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7,159 orders from the Karnataka High Court.
Most recent orders on record, from 2026.
The High Court held that the question of law raised in the present appeal was covered by its own previous decision in ITA.No.148/2026. This earlier decision arose from the same impugned order passed by the ITAT in IT(TP)A.No.639/Bang/2025 for Assessment Year 2014-15. Consequently, the Court found that no substantial question of law arose for consideration in the present appeal. The appeal was accordingly dismissed. The specific reasoning for the decision in ITA.No.148/2026 is not detailed in this judgment, but it formed the basis for dismissing the current appeal.
The High Court of Karnataka disposed of the appeal. The Court noted the submission by the assessee that the appeal had become infructuous because the Income-Tax Appellate Tribunal (ITAT) had remanded the matter to the Assessing Officer (AO), but the AO failed to pass an order within the stipulated period. The assessee had subsequently filed a writ petition seeking a refund, which was allowed by an order dated 07.11.2025, directing the Revenue to refund amounts for assessment years 2006-07, 2007-08, and 2008-09. The Revenue did not prefer a writ appeal against this order and processed the refund, thereby accepting the writ court's direction. The Revenue's counsel did not dispute these facts but requested liberty to revisit the matter if the assessee's statements were found to be incorrect. The appeal was disposed of on these terms.
The High Court held that the substantial questions of law projected by the Revenue did not arise from the impugned order passed by the ITAT in the Revenue's appeal. The Court noted that the questions pertained to the allowance for deduction under Section 35(2AB) of the Act, which was the subject matter of the Assessee's appeal before the ITAT (IT(TP)A.No.281/Bang/2014), and not the Revenue's appeal (IT(TP)A.No.237/Bang/2014). The Revenue had filed a separate appeal, ITA.No.155/2020, against the ITAT's order in the Assessee's appeal. Consequently, the present appeal was deemed misconceived. The Court did not decide on the merits of the disallowance under Section 35(2AB) or any other provision. The operative direction was to dismiss the appeal.
The High Court disposed of the present appeal with liberty to the assessee to revive it, subject to the outcome of the Revenue's pending appeal (W.A.No.2473/2015). The Court acknowledged that the assessee's appeal was filed under Section 260A of the Income Tax Act, 1961, impugning the ITAT's order. The Court noted that the ITAT had remanded the issue of scientific research and development expenses to the AO. The assessee informed the Court that while the deduction was subsequently allowed, the basis of the impugned orders was a Single Judge's decision that was under appeal. The Court reasoned that the final determination of the present appeal could be contingent on the outcome of the pending appeal. Therefore, the Court granted the assessee the liberty to revive the appeal, indicating that a decision on the merits would be deferred until the related appeal was decided.
The High Court held that no substantial question of law arises for consideration in this appeal. Regarding the comparables excluded by the TPO, the Tribunal rightly remanded the matter back to the TPO for verification of their FAR with that of the assessee, as the TPO had not provided sufficient reasons for rejection. The Revenue was not aggrieved by this remand. Concerning M/s Annanya Interface & Controls Pvt. Ltd. and Dembla Valves Ltd., the Tribunal's factual finding of functional dissimilarity was supported by the record, and the Revenue failed to demonstrate perversity. For Abak Elcerofab Engg Pvt. Ltd., the remand was due to unclear manufacturing activity. For Limitorque India Ltd., Flowserve India Controls Pvt. Ltd., and Koso India Ltd., the Tribunal remanded the matter to verify the RPT filter at 15%, which is a rational approach. The Court relied on its coordinate bench's decision in SAP Labs India (P) Ltd. v. Income Tax Officer, which held that the selection or exclusion of comparables is a factual and data-driven exercise and that the TPO cannot arbitrarily substitute comparables. The Revenue failed to point out any perversity or incorrect factual findings by the Tribunal. Therefore, the appeal was rejected.
The High Court of Karnataka, in its judgment, relied on a coordinate bench's decision in SAP Labs India (P) Ltd. v. Income Tax Officer. The court held that the selection or exclusion of comparables is a factual and data-driven exercise, and the Transfer Pricing Officer (TPO) cannot reject taxpayer comparables merely to substitute them with a standard departmental set. Such determination must strictly conform to Rule 10B of the Income-tax Rules. The Tribunal had excluded M/s Infosys Ltd., M/s Persistent Systems Ltd., and M/s Thirdware Solutions Ltd. because they were functionally dissimilar to the assessee, a software development service provider. Infosys owned significant intangibles and had revenue from software products, Persistent Systems was engaged in product development and design services, and Thirdware Solutions was involved in product development and earned revenue from license sales. The court found these exclusions justified, noting that these companies were part of a standard departmental set, a practice deprecated by the coordinate bench. The court also noted that M/s Cigniti Technologies Ltd. and M/s SQS India BFSI Ltd. were restored to the TPO for fresh consideration, meaning the Revenue was not aggrieved by this finding. Consequently, the substantial questions of law were answered in favor of the assessee and against the Revenue.
The High Court, in its judgment, referred to a coordinate bench's decision in SAP Labs India (P) Ltd. V. Income Tax Officer (dated 28.08.2026). The Court found that the principle laid down in SAP Labs India (P) Ltd. was aptly applicable to the present case. Specifically, the Court highlighted the finding that the selection or exclusion of comparables is essentially a factual and data-driven exercise, and the TPO cannot reject the taxpayer's comparables merely to substitute them with a standard departmental set. Such determination must strictly conform to the requirements of Rule 10B of the Rules. The Court noted that the present appeal pertained to the exclusion of M/s. Larsen and Tourbo Infotech Ltd. for being functionally dissimilar to the assessee. The Court observed that the assessee provides software development services, while M/s. Larsen and Tourbo Infotech Ltd. is involved in multiple business segments including services, industrials, and telecom, and operates in various domains like banking, financial services, insurance, media, and entertainment. Given this factual scenario, the Court agreed that M/s. Larsen and Tourbo Infotech Ltd. is not functionally similar to the assessee. The Court also noted that the Revenue's counsel failed to point out any perversity in the Tribunal's factual finding on functional dissimilarity. Therefore, the Court concluded that the substantial questions of law admitted in the appeal should be answered in favour of the assessee and against the Revenue. The appeal filed by the Revenue was dismissed.
The High Court held that export incentives, such as DEPB, which arise from the assessee's business of exporting gherkins, have a direct nexus with its export activity and therefore cannot be excluded from operating income. Relying on the Bombay High Court's decision in CIT v. Welspun Zucchi Textiles Ltd., the Court found the Tribunal justified in directing the TPO to treat export incentives as part of operating income for determining the Arm's Length Price (ALP). Consequently, substantial question of law No.1 was answered in favour of the assessee. Regarding the second substantial question of law, the Court agreed with the Tribunal's finding that comparables selected by the TPO were not functionally similar to the assessee's business of growing, processing, and exporting gherkins, as they were involved in general food processing. The Court found no perversity in the Tribunal's decision to remand the matter for fresh consideration of comparables. Thus, substantial question of law No.2 was also answered against the Revenue. The appeal was dismissed.
The High Court observed that the ITAT had answered grounds 3 to 7 and 20, but incorrectly recorded that no other grounds were urged. The Court noted that grounds 8 to 19 were raised in the appeal memorandum and elaborately recorded by the Tribunal in its paragraph 4. Since the Tribunal had the submissions on record, it ought to have answered these grounds. Consequently, the impugned order of the ITAT was set aside specifically concerning the non-consideration of grounds 8 to 19. The matter was remitted back to the ITAT for consideration of these grounds. The substantial questions of law and contentions of both parties were left open for the Tribunal to decide.
The High Court held that viewed from any angle, the impugned penalty orders and demand notices dated 23.05.2025 and 26.05.2025 could not be sustained on the ground of limitation. The action taken by the Revenue for levying penalty under Section 271DA of the Act was clearly beyond the period of limitation prescribed under Section 275(1)(c) of the unamended Act. The Court noted the divergent views of the co-ordinate benches in K. Umesh Shetty and Ganesh Agarwal regarding the commencement of the limitation period. However, it found that in the present case, whether the limitation commenced from the date of the assessment order (as per Umesh Shetty) or from the date of receipt of the proposal by the Joint Commissioner (as per Ganesh Agarwal), the show cause notice issued on 12.12.2024 was beyond the prescribed six-month period. Therefore, the appeals were dismissed, upholding the learned Single Judge's decision.
The High Court held that viewed from any angle, the impugned penalty orders and demand notices dated 23.05.2025 and 26.05.2025 could not be sustained on the ground of limitation. The action taken by the Revenue for levying penalty under Section 271DA of the Act was clearly beyond the period of limitation prescribed under Section 275(1)(c) of the unamended Act. The Court noted the divergent views of the co-ordinate benches in K. Umesh Shetty and Ganesh Agarwal regarding the commencement of the limitation period. However, it found that in the present case, whether the limitation commenced from the date of the assessment order (as per Umesh Shetty) or from the date of receipt of the proposal by the Joint Commissioner (as per Ganesh Agarwal), the show cause notice issued on 12.12.2024 was beyond the prescribed six-month period. Therefore, the appeals were dismissed, upholding the learned Single Judge's decision.
The High Court upheld the Single Judge's decision, finding that the penalty orders and demand notices were indeed issued beyond the period of limitation prescribed under Section 275(1)(c) of the Income Tax Act, 1961.
The High Court held that the assessee failed to produce sufficient evidence to substantiate the claim of business loss. The Court agreed with the Tribunal that once amounts are treated as bad and doubtful debts, they cannot be treated as business loss without adequate proof.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The Court held that the limitation for penalty proceedings under Section 275(1)(c) commences from the date of issuing notice under Section 274 by the Joint Commissioner. It clarified that the Joint Commissioner must issue this notice within six months of receiving the Assessing Officer's proposal, and the penalty order must be passed within six months from the end of the month the notice was issued. The Court also held that recording satisfaction by the Joint Commissioner is not a statutory requirement.
The Tribunal held that for STA No. 07/2025, the revision order dated 30.04.2024 passed by the SMR Authority under Section 64(1) of the KVAT Act was barred by limitation. The original order was dated 28.02.2015, and while a letter calling for records was issued on 11.01.2018 (within four years), the revision order itself was passed beyond five years from the original order. Therefore, the order was set aside. Similarly, for STA No. 05/2025, the revision order dated 21.10.2024 was found to be barred by limitation as it was passed beyond five years from the order dated 13.09.2019 sought to be revised. Consequently, this order was also set aside. For STA No. 2/2025, the revision order dated 31.07.2024 was held to be barred by limitation, being passed beyond five years from the order dated 29.09.2018. This order was also set aside. In STA No. 03/2023, the appeal was allowed in part, and the order of the SMR Authority dated 16.11.2022 was set aside and remitted for fresh consideration. The substantial questions of law were left unanswered. In STA No. 11/2022, the appeal was allowed, and the order of the SMR Authority dated 29.06.2022 was set aside. In STA No. 12/2022, the appeal was partly allowed, with some questions answered in favour of the assessee and others in favour of the revenue, and the order of the SMR Authority dated 28.06.2022 was set aside to the extent indicated.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court held that the limitation period under Section 275(1)(c) of the Income Tax Act, 1961, for imposing penalty under Section 271DA commences from the date of issuance of notice under Section 274 of the Act by the Joint Commissioner of Income Tax. The Court reasoned that a proposal or reference forwarded by the Assessing Officer to the Joint Commissioner for consideration of penalty initiation cannot be construed as the initiation of proceedings. Proceedings are initiated only upon the issuance of a notice under Section 274 by the Joint Commissioner. The six-month period prescribed under Section 275(1)(c) for passing a penalty order shall commence from the end of the month in which such notice is issued. Furthermore, the Joint Commissioner must issue the Section 274 notice within six months from the end of the month in which the proposal/reference is received from the Assessing Officer. If the notice is issued beyond this period, the proceedings are time-barred. The Court found that in some of the appeals (WA Nos. 1991, 1994, 1996, 2021), the notices were issued beyond six months from the date of the Assessing Officer's proposal, rendering the penalty orders time-barred. In the remaining cases, the notices were issued within the prescribed period. Accordingly, the penalty orders in the former set of appeals were declared time-barred, while those in the latter set were upheld.
The High Court set aside the Single Judge's order and remitted the matter back. This was done in light of a Supreme Court order that addressed similar issues arising from amendments to the Income Tax Act, particularly the insertion of Section 147A.