-term finance as required under section 36(1)(viii).

Aggrieved, the assessee preferred appeals before the CIT(A), which were dismissed. The disallowances were confirmed by the Income Tax Appellate Tribunal and thereafter by the High Court. Aggrieved by the High Court’s judgment, the assessee filed appeals before the Supreme Court.

Supreme Court Held

The Supreme Court held that the phrase “derived from” signifies a strict, first-degree nexus. It connotes a requirement of a direct, first-degree nexus between the income and the specified business activity. It is judicially settled that “derived from” is narrower than “attributable to”.

Assessee contended that the substance of redeemable preference shares is effective loans, as the fixed redemption schedule and dividend rate assimilate them to the nature of debt. However, the AO drew attention to the admitted factual position that these receipts are “investments in agricultural-based societies by way of contribution to share capital”.

AO submitted that under Section 85 of the Companies Act, 1956, preference shares unequivocally remain share capital and cannot be treated as loans.

The Supreme Court held that dividends are a return on investment dependent on the profitability of the investee company, and that this distinction is fundamental to the income’s genealogy. There is a fundamental distinction between a shareholder and a creditor. The basic characteristic of a loan is that the person advancing the money has the right to sue to recover the debt.

In stark contrast, a redeemable preference shareholder cannot sue for the money due on the shares or claim a return of the share money as a matter of right, except in the specific eventuality of winding up.

This is also the reason SC holds that the immediate source of dividend income is the investment in share capital, not the business of providing loans. Since the statute specifically mandates ‘interest on loans’, extending this fiscal benefit to ‘dividends on shares’ would defy the legislative intent. Therefore, the Supreme Court held that dividend income does not qualify as profits derived from the business of providing long-term finance.

List of Cases Reviewed

• National Co-operative Development Corporation vs. Assistant Commissioner of Income-tax, Circle 13(1) [2011] 16 taxmann.com 251 (Delhi)/[2012] 204 Taxman 6 (Delhi)/[2013] 356 ITR 184 (Delhi) (para 35) Affirmed
• Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) (para 14)
• Orissa State Warehousing Corpn. v. CIT [1999] 153 CTR 177/237 ITR 589/103 Taxman 623 (SC) (para 18)
• Mrs. Bacha F. Guzdar v. CIT [1955] 27 ITR 1 (SC) (para 21)
• National Co-operative Development Corporation v. CIT, Delhi-V [2020] 119 taxmann.com 137/427 ITR 288/274 Taxman 187 (SC) (para 24) Followed.
• CIT v. Meghalaya Steels Ltd. [2016] 67 taxmann.com 158/284 CTR 321/383 ITR 217/238 Taxman 559 (SC) (para 17) Distinguished.

List of Cases Referred to

• Pandian Chemicals Ltd. v. CIT [2003] 183 CTR 99/262 ITR 278/129 Taxman 539 (SC) (para 13)
• CIT v. Sterling Foods [1999] 153 CTR 439/237 ITR 579/104 Taxman 204 (SC) (para 13)
• CIT v. Meghalaya Steels Ltd. [2016] 67 taxmann.com 158/284 CTR 321/383 ITR 217/238 Taxman 559 (SC) (para 13)
• Liberty India v. CIT [2009] 225 CTR 233/317 ITR 218/183 Taxman 349 (SC) (para 13)
• Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) (para 14)
• Orissa State Warehousing Corpn. v. CIT [1999] 153 CTR 177/237 ITR 589/103 Taxman 623 (SC) (para 18)
• Mrs Bacha F. Guzdar v. CIT [1955] 27 ITR 1 (SC) (para 21)
• National Co-operative Development Corporation v. CIT, Delhi-V [2020] 119 taxmann.com 137/427 ITR 288/274 Taxman 187 (SC) (para 24)
• National Co-operative Development Corporation v. Asstt. CIT, Circle 13(1) [2011] 16 taxmann.com 251/[2013] 356 ITR 184/[2012] 204 Taxman 6 (Delhi) (para 35).

The post Dividend Income Not Eligible for Deduction Under Section 36(1)(viii) | SC appeared first on Taxmann Blog.

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