Half Yearly Income Tax Digest: ITAT Rulings 2024 [Part III]

This half-yearly round-up analytically summarizes the key direct tax decisions of the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during the first half of 2024.

Corporate entity can’t logically incur Expenditure for Individual Property improvement: ITAT dismissesAppeal Arun Tulshidas Kharat vs The Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 217

The Pune bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal, stating that a corporate entity cannot logically incur expenditure for individual property improvement.

The two member bench of the tribunal comprising SS Vishwanethra Ravi ( Judicial member ) Dipak P Ripoti ( Accountant member ) found that this declaration does not provide meaningful support to the

assessee’s case. Furthermore, it was important to consider that Wings Travel Management India Private

Limited was a corporate entity and cannot feasibly incur expenditure for an individual’s flat.

Pending Insolvency Proceedings before NCLT: ITAT orders Jet Airways to pay costs of Rs 25,000 to PM Relief Fund Jet Airways (India) Ltd vs Dy. CIT, CC-5(2) CITATION: 2024 TAXSCAN (ITAT) 221

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has ordered Jet Airways, amidst pending insolvency proceedings before the National Company Law Tribunal ( NCLT ), to pay costs amounting to Rs 25,000 to the Prime Minister’s Relief Fund.

The two member bench of the tribunal comprising Vikas Aswathy ( Judicial member ) and Pathmavathy ( Accountant member ) remitted the issue back to the AO for a denovo consideration of the various issues.

Banking company as per section 2(c) of Banking regulations Act, would be eligible for claim of deduction u/S 80P(2)(d) of Income Tax Act : ITAT Minority Co-op. Credit Society Ltd vs ITO Ward-1 CITATION: 2024 TAXSCAN (ITAT) 210

The Bangalore bench of the Income Tax Appellate Authority ( ITAT ) observed that Banking company as per Section 2(c) of Banking regulations Act, 1949, would be eligible for claim of deduction under Section 80P(2)(d) of Income Tax Act, 1961

The two member bench of the tribunal comprising Madumitha Roy ( Judicial member ) and Chandra Poojari ( Accountant member ) affirmed that the interest income acquired by a cooperative society from investments held with a cooperative bank lacking a license under section 22 of the Banking Regulation

Act 1949 was excluded from the definition of “Banking Company” as per section 2(c) of the Banking Regulations Act, 1949.

ITAT allows Deduction on Investment made for Mosque constructed used for Religious purposes in Residential Property u/s 54F of Income Tax Act Asstt. CIT Circle 6(1) Hyderabad vs Shri Iqbal Ali Khan CITATION: 2024 TAXSCAN (ITAT) 215

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) has permitted a deduction for the investment made in the construction of a mosque utilized for religious purposes within a residential property under Section 54F of the Income Tax Act, 1961

The two member bench of the tribunal comprising R.K.Panda ( Vice president ) and Laliet Kumar ( Judicial member ) scrutinized the provisions of Section 54F, of the Income Tax Act, 1961, which provide for deductions. A straightforward interpretation of the section indicates that there is no provision for a proportional deduction, especially when a residence cannot be established within a Mosque.

Traveling to India and depositing cash in to NRO bank account: ITAT deletes addition u/s 69 A of Income Tax Act Viren Bakhru vs ACIT CITATION: 2024 TAXSCAN (ITAT) 209

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that no addition shall be made under Section 69A of the Income Tax Act, 1961, for cash deposition into a Non-Resident Ordinary ( NRO ) bank account during travel to India.

The two member bench of the tribunal comprising Saktiji Dey ( Vice President ) and Dr.B.R.R Kumar ( Accountant member ) concluded that no addition under Section 69A of the Income Tax Act, 1961, was warranted. In the result, the appeal of the assessee was allowed.

Account of inadvertent mistake or ignorance included in income any amount is exempt from Income Tax Act: ITAT ITO-12(3)(1) vs M/s. Laxmi Realty and Advisory Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 211

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Account of inadvertent mistake or ignorance included in income any amount is exempt from Income Tax Act

The two member bench of the tribunal comprising Amarjith Singh ( Accountant member ) and Aby T. Varkey ( Judicial member ) observed that if taxation was not permitted under the law, tax cannot be imposed using the Doctrine of Estoppel. Article 265 of the Constitution of India states that no tax shall be levied or collected except by authority of law. Our position is further supported by the judgment of the Supreme Court in the case of CIT Vs. Shelly Products, where the Court stated that if an assessee unintentionally included in their income any amount exempt from income tax or not considered income under the law, they can bring this to the attention of the tax authorities. If satisfied, the authorities may provide relief and refund any excess taxes paid

Transaction done through Bombay Stock Exchange on STT cannot be considered as Sham or Bogus Transaction: ITAT Duxton Hills Builders [P] Ltd vs A.C.I.T. CITATION: 2024 TAXSCAN (ITAT) 208

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Transaction done through Bombay stock exchange on Securities Transaction Tax ( STT ) cannot be considered as sham or bogus transaction

The two member bench of the tribunal comprising Astha Chandra ( Judicial member ) and N.K.Billaiya ( Accountant member ) observed that the revenue’s attempt to provide compelling evidence to prove that the taxpayer benefited from declaring the alleged fraudulent loss fell significantly short. On the contrary, the available evidence indicated that the transaction had been conducted through the Bombay Stock Exchange, with Securities Transaction Tax ( STT ) duly paid, indicating its legitimacy and dispelling any notion of it being a sham or bogus transaction. Taking into account all the facts presented, we instructed the Assessing Officer to acknowledge the loss of Rs. 1,41,29,989/-

Disallowance made on basis of delayed filing of GST return without vouching exact amount of GST discharged by extended due date: ITAT Directs readjudication Sharp Aluminium vs Asstt. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 233

The Pune bench of Income Tax Appellate Tribunal ( ITAT ) observed that disallowance made on the basis of delayed filing of Goods and Service Tax return without vouching the exact amount of GST discharged by extended due date. Therefore the bench directed readjudication

After reviewing the submissions, a two-member bench of G. D. Padmahshal, ( Accountant member ) and Partha Sarathi Choudhury, ( Judicial Member ) remanding the matter back to the file of NFAC with a direction to deal with this limited issue in accordance with aforestated law & pass a speaking order in terms of section 250(6) of the Act.

Denial of deduction claimed u/s 80P(2)(d) of IT Act regard to interest received from Co-Operative Banks/Scheduled Banks : ITAT Directs Re adjudication S. K.Goldsmiths Industrial Co-operative Society Ltd vs ITO CITATION: 2024 TAXSCAN (ITAT) 230

The Bangalore bench of Income Tax Appellate Tribunal ( ITAT ) directed re adjudication upon the denial of deduction claimed under Section 80(2)(d) of the Income Tax Act , 1961 with regard to the interest received from cooperative banks /scheduled banks.

After observing the submissions of both parties the two-member bench Of Laxmi Prasad Sahu, ( Accountant member ) and George George K, ( Vice President ) directed readjudication upon the denial of deduction claimed under Section 80(2)(d) of the Income Tax Act , 1961 with regard to the interest received from cooperative banks /scheduled banks.

Receipts from Software Subscription Payments, Training and Professional Fees not taxable as FTS under India-Netherlands DTAA: ITAT Service Now Nederland BV vs ACIT CITATION: 2024 TAXSCAN (ITAT) 231

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that receipts from software subscription payments, training and professional fees were not taxable in India as Fee For Technical Service( FTS ) under India-Netherlands Double Taxation Avoidance Agreements( DTAA ).

The two-member bench of Dr. B.R.R. Kumar ( Accountant member ) and Kul Bharat, ( Judicial Member ) held that professional and training services rendered by the assessee does not fall within the definition of FTS both under the Income Tax Act as well as under the DTAA .

Non-deduction of TDS u/s 195(1) of Income Tax Act, leading to proposed disallowance u/s 40(a)(i) of Income Tax Act: ITAT ITO Ward-2 vs G. Tex Inc CITATION: 2024 TAXSCAN (ITAT) 212

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) observed that non deduction of Tax Deducted at Source ( TDS ) under Section 195(1) of the Income Tax Act, 1961, leading to proposed disallowance under Section 40(a)(i) of the Income Tax Act, 1961

The two member bench of the tribunal comprising Chandra Poojari ( Accountant member) and Madhumita Roy ( Judicial member ) noted that the only allegation made was regarding the non- deduction of TDS under Section 195(1) of the Income Tax Act, 1961, leading to a proposed disallowance under Section 40(a)(i) of the Income Tax Act, 1961. Consequently, nullified the reassessment order issued in this case based on this primary issue, particularly considering the proposed disallowance under section 40(a) (i) of the Income Tax Act, 1961

Disallowance u/s 14 A is allowable only on Investments that yielded Exempt Income: ITAT rules in favor of Reliance Power Lt Reliance Power Ltd vs The Deputy Commissioner of income tax CITATION: 2024 TAXSCAN (ITAT) 236

In the case of Reliance Power Ltd, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that disallowance under section 14 A of the Income Tax Act, 1961 is allowable only on Investments that yielded Exempt Income. The ITAT observed that while working out disallowance under section 14 A of administrative expenses under rule 8D (2) (iii) of the act, the assessing officer could have been made only after taking only those investments that have yielded exempt income.

A two-member bench comprising of Shri Prashant Maharishi, AM and Shri Rahul Chaudhary, JM observed that when the assessee does not have any exempt income during the year, the assessee did not claim any exemption and therefore there cannot be any disallowance under section 14 A of the act. Further, the amendment made to the Income Tax Act is also applicable with effect from 1 April 2022.

The Tribunal dismissed the appeal of the revenue and allowed the appeal of the assessee, however, there is no exempt income during the year, and such an issue becomes academic.

Failure to Substantiate Genuineness of Source of investment with Respect to Purchase of immovable Property: ITAT directs Readjudication Siddikha M. Pathan vs ITO, Ward-2 CITATION: 2024 TAXSCAN (ITAT) 234

The Pune bench of Income Tax Appellate Tribunal ( ITAT ) directs readjudication on account of failure to substantiate genuineness of source of investment with respect to purchase of immovable property

After observing the submissions of both parties the single -member bench Of R.S. Syal, ( Vice President ) directs readjudication on account of failure to substantiate genuineness of source of investment with respect to purchase of immovable property . Bhuvanesh V. Kankani counsel appeared for assessee and Sourabh Nayak , counsel appeared for revenue.

Interest Income Derived by Co-operative Society from any other Co-operative Bank allowable as Deduction u/s 80P(2)(d): ITAT Reserve Bank Staff and Officers co-op credit society Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 235

In a recent judgment, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that interest income derived by a co-operative society from any other co-operative bank is allowable as a deduction under section 80P(2)(d) of the Income Tax Act, 1961.

A two-member bench comprising Shri Prashant Maharishi, AM and Shri Rahul Chaudhary, JM observed that any income by way of interest or dividend derived by the cooperative society from its investment with any other cooperative society is also allowable as deduction fully under Section 80P(2)(d) of the Act, the facts are clear that assessee is a co-operative society and cooperative banks are also cooperative societies.

Non filing of TDS u/s 234 E of Income Tax Act for 8 years: ITAT dismisses Appeal Adithya Ferro Alloys Pvt.Limited vs AO CITATION: 2024 TAXSCAN (ITAT) 245

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal due to the non- filing of Tax Deducted at Source ( TDS ) under Section 234E of the Income Tax Act, 1961, for a period spanning eight years.

The two member bench of the tribunal comprising Manomohan Das ( Judicial member ) and Manoj Kumar Agarwal ( Accountant member ) concluded that there was no sufficient cause with the assessee seeking condonation of inordinate delay of more than 8 years before first appellate authority.

Addition u/s 68 of Income Tax Act cannot be made Without Examining Source of Cash Deposit: ITAT M/s. Mudhol Pattina Sahakari Sangh Niyamita vs ACIT CITATION: 2024 TAXSCAN (ITAT) 242

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) observed that addition under Section 68 of the Income Tax Act, 1961, cannot be made without examining source of cash deposit.

The single member bench of the tribunal comprising George George K (Vice President) observed that an addition under section 68 of the Income Tax Act, 1961, cannot be made without scrutinizing the source of the cash deposit. Consequently, for the limited purpose of scrutinizing the cash deposit’s source, the matter was referred back to the Assessing Officer. The assessee was instructed to provide evidence of the identity/source of the cash deposit and must satisfy the AO regarding the conditions stipulated under Section 68 of the Income Tax Act, 1961.

No Enquiries made AO in Respect of genuineness of Receipts of donation issued to Political party for Confirming Deduction Claimed u/s 80GGC of IT Act: ITAT Upholds Revision Order Rakesh Balubhai Padariya vs Commissioner of Income Tax-3 CITATION: 2024 TAXSCAN (ITAT) 232

The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ), upheld the revision order and held that no enquiries was made by AO in respect of genuineness of receipts of the donation issued to the political party for confirming the deduction claimed under Section 80GGC of the Income Tax Act, 1961.

After observing the submissions of both parties the two-member bench of Annapurna Gupta, ( Accountant member ) and Siddhartha Nautiyal ( Judicial Member )held that the assessing officer simply allowed the claim of deduction of donation by the assessee, without carrying out the necessary enquiries Therefore the bench dismissed the appeal filed by the assessee. And upheld the revision order.

ITAT upholds Reassessment Proceedings initiated on information of Investigation Wings with respect to Accommodation Entry Vilson Roofing Products Pvt. Ltd. vs Asstt. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 228

The Pune bench of Income Tax Appellate Tribunal ( ITAT ) upheld the reassessment proceedings initiated on information wings with respect to accommodation entry.

The single-member bench of G. D. Padmahshali, ( Accountant member ) held that notice u/s 148 of the Act was validly issued. Therefore the bench dismissed the ground of appeal filed by the assessee.

ITAT upholds Addition in Absence of Cogent Material for genuineness of Share Application/Subscription Transaction Vilson Roofing Products Pvt. Ltd. vs Asstt. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 228

The Pune bench of Income Tax Appellate Tribunal ( ITAT ), while upholding the addition made under section 68 of the Income Tax Act, 1961 held that the assessee failed due to the absence of cogent material to prove the creditworthiness and genuineness of share application /subscription transaction.

The single-member bench of G. D. Padmahshali ( Accountant member ) upheld the addition made by the assessing officer and observed that the assessee has failed due to absence of cogent material to prove the creditworthiness and genuineness of share application /subscription transaction.

Interest Income received from Co-operative Banks cannot be equated with interest received from Co- operative Society: ITAT not allowed deduction u/s 80P (2) (d) of Income Tax Act Bantwal Public Employees Consumers Co-operative Society vs ITO CITATION: 2024 TAXSCAN (ITAT) 244

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) disallowed deduction under Section 80P (2)(d) of the Income Tax Act, 1961, stating that interest income received from cooperative banks cannot be considered equivalent to interest received from a cooperative society.

The two member bench of the tribunal comprising George George k ( Vice President ) concluded that the assessee cannot claim deductions under Sections 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act, 1961 for interest income received from scheduled banks/cooperative banks.

Pure Charity Performance of Activity without Consideration is not Envisioned u/s 2(15) of Income Tax Act as GPU object: ITAT Media Research Users Council vs Asst. Director of Income Tax CITATION: 2024 TAXSCAN (ITAT) 246

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Pure Charity Performance of Activity without Consideration is not envisioned under Section 2(15) of the Income Tax Act, 1961, as General Public Utility ( GPU ) object

The two member bench of the tribunal comprising Gangan Goyal ( Accountant member ) and Amit Shukla ( Judicial member ) observed that the concept of pure charity, the performance of an activity without consideration was not envisioned under the Act, however, as long as GPUs object involves activities which also generates profits, it can be granted exemption provided the quantitative limit under second proviso to Section 2(15) of the Income Tax Act, 1961, for receipts from such profits, was adhered to

Delay in Filing form 10 A: ITAT Rejects Registration of Trust u/s 12A of Income Tax Act LTCL Palaniappa Charities Trust vs The Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 238

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) rejected the registration of the trust under Section 12A of the Income Tax Act, 1961, due to the delay in filing Form 10A.

Hence, The two member bench of the tribunal comprising Manjunatha G ( Accountant member ) and Mahavir Singh ( Vice President ) set aside the appeal and the matter was remitted back to the file of the CIT (E) who will allow assessee to file application in form No. 10A along with other required details and the CIT (E) will examine the entire aspect relating to registration under Section 12AB of the Income Tax Act, 1961 as well as under Section 80G of the Act and then will decide the appeal accordingly.

Deduction u/s 80 P of Income Tax Act does not apply to Interest earned on FDRs from Bank of Baroda: ITAT Matar Taluka Local Board vs D.C.I.T CITATION: 2024 TAXSCAN (ITAT) 226

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that deduction under Section 80 P of the Income Tax Act, 1961 does not apply to interest earned on Fixed Deposit Receipts ( FDRs ) from Bank of Baroda

The single member bench of the tribunal comprising Suchithra Kamble ( Judicial member ) Regarding the interest earned from Bank of Baroda, expenses incurred for earning interest income on Fixed Deposit Receipts ( FDRs ) from Bank of Baroda should be allowed, but deduction under Section 80P of the Act will not be applicable to the interest earned on the FDR from Bank of Baroda. Therefore, the appeal of the assessee was partly allowed.

Capital Gains arising on Sale of Shares cannot be regarded as Sham Profit: ITAT deletes additions made u/s 69A of Income Tax Act Sarika Bindal vs ITO CITATION: 2024 TAXSCAN (ITAT) 229

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ), while deleting the addition made under Section 69A of the Income Tax Act, 1961 held that capital gain arising on sale of shares could not be regarded as sham profit.

After observing the submissions of both parties the two-member bench Of Pradip Kumar Kedia, ( Accountant member ) and Challa Nagendra Prasad ( Judicial Member ) held that capital gains arising on sale of shares cannot be regarded as sham profit and consequently, additions under section 69A of the Act is not justified. Therefore the bench allowed the appeal filed by the assessee.

Extension of due date under CBDT circular is Dependent upon Quantification of Interest u/s 234 of Income Tax Act: ITAT Tata Rao Gali vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 237

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that extension of due date under Central Board of Direct Taxes ( CBDT ) circular is Dependent upon Quantification of Interest under Section 234 of the Income Tax Act , 1961

The two member bench of the tribunal comprising Rama Kanta ( Vice President ) and K.Narasimha Chary ( Judicial member ) observed that the first clarification provided in the circular lacks clarity regarding the specific date for assessing the interest liability under section 234A of the Income Tax Act , 1961.

No invocation of Section 201(1)/201(1A) of Income Tax Act as assessee cannot be termed “assessee in default” for non-deduction of TDS: ITAT Bharat Sanchar Nigam Ltd vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 239

The Rajkot bench of the Income Tax Appellate Tribunal ( ITAT ) observed that no invocation of Section 201(1)/201(1A) of the Income Tax Act, 1961, as assessee cannot be termed “assessee in default” for non-deduction of Tax Deducted at Source ( TDS )

The two member bench of the tribunal comprising Waseem Ahammad ( Accountant member ) and Siddartha Nautiyal ( Judicial member ) observed that the Department had not analyzed this aspect/contention of the assessee that since the assessee had already deducted taxes at source at appropriate rates, there was no question of invoking the provisions of Section 201(1)/201(1A) of the Income Tax Act, 1961, since the assessee could not be held to be an “assessee in default” for non- deduction of TDS, when the assessee had already deducted taxes at source at appropriate rates.

Debt does not Cease to Exist when there is no Writing in Books of Account, no Cessation of Liability u/s 41(1) of Income Tax Act: ITAT Total Environment Building Systems Pvt. Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 242

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) observed that debt does not cease to exist when there was no writing in books of account, no Cessation of Liability under Section 41(1) of the Income Tax Act, 1961

The two member bench of the tribunal comprising Madhumitha Roy ( Judicial member ) and Chandra poojari ( Accountant member ) observed that in the assessment year under consideration, this amount cannot be considered as cessation liability under Section 41(1) ) of the Income Tax Act, 1961. This ground of appeal of the assessee was allowed.

Goodwill is an Intangible asset, Depreciation Allowable u/s 32(1) of Income Tax Act: ITAT S&P Capital IQ (India) Private vs Asst. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 240

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that goodwill was an intangible asset, depreciation allowable under Section 32(1) of the Income Tax Act, 1961

The two member bench of the tribunal comprising Rama Kanta ( Vice President ) and N.K.Narasimha Chary ( Judicial member ) concluded that the denial of the deduction claim for depreciation on goodwill by the authorities below cannot be justified. Therefore, the bench observed that this disallowance should be overturned, and the claim for deduction of depreciation on goodwill should be accepted.

Consequently, the grounds of appeal are allowed.

Unexplained Cash Deposits during the Demonetization period: ITAT remits matter to AO produce Bills and Vouchers for Purchase and Sale of Gold Bollam Sampath Kumar Jewellers vs Asstt. C. I. T. Circle 3(2) Hyderabad CITATION: 2024 TAXSCAN (ITAT) 216

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) has remitted the matter to the Assessing Officer, directing them to produce bills and vouchers related to the purchase and sale of gold in response to unexplained cash deposits during the demonetization period.

The two member bench of the tribunal comprising Laliet Kumar ( Judicial member ) and R.K. Panda ( Vice President ) concluded that the grounds raised by the assessee are accordingly allowed for statistical purposes. In the result, an appeal filed by the assessee was allowed for statistical purposes.

Full Value of Consideration or Cost of Investment cannot be Substituted by Fair Market Value Except within Purview of Section 50 C of Income Tax Act: ITAT Asst.CIT vs Satya Realtors Pvt. Ltd. CITATION: 2024 TAXSCAN (ITAT) 243

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that full value of consideration or cost of investment cannot be substituted by fair market value except within purview of Section 50 C of the Income Tax Act, 1961

The two member bench of the tribunal comprising Shamim Yahaya ( Accountant member ) and Yogesh Kumar U.S ( Judicial member ) observed that the agreed consideration stated in the sale documents or any other instrument should be considered as the “full value of consideration” or “cost of investment”. Substitution of the fair market value is only permissible in cases falling within the scope of Section 50C and Section 56(l)(vi)/(vii), of the Income Tax Act, 1961 where the circle rate exceeds the recorded transaction value. However, in this instance, the consideration in registered conveyance deeds consistently exceeds the circle rate valuation.

Services provided to Jet Airways and Jet Lite in Malaysia head office of Resident Indian Company are taxable in India: ITAT Malaysian Airline System Berhad vs DCIT CITATION: 2024 TAXSCAN (ITAT) 247

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that services provided to Jet Airways and JetLite in Malaysia head in the office of resident Indian companies are taxable in India .

After observing the submissions of both parties the two-member bench of G.S. Pannu, ( Vice President ) and Challa Nagendra Prasad, ( Judicial Member ) held that services provided to Jet Airways and JetLite in Malaysia head in the office of resident Indian companies are taxable in India.

Receipts from sale of Software License is not royalty under Article 12(3) of India Singapore DTAA: ITAT ACIT vs Newspage Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 248

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) held that receipts from sale of software license is not royalty under Article 12(3) of India Singapore Double Taxation Avoidance Agreement.

After observing the submissions of both parties the two-member bench of G.S. Pannu, ( Vice President ) and Challa Nagendra Prasad, ( Judicial Member ) by determining the decision of the Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT held that software license and receipts from provisions of services cannot be assessed as royalty/FTS in the hands of the assessee.

Income from Transfer of Channels being an Asset Outside India not Taxable u/s 9(1)(i) Income Tax Act: ITAT deletes Addition Star Television Entertainment Ltd vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 249

The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) comprising Amit Shukla ( Judicial Member ) and Padmavathy S. ( Accountant Member ) while deleting the addition held that Income from transfer of channels being an asset outside India should not be taxable under Section 9(1)(i) of the Income Tax Act,1961.

Accordingly the ITAT bench held that the income arising out of the transfer of STAR Vijay channel, being an asset outside India by the SARF to VTPL will not fall within the provisions of section 9(1)(i) and hence not taxable in India.

No taxability arises in Absence of any Income Escapement on Repatriating Rs. 203.56 Cr arising from NCDs Redemption: ITAT BCP V Singapore FVCI Pte. Ltd vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 250

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that no taxability arose as there was no escapement of income on repatriating Rs.203.56 Cr. arising from redemption of non-convertible debentures ( NCDs ).

A two-member bench comprising Dr B R R Kumar, Accountant Member and Ms. Astha Chandra, Judicial Member observed that the assessee has only repatriated the amounts invested in the earlier years and hence, no taxability arises during the year. In the case of the assessee company, neither has any income accrued or arisen or is deemed to accrue or arise under that for the assessment year 2017-18 nor any claim has been under any DTAA. The Assessing Office has not examined the relevant records before them wherein the interest earned has been duly offered to tax.

Taxpayer can give Opportunity to Furnish Critical Additional Evidence before Completing Assessment u/s 144: ITAT Baba Kishan Dass Education & Charitable Society vs The ITO (Exemptions) Ward CITATION: 2024 TAXSCAN (ITAT) 252

The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT ) has held that taxpayers can be allowed to furnish critical additional evidence before completing an assessment under section 144 of the Income Tax Act, 1961.

A two-member bench comprising Shri Sanjay Garg, Jm & Shri Vikram Singh Yadav, Am observed that the additional evidence so submitted is critical and germane for deciding the matter under consideration and given that the assessment has been completed under section 144, the assessee deserves to be allowed an opportunity to furnish the necessary explanation and documentation in support of its claim for exemption under section 10(23C)(iiiad) of the Act.

Income Tax addition upheld without Application of Mind: ITAT deletes Addition Shiv Kumar Nayyar vs DCIT CITATION: 2024 TAXSCAN (ITAT) 253

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT )observed that the Income Tax Addition was upheld without Application of Mind and deleted the addition. It was viewed that the authorities below have again passed the very same order without proper application of mind

A single-member bench composed of Shri Shamim Yahya, Accountant Member viewed that the authorities below have again passed the very same order without proper application of mind. The Tribunal set-aside the order of the authorities below and deleted the addition.

Annual Letting Value of Unsold Flats cannot be added under section 22 of Income Tax Act: ITAT Shamdarshan Properties Pvt Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 254

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the annual letting value of unsold flats cannot be added under section 22 of Income Tax Act, 1961. The Tribunal directed the assessing officer to delete the addition of the annual let-out value ( ALV ) of the unsold flats.

A two-member bench comprising Shri Prashant Maharishi, Accountant Member & Shri Pavan Kumar Gadale, Judicial Member observed that the annual value of unsold flats held as stock in trade has to be considered as per the amendment in the Finance Act 2017 under section 23(5) of the Act is applicable from A.Y 2018-19. The Tribunal directed the assessing officer to delete the addition of the annual let-out value ( ALV ) of the unsold flats and allowed the grounds of appeal in favor of the assessee.

Voluntary Disallowance of Expense u/s 40 (a) (ia) not a base to treat Taxpayer as ‘Assessee in Default’:ITAT ACIT (TDS) vs Artemis Medicare Services Ltd CITATION: 2024 TAXSCAN (ITAT) 251

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that voluntary disallowance of an expense under section 40 (a) (ia) of the Income Tax Act, 1962 is not a basis to treat a taxpayer as ‘assessee in default’.

A two-member bench comprising Shri M Balaganesh, Accountant Member and Shri Anubhav Sharma, Judicial Member held that the assessee cannot be treated as an ‘assessee in default’ for mere book entries passed within the meaning of section 201(1) of the Act and consequently interest under section 201(1A) is also directed to be deleted.

Trust cannot be Barred from getting the benefit of Income Tax Deduction because of not Opting for it Previously: ITAT Diamond Cares vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 256

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the trust cannot be barred from getting the benefit of income tax deduction because it had not opted for it previously.

A two-member bench comprising of Shri Sanjay Garg, Judicial Member & Shri Girish Agrawal, Accountant Member viewed that taking the reasonable construction of the said provision, the assessee is well within the prescribed limitation period to apply for the final approval Under section 80G(5) of the Act.

No TDS on Minimum Guarantees Paid to Hotels: ITAT grants Relief to OYO Rooms M/s Oravel Stays Pvt Ltd vs The A.C.I.T

The Delhi Bench Income Tax Appellate Tribunal ( ITAT ), while granting relief to the Oravel Stays Private Limited, the company which runs OYO Rooms, has ruled that the company is not obligated to pay Tax Deduction at Source ( TDS ) on Minimum Guarantees Paid to Hotels. The ITAT ruled against the disallowance of Rs. 1,08,59,584 under Section 40(a)(ia) of the Income-tax Act, 1961, related to minimum guarantee expense

The two-member bench of Khul Bharat (Judicial Member) and N. K. Billaiya (Technical member)

observed that “The contention of the ld. DR that in furtherance of its business objectives/model, the assessee is providing service, cannot be accepted as neither the Assessing Officer nor the ld. CIT(A) have invoked the relevant provisions of the Act applicable for provisions of service. On the facts of the case, we hold that section 194C of the Act is not applicable.”

No Requirement of Commencement of activity for registration if Trusts already engaged in Charitable Activity: ITAT T B Lulla Charitable Foundation vs The CIT Exemption CITATION: 2024 TAXSCAN (ITAT) 257

In a recent case, the Pune bench of the Income Tax Appellate Tribunal ( ITAT ) has held that there is no requirement for commencement of activity for registration if trusts are already engaged in charitable activity.

A two-member bench comprising of Shri Satbeer Singh Godara, Judicial Member and Dr Dipak P Ripote, Accountant Member observed that “However, the CIT(E) has not discussed whether the Assessee fulfills all other conditions mentioned in the section as he rejected it on technical ground. Therefore, in these facts and circumstances, we hold that the Assessee had made the application in form 10AB within the prescribed time limit and hence it is a valid application.”

Profit Element in Unexplained Sales is to be treated under undisclosed Income: ITAT ACIT vs Conor Granito P.Ltd CITATION: 2024 TAXSCAN (ITAT) 255

The Rajkot Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the profit element in unexplained sales is to be treated under undisclosed income under the Income Tax Act, 1961. The ITAT observed that CIT(A) has failed to give the benefit of the income surrendered by the assessee voluntarily against the addition confirmed by him on account of unaccounted sales.

A two-member bench comprising Smt Annapurna Gupta, Accountant Member and Smt Madhumita Roy, Judicial Member viewed that there is no merit in the contentions of the DR that the CIT(A) ought to have applied a net profit of 12.5% in the present case.

Permitting right to use Brand name/ Trade name under Trademark License Agreement is in nature of Royalty u/s 9(1)(vi) of India Turkey Tax Treaty: ITAT M/s. Indian Oil Corporation Ltd vs Deputy Director of Income Tax CITATION: 2024 TAXSCAN (ITAT) 276

In a recent decision, the Income Tax Appellate Tribunal ( ITAT ) in Mumbai shed light on the nature of royalty payments concerning the usage of brand names or trade names under a trademark license agreement, as per Section 9(1) (vi) of the India-Turkey Tax Treaty.

The tribunal, consisting of Gagan Goyal ( Accountant Member ) and Vikas Aswathy ( Judicial Member ), observed precedents, including the case of Global Cricket Corporation PTE Ltd., which deliberated on the taxability of payments received from sponsors for the use of Event marks and signages. The tribunal concluded that such payments do not fall under the category of royalty as per section 9(1)(vi) of the India-Turkey Tax Treaty.

Assessee Entitled to claim TDS Deduction in year on which Corresponding Income offered to Tax on non claiming of Double Deduction: ITAT M/s. Adroit Structural Engineers Pvt. Ltd. vs The Asst. Director of Income Tax CITATION: 2024 TAXSCAN (ITAT) 273

In a major ruling the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that assessee entitled to claim Tax Deducted at Source (TDS) deduction in year on which corresponding Income offered to Tax on non-claiming of double deduction:

The two member bench of the tribunal comprising Waseem Ahamad ( Accountant member) and Siddhartha Nautiyal ( Judicial member) observed that if the assessee has not sought duplicate credit for TDS, they are entitled to claim TDS deduction in the year when the corresponding income has been declared for taxation and invoices have been raised on the payer. In this particular case, the assessee asserted that both the services and invoices were executed in the contested assessment year, i.e., A.Y. 2020-21, and additionally, they have not claimed TDS deduction in any previous assessment year.

No justification for disallowance on Ad Hoc basis, without pointing out any deficiency in books in nature of business: ITAT Zheng Yuan Mobiles Pvt. Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 274

In a significant ruling the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that no justification for disallowance on Ad Hoc basis, without pointing out any deficiency in books in nature of business

The two member bench of the tribunal comprising Shamim Yahya (Accountant member) and Anubhav Sharma (Judicial member) concluded that there was no evidence to suggest that the assessee was presenting any new information that had not been previously available to the tax authorities. What had been established was that, without identifying any specific defects, a portion of the expenses was dismissed on an estimated basis. Such a practice was not legally sustainable

Relief to Saint- Gobain India Pvt. Ltd: ITAT rules Excise Refund and Interest subsidy Received in pursuance to Incentive Announces and sanctioned are Capital Receipt The Deputy Commissioner of Income Tax vs M/s. Saint-Gobain India Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 272

In a significant ruling, the Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has granted relief to Saint-Gobain India Pvt. Ltd., ruling that the excise refund and interest subsidy received as part of announced and sanctioned incentives constitute capital receipts

Taking into consideration the point highlighted by the counsels, the tribunal of Manoj Kumar Agarwal ( Accountant member) and V. Durga Rao ( Judicial member) found that the Supreme Court in the case of Shree Balaji Alloys (supra), by considering its judgment in the case of CIT v. Ponni Sugars & Chemicals Ltd. (supra), dismissed the appeal of the revenue and upheld the judgment of High Court of Jammu & Kashmir in the case of Shree Balaji Alloys & Others v. CIT, wherein, the High Court has held Excise refund and interest subsidy received by the assessee in pursuance to the incentives announced and sanctioned are capital receipts.

Sale Consideration as determined by Stamp Duty Authorities has to be adopted for purposes of Computation of Capital Gain: ITAT Smt. Geeta Devi Sharma vs The ITO CITATION: 2024 TAXSCAN (ITAT) 284

A two member bench of Jaipur Income Tax Appellate Tribunal ( ITAT ) has held that the sale consideration as determined/adopted by the Stamp Duty Authorities, has to be adopted for the purposes of computation of capital gain.Thus, the intention of the legislature is quite clear that after this amendment, it is always the Stamp Valuation to be considered and there is no warrant to replace such figure in view of such binding legal fiction

The bench comprising Rathod Kamlesh Jayantabhai ( Accountant Member ) and Sandeep Gosain ( Judicial Member ) held that “the sale consideration as determined/adopted by the Stamp Duty Authorities, has to be adopted for the purposes of computation of capital gain.Thus, the intention of the legislature is quite clear that after this amendment, it is always the Stamp Valuation to be considered and there is no warrant to replace such figure in view of such binding legal fiction. The subject transaction between the seller and the assessee buyer firm, was in accordance with the prevailing DLC rates and the Stamp Duty Authority has duly accepted the declared consideration. Thus, Sec 50C of Income Tax Act directly and strongly supports the case of the assessee.

Sales of Jewellery could not be treated as Unexplained Cash Credit u/s 68 of Income Tax Act: ITAT The Income Tax Officer vs M/s.Sahana Jewellery- Exports Pvt. Ltd. CITATION: 2024 TAXSCAN (ITAT) 267

In a recent decision the chennai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that sales of jewelry could not be treated as unexplained cash credit under Section 68 of Income Tax, Act, 1961

The quorum of Mahavir Singh ( Vice President ) and Manjunatha G ( Accountant member ) considered view that the AO was erred in making additions towards cash receipts received for sale of jewelry, which has been subsequently converted into sales, for the impugned assessment year as unexplained cash credits taxable under Section 68 of the Income Tax Act, 1961

Amount of TDS can be reduced while calculating advance tax and Interest u/s 234B of IncomeTax Act cannot be levied: ITAT HCL Singapore PTE. Ltd. vs Asst. CIT Circle International CITATION: 2024 TAXSCAN (ITAT) 258

In a recent decision the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the amount of Tax Deducted at Source ( TDS ) can be reduced while calculating advance tax and interest under Section 234B of Income Tax Act, 1961, cannot be levied

The two member bench of the tribunal comprising Kul Bharat ( Judicial member ) and M.Balaganesh (Accountant member) observed that the payments made by HCLT to the assessee are not subject to taxation in India under domestic law. Consequently, the assessee is not required to pay advance tax, and therefore, no interest under Section 234B of the Income Tax Act, 961, can be imposed.

Incorrect adding of additional Depreciation to Computation of Book Profit: ITAT directs AO todelete addition u/s 115JB of Income Tax Act ATC Global Logistics Pvt. Ltd. vs ACIT CITATION: 2024 TAXSCAN (ITAT) 261

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer ( AO ) to delete the addition under Section 115JB of the Income Tax Act, 1961, citing incorrect inclusion of additional depreciation in the computation of book profit.

The two member bench of the tribunal comprising M.S. Pathmavathy ( Accountant member ) and Vikas Aswathy ( Judicial member ) uphold the contention raised by the assessee, and we instruct the AO to eliminate the addition made to the book profit computed under Section 115JB of the Income Tax Act, 1961, In the result, an appeal filed by the assessee was partly allowed.

No Deduction of TDS u/s 194 C of Income Tax Act for land leveling Expenses: ITAT deletes Income Tax addition Shri Nilesh Parshotambhai Pate vs D.C.I.T CITATION: 2024 TAXSCAN (ITAT) 282

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has decided to delete the Income Tax addition, as it found that no deduction of Tax Deducted at source ( TDS ) under Section 194C of the Income Tax Act was required for land leveling expenses.

The two member bench of the tribunal comprising T.R. Senthil Kumar ( Judicial member ) and Waseem Ahmed ( Accountant member ) it can be inferred that the assessee was not subject to Section 44AB of the Income Tax Act, in the previous year, thus exempt from TDS deduction under Section 194C of the Income Tax Act , for land leveling expenses. Therefore, overturned the CIT(A)’s decision and instructed the AO to remove the addition made.

Disallowance of Donation for Milan Mandir Building Fund u/s 11(i)(d) of Income Tax Act: ITAT quashes addition on difference amount to total Income of assessee Shree Variya Prajapati Chovashi Gyati Samsth vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 283

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has overturned the disallowance of donations for the Milan Mandir Building Fund under section 11(i)(d) of the Income Tax Act,1961, nullifying the addition made to the total income of the assessee due to discrepancies in income calculation

The single member bench of the tribunal comprising Suchithra Kamble ( Judicial member ) observed that donation received for the specific purpose i.e. Milan Mandir Building Fund and also invested for the said purpose/said fund as per the provisions of section 11(i)(d) r.w.s. 11(5) of the Income Tax Act, in the schedule bank for which the assessee has submitted the bank account therefore this aspect was not taken into consideration by the CIT (A).

Personal Identity of Depositors Confirmed: ITAT upholds deletion of addition u/s 68 of Income Tax Act The ACIT vs M/s. Dayal Steel P. Ltd CITATION: 2024 TAXSCAN (ITAT) 280

The two member bench of the Income Tax Appellate Tribunal ( ITAT ) Delhi, upheld the deletion of addition under Section 68 of the Income Tax Act, 1961, confirming the personal identity of depositors.

The tribunal comprising C.N.Prasad ( Judicial member ) and Dr. B.R.R.Kumar ( Accountant member ) determined that the AO rejected the evidence provided by the appellant without proving the falsity of the documents submitted by the assessee. The personal identities of these investors were established, their sources were proven, and their ITRs and subsequent repayments were examined. After thorough examination, the CIT(A) concluded that the AO was unjustified in treating the unsecured loans received under Section 68 of the Income Tax Act, 1961.

Income Earned from letting out of Auditorium is Eligible for Exemption u/s 11 of Income Tax Act, When Income is applied to Objects of Trust: ITAT The Synthetic & Art Silk Mills Research Association vs Commissioner of Income Tax (Exemption) CITATION: 2024 TAXSCAN (ITAT) 279

In a recent decision the Income Tax Appellate Tribunal, ( ITAT ) in Mumbai, observed that income earned from letting out of auditorium was eligible for exemption under Section 11 of the Income Tax Act, 1961, when income was applied to objects of Trust

the two member bench of the tribunal comprising Kavitha Rajagopal ( Judicial member ) and there was merit in the contention that whether the impugned income was incidental to the objects of the assessee trust was a debatable issue and that the AO while allowing the exemption in the order passed under Section 144 r.w.s.263 of the Income Tax Act has taken a possible view upon verifying the details available on record. In view of above discussions and applying the ratio laid down by the Apex court in the case of Malabar Industrial Co. Ltd ( supra )

Entire receipt of INR received from different entities not taxable as royalty: ITAT Volvo Information Technology AB vs DCIT CITATION: 2024 TAXSCAN (ITAT) 278

In a major ruling the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the entire receipt of Indian rupee ( INR ) received from different entities is not taxable as royalty.

The tribunal of Dr, B.R.R Kumar ( Accountant member ) and Kul Bharat ( Judicial member ) allowed the assessee’s claim by holding that the receipts in question could not be taxed as “royalty”. For the same reasons herein also we hold that the entire receipt of INR 119, 88, 54,215/- received from different India entities could not be taxed as royalty.

Failure to find any particulars furnished in ITR to be Inaccurate: ITAT deletes Penalty u/s 271 (1) of Income Tax Act Suryshree Blocks Pvt vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 281

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has decided to delete the penalty under Section 271(1) of the Income Tax Act, as it found no inaccuracies in the particulars furnished in the Income Tax Return.

The tribunal, of Suchithra Kamble observed that the Supreme Court in the case of Reliance Petro-Product Pvt. Ltd. clarified that “inaccurate particulars” refer to details in the return that are not precise or correct. As the Assessing Officer did not find any inaccuracies or false details supplied by the assessee, Section 271(1)(c) of the Income Tax Act, cannot be invoked.

Moreover, the assessee provided detailed calculations during the assessment proceedings regarding interest on borrowed funds, which were subsequently added by the Assessing Officer.

Failure to Furnish Proper ITR: ITAT upholds penalty u/s 271(1) (c) of Income Tax Act Anjis Developers Private Limited vs PCIT CITATION: 2024 TAXSCAN (ITAT) 275

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) upheld a penalty imposed under Section 271(1) (c) of the Income Tax Act, 1961, for failure to furnish proper Income Tax Return ( ITR ).

The coram of Kuldip Singh ( Judicial member ) and Om Prakash Kant ( Accountant member ) observed that failure to furnish returns, comply with notices, concealment of income, such person shall pay by way of penalty under Section 271(1)(c) of Income Tax Act, Since, both the penalty under Section 271(1) Income Tax Act, as well as penalty under Section 270A Income Tax Act, could be initiated if the Assessing Officer or other authority prescribed may consider so under the proceeding of the Act. Therefore, the issue decided by Allahabad High Court ( supra ) respectfully following the finding, the grounds raised by the assessee are dismissed.

Failure to explain amount found credited in Books: ITAT upholds Invocation u/s 68 of Income Tax Act ITO -11(3)(4) vs M/s. Winstar E Com Pvt Ltd CITATION: 2024 TAXSCAN (ITAT) 277

In a significant ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the invocation of under Section 68 of the Income Tax Act, 1961, due to the failure to explain the amount found credited in the books.

The two member bench of the tribunal comprising Prashanth Maharishi ( Accountant member ) and Pavan Kumar Gadale ( Judicial member ) believed that the Commissioner of Income Tax (

Appeals ) [CIT (A)] had issued a well-founded and conclusive order. Therefore, the bench did

not identify any shortcomings in the CIT (A)’s decision and upheld it accordingly.

Father’s Gift to son substantiated with Evidence: ITAT directs AO to delete addition onAgricultural IncomeRakesh Reddy Keshanna vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 271

The single member bench of the Income Tax Appellate Tribunal ( ITAT ), Hyderabad, directed the Assessing Officer (AO) to delete the addition of agricultural income, substantiating that the father’s gift to his son was supported by evidence.

The tribunal comprising K. Narasimha Chary (Judicial member) concluded that the matter was returned to the Assessing Officer’s jurisdiction for thorough examination of the evidence presented by the assessee concerning the Rs. 5 lakhs gifted by each grandfather.

Trust cannot be Barred from getting the benefit of Income Tax Deduction because of not Opting for it Previously: ITAT Diamond Cares vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 256

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the trust cannot be barred from getting the benefit of income tax deduction because it had not opted for it previously.

A two-member bench comprising of Shri Sanjay Garg, Judicial Member & Shri Girish Agrawal, Accountant Member viewed that taking the reasonable construction of the said provision, the assessee is well within the prescribed limitation period to apply for the final approval Under section 80G(5) of the Act.

Loans taken from Partnership Firms, in Violation of u/s 269SS of Income Tax Act: ITAT imposes Penalty u/s 275 (1) (c) of Income Tax Act Dr. Kalpana Sunil vs Joint Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 259

The single member bench of the Income Tax Appellate Tribunal ( ITAT ) Ahmedabad, imposed a penalty under Section 275(1)(c) of the Income Tax Act, 1961, on loans taken from partnership firms, which were deemed to violate Section 269SS of the Income Tax Act, 1961

The tribunal comprising Suchithra Kamble observed that the assessee, who was both a gynecologist and a partner in M/s. Kalpana Hospital conducted this transaction in a personal capacity but portrayed it as a loan taken from the partnership firm. Hence, the decision relied upon by the assessee and Circular No. 387 dated 06-07-1984 issued by the CBDT are not applicable in the present case. Consequently, the appeal of the assessee was dismissed.

Capital Gain Account Scheme towards Cost of Improvement of Residential Property Acquired is Eligible for Deduction u/s 54F of Income Tax Act: ITAT Anju Ahuja vs Principal Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 262

In a significant ruling the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the capital gain account scheme towards the cost of improvement of residential property acquired was eligible for deduction under Section 54F of the Income Tax Act, 1961.

The two member bench of the tribunal comprising Challaya Nagendra Prasad ( Judicial member

) and Pradip Kumar Kediya ( Accountant member ) observed that the assessee that the sum of Rs. 25 lakhs allocated and retained in the Capital Gain Account Scheme for the improvement of the acquired residential property qualifies for deduction under Section 54F of the Income Tax Act, 1961. This cost of improvement can, at most, be considered as deductible at the time of the eventual sale of the property. Therefore, the directive issued by the Principal Commissioner of Income Tax ( Pr.CIT ) regarding this matter remains unchallengeable.

Mere making of Incorrect Claim does not Tantamount to furnishing of inaccurate particular: ITAT deletes Penalty u/s 27(1)(c) of Income Tax Act Eureka Outsourcing Solutions Pvt. Ltd vs Dy. CIT CITATION: 2024 TAXSCAN (ITAT) 264

In a recent decision the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the mere making of an incorrect claim does not tantamount to furnishing of inaccurate particular, leading to the deletion of penalty under Section 27(1)(c) of the Income Tax Act, 1961

The two member bench of the tribunal comprising S.Rifafur Rahman ( Accountant member) and Kavitha Rajagopal ( Judicial member) found no justification in the penalty levied by the lower authorities considering the factual aspect of the present case Therefore, the bench further deemed it fit to direct the A.O. to delete the impugned penalty levied. Hence, the grounds raised by the assessee are allowed.

Failure to file form 10IC due to Non-appearance: ITAT Allows Concessional rate of tax u/s 115 BAA of Income Tax Act Traxit Engineers Pvt. Ltd. vs The Assessing Officer CITATION: 2024 TAXSCAN (ITAT) 270

In a major ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) allowed concessional rate of tax under Section 115BAA of the Income Tax Act, 1961, due to non- appearance resulting in the failure to file Form 10IC.

The ITAT concluded that the assessee’s assertion regarding the filing of Form 10IC requires factual verification, the bench returning the appeal to the CIT (A) to examine the assessee’s claim based on any evidence that may be submitted and to allow the claim in accordance with the law.

Non reply to Section 133(6) of the Income Tax Act, Notice cannot necessarily lead toDisallowance of Petty Expenses: ITAT GSR Industries vs DDIT CITATION: 2024 TAXSCAN (ITAT) 269

In a significant ruling the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that non reply to Section 133(6) of the Income Tax Act, 1961, notice cannot necessarily lead to disallowance of petty expenses

The two member bench of the tribunal comprising Saktijit Dey ( Vice President ) and Dr. B.R.R Kumar ( Accountant member ) observed that the Assessing Officer (AO) erred in assuming that the non-response to Section 133(6) of the Income Tax Act, notices automatically warrants the disallowance of petty expenses ranging from Rs. 9,000 to Rs. 1,00,000. In the absence of any other evidence indicating the non-incurrence of these expenses, the mere lack of response to notices cannot justify their disallowance.

No TDS Deduction u/s 194 J of Income Tax Act, when consultancy charges excluding Service Tax does not Exceed Rs. 30,000: ITAT Sunil Ghorawat vs ACIT CITATION: 2024 TAXSCAN (ITAT) 265

The two member bench of the Income Tax Appellate Tribunal ( ITAT ), Delhi, observed that no Tax Deducted at Source ( TDS ) deduction under Section 194J of the Income Tax Act, 1961, when consultancy charges excluding service tax does not exceed Rs. 30.000.

Hence, as per the provisions of Section 194J of the Income Tax Act, 1961, read with CBDT circular, the tribunal comprising Anubhav Sharma ( Judicial member ) M. Balaganesh ( Accountant member ) held that the assessee was not obligated to deduct tax at source. Hence, no disallowance under Section 40(a)(ia) of the Income Tax Act, 1961, could not be made.

Accordingly In the result, the appeal of the assessee was allowed

ITR Filed along with Form 10CCB: ITAT allows Claim of Deduction u/s 80-IC of Income Tax Act Supreme Treon Pvt. Ltd vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 266

The two member bench of the Income Tax Appellate Tribunal ( ITAT ) Mumbai, allowed the claim of deduction under Section 80-IC of the Income Tax Act, 1961, based on the Income Tax Return ( ITR ) filed along with Form 10CCB.

The two member bench of the tribunal comprising Prashanth Maharishi ( Accountant member ) and Sandeep Sing Karhail ( Judicial member ) observed that the fiscal year under review marks the 8th year of claiming the deduction under section 80-IC of the Income Tax Act, 1961, for the Rudrapur unit. Additionally, the assessee has provided a copy of Form No. 10CCB dated 29/11/2015, supporting their claim for deduction under Section 80-IC of the Income Tax Act, 1961.

Decision of CIT (A) without Considering Merits of Case is Violative of Provisions of Section 250(6) of Income Tax Act: ITAT Rajkumar Anandchand Jain vs Dy. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 260

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that decision of Commissioner of Income Tax ( Appeals ) [ CIT (A) ] without considering merits of case was violative of provisions of Section 250(6) of the Income Tax Act, 1961

The two member bench of the tribunal comprising Rahul Choudari ( Judicial member ) and Prashant Maharishi ( Accountant member ) observed that the order of the CIT-A does not align with the provisions of Section 250(6) of the Income Tax Act, 1961, particularly given that a specific ground concerning the addition of Rs. 14,098,500 was raised in the appeal. In the interest of natural justice, the appeal of the assessee was reinstated to the CIT-A with the directive that once the window for submission of detailed information was available, the assessee must comply within the prescribed time frame.

Satisfaction Note not provided: ITAT rejects Assessment Order due to Oversight and Typographical Error u/s 143(3) of Income Tax Act The Assistant Commissioner of Income Tax vs Prakash Ferrous Industries Private Limited CITATION: 2024 TAXSCAN (ITAT) 263

The Chennai bench Income Tax Appellate Tribunal ( ITAT ), rejected the assessment order under Section 143(3) of the Income Tax Act, 1961, due to oversight and typographical error, as the satisfaction note was not provided.

The two member bench of the tribunal comprising Manoj Kumar Agarwal ( Accountant member) and V. Durga Rao ( Judicial member ) observed that the remand report from the Assessing Officer refuted the objections raised by the assessee concerning the satisfaction note’s receipt and the typographical error in the order.

Successor Company can claim deduction u/s.80IA(4) of Income Tax Act as per recognition of Industrial Park Scheme: ITAT Deputy Commissioner of Income Tax vs M/s. Olympia Tech Park CITATION: 2024 TAXSCAN (ITAT) 304

The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) recently held that Successor companies could claim deduction under Section 80IA(4) of Income Tax Act, 1961 as per the recognition of Industrial Park Scheme, 2006.

After observing the submissions of both parties the two-member bench of Manjunatha. G ( Accountant member ) and Manomohan Das ( Judicial Member )observed that Successor companies could claim deduction under Section 80IA(4) of Income Tax Act, 1961 as per the recognition of Industrial Park Scheme, 2006. Therefore the bench dismissed the appeal filed by the revenue.

No addition shall be made on account of Sale of Gold when it reflected under head “sale” inregular books: ITAT Vaibhav Jain vs DCIT CITATION: 2024 TAXSCAN (ITAT) 303

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) held that no addition should be made on account of sale of gold when it is reflected under the head sale in regular books.

Therefore the two-member bench Of Dr. B. R. R. Kumar, ( Accountant member ) and Yogesh Kumar US, ( Judicial Member ) held that no addition should be made on account of sale of gold when it is reflected under the head sale in regular books.

Receipts from Sale/Distribution of Software to Indian Associate Enterprise are not taxable under Article 12(3) of India-Singapore DTAA: ITAT Finastra International Financial Systems PTE Ltd vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 301.The

Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that receipts from sale/distribution of software to Indian Associate Enterprise ( AE ) are not taxable under the Article 12(3) of India-Singapore DTAA,.

After observing the submissions of both parties the two-member bench Of Dr. B. R. R. Kumar, ( Accountant member ) and Challa Nagendra Prasad, ( Judicial Member ) hold that the subject matter is squarely covered by the judgment of Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited vs. CIT Therefore receipts from sale/distribution of software to Indian Associate Enterprise ( AE ) are not taxable under the Article 12(3) of India- Singapore DTAA,.

Stamp Value on Date of Agreement on Sale of Property to be considered for Applicability of Section 56(2)(vii)(b) of Income Tax Act: ITAT Shyamkumar Madhavdas Chugh vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 306

The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) held that stamp value on date of agreement on sale of property to be considered for applicability of Section 56(2)(vii)(b) of the Income Tax Act, 1961.

A Two-Member Bench of C.N Prasad, Judicial Member and Dr. B. R. R. Kumar, Accountant Member observed that “In view of the foregoing discussion, the provisions of s. 56(2)(vii)(b) do not apply to the facts of the instant case as it is covered by the first and second provisos inasmuch as the assessee entered into an agreement fixing the amount of consideration for the purchase of the immovable property in the year 2010 but the actual registration took place in 2013 and , further , the assessee paid a part of the consideration by cheque in the year 2010 before the date of the agreement. In such circumstances, we hold that the stamp value on the date of agreement in the year 2010, has to be considered.”

ITAT deletes Additions made on account of Salary Payment in Cash without having any Documents Vaibhav Jain vs DCIT CITATION: 2024 TAXSCAN (ITAT) 303

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition made on account of salary in cash without having any documents

The tribunal during the adjudication observed that Salary of Rs.1,00 ,000/- has been regularly paid from every month by cheque. Since 01.10 .2016 an amount of Rs.1 ,00,000/- each has been paid and reflected in the books. Thereafter, there was no salary payment owing to termination of the employee. Thus entry made on the date of 01.11.2015 was notional and no salary has been paid in cash as the employee has been terminated Therefore the two-member bench Of Dr. B. R. R. Kumar, ( Accountant member ) and Yogesh Kumar US, ( Judicial Member ) deleted the addition made on account of salary in cash without having any documents . Mayank Patawari, counsel appeared for assessee and Sapna Bhatia, counsel appeared for revenue.

Stubbed Diamond Jewellery found during Search Proceedings need not to declared in Wealth Tax Return: ITAT deletes Addition Shekhar Agarwal vs ACIT CITATION: 2024 TAXSCAN (ITAT) 313

The two member bench of Delhi Income Tax Appellate Tribunal (ITAT) ruled that stubbed diamond jewelry found during the search proceedings should not need to be declared in wealth tax return. Hence the bench deleted the addition made by the Assessing officer.

Therefore the two-member bench Of N.K. Billaiya, (Accountant member) and Yogesh Kumar Us, (Judicial Member) observed that “diamond jewelry is always studded with gold and it is not a case of revenue that separate diamonds were found during the search operation. Merely because the jewelry is studded with the diamond of 47.18 carat in the instant case, the same cannot be added in the hands of the assessee when such jewelry formed part of the gross weight of the jewelry found from the premises of the assessee.”

Warranty Expenses and Delivery Cost are Activities Post-Sales, not AMP Expenditure For Amazon India: ITAT Amazon Seller Services Private Limited vs The Commissioner of Income-Tax (TP) CITATION: 2024 TAXSCAN (ITAT) 299

In a recent ruling, the Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) has clarified that delivery costs and warranty expenses should not be categorized as advertising, marketing, and promotion ( AMP ) expenditures.

The tribunal of George George K. ( Vice President ) and Laxmi Prasad Sahu ( Accountant Member ) held that these costs should not be considered as part of AMP expenditure, concluding that the CIT (TP) was not justified in revising the order under Section 263 on this specific issue.

No Exclusion of comparable if Data available on Records can be reasonably Extrapolated: ITAT Syngenta Services Private Limited vs The Asst. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 297

In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that no exclusion of comparable if data available on records can be Reasonably Extrapolated

The two member bench of the tribunal comprising S. Rifafur Rahman ( Accountant member ) and Vikas Aswathy

ITAT allows Depreciation claims on Aircraft put to use for a period less than 180 days Deferred Revenue expenditure incurred on account of leased Aircraft Engine Improvement: ITAT directs re adjudication Flysafe Aviation Ltd. vs DCIT CITATION: 2024 TAXSCAN (ITAT) 360

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) allowed depreciation claims on the aircraft put to use for a period less than 180 days.

After reviewing the submissions of both parties the two-member bench Of M. Balaganesh ( Accountant Member ) and Anubhav Sharma, ( Judicial Member ) allowed depreciation claims on aircraft put to use for a period less than 180 days.

Central Govt issues Posting Orders for 40 new ITAT Members across Nation: Who are they

The Central Government has appointed 40 new members to the Income Tax Appellate Tribunal ( ITAT ) bench across the nation. The government has provided the list of names of the members appointed which includes judges, advocates, Chartered Accountants and IRS officers.

Established in January 1941, the Income Tax Appellate Tribunal ( ITAT ) stands as a pivotal quasi-judicial institution, specializing in the adjudication of appeals under the Direct Taxes Acts. Originally comprising six Members forming three Benches in Delhi, Kolkata ( Calcutta ), and Mumbai ( Bombay ), its scope has progressively expanded. Presently, the ITAT operates 63 Benches spread across 27 different stations, ensuring comprehensive coverage in nearly all cities hosting a High Court.

AO blindly relied Investigation Wing report for Reopening Assessment, No application of mind: ITAT quashes Reassessment Order Akik Marketing India Pvt. Ltd vs ITO CITATION: 2024 TAXSCAN (ITAT) 383

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has nullified the Reassessment Order, pointing out that the Assessing Officer ( AO ) relied blindly on the Investigation Wing report for reopening the assessment without due diligence

The two-member bench of the tribunal, comprising M. Balaganesh ( Accountant member ) and Anubhav Sharma ( Judicial member ), noted the unreasonableness of the reassessment proceedings. They observed a lack of application of mind by the AO during the recording of reasons, coupled with vague and unjustified justifications. Ultimately, the ITAT decision highlighted the importance of AO’s independent assessment and diligent consideration of tangible evidence before initiating reassessment proceedings, rather than mere reliance on reports without proper scrutiny.

719g Jewelry found in locker declared Stri Dhan from Parents: ITAT deletes Addition u/s 69 Mudita Chaturvedi vs ACIT CITATION: 2024 TAXSCAN (ITAT) 377

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) eliminated the additional assessment under section 69 of the Income Tax Act, following the declaration of 719 grams of jewelry found in the locker as Stri Dhan, received from the assessee’s parents.

The tribunal, comprising Yogesh Kumar ( U.S ) and N.K.Billaiya ( Accountant member ) stated that “Considering family background of the assessee possession of 719.91 grams gold jewelry cannot be ruled out. Considering the facts in totality we do not find any merit in the impugned addition we accordingly direct the AO to delete the same.” In the result, the appeal of the assessee is allowed.

Interconnect usage Payment received by Foreign Company from Indian telecom Operator not Taxable as ‘Royalty’: ITAT M/s. HCG Global Communications Ltd vs DCIT (IT) CITATION: 2024 TAXSCAN (ITAT) 379

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the interconnect usage payments received by a foreign company from an Indian telecom operator should not be classified as ‘Royalty’.

The two-member bench, consisting of Chandra Poojari ( Accountant member ) and George George K ( Vice President ), determined that the amount received by the assessee company from the Indian telecom operators for interconnect usage did not meet the criteria for taxation as “royalty”. Accordingly,

The ruling was made in favor of the assessee, resulting in a partial allowance of the appeal.

Judicial member ) observed that the company was deemed functionally comparable in both preceding and subsequent assessment years; there appears to be no justifiable reason to reject it based on functional disparities in the current assessment year. Therefore, the said company was directed to be included in the list of comparable.

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