Tax INFORM- December 2025

The fifty-ninth 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 holds that the deduction cap under Section 44C applies to head office expenses even where such expenses are incurred exclusively for the Indian branch.
• SC restricts Section 36(1)(viii) deduction to profits directly derived from long-term finance.
• Delhi HC rejects the concept of a “virtual service PE” in the absence of an express provision in the India-Singapore DTAA.
• Bombay HC holds that Dividend Distribution Tax is subject to the India–UK DTAA and restricts tax on dividends to ten per cent under Article 11.
• Bombay HC holds that reference to a trust resolution specifying purposes of accumulation constitutes sufficient compliance with Section 11(2).
• Madras HC holds that ownership of land is not a prerequisite for claiming deduction under Section 80-IB(10) by a developer.

Notifications/ Circulars:

• CBDT Notification No. 161/2025, dated November 19, 2025.

Indirect Tax: 

Goods & Services Tax

Case Laws:

• SC upholds GST exemption on renting of residential premises used as hostels by students and working professionals.
• Delhi HC cautions Revenue against citing AI-generated fake judgments in GST notices and refuses to quash SCN at a premature stage.
• Calcutta HC holds that GSTR-9 disclosures and payment of differential CESS cannot be ignored where initial non-disclosure is revenue neutral.
• Calcutta HC holds that cash is not “goods” under the CGST Act and directs release of cash seized during search proceedings.
• Andhra Pradesh HC holds that interest and penalty collected by a chit fund foreman from defaulting subscribers do not form a taxable supply under GST.

Notifications/ Circulars:

• CBIC Circular No. 29/2025 – Customs, dated November 21, 2025.