Big Relief for Taxpayers: Delay in Form-67 Not Fatal for Foreign Tax Credit

In a landmark ruling, the ITAT, Hyderabad Bench, in the case of Amith Vishnaw Gudimela, held that a delay in filing Form-67 cannot be the sole ground to deny Foreign Tax Credit (FTC). The tribunal allowed FTC to an assessee employed in the USA with Cognizant US Corp, even though Form-67 was filed after the due date.

The CPC had disallowed the claim under Section 143(1), citing Rule 128(9), which requires filing before the return due date. However, the ITAT observed that FTC prevents double taxation under Section 90 of the Income-tax Act and the India-USA DTAA. Procedural rules like Rule 128(9) are directory, not mandatory. Denying credit for a mere delay would violate treaty obligations.

The tribunal directed the department to grant FTC, reinforcing that substantive relief under DTAA overrides procedural lapses. This ruling is a key precedent for international tax professionals.

Orissa High Court Rules Against Adjustment of Refund During Stay

In a significant ruling, the Orissa High Court has held that adjusting an income tax refund against a disputed demand while a stay order is in force is illegal and arbitrary. The court directed the tax department to release a refund along with interest, declaring the adjustment as perfunctory and in violation of principles of natural justice.

Taxation of Capital Gains on Property: The Allotment vs Transfer Debate

Capital gains taxation on immovable property under the Income-tax Act, 1961 often turns on a deceptively simple question: when is a property “acquired” or “transferred”? In modern real estate transactions—especially under construction properties—this issue becomes complex due to multiple milestones such as allotment, agreement, possession, and registration.

Interest During Project Setup Phase Not Taxable and Set Off Against Project Cost

 The Delhi High Court held that interest earned on funds temporarily parked in bank deposits during the project setup phase is capital in nature and not taxable as income, where such funds are not surplus / idle funds but are inextricably linked to project. The Court further clarified that such interest is required to be adjusted against (i.e., set off against) project / pre-operative expenditure, thereby reducing the overall cost of project.

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Chennai NCLAT Rules Composite Schemes Must Stand as One - Strikes Down NCLT Order Splitting Amalgamation and Demerger in Separate Scheme

 In a significant ruling, the Chennai NCLAT has held that where a Composite Scheme of Arrangement envisages amalgamation followed by an immediate demerger, the Tribunal cannot sanction only the amalgamation portion and direct the parties to file a separate application for the demerger.

High Court of Andhra Pradesh: Failure to prove donor’s creditworthiness and source renders cash gifts unexplained income

 Recently, the Hon’ble High Court of Andhra Pradesh in the case of Bathina Srilakshmi v. Income-tax Officer held that where the assessee fails to substantiate the identity, creditworthiness, and source of funds of the donor with credible evidence, the claim of receipt of cash gifts cannot be accepted. The Court emphasised that mere assertions or unsupported explanations are insufficient to discharge the onus cast upon the assessee, and in the absence of proper documentation establishing the genuineness of the transaction, such amounts are liable to be treated as unexplained income.

Navigating the New Foreign Remittance Compliance Regime under ITA 2025

 The transition to the Income-tax Act, 2025 (ITA 2025) and the accompanying Income-tax Rules, 2026 introduces a significantly overhauled compliance framework for foreign remittances and treaty benefit claims. The familiar forms—10F, 15CA, and 15CB—have been succeeded by Forms 41, 145, and 146 respectively. This rewrite outlines the key structural shifts, enhanced disclosure requirements, and a critical interpretational issue regarding treaty eligibility.

Asset' vs ‘Undertaking’: NCLAT provides clarity

 The scope of shareholder approval for asset sales has long been a contested area, particularly where high-value assets are involved. A recent ruling by the National Company Law Appellate Tribunal (‘NCLAT’) provides useful clarity on when such approval is actually required.

When Buy-Back Becomes a Restructuring Activity

 Not all share buy-backs are mere return of capital. Under certain conditions, a buy-back can be recharacterised as a restructuring activity – with significant tax and legal implications.

TDS Critical Takeaway from the Pfizer Case

A recent ruling in the Pfizer case has delivered an important lesson for taxpayers deducting TDS on cross-border payments.

Major Shift in LDC Framework: Act Now

A significant change under Section 395(1) of the Income-tax Act, 2025 is reshaping how Lower Deduction Certificates (LDCs) operate via TRACES.

⚠️ Critical Update: Starting April 1, 2026, a Master LDC Certificate will no longer be valid for quoting in TDS returns.

AIF Scheme Eligible for Pass-Through Exemption Despite Separate PAN

 In a recent ruling, the Mumbai Tribunal held that a scheme floated under a SEBI-registered Category II AIF trust can claim pass-through exemption, and such benefit cannot be denied merely because the scheme has a separate PAN while the SEBI registration stands in the name of the parent trust.

Withdrawn IPO Expenses treated as Revenue Expenditure

 The Delhi Bench of the Income-tax Appellate Tribunal ('Tribunal'), in a recent decision, held that expenses incurred on withdrawn IPO are revenue in nature and that income arising from foreign exchange differences and write-back of provisions qualifies for export-linked deductions.

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Gujarat HC – Relief for delay in opting concessional tax regime

 Gujarat High Court has granted relief to a taxpayer by allowing condonation of delay in opting for the new tax regime, holding that genuine and bona fide procedural delays may not result in denial of tax benefits.

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