RNM Tax Alert – Direct Tax Part for August 2025

• NOTIFICATION G.S.R. 555(E) [NO. 133/2025/F. NO. 370142/27/2025-TPL], DATED 18-8-2025

The CBDT notifies monetary limits for salary u/s 17(2)(iii) & tax-free medical treatment abroad. 

• For the purposes of item (c) of sub-clause (iii) of clause (2) of section 17 of the Act, the prescribed income under the head “Salaries” shall be four lakh rupees.

• For the purposes of clause (vi) of Proviso to clause (2) of section 17 of the Act, the prescribed gross total income shall be eight lakh rupees.”.

• INSTRUCTION NO. F. NO. 285/46/2021-IT (INV.V)/88, DATED 18-8-2025

The CBDT amends instruction to not initiate prosecution in cases where penalty under Black Money Act isn’t imposed or imposable in relation to assets covered under the proviso to aforesaid sections i.e. an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed a value equivalent to Rs.20 lakh at any time during the relevant previous year.

Important Judicial Precedents

• Land not used for any agricultural purpose couldn’t be treated as agricultural land; SLP dismissed

[2025] 176 taxmann.com 1006 (SC) Prashant Jaipal Reddy vs. Income-tax Officer

SLP dismissed against order of High Court that where assessee sold a plot of land and claimed that it was an agricultural land and, thus, not a capital asset, since land in question was not used for any agricultural purpose and was embedded with commercial opportunity and viability for commercial exploitation, income derived from sale of such land was chargeable to tax.

• No sec. 68 additions on outstanding loan balance if assessee proved creditworthiness of loan creditor: ITAT

[2025] 177 taxmann.com 70 (Delhi – Trib.) ITO vs. Mansarover Exim (P.) Ltd

Where assessee had taken unsecured loan from third party and had produced documents such as confirmation copy of account statement, bank statement of lender, audited financial statement, tax audit report, copy of ITR etc. to prove identity, creditworthiness of lender and genuineness of transaction, impugned addition made by Assessing Officer under section 68 treating said loan as bogus was to be deleted.

• SLP dismissed against HC order that AO’s reopening based on GSTR data was unjustified as assessee had furnished GST details

[2025] 177 taxmann.com 684 (SC) Income -tax Officer vs. Parmukh Exports

SLP dismissed against order of High Court that where Assessing Officer issued reopening notice on ground that as per information available in GSTR data, assessee had made sales and purchases of huge amount but it had not furnished sales and purchase register, since assessee had placed on record details of Form GSTR-I wherein all details of sale and purchase as submitted to GST department were provided to Assessing Officer, impugned reopening notice was unjustified.

• No reassessment to tax housewife in whose name flat was purchased by husband from his own funds: HC

[2025] 177 taxmann.com 470 (Bombay-HC) Hetal Vipul Shah vs. ITO

Where assessee explained that she was a housewife and purchase of flat was done entirely by her husband from his own funds/sources and not by her and she had not contributed anything towards purchase of said flat and her name was added only for sake of convenience, impugned reopening notice issued against assessee on ground that she had not disclosed correct income in her return was unjustified.

• Common Area Maintenance charges not considered rent; Sec. 194C applies: HC

[2025] 177 taxmann.com 477 (Delhi-HC) CIT vs. Diamond Tree

Assessing Officer treated assessee as ‘assessee-in-default’ for not having deducted TDS at rate of 10 per cent as prescribed under section 194-I on common area maintenance charges – Tribunal held that payments towards common area maintenance charges were in nature of contractual payments that were made for availing certain services/facilities and not for use of any premises/equipment, thus, same would be subjected to deduction of tax at source under section 194C – Whether CAM charges could not be construed as payment of rent for occupying premises in question, thus, same would be covered under provisions of section 194C – Held, yes [Para 7][In favour of assessee]

• Statements recorded during survey have no evidentiary value; ITAT deleted additions made on basis of such statements

[2025] 177 taxmann.com 5 (Jaipur – Trib.) Pushpa Vidya Niketan Samiti vs. ACIT

Where Assessing Officer made addition in hands of assessee-school on basis of statement of accountant that lower fee collection had been disclosed as compared to actual fee collected by assessee, since documents in question were not found or impounded from assessee’s premises but in course of survey conducted against a third party, presumption set out in section 292C would not apply to assessee and thus, impugned addition was to be deleted.

• Revaluation of assets of firm not taxable in hands of partners as perquisite under section 28(iv) : ITAT

[2025] 177 taxmann.com 316 (Chennai – Trib.) ITO vs. Damayanti Ramachandran

Where assessee-HUF, partner in two firms, received certain amount on account of goodwill on revaluation of firms, since no benefit or perquisite arose to partner in course of business carried on, section 28(iv) could not be applied to bring sum in question to tax in hands of partners of firm.