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Tax Connect Advisory Services LLP, 3rd Floor, Royal Exchange Building, 6, N. S. Road, KOLKATA (2026)

17/07/2026

Tax Connect is pleased to share an Article on “Orders/Notices without DIN are liable to be quashed [Sec 282 of ITA’61 – Sec 501 of ITA’25]"

Circular No. 19/2019 holds that no communication shall be issued by any income- tax authority unless a computer-generated DIN has been allotted and is duly quoted in the body or such communication –
(i) Relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc.
(ii) Issued To the assessee or any other person,
(iii) Issued On or after the I st day of October, 2019

Exceptional circumstances for relaxation of the Circular after following the due process and post facto regularization –

(i) Where non DIN communication is issued due to technical difficulties
(ii) When non-DIN communication is issued by IT Authorities who is outside the office
(iii) When due to delay in PAN migration PAN is lying with non- jurisdictional Assessing Officer;
(iv) when PAN or assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated;
(v) When the functionality to issue communication is not available in the system,

Para 4 of The Circular is most important to note. It states that “4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued.” Furthermore as per Para 7, in all pending assessment proceedings, where notices were issued manually, prior to issuance of this Circular, the income-tax authorities should have identified such cases and should have uploaded the notices in these cases on the Systems by 31th October, 2019.

It is also important to note about the binding nature of CBDT circular on the Incometax Authorities which has been held as per the decision of Hon’ble Supreme Court in the case of CIT v. Hero Cycles [1997] 228 ITR 463 (SC) wherein it was held that circulars bind the ITO but will not bind the appellate authority or the Tribunal or the Court or even the assessee.

On these grounds, the order u/s 263 of IT Act passed by Commissioner which does not bear DIN was quashed in the case of G.P. TRONICS PVT. LIMITED Vs ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(1), KOLKATA [2023-VIL-482-ITAT-KOL]

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Tax Connect Advisory Services LLP

16/07/2026

On the auspicious occasion of Rath Yatra, Tax Connect extends its heartfelt wishes to everyone. May the divine blessings of Lord Jagannath inspire us with wisdom, integrity, resilience, and the strength to move forward with purpose. Wishing you and your family peace, prosperity, and continued success.

Happy Rath Yatra! Jai Jagannath.

Team Tax Connect Advisory Services LLP

15/07/2026

Tax Connect is pleased to share an Article on “Transfer Pricing Cases can be taken up by High Court when it can be proved that a matter of fact gives rise to a question of law [Sec 92C of ITA’61 – Sec 165 of ITA’25]"

ALP determination is an art and not a science. Transfer Pricing exercise is a valuation exercise. The question thus arises whether a Transfer Pricing case can be referred to the High Court. The answer is that if the arm’s length price is determined by the Tribunal de hors the guidelines stipulated under the Act and the Rules, more particularly Rules 10A to 10E of the Rules, the determination can be said to be perverse which is always subject to the scrutiny by the High Court in an appeal under Section 260A of the Act. However, the perversity has to be demonstrated and pleaded with material on record, as has been held in the case of Vijay Kumar Talwar v. CIT, (2011) 1 SCC 673 and Sir Chunilal V. Mehta and Sons Ltd. v. Century Spinning and Manufacturing Co. Ltd., reported in AIR 1962 SC 1314

In every writ under Article 226 of The Constitution of India, a question of law has to be framed. A finding of fact may give rise to a substantial question of law, in the event the findings are based on

(i) no evidence; and/or
(ii) while arriving at the said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration; or
(iii) legal principles have not been applied in appreciating the evidence; or
(iv) when the evidence has been misread.

The questions of law in TP Cases can be –

(i) where the issue relates to whether at all a transaction falls within the definition of ‘international transaction’
(ii) whether two enterprises are ‘associated enterprises’ as per the definition under the IT Act.

However the following are matters of facts –

(i) The question of comparability of two companies or selection of filters.
(ii) View taken on the basis of the particular set of facts in one case as different from another case
(iii) Benchmarking of controlled transactions with uncontrolled transactions

Hence it was held by The Apex Court in the case of SAP LABS INDIA PRIVATE LIMITED Vs INCOME TAX OFFICER, CIRCLE 6, BANGALORE [2023-VIL-11-SC-DT] that High Court’s have to examine whether in each case while determining the arm’s length price the guidelines laid down under the Act and the Rules, are followed or not and whether the findings recorded by the Tribunal while determining the arm’s length price are perverse or not. To this extent the TP matters can be taken up in High Court. Counsel’s and taxpayers may thus take up matters accordingly, even before the Tribunal Stage so that incase of adverse ITAT judgement, the matter of law can be taken up at the High Court Level. The Department too is taking note

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Tax Connect Advisory Services LLP

14/07/2026

Tax Connect is pleased to share an Article on “A difference of opinion cannot lead to invocation of penalty u/s 271(1)(c) [Sec 271 of ITA’61 – Sec 439 472 of ITA’25]"

The invocation of Sec 271(1)(c) of The Income Tax Act has the following prerequisites –

1. The officer must record his satisfaction in the notice invoking the said Section
2. The Officer specify the charge he is levying being –

(a) the assessee has concealed the particulars of his income, or
(b) the assessee has furnished inaccurate particulars of such income

2(a) or (b) above could be invoked incase the following conditions are satisfied –

1. Details supplied should be inaccurate, not exact or correct, not according to truth or erroneous.
2. Condition of Mens Rea should be satisfied.

The Hon’ble Supreme Court in case of CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 held that the disallowance of claim which is not allowable as per the provisions of law by itself will not amount to furnishing of inaccurate particulars of income when the assesse has disclosed and furnished all the relevant facts and details.

Incase the correctness of the expenditure incurred by the assesse under the heads is not in doubt, in no way can it be considered as concealment of income, merely because the classification of the expenditure was in doubt. A difference of opinion cannot lead to invocation of penalty u/s 271(1)(c), was held in the case of TURNING POINT ESTATES PVT. LTD Vs ACIT 5(1) INDORE [2023-VIL-601-ITATIND]

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Tax Connect Advisory Services LLP

13/07/2026

Tax Connect is pleased to share an Article on “No disallowance u/s 40(a)(ia) for short/wrong deduction of TDS [Sec 40 of ITA’61 – Sec 35 of ITA’25]"

Incase a person deducts TDS short of the required amount, no doubt he is to be considered as an assessee in default as per provisions of sec. 201 but disallowance of the expenditure is not permissible u/s. 40(a)(ia) of Income Tax Act. Section 40(a)(ia) lays down as under -

(ia) thirty percent. of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, 16[has not been paid on or before the due date specified in sub-section (1) of section 139],-

Hence the following cases would not fall under Section 40(a)(ia) disallowance –

A. TDS deducted under a Section at a rate lesser than prescribed. ADVAIT AGROTECH PRIVATE LIMITED Vs PRINCIPAL COMMISSIONER OF INCOME TAX [2023- VIL-791-ITAT-AHM]

B. TDS deducted under Another Section (say 192) instead of the section required (say 194J) - Gujarat High Court in the case of CIT Vs. Prayas Engineering Ltd. in Tax Appeal No. 1237 of 2014 vide order dated 17/11/2014

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Tax Connect Advisory Services LLP

11/07/2026

Tax Connect Advisory Services LLP is pleased to put forward the 𝟓𝟔𝟓𝐭𝐡 𝐈𝐬𝐬𝐮𝐞 of "𝐓𝐚𝐱 𝐂𝐨𝐧𝐧𝐞𝐜𝐭 𝐁𝐮𝐥𝐥𝐞𝐭𝐢𝐧".

We do hope that this initiative adds value to your professional sphere.

To access the same & other Issues, please click the link below :-
https://taxconnect.co.in/bulletins.php

10/07/2026

We are proud to share that our Partner, Mr. Vivek Jalan, Chairperson of the National Fiscal Affairs and Taxation Committee of The Bengal Chamber of Commerce & Industry (BCC&I), participated as a speaker in the Pan-India Webinar on "Understanding GST – TDS: Provisions and Challenges."

The webinar, organized by DGTS-KZU & DZU, Central Board of Indirect Taxes and Customs (CBIC), in association with Bengal Chamber of Commerce and Industry (BCC&I), successfully brought together tax professionals, industry representatives, and stakeholders from across the country to discuss the evolving GST-TDS framework, key statutory provisions, and emerging compliance challenges.

Team Tax Connect Advisory Services LLP

10/07/2026

Tax Connect is pleased to share an Article on "Determining the ‘basis’ of share of revenue in a contracting state [Sec 9 of ITA’61 – Sec 9 of ITA’25]"

There is always a question on what is the reasonable basis to determine the share of revenue of a contracting state. Lets understand the issue and the matter of law or fact involved -

Explanation 1(a) to Section 9(1)(i) states as follows –

“9. Income deemed to accrue or arise in India
(1) The following incomes shall be deemed to accrue or arise in India:
(i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India.

Explanation 1-For the purposes of this clause— (a) in the case of a business other than the business having business connection in India on account of significant economic presence of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India.”

“Article 7 of the DTAA between USA and India states as follows –

Business Profits –
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to
(a) that permanent establishment;
(b) sales in the other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or
(c) other business activities carried on in the other State of the same or similar kind as those effected through that permanent establishment.”

For detailed article please go through the pdf.

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Tax Connect Advisory Services LLP

09/07/2026

Tax Connect is pleased to share an Article on "Strengthening India’s Lithium Ion Battery Manufacturing Ecosystem Policy Breakthrough: Customs Duty Exemption on Capital Goods"

The Government of India has announced a landmark reform through Notification No. 27/2026 Customs (dated 08 July 2026), exempting customs duty on a wide range of capital goods essential for Lithium Ion cell manufacturing. This notification Issued under Section 25(1) of the Customs Act, 1962, consolidates and expands the earlier fragmented entries (69 & 69A) under Notification No. 25/2002 Customs, thereby ensuring that almost all machinery required for Lithium Ion battery production is now duty free. The notification is part of a series of amendments to Notification No. 25/2002 Customs, last updated by Notification No. 01/2026 Customs (01.02.2026).

The revised entry “69” now includes a comprehensive list of specialized machines, such as:
• Powder Dryer, Automatic Feeding & Blending System, Slurry Transfer System
• Cathode/Anode Extrusion Coating Machines, Compression (Cold Press) Machines, High Vacuum Pump
• Winding Machines, Auto EL Filling Machine, Degassing Sealing Machine
• Electrode cutters, slitting machines, vacuum ovens, evaporator chillers
• Testing & Trapping Systems, Auto taping/packing machines, Separator coating machines
• Formation machines, welding machines (laser/ultrasonic), Cell ageing machines, Helium test systems
• Effluent treatment, solvent recovery, heat recovery systems
• Final inspection, film wrapping, electrolyte injection machines, and many more.

The list spans 85+ distinct machines, each mapped to specific tariff items/sub headings.

For detailed article please go through the pdf.

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Tax Connect Advisory Services LLP

09/07/2026

Tax Connect is pleased to share an Article on "Angel Tax: Valuation method u/r 11UA adopted by assessee is final [Sec 56 of ITA’61 – Sec 92 of ITA’25]"

While Section 56(2)(viib) has been omitted, yet it is important to understand the jurisprudence for past periods.

Section 56(2)(viib) and Rule 11UA of The Income Tax Law providing for various methods of determining the fair value of shares has been much deliberated post budget 2023. Post bringing the non-resident assesses also in the ambit of Angel Tax, the CBDT has prescribed many methods of valuation of shares. Now the question is whether in case the assessee opts for determination of the fair market value of the shares by opting for any of the methods prescribed under rules, then can the AO reject that method itself? Or should the AO only limit himself to scrutinizing the valuation report within the conditions or parameters laid down in the method chosen by the assessee?

This was answered in the case of Innoviti Payment Solutions Pvt. Ltd. Vs. ITO reported in (2019) (Bangalore Trib) wherein the co-ordinate Bench of the Tribunal held that the method adopted by the assessee has to be accepted by the AO. The AO can of-course point out any defect in the implementation of the valuation method. The same was also held in the case of THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 16(1), HYDERABAD Vs M/s NCL GREEN HABITATS PRIVATE LIMITED [2023-VIL-717-ITAT-HYD].

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Tax Connect Advisory Services LLP

Tax Connect Advisory Services LLP

17/07/2026

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