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Article
When the Executive clarifies but the Courts disagree: Revisiting the binding nature of CBDT Circulars in Samtex Fashions Ltd.
By S. Vasudevan, Venkat Ramanan and Krishna Laasya
The article analyses the long-standing debate in Indian tax law: what happens when the Central Board of Direct Taxes adopts one interpretation of a provision, but the courts adopt another. It discusses the recent Supreme Court decision in the case of Samtex Fashions Ltd., relating to availability of a deduction under Section 80HHC of the Income Tax Act, 1961 in respect of export quota premium. According to the authors, the CBDT Office Memorandum dated 23 February 1998 deserved a purposive and liberal construction and thus instead of being treated as an impermissible attempt to override the statute, it could legitimately have been regarded as an interpretative aid reflecting the broader legislative objective of extending Section 80HHC relief to export-linked incentives.
Notifications and Circulars
Income Tax Rules, 2026 amended by 4th and 5th Amendment Rules – Few amendments applicable retrospectively
Statement of Financial Transactions for Depository and Mutual Fund Transactions – Guidelines for preparation and submission of statement specified
New Universities, Colleges and other institutions approved for purposes of Section 45(3)(a)(i)
Audit – Timelines extended for filing various audit reports for FY 2026-27
Ratio Decidendi
Foreign exchange gain on ECB utilized for acquisition of indigenous assets is taxable under Section 43AA and not eligible for treatment under Section 43A – ITAT Mumbai
No violation of natural justice where written submissions duly considered despite denial of oral hearing – ITAT New Delhi
Reassessment proceedings to be quashed where reopening is based on desire for further scrutiny rather than information suggesting escapement of income – Telangana High Court
Limitation under Section 153B must be computed after giving effect to Explanation-based exclusions, TOLA cannot be used to indefinitely extend assessment timelines – Madras High Court
Virtual rendition of services from outside India does not amount to rendering services in India – ITAT New Delhi
Managerial and technical services performed outside India are not FTS under Article 12(4) of the India-China DTAA – ITAT New Delhi
Tax Residency Certificate is not conclusive; Revenue must establish treaty abuse before invoking limitation of benefits provisions against a Mauritius resident – ITAT New Delhi
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