JOURNAL MARCH 2026

Ahmedabad Chartered Accountant Journal March, 2026 1043TMVolume : 49 Part : 12 March, 2026E-mail : [email protected] Website : www.caa-ahm.orgAhmedabad Chartered Accountant JournalIn this IssueContents Author's Name Page No.- caaahmedabadJournal CommitteeCA. Tarjani Shah CA. Shreyanshi RakhashiyaChairperson ConvenerCA. Shivang Chokshi CA. Jayesh SharedalalE. C. Representative Past PresidentMembersCA. Ashok Kataria CA. Disha Shah CA. Labdhi ShahCA. Mayur Zanjrukiya CA. Mira Shah CA. Monish ShahCA. Niket Rasania CA. Rajni Shah CA. Yash Shah - When Ego Wages War, Humanity Pays the Price CA. Rajni Shah 1046 Editorial CA. Tarjani Shah 1047From the President CA. Rushabh Shah 1049Compliance Tracker CA. Manthan Khokhani 1051ArticlesThe Great Divide CA. Tapas Ruparelia 1052Red Flags & Early Warning Signals - Borrower Behaviour, CA. Disha Shah 1056Transaction Pattern & Accounting MonitoringYear-End Compliance Checklist: 35 Critical Tasks for FY 2025-26 CA. Harshil Sheth 1059Closure and FY 2026-27 ReadinessThe New Indian Labour Codes : A Transformative Shift in Employment Law CA. Krishna Shah 1065When Procedure Defeats Justice : How Technical Lapses are CA. Vishwa Panchal 1072used Against TaxpayersDirect TaxesGlimpses of Supreme Court Rulings Adv. Samir N. Divatia 1074From the Courts CA. Jayesh Sharedalal 1075Tribunal News CA. Yogesh G. Shah & 1079CA. Aparna ParelkarUnreported Judgements CA. Sanjay R. Shah 1087Judicial Analysis Sr. Advocate Tushar Hemani 1090Controversies CA. Kaushik D. Shah 1096TM

1044 Ahmedabad Chartered Accountant Journal March, 2026TMContents Author's Name Page No. FEMA & International TaxationFEMA & International Taxation CA. Dhinal A. Shah & 1098CA. Sunil ManglaniFEMA Updates CA. Dr. Savan R. Godiawala 1102GULF Insights CA. Sanskar Jain 1105 Indirect TaxesGST and VAT Judgments and Updates CA. Bihari B. Shah & 1107CA. Vishrut R. ShahAdvance Ruling under GST CA. Monish S. Shah 1110Corporate Law & OthersInd AS Insights CA. Niket Rasania 1113Corporate Law Update CA. Naveen Mandovara 1116GujRERA Corner CA. Manan Doshi 1119Capital Markets CA. Karan P. Vora 1124From Published Accounts CA. Pamil H. Shah 1129From the Government CA. Ashwin H. Shah & 1132CA. Kunal A. ShahIT Corner CA. Hency Shah 1134CSR Stories CA. Siddharth Bhatt 1137Association News CA. Ashish Sharma & 1139CA. Sulabh PadshahFrom the Desk of Our Committee Leaders 1141Messages from the Journal Committee Team 1144ACAJ Crossword Contest 1147

Ahmedabad Chartered Accountant Journal March, 2026 1045TMAttentionMembers / Subscribers / Authors / Contributors1. Journals are carefully posted. If not received, you are requested to write to the Association's Office within onemonth. A copy of the Journal would be sent, if extra copies are available.2. You are requested to intimate change of address to the Association's Office.3. Subscription for the financial year 2025-26 is ` 1500/-, single copy ` 150/- (if available).4. Please mention your membership number in all your correspondence.5. While sending Articles for this Journal, please confirm that the same are not published / not even meant forpublishing elsewhere. No correspondence will be made in respect of Articles not accepted for publication,nor will they be sent back.6. The opinions, views, statements, results published in this Journal are of the respective authors / contributorsand Chartered Accountants Association, Ahmedabad is neither responsible for the same nor does it necessarilyconcur with the authors / contributors.7. Life Membership/Annual Membership and Other Fees F. Y. 2025-26 Amount in `Basic GST Total1. Admission Fees 500 90 5902. Annual Membership Feesa. If Paid Prior to june 30 of each financial year :i. In case of membership (of ICAI) for a period of less than or equal to five years 750 - 750ii. In case of membership of (ICAI) for a period more than five years, 800 - 800b. If paid after june 30 of each financial year :i. In case of membership (of ICAI) for a period of less than or equal to five years, 900 - 900ii. In case of membership of (ICAI) for a period of more than five years 980 - 9803. Life Membership Feesi. In case of membership (of ICAI) for a period of less than or equal to five years 8000 1440 9440ii. In case of membership of (ICAI) for a period more than five years 10000 1800 118004. Brain Trust Membership Feesa. Individual Membership Feesi. In case of membership (of ICAI) for a period of less than or equal to five years 1000 180 1180ii. In case of membership of (ICAI) for a period more than five years 1500 270 1770b. Flexi Firm/Corporate Membership Fees*** 3600 648 4248*** Registered Firm/Corporate can nominate any two participants from their firm for each Brain Trust Meeting.Additional Representatives can be nominated @1800/- plus GST per participant subject to maximum of 20 participantper firmPublished ByCA. Tarjani A. Shah, on behalf of Chartered Accountants Association, Ahmedabad, 2nd Floor, Darshak, 14/A,Swastik Society, Opp. Shrey Hospital, Navrangpura, Ahmedabad - 380 009 Phone : +91 79 40392596While every effort has been made to ensure accuracy of information contained in this Journal, the Publisheris not responsible for any error that may have arisen.Professional AwardsThe best articles published in this Journal in the categories of 'Direct Taxes', 'Company Law and Auditing' and 'AlliedLaws and Others' will be awarded the Trophies/ Certificates of Appreciation after being vetted by experts in theprofession. Articles and reading literatures are invited from members as well as from other professional colleagues.Printed : Pratiksha Printer, Ahmedabad Mobile : 98252 62512 E-mail : [email protected]

1046 Ahmedabad Chartered Accountant Journal March, 2026TMAcross the globe today, man-made crises havemade ordinary lives miserable. Not because ofanything people did wrong, but simply because theyexist in the wrong place at the wrong time. Wars,conflicts, and aggression continue to rage, and it isthe common man across the world who bears theheaviest burden.At the heart of it all lies ego. The uncheckedarrogance of a few, and their obsession with powerand conquest, has pushed the world into adangerous and deeply unsettling place. Nations arebeing divided into pieces, when what humanity sodesperately needs is peace. That one letter makesall the difference and yet, it seems further away thanever.We seem to have forgotten a principle that was onceconsidered basic human wisdom: live and let live.Somewhere along the way, coexistence gave wayto competition, and cooperation gave way to conflict.Adding fuel to this already raging fire is religiousfanaticism, which, rather than bringing peopletogether under the banner of faith, has only deepeneddivides and justified violence.What the world needs at this hour is not moreweapons or stronger armies. It needs a sane,When Ego Wages War,Humanity Pays the PriceCA. Rajni [email protected] group of voices of leaders, thinkers, andcitizens who are willing to stand up and say: enough.People who can guide, advise and push for dialogueover destruction.For those of us watching from the sidelines, this isnot the time for indifference. Staying alert and awareis our responsibility. And beyond awareness, actingin good faith, however small. Helping the needy,extending charity to those affected by conflict, andsupporting humanitarian causes are perhaps themost meaningful things we can do right now.In the end, after all the analysis and all thearguments, what remains is a simple prayer thatsanity prevails. That leaders choose wisdom overpride. That peace is achieved sooner rather thanlater, before more lives are lost and more futuresare stolen.The world has seen worse and found its way back.We can only hope and act so that it does again.

Ahmedabad Chartered Accountant Journal March, 2026 1047TMMarch Closure, April Beginning : The Cycle That Drives Every BusinessBy the time this March issue of our journal reaches your hands in April, we will have already stepped into theTax Year 2026–27. This transition perfectly reflects the true nature of our profession. While we close one year,we simultaneously begin preparing for the next.March is not just the last month of the financial year. It is the month that defines the quality of the entire year’swork. It is the period of discipline, deadlines, compliance reviews, tax planning closure, and financial finalization.For businesses, March answers the most important question: Where do we stand today?April answers the next question. Where do we want to reach?For any business planning expansion, new targets, process improvements, or even new incorporations,April provides the cleanest starting point. Systems implemented at the beginning of the financial year, whetheraccounting processes, compliance trackers, internal controls, or technology adoption, get the benefit ofconsistency throughout the year. A strong April often reduces the pressure of the next March.This year also brings a simple but important conceptual shift. Where we earlier used concept of PreviousYear and Assessment Year, and now the idea of a Tax Year simplifies understanding and aligns taxationlanguage closer to business thinking. Sometimes clarity itself becomes the biggest reform.For us as Chartered Accountants, this period is more than compliance season. It is our opportunity to guidebusinesses in converting year end learnings into year beginning strategies.As I write this editorial for the March issue reaching you in April, it also marks my last editorial of this journeywhich began in April 2025. I remain grateful for the opportunity to contribute, learn, and stay connected withsuch a knowledge driven professional community.To know more about my journey as Journal Committee Chairperson and Messages from the Journal CommitteeTeam read Part 2 of editorial.As always, the cycle continues.March teaches lessons. April gives opportunity to implement them.CA. Tarjani [email protected]

1048 Ahmedabad Chartered Accountant Journal March, 2026TMJournal Committee Journey | The Year 2025–26It all started with a simple question from President Rushabh Shah:”Will you head the Journal Committee thisyear?”From our very first committee meeting, we discussed how we could add more value to the journal. Wefocused on introducing new initiatives, starting new columns, bringing more diverse articles, and mostimportantly, encouraging young members to step into the world of writing. Seeing these ideas take shapethrough the year has been one of the most satisfying parts of this journey.None of this would have been possible without the constant guidance and encouragement of our seniors.A special note of gratitude:Rajni Sir, for always being available whenever guidance was needed.Ashok Sir, for his constant support in final proofreading and for giving us one of the most loved journalcrosswords throughout the year.Jayesh Sir, for being open to new ideas from our very first conversation and encouraging us to think differently.Shivang Sir, for always encouraging and appreciating the journal’s new initiatives, whether it was the coverdesign, themes, or content direction.Monish Sir, for always being available for the association, helping resolve my doubts, and supporting variousresponsibilities.Our Convener Shreyanshi played a very important role in designing beautiful cover pages throughout theyear and also helped in improving the journal’s LinkedIn visibility.I also thank all our committee members for their valuable contributions, whether it was bringing good articles,vetting content, or contributing articles themselves.A special appreciation to our young and energeticmembers, Disha, Labdhi, Mayur, Mira, Niket and Yash, for their time, efforts, and enthusiasm in making thisyear meaningful.I am also thankful to Ashishbhai for sharing association news regularly and encouraging journal initiatives. Mythanks to the IT Committee for contributing technology-focused articles and to Tapasbhai for smooth coordinationsupport.A special mention to the backbone support from Team Association. Thank you Jitubhai for your constantcoordination support and our publication partner Kamalbhai for ensuring timelines were maintained and thejournal production process remained smooth throughout the year.My sincere gratitude to all the article writers,column contributors and esteemed authors whose knowledge and efforts truly enriched the journal. Thisyear, we covered many new topics and perspectives. By the time you read this, the journal for this year hascrossed 1150 pages of knowledge. This reflects the collective effort, commitment and belief in knowledgesharing.Warm regards,CA. Tarjani ShahEditorial

Ahmedabad Chartered Accountant Journal March, 2026 1049TMSome years pass. Some years leave a mark. This one leaves a legacy.Dear Members,As I sit down to write this final message of the year, I am filled with deep gratitude and quiet pride. March isalways a month of intensity for our profession - the year-end pressure, the deadlines, the demand for precision.And yet, this March has been something more. It has been a culmination. Of efforts, of milestones, of a yearthat has truly lived up to the promise of being the beginning of our 75th year. Looking back at where we startedand where we stand today, I can say with conviction: this has been a year that the Chartered AccountantsAssociation, Ahmedabad, will remember for a long time.The most defining moment of this month and perhaps of the entire year was the unveiling of CAAA’s 75thYear Logo. More than a design, the logo is a declaration. It carries the weight of 75 years of service, credibility,and contribution, and it carries within it the aspiration of everything we are yet to become. The tagline thataccompanies it -”Celebrating Legacy – Shaping the Future”- says it all. We are not a body that merely looksback with nostalgia. We are an institution that draws strength from its past to build boldly into the future. Seeingthe logo come to life at our special session was a moment of genuine emotion for many of us - a reminder ofthe shoulders we stand on, and the responsibility we carry forward.The logo launch was part of a landmark Special Session held on 18th March at H T Parekh Auditorium,AMA- an evening that embodied exactly what CAAA stands for. The first session, on Path-breaking Judgementsof the Supreme Court of India, was delivered by the eminent Sr. Adv. Saurabh Soparkar, who broughtclarity, depth, and perspective to judicial developments that deeply impact our profession. The secondsession, on Technology in Professional Practice, was led by Mr. Mrugank Parikh, who brought into sharpfocus how technology is no longer optional for a practising CA - it is essential. Together, these two sessionscaptured the dual imperative of our time: staying grounded in the law while embracing the future with openarms.This month also saw the continuation and deepening of our knowledge agenda. The Income Tax ReadingSeries brought members together to deliberate, question, and reason through the new Income Tax framework- not just to understand it, but to truly internalise it. The Transfer Pricing Series addressed a domain ofgrowing complexity and consequence, equipping our members with rigour for an increasingly interconnectedbusiness environment. And, as always, the Brain Trustremained the forum where our most thoughtful memberscame together to think critically, challenge conventional wisdom, and shape the intellectual direction of theAssociation.March also marked an exciting new chapter with our partnership with the Wadhwani Foundation. Thiscollaboration opens doors for our members and our initiatives to benefit from a world-class ecosystem focusedon skills, entrepreneurship, and economic growth. It is a partnership that reflects our belief that CAAA mustalways be reaching outward — building bridges with institutions that share our commitment to professionalFrom the PresidentCA. Rushabh [email protected]

1050 Ahmedabad Chartered Accountant Journal March, 2026TMexcellence and national progress. We look forward to what this association will bring to fruition in the monthsahead.As I reflect on the year gone by, I am struck by how much we have accomplished together. This year, CAAAwelcomed over 150 new members- a number that is not just a statistic, but a validation. It tells us that theprofession trusts CAAA, that our programmes are relevant, and that our community is one that people genuinelywant to be part of. We ran Techathon Edition 1, establishing CAAA as a force at the intersection of technologyand the CA profession. We organised the Articleship Mela, creating a meaningful bridge between aspiringstudents and the profession. We played cricket, celebrated together, grew together, and engaged with ourparent body through the Union Budget Session with WIRC. It has been a year worthy of the 75th year it usheredin.As this year draws to a close and FY 2026–27 begins, the 75th year celebrations continue, and with the logonow unveiled, they have a symbol to rally around. “Celebrating Legacy – Shaping the Future” is not just atagline. It is our collective resolve. Every member who contributed this year, every speaker who shared theirknowledge, every committee member who worked behind the scenes, every young CA who attended theirfirst CAAA programme - you are all part of this story. And the best chapters are still ahead.Thank you for a remarkable year. Here’s to the next one - and to the 75 more that follow.Warm regards,CA. Rushabh ShahPresidentFrom the President

Ahmedabad Chartered Accountant Journal March, 2026 1051TMDate Compliance Applicable To02-Apr-26 Challan cum statement - 194M Furnishing challan-cum-statement (Form 26QD) for TDS onpayments to contractors/professionals by individuals/HUFsexceeding Rs. 50 lakh, made or credited in January 202607-Apr-26 GSTR - 7 GST TDS Deductors07-Apr-26 TCS Payment TCS Payment for March 202611-Apr-26 GSTR-1 (Monthly) Turnover > ` 5 Cr or opted monthly13-Apr-26 GSTR-6 Input Service Distributors (ISD)13-Apr-26 IFF (QRMP Scheme) Quarterly filers (QRMP)13-Apr-26 GSTR-5 (Non-Resident Taxable Person) Filing of GSTR-5 by Non-Resident foreign taxable personscarrying out transactions in India for November 2025.15-Apr-26 Provident Fund (PF) Filing of Provident Fund (PF) Electronic Challan cum Return(ECR) and payment of PF contributions for November 202515-Apr-26 CCFS Scheme Start of CCFS 2026 scheme for Private Limited and OPC15-Apr-26 ESIC Payment Filing of Employees’ State Insurance (ESI) return andpayment of ESI contributions for November 2025.15-Apr-26 Professional Tax Employers in applicable states18-Apr-26 CMP-08 Composition Tax payers20-Apr-26 GSTR-3B (Monthly) All regular GST filers20-Apr-26 GSTR-5A (OIDAR Services) Filing of GSTR-5A by non-resident providers of OnlineInformation and Database Access or Retrieval (OIDAR)services for November 2025.25-Apr-26 PMT-06 (QRMP Scheme) QRMP taxpayers30-Apr-26 TDS/TCS Payment30-Apr-26 QRMP Scheme Opt in / Opt out of GST Quarterly scheme for April to June202630-Apr-26 TDS Payment TDS Payment for March 202630-Apr-26 Composition Scheme GSTR-4 (FY 2025-26) for Composition taxpayersCA. Manthan [email protected]

1052 Ahmedabad Chartered Accountant Journal March, 2026TMWhen AI Writes the Draft, What Will Your Signature BeWorth?The February 2020 MomentMost of us remember where we were in early March2020. Business was running as usual — client meetingswere scheduled, returns were being filed, and ifsomeone told you that within three weeks your entireoffice would shut down and your staff would be workingfrom their dining tables, you would have laughed it off.The signs were there for those who were watching,but the majority (myself included) were caught off-guardby the sheer speed of the disruption.I bring this up because I believe we are at a remarkablysimilar inflection point — not with a virus, but with ArtificialIntelligence. Matt Shumer, an AI startup founder whohas spent six years building and investing in the space,wrote a widely circulated essay in February 2026 titled“Something Big Is Happening”, where he argued thatwe are currently in the “this seems overblown” phaseof a transformation that will be far bigger than mostpeople realise. His comparison to that pre-COVIDmoment is apt: by the time the disruption becomesobvious to everyone, the window to prepare will havenarrowed significantly.Now, what does this have to do with CharteredAccountants?Everything.The Illusion of SafetyLet me address the most common response I hearfrom fellow practitioners when AI comes up inconversation: “I tried ChatGPT last year, it wasn’t thatgreat.” Or: “AI cannot replace the judgment of a CA.”Or, my personal favourite: “Let AI try passing the CAFinal exam first.”The Great DivideThese reactions are understandable. And they werelargely correct — in 2023. The problem is, we are nolonger in 2023. In AI time, 2023 might as well be adecade ago. To put this in perspective, an organisationcalled METR tracks the length of real-world tasks thatAI can complete end-to-end without human help. Abouta year ago, AI could handle tasks that took roughly tenminutes. Then it was an hour. Then several hours. Themost recent measurement showed AI completing tasksthat would take a human expert nearly five hours. Andthis capability is doubling approximately every sevenmonths — with recent data suggesting it may beaccelerating to every four months.Here is the uncomfortable part: most professionals whohave dismissed AI are judging it based on the freeversion of tools from a year ago. As Shumer puts it,evaluating AI based on free-tier ChatGPT from 2024 islike evaluating the state of smartphones by using a flipphone. The professionals who are paying for the latesttools and actually integrating them into daily workflowssee where this is going. And they are positioningthemselves accordingly.What the Data Actually SaysLet us set aside opinions and look at the evidence.Three major reports published recently paint aremarkably consistent picture for knowledge workerslike us.The World Economic Forum’s Future of Jobs Report2025, based on a survey of over 1,000 globalemployers representing 14 million workers, projectsthat by 2030, macrotrend-driven labour markettransformation will churn through 22% of today’s totalformal jobs — creating 170 million new jobs whiledisplacing 92 million existing ones. Among the rolesexplicitly listed in the fastest-declining category?Accountants and Auditors — alongside Cashiers,CA. Tapas [email protected]

Ahmedabad Chartered Accountant Journal March, 2026 1053TMThe Great DivideAdministrative Assistants, Bank Tellers, and Data EntryClerks. The primary drivers? AI and informationprocessing technologies (identified by 86% ofemployers as transformative) and broadening digitalaccess.Perhaps even more striking is this statistic from thesame report: if the world’s workforce were made up of100 people, 59 would need training by 2030 to remainrelevant. Of these, employers believe 11 would beunlikely to receive the reskilling they need — leavingthem increasingly at risk.Now, the Anthropic report (“Labor Market Impacts ofAI: A New Measure and Early Evidence”, March 2026)adds an important nuance. The researchers introduceda new metric called “Observed Exposure” whichmeasures not just what AI could theoretically do in aprofession, but what it is actually doing in real-worldprofessional settings. The Business and Financecategory shows among the highest theoretical AIexposure across all occupational categories. Financialand Investment Analysts already have an observedexposure of 57.2%.And here is the finding that should concern every seniorpartner: while there has been no systematic increasein unemployment among highly exposed workers(good news on the surface), there is a 14% drop inthe job-finding rate for workers aged 22–25 in AIexposed occupations compared to 2022 levels. Nosuch decrease exists for workers older than 25.Existing professionals are keeping their jobs. But firmsare hiring fewer young people into these roles. Thedisruption is not coming as a dramatic wave of layoffs.It is coming as a quiet thinning of the pipeline.When the Output Becomes CheapConsider what happened to professional photography.When smartphones put a decent camera in everypocket, professional photographers did not disappearovernight. But the ones who survived and thrived wereno longer selling “a photograph.” Everyone could takea photograph now. What the successful photographerssold instead was vision i.e. the ability to see what otherscould not, to tell a story through images, to understandlight, composition and emotion in ways that a pointand-shoot device never could.A very similar shift is underway for our profession.Today, a client pays for a professional opinion thatinvolves days of research, careful drafting, analysis ofcase law, and considered conclusions. Within the nexttwo to three years — and I believe this is a conservativeestimate — AI tools will generate a reasonablycompetent first draft of that same opinion in minutes.The research will be comprehensive. The languagewill be polished. The citations will be largely accurate(though verification will remain critical).When the visible output becomes cheap to produce,the profession faces a fundamental question: what isthe client actually paying for?The answer, I believe, is what it has always been —but what many of us have forgotten. Clients are notpaying for the document. They are paying for theyourjudgment behind it. They are paying for theaccountability that comes with a Chartered Accountant’ssignature. They are paying for the peace of mind thatsomeone qualified has thought through the legal,commercial, and strategic the implications that no AIcan fully grasp about their specific situation, their riskappetite and their business context.The uncomfortable truth is this: many practices havebeen selling labour- hours spent on research, dataentry, reconciliation, drafting and not really an expertise.AI exposes this distinction ruthlessly. Those who werealways selling genuine expertise will thrive. Those whowere selling labour will find their fees increasinglydifficult to justify.The Two CAs That Will Exist in Five YearsThis brings me to what I believe is the definingprofessional question of our time. Within five years,there will not be “CAs who use AI” and “CAs who don’tuse AI.” There will be CAs who are five to ten timesmore productive than their peers and CAs who arestruggling to justify their fees in a world where theclient’s nephew can generate a decent-looking draftwith a monthly AI subscription.

1054 Ahmedabad Chartered Accountant Journal March, 2026TMThe divide is not about age, and it is not about technicalaptitude. I have seen senior practitioners in their fiftiesand sixties adopt AI with enthusiasm, and I have seenyoung CAs fresh out of articleship dismiss it as a fad.The divide is about willingness to redesign how youwork.Consider this: AI does not just make things faster. Itcollapses the experience gap. A two-year postqualification CA with the right AI toolkit and the rightapproach can now produce a first draft of work thatpreviously required a decade of practice to deliver.What does that mean for seniority structures, for feehierarchies, for the traditional progression from juniorto senior to partner?The WEF report identifies 39% of existing worker skillsas likely to be transformed or become outdated by2030. But it also identifies what will become morevaluable and the list is instructive: analytical thinking(essential for 7 out of 10 employers), resilience andadaptability, leadership, creative thinking, and curiosity.Notice what is not on the list of growing skills: manualdata processing, routine compliance work, or templatebased drafting. These are precisely the tasks that AIhandles most competently today.So, What Should CAs Actually Do?I am not writing this to alarm anyone. I am writing thisbecause I believe the single biggest advantage anyprofessional can have right now is simply being early.Early to understand. Early to use. Early to adapt.Here are practical steps, drawn from both my ownexperience and the patterns I see among CAs whoare successfully integrating AI into their practices.First, start using AI seriously — not as a searchengine. Most professionals treat AI the way they treatGoogle: ask a quick question, get a quick answer,move on. That barely scratches the surface. Feed it amessy client spreadsheet and ask it to identifyanomalies. Give it a show cause notice and ask it todraft a point-by-point reply. Upload a GSTR-2Breconciliation and ask it to flag mismatches. Give it acontract and ask it to find every clause that could hurtyour client. The first attempt will not be perfect. Iterate.Give it more context. Rephrase. Try again. This is theskill — learning to work with AI as a capable (butunsupervised) junior.Second, invest in the paid versions of AI tools. Thisis not a marketing pitch — it is a practical observation.The gap between free-tier and paid-tier AI modelstoday is enormous. The best models available on paidplans can handle complex multi-step reasoning,process lengthy documents, and produce output thatis qualitatively different from what free versions offer.Spending a few thousand rupees a month on the righttools may be the highest-ROI investment a practitionercan make today.Third, shift your identity from “I prepare and file” to“I advise and decide.” This is the hardest shift, butthe most important one. If the core of your valueproposition is preparation, compilation, and filing —activities that are increasingly automatable — theeconomics of your practice will come under pressure.If, however, your value proposition is judgment,strategic advice, representation, and accountability, AIbecomes your greatest ally. It handles the grunt work;you focus on the thinking work.Fourth, rethink how your firm trains articleassistants. If AI is doing the research and first drafts,the traditional articleship model — where juniors learnby doing hundreds of manual reconciliations anddrafting from scratch — needs to evolve. Perhaps thenew “grunt work” is learning to verify AI output, detecthallucinations, and apply judgment to machinegenerated drafts. The skill shifts from creation tocuration. Firms that consciously redesign their trainingprogrammes for this reality will produce betterprofessionals; firms that do not will find their juniorsincreasingly hollow in their understanding.A Balanced Word of CautionI want to be clear: I am not suggesting AI is infallible orthat it is ready to replace professional judgment. It isnot. AI still hallucinates — it can confidently cite caselaw that does not exist. It does not understand thecommercial nuances of a specific client’s business. Itcannot read the room in a hearing before an IAS officer.It cannot build the trust that comes from years of aThe Great Divide

Ahmedabad Chartered Accountant Journal March, 2026 1055TMclient relationship. And crucially, it cannot takeaccountability — it cannot sign a document, it cannotappear before a tribunal, and it cannot go to jail if theadvice turns out to be fraudulent.These are not small things. They are the bedrock ofwhat makes a professional a professional.But here is what has changed: the range of tasks whereAI is “not good enough” is shrinking at an exponentialrate. The Anthropic data shows that actual AI coverageof professional tasks is still a fraction of theoreticalcapability — meaning there is an enormous gap yet tobe closed. Every quarter, more of that gap closes.The WEF report notes that the share of work tasksperformed predominantly by humans is expected todrop from 47% today to roughly a third by 2030, with82% of that shift driven by automation rather thanaugmentation.The responsible position is neither panic norcomplacency. It is informed preparation.The Road AheadI would like to conclude with a thought experiment.Imagine it is 2029. You walk into a meeting with aprospective client. You have two competitors. One ofthem spent the last three years building AI-augmentedworkflows — they can turn around a comprehensiveanalysis in a day that would take your team a week.They are not cheaper; they are better. They delivermore insight, more accuracy, and more strategic valueper engagement. The other competitor never adapted.They are still doing things the way they were done in2024. They are cheaper, but their work is slower, lesscomprehensive, and less insightful.Which one are you?The tools are here. The data is unambiguous. Thechoice is yours, as it always has been in our profession.As I have said many times in my seminars and articles:the tools are not going to replace CAs. But CAs whoare at the forefront of using these tools are clearly goingto win the race. The only question left is: which side ofthe divide will you be on?References1. World Economic Forum, Future of Jobs Report2025, January 2025.2. Massenkoff, M. and McCrory, P., “Labor MarketImpacts of AI: A New Measure and Early Evidence,”Anthropic Research, March 2026.3. Shumer, M., “Something Big IsHappening,”shumer.dev, February 2026.The Great Divide

1056 Ahmedabad Chartered Accountant Journal March, 2026TMIntroduction :In today’s dynamic credit environment, timelyidentification of stress signals in a borrower’s financialbehaviour has become more critical than ever.Financial institutions increasingly rely oncomprehensive monitoring frameworks to detectpotential risks long before they manifest into defaults.Red flags and early warning signals (EWS) serve asessential tools in this process, enabling lenders,auditors and risk managers to evaluate the health ofa borrower’s operations, financial discipline, andoverall creditworthiness.Borrower behaviour, transaction patterns, andaccounting records collectively provide invaluableinsights into emerging risks. Subtle changes such asirregular transaction flows, inconsistent financialreporting, or unusual operational decisions can oftenbe the first indicators of underlying financial distressor intentional misrepresentation. When identified early,these signals allow timely intervention, safeguardingthe lender’s exposure and supporting more informeddecision making.- Red Flags Accounts (RFA) is one where the bankdetects suspicious activity or indicators that raiseconcerns about potentially fraudulent activity. Theseindicators, called Early Warning Signals (EWS),promote the bank to investigate further andpotentially classify the account as Red FlagsAccounts (RFA).- Early Warning Signals (EWS) are those, which whennoticed in any loan account, should alert the Bankabout some wrong doings in the loan accountswhich may turn out to be fraudulent. However, incases where Law Enforcement Agencies (LEAs)have suomoto initiated investigation involving aborrower account, bank shall immediately red-flagRed Flags & Early Warning Signals -Borrower Behaviour, TransactionPattern & Accounting Monitoringthe account and follow the usual process forclassification of account as fraud and complete thesame within the stipulated period.- The EWS indicators identified for monitoring creditfacilities / loan accounts and other bankingtransactions shall be approved by the RiskManagement Committee of the Board (RMCB).Appropriate Turnaround Time (TAT), preferably notmore than 30 days, for examination of EWS alerts /triggers shall be prescribed by the RMCB. Theauditor shall obtain the list of EWS indicators, asapproved by RMCB for reference when verifyingloan accounts.- Banks have also been advised to develop/strengthen their EWS system by identifying suitableindicators and parameterising them in their EWSsystem for monitoring other banking / non-creditrelated transactions, which may also be of verifiedby the auditor.- Aggregate fund-based and non-fund-basedexposure of ` 3 crore and above is required forreporting any account as red-flagged accounts/frauds. The decision to classify any account, eitherstandard or NPA, as a red-flagged account shallbe at the individual bank level and such bank(s)shall report the status of the account on the ReserveBank’s CRILC platform immediately and not laterthan seven days of being red flagged.- The system of EWS/RFA framework to be integratedwith Core Banking solutions (CBS) or otheroperational systems including for remedial actionon alerts, periodic review of credit process andeffective use of Central Repository ofInformation onLarge Credits (CRILC) and Central Fraud Registry(CFR).CA. Disha H. [email protected]

Ahmedabad Chartered Accountant Journal March, 2026 1057TMRed Flags & Early Warning Signals - Borrower Behaviour, Transaction Pattern & Accounting MonitoringPractical Aspects of EWS &RFA :Auditor can make use of the following illustrative list ofEWS for identifying an account as a possible RFA:-(A) Borrower behavior – Key EWS1. Request received from the borrower to postponethe inspection of the godown for flimsy reasons.2. Non-submission of End Use certificate.3. Dispute on title of collateral securities.4. Project cost overruns without proper justification.5. Requests for top-up loans when existing facilitiesshow stress6. Evergreening of loans7. Significant reduction in the stake of promoter/director or increase in the encumbered shares ofpromoter/ director.Example of Borrower’s Behaviour–EvergreeningA borrower has a large term loan nearing defaultdue to non-payment of interest. Just before theoverdue period hits 90 days (which would classifythe account as an NPA), the bank sanctions a newshort-term working capital loan. The entiredisbursed amount is immediately used by theborrower to pay interest and overdue EMIs onthe original loan.Red Flag Behavior:• Borrower uses funds from new facilities toservice old debts.• No actual business need or cash inflowjustifying the new facility.• Borrower provides false purchase orders orinvoices to justify new limits.• The bank fails to monitor end-use or ignorerepayment pattern mismatches.Why it’s a Warning:• This is a classic case of evergreening,concealing the stress of an account by rollingover debt.• It indicates lack of genuine cash flow andpotential default risk.• Often done in collusion with internal bank staffor through internal lax controls.(B) Transaction Patterns & Account Monitoring:-1. Creation of collateral out of Bank Funding.2. Heavy cash withdrawal in loan accounts.3. Frequent return of cheques.4. Unusual transfer of funds.5. Frequent overdrafts beyond sanctioned limits.6. Delay in servicing Interest or Principal.7. Frequent invocation of BGs and devolvement ofLCs.8. Review of CBS generated exceptional reports todetect unauthorized or manual intervention inaccount transactions.Example of Transaction Patterns & AccountMonitoringA borrower, who has availed a working capital loan(Cash Credit/Overdraft), consistently withdrawslarge amounts in cash immediately after funddisbursement. These cash withdrawals are notaligned with the stated nature of business which,in this case, is a manufacturing unit with bulksupplier transactions normally done via banktransfers.Red Flag Patterns:• Frequent and high-value cash withdrawals fromthe loan account or current account.• No proper vendor or payroll documentationjustifying the cash usage.• Pattern shows cash withdrawn within 1–2 daysof disbursement.• No correlation with purchase bills, GST filings,or stock movement.Why it’s a Warning:• Indicates potential diversion of funds for nonbusiness or personal use.

1058 Ahmedabad Chartered Accountant Journal March, 2026TM• Reflects possible misstatement of workingcapital requirements.• Potential parallel (off-book) operations or cashmanipulation.RBI Guidelines :- RBI Master Directions on Fraud RiskManagement in Banks and All India FinancialInstitutions ) to ensure identification of fraudulenttransactions and timely reporting of frauds.(RBI/DOS/2024-25/118 DOS.CO.FMG.SEC.NO.5/23/04.001/2024-25 Dated July 15,2024)- In terms of the extant RBI guidelines, banksneed to report the status of all RFA accountson the Reserve Banks CRILC platform within 7days from the date of classification as redflagged account.- Once an account has been red-flagged, entireprocess of classification of the account asfraud or removal of RFA status shall ordinarilybe completed within 180 days from the dateof first reporting of the account as RFA onCRILC.- Cases remaining in RFA status beyond 180days shall be reported to the banks “SpecialCommittee of the Board for monitoring andfollow-up cases of Frauds” (SCBMF) for reviewwith adequate reasoning/ justification which issubject to supervisory review by the RBI.Auditor’s Responsibilities :• During the audit, auditors may come acrossinstances where the transactions in the accountor the documents point to the possibility offraudulent transactions in the account. In sucha situation, the auditor may immediately bringit to the notice of the top management and ifnecessary to the Audit Committee of the Board(ACB) for appropriate action.• Auditors are obliged to report the same to thetop management and/or Audit CommitteeChairman only where the number of transactionsis above the prescribed materiality level.• Though the objective of the statutory auditor isnot to find out fraud / fraudulent activity or itspossibility, it would be advisable for thestatutory auditor to assess the existence andeffectiveness of fraud risk mitigating andavoidance framework and controlsimplemented by the auditee bank.• The branch auditor needs to consider theimpact of his observations made in respect offraud on overall presentation of financialstatements of the bank while opining on thesefinancial statements.Conclusion – Red Flags & Early Warning SignalsBased on the review of borrower behaviour, transactionpatterns, and accounting practices, certain red flagsand early warning signals have been observed whichmay indicate heightened financial, governance, andcompliance risks. These indicators include unusual ornon-routine transactions, weak linkage betweenexpenditure and business purpose, reliance ondirector-funded payments, and accounting treatmentsthat deviate from standard principles.Such patterns may reflect stress on liquidity,inadequate internal controls, or potential misstatementof financial position, and therefore warrant closermonitoring. It is recommended that these signals beaddressed through enhanced scrutiny, strengtheneddocumentation, timely reporting, and correctivecontrols to mitigate the risk of adverse financial orregulatory outcomes going forward.Red Flags & Early Warning Signals - Borrower Behaviour, Transaction Pattern & Accounting Monitoring

Ahmedabad Chartered Accountant Journal March, 2026 1059TMThe financial year end is not just about closing books ofaccounts; it is a critical period for businesses andprofessionals to ensure timely compliance, properreporting, and strategic planning for the upcoming year.Missing important year-end actions can lead todisallowances, penalties, loss of Input Tax Credit, orunnecessary interest costs. At the same time, thebeginning of a new financial year provides an opportunityto reset systems, review applicability of variousprovisions, and strengthen compliance processes. Withthis objective, the following checklist of 35 important tasksis designed to help taxpayers, accountants, and businessowners stay organised, compliant, and financiallyprepared for both the closure of FY 2025-26 and thesmooth beginning of FY 2026-27.35 IMPORTANT TASKS FOR YEAR-END &BEGINNING OF YEARThis topic covers list of 35 Tasks comprises of -19 Compliances to in March end + One Bonus8 Tasks to do for finalization of Books of Accounts8 Checks to do for new F.Y. Beginning19 COMPLIANCES TO DO IN MARCH END1. Investments/Deductions - Income TaxTaxpayers should make payments for LIC, NPS,Mediclaim, PPF, and other investment obligationsbefore 31st March to ensure financial security and toclaim deductions under Sections 80C, 80D, 80G,etc., if opting for the old tax regime for tax benefits.2. Pending Filing of ITR for last 5 years if at allpending with ITR-U-Income TaxWith ITR-U, ITRs for the last 5 years can still befiled with late fees and additional tax. Currently, ataxpayer can file ITR-U for AY 2021-22, 2022-23,AY 2023-24, AY 2024-25, and AY 2025-26 before31st March 2026 if original ITR was pending or fordeclaring the income which was not declaredduring original ITR filing.Year-End Compliance Checklist: 35Critical Tasks for FY 2025-26 Closureand FY 2026-27 Readiness3. Advance Tax for FY 2025-26-Income TaxTaxpayers must make Payment of Advance taxbefore 15th March. (If expected tax liabilityexceeds Rs. 10,000). Taxpayer should assesshis tax liability based on his estimated income. Ifforgot, paying before 31st march can also savelots of interest cost.4. Payment to Micro and Small Enterprise -Section43B(h)-Income TaxAs per section 43B(h) of Income Tax Act,Applicable from 1-4-2023, If paymentto MANUFACTURE OR SERVICE PROVIDERCATEGORY OF MICRO AND SMALLENTERPRISES are not made within MAX. allowedtime, as per MSMED ACT, then such expenditureswill be disallowed in said year and allowed in theyear the actual payment made. This is importantfor year-end outstanding payables. If there is awritten agreement, the payment period is amaximum of 45 days; otherwise, it is limited to15 days for such creditors. As far as GST law is concerned, as per rule 37,check whether the payment to the supplier hasbeen made within 180 days or not. This is importantto check for 31st march closing balance of Creditorsand if paid after 180 days then pay interest fromutilization of ITC to date of Actual payment. This Ruleis for ALL PAYMENTS (Micro/Small/Medium or anyother). If no payment is done at all, then even ITC isliable to reverse along with Interest.5. Payment of ESI + PF + PT before 15th of everymonth - Income TaxAny sum received by the Taxpayer from any of hisemployees on account of ESI/PF/ PT will be allowedas deduction, if such sum is credited by the taxpayerto the employee’s account in the relevant fund orfunds on or before the monthly due date. For ESI/CA. Harshil [email protected]

1060 Ahmedabad Chartered Accountant Journal March, 2026TMPF/PT, it is 15th of next month and for Professionaltax, it is 15th of next quarter.As per section 36(1)(va), ESI + PF +PT need tobe paid as per above due dates Otherwise, it willbe disallowed if delayed by even a single day.This is not a year-end reminder. Rather this is tokeep in mind as a monthly reminder. (Here we aretalking about Employee’s contributions.)6. Payment of other Statutory Liabilities u/s 43Bbefore Tax Audit - Income TaxStatutory liabilities like GST or liabilities like Intereston loans from certain financial institutions or employeerelated contributions like ESI/PF/PT (Here we aretalking about Employer’s contributions.) for year FY2025-26 must be paid before the ITR due date;otherwise, it will not be allowed as a deduction forthe year ended. 7. TDS TCS - Payment for March and filing of26Q/24Q/27EQ return - Income TaxTDS deduction must be made for expenses/payments like Job work, repairing, labourcontracts, advertisement, ocean freight shippingcharges, shipping charges, any contract,professional fees, technical fees, interest onunsecured loans, rent expenses, and commissionexpenses, etc., if amount crossing specified limits.Prepare details for TDS TCS RETURN DETAILSFOR Q4-Make payment of TCS before 7th April and TDSbefore 30th April for March month andFile TCS return before 15th May and TDS returnbefore 31st May for Q4. (Also, if TDS/TCS not deducted/collected in anyearlier quarters like Q1/Q2/Q3, then thesetransactions must be shown in Q4 TDS returns &payment of TDS must be done with Interest, sodeduct in March month & pay in APRIL.) (Note- TDSon purchase above Rs. 50 lacs is applicable if lastyear turnover crossed Rs. 10 crores)Note for 194T- for FY 2025-26, New complianceisaddedi.e TDS Compliance for Partnership Firms& LLPs - From FY 2025-26, Section 194T mandatesTDS on payments made to partners, such as:‘ Partner Remuneration / Salary / Bonus and ‘Interest paid to PartnersIf both combined crosses Rs. 20,000. SoPartnership Firms must finalize Books ofAccounts in April 2026 itself for FY 2025-26, Andpay TDS by 30th April , 2026.8. Filling of 15G - 15H - Income TaxFor interest/dividend / or certain other payments (asapplicable) exceeding the threshold, where TDS isnot required to be deducted (as per applicablesection) because the recipient’s taxable income isbelow the exemption limit, the tax deductor shouldupload consolidated Form 15G/H by April 30, 2026,for FY 2025-26.9. Reconciliation of GSTR 2B with the BooksPurchases and taking pending ITC inMarch GSTR 3B-GSTTaxpayer should check yearly GSTR 2B of 2025-26, if any ITC is reflected in GSTR-2B and he hasnot claimed credit in any previous months’GSTR3B then It’s better to avail this pending ITCin 2025-26 only i.e.up-to March GSTR 3B itself.For example, ITC of bank charges, C&F charges,Shipping line charges, Telephone charges etc.may have been missed.10. Reconciliation of GSTR 2B with the BooksPurchases for missing Invoices or Non Paymentof Tax by Supplier - GSTITC shall be availed by the recipient subject tothe condition that Supplier must have furnishedthe details of Invoices in his GSTR 1 & same isappearing in taxpayer’s GSTR 2B. Also thesupplier must have paid tax in his GSTR 3B.Taxpayer should reverse ITC which is not reflectingin GSTR 2B & it has been availed inadvertently orwhen Supplier has uploaded but he has not paidtax in his GSTR 3B.As per rule 37A of the CGST Rules, If Supplierhas not furnished the GSTR-3B for the periodcorresponding to such invoice/ debit note till 30thSeptember following the end of financial year inwhich the ITC is availed by buyer, Then Buyerneeds to reverse the ITC while filing its GSTR-3Bon or before 30th November following the end ofFY in which such ITC is availed. If the buyer isYear-End Compliance Checklist: 35 Critical Tasks for FY 2025-26 Closure and FY 2026-27 Readiness

Ahmedabad Chartered Accountant Journal March, 2026 1061TMnot able to reverse within 30th November, ITCamount needs to be paid along with interest. Also, identify the suppliers whose registration hasbeen either cancelled or suspended for anyreasons during the FY 2025-26. Reverse the ITCwith Interest. Taxpayers should check yearly GSTR2B for above matters.11. Reversal of blocked Credit or Reversal due toRULE 42/43 in March GSTR 3B Return-GSTMake the reversal in March GSTR 3B if claimedwrong ITC as per listed below instances (if any)1. Blocked ITC -Section 17(5) of CGST ActFood & Beverages: Outdoor catering,beauty treatment, health services,cosmetic & plastic surgery, leasing/renting/hiring of motor vehicles, life &health insurance, club memberships,health & fitness centres, travel benefitsfor employees (leave/home travelconcession).Motor Vehicles: Except goods vehicles.Construction: ITC on Works contract orconstruction-related matters.Goods Lost/Stolen/Destroyed: Includesgoods written off or given as gifts/freesamples.Personal Expenses: ITC wrongly availedon personal expenses.2. ITC Claimed Twice: Due to duplicate expense/purchase bill entries.3. Wrong Tax Type Claimed: claimed IGSTinstead of CGST + SGST or CGST + SGSTinstead of IGST.4. Sales Return Misclassified: Shown aspurchase and ITC wrongly claimed.5. Common ITC Reversal for EXEMPTEDTURNOVER (Rule 42/43 of CGST rules):Recalculate reversal based on the yearly ratioof exempted turnover vs. aggregate turnover.6. ITC on Sale of Capital Goods/Fixed Assets:Reverse ITC if sold within 5 years.12. Payment of RCM in March Return if pending -GSTTaxpayer should Check that RCM must have paidon Security charges, Sponsorship service, importof service, transport services, Advocate Service,rent paid for property, rent a cab service, certainAgriculture goods purchase as per list, Metal scrappurchase from URD, etc., as per provisions ofCGST Act.Also he should make sure that RCM is requiredto be paid in IGST head, if Transporter hasuploaded in the Inter-state category in his GSTR1 So he should check GSTR 2B and dischargeRCM properly in IGST head.For RCM paid for URD supplier, Taxpayer mustmake Invoice within 30 days of supply.13. Reconciliation of Sales – GSTR 1 Outward GSTvis-a-vis GSTR 3B Outward Side GST - GSTa. Sales Reconciliation: taxpayer shouldcompare Books of Accounts with GSTR-1 andGSTR-3B to identify and rectify discrepancies.b. Ensure GST is Paid on the Following Incomes:1. Other Incomes recorded in the Profit &Loss account.2. Sale of Fixed Assets, Machinery, orVehicles.3. Commercial Property Rent received.4. Freight Charged by Supplier on GoodsSold.5. Commission Income earned.6. Purchase Return mistakenly recorded asSales, leading to incorrect outward GSTpayment.c. Interest on late GSTR-3B Filing.14. GTA to OPT for Forward Charge Mechanism fornext FY - GSTIf a GTA (Goods Transport Agency) wants to opt topay GST on a forward charge basis for theupcoming financial year, then they are required tosubmit the Annexure V form on the GST portal by31st March of the preceding financial year. Forexample, for FY 2026-27, the deadline to opt topay tax on forward charge basis is 31st March2026. The option exercised by GTA to pay GSTon services supplied is deemed valid forsubsequent financial years unless a declarationin Annexure VI to revert under reverse charge isfiled. So Forward Charge Option Can be withdrawnYear-End Compliance Checklist: 35 Critical Tasks for FY 2025-26 Closure and FY 2026-27 Readiness

1062 Ahmedabad Chartered Accountant Journal March, 2026TMonly for subsequent years by filing Annexure-VIbetween 1st January to 31st March.15. Opting Composition Scheme for next FY - GSTOpting or opting out Composition till 31-3-2026 forFY 2026-27. The taxpayer should work out whetherhe wants to convert to a Composition scheme(Turnover Limit is Rs. 1.5 Crore) for FY 2026-27 ifhe wants to opt in.16. ITC 4 Filling - for those who sent Goods on JobWork - GSTTaxpayer should file ITC -4 for 2025-26 or earlieryear (if pending) if goods are sent on Job-workthe frequency of filing the ITC-04 form is as below.(1) Those with Turnover more than Rs.5 crores –Half-yearly(2) Those with Turnover up to Rs.5 crores –Yearly17. Mandatory Payment of 1% cash-Rule 86B ofCGST Rules - GSTTaxpayers with a turnover exceeding Rs. 50 lakhs(excluding zero-rated and exempt supplies) in amonth shall be liable to pay 1% of tax liability inCash only if conditions of rule 86B are applicablei.e Maximum 99% ITC utilization; minimum 1%payment via Electronic Cash Ledger. Verify itcumulatively over the course of a particular financialyear. Not applicable to those who falls in Exceptionprovided in Rule 86B.18. Declaration for specified premises by HotelAccomodation & Restaurant Service Provider -GSTA registered person supplying hotel & restaurantservices, having Room Rent below Rs. 7500 perunit per day, may choose to file an opt-indeclaration with the jurisdictional GST authority by31-03-2026 for FY 2026-27, declaring the premisesas specified premises. Upon such declaration,the GST rate applicable to restaurant servicesoffered by the hotel will be 18% with Input TaxCredit (ITC).Once Annexure-VII is filed, it appliesto the next financial year and subsequent financialyears unless the hotel decides to opt out bysubmitting Annexure-IX.For those having room rent above Rs. 7500, isnot required to file Annexure-VII as they are alreadyconsidered as Specified Premises as per itsdefinition.19. Issuance of Credit Note or Debit Note for Supplymade in FY 2025-26-GSTFor transactions such as sales returns, quality orquantity difference, price revisions, or discounts,the necessary debit or credit notes should beissued in March 2026 for FY 2025-26. So that itcan form part of Fin. year 2025-26 books ofaccounts. As per GST law, Credit Notes/ Debitnotes should be issued before 31st October 2026or filing of annual return whichever is earlier w.r.tinvoices issued during FY 2025-26. Also, do matchdebtors/creditors Ledger balance with counterparty Ledgers. Any adjustments may be bookedif required (if any).BONUS20. Tribunal Appeal – Important Deadline Alert - GSTGovernment has notified a special time limit forfiling appeals before the GST Appellate Tribunal(GSTAT). It provides that for all cases where theadjudication or appellate order sought to bechallenged has been communicated to thetaxpayer before 01 April 2026, the appeal to theAppellate Tribunal may be filed up to 30 June2026, thereby granting an extended window totaxpayers to approach the Tribunal. However, fororders communicated on or after 01 April 2026,the normal statutory time limit will apply, meaningthe appeal must be filed within three months fromthe date of communication of such order.Accordingly, taxpayers and professionals shouldreview all GST orders received before 01-04-2026and ensure that any appeal intended to be filedbefore the GST Appellate Tribunal is prepared andsubmitted on or before 30-06-2026, failing whichthe right to appeal may be lost due to limitation.8 Tasks to do for Books of Accounts Finalizationsfor 2025-26Ensure all entries are recorded to finalize thebooks and to prepare the March GST return andMarch TDS TCS returns with all adjustments andprovisions necessary for finalization of booksof accounts on time. Aim to complete this bythe end of March or the first week of April.Year-End Compliance Checklist: 35 Critical Tasks for FY 2025-26 Closure and FY 2026-27 Readiness

Ahmedabad Chartered Accountant Journal March, 2026 1063TM1. Prepare Files and Opening BalanceVerificationCompile files for purchases, sales,expenses, investments, and bank statementsup to March 2026 so that Accounting can becompleted as soon as possible. Verifyclosing balances from the FY 2024-25 auditreport or FY 2024-25 Balance sheet and matchthem with the opening balances for FY 2025-26 across all ledgers.2. Bank Closing Matching–Bank accounts / CC account/ Term loanclosing must match with Books of accounts.Taxpayers should make sure all entries aredone up to 31-3-2026. Prepare BRS if notmatching. All Term loan/CC loans/OD loanInterests must be accounted up to March2026.3. Make Provision for ExpensesAccounting entries for interest on depositors,interest on unsecured loan, partner interest,partner remuneration (as per maximumallowed as per Income tax) and depreciationmust be accounted. March expensesprovisions like E.g. salary, rent, audit fees,accounting fees, telephone bill, electricitybills, and statutory liabilities like GST, ESI,and PF, etc. Taxpayers should makeprovision for such Expenses in March inbooks of Accounts. (Of course, these needto be genuine. This Bullet point is only forreminder)4. Comparison between Current Year Data andPreivous Year Data:The comparison of current year data with thatof the previous year (Specially Incomes andExpenses) provides valuable insightsenabling the identification of areas whereinconsistencies or discrepancies may exist.With Actual Stock accounted for on 31-3-2026with correct valuation, GP % and NP %checking with last year with that of Current yearprovides useful information.5. GST Ledgers Reconciliation -Taxpayer should make reconciliation of GSTcredit ledger & GST cash ledger with booksof accounts for FY 2025-26 after filling GSTR3B of March 2026. He should match balanceson portal with Books after March GSTR 3B isfilled.6. Stock Checking for year ending on 31-03-2026On 31st march, Physical stock needs to bereconciled with the stock as per books ofaccounts. This would be helpful in bothIncome tax audit and GST audit. In case ofany discrepancies, possibilities of loss ofstock, over/under consumption, or missedsales details may be checked. This will helpto decide Closing stock valuation whenFinalization of Books.7. Booking of Income & Checking AIS TIS26ASTaxpayer must check 26AS AIS TIS, if earningany income on Investments like Dividend,Interest on FD, Interest on Deposits, SBinterest etc., taxpayer should make sure tobook these incomes in Books of Accounts.Also make sure correct reporting has beendone in 26AS AIS TIS by banks & financialinstitutions etc. Taxpayer can access 26ASAIS TIS after 31st May. Also Match TDSdeducted in 26AS with Books.8. Clearing Suspense Account Ledgers:In the books of accounts, any unresolvedsuspense accounts, unidentified receipts orpayments due to missing details of debtorsand creditors, or pending matters must besolved.8 Most Important Tasks to do for the Beginningof New Financial Year 26-271. Check last year Turnover to decide GeneralApplicability of Different Sections of TDSIf Turnover crossed Rs. 1 Crorein FY 25-26in case of INDIVIDUAL & HUF havingYear-End Compliance Checklist: 35 Critical Tasks for FY 2025-26 Closure and FY 2026-27 Readiness

1064 Ahmedabad Chartered Accountant Journal March, 2026TMBusiness, then GENERAL TDS / TCSSECTIONS are applicable and TDS need tobe deducted on Expenses like Interest / Rent/ Commission / Job work / Repairing / Labourcontract / Advertisement / Ocean Freight /Shipping charges / Any Contractual paymentsu/s 194C / Professional fees / Technical feesetc. if crossing limits as specified in thatsection w.e.f. 01/04/2026. (Remember, TDSto be deducted by all Partnership Firms /Company / LLP (Irrespective of Turnover or AuditApplicable) from first year of operation &Individual/HUF having Turnover more than Rs.1 Crore in last year (Irrespective of AuditApplicable)2. Check last year Turnover to decideApplicability of TDS U/S 194QIf Turnover crossed Rs. 10 Crore in FY 25-26, then TDS u/s 194Q Applicable onPurchase of Goods if purchases from asupplier crosses limit of Rs. 50 lacs w.e.f.01/04/20263. Check last year Turnover to decideapplicability of HSN/SAC CodeAnnual Aggregate TurnoverIf crossed Rs.5 crores, then 6/8 digit HSN/SAC codemandatory for all supply (B2B and B2C)w.e.f.01/04/20264. Decide E-Invoice applicabilityBusinesses with Annual Aggregate Turnoverof more than Rs.5 crores, as calculated inany preceding financial year from 2017-18 upto 2025-26, must begin generating e-invoicesw.e.f. 01/04/2026 if not applicable earlier.Taxpayers should configure their accountingsystem and generate API credentials in Einvoice portal and start making Tax invoicewith IRN.5. Opting QRMP filling frequency for FY 25-26For GST return filing frequency - Opting oropting out QRMP till 30-04-2026 for FY 2026-27. Taxpayers having Turnover below Rs 5Crores shall have an option to select thisfrequency of GST return i.e., Quarterly returnmonthly payment (QRMP) Scheme filing forFY 2026-27 till 30th April 2026.6. Apply for LUT (For Exporter)Apply LUT in case of Exporters for FY 2026-27.All the exporters who make direct export ofgoods/services or supplies to SEZ withoutpayment of GST should apply for Letter ofUndertaking (LUT) in form GST RFD 11 for FY2026-27 for hassle-free zero rated supply7. New Billing Series w.e.f. 1st April 2026Taxpayer should start a fresh, unique,consecutive series for tax invoices, debitnotes, credit notes, bills of supply, selfinvoices, etc., from 01-04-2026 for FY 2026-27. The series can be alphanumeric, includingspecial characters, with a maximum of 16characters.8. Customs RelatedIEC Updation on DGFT portal Mandatorybefore June, 2026. Filing of Annual RODTEPReturn (ARR)- IEC holders having totalRODTEP claim more than Rs.1 Crore in a FY2023-24 are required to be filed ARR on orbefore 31.03.2026. ARR can be filed within agrace period of 3 months (i.e.30.06.2025) withcomposition fee of Rs. 15,000/-A disciplined approach towards year-endcompliance and new year readiness cansignificantly reduce litigation risk, improve financialaccuracy, and enhance overall compliance healthof a business. This checklist serves as a practicalreference to ensure that important tax, GST,accounting, and regulatory matters are notoverlooked during this crucial transition period.Professionals and taxpayers should treat this asa guiding framework and may also review anyindustry-specific or case-specific requirementsapplicable to them. A timely review today canprevent costly corrections tomorrow, makingpreparedness the best compliance strategy.Year-End Compliance Checklist: 35 Critical Tasks for FY 2025-26 Closure and FY 2026-27 Readiness

Ahmedabad Chartered Accountant Journal March, 2026 1065TMIndia’s consolidation of 29 Central labour legislationsinto four comprehensive Labour Codes represents oneof the most significant structural reforms in the country’semployment regulatory framework. The Code onWages, 2019; the Industrial Relations Code, 2020; theCode on Social Security, 2020; and the OccupationalSafety, Health and Working Conditions Code, 2020collectively aim to simplify compliance, harmonizedefinitions, expand social security coverage andmodernize enforcement mechanisms.However, the reform is not merely legislativeconsolidation. It fundamentally alters wage computationstructures, statutory contribution bases, industrialrelations thresholds, benefit provisioning models andcompliance governance systems. For professionalslike us, advising enterprises, the transition requiresmoving beyond historical compliance review towardproactive structuring, financial modelling and riskmanagement.This article examines the four Labour Codes from astructural, financial and governance perspective, withparticular emphasis on payroll design, provisioningimplications and advisory responsibilities; in a way, atry to capture a 360°compliant payroll.The New Indian Labour Codes: A TransformativeShift in Employment LawIntroduction: From Chaos to CodesIndia’s traditional labour laws consisted of a complexweb of over 29 central statutes, leading tofragmentation, procedural confusion, and highcompliance costs. The Government of Indiaconsolidated these into four comprehensive LabourCodes.The New Indian Labour Codes :A Transformative Shift inEmployment LawCA. Krishna [email protected] reform is not merely legislative consolidation. Italters cost architecture, benefit design, documentationstandards, inspection methodology and the nature ofemployer exposures. Consequently, our functionexpands from compliance verification to systemredesign, provisioning analytics and risk anticipation.

1066 Ahmedabad Chartered Accountant Journal March, 2026TMThe New Indian Labour Codes : A Transformative Shift in Employment LawThe Government consolidated everything into four Labour Codes:Code No. Title Principal Laws ReplacedI Code on Wages, 2019 (Wage Code) 1. Minimum Wages Act, 19482. Payment of Wages Act, 19363. Payment of Bonus Act, 19654. Equal Remuneration Act, 1976II Industrial Relations Code, 2020 5. Trade Unions Act, 1926(IR Code) 6. Industrial Employment (Standing Orders) Act, 19467. Industrial Disputes Act, 1947III Code on Social Security, 2020 8. EPF Act, 1952(SS Code) 9. ESI Act, 194810. Employees’ Compensation Act, 192311. Payment of Gratuity Act, 197212. Employment Exchanges Act, 195913. Maternity Benefit Act, 196114. Cine-Workers Welfare Fund Act, 198115. Building and Other Construction Workers’ Welfare CessAct, 199616. Unorganized Workers’ Social Security Act, 2008IV Occupational Safety, Health & 17. Factories Act, 1948Working Conditions Code, 2020 18. Contract Labour Act, 1970(OSH Code) 19. Mines Act, 195220. Plantations Labour Act, 195121. Working Journalists (Conditions of Service) andMiscellaneous Provisions Act, 195522. Working Journalists (Fixation of Rates of Wages) Act,195823. Motor Transport Workers Act, 196124. Beedi and Cigar Workers Act, 196625. Sales Promotion Employees Act, 197626. Inter-State Migrant Workmen Act, 197927. Cine-Workers and Cinema Theatre Workers Act, 198128. Dock Workers Act, 198629. Building and Other Construction Workers Act, 1996

Ahmedabad Chartered Accountant Journal March, 2026 1067TMI. Code on Wages, 2019 – Unifying CompensationThe Code on Wages, 2019 is arguably the mostfundamental reform among the four Labour Codes,as it standardizes the definition of “wages” acrossall central labour legislations. By replacing multipleinconsistent definitions under earlier laws, itintroduces a single uniform wage framework forstatutory purposes. In effect, this represents oneof the most significant payroll complianceoverhauls in recent decades, as it directly impactshow statutory contributions and benefits arecalculated.A key feature of the Code is the uniform definitionof wages along with the 50% threshold rule. Ifexcluded components such as allowancesexceed 50% of total remuneration, the excessmust be added back to wages for statutorypurposes. As a result, Provident Fundcontributions, gratuity and bonus are computedon a broader base than in many earliercompensation structures, requiring businesses toreconsider their CTC design and provisioningmodels.The Code also introduces a national floor wage tobe fixed by the Central Government. While Statesmay prescribe higher minimum wages based onlocal conditions, they cannot go below the nationalfloor, thereby ensuring a minimum wage standardacross the country.Further, the Code mandates timely and digitalpayment of wages. Salaries must be paid by the7th of the following month, and final settlement uponseparation must be completed within two workingdays. The requirement of digital paymentsenhances transparency and reduces wage-relateddisputes. Employers are also required to issueformal appointment letters clearly setting out termsof employment, strengthening documentation andreducing ambiguity in service conditions. Inaddition, the principle of equal pay for equal workis reinforced, ensuring non-discriminatory wagepractices.Under Section 2(k), the Code defines an“employee” as any person employed on wagesin an establishment, directly or through acontractor, to perform skilled, semi-skilled,unskilled, manual, operational, supervisory,managerial, administrative, technical or clericalwork, but excludes apprentices engaged underthe Apprentices Act. This broad definition expandscoverage and ensures uniform application of wagerelated protections across employmentcategories.Key Takeaways & Conclusion:For finance professionals like us, this Code is amajor payroll restructuring exercise. CTC (Cost toCompany) structures require reconsideration andredesign to ensure alignment with the 50% wagedefinition threshold. This increases employercosts for PF, gratuity and bonus. Consequently,the overall labour cost rises, and financialprovisioning requirements must be recalculatedand the increase must be recognized immediatelyin the P&L as past service cost. The national floorwage requires auditors to audit wage levels acrossstates. Timely digital payments mean payrollsystems must be automated and auditable, withpenalties for delays. Overall, we, as auditors, mustshift from just auditing payroll to actively designingcompliant salary frameworks and monitoring risksof wage disputes.II. Industrial Relations Code, 2020 – BalancingFlexibility & RightsThe Industrial Relations Code, 2020 introducessignificant changes aimed at increasing operationalflexibility while retaining core worker protections.One of the most notable reforms is theenhancement of the threshold for lay-off,retrenchment and closure requiring priorgovernment approval. Establishments employingup to 300 workers can now undertake such actionswithout seeking prior permission, compared tothe earlier limit of 100 workers. While this providesmid-sized businesses with greater flexibility inworkforce management, it also reduces a layer ofprotection previously available to workers inestablishments falling within this expandedthreshold.The New Indian Labour Codes : A Transformative Shift in Employment Law

1068 Ahmedabad Chartered Accountant Journal March, 2026TMThe Code also formally legalizes fixed-termemployment. Employers are permitted to engageworkers on fixed-term contracts without the earlierambiguity or structural restrictions. Importantly,fixed-term employees are entitled to the samestatutory benefits as permanent employees,including Provident Fund, gratuity and bonus,calculated on a pro-rata basis. This ensures parityin benefits while allowing employers contractualflexibility in staffing decisions.To address delays in industrial disputeadjudication, the Code provides for fasterresolution through Industrial Tribunals, typicallyconsisting of two members, with an objective ofresolving disputes within one year. This aims toreduce prolonged litigation and bring greaterpredictability to industrial relations.Under Section 2(l), the Code defines an“employee” as any person employed by anindustrial establishment, directly or through acontractor, to perform skilled, semi-skilled,unskilled, manual, operational, supervisory,managerial, administrative, technical or clericalwork, excluding apprentices engaged under theApprentices Act. Separately, Section 2(zr) definesa “worker” as a person employed in any industryto perform manual, unskilled, skilled, technical,operational or clerical work, but excludes thoseemployed mainly in managerial or administrativecapacities, as well as supervisors drawing wagesabove the notified limit or performing primarilymanagerial functions. This distinction between“employee” and “worker” remains significant fordetermining the applicability of specific industrialrelations provisions under the Code.Key Takeaways & Conclusion: For financeprofessionals like us, this Code changes howcompanies plan workforce costs. The higher layoffthreshold reduces severance reserves for midsized firms and some mid-sized entities that earlierfell inside the restriction may now fall outside it.Fixed-term employment being legalized canattract assurance of pro-rata provisioning for PF,gratuity, and bonus even for short contracts,preventing under-reporting of liabilities. Fasterdispute resolution means litigation reserves mayshrink, but potential exposuresstill should betracked. Overall, this Code requires professionalsto act as risk managers for labour liabilities,ensuring companies do not under-provision ormiscalculate obligations.III. Code on Social Security, 2020 – Expanding theSafety NetThe Code on Social Security, 2020 consolidatesnine social welfare laws into a single frameworkand expands coverage to new categories ofworkers. It not only simplifies the legal structurebut also widens the scope of statutory benefits.A significant change is the extension of gratuity tofixed-term employees. While gratuity earlierrequired five years of continuous service, fixedterm employees are now eligible on a pro-ratabasis. This ensures that short-term contractualworkers also receive retirement benefits.The Code also formally recognizes gig workersand platform workers within the statutory socialsecurity framework. A Social Security Fund is tobe created for such workers, financed partlythrough aggregator contributions ranging from 1–2% of turnover, subject to a cap of 5% of paymentsmade to these workers. The fund providesbenefits such as insurance and accident cover.Gig and platform workers must register on theGovernment’s e-Shram portal to access benefitsunder schemes framed pursuant to the Code.Although they are not traditional employees, theCode specifically extends social securityprotections to them.Further, the Code expands the scope ofEmployees’ State Insurance (ESI) coverage.Even hazardous establishments employing asingle worker may be brought within the ambit ofESI, whereas earlier the general threshold forapplicability was 10 employees. This marks asubstantial broadening of the social insurance net,particularly in high-risk sectors.Under Section 2(26), an “employee” is defined asa person employed on wages in an establishment,directly or through a contractor, to perform skilled,The New Indian Labour Codes : A Transformative Shift in Employment Law

Ahmedabad Chartered Accountant Journal March, 2026 1069TMsemi-skilled, unskilled, manual, operational,supervisory, managerial, administrative, technicalor clerical work, excluding apprentices under theApprentices Act. The Code separately defines “gigworker” and “platform worker” under Sections 2(35)and 2(60), thereby formally recognizing these newworkforce categories.Key Takeaways & Conclusion: For auditors,thisCode creates new financial liabilities for employersthat we must track carefully. Gratuity for fixed-termemployees means actuarial valuations mustinclude even short-term contracts, creatingliabilities from day one. Gig and platform workerinclusion means we, as auditors, must auditrevenues and ensure contributions to welfare fundsare correctly calculated and reported. For us, thisCode shifts their role toward strategic planning ofbenefit costs, actuarial valuations, and complianceaudits across diverse categories of workers.IV. Occupational Safety, Health & WorkingConditions (OSHWC) Code, 2020 – Safety &Equality at WorkThe Occupational Safety, Health and WorkingConditions Code, 2020 standardizes keyworkplace norms across sectors. It prescribesmaximum working hours of eight hours per dayand forty-eight hours per week, with overtimepayable at twice the ordinary rate of wages.However, overtime provisions do not apply toemployees in managerial or administrative roles,supervisors exercising significant authority, orpositions where working hours cannot be strictlymeasured. Clarifying a common misconception:Codes mandate a compulsory four-day workweek. What it enables is flexibility in scheduling,provided the aggregate weekly hours aremaintained. Accordingly, an establishment maydesign a compressed week (for instance, longerdaily shifts with additional days off), but this is achoice that employer and employees can mutuallyagree upon.The Code permits women to work night shiftssubject to adequate safety measures, includingsecure transport and protection arrangements.Establishments employing fifty or more employeesmust provide crèche facilities as per prescribedstandards. It also strengthens protections for interstate migrant workers by requiring travelallowances and insurance or welfare measures,particularly in sectors like construction.In establishments with five hundred or moreworkers, safety committees are mandatory, andemployers must provide free personal protectiveequipment and periodic health check-ups whererequired. The Code further recognizes certaincommuting accidents as employment-relatedhazards, enabling workers to claim insurance orcompensation benefits.Under Section 2(t), an “employee” is defined as aperson employed on wages in an establishment,directly or through a contractor, to perform skilled,semi-skilled, unskilled, manual, operational,supervisory, managerial, administrative, technicalor clerical work, excluding apprentices engagedunder the Apprentices Act.Inspection, Penalties & CompoundingFramework:The Codes introduce the concept of an “Inspectorcum-Facilitator,” shifting the inspection mechanismfrom purely punitive to facilitative complianceoversight. Inspections are intended to be webbased and risk-driven, reducing arbitrariness whileincreasing transparency.The penalty structure across the Codes has beenrationalized. Certain offences are compoundable,and monetary penalties replace imprisonment inspecified instances. However, repeat offencesattract significantly enhanced penalties.From a compliance governance perspective, thissignals a transition toward data-drivenenforcement. Non-compliance may become moreeasily traceable due to digitized filings andintegrated databases, thereby increasing theimportance of preventive internal audits.Key Takeaways & Conclusion:This Code adds direct cost implications foremployers which must be considered andaccounted for. Standardized working hours andThe New Indian Labour Codes : A Transformative Shift in Employment Law

1070 Ahmedabad Chartered Accountant Journal March, 2026TMmandatory double overtime mean payroll costswill rise, requiring careful accruals for overtimeand leave encashment. Women working nightshifts and migrant worker protections introducenew compliance costs (transport, insurance, travelallowances) that must be tracked and budgeted.Safety committees and mandatory PPE/healthchecks create infrastructure and complianceexpenses, which should be provided anddisclosed. For us, this Code means expandingaudit checklists to include safety and welfareexpenditures, ensuring companies do not missmandatory provisions that could lead to fines. Italso requires advising clients on long-termbudgeting for workplace safety and inclusivitymeasures.Compliance Focus: State wise ApplicabilityState-Wise Applicability: The Rollout ChallengeThe four Codes are Central Acts, but theirenforcement depends on the notification of Rulesby the Central and respective State Governments.1) Central vs State Rules:The Central Government has notified theRules, but each State must adopt and notifyits own Rules for the Codes to be fullyoperational within that State’s jurisdiction.2) Simultaneous Transition:Businesses with pan-India operations face thechallenge of transitioning across multiplejurisdictions simultaneously, as the date ofapplicability varies from State to State.3) Risk Area:Finance professionals and auditors shouldtrack these State notifications meticulously,as a client’s payroll or compliancerequirements might be governed by the OldActs in one state and the New Codes inanother, leading to dual compliance systemsduring the transition phase.Navigating Central and State jurisdictionAlthough the four Labour Codes are Centralenactments, their implementation depends uponrules framed by the “appropriate Government.”Determining whether the Central Government orthe State Government has jurisdiction is thereforefundamental, since compliance requirements,registers, forms and enforcement practices willflow from that authority.1. Code on WagesPrivate sector establishments ordinarily fallwithin the jurisdiction of the State Governmentwhere the establishment is situated. However,establishments in certain notified sectors—such as railways, mines, oil fields, majorports, air transport services,telecommunication, banking and insurance—fall under the Central Government.2. Industrial Relations CodeMost private establishments will come underthe State Government where theestablishment is situated. The CentralGovernment will be the appropriate authorityfor:- establishments in specified industriessuch as railways, mines, oil fields, majorports, air transport services,telecommunication, banking andinsurance; and- companies in which the CentralGovernment previously heldshareholding of 51 percent or more.3. Code on Social SecurityWhere an establishment operates in morethan one State, the Central Governmentgenerally becomes the appropriateGovernment. Establishments operating withina single State will typically fall under thatState’s jurisdiction, except:- entities in the specified industries notedabove; and- companies that earlier had CentralGovernment shareholding of at least 51percent.The New Indian Labour Codes : A Transformative Shift in Employment Law

Ahmedabad Chartered Accountant Journal March, 2026 1071TM4. Occupational Safety, Health and WorkingConditions CodeFactories, motor transport undertakings,plantations and newspaper establishmentsare ordinarily regulated by the StateGovernment. Other private establishmentsare also likely to fall under the State jurisdictionbased on location, except:- establishments in railways, mines, oilfields, major ports, air transport services,telecommunication, banking andinsurance; and- companies that previously had 51 percentor more Central Governmentshareholding.Effective Date, Transition & ApplicabilityWhilst the new Labour Codes are effective from21 November 2025, the supporting Rules are yetto be notified. The Labour Codes will becomeoperational only upon notification by theappropriate Government along with thecorresponding Rules. Until then, the existing Actscontinue to apply. Since States may notify Rulesat different times, multi-state establishments mayface staggered implementation.For establishments operating across multipleStates, this creates a transitional compliance risk.It is possible for one State to notify its Rules earlierthan another, leading to a temporary dualcompliance environment. Accordingly, notificationdates to be tracked carefully and it is to be ensuredthat payroll systems, employment contracts andcompliance registers are updated only upon theeffective date applicable to the establishment.Conclusion: From Consolidation to ComplianceArchitectureThe four Labour Codes mark a significant shift from afragmented and overlapping regulatory regime to aunified and coherent compliance framework, bringinggreater clarity and consistency to India’s labour lawarchitecture. By harmonizing definitions andconsolidating multiple legislations, the Codes simplifycompliance while simultaneously expanding the socialsecurity net, particularly through the formal inclusion ofgig and platform workers. At the same time, the balancebetween enhanced operational flexibility for industryand the preservation of worker safeguards remains asubject of ongoing debate. The expanded definitionof “wages” fundamentally reshapes payroll structuring,statutory contribution calculations and long-term costmodelling, requiring organizations to reassesscompensation design and provisioning strategies.Collectively, the reform elevates labour compliancefrom a routine statutory function to a strategicgovernance concern, redefining our, charteredaccountants’ role as proactive advisors and riskmanagers in the evolving regulatory landscape.References:ICAI Guidance on New Labour Codes (February 2026Edition) -https://resource.cdn.icai.org/90779aasbaps4103-guidance.pdfICAI ASB FAQs on Accounting Implications of NewLabour Codes - https://resource.cdn.icai.org/90049asb-faq-nlc.pdfThe Code on Wages, 2019 - https://www.indiacode.nic.in/bitstream/123456789/15793/1/aA2019-29.pdfThe Industrial Relations Code, 2020 - https://www.indiacode.nic.in/bitstream/123456789/22040/1/aa202035.pdfThe Code on Social Security, 2020 - https://www.indiacode.nic.in/bitstream/123456789/16823/1/aA2020-36.pdfThe Occupational Safety, Health and WorkingConditions Code, 2020 - https://www.indiacode.nic.in/bitstream/123456789/22041/1/a2020-37.pdfThe New Indian Labour Codes : A Transformative Shift in Employment Law

1072 Ahmedabad Chartered Accountant Journal March, 2026TMIntroduction :The Indian Income Tax system has undergone amassive transformation in recent years. With facelessassessments, scrutiny notices, and automatedcommunication, the intention was clear — bringtransparency, reduce corruption, and ensure objectivedecision-making. Instead of focusing on whetherincome is genuinely taxable, many cases now revolvearound defective notices, wrong authority issuingorders, portal glitches, or minor technical lapses.Taxpayers are forced to fight long litigation battles, notbecause they did something wrong but becauseprocedure was not properly followed.Procedure in Tax Law: Not a Formality, But aSafeguard :Tax laws prescribe certain procedures before makingadditions or passing orders. These include:Issuing valid notices under the correct sectionProviding proper opportunity of hearingFollowing faceless assessment rulesIssuing communications with valid DocumentIdentification Number (DIN)Ensuring correct jurisdictionHaving a DIN number in notices and orderThese are not small technicalities. When thesesafeguards are ignored, the entire foundation of theassessment becomes weak.Faceless Assessment and re-assessment: ARevolutionary Reform — But with Practical Issues:Section 144B of the Income Tax Act deals with facelessassessment scheme. Under this scheme, theassessee and assessing officer interact through virtualmeans, not aware of each other’s personal identity. TheCentral Government introduced the FacelessAssessment Scheme to provide greater transparency,efficiency and accountability in income taxassessments.Before the introduction of faceless assessment,assessing officer and the assessee had knowledgeof each other’s identity during the assessment processand the whole assessment process was undertakenphysically. This created opportunities for unlawful taxpractices and lobbying. Therefore, the centralgovernment has introduced a faceless assessmentscheme.In 2022, the Government introduced a faceless schemerequiring reassessments to be conducted by aFaceless Assessing Officer (FAO). In practice, actionsand inquiry prior to the issuance of a reassessmentnotice were undertaken by the Jurisdictional AssessingOfficer (JAO), while the reassessment proceedingsand reassessment order were carried out by the FAO.Various High Courts held that all actions were requiredto be undertaken by the FAO and not the JAO, resultingin the quashing of entire proceedings for want ofrequisite jurisdiction. This issue is currently pendingbefore the Supreme Court. The Union budget 2026proposes an amendment to clarify that JAO shallbe the appropriate authority for all such actions. Theamendment is proposed to be clarificatory and iseffective from 1 April 2026 (ITA 2025).DIN (Document Identification Number): ImportantProcedural ChangeThe introduction of the Document Identification Number(DIN) by the Central Board of Direct Taxes (CBDT) is alandmark procedural change in the Indian Income TaxAct, designed to enhance transparency, accountability,and prevent fraud. Effective from October 1, 2019, allcommunications including notices, orders, andsummons must bear a unique computer-generated DIN.Several High Courts have held that absence orincorrect quoting of DIN renders the assessment orderinvalid, while other courts have taken a more pragmaticview and upheld assessments where substantiveWhen Procedure Defeats Justice :How Technical Lapses are used AgainstTaxpayersCA. Vishwa [email protected]

Ahmedabad Chartered Accountant Journal March, 2026 1073TMcompliance existed. The matter is currently pendingbefore the Supreme Court, lending to uncertainty.The Finance Bill 2026 proposes to retrospectivelyclarify that:An assessment shall no be invalid merely dueto any mistake, defect or omission in quotingthe DIN,Provided the assessment order is otherwisetraceable or referenced through a computergenerated DIN or system reference.Timelines, Notices, and Portal Glitches: UnequalBurden on TaxpayersAnother frequently encountered procedural challengearises from notice timelines and portal technicalities.Taxpayers may have limited windows to respond, whilethe system experiences downtime, failed uploads, ornon-receipt of communication altogether.In one recent ITAT decision, the Tribunal condoned adelay of 621 days in an appeal because notices weresent to an incorrect email address due to departmentalerror, restoring the matter to the appellate forum. Thisdecision underscores the importance of accurateprocedures even in a digital regime.Section 292B & 292BB - When Defects Are Cured,and When They Are Not:In recent years, whenever procedural lapses arepointed out by taxpayers, the Department frequentlyinvokes Section 292B and Section 292BB of theIncome-tax Act as a defensive shield. These provisionsare often projected as curative mechanisms intendedto prevent proceedings from failing on mere technicalgrounds. However, judicial interpretation makes itabundantly clear that these sections are not blanketimmunity clauses.Section 292B provides that an assessment, notice orproceeding shall not be invalid merely by reason ofany mistake, defect or omission if it is in substanceand effect in conformity with the intent and purpose ofthe Act. The legislative intent behind this provision isto protect proceedings from minor clerical orprocedural irregularities.Similarly, Section 292BB deems that if an assessee hasparticipated in proceedings, he cannot later object thatnotice was not properly served, provided such objectionwas not raised before completion of assessment.However, courts have consistently drawn a cleardistinction between:Curable defects (clerical errors, typographicalmistakes, minor irregularities), andJurisdictional defects (absence of valid notice,notice issued under wrong section, notice issuedby an incompetent authority, or notice issuedbeyond limitation period).Judicial Guidance on the Scope of 292B & 292BB:1. CIT v. Laxman Das Khandelwal (2019) – SupremeCourt : In this landmark judgment, the SupremeCourt held that Section 292BB cannot cure thecomplete absence of a mandatory notice. TheCourt clarified that for Section 292BB to apply, thenotice must have been issued in the first place. Ifno notice under Section 143(2) was issued at all,the defect is not procedural but foundational.2. PCIT v. Brandix Mauritius Holdings Ltd. (DelhiHigh Court) : In this case, the Delhi High Courtheld that where reassessment proceedings wereinitiated by an authority lacking proper jurisdictionunder the faceless regime, such defect was not amere procedural irregularity but a substantiveillegality.The Court emphasized that jurisdiction is not atechnicality. If proceedings are initiated by anincompetent authority or in violation of statutorymandate, they are void ab initio and cannot bevalidated by invoking Section 292B.ConclusionAs India’s tax administration becomes increasinglydigitised and system-driven, the importance ofprocedural discipline becomes even greater. Thelegitimacy of taxation lies not merely in collection butin compliance with due process. Procedure is not theenemy of revenue; it is the guardian of fairness. Whenprocedural safeguards are diluted in the name ofefficiency, the system risks sacrificing justice at thealtar of expediency. Ultimately, a fair tax system is notmeasured by the quantum of additions made, but bythe legitimacy of the process adopted. If procedure isrespected, justice follows naturally. But whenprocedure is treated as an inconvenience, litigationmultiplies and trust erodes.When Procedure Defeats Justice : How Technical Lapses are used Against Taxpayers

1074 Ahmedabad Chartered Accountant Journal March, 2026TMConstructive Trust – Applicability to PublicentitiesA constructive trust arises by operation of law withoutregard to the intention of the parties to create a trust. ITdoes not require a deed signifying the institution oftrust. Under a constructive trust, the trust arises byoperation of law as from the date of the circumstanceswhich give rise to it. The function of the court is todeclare as such. It is regarded as a residuary category.It is imposed not necessarily to effectuate anyexpressed or implied intention but to redress a wrong.It is the result of judicial intervention.An express trust is a legal relationship which is createdby an individual(s) out of his own volition, whilemanifesting an intention to create a trust which may beexpressed either by words or through conduct.In English Private Trust jurisprudence three certaintiesare required – (a) certainty of intention (b) certainty ofthe subject matter of the property to the trust and (c)certainty of objects or the beneficiaries and the interestto be enjoyed by them.A trust can be said to have been created for a publicpurpose when the beneficiaries are the general publicwho are incapable of exact ascertainment. Though theymay not necessarily be public at large but they mustat least be a classified section of it and not a preascertained group of specific individuals.A Society registered under the Societies Act is not ajuristic person or a body corporate capable of holdingproperty by itself and it is for this reason that fictionalvesting of the property belonging to the society hasbeen made in favour of the governing body of thesociety. In absence of a separate vesting in trustees,the property belonging to the society would beautomatically vested through deeming fiction in thegoverning body. A public trust would be created priorto registration of the society subject to sec.92 of CPC.30Advocate Samir N. [email protected] ofRulingsSuch a governing body is duty bound to ensure that theproperty is put towards and utilized for the purposes/aims of the society as laid down in its memorandumetc. Moreover, in the event of society’s dissolution themembers would not derive any right to distribute theassets belonging to the society between themselvesbecause both during subsistence and dissolution of thesociety, the members or the governing body cannot besaid to possess any beneficial or individual interest overthe property vested in them. They are supposed tosafeguard the same for the future members or governingbody of the society.Operation Asha vs Shelly Batra [2026] [1 SCC 569].Double Taxation Avoidance – Mauritiusbased entitiesThe provisions of DTAA are expressions of sovereignpolicy of more than one sovereign State, negotiatedand entered into at a political, diplomatic level andhaving several explicit and subliminal and unarticulatedconsiderations as their basis. Such agreements mustbe seen in the context of aiding commercial relationbetween the partners and a bargain betweencontracting States as to the division of the tax revenuebetween them.The object of DTAA is to prevent double taxation andnot to facilitate avoidance or evasion of tax. To codifythe doctrine of “substance over form” ensuring that thereal intention of the parties, the actual effect oftransactions, and the purpose of an arrangement weretaken into account for determining tax consequences,the General Anti Avoidance Rules (GAAR). It was acomprehensive mechanism to deter tax evasion underthe guise of foreign institutional investment bycompanies misusing DTAA with Mauritius Govt.AAR v Tiger Global International [485 ITR 214].SUPREME COURT31

Ahmedabad Chartered Accountant Journal March, 2026 1075TMRevision u/s 263 where there are twopossible views:PCIT v/s. Sasken Technnologies Ltd(2025) 483 ITR 49 (Kar)Issue:Whether powers u/s 263 cannot be exercised by CITwhen the AO has taken one out of the two possibleviews?Held: Head NotesIn CIT v/s, Amitabh Bachchan (2016) 384 ITR 200 (SC);(2016) 11 SCC 748; 2016 SCC Online SC 484, theSupreme Court has held that so long as the view takenby the Assessing Officer is a “possible view”, it oughtnot be interfered with by the Commissioner undersection 263 of the Income Tax Act, 1961 merely on theground that there could be another possible view inthe matter.Held, dismissing the appeal, that the Tribunal hadrecorded that on the first issue, the Commissionerhad misconstrued the facts. On issue Nos 2,3 and 4,the Assessing Officer had taken “possible views”.The Tribunal was justified setting aside the order ofrevision.Validity of assessment order without givingadequate opportunity to assessee.Mangal Chand v/s. Addl / joint/ Deputy /AsstCIT of Income Tax, NFAC(2025) 483 ITR 187 (Mad)Issue:What is the validity of assessment order passed withoutgiving adequate opportunity to be heard?Held: Head Notes:Held, that the material on record showed that a requestfor adjournment to the notice dated March 31, 2021,was in fact submitted on April 3, 2021. Without dealingwith the assessee’s request or informing the assesseeas to whether adjournment request was accepted orrejected, the assessing authority proceeded to makethe order of assessment. The order had been passedin violation or principles of natural justice. The order ofassessment was not valid. (Paras 4, 6).Change of Opinion: ReassessmentE Infochips Pvt. Ltd. v/s. AssistantCommissioner of Income Tax[2025] 483 ITR 229 (Guj)Issue:Whether it was a case of ‘change of opinion’ when thedetails of MAT credit were stated in the statement ofincome against which the AO did not raise anyobjection to it during the course of assessment?Held: Head Notes:“Held, that there was no failure on the part of thepetitioner to disclose fully and truly all material factsnecessary for its assessment. Even from the record,it was evident that in the statement of income minimumalternate tax credit details were filed. No details or furtherinquiry was made on the claim. Having accepted theclaim in the absence of any other reason,reassessment on the very issue was a change ofopinion. The notice of reassessment was not valid.(para 8)”Validity of reassessment notice in absenceof any fresh material.Manu Drives and Controls Pvt. Ltd. v/s.Income Tax Officer[2025] 483 ITR 238 (Guj)Issue:When the AO had recorded the reasons for reopeningonly on the basis of the material available during theCA. Jayesh C. [email protected] the Courts113112114

1076 Ahmedabad Chartered Accountant Journal March, 2026TMcourse of the original assessment and there was nofresh material to form a reason to believe that incomehad escaped assessment, whether the reassessmentnotice is invalid?Held: Head Notes:“Held, that the Income-tax Officer had recorded thereasons for reopening only on the basis of the materialavailable during the course of the original assessmentand there was no fresh material to form a reason tobelieve that income had escaped assessment. Theassessee had disclosed all material facts during thecourse of the original assessment and in response tothe notices issued under sections 143(2) and 142(1)of the Income-tax Act, 1961 and the assessment orderwas passed after considering the details provided bythe assessee. The Assessing Officer did not have anyjurisdiction to issue the notice in the absence of anybasis except assumptions and presumptions. Thenotice of reassessment was not valid. (paras 18, 19,20, 23)”Adequate inquiry v. Lack of inquiry u/s 263PCIT v/s. Corus Vitrified Pvt. Ltd.[2025] 483 ITR 254 (Guj)Issue:When adequate inquiry is done for an issue whethersection 263 can be invoked taking a view that therewas a lack of inquiry?Held: Head Notes:“Held, dismissing the appeal, that the Tribunal hadfound that adequate inquiry was done and it was not acase of lack of inquiry. Repayment of the loan did notconstitute any expenditure and as the source of suchrepayment was explained before the Assessing Officeras well as the Principal Commissioner, section 69C ofthe Income-tax Act, 1961, could not have been invoked.The receipts had already been taxed in the hands ofthe assessee and the assessment order which wasfinally closed under the Direct Tax Vivad se VishwasScheme. The Tribunal was right in holding that it wasnot a case where there was lack of inquiry and thereforethere was no ground on which revisionary powersunder section 263 could have been invoked. (paras4, 5)”From the CourtsChange of Opinion: ReassessmentTroikaa Pharmaceutical Ltd. v/s. Additional/Joint/ Deputy/ Assistant Commissioner ofIncome Tax.[2025] 483 ITR 302 (Guj)Issue:Whether it was a case of ‘change of opinion’ when thedetails were examined by the AO during the course oforiginal assessment and hence the notice u/s 148 isinvalid?Held: Head Notes:“Held, allowing the petition, (i) that the notice undersection 148 of the Act and the reasons for reopeningthe case were based on the very same records whichwere placed at the time of the original assessment.The details regarding the issue under considerationwere already examined by the Assessing Officer forwhich a specific query was raised and therefore it wasnot open to the Assessing Officer to revisit his opinionbecause of a “change of opinion”. It was evident thatwhile issuing notice under section 148 of the Act, theDepartment had relied on the very same assessmentrecords and that there was no fresh material andtherefore the notice and the order disposing of theobjections were bad. (paras 6.1, 9)Rule of consistency when the departmenthas not appealed against ITAT order inearlier assessment year.Principal Commissioner of Income Tax v/s.Times Internet Ltd.[2025] 483 ITR 406 (Delhi)Issue:Whether the rule of consistency should prevailwhenthe matter had attained finality since the Departmentdid not appeal against the order?Held: Head Notes:“Held also, (i) that the rule of consistency should prevailover the issue of restriction of depreciation undersection 32 at 25 per cent instead of 60 per cent onsoftware licences. The Commissioner (Appeals) hadfollowed the decision taken by his predecessor forthe assessment year 2009–10 and had deleted thedisallowance which was confirmed by the Tribunal115116117

Ahmedabad Chartered Accountant Journal March, 2026 1077TMfollowing its own decision for the assessment years2006–07 to 2008–09. The matter had attained finalitysince the Department did not appeal against the order.The order of the Tribunal need not be interfered with.(paras 14, 15, 15.1, 16)(ii) That the deleted disallowance included the amountexpended towards software expenditure and theamount, which was accorded as depreciationunder section 32, upon the Assessing Officertreating it as capital expenditure. Hence, thetreatment of this disallowance ordered by theAssessing Officer depended on whether thesoftware expenditure was treated as moneyexpended on revenue or on capital account.(paras 20, 21)”“Furnishing of inaccurate particulars ofincome” when the AO changes the “head ofincome”PCIT v/s. Ankita Deposits and Advances Pvt.Ltd.[2025] 483 ITR 458 (HP)Issue:Whether the assessee could be accused of furnishingincorrect particulars of income or suppressing factsbecause he had declared it under a particular “headof income”, and the Assessing Officer chose to treat itunder some other head?Held: Head Notes:“Held, that the High Court while affirming theassessment did not say that the assessee hadconcealed the particulars of his income or hadfurnished in accurate particulars of his income. Therewas no concealment or furnishing of any inaccurateparticulars regarding the income in the return filed bythe assessee and no statement made or detailsupplied by the assessee was found to be factuallyincorrect. Merely because he had declared it undera particular “head of income”, and the AssessingOfficer chose to treat it under some other head, theassessee could not be accused of furnishing incorrectparticulars of income or suppressing facts. Penaltycould not be levied under section 271(1)(c). (paras26, 28, 30, 33)”OLD is GOLDCommission paid to non-resident agents forservices rendered entirely outside India CIT v/s. Toshuku Ltd.(1981) 125 ITR 525 (SC)Issue:Whether commission paid to non-resident agentsoperating entirely outside India is not deemed to beincome accruing or arising in India, even if the saleproceeds are remitted to India?Held:“….. It cannot be said that the making of the bookentries in the books of the statutory agent amountedto receipt by the assessees who were non-residentsas the amounts so credited in their favour were not attheir disposal or control. It is not possible to hold thatthe non-resident assessees in this case either receivedor can be deemed to have received the sums inquestion when their accounts with the statutory agentwere credited, since a credit balance without moreonly represents a debt and a mere book entry in thedebtor’s own books does not constitute payment whichwill secure discharge from the debt. They cannot,therefore, be charged to tax on the basis of receipt ofincome actual or constructive in the taxable territoriesduring the relevant accounting period.The second aspect of the same question is whetherthe commission amounts credited in the books of thestatutory agent can be treated as incomes accrued,arisen, or deemed to have accrued or arisen in Indiato the non-resident assessees during the relevant year.This takes us to section 9 of the Act. It is urged that thecommission amounts should be treated as incomesdeemed to have accrued or arisen in India as they,according to the Department, had either accrued orarisen through and from the business connection inIndia that existed between the non-resident assesseesand the statutory agent. This contention overlooks theeffect of clause (a) of the Explanation to clause (i) ofsub-section (1) of section 9 of the Act which providesthat in the case of a business of which all the operationsare not carried out in India, the income of the businessdeemed under that clause to accrue or arise in Indiashall be only such part of the income as is reasonablyFrom the Courts118119

1078 Ahmedabad Chartered Accountant Journal March, 2026TMattributable to the operations carried out in India. If allsuch operations are carried out in India, the entireincome accruing therefrom shall be deemed to haveaccrued in India. If, however, all the operations are notcarried out in the taxable territories, the profits and gainsof business deemed to accrue in India through andfrom business connection in India shall be only suchprofits and gains as are reasonably attributable to thatpart of the operations carried out in the taxableterritories. If no operations of business are carried outin the taxable territories, it follows that the incomeaccruing or arising abroad through or from anybusiness connection in India cannot be deemed toaccrue or arise in India. (See Commissioner of Incometax, Punjab v. R. D. Aggarwal & Co. & Anr.(1) and M/s. Carborandum Co. v. C.I.T., Madras(2) which aredecided on the basis of section 42 of the IndianIncome-tax Act, 1922, which corresponds to section9(1)(i) of the Act.) In the instant case the non-residentassessees did not carry on any business operationsin the taxable territories. They acted as selling agentsoutside India. The receipt in India of the sale proceedsof tobacco remitted or caused to be remitted by thepurchasers from abroad does not amount to anoperation carried out by the assessees in India ascontemplated by clause (a) of the Explanationto section 9(1)(i) of the Act. The commission amountswhich were earned by the non-resident assessees forservices rendered outside India cannot, therefore, bedeemed to be incomes which have either accrued orarisen in India. The High Court was, therefore, right inanswering the question against the Department.””Deemed dividend” u/s 2(22)(e ) :LoanrepaidTarulata Syam And Ors v/s CIT( 1977) 108 ITR 345 (SC)Issue:If the loan is repaid within a short time after it is availed,whether section 2(22)(e ) will not apply?Held:“To us, there appears no justification to depart fromthe normal rule of construction according to which theintention of the legislature is primarily to be gatheredfrom the words used in the statute. It will be well toFrom the Courtsrecall the words of Rowlatt J. in Cape Brandy Syndicasev. I.R.C.(1) at p. 71, that “in a taxing Act one has to lookmerely at what is clearly said. There is no room forany intendment. There is no equity about a tax. Thereis no. presumption as to a tax. nothing is to be read in,nothing is to be implied. One can only look fairly at thelanguage used”. Once it is shown that the case of theassessee comes within the letter of the law, he mustbe taxed, however great the hardship may appear to.the judicial mind to be. In our opinion, the IndianLegislature has deliberately omitted to use in ss.2(6A)(e) and 12(lB) words analogous to those in thelast limb of sub-section (1) of s. 108 of the Commonwealth Act. When Sections 2(6A) (e) and 12(lB) wereinserted by the Finance Act, 1955, Parliament musthave been aware of the provision contained in s. 108 ofthe Common wealth Act. In spite of such awareness,Parliament has not thought it fit to borrow whole hogwhat is said in s. 108 (1 ) of the Common wealth Act.So far as the last limb of s. 108(1) is concerned, ourParliament imported only a very restricted version andincorporated the same as the ‘fifth condition’ in sub-s.(lB) of s. 12 to the effect, that the “payment deemedas dividend shall be treated as a dividend receivedby him in the previous year relevant to the assessmentyear ending on the 31st day of March, 1956 if suchloan or advance remains outstanding on the last dayof such previous year”. The word “such” pre- fixed tothe “previous year” shows that the application of thisclause is confined to the assessment year ending on31-3-1956. In the instant case we are not concernedwith the assessment year ending on 31-3-56. Thishighlights the fact that the Legislature has deliberatelynot made the subsistence of the loan or advance, orits being outstanding on the last date of the previousyear relevant to the assessment year, a prerequisitefor raising the statutory fiction. In other words, even ifthe loan or advance ceases to be outstanding at theend of the previous year, it can still be deemed as a‘dividend’ if the other four conditions factually exist, tothe extent of the accumulated profits possessed bythe Company.” [emphasis supplied]120

Ahmedabad Chartered Accountant Journal March, 2026 1079TMACIT v. Anuj Prakash Gupta183Taxmann.com 392 (Raipur)Order dated 5th Feb 2026, Assessment Year2019-20Basic FactsThe assessee had claimed deduction under section80GGC for donation given to a political party, throughbanking channel & had obtained receipt. Consequentupon search action carried out in the case of RUPPsgroup, Ahmedabad as per section 132, the politicalparty was found to be one of the entities that wasinvolved in providing accommodation entries.Basedon the information received from Investigation Wing,Ahmedabad that the said political party was involvedin providing accommodation entries of bogusdonation, the case of the assessee was reopenedunder section 147/148, wherein the AO had disalloweddeduction under section 80GGC. On appeal, the CIT(A)deleted the addition on the ground that there was nodirect material brought by the AO to show that theappellant in particular received any refund of thealleged donation, nor was the appellant confronted withspecific evidence or given cross examination ofpersons whose statements were relied upon. The AOhad not shown any bank trail, statement, or confirmationlinking the assessee to the alleged refund. Therefore,the disallowance was made purely on presumptionand general findings. On Dept’s appeal to the Tribunal:Issue:Whether the Assessee was entitled to deductionunder section 80GGC for donation to political partyHeld by Tribunal in Favour of the assessee:The allegation of the department was that the saidpolitical party in which the assessee had made donationwas tainted party providing bogus accommodationentries through donations. However, the AO had notbrought out any evidence which suggests that the saidpolitical party has derived commission and has paidmoney back to the assessee through backdoor.Nothing has been brought on record by the AO toestablish the direct nexus regarding benefit derivedby the assessee from the said political party whilemaking the said donation. In view of the aforesaid factsand circumstances, the tribunal found no infirmity withthe findings of the CIT(A) (Appeals)/NFAC and thereforeupheld CIT(A)’s findings. The appeal of the Revenuewas accordingly dismissed.Hareon Solar Singapore (P.) Ltd. v. DCIT(International Taxation) 182 Taxmann.com125 (Del), TS-122-ITAT-2026Order dated 30th January 2026, AY 2020-21Basic Facts:The assessee, a company incorporated under lawsof Singapore, claimed to be tax resident in Singaporeduring year under consideration. It claimed exemptionof long-term capital gains arising from transfer of equityshares and compulsorily convertible debentures(CCDs) of an Indian company, contending that suchgains were not chargeable to tax in India under Articles13(4A) and 13(5) of India–Singapore DTAA. The AOobserved that assessee had no employees and hadnot incurred any operational expenditure. He held thatif entity had substantial business activity, includinginvestment in shares, there would necessarily beexpenditure towards employees and operations, andin absence thereof, assessee was merely shell/conduitentity interposed for purpose of routing investmentsand claiming treaty benefit.The AO further observedthat control and management of assessee-companywas exercised outside Singapore, as personsmanaging and operating bank accounts were notbased in Singapore. Accordingly, he denied DTAAbenefits and held capital gains taxable in India under71CA. Yogesh G. [email protected]. Aparna [email protected] News72

1080 Ahmedabad Chartered Accountant Journal March, 2026TMprovisions of Act.The DRP upheld draft assessmentorder and rejected objections raised by assessee.Onappeal to the Tribunal:Issue:Whether the capital gain on sale of equity/CCDsgrandfathered as per India – Singapore DTAA inrespect of assessee a company incorporated inSingaporeHeld by Tribunal against the Assessee.The Tribunal noted that the assessee being 100 percent subsidiary of Hareon Solar Company Limited,Hongkong was interposed/incorporated in Singaporeby its ultimate Chinese Holding Company (HareonSolar Technology Company Limited, China) throughits 100 per cent subsidiary in Hongkong (Hareon SolarCompany Limited, Hongkong), as an investmentholding company to route investments throughassessee company by way of equity/CCD’s in RenewSolar Energy (Karnataka) Pvt. Ltd., India. The fundingfor the said investments were done by the parentcompany of the assessee. The route adopted byultimate parent company in China of creating 100 percent subsidiary in Hong Kong and step down 100 percent subsidiary in Singapore i.e. the assesseecompany was to take benefit of India-Singapore DTAAotherwise there is no commercial purpose or economicsubstance in incorporating a company in SingaporeHad the investments been made directly by ultimateParent company at China and/or by immediate Parentcompany at Hongkong, the income tax on capital gainswould have been payable in India. Thus, it was heldthat the assessee company was created for theprincipal purposes of taking a tax advantage underthe India-Singapore DTAA. Thus, in the instant case,LOB clause 1 of Article 24A of India Singapore DTAAwas attracted. The Tribunal further noted that theassessee did not have any office in Singapore. Thereare no employees. The assessee has not incurredany operating expenses to run its business. It has madesome arrangements with its consultant TMF and itleases the office space as needed from its consultant.Its income statement had two heads of expenses,firstly, Legal and Professional fees, and secondly losson foreign exchange. The tribunal further noted thatthere were four Directors of the assessee companyTribunal Newson 15-6-2015 when Board of Directors Meeting wasclaimed to be held at Singapore to take decision toinvest in Renew Solar Energy (Karnataka) Pvt. Ltd. wastaken, out of which 3 Directors were stated to haveattended the meetings namely ‘W’ from Taiwan, ‘R’ fromUSA and ‘C’ from Singapore, while ‘Z’ did not attendedthe meeting. But no authenticated records such ascopies of passport of Directors, Visa, Entry/Exit stampby Immigration authorities at Singapore, apostille,notary attested documents etc. were produced tosubstantiate through cogent evidence that the meetingwas held in Singapore. No invoices/air tickets, hotelbill expenses of Directors etc. were produced. Almostsimilar situation existed with respect to decision byBoard to divest its equity shares/CCD in Renew SolarEnergy (Karnataka) Pvt. Ltd., India. The tribunal furthernoted from the HSBC KYC document that the assesseewas having Bank account with HSBC Bank, Singapore,and the said bank account is operated by ‘R’ (USCitizen/national) and by ‘E’ (Taiwan National/Citizen).Thus, none of the signatory to bank account is basedin Singapore. In view of the above, the tribunal heldthat the place of control and management of theassessee is not situated in Singapore, and it couldnot be said to be resident in Singapore. The assesseeclaimed that it holds TRC issued by SingaporeRevenue Authorities. It can be seen that TRC for theyear of assessment 2020 was issued in July 2019 bySingapore Revenue Authorities based on declarationof the assessee that its control and management forwhole of the year 2019 will be exercised in Singapore.The assessee has not produced any confirmationcertificate from the Inland Revenue authorities ofSingapore (IRAS) that the assessee satisfies theprescribed expenditure test under the DTAA. The TRCis not conclusive, Further, LOB clause 2 & 3 of Article24A of India Singapore DTAA were also attracted andthe assessee would not be entitled to benefits of IndiaSingapore DTAA. The assessee was merely a shell/conduit company interposed in Singapore to take thetax-advantage of India-Singapore DTAA to avoid payingtax in Indian jurisdiction. Singapore does not havecapital gains tax on sale/transfer of shares. Thus, thearrangement of interposing assessee as SingaporeCompany to invest in India in equity shares/CCDs ofRenew Solar Energy (Karnataka) Pvt. Ltd. was animpermissible arrangement to take tax-advantage under

Ahmedabad Chartered Accountant Journal March, 2026 1081TMIndia-Singapore DTAA, and treaty benefit would notbe available. Thus, based on aforesaid discussions,the Tribunal held that the capital gains on sale/transferof equity shares/CCDs shall be chargeable to incometax in India by invoking source rule under theprovisions of Income-tax Act, 1961 and the assesseeshall not be eligible and entitled to avail treaty benefitunder the India-Singapore DTAA. The assessmentorder passed by the AO was affirmed.DCIT (International Taxation)-2 v.Thogarchedu Subha Sri183 Taxmann.com481 (Hyd)Order dated 11th Feb 2026, Assessment Year2023-24Basic Facts:The assessee, a non-resident and tax resident of USA,filed return claiming beneficial tax rates under the India–USA DTAA. While claiming DTAA benefit under section90, the assessee did not file Form No. 10F along withthe return. The return was processed under section143(1) by CPC, which denied DTAA benefit solely onthe ground of non-filing of Form No. 10F andrecomputed tax under normal provisions, raising ademand. The assessee subsequently filed Form No.10F along with TRC during rectification proceedingsunder section 154. However, CPC rejected therectification applications. On appeal, CIT(A) directedgrant of DTAA relief after verification of Form 10F andTRC. On appeal to the Tribunal:Issue:Whether assessee was entitled to treaty benefit eventhough there was delay in filing form 10FHeld by tribunal in favour of the assessee.Rule 21AB mandates furnishing of prescribedinformation in Form No.10F. Further, a combinedperusal of section 90 and rule 21AB, it was evidentthat no time limit has been prescribed either under theAct or the Rules for filing the said form. Further, it isevident that Form 10F does not create the right to claimDTAA benefit; it only facilitates verification of information.The right flows from the DTAA read with section 90(2).Once tax residency and treaty entitlement areestablished, Form 10F remains a proceduralcompliance. Unlike certain provisions where thelegislature has expressly mandated filing of a reportor form within a specified time, no such embargo isattached to Form 10F. Therefore, in absence of anystatutory prescription, the filing of Form 10F cannot betreated as a condition precedent, non-fulfilment of whichwould automatically result in denial of treaty benefit. Atbest, it is a directory procedural requirement, noncompliance of which is curable. Applying this wellestablished principle, it was held that delay in filingForm 10F is a curable procedural defect, and oncethe form is furnished, the same relates back to theclaim of DTAA benefit made in the return of income. Inthe above facts and circumstances of the case, it isheld that the procedural requirements, in the absenceof statutory time limits, are directory in nature, andsubstantive benefits flowing from a tax treaty cannotbe denied merely on account of delayed compliancewith procedural formalities, particularly when theassessee is otherwise eligible in substance.Accordingly, there was no infirmity in the order of theCIT(A). The grounds raised by the revenue aredismissed and the order of the CIT(A) was upheld.DCIT v. ERIS Lifesciences Ltd181taxmann.com 468 (Ahd),Order dated 9th December 2025, AssessmentYear 2018-19, 2020-21, 2022-23Basic Facts I:The assessee, a pharmaceutical manufacturingcompany, had a Guwahati Unit claiming deductionunder section 80-IE. In computing eligible profits, theassessee allocated employee benefit expenses ona division-wise basis by linking the Guwahati Division’ssales to total division-wise sales, asserting separatebrands, operations and identifiable workforcesupported by audited certificates and division-wisesales data. During assessment, the AO rejected theassessee’s division-wise allocation as inconsistent andunverifiable, and reallocated employee benefitexpenses based on overall unit-wise sales, resultingin higher allocation to the Guwahati Unit and acorresponding reduction in section 80-IE deduction.On appeal, CIT(A) accepted the assessee’ s divisionwise allocation as supported by audited division-wisesales certificates and consistent with cost accountingprinciples and deleted the entire adjustment. Onrevenue’s appeals to the Tribunal:Tribunal News7374

1082 Ahmedabad Chartered Accountant Journal March, 2026TMIssue I:Whether the allocation of employee expenses madeby the assessee on scientific basis was appropriatewhile calculating deduction u/s 80IEHeld by tribunal in favour of the assessee:The Tribunal noted that during the assessmentproceedings the assessee had, furnished a detailedexplanation supported by workings, demonstrating thatemployee benefit expenses were allocated on thebasis of division-wise sales of the Guwahati Divisionto total division-wise sales, which according to theassessee was a more specific, reliable and scientificmethod, considering that each division of the assesseemaintained separate brands, separate heads ofoperations and identifiable manpower structure. Theassessee had also placed on record the auditedfinancial statements, certificates issued by statutoryauditors certifying division-wise sales, sample copiesof appointment letters evidencing division-specificdeployment of employees and the computation ofeligible profits under section 80-IE prepared inaccordance with Cost Accounting Standards (CAS-7).The Tribunal did not infirmity in the decision of theCIT(A). As per tribunal it was a well-settled principlethat where the assessee adopts a more scientific orrational basis for allocation of common expenses, suchbasis cannot be substituted by the AO unless themethodology adopted is shown to be perverse,erroneous, or contrary to law. The assessee hasdemonstrated with ample evidence that each divisionof the assessee is functionally and operationally distinctwith specific brands, manpower and revenue streams,thereby justifying a division-wise allocation mechanism.The AO has neither controverted the correctness ofsuch bifurcation nor brought any material todemonstrate that the method employed by theassessee leads to inflation of eligible profits or that itis inconsistent with section 80-IE. Tribunal alsoobserved that the findings of the CIT(A) were fullyconsistent with judicial principles holding that wherethe assessee’s method is based on verifiable dataand have been consistently applied, the AO cannotimpose a different method merely on presumption orsuspicion. In view of the above, as the CIT(A) had takena fair, reasonable and well-supported view and theRevenue has not brought any material to displace thefactual findings recorded by the CIT(A), the deletion ofthe disallowance made by the AO on account ofreallocation of employee benefit expenses to theGuwahati Unit is upheld and Ground raised by therevenue was dismissed.Basic Facts II:The assessee, a pharmaceutical manufacturingcompany with a Guwahati Unit, received excise duty/GST refunds which were credited in the auditedaccounts. While computing MAT under section 115JB,the assessee sought exclusion of such refund frombook profit. During assessment for assessment year2018-19, the AO rejected the additional claim to excludethe refund from book profit on the ground that suchrelief could be claimed only through a revised return,and computed MAT without allowing the exclusion.Similar treatment continued in later years.On appeal,the CIT(A) admitted the legal claim and directedexclusion of the excise duty/GST refund from bookprofit, treating it as a capital receipt for assessmentyear 2018-19; and similarly allowed exclusion forassessment years 2020-21, 2021-22 and 2022-23respectively). On revenue’s appeals to the Tribunal:Issue II:Whether the refund of excise duty/GST can beexcluded from computation of book profit u/s 115JBon the ground that these were capital receipt.Held II against the Assessee:The CIT(A) proceeded on the footing that such refundconstituted a capital receipt and, following variousjudicial decisions including that of the Nagpur Benchof the Tribunal in Economic Explosives Ltd. v. ACIT[2024] 167 taxmann.com 9 (Nagpur - Trib.), directedits exclusion from the ambit of book profit, holding thatits inclusion would distort the working results. Therevenue has disputed this finding and has contendedthat post the amendment to section 2(24)(xviii) byFinance Act, 2015, with effect from 1-4-2016, thestatutory position is absolutely clear that assistance inthe nature of a subsidy, grant, reimbursement orconcession by whatever name called constitutes‘income’ unless it falls within the limited exclusionsprovided in the provision, which the present exciseTribunal News

Ahmedabad Chartered Accountant Journal March, 2026 1083TMrefund admittedly does not. It is an admitted positionon record that the excise duty refund received by theassessee does not fall under either clause (a) or clause(b) of the exclusion. When the statute expressly laysdown what is to be excluded, the principle expressiounius est exclusio alterius squarely applies, andanything not excluded must necessarily be included.In the light of the above settled legal position, there asper the tribunal there was considerable merit in therevenue’s contention that once section 2(24)(xviii)expressly treats all forms of Government assistanceincluding duty refund or concession as income unlessfalling within the specific exclusions. Once the exciserefund constitutes ‘income’ as per section 2(24)(xviii),it forms part of ‘net profit’ as per the profit and lossaccount prepared in accordance with Schedule III ofthe Companies Act, and consequently becomes partof book profit under section 115JB unless specificallyexcluded under Explanation 1 to section 115JB—anexclusion which the statute does not provide for suchrefund. Therefore, the CIT(A) erred in concluding thatthe excise duty refund constitutes a capital receipt orthat it can be excluded from book profit on the basisof general accounting principles or pre-amendmentdecisions. In view of the above, the findings of theCIT(A) were reversed and the adjustment made bythe AO was restored.Basic III:The assessee incurred channel partner/retail promotionexpenses and conference-related expenses andclaimed them as deductible business expenditure.Inassessment for assessment year 2018-19, the AO heldthat documentation did not substantiate that the entireexpenditure was wholly for business and that part of itcould relate to benefits to medical practitioners. Onthis basis, the AO disallowed 7.5 per cent each ofchannel partner/retail promotion expenses andconference-related expenses. On similar reasoning,disallowances were made in later years. On appeal,the CIT(A) confirmed the AO’s estimated disallowanceson both heads for all relevant years.On assessee’sappeals to the Tribunal:Issue III:Whether the channel partner/retail promotionexpenses & conference related expenses were notTribunal Newsfreebies for the Medical Practitioners and wasallowable u/s 37 of the Act.Held III against the Assessee:The assessee placed reliance on certain decisions tocontend that these expenses were wholly incurred forbusiness purposes and that no part of the expenditurewas proved to have been incurred on doctors. But theTribunal noted that the matter now stands squarely andconclusively covered against the assessee by thejudgment of the Supreme Court in Apex Laboratories(P.) Ltd. v. Dy. CIT LTU [2022] 135 taxmann.com 286/[2022] 286 Taxman 200/[2022] 442 ITR 1 (SC) whereinthe Court, after examining Regulation 6.8 of the MCIRegulations, 2002 and Circular No. 5/2012 dated 1-8-2012, has held that any expenditure incurred bypharmaceutical companies in providing freebies, gifts,travel facilities, hospitality or any other benefit to medicalpractitioners being prohibited by law falls within themischief of Explanation 1 to section 37(1) and is notallowable as business expenditure. The SupremeCourt categorically held that where acceptance of suchbenefits is punishable for the recipient doctor underMCI Regulations, the payer-pharmaceutical companycannot be permitted to claim deduction for the verysame prohibited expenditure, as doing so would defeatthe object of the law. The ratio laid down therein wasbinding and directly applied to the assessee’s case.Further, the tribunal also referred to Ahmedabad Benchof the Tribunal in Sunflower Pharmacy v. ITO [2023]156 taxmann.com 215 (Ahmedabad - Trib.)/[2023] 203ITD 623 (Ahmedabad - Trib.) and Mumbai benchdecision in case of Stemade Biotech (P.) Ltd. v. DCIT[2022] 138 taxmann.com 368/[2022] 195 ITD 346(Mumbai - Trib.), wherein SC decision had beenfollowed. As per the tribunal although the assesseehad furnished bills and vouchers, it has failed toestablish that the entire expenditure was incurred solelyfor channel partners or retailers and that no part of itbenefited medical practitioners. Even before theTribunal, the assessee had not brought any cogentmaterial to rebut the findings of the lower authoritiesthat a component of these expenditures had thepotential to relate to doctors, nor has it demonstratedthat the estimation made by the AO is excessive,arbitrary or unreasonable. In view of the consistentjudicial position, the inability of the assessee to furnish

1084 Ahmedabad Chartered Accountant Journal March, 2026TMevidences establishing that no part of the expenditurewas incurred in violation of the MCI Regulations, andthe fact that the Supreme Court in Apex Laboratories(supra) has conclusively settled the law against theassessee, the tribunal did not find infirmity in the orderof the CIT(A). Accordingly, the order of the CIT(A) wasupheld and the ground of appeal raised by theassessee was dismissed.Basic IV:The assessee credited long-term capital gains to itsprofit and loss account and claimed that the indexedcost of acquisition should be reduced while computingbook profit under section 115JB. During assessmentfor assessment year 2018-19, the AO rejected the claimon the technical grounds that it was an additional claimnot made through a revised return, and computed MATwithout allowing indexation. Similar rejection occurredin later years.On appeal, the CIT(A) admitted the legalclaim but rejected it on merits, holding that section115JB does not contain a provision permittingindexation for computing book profit.On assessee’sappeals to the Tribunal.Issue IV:Whether in case of long-term capital gain creditedto Profit & loss account, for computing Book profitu/s 115JB, index cost should be reduced.Held IV held in favour of the assessee:The Tribunal noted that on merits, the CIT(A) rejectedthe assessee’s claim by observing that section 115JBcontains no specific clause allowing indexation andby placing reliance on the Kolkata ITAT decision inSplendour Villa Makers (P.) Ltd. v. Asstt. CIT [IT AppealNo. 734 (Kol) of 2023, dated 25-7-2024]. As per thetribunal the issue was squarely covered in favour ofthe assessee by the judgment of the Karnataka HighCourt in Best Trading and Agencies Ltd. v. DCIT [2020]119 taxmann.com 129 (Karnataka)/[2020] 275 Taxman550 (Karnataka)/[2020] 428 ITR 52 (Karnataka) whereinit was held that by virtue of section 115JB(5), all otherprovisions of the Act—including those governingcomputation of long-term capital gains under sections45, 48 and 112—continue to apply unless expresslyoverridden. The tribunal also noted that similar viewwas taken by the Bangalore Bench of the Tribunal inTribunal NewsKarnataka State Industrial Infrastructure DevelopmentCorporation Ltd. v. DCIT [2016] 76 taxmann.com 360(Bangalore - Trib.) The Tribunal accordingly held thatsuch indexed long-term capital gains must form thebasis of computation of book profits under section115JB, and that the assessee is entitled to indexationfor MAT purposes. As per the tribunal these authorities,which analyse the statutory scheme in detail, clearlyestablished that: (i) section 115JB(5) expresslypreserves the applicability of all other provisions ofthe Act unless specifically excluded (ii) computationof long-term capital gains under sections 45 and 48necessarily requires substitution of cost with indexedcost (iii) there is no express bar in section 115JBexcluding indexation (iv) denying indexation leads totaxation of unreal income, contrary to the real incometheory recognised by the Supreme Court in CIT v.Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (SC); and(v) specific provisions governing capital gains overridethe general MAT machinery. The Tribunal also notedthat the decision relied upon by the CIT(A), namelySplendour Villa Makers Pvt. Ltd. (Kol-ITAT), did notconsider the binding ratio of the Hon’ble KarnatakaHigh Court in Best Trading and Agencies Ltd. andtherefore cannot be preferred over a High Courtjudgment directly on the point. In absence of anycontrary judgment of the jurisdictional High Court,tribunal held that the decision of the Karnataka HighCourt being the only High Court judgment directly onthe issue deserves to be followed in terms of judicialdiscipline. The order of the CIT(A) on this issue wastherefore reversed and the AO was directed torecompute book profit after allowing indexation inaccordance with law. Accordingly, Ground raised bythe assessee was allowed.DCIT (International Taxation) v. East WestSeeds India (P.) Ltd.182 taxmann.com 26(Pune - Trib.)Order dated 19th December 2025, AssessmentYear 2018-19 to 2020-21Basic Facts:The assessee is engaged in the business of researchand development of seeds and vegetables, enteredinto anagreement with company, HR, based in Thailand,to carry out research processes in specific crops. HR75

Ahmedabad Chartered Accountant Journal March, 2026 1085TMprovided the assessee with all the technical materialsand information related to seed technology.The AOheld that fees for technical services (FTS) receivedby HR were taxable in India under section 9(1)(vii) andsection 201, as HR did not have a permanentestablishment (PE) in India. The AO also invoked article22 of the India-Thailand DTAA, which deals with taxationof income not specifically covered by other articles.Onappeal, the CIT(A) held that in the absence of a specificprovision for FTS in the India-Thailand DTAA, suchincome should be treated as business income underarticle 7, which could only be taxed in the sourcecountry if earned through a PE, which was not the casehere.On appeal to the Tribunal:Issue:Whether in absence of FTS clause in the IndiaThailand DTAA, the payment of FTS was taxable asBusiness income & in absence of PE in India, thesame would not be taxable in India.Held by tribunal in favour of the Assessee:The Tribunal noted the decision in case of Denso(Thailand) co. Ltd., v. ACIT (International Taxation) [2024]163 taxmann.com 257 (Delhi Tribunal) wherein it washeld that the FTS in the absence of any specific clausefor FTS in DTAA will be treated as business incomeunless AO has brought on record any specific contraryfact. If there is no PE in India, then such FTS will not betaxable as per DTAA in India and the FTS cannot beclassified as miscellaneous income to bring it underthe article 22 of DTAA. As per Tribunal the facts in thecase of the Assessee are identical. In the case of theassessee, the payments have been made by theassessee to HR. These payments as mentioned bythe AO are in the nature of the FTS. The AO has notbrought on record any evidence to prove existenceof any PE of HR. Therefore, as claimed by theassessee, there was no PE of HR in India. Since thereis no specific mention of FTS in India Thailand DTAAand assessee has claimed that HR is into business ofresearch and development of seeds, vegetables, theimpugned FTS will be business income. Admittedly,there was no PE of HR in India. Therefore, as per article7 of India Thailand DTAA, business income of HR isnot taxable in India. The FTS could not be classifiedas miscellaneous income. Hence, it was outside theTribunal Newspurview of article 22 of India Thailand DTAA.Accordingly, the order of the CITA(A) was upheld.Zydus Lifesciences Ltd. Vs. DCITTS-64-ITAT2026 (Ahd)-TPOrder dated 29th January 2026, AssessmentYear 2017-18Basic Facts:The assessee is a manufacturer andtrader ofpharmaceutical products including veterinarypharmaceutical products operating both at the domesticlevel and internationally. The assessee exportedgoods tovarious foreign countries either directly orthrough its Overseas Associate Enterprise. A referenceu/s.92CA(1) of the Act wassent by the AO to the TPOto determine the Arm’s Length Price ofthe internationaltransactions undertaken by the assessee companyduring the impugned year. The TPO passed an orderu/s.92CA(3) of the Act working out an upwardadjustment with respect to the international transaction.The assessee filed objections to the same to the DRPwho, in turn, gavedirections in its order passedu/s.144C of the Act following whichthe AO passed ordermaking addition u/s 92CA(3) of the Act.Basic Fact I:The assessee whilebenchmarking its transaction ofsale of goods to its AE, ZydusUSA, had treated its AEas the tested party and benchmarked thetransactionby conducting an independent search on CompustatNorth America, database of North American companies.The TPO rejected the three comparables selected bythe assessee i.e., SCHEIN (HENRY) INC, ACETOCORP, and PATTERSON COMPANIESINC finding themto be not functionally comparable and to be havingwider geographical or expanded territorial jurisdiction.Issue I:Whether the TPO was correct in rejecting the threecomparable as not functionally & geographicallycomparableHeld I by tribunal in favour of the assessee:The tribunal noted that the assessee had pointed outthat it had submitted segmental results of thepharmaceutical division of all three entities to the TPO.This fact has not been controverted by the Department.76

1086 Ahmedabad Chartered Accountant Journal March, 2026TMFurther, the assessee had also demonstrated that themajority of the revenue or operations of all the threeentities was in the jurisdiction of USA. In the light of thesame, the tribunal did not find merit in Departmentrejecting these three entities as comparables, sincethe basis for rejecting the same by the TPO does notsurvive i.e. the entities not being functionallycomparable and operating in a wider jurisdiction.Further the assessee pointed out that the three entitieshave been accepted as comparable in the past yearsalso, right from A.Y. 2011-12 onwards. And the fact thatthe tested party, that is the AE, had consistently beenreturning profits in the past of 4.5%, which have notbeen visited with any adjustment in the hands of theassessee in the past, add strength to the argument ofthe assessee in support of the arm’s length price ofthe transaction entered into by the assessee with itsAE. In view of the above, the tribunal held that the AO/ TPO was not justified in rejecting the threecomparables selected by the assessee fordetermining the arm’s length price of its internationaltransaction of sales to Zydus USA. All the three entitieswere held to be comparable and the transfer pricingadjustment made to the international transaction of salesto Zydus USA was accordingly directed to be deleted.Basic Facts II:In the International Transaction pertaining to sale offinished goodsto Zydus France, the TPO had rejected4 comparables selected by the assessee in itsbenchmarking exercise. The Dispute Resolution Panel(DRP) additionally rejected four more comparablesfinding them to be functionally not comparable to thetested party and directed that the adjustment be madeto impugned international transactions. Aggrieved bythe aforesaid adjustment made to the internationaltransaction of sale of finished goods to Zydus France,the assessee before Tribunal.Issue II:Whether Rule 10CA prescribe 3 years data wasrequired for comparison.Whether functionally non comparable can beconsidered as comparables.Held II by tribunal against the assessee:The four comparables rejected by the TPO were onaccount of the fact that the result for the Financial Yearending December 2016 had not been provided in caseof the 3 companies and in one company the result forFY ending 2015 had not been provided. One of thearguments of the assessee before tribunal was that asper Rule 10CA of Income Tax Rules, 3 years data ofeach comparable company was to be taken for theBench marking exercise, however it was contendedthat as per Rule 10CA itself the mere non availability ofdata for one year could not be the reason for rejectionof comparables. In this regard the asessee contendedthat as per illustration 2 provided in Rule10CA theabsence or the non-availability of data for one of theyears could not be the reason for rejection ofcomparable. After considering the illustration 2provided under Rule 10CA, the Tribunal was not inagreement with the contention of the assessee. Asper Tribunal what the illustration 2 provides is that incase, at the time of benchmarking transaction by theassessee the data of that comparable was notavailable, however it is available during the assessmentproceedings then that data is to be considered for thepurposes of benchmarking of transaction and if duringthe assessment any new comparable also arises thenthat is also to be considered for determining of arm’slength price of the transaction. That did not mean thatand in no way implied that if the data of the particularyear relating to the comparable is not available thesame can be ignored. On the contrary, the illustrationemphasizes the consideration of 3 years data ofcomparables. The tribunal noted from orders of theauthorities below that the assessee had not provideddata at the time of assessment or DRP proceedingsnor before the Tribunal. Since the issue related to AY2017-18 and pertains to unavailability of financial dataof FY 2016, as per tribunal the same must very well beavailable now in 2025. The assessee was directed toproduce the data to the TPO for determining the arm’slength price of the transaction and for this limitedpurpose, the issue was restored back to the TPO totake into consideration the missing data of the fourcomparables noted by the TPO and thereafter,determine the arm’s length price of the internationaltransaction of the sale of goods to Zydus France.Tribunal NewsContinued to page 1104

Ahmedabad Chartered Accountant Journal March, 2026 1087TMIn this issue, we are giving full text of the recentdecision of Ahmedabad Tribunal in the case of GlotexSolutions Pvt. Ltd. in ITA No.2554/Ahd/2025 for Asst.Year 2021-22, wherein the issue was whether theassessee can get benefit of deduction u/s.80IAC whenForm No.10CCB, which is required to be filed for thesame claim, was not filed within the due date orextended due date for filing return of income.There are quite a few decisions on this issue of notonly Ahmedabad Tribunal but also other tribunals andhigh courts whether it has been held that filing of therequired form is mandatory but filing within due date isdirectory, and hence, if such form is filed even beforethe assessment is over, the assessee can get benefitof deduction under the respective section. However,Department has been taking a view based on thedecision of Hon’ble Supreme Court in the case of PCITvs. Wipro Ltd – 140 taxmann.com 223 where SupremeCourt has held that both filing of declaration as well asfiling within due date are mandatory, and hence,assessee cannot get benefit if any of the aboveconditions is not fulfilled. The Ahmedabad Tribunal inthe attached case has discussed this issue based onthe earlier decision of Ahmedabad Tribunal in DCITvs. Croygas Equipments Pvt. Ltd. in ITA No.415/Ahd/2020, wherein the said decision of Wipro Limited wasdistinguished and benefit was granted to the assessee.The present decision has also followed the samereasoning while allowing benefit to the assessee.We hope the readers would find the same useful.In the Income Tax Appellate Tribunal“C” Bench, AhmedabadBefore Shri Sanjay Garg, Judicial Member& Smt. Annapurna Gupta, Accountant MemberI.T.A. No. 2554/Ahd/2025(Assessment Year: 2021-22)CA. Sanjay R. [email protected] Solutions Pvt. Ltd., Vs. Income Tax Officer,Patel Nivas, B/h. Gopal Tower, Ward-2(1)(1),B/h. Sindhi Market, Maninagar, AhmedabadAhmedabad-380008[PAN No.AAGCG8907M](Appellant) (Respondent)Appellant by : Shri M K Patel, ARRespondent by : Shri Abhijit, Sr. DRDate of Hearing : 29.01.2026Date of Pronouncement : 16.03.2026O R D E RPer: Annapurna Gupta - AM:The present appeal has been filed by the assesseeagainst the order of the Ld. Commissioner of IncomeTax (Appeals), ADDL/JCIT(A)-9, Mumbai (hereinafterreferred to as “CIT(A)”) dated 07.10.2025 passed underSection 250 of the Income Tax Act, 1961 (hereinafterreferred to as the “Act”) and relates to AssessmentYear (A.Y.) 2021-22.2. The Grounds of Appeal raised by the assesseeare as under:“(1) That on facts, and in law, the learned Addl/JCIT(A)-9, Mumbai has grievously erred inconfirming the disallowance of claim ofdeduction of Rs. 1,02,96,890/- made u/s 80IACof the Act.(2) That on facts, and in law, the learned Addl/JCIT(A)-9, Mumbai ought to have held that theclaim made u/s 80IAC of the Act is allowableas per law, as admittedly the Form 10CCB isfiled before processing of return u/s 143(1) ofthe Act.(3) The appellant craves leave to add, alter, amendany ground of appeal.”

1088 Ahmedabad Chartered Accountant Journal March, 2026TMUnreported Judgements3. The solitary issue in the present appeal relates todenial of deduction claimed by the assessee underSection 80IAC of the Act, on account of delayedfiling of requisite Form 10CCB, being the AuditReport required to be filed for claiming the saiddeduction. The assessee is in the business ofengineering products and solutions and had filedReturn of Income for the impugned year declaringtotal income of Rs. 2,72,080/- after claimingdeduction under Chapter VI-A under Section 80IACof the Act amounting to Rs. 1,02,96,890/-. The Returnof Income was filed by the assessee within the duedate on 01.02.2022. Subsequently, communicationwas received by the assessee under Section143(1)(a) of the Act pertaining to the incorrect claimmade by the assessee under Section 80IAC of theAct since Form 10CCB was not filed within the duedate or the extended due date for the impugnedyear. Hence, the addition claimed was disallowedin the intimation made under Section 143(1) of theAct dated 28.12.2022. The assessee though hadnot filed Form 10CCB within the due date / theextended due date for the impugned year i.e. upto15.02.2022, however, the assessee had filed thesaid Form with a delay of 43 days on 28.03.2022.Thus, though Form 10CCB was filed and availableon record when the intimation was made underSection 143(1) of the Act on 28-12-22, however,since it was delayed for filing, having not been filedwithin the prescribed due date / extended due date,the assessee’s claim of deduction under Section80IAC of the Act was denied.4. The assessee moved a rectification applicationunder Section 154 of the Act on 16.01.2023, whichwas rejected by the Assessing Officer vide hisorder passed under Section 154 dated 24.01.2023.5. Aggrieved by the same, the assessee went inappeal before Ld. CIT(A) who confirmed the orderpassed by the Assessing Officer and dismissedthe assessee’s appeal.6. Aggrieved by the order of the CIT(A), theassessee has come up before us.7. The contention of the Ld. Counsel for the assesseebefore us was that the requirement of filing Form10CCA for the purpose of claiming deduction underChapter VI-A of the assessee had been held invarious decisions by Courts to be a proceduralrequirement and that it has been held that if therequirement was fulfilled during the pendency ofassessment proceedings, it would suffice forclaiming deduction. He contended that this aspectwas brought to the notice of the Ld. CIT(A) alsowherein the following decisions were pointed outto him holding so:(i) Niteshkumar J. Shah vs. DCIT, Circle-2(1)(1),Ahmedabad (ITA No. 189/Ahd/2023 dated12.07.2023)(ii) DCIT vs. Croygas Equipments Pvt. Ltd. (ITANo. 415/Ahd/2020 dated 16.06.2023)(iii) A.R. Industries vs. DCIT CPC Bengaluru(iv) Desai Infra Projects (I) Pvt. Ltd. vs.CIT(A),Pune-117.1 Ld. Counsel for the assessee contended thatdespite so pointing out the Ld. CIT(A) rejectedassessee’s contention referring to two judicialdecisions which had either been considered in theaforestated decisions of the ITAT or were over-turnedby the Hon’ble High Court. He pointed out that theLd. CIT(A) referred to the decision of the Hon’bleITAT, Ahmedabad Bench in the case of Associationof Indian Panel board Manufacturer vs. DCIT 143taxmann.com 418 (Ahmedabad-Tribunal) for holdingthat the requirement of filing Form 10CCB wasmandatory and not procedural. Ld. Counsel for theassessee contended that the Hon’ble Gujarat HighCourt had over-turned this decision of the ITAT in itsorder Association of Indian PanelboardManufacturer vs. DCIT 157 taxmann.com 550(Gujarat). He further contended that the Ld. CIT(A)relied on the decision of the Hon’ble Apex Court inthe case of Principal Commissioner of Income TaxIII, Bangalore and another vs. M/s. Wipro Ltd. CivilAppeal No. 1449 of 2022 dated 11.07.2022 for theproposition that the requirement of filing Form10CCB was mandatory. He contended that the ITAThad referred to the said decision of the Hon’bleApex Court in the case of M/s. Wipro Ltd. (supra)and distinguished the same while holding therequirement of the requisite Form for claimingdeduction / exemption to be a proceduralrequirement. He further contended that the CIT(A)order confirming the disallowance claim under

Ahmedabad Chartered Accountant Journal March, 2026 1089TMSection 80 IAC of the Act was contrary to the law inthis regard as interpreted by various JudicialAuthorities.8. Ld. DR on the other hand, relied on the order ofthe Ld. CIT(A) though he was unable to point outany infirmity in the contention made by the Ld.Counsel for the assessee before us that thedecisions relied upon by the Ld. CIT(A) holdingthe requirement of filing the requisite Form withinthe stipulated due date for being eligible to claimdeduction under Chapter VI-A were not relevantas pointed out by the Ld. Counsel for theassessee before us and noted above in our order.9. Having heard the contention of both the parties, weagree with the Ld. Counsel for the assessee thatthe assessee has been wrongly denied claim ofdeduction under Section 80 IAC for the reason thatthe Audit Report for claiming such deduction in Form10CCA was filed delayed by the assessee. Thefacts on record as noted by us above clearly revealthat the said Form 10CCB was filed with a delay ofonly 43 days and that too during the pendency ofthe intimation made on the assessee under Section143(1) of the Act, meaning thereby that when theintimation under Section 143(1) was made on theassessee the requisite Form 10CCB was availableon record. The Ld. Counsel for the assessee hasdrawn our attention to various decisions of the ITATholding the requirement of filing Form 10CCB to bea procedural requirement and further that the filingof the same before the Assessing Officer wouldsuffice the fulfillment of the condition of filing Form10CCB. Besides the decisions referred to beforeLd. CIT(A) as noted above, Ld. Counsel for theassessee further pointed out that several otherdecisions also held so:(1) Order of Hon’ble ITAT, Kolkata Bench in ITANo. 1318/Kol/2014, in the case of ACIT vs HiTeck Systems & Services Ltd. dated06.01.2025(2) Order of Hon’ble ITAT, Ahmedabad Bench inITA No. 189/Ahd/2023, in case of NiteshkumarJ. Shah, dated 12.07.2023(3) Order of Hon’ble ITAT, Pune Bench in ITA No.951/Pun/2025, in case of Sahyadri FarmersProducer Company Ltd., dated 08.10.202510. It is abundantly clear therefore that the requirementof filing of Form 10CCB for the purpose of claimingdeduction under Chapter VI-A has been consistentlyheld by Courts to be a procedural requirement. TheLd. CIT(A)’s finding for the requirement beingmandatory, we find, is based on the decision of theITAT Ahmedabad Bench in the case of Associationof Indian Panel Board Manufacturer (supra) whichthe Ld. Counsel for the assessee has demonstratedbefore us too have been overturned by the Hon’bleGujarat High Court.In fact, the decision of theHon’ble Gujarat High Court in the said case supportsthe case of the assessee wherein the Hon’ble Courthas held the requirement of filing Form 10B for thepurposes of claiming exemption under Section 12Aof the Act to be a procedural requirement. Thereliance placed by the Ld. CIT(A) on the decisionof the Hon’ble Apex Court in the case of M/s. WiproLtd. (supra) has also been demonstrated by theLd. Counsel for the assessee to be misplaced sinceit has been pointed out that the ITAT had consideredthe decision of the Hon’ble Apex Court in the caseof Cryogas Equipment (supra) while holding therequirement of filing the requisite Form to be aprocedural requirement. Since the Ld. DR wasunable to controvert the contention of the Ld.Counsel for the assessee as above, we do notfind any merit in the order of the Ld. CIT(A) confirmingthe disallowance of deduction under Section 80 IACof the Act amounting to Rs. 1.02 crores. Theassessee having filed Form 10CCB during thependency of the processing of its Return of Incomeby CPC under Section 143(1) of the Act, it hadsufficiently fulfilled the condition of filing the requisiteForm for claiming deduction under Section 80 IACof the Act. The assessee, therefore, we hold iseligible to claim deduction under Section 80 IAC ofthe Act and the Assessing Officer is directed to allowthe same claim to the assessee.11. In the result, the appeal of the assessee is allowed.This Order pronounced in Open Court on 16/03/2026Sd/- Sd/-(Sanjay Garg) (Annapurna Gupta)Judicial Member Accountant MemberAhmedabad; Dated 16/03/2026Unreported Judgements

1090 Ahmedabad Chartered Accountant Journal March, 2026TMSr. Advocate Tushar [email protected] AnalysisWhile computing the ten-year period of ‘relevantassessment year’, “the search assessment year” isto be included or excluded?Jayantibhai Karamshibhai Maniya v. ITO[2026] 182 taxmann.com 493 (Gujarat)[05-01-2026]xxx…8 The facts which are established from the pleadingsare that a search action under Section 153A of theAct against the searched person was undertakenon 09.05.2024, which indubitably falls in theFinancial Year 2024-25. The revenue found someincriminating material against the present petitionerand accordingly issued the impugned notices forreopening the assessment for the year 2015-16.The notice has been issued under Section 148 ofthe Act. With reference to the date of search, it isnecessary to refer to the provisions of Section152(3) of the Act, which read as under:“Section 152(3)“Where a search has been initiated under section132 or requisition is made under section 132A ora survey is conducted under section 133A [otherthan under sub-section (2A)] on or after the 1stday of April, 2021 but before the 1st day ofSeptember, 2024, the provisions of section 147to 151 shall apply as they stood immediatelybefore the commencement of the Finance (No. 2)Act, 2024.”Thus, since the date of search falls within the periodfrom the 1st day of April, 2021 to the 1st day ofSeptember, 2024, the provisions of Sections 147to 151, as they stood prior to the Finance Act (No.2), 2024, shall apply.xxx…409.1 Section 149(1)(b) of the Act refers to the limitationperiod of ten years, which has elapsed from theend of the “relevant assessment year”. Therelevant assessment year in the present case is2015-16, which is prior to the cut-off date of 1stApril, 2021, as specified in the first proviso. Thelink between Section 149 and Sections 153A and153C of the Act is found in the first proviso toSection 149(1) of the Act. The expression“relevant assessment year” is explained underExplanation 1 to the fourth proviso to Section153A(1). The first proviso to Section 149(1) ofthe Act bars the issuance of notice under Section148 of the Act for the relevant assessment yearbeginning on or before 01st April, 2021, if a noticeunder Section 148 or Section 153A or Section153C of the Act could not have been issued atthat time on account of it being beyond the timelimit specified under the provisions of clause (b)of sub-section (1) of Section 149 of the Act orSection 153A or Section 153C of the Act. In thepresent case, the notice under Section 148 ofthe Act emanates from the search proceedingsundertaken under Sections 132 / 132A of the Act,and hence the provisions of Sections 153A and153C of the Act would get attracted, and thereassessment of the petitioner has to beexamined by keeping in mind the limitationprovided under Section 153C of the Act, whichis pari materia to Section 153A of the Act.At this stage, we may refer to the provisions ofSection 153A(1)(b) and Explanation (1) to Section153A of the Act, on which the learned advocateshave premised their submissions. Section153A(1)(b) and Explanation (1) to Section 153A ofthe Act read as under:xxx…