We are pleased to present the inaugural edition of The Tax Controversy Chronicle - Grant Thornton Bharat’s quarterly publication that captures the pulse of India’s evolving tax litigation landscape. The October 2025 edition brings together key tax rulings and developments across direct tax, indirect tax, transfer pricing, and the Foreign Exchange Management Act (FEMA).
At Grant Thornton Bharat, our commitment is to deliver #ExceptionalCare through practical guidance and deep insights into tax disputes, enabling clients to navigate complex challenges with clarity.
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 manage risks proactively, anticipate litigation outcomes, streamline tax controversy management, and stay ahead in India’s dynamic tax and regulatory framework.
Key highlights:
In this edition, we analyse several significant tax rulings, including:
- Direct tax rulings: The Supreme Court (SC) holds that the foreign enterprise’s control over an Indian hotel’s operations, compliance, and profit-linked earnings established a fixed place PE under the India-UAE DTAA. Upholding the Delhi HC’s case, the SC rules that the income was attributable to a PE and taxable in India.
- Indirect tax: The SC rules that DTA to SEZ supplies are not exports under Section 12 of the Customs Act; hence, the export duty applies only when goods physically leave India. In another case, the Sikkim HC (Division Bench) sets aside the Single Judge order; it holds that the refund of unutilised ITC on business closure is not permissible.
- Foreign Exchange Management Act: The Appellate Tribunal holds that the FEMA residency must be determined by an actual physical presence in India during the preceding financial year, not by intention alone. The assessee’s purchase of agricultural land, while classified as a non-resident, violates the FEMA provisions.
- Transfer pricing: The SC’s judgement provides a split view on the interplay of sections for the determination of the limitation period with regard to the DRP Directions.
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