Insights & Resources

The CBDT has issued clarificatory FAQs to operationalise the 2024 Guidelines on compounding of offences under the Income-tax Act, 1961. This update explains the legal position on key procedural issues such as filing timelines, multi-jurisdictional applications, post-conviction compounding, and treatment of co-accused. The write-up unpacks the framework and highlights areas where discretion remains with the tax authorities.

The Gauhati High Court, in Principal Commissioner of Income-tax v. Greenply Industries Ltd., held that excise duty exemptions granted under a notified industrial policy constitute capital receipts. Consequently, such receipts are neither taxable under regular provisions of the Income-tax Act, 1961 nor includible in book profits for MAT purposes under section 115JB.

The Delhi High Court, in Christian James Michel v. Directorate of Enforcement, granted bail under PMLA on grounds of prolonged undertrial incarceration. The judgment highlights the constitutional imperative under Article 21 and harmonises it with the stringent bail provisions of Section 45 PMLA, reinforcing the jurisprudence against indefinite pre-trial detention in economic offences.

The SAFEMA Appellate Tribunal upheld the ED's attachment of property acquired before the commission of a scheduled offence, holding it to be ‘proceeds of crime’ under PMLA. It ruled that the date of detection of laundering, not the original offence, governs applicability. The decision underscores key compliance principles around equivalent value attachment, retrospective prosecution, and statutory timelines impacted by COVID-19.

In a pivotal decision, the ITAT Chennai held that accrued interest on non-performing assets (NPAs) is not taxable for co-operative banks if not credited to the profit and loss account, in compliance with RBI guidelines. This ruling reinforces the legal principle that RBI norms on income recognition, under Section 45Q of the RBI Act, override the provisions of the Income-tax Act, even prior to the 2018 amendment to Section 43D.

The SAT’s ruling in CapitalVia Global Research Ltd. v. SEBI offers valuable guidance on regulatory compliance for investment advisers under the SEBI framework. While upholding nine out of thirteen charges—including KYC failures, risk profiling lapses, and misleading disclosures—the Tribunal reduced the penalty from ₹1 crore to ₹70 lakhs, reaffirming the importance of proportionality in enforcement and the fiduciary obligations of advisory firms.

The Jaipur ITAT’s ruling in Jai Singh Sethia v. DCIT/ACIT clarifies the distinction between Sections 54 and 54F under the Income-tax Act, 1961. The Tribunal denied exemption under Section 54F due to the property’s residential classification but granted relief under Section 54, reaffirming that procedural lapses should not defeat substantive tax relief when eligibility conditions are otherwise satisfied.

SC upholds PMLA’s continuing offence doctrine, rejecting retrospective and threshold-based challenges to money laundering prosecutions.

The Supreme Court has clarified that regulatory penalties imposed under the Consumer Protection Act do not qualify as ‘debt’ under Section 96 of the IBC. This landmark ruling restricts the use of insolvency proceedings by errant developers to avoid penalties for non-compliance, reinforcing consumer rights and statutory accountability.

The Appellate Tribunal (SAFEMA) in SBI v. ED (2025) held that the moratorium under section 14 of the IBC does not bar enforcement proceedings under the PMLA. The decision reinforces that financial creditors cannot claim immunity under section 32A unless a resolution plan is approved. The ruling draws a clear boundary between civil insolvency resolution and criminal asset confiscation under anti-money laundering laws.