Tax INFORM- May 2026

The sixty-fourth issue of our monthly tax newsletter, Tax Inform, is out. Through these newsletters, we provide a compilation of key tax-related case laws, circulars, notifications, etc. issued by the authorities in the previous month, impacting entities and individuals operating in India.

The highlights of the current issue are:

Direct Tax:

Domestic Tax Rulings:

• SC allows deduction under Section 36(1)(iii) for interest paid on capital borrowed for business purposes, including acquisition of shares on grounds of commercial expediency.
• SC upholds reassessment where fresh survey material revealed that income disclosed as AOP profit was, in substance, a taxable revenue receipt.
• Madras HC allows deferred recognition of time-share membership fee income over the contract period where continuing accommodation obligations subsist.
• Delhi HC holds that shareholders cannot be taxed on company-owned assets or income in the absence of a specific statutory provision.
• The Calcutta HC holds that a sales tax remission subsidy for industrial expansion is a capital receipt and must be excluded from book profits under Section 115JB.

Indirect Tax: 

Goods & Services Tax

Case Laws:

• Bombay HC quashes ₹1,524 crore IGST demand on Tata-Docomo arbitral award payments, holding that settlement of damages does not constitute “supply”.
• Bombay HC quashes GST proceedings on corporate guarantees issued without consideration, while upholding Rule 28(2).
• Delhi HC holds that education consultancy, marketing and recruitment support services provided to foreign universities are export of services and not intermediary services.
• Bombay HC holds that affiliation fees collected by a statutory university in discharge of statutory functions do not constitute taxable supply under GST.
• Bombay HC quashes GST proceedings initiated against an amalgamating entity after merger, holding them void ab initio.

Notifications/Circulars:

• CBIC amended multiple customs exemption notifications to align tariff references with revised customs tariff classifications.
• CBIC revised customs duty entries for specified precious metals, spent catalyst, ash containing precious metals and related goods under Chapter 71.