Section 115JG — Case Laws & Commentary

CHAPTER XII-BB — SPECIAL PROVISIONS RELATING TO CONVERSION OF INDIAN BRANCH OF A FOREIGN BANK INTO A SUBSIDIARY COMPANY

SECTION 115JG — CONVERSION OF AN INDIAN BRANCH OF FOREIGN COMPANY INTO SUBSIDIARY INDIAN COMPANY

Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · Live Provision — the sole section of Chapter XII-BB

Status: LIVE. Chapter XII-BB, consisting of the single section 115JG, was inserted by the Finance Act, 2012, with effect from 1 April 2013 (assessment year 2013-14 onwards). It provides a one-time, tax-neutral framework for the conversion of the Indian branch of a foreign bank into an Indian subsidiary company, operationalised through the Reserve Bank of India’s scheme and the Central Government’s notification under sub-section (1). It remains on the statute book unchanged.

Operative trigger: The benefit is not automatic. It applies only “in accordance with the scheme framed by the Reserve Bank of India” and “subject to the conditions as may be notified by the Central Government”. The governing instruments are (i) the RBI’s “Framework for setting up of Wholly Owned Subsidiaries by foreign banks in India” (press release No. 2013-2014/936 dated 6 November 2013), and (ii) CBDT Notification No. 85/2018 [S.O. 6053(E)] dated 6 December 2018.

Finance Act, 2026 impact: None. The Finance Act, 2026 does not amend section 115JG or Chapter XII-BB. The only amendment in the 115J family made by the Finance Act, 2026 is to section 115JB (MAT) in Chapter XII-B (extension of the MAT carve-out to certain non-residents opting for presumptive taxation, w.e.f. AY 2026-27); that does not touch this chapter.

Candour note on case law: As at June 2026 there is no reported decision of the Supreme Court, of any High Court, or of the Income-tax Appellate Tribunal that directly construes section 115JG. The conversion route has been used by very few foreign banks (notably SBM Bank (India) Ltd, with effect from 1 December 2018, and DBS Bank India Ltd, with effect from 1 March 2019), and no litigation interpreting the section has yet surfaced. In keeping with the discipline of this treatise, no case has been invented or stretched. Part C therefore presents (1) the governing primary materials — the enabling notification and the RBI scheme — which are the real ‘law’ a practitioner applies, and (2) a carefully labelled set of cognate Supreme Court and High Court authorities on each legal principle that section 115JG embodies. Each cognate authority is expressly flagged as authority on the underlying principle, not a decision on section 115JG itself.

A. SECTION COMMENTARY

A.1 Purpose and place in the scheme of the Act

Before 2012, a foreign bank could carry on banking in India only through a branch, taxed in India as the permanent establishment (PE) of a non-resident: at the rate applicable to foreign companies, on income attributable to the branch, with the head-office expenditure deduction capped by section 44C. The Reserve Bank of India, following the lessons of the 2008 global financial crisis, moved to encourage foreign banks to operate instead through a locally incorporated, ring-fenced wholly owned subsidiary (WOS), which is better capitalised, separately supervised and insulated from the parent’s global distress. A subsidiary is, however, a distinct Indian resident company, so the very act of folding a branch into a subsidiary would, in the ordinary course, be a ‘transfer’ attracting capital gains, would extinguish the branch’s carried-forward losses, unabsorbed depreciation and MAT credit, and would reset the cost base of its assets. Section 115JG was enacted to remove these tax frictions, so that a conversion driven by prudential regulation is not defeated by an incidental tax cost. It is, in substance, a bespoke tax-neutrality provision for one narrow class of reorganisation — conceptually a cousin of the amalgamation/demerger reliefs in sections 47, 72A and 72AA, but confined to the foreign-bank branch-to-WOS case and delivered through delegated legislation rather than through the body of the Act.

A.2 The regulatory backbone — the RBI WOS Framework, 2013

The condition precedent to any relief is that the conversion takes place “in accordance with the scheme framed by the Reserve Bank of India”. That scheme is the “Framework for setting up of Wholly Owned Subsidiaries by foreign banks in India”, issued by the RBI by press release No. 2013-2014/936 dated 6 November 2013. Two paragraphs of that Framework are load-bearing for the tax relief: paragraph 20(h), under which the RBI sanctions the scheme of amalgamation of the Indian branch with the Indian subsidiary; and paragraph 20(i), under which the RBI appoints the date for the vesting of the undertaking of the Indian branch in the Indian subsidiary — that appointed date is, by the notification’s own Explanation, the “date of conversion” for income-tax purposes. The statutory marginal note speaks of a ‘foreign company’, but both the chapter heading and the operative text confine the relief to a foreign company “engaged in the business of banking in India”; the provision does not extend to non-banking foreign companies.

A.3 The operative scheme of section 115JG (editorial summary)

This is an editorial summary to make the materials intelligible; it is NOT a verbatim reproduction — for the exact words see Part B. Sub-section (1) is the charging-relief provision: where a foreign banking company’s Indian branch is converted into an Indian subsidiary in accordance with the RBI scheme, then — notwithstanding anything in the Act, and subject to the conditions notified by the Central Government — (i) the capital gains arising from the conversion are not chargeable to tax in the year of conversion; and (ii) the Act’s provisions on unabsorbed depreciation, set-off and carry forward of losses, MAT credit under section 115JAA, and the computation of income of both the foreign company and the Indian subsidiary apply “with such exceptions, modifications and adaptations as may be specified in that notification”. Sub-section (2) is the all-or-nothing forfeiture clause: on failure to comply with any condition of the scheme or the notification, the whole Act applies to both companies “without any benefit, exemption or relief” under sub-section (1). Sub-section (3) is the claw-back/recapture machinery for a later breach — where relief was claimed and granted and a condition is subsequently breached, the relief is deemed to have been wrongly allowed, the Assessing Officer may (notwithstanding anything in the Act) re-compute total income for the relevant year, and section 154 applies, with its four-year limitation reckoned from the end of the previous year in which the failure occurs. Sub-section (4) requires every notification issued under the section to be laid before each House of Parliament.

A.4 The notified conditions and the exceptions, modifications and adaptations — Notification No. 85/2018

The relief in clauses (i) and (ii) of sub-section (1) is switched on only by CBDT Notification No. 85/2018 [S.O. 6053(E)] dated 6 December 2018 [F.No. 370133/34/2016-TPL], issued after a draft was put out for public comment in 2017. Limb (i) of the notification lays down five cumulative conditions: (a) the branch amalgamates with the subsidiary under a scheme approved by shareholders and sanctioned by the RBI under paragraph 20(h) of the Framework; (b) all assets and liabilities of the branch become those of the subsidiary; (c) those assets and liabilities are transferred at the values in the branch’s books immediately before conversion (revaluation to be ignored); (d) the foreign bank or its nominee holds the whole share capital of the subsidiary from the date of conversion to the end of that previous year, and continues to hold shares carrying not less than 51% of the voting power for five years thereafter; and (e) the foreign company receives no consideration or benefit other than the allotment of shares in the subsidiary. Limb (ii) prescribes the exceptions, modifications and adaptations governing the continuity of attributes: depreciation under section 32 is capped, in aggregate for the branch and the subsidiary in the year of conversion, at the amount that would have been allowable had no conversion occurred, apportioned in the ratio of days of use; accumulated business loss and unabsorbed depreciation of the branch are deemed to be those of the subsidiary for the year of conversion (with section 72-style definitions); the written-down value/actual cost of the block of assets carries over under section 43(1); cost of acquisition for future capital-gains computation is the branch’s (or previous owner’s) cost; MAT credit of the branch is deemed to be the subsidiary’s credit under section 115JAA; sections 35DDA and 36(1)(viia) continuity is preserved; and the anti-abuse charge in section 56(2)(x) is disapplied to the foreign company’s receipt of shares on conversion.

A.5 Forfeiture and recapture — sub-sections (2) and (3) and the section 154 mechanism

The relief is conditional throughout its life, not merely at the date of conversion. Sub-section (2) operates where a condition is not satisfied at the outset or within the scheme: the benefit simply never accrues and the Act applies in full. Sub-section (3) addresses the harder case where the benefit was claimed and granted but a continuing condition — most obviously the five-year, 51%-voting-power holding requirement in condition (d) of the notification — is subsequently broken. The relief is then deemed to have been wrongly allowed, and the Assessing Officer is empowered, ‘notwithstanding anything contained in this Act’, to re-compute the total income of the relevant earlier year and make the necessary amendment, the section 154 four-year clock running not from the original assessment but from the end of the previous year in which the breach occurs. This bespoke limitation is what makes recapture workable years after the conversion. It also raises a genuine interpretive tension addressed in Part C: section 154 is, by long authority, confined to a ‘mistake apparent from the record’, whereas whether a holding-period condition has in fact been breached may be a contested, fact-and-law question — so the section 154 route, though expressly invoked, may in a disputed case sit uneasily with the Volkart Brothers limitation, and a regular reassessment route may be needed.

A.6 Parliamentary control — sub-section (4)

Sub-section (4) subjects every notification under the section to the ‘laying’ procedure before both Houses of Parliament. This is the standard mechanism of legislative oversight over delegated legislation: it does not make the notification dependent on a positive resolution, but exposes it to parliamentary scrutiny and possible modification, and is a reminder that the substantive content of the relief lives in subordinate legislation rather than in the section itself.

A.7 Core doctrinal themes and interpretive issues

Theme (1) — The relief is a creature of conditional, delegated legislation: nothing flows from the bare section until the RBI scheme and the CBDT notification are both engaged; the conditions are cumulative and are construed strictly, with the burden on the assessee to establish entitlement.

Theme (2) — Neutrality is deferral, not forgiveness: the carry-over of cost, written-down value and the previous owner’s holding period means the latent capital gain is preserved in the subsidiary’s hands and will be taxed on a future transfer; section 115JG removes the charge on the conversion itself, it does not erase the gain.

Theme (3) — Continuity of tax attributes by deeming: losses, unabsorbed depreciation and MAT credit do not survive a corporate reorganisation as of right; they pass to the subsidiary only because the notification deems them to, modelled on sections 72A and 170.

Theme (4) — The non obstante clause is limited, not at large: ‘notwithstanding anything contained in the Act’ displaces the Act’s charging and computation provisions only to the extent of the specified exceptions; it is not a general charter to disregard the Act.

Theme (5) — Forfeiture is total and recapture is time-shifted: breach forfeits the entire relief (not a proportionate part), and the special section 154 limitation in sub-section (3) revives the power to tax the earlier year by reference to the year of breach.

Theme (6) — The branch/subsidiary divide changes the whole tax footing: a branch is a PE taxed on attributed profits with the section 44C head-office cap; a subsidiary is an Indian resident company taxed on worldwide income at domestic rates without the section 44C cap — conversion is therefore a structural, not merely formal, change, which is precisely why a neutral one-time bridge was thought necessary.

B. STATUTORY POSITION (verbatim heading and operative text)

Reproduced verbatim from the Income-tax Act, 1961 (Bare Act, as amended up to the Finance Act, 2025; not amended by the Finance Act, 2026):

Conversion of an Indian branch of foreign company into subsidiary Indian company.

115JG. (1) Where a foreign company is engaged in the business of banking in India through its branch situate in India and such branch is converted into a subsidiary company thereof, being an Indian company (hereafter referred to as an Indian subsidiary company) in accordance with the scheme framed by the Reserve Bank of India, then, notwithstanding anything contained in the Act and subject to the conditions as may be notified by the Central Government in this behalf,—

(i) the capital gains arising from such conversion shall not be chargeable to tax in the assessment year relevant to the previous year in which such conversion takes place;

(ii) the provisions of this Act relating to treatment of unabsorbed depreciation, set off or carry forward and set off of losses, tax credit in respect of tax paid on deemed income relating to certain companies and the computation of income in the case of the foreign company and Indian subsidiary company shall apply with such exceptions, modifications and adaptations as may be specified in that notification.

(2) In case of failure to comply with any of the conditions specified in the scheme or in the notification issued under sub-section (1), all the provisions of this Act shall apply to the foreign company and the said Indian subsidiary company without any benefit, exemption or relief under sub-section (1).

(3) Where, in a previous year, any benefit, exemption or relief has been claimed and granted to the foreign company or the Indian subsidiary company in accordance with the provisions of sub-section (1) and, subsequently, there is failure to comply with any of the conditions specified in the scheme or in the notification issued under sub-section (1), then,—

(i) such benefit, exemption or relief shall be deemed to have been wrongly allowed;

(ii) the Assessing Officer may, notwithstanding anything contained in this Act, re-compute the total income of the assessee for the said previous year and make the necessary amendment; and

(iii) the provisions of section 154 shall, so far as may be, apply thereto and the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the failure to comply with the condition referred to in sub-section (1) takes place.

(4) Every notification issued under this section shall be laid before each House of Parliament.

[Chapter XII-BB and section 115JG inserted by the Finance Act, 2012, w.e.f. 1-4-2013.]

C. AUTHORITIES — GOVERNING PRIMARY MATERIALS AND COGNATE CASE LAW

Important: No decision of the Supreme Court, any High Court or the ITAT has, to date, directly interpreted section 115JG. The materials below are organised so that Cluster C-1 sets out the binding subordinate legislation and regulatory scheme that actually govern an application of the section, and Clusters C-2 to C-7 set out cognate higher-court authority on each legal principle the section embodies. The cognate authorities are NOT decisions on section 115JG; each is included because the principle it lays down is the principle a tribunal would apply when section 115JG is litigated.

Cluster C-1 : The governing primary materials (binding law in an actual case)

CBDT Notification No. 85/2018 [S.O. 6053(E)], dated 6 December 2018 [F.No. 370133/34/2016-TPL].

Nature: Delegated legislation issued under section 115JG(1); the instrument that switches on clauses (i) and (ii) of the sub-section.

Content: Limb (i) prescribes five cumulative conditions — RBI-sanctioned amalgamation under paragraph 20(h) of the WOS Framework; vesting of all assets and liabilities in the subsidiary; transfer at book values (revaluation ignored); a holding-period condition (whole share capital to year-end, and ≥ 51% voting power for the next five years); and no consideration to the foreign company other than shares. Limb (ii) prescribes the exceptions/modifications/adaptations for continuity — capped and day-apportioned depreciation under section 32; deemed transfer of accumulated loss and unabsorbed depreciation to the subsidiary; carry-over of written-down value/actual cost under section 43(1); carry-over of cost of acquisition and previous-owner holding for future capital gains; deemed transfer of section 115JAA MAT credit; continuity under sections 35DDA and 36(1)(viia); and disapplication of section 56(2)(x) to the foreign company’s receipt of shares. An Explanation fixes the ‘date of conversion’ as the RBI-appointed vesting date under paragraph 20(i) of the Framework.

Relevance: This notification is, in practice, the operative law of section 115JG. Any dispute on the section will turn first on whether each of its conditions is satisfied; its conditions are the touchstone for both forfeiture under sub-section (2) and recapture under sub-section (3).

Source: Gazette of India, Extraordinary, Part II—Section 3(ii); CBDT/Department of Revenue; text verified against the published notification.

RBI — Framework for setting up of Wholly Owned Subsidiaries by foreign banks in India (press release No. 2013-2014/936, dated 6 November 2013).

Nature: The ‘scheme framed by the Reserve Bank of India’ referred to in section 115JG(1).

Content: Sets out the policy and procedure for foreign banks to operate through a locally incorporated wholly owned subsidiary, including (paragraph 20(h)) RBI sanction of the scheme of amalgamation of the existing branch with the subsidiary, and (paragraph 20(i)) the RBI-appointed date for vesting of the branch undertaking in the subsidiary.

Relevance: Conversion must be ‘in accordance with’ this Framework for section 115JG to apply at all; the Framework’s appointed vesting date is adopted as the income-tax ‘date of conversion’. Real-world use: SBM Bank (India) Ltd (effective 1 December 2018) was the first foreign bank to convert under this route, followed by DBS Bank India Ltd (effective 1 March 2019).

Source: Reserve Bank of India press release/notification dated 6 November 2013.

Cluster C-2 : The non obstante clause — ‘notwithstanding anything contained in the Act’ (scope and limits)

South India Corporation (P) Ltd v. Secretary, Board of Revenue, Trivandrum, AIR 1964 SC 207.

Principle: A non obstante clause is a legislative device to give the enacting part overriding effect over the provision or law mentioned in it; its reach is governed by, and limited to, that which it is intended to override.

Application to s.115JG: The opening words ‘notwithstanding anything contained in the Act’ in sub-section (1) override the charging and computation provisions only to the extent of the specified non-chargeability of capital gains and the notified exceptions; they are not a general dispensation from the Act.

Status: Supreme Court; settled authority on the construction of non obstante clauses. Cited here on principle only — not a decision on section 115JG.

Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, (1986) 4 SCC 447.

Principle: A non obstante clause must be read in the context of, and harmoniously with, the enacting words it qualifies; it removes obstacles only so far as is necessary to give effect to the main provision, and does not override that with which it is not inconsistent.

Application to s.115JG: Supports a confined reading of the non obstante clauses in sub-sections (1) and (3): in sub-section (3), the Assessing Officer’s power to re-compute ‘notwithstanding anything contained in this Act’ is targeted at removing procedural/limitation bars to recapture, not at enlarging the substantive charge.

Status: Supreme Court; leading exposition of the function of non obstante clauses. Principle authority only.

Cluster C-3 : Tax-neutral reorganisation — capital gains, ‘transfer’ and the appointed date

CIT v. B.C. Srinivasa Setty, (1981) 128 ITR 294 (SC).

Principle: The charge to capital gains fails where the computation machinery cannot be applied — charging and computation provisions constitute an integrated code, and an asset with no ascertainable cost of acquisition falls outside the charge.

Application to s.115JG: Explains why the notification must, and does, supply a deemed cost of acquisition and a carried-over written-down value for the subsidiary: without that machinery a future transfer of the converted assets could not be computed. Section 115JG defers the gain; the notification preserves the machinery to tax it later.

Status: Supreme Court; foundational on the integrated charge/computation code. Principle authority only.

Marshall Sons & Co. (India) Ltd v. ITO, (1997) 223 ITR 809 (SC).

Principle: In an amalgamation/transfer of undertaking sanctioned by an authority, the scheme takes effect from the appointed date fixed in/under the scheme; the transferor’s business from the appointed date is treated as that of the transferee.

Application to s.115JG: Mirrors the notification’s Explanation that the ‘date of conversion’ is the RBI-appointed vesting date under paragraph 20(i) of the WOS Framework — the appointed date governs the year of conversion and the apportionment of depreciation between branch and subsidiary.

Status: Supreme Court; leading authority on the ‘appointed date’ in reorganisations. Principle authority only.

Cluster C-4 : Continuity of losses, unabsorbed depreciation and credits on reorganisation

Saraswati Industrial Syndicate Ltd v. CIT, (1990) 186 ITR 278 (SC).

Principle: On amalgamation the transferor company loses its identity and ceases to exist; its losses do not automatically devolve on the transferee — carry-forward and set-off of a predecessor’s loss is available only where the statute expressly so provides.

Application to s.115JG: Confirms that but for the express deeming in Notification No. 85/2018 (limb (ii)(b)), the branch’s accumulated loss and unabsorbed depreciation would lapse on conversion. The continuity of attributes under section 115JG is wholly a creature of the deeming provisions — it cannot be assumed.

Status: Supreme Court; foundational on succession and carry-forward of losses. Principle authority only.

CIT v. Tulsyan NEC Ltd, (2011) 330 ITR 226 (SC).

Principle: MAT credit under section 115JAA accrues by operation of law in the year the MAT is paid and is to be given effect in the computation of tax; it is a vested entitlement, not a discretionary concession.

Application to s.115JG: Underpins limb (ii)(f) of the notification, which deems the branch’s section 115JAA MAT credit to be the subsidiary’s credit — the credit being a recognised, transferable attribute, its statutory carry-over on conversion is coherent with the MAT-credit scheme.

Status: Supreme Court; governing authority on section 115JAA MAT credit. Principle authority only.

Cluster C-5 : Strict construction of conditional reliefs; benefit lost on breach

Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co., (2018) 9 SCC 1 (SC, Constitution Bench).

Principle: An exemption/relief provision is to be construed strictly; the burden of proving entitlement is on the assessee, and any ambiguity in an exemption is resolved in favour of the revenue.

Application to s.115JG: The conditions in sub-section (1) and in Notification No. 85/2018 are conditions precedent, to be strictly satisfied; the assessee bears the burden of demonstrating compliance, and a doubt as to fulfilment of any condition is resolved against the relief, with forfeiture under sub-section (2) following.

Status: Supreme Court Constitution Bench; the current governing authority on strict construction of exemptions. Principle authority only.

Novopan India Ltd v. CCE & Customs, 1994 Supp (3) SCC 606 (SC).

Principle: A person claiming the benefit of an exemption must establish that the case falls clearly within its terms; an exemption is construed strictly at the threshold of eligibility.

Application to s.115JG: Reinforces that each of the five cumulative conditions in limb (i) of the notification — especially the five-year, 51%-voting holding condition — must be clearly met; partial or substantial compliance does not suffice.

Status: Supreme Court; classic statement on strict construction of exemptions. Principle authority only.

Cluster C-6 : Recapture through section 154 — the ‘mistake apparent from the record’ limit

T.S. Balaram, ITO v. Volkart Brothers, (1971) 82 ITR 50 (SC).

Principle: The power under section 154 is confined to the rectification of a mistake ‘apparent from the record’ — an obvious and patent mistake, not one that requires a long-drawn process of reasoning on points on which two views are possible; a debatable question of law is not a mistake apparent from the record.

Application to s.115JG: Section 115JG(3)(iii) routes recapture through section 154 with a special four-year limitation. Where the alleged breach of a condition is itself contested on facts or law, the Volkart Brothers limit means section 154 may not be the apt vehicle, and the bespoke re-computation power in sub-section (3)(ii) ‘notwithstanding anything contained in this Act’ (or a regular reassessment) may be required. This is the principal latent dispute embedded in the section.

Status: Supreme Court; the governing authority on the scope of section 154. Principle authority only.

Mepco Industries Ltd v. CIT, (2009) 319 ITR 208 (SC).

Principle: A mere change of opinion, or a debatable issue, cannot be corrected under section 154; rectification is limited to glaring and obvious errors of fact or law.

Application to s.115JG: Confirms the Volkart Brothers limit in a direct-tax setting and reinforces that recapture under sub-section (3) for a genuinely disputed breach cannot be forced through the section 154 channel as a substitute for substantive adjudication.

Status: Supreme Court; principle authority on section 154. Principle authority only.

Cluster C-7 : The branch (PE) versus subsidiary divide — the backdrop to the provision

DIT v. Morgan Stanley & Co. Inc., (2007) 292 ITR 416 (SC).

Principle: A foreign enterprise’s Indian operations are taxed on the profits attributable to its permanent establishment in India; the existence and extent of a PE governs the Indian tax footprint of a non-resident.

Application to s.115JG: Frames why conversion is a structural change: pre-conversion the foreign bank is taxed on its Indian branch as a PE (with the section 44C cap on head-office expenditure and foreign-company rates); post-conversion the Indian subsidiary is a resident company taxed on its worldwide income at domestic rates without the section 44C cap. Section 115JG bridges this fundamental shift without an immediate tax cost on the change itself.

Status: Supreme Court; leading authority on PE and attribution. Principle authority only — cited for context, not as a decision on section 115JG.

D. PRACTITIONER NOTES

(1) Treat the CBDT notification, not the bare section, as the operative checklist. Map every one of the five cumulative conditions in limb (i) of Notification No. 85/2018 and every adaptation in limb (ii) against the actual scheme of amalgamation sanctioned by the RBI before relying on section 115JG; a single unmet condition forfeits the entire relief under sub-section (2).

(2) Diarise the five-year holding condition. Condition (d) requires the foreign bank/nominee to hold the whole share capital to the end of the year of conversion and ≥ 51% voting power for the next five years. A dilution within that window triggers recapture under sub-section (3); calendar the watch period and document the shareholding annually.

(3) Fix the ‘date of conversion’ by the RBI-appointed vesting date (paragraph 20(i) of the WOS Framework), and apportion section 32 depreciation between branch and subsidiary on a days-of-use basis, subject to the aggregate cap — a common computational error.

(4) Preserve cost history. Because cost of acquisition and the previous-owner holding period carry over, retain the branch’s asset cost records; the latent capital gain survives in the subsidiary and will be computed on a future transfer (B.C. Srinivasa Setty machinery point).

(5) Anticipate the section 154 friction on recapture. If the department asserts a breach years later and proceeds under section 154, consider whether the breach is genuinely ‘apparent from the record’ (Volkart Brothers; Mepco Industries); a contested breach may be outside section 154, and the appropriate channel may be the sub-section (3)(ii) re-computation power or reassessment.

(6) Confirm continuing live relevance. Section 115JG remains operative and unamended by the Finance Act, 2026; with further foreign banks examining the WOS route (e.g., in-principle approvals granted in 2025–26), the provision is of growing, not diminishing, practical importance.

E. SOURCES

Income-tax Act, 1961, Chapter XII-BB, section 115JG (Bare Act, as amended up to the Finance Act, 2025) — text verified against the canonical bare-Act PDF. CBDT Notification No. 85/2018 [S.O. 6053(E)], 6 December 2018 — full text verified against the published Gazette notification. RBI “Framework for setting up of Wholly Owned Subsidiaries by foreign banks in India”, press release No. 2013-2014/936, 6 November 2013. Finance Act, 2012 (insertion); Finance Act, 2026 (no amendment to this chapter — verified against the Finance Act, 2026 text and the BharatTax FA-2026 tracker). Cognate authorities (cited on principle only): South India Corporation AIR 1964 SC 207; Chandavarkar Sita Ratna Rao (1986) 4 SCC 447; B.C. Srinivasa Setty (1981) 128 ITR 294 (SC); Marshall Sons & Co. (1997) 223 ITR 809 (SC); Saraswati Industrial Syndicate (1990) 186 ITR 278 (SC); Tulsyan NEC (2011) 330 ITR 226 (SC); Dilip Kumar & Co. (2018) 9 SCC 1 (SC, CB); Novopan India 1994 Supp (3) SCC 606 (SC); Volkart Brothers (1971) 82 ITR 50 (SC); Mepco Industries (2009) 319 ITR 208 (SC); Morgan Stanley (2007) 292 ITR 416 (SC).