The Tax Controversy Chronicle – July 2026

This publication presents a curated selection of landmark judgements, concise case insights, and a watchlist of key pending matters that are expected to shape the future of tax jurisprudence. Our objective is to empower stakeholders to proactively manage risks, anticipate litigation outcomes, streamline tax controversy management, and stay ahead in India’s dynamic tax and regulatory landscape.

Key highlights: 

In this edition, we analyse several significant tax rulings, the summary of which is as follows:

• Direct tax -
  • The Supreme Court (SC) held that an Association of Persons (AOP) member’s share in the gross sale proceeds is taxable as business income; a reassessment is valid where no opinion was previously formed. 
  • In another case, the Delhi High Court (HC) ruled that the salary-cost reimbursement for seconded employees is taxable as fees for technical services (FIS) under the India-U.S. Double Taxation Avoidance Agreement (DTAA). 
• Indirect tax -
  • The SC upheld the GST on actionable claims involving monetary stakes, holding that the skill-versus-chance distinction is irrelevant. 
  • The Rajasthan HC held that the Build-Operate-Transfer (BOT) highway construction constituted a taxable barter supply, with the toll collection rights constituting consideration.
  • In addition, the SC declined to interfere with the Bombay HC’s ruling that assignment of leasehold rights is not a taxable supply under GST. 
• Foreign Exchange Management Act - The Appellate Tribunal held that export proceeds must be actually realised and repatriated; mere follow-ups with buyers or deposits in local currency abroad are insufficient.
• Transfer pricing - The Bombay HC held that excess royalty refunded under an advance pricing agreement (APA) is not taxable, as only income ultimately retained by the assessee can be brought to tax.

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The Tax Controversy Chronicle

July 2026 edition

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