Today's Digest Summary
TaxCorp Daily Digest
Your trusted source for tax, corporate & regulatory intelligence
⚡ Quick Summary
- Income Tax Reforms: Major rulings on reassessment jurisdiction under Section 147/148, with multiple ITATs quashing invalid reopenings where no addition was made on the original reason for reopening — a critical trend for practitioners managing reassessment notices.
- GST Enforcement: Gujarat High Court mandates provisional release of seized goods even during Section 130 confiscation proceedings; GST Council's 57th recommendations signal major reforms to e-way bill detention norms.
- International Tax: ITAT Delhi issues a series of rulings upholding India-Mauritius DTAA capital gains exemptions for pre-April 2017 investments backed by valid Tax Residency Certificates, firmly rejecting shell company allegations without substantive evidence.
- Procedural Compliance: Karnataka and Delhi High Courts issue strong rulings reinforcing mandatory procedural requirements — Section 144C draft orders and Section 144B faceless assessment protocols — as jurisdictional, non-curable defects.
📂 Category-wise Updates
🔵 Income Tax
1. Default New Tax Regime Under Section 202, Income-tax Act 2025: Operation, Choices and Planning
The concessional regime migrates from Section 115BAC of the 1961 Act to Section 202 of the 2025 Act — a relocation rather than a redesign. Slab bands remain unchanged; the standard deduction for salary and pension is enhanced to ₹75,000, and a rebate of up to ₹60,000 under Section 156 applies for resident individuals with normal income up to ₹12,00,000. Key deductions such as HRA, LTA, Chapter VI-A benefits and interest on self-occupied property are forfeited, while employer NPS contributions, Agniveer contributions and interest on let-out property are retained.
⚠️ Action Item: Salaried taxpayers and HUFs must evaluate whether opting out of the new default regime is beneficial before the applicable deadline. Businesses with carried-forward losses and depreciation claims must specifically assess the impact of Section 202(3)'s deemed absorption rules.
Section 147A, retrospectively inserted by the Finance Act, 2026 (effective 1 April 2021) to resolve the JAO vs. NFAC jurisdiction dispute on reassessment notices, has been struck down by two High Courts — Punjab & Haryana and Andhra Pradesh. The Supreme Court has stayed the Punjab & Haryana ruling and listed the matter for final hearing on 3 December 2026. The constitutional challenge is live and the outcome will fundamentally determine the validity of thousands of pending reassessment proceedings.
⚠️ Action Item: Practitioners must immediately audit all pending Section 148/148A notices for JAO versus NFAC jurisdiction issues and file protective objections wherever applicable. Monitor the Supreme Court hearing on 3 December 2026 closely.
3. Delhi High Court Invalidates Post-01.04.2021 Faceless Assessment Not Framed Under Section 144B
The Delhi High Court set aside an assessment order dated 15.04.2021 (AY 2018-19) framed under Section 143(3) read with Sections 143(3A) and 143(3B), holding that the legislative basis for using those sub-sections was removed by Section 143(3D) for assessments made on or after 01.04.2021. Post that date, all faceless assessments must follow Section 144B. The court quashed the assessment order, demand notice under Section 156, and penalty initiation under Section 274 read with Section 270A, while preserving Revenue's right to reassess under the correct procedure.
⚠️ Action Item: Review all assessment orders passed on or after 01.04.2021 for compliance with Section 144B. Where Section 143(3A)/(3B) was invoked post this date, challenge the jurisdictional validity immediately.
The Karnataka High Court has categorically held that Section 144C's draft assessment order requirement is not limited to the first assessment — it applies every time a prejudicial variation is proposed after an ITAT remand for eligible assessees (international transactions / specified domestic transactions). Non-issuance of a draft order is a jurisdictional defect, not a curable irregularity under Section 292B or Section 292BB. Any Section 263 revisionary order built on such a void assessment equally fails.
⚠️ Action Item: Foreign companies and parties with international transactions must verify that post-remand re-assessments were preceded by a draft order under Section 144C. If not, the assessment and any consequential revision are void and challengeable.
The Madras High Court reaffirmed that an AO conducting limited scrutiny under CASS is strictly confined to the specified issue and cannot unilaterally expand the inquiry. In this case, the AO was limited to verifying depreciation claims (AY 2016-17) but proceeded to deny Section 11(2) exemption on accumulated income of ₹26,86,786 — held entirely beyond the permissible scope of limited scrutiny without prior Pr.CIT/CIT approval under Section 119.
⚠️ Action Item: Assessees facing limited scrutiny must carefully compare the CASS notice scope against any additions made in the assessment order. Any additions outside the specified issue without prior approval are jurisdictionally invalid and must be challenged.
ITAT Rajkot quashed a reassessment on two independent grounds: first, the Section 151 approval bore neither a digital nor a manual signature, making it invalid and the Section 148 notice jurisdictionless; second, the AO opened assessment based on cash deposits/withdrawals but made no addition on that issue — instead disallowing Section 80P deduction. Applying CIT v. Jet Airways, the Tribunal held the AO cannot tax other items when the foundational reopening issue is abandoned.
⚠️ Action Item: Always scrutinise Section 151 sanction documents for valid signatures. Where reopening is based on specific information but the AO makes additions on different grounds, challenge the reassessment as invalid under the Jet Airways principle.
7. ITAT Ahmedabad: Reassessment Under Section 147 Invalid If No Addition on Original Reopening Reason
Reaffirming the Jet Airways principle, ITAT Ahmedabad quashed a reassessment where the reopening was triggered by alleged LTCG of ₹1,17,49,792, but no addition was made on that amount. Instead, the AO disallowed Section 54F deduction of ₹7,35,327 and added ₹1,065 as other income. The Tribunal held Explanation 3 to Section 147 does not authorise such a tangential reassessment.
⚠️ Action Item: In any reassessment proceeding, document whether the income cited as the basis of reopening is ultimately assessed. If not, the entire reassessment, including any incidental additions, is unsustainable.
ITAT Rajkot demolished a ₹26,02,186 addition on three independent grounds: (i) reopening was based on borrowed satisfaction from third-party search proceedings without independent application of mind; (ii) the AO denied cross-examination of the key deponent — a violation of natural justice per the Supreme Court; and (iii) the loan transactions were genuine, supported by documentary evidence and completed repayments through banking channels.
⚠️ Action Item: Always assert the right to cross-examine adverse witnesses in reassessment and addition proceedings. Borrowed satisfaction from third-party searches, without the AO forming an independent view, is a strong ground to invalidate reopening.
ITAT Ahmedabad quashed a reassessment where the AO relied on Insight Portal data showing ₹60,37,086 from share trading, without verifying that it had already been returned as business income and assessed under Section 143(3). The Section 68 addition was also deleted for absence of cash movement evidence and no established link to persons named in an SEBI adjudication order.
⚠️ Action Item: Assessees receiving reassessment notices based on Insight Portal data should immediately cross-reference that data against the original return and assessment records and file a response demonstrating prior disclosure.
The Gujarat High Court upheld a Section 68 addition of ₹7,25,000 on unsecured loans, holding that production of account payee cheques and confirmation letters is insufficient when creditors demonstrably lack the financial capacity to make such advances. Identity, creditworthiness, and genuineness are three distinct cumulative requirements — all must be independently and collectively established.
⚠️ Action Item: For all unsecured loan transactions, maintain and furnish creditors' bank statements, income tax returns, balance sheets, and net worth certificates — not merely confirmation letters and cheque copies.
ITAT Kolkata confirmed that an assessment order passed in the name of a company which had ceased to exist post-Court-approved amalgamation is void ab initio, following the Supreme Court-approved Spice Infotainment ruling. Even on merits, the Tribunal upheld deletion of a ₹150.20 crore Section 68 addition, finding identity and creditworthiness of creditors well established.
⚠️ Action Item: Where a company has been amalgamated under a Court-approved scheme, ensure that all pending assessments, notices, and demands are redirected to the amalgamated surviving entity. Any assessment in the name of the dead entity is a nullity.
12. ITAT Kolkata Quashes Section 68 Addition on Unsecured Loans Refunded in the Same Financial Year
ITAT Kolkata deleted a ₹52,42,900 Section 68 addition, holding that full repayment of unsecured loans through banking channels within the same financial year, combined with substantial lender net worth (₹59.79 crore and ₹9.82 crore respectively) and lender assessed income of ₹234.26 lakh, establishes genuineness. The AO must produce positive evidence of cash recycling — mere suspicion is insufficient.
⚠️ Action Item: Maintain complete repayment trail through banking channels for all unsecured loans. Obtain and preserve lender financials, ITR acknowledgements, and bank statements as standard practice.
The ITAT Rajkot restricted a Section 68 addition from ₹2,87,345 to ₹22,987 (8% of transaction value), holding that where the Revenue has historically accepted taxation of only the embedded profit element on unrecorded cash transactions, it cannot arbitrarily shift to taxing the full gross value in subsequent years.
⚠️ Action Item: Maintain historical assessment records demonstrating past departmental treatment of similar transactions. Use prior concessions as a shield against disproportionate additions in reassessment.
A 600-day delay in filing the first appeal was condoned where the ₹5.15 crore cash deposit addition arose from a PAN erroneously linked to a partnership firm's bank account. The ITAT held that substantial justice demands merits-based examination when documentary support exists, and remanded the matter for fresh consideration.
⚠️ Action Item: Never allow procedural delay alone to defeat a meritorious claim. Where ex-parte reassessments arise from data mismatches or PAN linkage errors, document the genuine cause of delay and pursue condonation vigorously.
15. ITAT Ahmedabad Quashes Unexplained Credit Addition on Joint Property Purchase Funded by Relative
The ITAT deleted a ₹1,76,250 Section 68 addition arising from a relative's contribution in a joint property purchase, holding that where the advance is small, below the taxable threshold, supported by a formal confirmation letter and primary transaction documents, and consistent with family-assisted real estate practices, the AO cannot arbitrarily doubt creditworthiness.
⚠️ Action Item: For joint property acquisitions involving family funding, maintain a documented breakdown of each co-owner's share, proof of institutional financing, and formal confirmations from contributing relatives with their PAN and basic financial details.
ITAT Ahmedabad quashed a ₹28,66,040 Section 69A addition on a dissolved partnership firm, where the successor sole proprietor had already declared a turnover of ₹63,61,975 under Section 44AD subsuming the disputed deposits. The Tribunal held that double taxation of the same receipts — once in the firm and once in the proprietorship — is impermissible.
⚠️ Action Item: During entity transitions (partnership to proprietorship), ensure seamless continuity of income reporting and maintain a clear dissolution deed. Proactively flag such transitions in subsequent returns to prevent ex-parte additions.
ITAT Surat clarified that an advance already included in the slump sale consideration cannot simultaneously remain as a balance sheet liability to reduce net worth — doing so artificially inflates the capital gain. The correct capital gain was ₹62,37,948 vs the AO's inflated figure of ₹1,12,37,948.
⚠️ Action Item: In slump sale transactions, reconcile all advance payments against the agreed consideration before computing net worth under Section 50B. Ensure consistency between the balance sheet and sale agreement to prevent inflated capital gain assessments.
18. ITAT Mumbai Validates Depreciation on Goodwill Arising from High Court-Approved Amalgamation Scheme
ITAT Mumbai held that goodwill arising as a balancing figure in an amalgamation is eligible for depreciation under Section 32(1) as an intangible asset. The fifth proviso to Section 32(1) and Explanation 7 to Section 43(1) target pre-existing assets and double deductions — they do not bar depreciation on newly birthed goodwill. Revenue cannot challenge the DCF valuation methodology used in a Court-approved amalgamation scheme.
⚠️ Action Item: In post-amalgamation assessments, document that goodwill arose for the first time upon amalgamation (not pre-existing), support the valuation methodology, and rely on CIT v. Smifs Securities Ltd. as binding Supreme Court precedent.
19. ITAT Bangalore Validates Depreciation Claim on Goodwill Originating from Corporate Amalgamation
Consistent with the ITAT Mumbai ruling above, ITAT Bangalore held that newly born goodwill (calculated as excess consideration over net assets) on amalgamation is eligible for Section 32 depreciation for AY 2015-16. The sixth proviso apportionment rules do not apply to goodwill that did not exist in the transferor's books. TDS credits associated with the amalgamating company's PAN can be claimed by the amalgamated entity.
⚠️ Action Item: Entities involved in past amalgamations should review whether goodwill depreciation claims were made and, if not, consider filing revised returns or challenging any disallowance in appellate proceedings.
ITAT Delhi upheld DTAA benefits for a Mauritius entity with a valid Tax Residency Certificate investing in pre-April 2017 shares. Generalised treaty shopping allegations and lack of commercial substance arguments cannot override TRC protection. Article 27A (Limitation of Benefits) cannot be applied retrospectively to grandfathered investments under Article 13(4). GAAR challenges must follow the codified Section 144BA procedure exclusively.
⚠️ Action Item: Foreign investors with pre-April 2017 share acquisitions backed by valid Mauritius TRCs should maintain documentation of TRC validity, investment dates, and SEBI/Global Business Licence credentials to rebut any treaty-denial attempts.
21. India-Mauritius DTAA: ITAT Delhi Upholds Capital Gains Exemption Despite 'Shell Company' Allegation
Confirming the above trend, ITAT Delhi upheld capital gains exemption under Article 13(4) for Norwest Venture Partners X-Mauritius, a Mauritius-resident entity with valid TRC, Category-1 Global Business Licence, and SEBI registration. Shell company allegations without cogent evidence of sham or fraud are insufficient. The Tribunal also held that the DRP must decide objections on merits — remanding issues back to the AO without a hearing is a procedural defect.
⚠️ Action Item: Where the DRP remands issues to the AO without adjudication on merits and without a further hearing opportunity, raise the procedural defect as a ground of challenge in ITAT proceedings.
22. Capital Gains on Pre-April 2017 Mauritius Share Investments Held Non-Taxable in India: ITAT Delhi
A third ruling from ITAT Delhi in Superb Mind Holding Ltd. confirms that capital gains on pre-April 2017 Indian shares held by a Mauritius-resident company are not taxable in India under Article 13(4) of the India-Mauritius DTAA (as amended by the 2016 Protocol). Valid TRC + pre-April 2017 acquisition creates near-absolute treaty protection absent evidence of sham or fraud.
⚠️ Action Item: Mauritius fund managers and investment advisors should consolidate documentation of acquisition dates and TRC validity for all Indian portfolios to proactively address any potential reassessment.
The Tribunal deleted Section 2(22)(e) deemed dividend additions on withdrawals from a running account with a sufficient credit balance, holding that such withdrawals are not loans or advances out of accumulated profits. Section 69A additions on seized cash were also deleted where the assessee correlated the cash to proximate bank withdrawals and the Revenue provided no independent corroboration.
⚠️ Action Item: In deemed dividend cases under Section 2(22)(e), always demonstrate the running account credit balance position at the time of each withdrawal. Maintain bank withdrawal records to correlate against any seized cash.
24. ITAT Raipur: Section 263 Revision Justified Where Bogus Purchases Not Properly Verified
ITAT Raipur upheld a Section 263 revision where the AO issued statutory notices to suppliers but failed to investigate non-compliance or probe further, instead mechanically estimating 2% profit on ₹3,47,42,785 of suspicious purchases. Superficial inquiries do not protect an assessment from revision when serious doubts about genuineness remain unresolved.
⚠️ Action Item: AOs and assessees alike should note that issuing notices without follow-through investigation on suspected bogus purchases will not withstand Section 263 scrutiny. Assessees should voluntarily provide robust supplier documentation during original assessment.
The Delhi High Court quashed a Section 263 revision where the AO had raised queries, examined audited financials and VAT returns, and taken a plausible view. The Pr.CIT cannot invoke revision merely on a difference of opinion. If the revisional authority believes enquiry was inadequate, they must conduct independent verification and reach specific findings — not merely cancel the order and remand for fresh assessment.
⚠️ Action Item: Where a Section 263 order is passed without independent findings by the Pr.CIT — simply cancelling an order for perceived inadequate enquiry — challenge it on the grounds established in this ruling. The authority must conclusively demonstrate the assessment was erroneous and prejudicial to revenue.
ITAT Rajkot held that Section 147 additions for political donations cannot be sustained merely because the recipient party failed to declare the donation in its returns. The assessee's burden is discharged upon producing valid receipts, recipient PAN, proof of registration under the Representation of the People Act, 1951, and banking proof of payment.
⚠️ Action Item: Assessees claiming deductions for political contributions should preserve valid receipts, PAN of the political party, Registration Certificate under the Representation of the People Act, and bank transaction records.
27. Surcharge on Private Trusts Taxed at MMR: ITAT Jaipur Mandates Adherence to Finance Act Slabs
ITAT Jaipur held that while a private discretionary trust may be taxed at Maximum Marginal Rate under Section 164, the surcharge must be computed strictly as per the First Schedule slabs of the applicable Finance Act — not at the highest available rate by default. CPC's adjustment powers under Section 143(1) are limited and cannot resolve complex interpretational issues around Section 115BAC applicability to trusts.
⚠️ Action Item: Trustees and their advisors should compute surcharge on MMR-taxed trusts by reference to the specific Finance Act slabs and challenge any CPC intimation that applies the highest surcharge rate without following the slab structure.
28. Axis Large Cap Fund (Formerly Axis Bluechip): Structure, SEBI Rules and Post-2024 Tax Treatment
Axis Large Cap Fund's renaming from Axis Bluechip Fund involves no change in folio continuity, track record, or tax holding periods. Post-23 July 2024, eligible short-term capital gains attract 20% under Section 111A; long-term gains exceeding ₹1.25 lakh attract 12.5% under Section 112A without indexation. IDCW distributions are taxable at slab rates with TDS under Section 194K.
⚠️ Action Item: Investors in Axis Bluechip/Large Cap Fund should recalculate holding periods and tax liability for post-July 2024 redemptions and switches using the revised tax rates. Consult advisors on the Direct vs. Regular plan impact on net returns.
🟢 GST
1. E-way Bill Detentions Under GST Section 129: Penalties, Appeals & Reforms
Post-2022 amendments, Section 129 operates as a penalty-only regime (200% penalty for documentation failures), with the provisional release mechanism removed. However, established jurisprudence protects against severe penalties where there is no intent to evade tax. The 57th GST Council has recommended intelligence-based interceptions and territorial limits on transit checks — these reforms are pending enactment.
⚠️ Action Item: Until the 57th Council recommendations become law, rely on minor discrepancy circulars, strict adherence to statutory timelines, and the 10% pre-deposit norms for appellate relief. Document all transit goods movements meticulously.
The Gujarat High Court held that the right to seek provisional release under Section 67(6) survives even when the department escalates proceedings to confiscation under Section 130. Section 130 contains no independent seizure power; once goods stand seized under Section 67(2) (Form GST MOV-10 issued), Section 67(6)'s mandatory release mechanism operates. The word "shall" in Section 67(6) is unambiguous — once the assessee executes a bond with bank guarantee (Rule 140(1)) or pays tax, interest and penalty, release is mandatory.
⚠️ Action Item: Businesses facing GST confiscation proceedings should immediately invoke Section 67(6) and Rule 140(1) to seek provisional release of seized goods and conveyances, regardless of whether Section 130 proceedings have been initiated.
The Supreme Court has affirmed the Gujarat High Court's position in Bhandari Scrap Traders: Section 16(2)(c) ITC eligibility is conditional on actual tax payment by the supplier — it cannot be equated with the Delhi VAT regime. However, concluded High Court rulings that have achieved finality cannot be reopened by a subsequent Supreme Court decision that refines or reverses the legal position (doctrine of finality upheld in Saraswati Agro Chemicals).
⚠️ Action Item: Genuine purchasers denied ITC due to supplier default should explore the constitutional challenge route while simultaneously engaging with the department to demonstrate bona fide purchasing. Review whether any past favourable High Court orders have achieved finality and are protected from reopening.
The Orissa High Court struck down a State Resolution (dated 18.8.2020) that retrospectively excluded cement manufacturing units from SGST reimbursement benefits under IPR 2015 with effect from 1.7.2017. Units that had made substantial investments and commenced production in reliance on the policy are protected by the doctrines of promissory estoppel and legitimate expectation. Retrospective withdrawal of fiscal incentives already accrued is constitutionally impermissible.
⚠️ Action Item: Businesses in Odisha or other States facing retrospective withdrawal of industrial policy SGST/GST incentives should invoke promissory estoppel and legitimate expectation principles and challenge such notifications before the relevant High Court.
CESTAT Delhi set aside recovery of ₹65,01,43,929 CENVAT credit with interest and penalty, holding that a show cause notice issued in July 2012 was beyond the one-year normal limitation. The Department had full knowledge of all facts following its own audit in September 2010 and had communicated objections by November 2010. Invoking the five-year extended limitation period requires proof of a positive, deliberate act of concealment with intent to evade — not merely a discrepancy.
⚠️ Action Item: Where the Department conducted an audit and raised objections, begin counting the one-year limitation from that date. Any SCN issued beyond one year is time-barred unless the department can prove active concealment with evasion intent.
CESTAT Chennai reaffirmed that reimbursements of actual third-party expenses (unloading charges, fumigation, harbour dues, transport costs) paid on behalf of clients are not taxable service consideration, following the Supreme Court's binding ruling in Union of India v. Intercontinental Consultants (2018). Pure accounting entries without cash flow do not constitute taxable value.
⚠️ Action Item: Service providers recovering third-party disbursements should maintain clear separate billing, contemporaneous records of actual payments made on behalf of clients, and ensure reimbursements are not commingled with service fees in invoicing.
🟠 Company Law / Corporate Law
Ind AS 10 requires rigorous factual analysis of post-reporting-date events to determine whether they are "adjusting" (conditions existed at year-end) or "non-adjusting" (new conditions post year-end). GST demands and customer insolvencies must be evaluated based on the condition at the reporting date — not merely the timing of receipt. Critically: post-period equity dividends must not be recognised as liabilities, and if post-period events destroy the going-concern assumption, the entire accounting basis must be overhauled.
⚠️ Action Item: Finance teams must establish a formal process for identifying and evaluating post-reporting-date events before financial statement authorization. Maintain robust contemporaneous documentation for all material non-adjusting events requiring disclosure.
The Bombay High Court upheld a five-year disqualification of housing society committee members under Section 154B-23(1)(iii) of the Maharashtra Co-operative Societies Act, 1960 for failing to provide documents within the mandatory 45-day limit under Section 154B-8(2). Courts rejected "directory" and "substantial compliance" defences — the 45-day timeline is absolute and fundamental records must be readily accessible.
⚠️ Action Item: Managing committees of cooperative housing societies should maintain all statutory records in an organised, readily retrievable format and respond to document requests within the 45-day statutory limit without exception.
The Supreme Court in Mohd. Abdul Samad v. State of Telangana held that a divorced Muslim woman may claim maintenance under Section 125 CrPC concurrently with remedies under the Muslim Women (Protection of Rights on Divorce) Act, 1986. The 1986 Act does not extinguish the secular welfare remedy. Section 127(3)(b) CrPC prevents unjust enrichment by mandating consideration of amounts already paid under personal or customary law.
⚠️ Action Item: Legal advisors in family law matters must inform divorced Muslim women of their concurrent right to pursue Section 125 CrPC maintenance while also utilising the 1986 Act, and advise former husbands to claim set-off under Section 127(3)(b) for amounts already paid.
🔴 Customs
1. CESTAT Mumbai Quashes Revocation of Customs Broker Licence in Sun Clearing Agency Case
CESTAT Mumbai set aside the revocation of Sun Clearing Agency's Customs Broker licence, penalty, and security deposit forfeiture. The clearance and transshipment of allegedly smuggled E-waste was handled by other parties — not the broker. Critically, the disciplinary notice under Regulation 17(1) was issued far beyond the prescribed 90-day period from the DRI offence report. The right to cross-examine witnesses whose statements are relied upon was also affirmed as a procedural minimum.
⚠️ Action Item: Customs Brokers facing disciplinary action must immediately check whether the Regulation 17(1) notice was issued within 90 days of the offence report. Delay beyond this period, without adequate explanation, vitiates the proceedings.
2. CESTAT Kolkata Overturns Customs Broker Licence Suspension Due to Absence of Immediate Necessity
CESTAT Kolkata held that suspension of a Customs Broker licence under Regulation 16(2) of CBLR 2018 requires demonstration of "immediate necessity." An unexplained time lag between the alleged violation and the suspension order negates urgency, making the suspension legally untenable. The substantive disciplinary inquiry under Regulation 17 was allowed to proceed separately on merits.
⚠️ Action Item: Customs Brokers served with suspension orders should scrutinise the timeline between the alleged violation and the suspension for unexplained gaps. A delayed suspension lacking documented urgency is challengeable as arbitrary and disproportionate.
🟣 SEBI
1. SEBI's EPI-Linked Margin Waiver in Cash Segment: Conditions, Controls and Broker Implementation
SEBI's 22 October 2026 circular introduces a targeted margin waiver in the cash segment for clients who have already delivered securities via accepted early pay-in (EPI) against a net sell obligation and subsequently trade in the same security. The relief is capped at the lower of accepted EPI value and the value of the underlying sale, computed real-time at the client-security level. Critically, the waiver must be withdrawn (and margin shortfall blocked from member proprietary collateral) when the original sale is fully or partially squared off.
⚠️ Action Item: Stock brokers must update their systems to implement real-time EPI-linked margin computation at the client-security level, build automatic waiver withdrawal triggers on square-off events, and test for edge cases including trade-for-trade securities, partial EPI acceptances, and delayed clearing corporation status updates. Implementation deadline to be verified against the SEBI circular.
🟡 Insolvency
1. NCLT Delhi Admits Section 9 Insolvency Petition Despite MOU Termination and Disputed Invoices
NCLT Delhi admitted an IBC Section 9 petition from Honest Machinery Pvt. Ltd., holding that invoices raised during the operative period of an agreement remain valid despite the agreement's subsequent termination — the operational creditor's claim survives termination. Speed post delivery to the registered office satisfies demand notice delivery requirements under Regulation 5(2) of IBBI Rules regardless of personal non-receipt by directors. A counterclaim or pending civil suit does not constitute a "pre-existing dispute" to defeat an IBC admission if no dispute was raised before the demand notice.
⚠️ Action Item: Operational creditors must ensure demand notices are served at the corporate debtor's registered address with postal proof. Corporate debtors wishing to raise a pre-existing dispute as a defence must have documentary evidence of the dispute pre-dating the demand notice.
📅 Key Deadlines & Action Items
| Deadline / Event | Details | Action Required |
|---|---|---|
| 3 December 2026 | Supreme Court hearing in Union of India v. Bharat Industrial Enterprises on Section 147A JAO jurisdiction validity | Monitor outcome; file protective objections on all pending JAO reassessment notices |
| SEBI EPI Margin Waiver | SEBI Circular dated 22 October 2026 — broker implementation of EPI-linked margin waiver | Verify implementation deadline from circular; update systems for real-time client-security level computation |
| Ind AS 10 Compliance | Financial statement authorization process | Establish post-reporting-date event review protocols before year-end authorization |
| MCS Act — 45-Day Record Production | Maharashtra Co-operative Societies Act Section 154B-8(2) | Managing committees must respond to document requests within 45 days — no extensions available |
| CBLR 2018 — 90-Day SCN Requirement | Customs Broker disciplinary notices must be issued within 90 days of DRI offence report | Review all pending disciplinary proceedings for timeliness; raise delay as a ground of challenge |
| GST Provisional Release | Section 67(6) mandatory release upon bond/payment compliance | File provisional release applications immediately upon seizure — do not wait for confiscation proceedings to conclude |
| Section 143(1) CPC Adjustments | Private trusts taxed at MMR — surcharge computation | Verify all CPC intimations for correct Finance Act slab-based surcharge computation |
💡 Professional Takeaways
1. The "Jet Airways Principle" is Emerging as a Mass Reassessment Defence
Across at least four separate ITAT rulings this week — Rajkot, Ahmedabad (two benches), and Kolkata — the principle from CIT v. Jet Airways (I) Ltd. is being consistently applied: if no addition is made on the original reason for reopening, the entire reassessment collapses, including any incidental additions made on other grounds. Tax professionals should immediately audit all pending and completed reassessments to identify whether the original reopening reason was actually assessed. If not, a strong jurisdictional challenge exists regardless of the merits of any other addition made.
2. The India-Mauritius DTAA Grandfathering Protection Remains Robust — But Documentation is Non-Negotiable
Three independent ITAT Delhi rulings this week confirm a consistent judicial position: pre-April 2017 share investments held by Mauritius entities with valid TRCs are protected from Indian capital gains taxation under Article 13(4) of the DTAA. Shell company allegations, treaty shopping claims, and lack of commercial substance arguments fail without cogent evidence of sham or fraud. GAAR must be invoked through Section 144BA exclusively. However, the protection is documentation-dependent — practitioners advising Mauritius-based funds and investors must ensure TRC validity, investment date evidence, Global Business Licence, and SEBI registration are maintained and readily producible.
3. Procedural Compliance in Assessment Proceedings is Now a Jurisdictional — Not Merely Directory — Requirement
The week's rulings from the Karnataka High Court (Section 144C draft order after ITAT remand), Delhi High Court (Section 144B mandatory for post-01.04.2021 faceless assessments), Madras High Court (limited scrutiny expansion without Pr.CIT approval), and multiple ITATs (Section 151 unsigned approvals, cross-examination denials) collectively send an unambiguous signal: procedural non-compliance in assessment proceedings is increasingly being treated as a jurisdictional defect that voids the assessment entirely, not as a curable irregularity. Tax practitioners must build procedural compliance checklists into their assessment response strategies and raise procedural grounds as primary — not alternative — challenges.
© TaxCorp India | thetaxcorp.in | This digest is prepared for informational purposes. Always obtain professional advice before acting on any content herein.