Navigating Section 79: How Continuity of Beneficial Ownership Preserves Loss Carry-Forward

 A recent ruling by the Income Tax Appellate Tribunal (ITAT) in ACIT vs. Lurgi India International Services Pvt. Ltd. provides crucial clarity on the application of Section 79 of the Income Tax Act, which restricts the carry-forward of losses in closely-held companies upon a change in shareholding. The decision underscores that the provision looks at economic reality over legal form, emphasizing beneficial ownership and the timing of corporate restructuring.

Section 194Q and the Jute Aarth Crisis: When Tax Compliance Clashes with Agency Law

The introduction of Section 194Q into the Income Tax Act, 1961, via the Finance Act, 2021, was designed to widen the tax net and create audit trails for high-value business transactions. However, its mechanical application has inadvertently triggered a systemic crisis for traditional commission-based business models, most notably in the jute industry’s aarth system. This provision mandates buyers with a turnover exceeding ten crore rupees to deduct tax at source (TDS) on purchases over fifty lakh rupees. The resulting conflict between procedural tax compliance and the substantive principles of agency law reveals a critical flaw in legislative design.

MCA Relaxes Small Company Thresholds: Unlocks Compliance Benefits

 The Ministry of Corporate Affairs has recently expanded the eligibility thresholds for classification as a ‘small company’ under the Companies Act, 2013. A company will now qualify as a small company if its paid-up capital does not exceed ₹10 crore and its annual turnover in the preceding financial year does not exceed ₹100 crore.

Case Laws on HUF

 The ITAT Kolkata SMC Bench, has given a strict reading of the deemed tax provisions defining “relatives” for tax purposes and ruled that gift received by an individual member from HUF does not qualify as being from a “relative” for Gift tax provisions, making it taxable in the recipient’s hands.​ However, the matter was remanded back to the tax officer to examine whether the same was an exempt income in the hands of recipient member u/s 10(2) of the Income Tax Act.

The assessee received certain sum as a gift from her husband’s HUF (of which the husband was Karta) and claimed exemption under section 56(2) considering the same as received from 'relative' . The AO and CIT(A) treated it as taxable under section 56(2), relying on ITAT Ahmedabad’s decision, which clarified that post-Finance Act 2012 amendment (retrospective from 01.10.2009), HUF is recognized only as a Donee (not donor) in the relative definition for individual recipients. The ITAT Kolkata upheld this view, emphasizing HUF’s distinct legal entity status from its members, rejecting arguments that HUF equates to a “conglomeration of relatives”.

Navigating the New Dawn: India's M&A Landscape in 2025

The Indian mergers and acquisitions (M&A) arena in 2025 is a narrative of strategic resilience and calculated ambition. Despite global economic crosswinds, the market demonstrates robust health, driven not by reckless exuberance but by a clear focus on consolidation, capability building, and capitalizing on long-term structural growth stories. The latest landscape analysis reveals an ecosystem evolving in sophistication, where regulatory clarity, sector-specific trends, and strategic foresight are shaping deal-making’s future.

Clean scrutiny order u/s 143(3) by Assessing Officer to override Tax Adjustment from intimation order u/s 143(1) by CPC

 In Standard Castings Private Limited v. ITO, the Hon’ble ITAT Delhi allowed the assessee’s appeal and set aside a demand that had continued to stand merely because it was raised in a CPC intimation under section 143(1), despite a complete and clean scrutiny assessment under section 143(3) accepting the returned income. The dispute arose from a typographical error during e-filing, where capital gains were inadvertently entered in the wrong row of Schedule BP. The CPC, while processing the return treated the figure as ‘income from other sources,’ and raised a demand. The assessee filed a rectification application under section 154, but CPC transferred rectification rights to the Jurisdictional Assessing Officer.

Corporate Guarantees Under GST: Navigating Taxability, Valuation, and Legal Precedents

The provision of a corporate guarantee, where one company pledges to cover the financial obligations of another (often a subsidiary or affiliate), is a common business practice. However, under India's Goods and Services Tax (GST) regime, this "costly promise" has evolved into a complex area of taxability, sparking significant litigation and regulatory clarification. Understanding the current landscape is crucial for businesses to ensure compliance and mitigate potential liabilities.

No undervaluation trigger under IT Act (Section 56) when asset acquired from Government undertaking at lower value

 Recently, the Hon’ble Income-tax Appellate Tribunal, Kolkata (‘ITAT’), in the case of Kanha Villa LLP (‘the Appellant’), deleted an addition of Rs. 6.59 crore made under Section 56(2)(x) of the Income-tax act, 1961 (‘the Act’), which was based on an enhanced valuation by the District Valuation Officer (‘DVO’) for a property acquired from West Bengal Infrastructure Development Corporation Ltd. (‘WBIDCO’), a state government undertaking. The Hon’ble ITAT held that since the transaction was directly with the State Government entity, there could be no undervaluation or suppression of the purchase price. Accordingly, the addition made on the grounds of undervaluation or suppression of purchase price was deleted.

Tax Due Date - December 2025.

 

S No	Due Date	Related to	Compliance to be made
1	11.12.2025	GSTR – 1	Filing of GSTR – 1 for the month of November 2025
2	13.12.2025	GST ISD	Filing for the month of Nov 2025
3	20.12.2025	GST	Payment of GST for the month of November, 2025 Filing of GSTR 3B for the month of November, 2025
4	07.12.2025	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of November 2025. · Deposit TDS from Salaries deducted during the month of November 2025 • Deposit TCS for collections made under section 206C including sale of scrap during the month of November 2025, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of November 2025, if any
5	15.12.2025	Income tax	Payment of Advance tax for the Corporate and Non Corporate assesses –Amount not less than 75% and 60% of advance tax respectively.
6	31.12.2025	GST	Filing of Annual Return -  GSTR 9 & 9C.

HC holds two-year period of limitation for claiming refund of wrongly paid tax is not mandatory

 This Tax Alert summarizes a recent ruling^[1] of the Karnataka High Court (HC) on whether the two-year time limit prescribed under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act) is mandatory or directory.

Tribunal rules that exemption on gifts from relatives does not require a gift deed

 In a recent decision, the Kolkata Tribunal held that where an individual receives cash from his brother-in-law (a specified relative under the tax laws) through banking channels, a gift deed is not required to establish its tax-exempt nature.

Nature of land determined as "agricultural land" at time of acquisition, the subsequent stamp duty reclassification as “non-agricultural” cannot warrant tax addition

 The Ahmedabad ITAT recently held that decision of Sub-Registrar to determine stamp duty value treating the land as “non-agricultural land” does not in itself alter the actual nature of the property. Since the land in question was demonstrably agricultural in nature, the ITAT held that the addition made under Section 56(2)(x) of the Income-tax Act, 1961 (“the Act’) being the difference of actual consideration and stamp duty value was unsustainable.

ITAT Mumbai rules redevelopment consideration in real estate projects taxable in hands of individual members, not the co-operative society

 The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently delivered an order in the matter of RBI Employees Bhagvati Co-operative Housing Society Ltd., deciding on taxability of consideration received on redevelopment projects and clarifying whether capital gains arising from transfer of development rights are taxable in the hands of the co-operative housing society or its individual members.

Bombay HC: Penalty Order on Tax Adjustment held unsustainable when Quantum Appeal (the Tax Adjustment itself) pending before ITAT

 In a significant ruling, the Hon’ble Bombay High Court held that a penalty order passed under section 271(1)(c) of the Income-tax Act, 1961 (‘the Act’) is invalid where the appeal relating to quantum matter is pending disposal by the Income Tax Appellate Tribunal (‘ITAT’). The Court clarified that section 275(1)(a) of the Act, contains a substantive statutory bar that prohibits the Assessing Officer (‘AO’) from imposing penalty until the quantum appeal has been disposed of, making any penalty order issued in the interim, legally unsustainable.

CESTAT holds royalty paid by OEM to overseas entities is includible in the assessable value of goods imported by contract manufacturer

 This Tax Alert summarizes the recent ruling ^[1] of the Customs, Excise and Service Tax Appellate Tribunal, Chennai (CESTAT) on whether the royalties paid by original equipment manufacturer (OEM) to overseas entities should be added to the assessable value of the goods imported by Contract Manufacturers (CMs).