Tax Controversy Chronicle - October 2026

This publication presents a curated selection of landmark judgements, concise case insights, and a watchlist of key pending matters 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 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) holds that hospitality and entertainment services on a cruise do not alter its essential character as carriage of passengers for presumptive taxation under Section 44B. 
  • In another case, the SC rules that revision under Section 264 cannot substitute a revised tax return or reopen matters settled by the Income-tax Settlement Commission.
• Indirect tax -
  • The SC affirms that the supplier’s payment of tax to the government is a mandatory precondition for ITC entitlement under Section 16(2)(c). 
  • The another case, the SC held that the omission of Rule 96(10), without a saving clause, applies to all pending IGST refund proceedings. 
  • The Delhi HC rules out a 10% pre-deposit for penalty-only appeals arising from show-cause notices issued before 1 October 2025.
  • In addition, the Gujarat HC holds that corporate guarantees were not taxable before 26 October 2023 and that, thereafter, the 1% deemed valuation cannot override the actual consideration.
• Foreign Exchange Management Act - The Appellate Tribunal holds that the BCCI’s remittances to Cricket South Africa for IPL-2009 hosting services constitute current account transactions not requiring prior RBI approval.
• Transfer pricing - The Karnataka HC reaffirms that benchmarking must follow Chapter X and Rule 10B, while clarifying the treatment of turnover and RPT filters, foreign exchange fluctuations, and the ±5% tolerance range. 
• The Mumbai ITAT rejects an ad hoc FAR-based revenue allocation and upholds TNMM benchmarking based on functionally comparable distribution businesses.

Read the report

The Tax Controversy Chronicle

October 2026 edition

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