Section 56(2)(ix): Forfeiture of Advance Money Received – A Critical Analysis

The Dual Conditions for Taxability

Section 56(2)(ix) of the Income Tax Act imposes tax liability on sums received as advance or otherwise during negotiations for transfer of a capital asset, provided two essential conditions are concurrently satisfied: (i) the amount must be received in the course of negotiation for transfer of a capital asset, and (ii) such negotiation must not result in transfer, with the amount being forfeited. The legislature has consciously employed the conjunction 'and', making both conditions mandatory for the provision to apply.

Gujarat High Court reaffirms mandatory right to personal hearing in Faceless Assessments

 Recently, the Hon’ble Gujarat High Court in B.M. Developers v. Assessment Unit of Income-tax Department ruled in favor of the taxpayer and reaffirmed that an assessment completed under the faceless assessment regime cannot disregard the taxpayer's statutory right to a personal hearing. The Hon’ble Court held that where a taxpayer specifically requests a hearing through video conferencing, the same must be granted in accordance with the prescribed procedure, failing which the assessment would be vitiated for breach of the principles of natural justice.

CBIC clarifies drawback and refund mechanism under customs where import duty is paid through duty credit scrips

 This Tax Alert summarizes a recent Circular issued by the Central Board of Indirect Taxes and Customs (CBIC) clarifying the manner of grant of drawback or refund in cases where import duty was paid through duty credit scrips.

The key clarifications are:

Section 54F Survives Family Connection: ITAT Backs Genuine Intra-Family Property Transaction

 In a recent ruling, the Hon'ble Mumbai Tribunal examined the availability of deduction under Section 54F of the Income-tax Act, 1961 where a residential property is purchased from close relatives, and whether such a transaction can be disregarded as a colourable device merely because the parties are family members.

Strategic Grounds for Tax Appeals in GST

 

There is a visible surge in Indirect Tax litigations in recent times. An effective litigation strategy is built not just on merits of the case but also on various other grounds. In this Insight, we have discussed such grounds that Taxpayers can consider evaluating.

Management Support Services Not FTS

 

Mumbai ITAT Rules in Favour of Taxpayer in Tech Data (Singapore) Case

Tech Data (Singapore) Pte Limited v. DCIT [ITA 8995/MUM/2025] | Date of Order: June 17, 2026

Introduction

Secondment of Employees & FTS under India-USA DTAA: Delhi High Court Upholds Make Available Test in EY US Case

 Ernst & Young U.S. LLP (ITA 423, 424, 715, 753 & 760 of 2025)

Introduction

On June 18, 2026, the Delhi High Court delivered a landmark ruling in Commissioner of Income Tax (International Taxation)-1 v. Ernst & Young U.S. LLP, fundamentally reshaping the tax treatment of cross-border employee secondment arrangements under the India-USA Double Taxation Avoidance Agreement (DTAA). The Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar set aside all ITAT orders and held that cost-to-cost reimbursements for seconded employees constitute Fees for Technical Services (FTS) under Article 12 of the DTAA.

HC strikes down GST Notifications to the extent issued without GST Council’s recommendation and holds subsequent ratification invalid

 This Tax Alert summarizes a recent ruling of the Madras High Court (HC) ^[1] on the validity of notifications issued under Sections 9 and 11 of the Central Goods and Services Tax Act, 2017 (CGST Act) which incorporated provisions beyond the recommendations of the GST Council, and whether the same could subsequently be ratified by the GST Council.

The key observations of the HC are:

• Notifications issued under Sections 9 and 11 of the CGST Act are required to be issued “on the recommendations” of the GST Council, implying that such recommendations must precede and support the exercise of the Government’s delegated legislative powers.
• The Government may choose not to act upon a recommendation of the GST Council; however, it cannot act without a recommendation or travel beyond the scope of the recommendation where the statute expressly mandates the same.
• Article 279A of the Constitution confers upon the GST Council the power to make recommendations on GST matters but does not confer any express or implied power of ratification.
• Since neither the Constitution nor the GST law framework grants the GST Council the power to ratify actions already taken by the Government, the subsequent approval accorded by the Council could not cure the absence of a prior recommendation.

Basis above, HC allowed the writ petitions and quashed the notification to the extent it contained aspects on which there was no recommendation of the GST Council. Its subsequent ratification was also held to be invalid.

Comments:

• The ruling may have implications beyond the specific dispute under consideration. There are several instances (especially during COVID-19) where notifications were issued or amendment in Rules and other notifications were carried out by the Government and were subsequently placed before the GST Council for ratification in subsequent meetings. The validity of the same may be called into question basis this ruling.
• Validity of the Notification No. 56/2023 – Central Tax extending time limit to issue show cause notices (SCN) for FY 2018-19 and 2019-20 is also under challenge on the ground that they were issued without recommendation of the GST Council. Divergent HC rulings exist, and the issue is currently pending before the SC [SLP(C) No. 4240/2025].

Bombay High Court rules excess royalty refunded pursuant to tax authority’s Advance Pricing Agreement with associated enterprise is not taxable

 This Tax Alert summarizes Bombay High Court (HC) ruling ^[1] in the case of CIT v. Gemological Institute of America Inc (Taxpayer/GIA US) which held that refund of excess royalty repaid in tax year 2018-19 pertaining to tax year 2010-11 pursuant to Advance Pricing Agreement (APA) entered by Taxpayer’s Indian subsidiary/associated enterprise (AE) with tax authority is not taxable in tax year 2010-11.

Cash shortage in taxpayer's proprietary concern not taxable as deemed dividend

 Recently, the Bangalore Tribunal held that a cash shortage in a taxpayer's proprietary concern cannot, by itself, be treated as a deemed dividend from a company in which the taxpayer is a substantial shareholder. The Tribunal clarified that, unless the Revenue establishes that the company has actually advanced funds or conferred a benefit on the shareholder, no addition can be made under the deemed dividend provisions.

ITAT Ruling on Interest for Delayed Payments to Foreign Associates: Key Takeaways

 A recent decision by the Bangalore Income Tax Appellate Tribunal (ITAT) in the case of Subex Assurance LLP offers important guidance for companies dealing with transfer pricing adjustments on overdue receivables from their associated enterprises.

CBIC clarifies officer’s jurisdiction in GST proceedings upon change in taxpayer’s principal place of business

 This Tax Alert summarizes a recent Circular^[1] issued by Central Board of Indirect Taxes and Customs (CBIC) regarding the authority competent to act at various stages of proceedings under Central Goods and Services Tax Act, 2017 (CGST Act) where a taxpayer migrates or transfers from one jurisdiction (transferor jurisdiction) to another (transferee jurisdiction) due to a change in principal place of business.

The key clarifications are:

Government notifies 31 July 2026 as the date upto which appeal in specified cases can be filed before GSTAT

 This Tax Alert summarizes a recent Press Release^[1] and Notification ^[2] issued by the Ministry of Finance extending the last date for filing appeal or application before the Goods and Services Tax Appellate Tribunal (GSTAT) under Section 112 of the Central Goods and Services Tax Act, 2017 (CGST Act).

Capital Gains Exemption on Reinvestment in Residential House to Be Allowed Before Set-off of Capital Losses

 In a recent ruling, the Mumbai Tribunal in the case of Nikesh Bhagwandas Mehta held that capital gains exemption must be granted before applying the provisions relating to set-off of capital losses. Accordingly, where the conditions are satisfied, long-term capital gains eligible for exemption cannot be reduced by long-term capital losses before allowing the exemption.

JULY 2026 - TAX DUE DATE.

Sr No	Due Date	Related to	Compliance to be made
1	11.07.2026	GST	Filing of GSTR – 1 for the month of June 2026
2	13.07.2026	GST	ISD Return Filing for the month of June 2026
3	20.07.2026	GST	Payment and Filing the GSTR – 3B for the month of June 2026
4	07.07.2026	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 June 2026. Deposit TDS from Salaries deducted during the month of June 2026 Deposit TCS for collections made under section 394 including sale of scrap during the month of June 2026 if any Deliver a copy of Form 121(15G/15H), if any to CCIT or CIT for declarations received in the month of June 2026, if any
5	31.07.2026	TDS/TCS (Income Tax)	Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended June 2026 in Form 138/140/144/143 (Form 24Q / 26Q / 27Q / 27EQ).

Haryana AAAR allows ITC on services used for raising capital based on end-use of funds

 This Tax Alert summarizes a recent ruling of the Haryana Appellate Authority for Advance Ruling (AAAR) on availability of input tax credit (ITC) on services used directly in relation to raising capital by issuance of shares. Assessee arranged a Qualified Institutional Placement (QIP) to raise funds for restructuring/ repayment of borrowings and for investment in its subsidiary. ITC w.r.t expenses incurred in this regard was treated not eligible by Haryana Authority for Advance Ruling (AAR). Aggrieved, assessee filed an appeal before the AAAR.