This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during the previous week from October 8 to October 14, 2022
Microsoft Regional Sales Pte. Ltd vs Assistant Commissioner of Income tax – 2022 TAXSCAN (ITAT) 1388
In a relief to Microsoft, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has allowed a TDS claim of Rs. 9 Crores to the Microsoft Regional Sales Pte Ltd. “The Chennai Tribunal in the case of ACIT v Vishwak Solutions Pvt. Ltd ITA No. 1935 & 1936/MDS/2010 dated 30.01.2015 has upheld the findings of CIT(A) that “the amount paid to the nonresident is towards hiring of storage space.” The aforesaid squarely covers the controversy in regard to the present assessee also. In the light aforesaid, the Bench is of considered view that the ld. Tax Authorities below had fallen in error in considering the subscription received towards Cloud Services to be royalty income,” the Tribunal said.
M/s. Russell Reynolds Associates Inc vs DCIT – 2022 TAXSCAN (ITAT) 1387
The Income Tax Appellate Tribunal (ITAT), Delhi bench, while allowing relief to Russell Reynolds Associates Inc., has held that the receipts from support services and reimbursement of training expenses are not in the nature of FIS under India – USA DTAA. A division bench comprising Shri G.S. Pannu, President and Shri Saktijit Dey, Judicial Member has held that “As could be seen from the aforesaid observations of the Coordinate Bench, the reimbursement of expenses was held to be not in the nature of FIS in terms with India – USA DTAA. That being the decision of the Coordinate Bench in the assessee’s own case under identical facts and circumstances, respectfully following the aforesaid decision, we hold that the receipts from support services and reimbursement of training expenses are not in the nature of FIS under India – USA DTAA, hence, not taxable in India.”
Radheyshyam Mandir Trust vs CIT – 2022 TAXSCAN (ITAT) 1390
The Income Tax Appellate Tribunal, Jaipur Benches, “B” Jaipur, has recently while deciding upon an appeal filed before it by the Assessee, held that registration sought u/s 12AA(1)(a) of the Act cannot to be denied for the want of submission of original documents and that self – certified copy or instruments should be considered sufficient for the same. “We observe that the ld. CIT(E) is factually incorrect and unjustifiable where the ld. CIT(E) has failed to observe that the activities carried out by the trust is genuine in nature. We observe that the assessee carried out charitable activities in accordance with law, with main objects and amended objects of the trust deed.”
Smt. Bhanuben Dhanji Shah vs Dy. Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1328
The Income Tax Appellate Tribunal(ITAT) “SMC” Bench, Mumbai, has recently, in an appeal filed before it by an assessee, held that the Assessing Officer (A0), shall compute the capital gains only after considering the value as determined by the Department Valuation Officer. “Since the impugned addition under the head “Long Term Capital Gain”, which was upheld by the learned CIT(A), has been made on the basis of the value determined by the Registration Authority without taking into consideration the report of the Department Valuation Officer, we deem it fit and proper to restore this issue to the file of the Assessing Officer for de novo adjudication”, it added.
Smt. Bhanuben Dhanji Shah vs Dy. Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1328
The Income Tax Appellate Tribunal(ITAT) “SMC” Bench, Mumbai, has recently, in an appeal filed before it by an assessee, held that allowance on the cost of improvement is not claimable in the absence of supporting bills, vouchers, source funds etc. Thus, disallowing the assessee’s claim the Tribunal concluded: “In the absence of these supporting details, we do not find any infirmity in the orders of the lower authorities denying the claim of the assessee on this issue.’’
Goyal Solar Systems Pvt. Limited vs Principal Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1358
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench held that Order that suffers from patent irregularity, cannot be made foundation for subsequent proceedings. The Bench consisting of Rajpal Yadav, Vice-President and Girish Agrawal, Accountant Member observed that “Even before doubting the claim of assessee disclosing nil income, he has to first issue a notice under section 143(2), so that the assessee can submit evidence in support of its claim while it has shown nil income. After this notice only, he can verify other details and change the status of nil income. Thus, the assessment order itself is not sustainable. If an order itself suffers from the patent irregularity, it cannot be made a foundation for subsequent proceedings either 263 or any other proceeding.It is also pertinent to note that as far as the fact regarding non-issuance of notice is concerned, it has been specifically observed by the ld. Commissioner in paragraph no. 6 of the impugned order”
Vanishree Holabasu Shettar vs Principal Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1155
Jurisdiction under section 263 can invoke only on inadequacy in enquiry done by Assessing Officer and the Bengaluru bench of Income Tax Appellate Tribunal (ITAT) has set aside revisional order. The Tribunal observed that the explanation (2) to Section 263 of the Act could be invoked only in a very gross case of inadequacy in enquiring or where the mandatory enquiries are not conducted have reached finality.
Ashok Developers & Builders Ltd vs Dy. C.I.T – 2022 TAXSCAN (ITAT) 1132
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) ruled that proceedings under section 153 can’t be invalidated without examining incriminating material found in the search. The Tribunal observed from the order of CIT (A) that he neither has decided the appeal on merit nor has passed an Michelle Y. Poonawalla vs Pr. Commissioner of Income Tax-4
Michelle Y. Poonawalla vs Pr. Commissioner of Income Tax-4 – 2022 TAXSCAN (ITAT) 1082
The Income Tax Appellate Tribunal (ITAT), Pune bench has held that deduction of interest under section 24(b) based on the wrong assumption of facts and applying incorrect law and upholds review under section 263. The Tribunal observed that on a plain reading of clause (b) of section 24 of the Act explains that the deduction is allowable where the property has been acquired, constructed, repaired, renewed, or reconstructed with borrowed capital. The appellant purchased the said property in the year 2001 and the relinquishment agreement shows that the appellant is the “landlord”, therefore, as rightly pointed out by the PCIT, the claim of the assessee is not entitled to claim interest as deduction u/s. 24(b) of the Act.
Naveen Kumar vs ITO – 2022 TAXSCAN (ITAT) 1392
The Income Tax Appellate Tribunal (ITAT), Chandigarh bench has slammed the National Faceless Appeal Centre (NFAC) for not acknowledging the submissions and additional evidence produced by the assessee stating that the same is patently and legally wrong. Sudhanshu Srivastava , Judicial Member observed that the assessee, during the course of First Appellate proceedings, did furnish various evidences and submissions before the NFAC like copy of bank statement and the credit card statement as well as copy of employments letter with the telecom company etc.
Dipakkumar Ishwarlal Panchal vs ITO -2022 TAXSCAN (ITAT) 1391
The Income Tax Appellate Tribunal (ITAT), Ahmedabad set aside penalty imposed under Section 271(1)(c) of the Income Tax Act,1961 as there was no payment made above purchase price of asset. The Bench consisting of Annapurna Gupta, Accountant Member and Madhumita Roy, Judicial Member held that “In the facts and circumstances, where the assessee had objected to the invocation of section 56(2)(x) of the Act in its case for the purpose of making addition and had given a reason for the same, which the Revenue has not found to be false or not bona fide and in any case the addition having been made on account of deeming fiction, the assessee having not been found to have actually made any payment in excess of the such price, we are of the view that the assessee cannot be said to have concealed or furnished inaccurate particulars of income so as to attract levy of penalty under section 271(1)(c) of the Act amounting to Rs.1,18,965/-.”
Prakash Chandra Mishra vs Deputy Commissioner of Income Tax -2022 TAXSCAN (ITAT) 1393
In a major relief to digital marketing firms having clients outside India, the Income Tax Appellate Tribunal ( ITAT ), Jaipur bench has dismissed the department’s appeal seeking disallowance from the advertiser for not charging an equalisation levy, commonly known as Google tax, on the payment made to Google Singapore on jurisdictional grounds. Holding that in substance, the assessee is only acting as a conduit for channeling the funds from the person wanting to advertise on Google, the Tribunal concluded that “Thus, when the intention of the levy is related to the targeted audience and party paying the online advertisement has no relation in India, EL is not attracted in the set of present facts and circumstance placed before us and we see no reason to interfere in the reasoned findings given by the ld. National Faceless Appeal Center as revenue did not controvert any of the factual aspects related to this case. Therefore, the order passed by the learned National Faceless Appellate Center could not be found faulty, and therefore, we see no reason to intervene in the findings of the learned National Faceless Appellate Center. Based on these facts we hold the view of the learned National Faceless appeal Centre as correct and appeal of the revenue is dismissed.”
ACIT Non-Corporate Circle-22 vs Joseph Selvakumar Selvan – 2022 TAXSCAN (ITAT) 1399
The Income Tax Appellate Tribunal (ITAT), Chennai held that Reopening of assessment cannot be made on mere change of opinion. A Division Bench consisting of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that “The AO, with due application of mind, adopted one of the views during regular assessment proceedings. Thereafter, without there being any fresh intangible material on record, AO proceeded to reopen the case merely to change the head of income. It is trite law that review of the order, on same set of facts and material, is impermissible. Therefore, we have no hesitation to hold that the reopening was merely on the basis of change of opinion.”
Shri Gurpreet Mohan Singh Bindra vs The JCIT -2022 TAXSCAN (ITAT) 1394
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Chandigarh bench has held that the employee cannot be treated as “TDS defaulter” for the fault on the part of the employer who does not remitted the collected TDS to the Government. Concluding the order, the Tribunal held that “The legislature in very clear terms has already factored the factum of TDS deducted by the deductor. Credit of the said deduction is clearly embedded in the calculation of amount of tax on the total income as considered in Section 234A; and assessed tax as applicable in Section 234B and tax due on the returned income to be considered for Section 234C. Thus, I find that the tax authorities are necessarily bound to factor in the deduction made on behalf of the assessee to the tune of Rs.9,37,296/-. Any other shortfall in the assessed tax and tax on total income or tax due on the returned income would be the only limited areas open to the AO. As far as the present issue of non deposit of the tax deducted from the salary of the assessee in the present case is concerned, the provisions of Section 234A, 234B and 234C would have no role to play.”
Kanagaraj Shanmugam vs ITO – 2022 TAXSCAN (ITAT) 1398
The Income Tax Appellate Tribunal (ITAT), Chennai directed to re-compute Refund Claim as per India- UK Double Taxation Avoidance Agreement (DTAA). A Division Bench consisting of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that “Upon perusal of UK tax return, it could be seen that the assessee has offered earnings from employment for £24184 on net basis which has been tax grossed up for £6046. This is in view of the fact that OFSSL has paid provisional payment of £9062 to UK revenue authorities since the employer has undertaken to meet the UK income tax liability arising from employee’s earnings in UK. Accordingly, the assessee has claimed refund of £3016. On the basis of the above, it could be seen that separate tax payment has been made by OFSSL to UK revenue authorities to discharge the tax liability of the assessee in that country. Accordingly, we direct AO to re-compute the income of the assessee”
TV Today Network Ltd. vs Addl. CIT – 2022 TAXSCAN (ITAT) 1400
On granting relief to TV Today Network, the assessee the Income Tax Appellate Tribunal (ITAT), New Delhi held that no question of disallowance under Section 14A of the Income Tax Act, 1961 arises on non-receipt of exempt income during the year under consideration. The Bench consisting of Shamim Yahya, an Accountant Member, and Yogesh Kumar the US, Judicial Member observed that “The CIT(A) after relying on the ratio laid down by the various Courts including Jurisdictional High Court held that disallowance u/s 14A made only if the assessee is in receipt of exempt income. As the assessee company has not received any exempt income during the year under consideration, therefore, the question of disallowance u/s 14A of the Act does not arise. Therefore, in the facts and circumstances and also by following the order of this Tribunal in the assessee’s own case, we do not find merit in the Revenue’s Appeal.”
Shri Surender vs Income Tax Officer – 2022 TAXSCAN (ITAT) 1401
The Income Tax Appellate Tribunal ( ITAT ), condoned a delay of 224 days on the ground that there was no intimation from the Counsel of the assessee regarding the ex parte order. The Bench consisting of Shamim Yahya, Accountant Member, and Yogesh Kumar US, Judicial Member observed that “The CIT(A) has dismissed the Appeal not being convinced with the reasons assigned by the assessee for condoning the delay. We are of the considered opinion that the CIT (A) ought to have applied a liberal view in condoning the delay for the reasons stated by the assessee for condoning the delay and should have decided the matter on merit.”
Shri Shiv Nath vs ITO -2022 TAXSCAN (ITAT) 1402
In an assessee friendly ruling, the Income Tax Appellate Tribunal (ITAT), Chandigarh deleted addition of Rupees Three Lakhs as Deposits were made from past savings and earnings of entire family for study visa requirement of son. The Bench consisting of observed that “Keeping in view the realities and aspirations of the rising India and the efforts of the toiling masses where certain families instead of sitting in apathy for the State Administration to dole out State largesse the enterprising self respecting population also consists of such citizens who instead choose to make their own efforts to avail of the opportunities and advantages provided by educating their children.”
Smt. Nandini V.Kalgutkar vs The Income Tax Officer – 2022 TAXSCAN (ITAT) 1397
The Income Tax Appellate Tribunal (ITAT), Bangalore approved addition on Gross Profit (GP) at 2.5% on non-explanation regarding closing stock. The Bench consisting of Chandra Poojari, Accountant Member and Beena Pillai, Judicial Member observed that “The assessee not able to explain what happened to the closing stock stored at Bilikere near Ankola. No FIR registered with police authorities. In our opinion, assessee has not explained the true facts of this issue and it is reasonably presumed that assessee has sold these goods out of books and shown Nil stock. Being so, estimation of GP on this stock at 2.5% at Rs.2,58,839/- is justified. The addition is sustained.”
District Bar Association vs CIT– 2022 TAXSCAN (ITAT) 1396
The Income Tax Appellate Tribunal (ITAT), Chandigarh grants registration to society under Section 12AA of the Income Tax Act, 1961 as Primary object is advancement of general public utility. The Bench consisting of Sudhanshu Srivastava, Judicial Member and Vikram Singh Yadav, Accountant Member observed that “the CIT(E) has misdirected himself in reaching the conclusion that the activities of the assessee society were not for the purpose of general public but were only directed and benefitting only the members of the assessee society. We have also perused the objects and it is clear that the primary objects are aimed at the advancement of the object of general public utility within the meaning of section 2(15) of the Act and as such, the assessee society would be entitled to registration u/s 12AA of the Act.”
HolisolLogistrics P. Ltd. vs DCIT – 2022 TAXSCAN (ITAT) 1395
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has declared that the DCF method valuation report is valid as it provides the basis for the computation of projection and growth factors. It was observed that the Assessee has adopted one of the methods available for valuing its shares under section 56(2)(viib) of the income tax Act, based on the valuation report certified by the Chartered Accountant, which was not only based upon scientific valuation and financial position for the next seven years in the normal market/business scenario but also prepared by the prescribed Rules as applicable thereto.
CLP Wind Farm (India) Ltd vs DCIT – 2022 TAXSCAN (ITAT) 1408
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) ruled that premiums on Forward exchange contracts can be deducted as an expense. The Tribunal held that the assessee is entitled to claim the amortization of premium paid onforeign exchange contracts amounting to Rs. 38,96,97,000/- and allowed the appeal of the assessee.
Assistant Commissioner of Income Tax vs Sri Arjun Lal Agarwal – 2022 TAXSCAN (ITAT) 1409
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that the penalty under section 271AAB of the Income Tax Act, 1961 is not leviable on the basis of disclosure made by the other persons during the search proceedings, which is not binding on the assessee. Upholding the order of the first appellate authority, the Tribunal held that“It is totally a fallacious approach at the end of the ld. CIT(D.R.) and a fatuous attempt is being made to visit the assessee with penalty. It is pertinent to observe that 271AAB penalty is imposable on the person upon whom search was made. We have discussed it in the finding extracted supra. The other persons upon whom 153C assessment has been made would be covered by Explanation 5A of Section 271(1)(c). They could be visited with penalty for concealment but with the help of other provisions. It is not the case that on account of accumulation of undisclosed income, the other persons would be absolved for visiting any type of penalty. There are provisions under section 271(1)(c) read with Explanation 5 and 5A for taking care of such situation. But in the present situation, no penalty is imposable under section 271AAB upon the assessee. The ld. CIT(Appeals) has rightly deleted the penalty. We do not find any error in the order of ld. CIT(Appeals). Hence both the appeals are dismissed.”
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