1. Facts

Enova-tech Limited, hereinafter referred to as “the company”, is engaged in the business of software services. The company entered into a three-year licensing arrangement on 1st April 2020 with Fomato Limited, granting Fomato the right to use the company’s patented manufacturing technology.

Under the agreement, consideration was entirely in the form of a usage-based royalty of ₹50 per unit produced using the patent, payable on a quarterly basis. In the first year of the contract, Fomatoproduced 1,00,000 units and paid the full royalty of ₹50,00,000 on time.

In the second year of the arrangement, although Fomato continued to use the patent and produced approximately 1,00,000 units, its financial position began to deteriorate. While the royalty for the year amounted to ₹50,00,000, Fomatopaid ₹12,50,000 in the first quarter but made only nominal payments totalling₹7,50,000 across the remaining three quarters. The company observed delays, partial settlements, and weakening liquidity indicators, signalling a decline in Fomato’s creditworthiness, even though operations and usage of the patent continued throughout the year.

During the third year of the contract, Fomato continued to use the patented technology and produced around 80,000 units, resulting in contractual royalties of ₹40,00,000. However, during this period,Fomato lost a major customer and completely lost access to external credit, leading to severe financial stress. Based on these facts, the company concluded that it was no longer probable that it would be able to collect any further royalty payments for the ongoing usage of the patent. Accordingly, despite continued use of the licensed intellectual property, the company determined that recognition of royalty income for the third year was not appropriate due to significant uncertainty regarding collectability.

In the year following the end of the licensing term, Fomato won a major new customer, and its financial position improved significantly, restoring its overall credit strength.

Based on the above facts, how should Enova-tech Limitedrecognise usage-based royalty revenue in each year of the licensing arrangement under Ind AS 115, considering the changes in the customer’s creditworthiness and collectability from Year 1 to Year 4?

2. Relevant Provisions

Ind AS 115 – Revenue from Contracts with Customers

Para 9 of Ind AS 115

An entity shall account for a contract with a customer that is within the scope of this Standard only when all of the following criteria are met:

……………

(e) it is probable that the entity will collect the considerationto which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer’s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession.

Para 31 of Ind AS 115

An entity shall recognise revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (ie an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

Para B63 of Ind AS 115

Notwithstanding the requirements in paragraphs 56–59, an entity shall recognise revenue for a sales-based or usage-based royalty promised in exchange for a licence of intellectual property only when (or as) the later of the following events occurs:

a) the subsequent sale or usage occurs

b) the performance obligation to which some or all of the salesbased or usage-based royalty has been allocated has been satisfied (or partially satisfied).

Ind AS 109 – Financial Instruments

Para 5 of Ind AS 109

An entity shall recognise in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised.

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Circular no. HO/38/13/11(2)2026-MIRSD-POD/ I/3750/2026; Dated: 30.01.2026

The Securities and Exchange Board of India (SEBI) has decided to open a special window for transfer and dematerialisation of physical securities that were sold or purchased prior to April 01, 2019. This measure aims to address long-pending investor grievances arising from earlier procedural rejections.

1. Scope of the Special Window

The special window will be available for transfer requests that were submitted earlier but were rejected, returned, or not attended to due to deficiencies in documentation or process requirements. The initiative provides investors with a fresh opportunity to regularise such transfers and complete dematerialisation.

2. Duration of the Window

The special window will remain open for a period of one year, commencing from February 05, 2026, and ending on February 04, 2027. Requests must be submitted and processed within this timeframe to be eligible for consideration.

3. Exclusion of Disputed Cases

Cases involving disputes between the transferor and the transferee will not be covered under this special window. Such matters are required to be resolved separately by the concerned parties through appropriate legal forums, including the Court or the National Company Law Tribunal (NCLT).

4. Securities Transferred to IEPF Not Eligible

SEBI has also clarified that securities already transferred to the Investor Education and Protection Fund (IEPF) will not be considered for processing under this special window. Such cases will continue to be governed by the applicable IEPF framework.

5. Regulatory Objective

The special window reflects SEBI’s intent to facilitate investor protection and ease of compliance, while drawing clear boundaries to exclude disputed matters and cases already governed by statutory transfer mechanisms.

6. Key Takeaway for Investors

Eligible investors should review previously rejected or pending transfer requests relating to physical securities acquired before April 01, 2019, and take timely action within the specified one-year window to complete transfer and dematerialisation.

Click Here To Read The Full Circular

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Master Circular No. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026, Dated: 30.01.2026

The Securities and Exchange Board of India (SEBI) has notified a Master Circular consolidating all operative circulars issued under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as updated up to December 30, 2025. The Master Circular serves as a single reference point for disclosure and compliance requirements applicable to listed entities and market infrastructure institutions.

1. Consolidation of Disclosure and Compliance Framework

The Master Circular brings together various circulars governing periodic, event-based, and annual disclosures, thereby streamlining the compliance framework under the LODR Regulations. By consolidating existing instructions, SEBI aims to improve regulatory clarity and ease of reference for stakeholders.

2. Coverage of Financial Reporting and Governance Requirements

The circular comprehensively covers requirements relating to financial statements and reporting, related party transactions, and corporate governance norms, including board composition, committee requirements, and oversight mechanisms prescribed for listed entities.

3. Business Responsibility and Sustainability Reporting (BRSR)

The Master Circular also consolidates provisions relating to Business Responsibility and Sustainability Reporting (BRSR), reinforcing SEBI’s focus on transparency, ESG disclosures, and responsible business conduct by listed companies.

4. Applicability to Market Participants

The consolidated instructions are applicable to listed entities, stock exchanges, depositories, and other specified stakeholders, ensuring uniform compliance across the securities market ecosystem.

5. Compliance Implications

Listed entities and other concerned participants should review and align their compliance processes with the consolidated Master Circular to ensure adherence to the updated disclosure and governance requirements under the LODR Regulations.

Click Here To Read The Full Circular

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Himesh Dilip Gajjar – [2026] 182 taxmann.com 856 (Article)

1. Introduction

The transition from Indian Generally Accepted Accounting Principles (IGAAP) to Indian Accounting Standards (Ind AS) is driven by the need for convergence with International Financial Reporting Standards (IFRS), aiming to enhance the transparency, global comparability, and credibility of financial statements prepared by Indian corporates. However, viewing this transition solely as a compliance exercise to meet regulatory mandates is a critical misstep. It is, in fact, a strategic business imperative with far-reaching implications. A meticulously planned and flawlessly executed transition is paramount as it serves not only to meet the requirements of the Companies Act, 2013 and notifications by the Ministry of Corporate Affairs (MCA) but also to minimise business disruptions, avoid the substantial costs and reputational damage associated with errors and subsequent restatements, and maintain the trust of investors, lenders, and other stakeholders.

The adoption of Ind AS profoundly impacts key financial metrics, which can, in turn, affect critical areas such as compliance with debt covenants, computation of Minimum Alternate Tax (MAT), and the determination of distributable profits under Section 123 of the Companies Act, 2013. These are not mere accounting adjustments; they have tangible economic consequences. Ind AS, with its principle-based approach and emphasis on reflecting the economic substance of transactions (often through fair value measurements), can provide management with a much richer and more realistic understanding of the company’s performance and financial position. The author’s experience from numerous transitions suggests that entities that embed this strategic view into their transition process achieve more sustainable and beneficial long-term outcomes.

This article aims to offer an exhaustive practical analysis of this transition. It talks about the conceptual divergences between the old and new frameworks, and scrutinises the Indian Accounting Standards, which have driven the most significant quantitative impacts.

2. The Paradigm Shift

Indian GAAP was predominantly a rule-based framework. It relied heavily on the legal form of transactions and historical cost. If a company bought a piece of land 20 years ago, it sat on the balance sheet at that 20-year-old price, ignoring decades of appreciation. If a financial instrument was legally structured as equity (e.g., Preference Shares), it was recorded as Share Capital, even if it carried a mandatory redemption clause that economically made it debt.

Now, Ind AS, converged with IFRS, introduced a principle-based framework centered on “Substance over Form”. This shift places an immense burden on professional judgment. Now, the accountant can no longer merely look at the contract’s title; they must deconstruct its terms to understand the economic reality.

• Economic Substance – Under Ind AS 32, a preference share that must be redeemed is a liability, not equity. This seemingly academic distinction can radically alter a company’s Debt-to-Equity ratio, triggering covenant breaches in loan agreements.
• Fair Value – The move from Historical Cost to Fair Value (Ind AS 113) forces companies to reflect the current market value of assets and liabilities. This brings the balance sheet closer to economic reality but introduces significant volatility in the Statement of Profit and Loss (P&L), as mark-to-market gains and losses fluctuate with market sentiment.

The driving force behind Ind AS was not academic purity but economic necessity. In the early 2000s, as Indian conglomerates like Tata, Reliance, and Infosys began acquiring global assets and listing on foreign exchanges, the limitations of IGAAP became a bottleneck. International investors found it difficult to benchmark Indian companies against their global peers. An Indian steelmaker’s EBITDA calculated under IGAAP was not comparable to a European rival’s EBITDA under IFRS.

Adopting Ind AS was a strategic move to unlock global capital. Foreign Direct Investment (FDI) relies on trust, and by aligning with IFRS, the accounting language used in over 140 jurisdictions, India reduced the “translation risk” for foreign investors.

3. The Conceptual Framework

The transition from IGAAP to Ind AS required unlearning decades of “matching concepts” and “prudence” as defined in the old world. The new framework rests on 3 pillars:

1. The Balance Sheet Approach
2. Fair Value Measurement, and
3. Time Value of Money.

Click Here To Read The Full Article

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Case Details: Citius Holidays (P.) Ltd., In re [2026] 182 taxmann.com 675 (AAR-WEST BENGAL)

Judiciary and Counsel Details

• Shafeeq S. & Jaydip Kumar Chakrabarti, Member
• Vikas B. Waghmare, CA & Keyur Thakkar, AR for the Applicant.

Facts of the Case

The applicant, engaged in event management, tours and travel services, arranged bundled services for clients, including hotel accommodation, conference rooms, and meals, for which a consolidated fee was charged. Hotels issued single or bundled invoices covering accommodation, venue facilities, and food and beverages used for providing such services. An application for advance ruling was filed seeking clarity on the admissibility of Input Tax Credit on food and beverages used in supplying event management services. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that the services supplied qualified as a composite supply with event management as the principal supply and hotel accommodation, conference facilities, and food and beverages as ancillary supplies. It recorded that food and beverages were supplied as part of the bundled service provided to clients. It ruled that where such inward supplies form part of a taxable composite supply, restriction on Input Tax Credit would not apply. Accordingly, Input Tax Credit on food and beverages used in providing event management services was held to be admissible, subject to the fulfilment of general conditions under the CGST Act and the West Bengal GST Act.

List of Cases Referred to

• Indian Society of Critical Care Medicine, In re [2022] 140 taxmann.com 526/93 GST 802 (AAR – GUJARAT) (para 2.3)
• All Rajasthan Corrugated Board and Box Manufacturers Association, In re [2019] 107 taxmann.com 264/75 GST 335/27 GSTL 295 (AAR – RAJASTHAN) (para 2.3)
• Mangaldas Mehta & Company Ltd., In re [2024] 159 taxmann.com 654 (AAR – GUJARAT) (para 2.3)
• GRB Dairy Foods (P.) Ltd., In re [2022] 140 taxmann.com 414 (AAAR – TAMILNADU) (para 2.3).

The post ITC on Food and Beverages Allowed for Event Services | AAR appeared first on Taxmann Blog.

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Case Details: Vashishtha Luxury Fashion Ltd. vs. Deputy Director of Income-tax/Income-tax Officer - [2026] 182 taxmann.com 396 (Mumbai-Trib.)

Judiciary and Counsel Details

• Ms Kavitha Rajagopal, Judicial Member & Om Prakash Kant, Accountant Member
• Manish Agarwal for the Appellant.
• Annavaram Kosuri, Sr. DR for the Respondent.

Facts of the Case

The assessee company was engaged in designing and manufacturing a distinctive collection of hand-embroidered apparel. The assessee filed its return of income, applying the tax rate under Section 115BAA. However, the Centralized Processing Centre (CPC) computed the assessee’s tax liability under the normal provisions without considering the assessee’s option to be taxed under Section 115BAA.

The matter reached the Mumbai Tribunal.

ITAT Held

The Tribunal held that Section 115BAA applies to a domestic company where the assessee opts to be computed at 22%, subject to the satisfaction of the conditions specified in sub-section (2). It prescribes that the assessee exercises the said option only when it is in the prescribed manner on or before the due date specified in section 139 for furnishing the return of income. The third proviso to the said section states that the option exercised by the assessee becomes invalid when there is a violation of the condition prescribed in sub-clause (ii) or (iii) or clause (a) or clause (b) of sub-section (2).

There has been no express bar for the assessee to claim the benefit of the provision if there is a delay in filing the return, i.e. return filed under section 139(4), though it says in sub-section (5) that the assessee has to exercise the option in the prescribed manner on or before the due date specified under section 139(1).

In the instant case, the assessee had filed Form 10IC within the prescribed time limit specified in section 115BAA. The assessee shall exercise the option in the prescribed manner on or before the due date specified under section 139(1) for furnishing the return of income for any previous year relevant to the assessment year on or after the first day of April 2020. The assessee has also filed the tax audit report well within the time, which establishes the fact that the assessee intended to opt for the concessional tax regime under Section 115BAA.

Therefore, the assessee was entitled to a concessional tax regime even if the return was filed belatedly.

List of Cases Reviewed

• Aprameya Engineering Ltd. v. ITO [2024] 164 taxmann.com 740 (Ahmedabad – Trib.) (para 15) followed

List of Cases Referred to

• Aprameya Engineering Ltd. v. ITO [2024] 164 taxmann.com 740 (Ahmedabad – Trib.) (para 15)
• Pr. CIT v. Wipro Ltd. [2022] 140 taxmann.com 223 (SC)/[2022] 288 Taxman 491 (SC)/[2022] 446 ITR 1 (SC) (para 15).

The post Section 115BAA Benefit Allowed Despite Belated Return | ITAT appeared first on Taxmann Blog.

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Notification No. S.O. 461(E); Dated: 30.01.2026

The Central Government has notified an exemption, on the recommendation of the Reserve Bank of India (RBI), under section 53 of the Banking Regulation Act, 1949. The exemption relates to the applicability of section 19(2) of the Act in respect of specified shareholding limits.

1. Exemption from Shareholding Restrictions under Section 19(2)

Section 19(2) of the Banking Regulation Act, 1949, restricts a banking company from holding shares in any company beyond a prescribed percentage of its paid-up share capital. Pursuant to the notified exemption, the provisions of section 19(2) shall not apply to:

• Bank of Baroda, and
• State Bank of India,

in relation to their shareholding exceeding thirty per cent of the paid-up capital of the Indian Digital Payment Intelligence Corporation (IDPIC).

2. Entity Covered – Indian Digital Payment Intelligence Corporation

The exemption is specific to the shareholding of Bank of Baroda and State Bank of India in the Indian Digital Payment Intelligence Corporation (IDPIC) and does not extend to investments in any other entity.

3. Validity Period of the Exemption

The exemption has been granted for a limited period and shall remain valid up to 16 October 2026, unless withdrawn or modified earlier.

4. Regulatory Context and Implications

The exemption enables the concerned banks to continue holding a higher stake in IDPIC beyond the statutory threshold, supporting the operational and strategic objectives of the digital payments and financial intelligence framework, while remaining within the regulatory oversight of the RBI.

5. Key Takeaway

By exercising its powers under section 53 of the Banking Regulation Act, the Government has provided regulatory flexibility to Bank of Baroda and State Bank of India for a defined period, ensuring continuity in their investment in IDPIC without contravention of shareholding restrictions under section 19(2).

ick Here To Read The Full Notification

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Simran Keswani – [2026] 182 taxmann.com 810 (Article)

With the advancement in technology especially after the introduction of AI smartphones are inevitable part of our daily life’s. The Indian telecom sector thus plays an important role in category to the ever-evolving technological needs. Furthermore, the imminent rollout of 5G networks promises even faster connectivity, but it also introduces complex infrastructure demands and hefty capital investments. The telecom industry has been grappling with the cash flow issues due to variety of reasons ranging from high operational cost, high spectrum cost, intense competition due to tariff wars. As of late January 2026, the total Adjusted Gross Revenue (AGR) demands for the Indian telecom sector are estimated at approximately Rs. 1.66 trillion (Rs. 1.66 lakh crore). Adjusted Gross Revenue (AGR) refers to the revenue metric used by the Department of Telecommunications (DoT) to calculate the license fees and spectrum usage charges (SUC) that telecom companies (telcos) must pay to the government. Telecom Companies have to pay Adjusted Gross Revenue (AGR) dues which are fees telecom operators in India pay to the Department of Telecommunications (DoT), consisting of license fees i.e. right to obtain telecommunication license (approx. (7-8%) and spectrum usage charges i.e. right to use spectrum (approx. 3-5%).

A 2019 Supreme Court ruling widened the definition of AGR to include non-telecom revenue (e.g., rent, interest, asset sales), resulting in massive, legally binding liabilities for companies like Vodafone Idea. Major telecommunication providers, particularly Vodafone Idea, faced substantial financial distress due to these recalculated, retrospective payments. In late 2025, the Supreme Court permitted a review and recalculation of certain dues to provide relief to struggling operators. Following severe financial stress, the government has provided a 5-year moratorium of the dues followed by a staggered repayment structure for these dues, with the bulk of payments deferred over a 10-year period. The frozen dues are subject to reassessment which may further reduce this amount. Following Vodafone’s case, Airtel is seeking similar relief

Telecommunications finance ensures that telecom companies have the funds they need to build, maintain, and expand their services while making wise financial decisions to ensure long-term success. This involves everything from budgeting for daily operations to securing investments for future growth. Taxation is one of the critical part impacting the cash flow challenges of the telecom sector.

Click Here To Read The Full Article

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