The Telangana High Court dismissed a writ petition filed by the taxpayer seeking a mandamus to declare the initiation of general anti-avoidance rules (GAAR) proceedings by the Principal Commissioner of Income-tax under the Income-tax Act, 1961 (the Act) as it lacked jurisdiction. The High Court upheld the Revenue’s action in applying GAAR provisions on bonus-stripping transactions on shares before the specific amendment into the Act.

While concluding its observations, the court relied on the landmark Supreme Court decision and reiterated the settled principle of law that tax planning is legitimate if it is within the framework of law.

The Supreme Court ruled that a shopping mall could be considered a ‘plant’ if its construction is essential for supplying services such as renting or leasing, thus allowing input tax credit (ITC). This decision hinges on the functionality test, assessing whether the building is integral to business operations.

Accordingly, this decision must not be read as a blanket uplifting of the restriction on construction-related credits. A robust fact-finding exercise is required, supported by adequate documentation to conclude whether ITC would be available based on this Supreme Court decision.

Considering the resounding success of the direct tax ‘Vivad se Vishwas’ scheme introduced in 2020, wherein as many as 1,46,701 disputes were settled and translated into a tax collection of approximately INR 1 lakh crore, the government, introduced a similar scheme in 2024 to reduce direct tax litigation.

In line with its policy initiative to allow Indian companies to list their securities directly on international exchanges in permissible jurisdictions, the Government of India – in the first phase – has permitted direct listing of equity shares by an Indian public company on the ‘India International Exchange’ and the ‘NSE International Exchange’ located in Gujarat International Finance Tec-City, International Financial Services Centre (GIFT-IFSC).

Following the recommendations of the 53rd GST Council meeting, the CBIC issued circulars aiming to simplify GST compliance and reduce litigation. Key topics included taxability of employee stock options, reverse charge mechanism supplies, post-sales discounts, place of supply rules and input tax credit on life insurance premiums. The circulars also address the tax treatment of salvage values in motor insurance, warranty replacements and services between related parties. Overall, these clarifications are intended to ease business operations and resolve ongoing disputes.