Corporate TaxArticle·2 May 2026
Custodial Receipt Principle
By J the App
Executive Summary
In a dispute concerning taxability of bank guarantee encashment, the Tribunal reaffirmed that where amounts are received under government mandate and held in a fiduciary capacity, they do not assume the character of income.
The ruling underscores that absence of beneficial ownership and existence of statutory directions governing utilisation negate accrual of income, reinforcing the distinction between custodial receipts and taxable revenue.
Tax Domain; Direct Tax – Income Tax – Corporate tax
Case Details ; The matter was adjudicated by the Income Tax Appellate Tribunal, ...
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