Income Tax Annual Digest 2024: ITAT Cases [Part 7]

This annual round-up analytically summarizes all the Income Tax related Orders of the Income Tax Appellate Tribunal (ITAT) Benches of India reported at Taxscan.in during 2024.

Relief to Bank of Nova scortia: ITAT allows Expenditure incurred towards earnings interest income exempt u/s 10 (15)- The Bank of Nova Scotia vs Assistant Director of Income Tax CITATION:   2024 TAXSCAN (ITAT) 492

The Income Tax Appellate Tribunal (ITAT) has provided relief to the Bank of Nova Scotia by permitting the expenditure incurred towards earning interest income exempt under Section 10(15) of the Income Tax Act, 1961

The two member bench of the tribunal comprising Vikas Aswathy (Judicial member) and Amarjith Singh (Accountant member) directed the assessing officer to delete the disallowance made under Section 14A r.w.Rule 8D in the case of the assessee. Accordingly, this ground of appeal of the assessee was allowed.

Taxpayer engaged in Development Work with Statutory Bodies eligible for Deduction under Section 80-IA of Income Tax Act: ITAT- M/s. N.C.C. – M.S.K.E.L (J.V.) vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 491

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT) observed that the taxpayer engaged in development work with statutory bodies eligible for deduction under Section 80-IA of Income Tax Act, 1961

The coram of Waseem Ahemad ( Accountant member ) and Siddhartha Nautical ( Judicial member ) observed that CIT (A) undertook a detailed analysis of the scope of work undertaken by the assessee and the various risks and responsibilities undertaken by the assessee and then came to conclusion that assessee qualifies as a “developer” and is eligible to claim of deduction under Section 80-IA (4) of the Income Tax Act. Accordingly, ITAT found no infirmity in the order of CIT ( Appeals ) so as to call for any interference.

CIT (A) Fails to Prove Records of Unsecured Loan Non -genuine: ITAT Deletes Disallowance of Rs. 116 crore- J.M. Mhatre Infra Private Limited vs Assistant Commissioner of Income-tax CITATION:   2024 TAXSCAN (ITAT) 490

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) deleted the disallowance of Rs. 116 crore as Commissioner of Income Tax (Appeals) failed to prove the non-genuineness of records pertaining to the unsecured loan.

The two member bench of the tribunal comprising Narendra Kumar Chaudhary ( Judicial member) and Amarjith Singh ( Accountant member) consider that decision of  CIT(A) in sustaining the disallowance of interest payment made by the assessing officer purely on presumption basis without disproving the relevant supporting evidences brought on record by the assessee is not justified. Therefore, this ground of appeal of the assessee was allowed. Accordingly, the appeal of the assessee was allowed.

CIT Appeal has no power u/s 250 of Income Tax Act to dismiss Appeal on account of non prosecution without discussing Merit of Case: ITAT- Babubhai Ramanbhai Patel vs Deputy Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 489

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that CIT Appeal has no power under section 250 of the Income Tax Act, 1961 to dismiss an appeal on account of non-prosecution without discussing the merit of the case.

A two member bench comprising Smt Annapurna Gupta, Accountant Member & Shri Siddhartha Nautiyal, Judicial Member restored the matter to the file of CIT(A) for de Novo consideration.  Assessing Officer nor CIT(A), the assessee is directly to promptly comply with all notices of hearing and in case of any further default on the part of the assessee to cause appearance, CIT(A) would be at liberty to pass orders based on materials available on record, under law. The appeals of the assessee are allowed for statistical purposes.

Addition u/s 68 is invalid When Creditworthiness of Money was proved by Balance Sheet showing Legitimate Fund Transfer to Company: ITAT- The I.T.O vs M/s Placid Buildwell Pvt Ltd CITATION:   2024 TAXSCAN (ITAT) 488

The Delhi bench of the Income Tax Appellate Tribunal( ITAT )has held that addition under section 68 is invalid when the creditworthiness of money was proved by a balance sheet showing legitimate fund transfer to the company.

Considering the assessment status of all the three share applicant companies, the two-member bench comprising Shri N K Billaiya, Accountant Member and Shri Yogesh Kumar U S, Judicial Member held that the assessee has successfully discharged the initial onus cast upon it by provisions of section 68 of the Act.

Chargeability of Deemed Income between Holding and Subsidiary Contradicts Intent of Section 56(2)(viib) of the Income Tax Act : ITAT- M/s. Rugby Regency P. Ltd vs Addl. CIT CITATION:   2024 TAXSCAN (ITAT) 48

The two member bench of the Income Tax Appellate Tribunal ( ITAT ) Delhi, observed that chargeability of deemed income between holding and subsidiary contradicts intent of Section 56(2)(viib) of the Income Tax Act, 1961.

The Coram comprising N.K.Billaiya ( Accountant member ) and Astha Chandra ( Judicial member ) held that the objective behind the provisions of section 56(2) ( viib ) of the Income Tax Act is to prevent unlawful gain by issuing company in the garb of capital receipts. However, in the transaction between holding and its subsidiary company no income can be said to accrue to the ultimate beneficiary i.e. holding company.

No Addition u/s 68 based on turnover declared under 44 AD of Income Tax Act: ITAT- DCIT, Circle-1 vs Shri Kalpesh Kantilal Gada CITATION:   2024 TAXSCAN (ITAT) 486

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that no addition can be made under section 68 of the Income Tax Act, 1961 based on turnover declared under 44 AD of the act.

A two-member bench comprising Shri Narender Kumar Choudhry, JM & Ms Padmavathy S, Am viewed that the addition made by the assessing officer under section 68 of the entire turnover which the assessee declared under section 44 AD of the act is not tenable. The Tribunal deleted the addition made by the assessing officer and dismissed the appeal of revenue.

Maturity LIC Amounts Exempt from Taxability u/s 10 (10D): ITAT directs AO to delete Addition of 1.43 Crore- Mihir Parikh vs ACIT CITATION:   2024 TAXSCAN (ITAT) 485

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has directed the Assessing Officer (AO) to delete the addition of 1.43 crore on ground that maturity Life Insurance Corporation (LIC) amounts are exempted from taxability under section 10(10D) of Income Tax Act, 1961.

The two member bench of the tribunal comprising N.K Billaya (Accountant member) and Kul Bharat (Judicial member) considered that the authorities below were not justified in denying the benefit of exemption to the assessee. Maturity maturity Life Insurance Corporation (LIC) amounts are exempted from taxability under section 10(10D) of the Income Tax Act, The AO is directed to delete the addition of Rs. 1,43,08,000/-. Accordingly appeal of the assessee was allowed

Non-Deduction of TDS u/s 192 on Reimbursement of LTC/LFC and HTC: ITAT holds SBI in default u/s 201(1)(1A) of Income Tax Act- Assistant CIT vs State Bank of India CITATION:   2024 TAXSCAN (ITAT) 483

In recent ruling the Delhi bench of the Income Tax Appellate Tribunal ( ITAT) observed that the State Bank of India is in default meaning under Section 201 (1) (1A) of Income Tax Act, 1961 for non-deduction of Tax Deducted at Source ( TDS ) under Section 192 of reimbursement of LTC ( Leave Travel Concession ) /LFC ( Leave Fare Concession ) and  HTC ( Home Travel Concession ).

The two member bench of the tribunal comprising G.S.Pannu (Vice president) and Challa Nagendra Prasad (Judicial member) held that the assessee is in default within the meaning of Section 201(1)(1A) of the Act for non-deduction of tax under Section 192 of the Income Tax Act on the reimbursement of LTC ( Leave Travel Concession ) /LFC ( Leave Fare Concession ) and HTC ( Home Travel Concession ). Accordingly, the appeals of the assessee are dismissed.

ITAT upholds Disallowance for delayed deposit of PF & ESIC- Kaarya Facilities and Services Limited vs ITO – 12(3)(1) CITATION:   2024 TAXSCAN (ITAT) 482

The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) upheld the disallowance for delayed deposit of provident fund ( PF ) and employee state insurance corporation( ESIC ).

the issues Karnataka High Court in the case of Biocon Ltd the two member  bench comprising Kavitha Rajagopal, (Judicial Member) & S Rifaur Rahman, (Accountant Member) observed that Madras High Court has cleared the ambiguity in interpreting the “due date” for the purpose of provision of section 36(1)(va) of the Act. On this observation, the arguments of the AR fails and the bench is inclined to dismiss the additional ground raised by the assessee.

Calculation of Fair Market Value of Equity Shares based on Book Value by AO: ITAT deletes Addition of Rs. 46.52 Lakhs on Share Premium Maa Biddeswari Agro Products Pvt. Ltd vs ITO, Ward-3(4) CITATION:   2024 TAXSCAN (ITAT) 512

The Income Tax Appellate Tribunal ( ITAT ), Kolkata Bench recently deleted the addition of Share Premium as calculation of Fair Market Value ( FMV ) of equity shares based on book value by the Assessing Officer was carried out without due consideration of the valuation report furnished by the assessee.

The appellate tribunal noted that the valuation report obtained from a registered valuer meticulously considered both movable and immovable properties, a crucial aspect overlooked by the lower authorities.

Taxpayer voluntarily clarifies discrepancy in Lease Equalization Disallowance without Malicious Intent: ITAT deletes Penalty u/s 271(1)(c) of Income Tax Act Eureka Outsourcing Solutions Pvt. Ltd vs CIT CITATION:   2024 TAXSCAN (ITAT) 513

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 as the taxpayer voluntarily clarified the discrepancy in lease equalization disallowance without any malicious intent.

The two member bench of the tribunal comprising S.Rifafur Rahman (Accountant member) and Kavitha Rajagopal (Judicial member) observed that the taxpayer voluntarily clarified discrepancy in lease equalization disallowance without malicious intent. Therefore, the bench further deemed it fit to direct the AO to delete the impugned penalty levied. Hence, the grounds raised by the assessee are allowed.

AO made No Reference to any Incriminating Material while Making Addition on TDR Transactions: ITAT dismisses Revenue’s Appeal DCIT Faridabad vs Martial Buildcom P. Ltd CITATION: 2024 TAXSCAN (ITAT) 514

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the Revenue’s appeal as the Assessing Officer ( AO ) made no reference to any incriminating material while adding on TDR transactions.

The Coram of Saktijit Dey ( Vice President ) and N.K Billaiya ( Accountant member ) observed that the addition on account of EDC to HUDA is concerned the same is made on examination of the entries in the books of account, therefore, this is also devoid of any incriminating material.

Jurisdiction Challenge of Assessing Authority shall be filed within 1 Month as u/s 124(3) of Income Tax Act: ITAT dismisses Appeal M/s. Regional Oilseeds Growers Co-operative Societies Union Ltd vs The Joint Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 515

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal as the jurisdiction challenge of the assessing authority was not filed within one month as per Section 124(3) of the Income Tax Act, 1961.

The two member bench of the tribunal comprising Chandra Poojari ( Accountant member ) and Beena Pillai ( Judicial member ) observed that this issue had already become time barred by virtue of the provisions of Section 124(3) of the Income Tax Act.

Trust mistakenly applies for Registration u/s 12A (1)(ac)(ii) instead of 12A(1)(ac)(iii) of Income Tax Act: ITAT directs Readjudication Sri Jeyamkonda Choleeswara Soundaranayaki Amman Kumbhabisheka Malar Kuzhu vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 516

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the order of the Commissioner of Income Tax (Exemption) [(CIT(E)] and directed re-adjudication after a trust mistakenly applies for registration under Section 12A(1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Income Tax Act, 1961.

The bench noted that the assessee has simpliciter made a technical mistake in applying under Section 12A (1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Income Tax Act. It was informed to the Bench by the AR for the assessee that even now the assessee has filed fresh Form No.10AB seeking registration under Section 12A(1)(ac)(iii) of the Income Tax Act, which can also be considered.

Non-Competition Fee received under Restrictive Covenants Restrains Source of Income: ITAT deletes Addition of Rs. 64 Cr M/s SIEL Limited vs The A.C.I.T. CITATION:   2024 TAXSCAN (ITAT) 517

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled to delete the addition of Rs. 64 crore after determining that the non-competition fee received under restrictive covenants restrained the source of income.

The two member bench of the tribunal comprising Sakti Jit Dey ( Vice President ) and N.K.Billaiya ( Accountant member) concluded that whereas compensation received for loss of agency is taxable as revenue receipt, however, receipts attributable to the negative covenants for not to carry on a business are capital receipts not liable to tax. Accordingly, the Assessing Officer was directed to delete the same. Appeal of the assessee was allowed.

Printing, Publishing and Subscription of books of Vedas, Gita, Upanishads for imparting education is  not Commercial activity: ITAT allows exemption u/s 11 of Income Tax Act Income Tax Officer vs Satvichar Darshan CITATION:   2024 TAXSCAN (ITAT) 518

The Mumbai bench Income Tax Appellate Tribunal (ITAT) while allowing the exemption under section 11 of the Income Tax Act, 1961 held that printing, publishing and subscription of books of vedas, gita, upanishads for imparting education is  not commercial activity.

The tribunal observed that the assessee trust is not merely engaged in the business of printing, publication and subscription of books, but rather incidental to the main activity of the trust which is nothing but the spreading the message of Rev Dada.

Failure to appeal before Lower Authorities due to sudden resignation of Accountant without intimation: ITAT directs Readjudication Ramakushna Kiritbhai Tripathi vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 519

The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) on account of failure to appeal before the lower authorities due to the sudden resignation of accountant without intimation directed readjudication the assessee case.

The tribunal observed that the in the present assessee’s peculiar case wherein the assessee’s accountant who was looking after the assessee’s case left the job without intimating the notices as well as the assessee not being able to know the intricacies of Income Tax Act and its compliances could not represent his case either before the Assessing Officer or before the CIT(A).

Waiver of Loan for Acquiring Capital Assets cannot be taxed as a Perquisite u/s 28 (iv) of Income Tax Act: ITAT The Great Eastern Shipping Co. Ltd vs The Asst. Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 520

In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the waiver of loan for acquiring capital assets cannot be taxed as a perquisite under Section 28 (iv) of Income Tax Act, 1961.

The bench observed that the Supreme Court in the case of Mahindra & Mahindra Ltd wherein the Supreme Court held that waiver of loan for acquiring capital assets cannot be taxed as a perquisite under Section 28(iv) of the Income Tax Act as receipt in the hands of the assessee are in the form of cash / money and further, the same cannot be taxed as a remission of liability under Section 41(1) of the Income Tax Act as waiver of loan does not amount to cessation of trading liability.

No Legal Proceedings during Resolution Process against CD, Only IRP can file Appeal with Creditor Committee Approval: ITAT dismisses Appeal M/s Infrastructure Leasing and Financial Services Ltd vs Addl. Joint/Deputy/Assistant Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 521

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal, affirming that no legal proceedings can be initiated during the resolution process against the Corporate Debtor (CD), and only the Interim Resolution Professional ( IRP ) can file an appeal with approval from the Creditor Committee.

Consequently, the two member bench of the tribunal comprising Gagan Goyal (Accountant member) and Kuldip Singh (Judicial member) concluded that the appeal filed by the assessee was hereby dismissed with liberty to file the fresh one in proper format duly verified the person authorized or to get the present appeal restored by moving an application.

Routine establishment Expenses and Interest on Loan taken for General Business Purposes is required to be allowed as Deduction: ITAT sets aside order passed by CIT(A) Gauri Construction Company vs ACIT CITATION:   2024 TAXSCAN (ITAT) 522

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) sets aside the order passed by CIT (A), emphasizing that routine establishment expenses and interest on loans taken for general business purposes must be allowed as deductions.

The bench observed that the assessee had acquired land in previous years with plans for constructing five towers. Despite completing construction and selling all flats in Tower D1 in the preceding year, the assessee did not declare any income from the sale of Tower D1 flats during that period.

Deduction u/s 80 IA of Income Tax Act not available only to Persons Executing Works Contract: ITAT rejects Deduction Claim AJR Infra and Tolling Limited vs DCIT CITATION:   2024 TAXSCAN (ITAT) 523

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) rejected the claim of deduction under Section 80IA of the Income Tax Act, 1961 stating that it is not available to individuals engaged in executing works contracts.

The two member bench of the tribunal comprising Pavan Kumar Gadale ( Judicial member) and B.R.Baskaran ( Accountant member) observed  that the AO was right in holding that the assessee has only executed a works contract allotted to it by the SPVs. There should not be any dispute that the deduction under Section 80IA of the Income Tax Act, is not available to the persons executing works contract.

Share profit From Partnership Firm exempted u/s 10 (2A) of Income Tax Act: ITAT Kanti Thermo Equip Pvt. Ltd vs ACIT CITATION:   2024 TAXSCAN (ITAT) 524

In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that share profit from partnership firms is exempted under Section 10 (2A) of Income Tax Act, 1961.

The two member bench of the tribunal comprising Aby T. Varkey (Judicial member) and B.R.Baskaran (Accountant member) observed that the share of profit received from a partnership firm is exempted under section 10(2A) of the Income Tax Act.

AO fails to consider Sale Consideration of Immovable Property as per Sale Agreement with Stamp Duty Valuation: ITAT sets aside u/s 56(2)(x) of Income Tax Act Smt. Mohini Bharat Kumar Ludhani vs National E-Assessment Centre 2024 TAXSCAN (ITAT) 525

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) set aside assessing officers' decisions under Section 56(2) (x) of the Income Tax Act, 1961 due to failure to consider sale consideration of immovable property as per sale agreement with stamp duty valuation.

The tribunal, consisting of Om Prakash Kant (Accountant member) and Rahul Chaudhary (Judicial member), set aside the addition of INR 56,00,022/- under Section 56(2)(x) of the Income Tax Act was set aside.

Material /document Uncovered during Search Raises no doubt or suspicion against Taxpayer: ITAT deletes addition u/s 153A Shri Renukamata Multi–State Co–operative vs Asstt. Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 526

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted addition under Section 153A of the Income Tax Act, 1961 as material uncovered during search raises no doubt or suspicion against the taxpayer.

The ITAT concluded that the material/documents found during the course of the search are not of such a nature which incriminates or militates against the assessee. Further, viewed that the material/documents found during the course of search also do not raise any doubt or suspicion against the assessee, and if at all the material/documents may only incriminate against the members in whose account the money was deposited.

AO cannot Pass Final Assessment Order without Passing Draft as Prescribed u/s 144C (1) of Income Tax Act: ITAT quashes Order M/s Welspun Global Brands Ltd vs DCIT CITATION:   2024 TAXSCAN (ITAT) 527

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT )  quashed the Assessing Officer’s ( AO ) final assessment order for failing to pass a draft assessment as required under Section 144C(1) of the Income Tax Act,1961.

The two member bench of the tribunal comprising Mrs. Pathmavathy (Accountant member) and Narendar Kumar Choudhri (Judicial member) observed that the final assessment order dated 13/03/2015 under Section 143(3) read with section 92CA (4) of the Income Tax Act passed by the Assessing Officer, without passing the draft assessment order as prescribed Under Section 144C (1) of the Income Tax Act, 1961, was without jurisdiction and void-ab-initio. Hence, the assessment order itself was quashed.

Passing Intimation u/s 143 without Reasonable Opportunity to Taxpayer Deemed Unlawful: ITAT against AO Aashirvad Villa Limited vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 529

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that passing intimation under Section 143 of the Income Tax Act, 1961 without affording the taxpayer a reasonable opportunity is deemed unlawful, opposing the action of the Assessing Officer (AO).

The two member bench of the tribunal comprising Rajesh Kumar (Accountant member) and Anikesh Banerjee (Judicial member) observed that the assessee has claimed this loss in the return of income, which was rejected by the Assessing Officer without giving reasonable opportunity to the assessee and issued intimation under Section 143(1) of the Income Tax Act, 1961.

ITAT Directs Readjudication with respect to Interest paid to Related Persons and Family Members for Availing of Unsecured Loans- Gallant Freight And Travels Pvt. Ltd. vs Asstt. Commissioner of Income Tax Circle–9(3)(2) CITATION:   2024 TAXSCAN (ITAT) 564

The  Mumbai bench  of Income Tax Appellate Tribunal (ITAT) recently directed readjudication with respect to interest paid to the related persons and family members for availing of unsecured loans

The tribunal bench comprising  Sandeep Singh Karhail (Judicial Member) and Om Prakash Kant (Accountant Member) observed that the loans received from the related parties are unsecured loans. It is further pertinent to note that though the AO considered the rate of interest charged by the bank @12%, however, did not provide the name of such bank and the terms of such loan for comparing the same with the unsecured loans received by the assessee.

ITAT allows Bad Debts claimed u/s 36(1)(vii) in respect of Identified Debts- E-oriental Bank of Commerce vs ACIT CITATION:   2024 TAXSCAN (ITAT) 563

The  Delhi bench  of Income Tax Appellate Tribunal (ITAT) allowed the bad debts claimed under Section 36(1)(vii) of Income Tax Act in respect of identified debts.

Astha Chandra, (Judicial Member)  and  N.K. Billaiya(Accountant Member) observed that an identical issue was brought up for consideration before the Coordinate Bench of the Tribunal in assessee’s case for AY 2015-16. According to the decision the bench observed “that deduction under Section 36(1)(vii) of Income Tax Act will be limited only in those cases where such bad debt exceeds provision under Section 36(1)(viia) of Income Tax Act . That means there should be a debt against which a provision under Section 36(1)(viia) Income Tax Act should exist and such debt is a subject matter of write off under Section  36(1)(vii). Under such circumstances only the excess will be allowed. “

Purchase and Sale of Shares Transactions cannot be considered bogus when Documentary Evidence Genuinely Established : ITAT- Chirag Tejprakash Dangi vs ITO CITATION:   2024 TAXSCAN (ITAT) 562

The  Mumbai bench  of Income Tax Appellate Tribunal (ITAT)   recently ruled that purchase and sale of shares transactions could not be considered bogus when documentary evidence genuinely established.

the bench comprising  Justice (Retd.) C.V. Bhadang (President)  and  B.R. Baskaran (Accountant Member)  relied upon the decision of CIT vs. Jamnadevi Agarwal observed  that the transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the assessee establish genuineness of the claim

Relief to Tata Steel Limited: ITAT rules Perpetual Non-convertible Debenture is an allowable Expenditure u/s 36 (1) (iii) of Income Tax Act- Tata Steel Limited vs Income-tax Officer CITATION:   2024 TAXSCAN (ITAT) 561

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) granted relief to Tata Steel Limited, ruling that perpetual non-convertible debentures are allowable expenditure under Section 36(1)(iii) of the Income Tax Act,1961.

the tribunal comprising M.Balaganesh (Accountant member) and Vikas Aswathy (Judicial member) found that in AY 2011-12 and 2012-13, the PCIT had invoked revisional jurisdiction on the same issue, It is not disputed by the Department that the PNCD on which the assessee has paid interest are the same that were subject matter of dispute in AY 2011-12 and 2012-13 in proceedings under Section 263 of the Income Tax Act Thus, in the light of the decision of Co-ordinate Bench on same issue in assessee’s own case in preceding assessment year.

ITAT directs Matter to CIT(E) citing Form No.10AB Application should be Construed u/s 12A(1)(ac)(i) of Income Tax Act- Santiniketan Sishutirtha vs Commissioner of Income Tax (Exemptions) CITATION:   2024 TAXSCAN (ITAT) 560

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) directed the matter to Commissioner of Income Tax (Exemption), emphasizing that the application in Form No.10AB should be construed under Section 12A (1)(ac)(i) of the Income Tax Act, 1961.

The two-member bench of the tribunal, comprised of Sanjay Garg (Judicial member) and Girish Agarwal (Accountant member), meticulously reviewed the records. It became apparent that the assessee’s application should have been made under section 12A, sub-clause (1)(ac)(i), entitling them to regular registration for a period of five years. Dismissal of the applications occurred solely due to the erroneous mention of the clause in the application form. Given the opportunity within the system, the assessees could have rectified this mistake and correctly referenced Section 12A(1)(ac)(i) of the Income Tax Act.

ITAT allows Capital Gain Deduction for Additional Compensation Paid to Vendors for Land Acquisition Costs, Finding no grounds for doubt- Prime Maxi vs ACIT CITATION:   2024 TAXSCAN (ITAT) 559

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) allowed capital gain deduction for additional compensation of Rs. 25 lakhs paid to vendors for land acquisition costs, finding no grounds for doubt.

The tribunal comprising Astha Chandra (Judicial member) and M. Balaganesh (Accountant member) directed the AO to grant deduction of Rs. 25 lakhs while computing capital gain on sale of lands. Accordingly, the ground raised by the assessee was allowed.

Management Fees for Sale of Securities is allowable Expenditure u/s 48 of Income Tax Act: ITAT- Krishnamurthy Thiagarajan vs The ACIT CITATION:   2024 TAXSCAN (ITAT) 558

The two member bench of the Income Tax Appellate Tribunal ( ITAT ), Mumbai, ruled that management fees for sale of securities is allowable expenditure under Section 48 of the Income Tax Act, 1961

The two member bench of Amarjit Singh (Accountant member) and Vikas Aswathy (Judicial member) observed that there are contrary decisions of the Tribunal on allowability of Management Fee under Section 48 of the Income

Tax Act. It is a well settled proposition that when two views are possible, the view in favor of assessee, thus the appeal of the assessee was allowed.

Filing Audit Report in Form 10CCB before filing ITR is only directory Not Mandatory: ITAT allows S.80IA Deduction- Sanjay Kukreja vs ACIT CITATION:   2024 TAXSCAN (ITAT) 557

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed Section 80IA deduction as it considered filing the Audit Report in Form 10CCB before filing the Income Tax Return as merely directory and not mandatory for the year under consideration.

The two member bench of the tribunal comprising G.S.Pannu ( Vice President) and C.N.Prasad ( Judicial member) held that filing of audit report in Form 10CCB  before the due date for filing of return of income under Section  139(1) is only directory and not mandatory for the year under consideration. Thus, ITAT directed the AO to allow deduction claimed under Section 80IA of the Income Tax Act. Accordingly, the appeal of the assessee was allowed.

Form 26 AS or Form 16 Essential for TDS Credit Claim: ITAT Directs Re-adjudication- Shri Ajit Chandrashekar Dighe vs The DCIT CITATION:   2024 TAXSCAN (ITAT) 556

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has directed re-adjudication, stating that either Form 26AS or Form 16 is essential for claiming Tax Deducted at Source ( TDS ) credit.

The two member bench of the tribunal comprising S. Rifafur Rahman ( Accountant member ) and Narendar Kumar Choudhry ( Judicial member ) observed that the assessee by filing TDS working which is though initialed by somebody but the same is neither on proper letter head nor there is a name of the person who signed such document and even otherwise, the assessee has also failed to file any document, wherefrom it can be reflected that the Assessee has received any particular amount of salary  on which TDS has been deducted and therefore, in absence of relevant documents, the  Commissioner correctly held that the AO has not made any mistake in non-granting of credit of TDS, since, the assessee did not furnish any salary slip or Form No.16.

Income already declared by Wife: ITAT quashes Addition as ‘Undisclosed Income’ at the Hands of Husband

The Rajkot bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the addition of income as ‘undisclosed income’ at the hands of the husband, citing that the income was already declared by the wife.

The two member bench of the tribunal comprising Suchithra R Kamble ( Judicial member ) and Annapurna Gupta ( Accountant member ) found that there was  no case with the Revenue now to tax the same income in the hands of the assessee also in terms of the clubbing provisions of Section 64(1)(ii) of the Income Tax Act. Having accepted the said income as belonging to the assessee’s wife in scrutiny assessment, the Department is now debarred from taking a contrary view and taxing it in the hands of the assessee on the ground that his wife was not actually carrying out any business. Accordingly, the appeal filed by assessee was allowed.

Surrender of Additional Professional Income Covering Expenditure Incurred on Building: ITAT deletes Addition u/s 69 of Income Tax Act- Shri Jaspreet Singh Mauj vs The DCIT/ACIT CITATION:   2024 TAXSCAN (ITAT) 554

The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition under Section 69 of the Income Tax Act, 1961 citing the surrender of additional professional income to cover the expenditure incurred on building.

The two member bench of the tribunal comprising Vikram Singh Yadav (Accountant member) and Sanjay Garg (Judicial member) observed that the addition made by the AO of Rs. 2,11,600/- on account of addition in the value of building cannot also be held to be justified as the assessee in clear terms has surrendered the additional professional income covering the expenditure incurred on building also. The addition made by the AO cannot be held to be justified and the same is, accordingly, set aside. Accordingly, the appeal of the assessee was treated as allowed.

Jurisdictional notice u/s 143(2) of Income Tax Act issued beyond prescribed limitation period: ITAT quashes Assessment Order- Aark Infosoft Private Limited vs The ACIT CITATION:   2024 TAXSCAN (ITAT) 553

In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the assessment order due to the jurisdictional notice under Section 143(2) of the Income Tax Act, 1961 being issued beyond the prescribed limitation period.

The two member bench of the tribunal comprising Suchithra Kamble ( Judicial member ) and Annapurna Gupta ( Accountant member ) quashed the assessment order finding the jurisdictional notice under Section 143(2) of the Income Tax Act being issued beyond limitation prescribed under the Act. Accordingly, the appeal of the assessee is allowed.

Sponsorship Fee paid to Trust found more Personal Obligation of Director, Not a Business Expenditure: ITAT confirms Disallowance of Rs.15L- Yala Construction Co. Pvt. Ltd vs Addl. CIT CITATION:   2024 TAXSCAN (ITAT) 552

The Income Tax Appellate Tribunal ( ITAT ) confirmed the disallowance of Rs. 15 lakhs for sponsorship fees paid to a trust, as it was deemed to be a personal obligation of the director rather than a legitimate business expenditure.

The two member bench of the tribunal comprising Yogesh Kumar US ( Judicial member ) and Dr. B.R.R Kumar ( Accountant member) held that the assessee could not prove anything contrary to the adjudication of the CIT(A) and hence declined to interfere with the order of the CIT(A). Accordingly, the ground was dismissed.

Determination of Income in Assessment Order cannot be basis for Filing of ITR u/s 139 (1): ITAT Quashes Penalty u/s 271 F of Income Tax Act- Maheshbhai Prabhudas Gandhi vs Ld. AO, CIT(A) CITATION:   2024 TAXSCAN (ITAT) 551

The Income Tax Appellate Tribunal (ITAT) quashes penalty under Section 271F of the Income Tax Act, stating that determination of income in the assessment order cannot serve as the basis for filing Income Tax Return under Section 139(1) of the Income Tax Act, 1961

The two member bench of the tribunal comprising Wassem Ahemed ( Accountant member) and Madumitha Roy ( Judicial member) concluded that the levy of penalty seems not only harsh but also not sustainable in the eyes of law under Section 271F of the Income Tax Act and hence quashed. Accordingly, the appeal filed by the assessee was allowed.

Relief to Indian Oil Employees Welfare: ITAT rules Interest Income to Cooperative Society from Investment with any Other Cooperative Society Deemed allowable u/s 80P- Indian Oil Employees Welfare Cooperative Society Ltd vs ACIT 23(1) CITATION:   2024 TAXSCAN (ITAT) 550

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that interest income to a cooperative society from investments with any other cooperative society is deemed allowable under Section 80P, providing relief to Indian Oil employees’ welfare.

The two member bench of the tribunal comprising Amit Shukla ( Judicial member ) and Prashanth Maharishi ( Accountant member ) directed  the  lower authorities to allow the deduction to the assessee on interest income earned from various cooperative banks under Section 80P(2)(d)  of the  Income Tax Act. Accordingly, the appeals of the assessee were allowed.

Labor Expenses Capitalised in Land value, No Deduction claimed in P & L Account: ITAT deletes Addition of 1.74 crore- Sunil Dhirubhai Patel vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 549

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of 1.74 crore after finding that labor expenses capitalized in land value did not warrant deduction claimed in the Profit & Loss Account.

The bench of T.R.Senthil Kumar (Judicial member) and Waseem Ahemed (Accountant member) noted that the question of making disallowance arises when the assessee claimed the deduction. In the present case, undeniably the assessee has not claimed any deduction in the year in dispute and therefore on this count as well as such expenses cannot be disallowed in the year under consideration.

Form No. 10AB Timeline Extension for S.12A Recognition is Deemed Extension for Approval Renewal u/s 80G (iii) First Provison of Income Tax Act: ITAT- M/s. CIT-1982 Charitable Trust vs The Commissioner of Income Tax (Exemption) CITATION:   2024 TAXSCAN (ITAT) 548

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) noted that the extension timeline provided in Form No. 10AB for Section 12A recognition was deemed to be an extension for the approval renewal under the first provision of Section 80G(iii) of the Income Tax Act, 1961

The two member bench of the tribunal comprising Manoj Kumar Agarwal (Accountant member) and Mahavir Singh (Vice President) set aside the order of CIT (Exemption) on the same reason and remand the matter back to the file of the CIT (Exemption) for deciding the issue on merits as per law. The appeal of the assessee was allowed.

CPC Lacked Authority for Preliminary Deduction u/s  80P of Income Tax Act Pre-April 2021: ITAT- Bisharpara Kodalia Cooperative Credit Society Ltd. vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 547

The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that the Centralized Processing Centre (CPC) lacked authority for preliminary deduction under Section 80P of the Income Tax Act, 1961, prior to April 2021.

Therefore, the two member bench consisting Rajpal Yadav ( Vice President ) and Girish Agarwal ( Accountant member) set aside the order of the  CIT(A) and allowed the grounds of appeal raised by the assessee for the claim of deduction under Section 80P of the Income Tax Act at Rs.19,42,264/-. Accordingly, appeal of the assessee was allowed.

ITR Filing within Due Date is Mandatory for Claiming Deduction u/s 80IB (10) of Income Tax Act: ITAT- The DCIT vs Umang Hiralal Thakkar CITATION: 2024 TAXSCAN (ITAT) 546

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the Income Tax Return filing within due date in mandatory for claiming deduction under Section 80IB (10) of Income Tax Act, 1961.

the two member bench of the tribunal comprising Waseem Ahemed ( Accountant member ) and Suchithra Kamble ( Judicial member ) observed that the assessee was claiming deduction under Section 80IB (10) and the Income Tax Statute under Section 80IB (10) is also uses the word “shall” and therefore the condition of filing the return of income within the due date was mandatory in nature. Accordingly, appeal of the assessee was dismissed.

Explanation 3 to Section 147 of Income Tax Act cannot be extended to make New Addition beyond Initial Reopening Assessment Reasons: ITAT quashes Order- M/s Vishram Sahakari Awas Samiti Limited vs ITO CITATION: 2024 TAXSCAN (ITAT) 545

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order as no addition was made based on the reason to believe recorded by the Assessing Officer ( AO ) for reopening the assessment under section 148 of the Income Tax Act, 1961.

The two member bench of the tribunal comprising Anubhav Sharma (Judicial member) and Shamim Yahya (Accountant member) found that the issue is squarely covered in favour of the assessee, and the assessment order was liable to be quashed. Therefore, the same was quashed accordingly.  The appeal of the assessee stands allowed.

Taxpayer without Shareholding cannot be Deemed ‘Dividend’ Receiver u/s 2(22) of Income Tax Act: ITAT- Apeejay Surrendra Management Services Pvt. Ltd vs DCIT, Circle-8(1) CITATION:   2024 TAXSCAN (ITAT) 544

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the taxpayer without shareholding cannot be deemed ‘dividend’ receiver under Section 2(22) of Income Tax Act, 1961.

The two member bench of the tribunal comprising Sanjay Garg ( Judicial member ) and Girish Agarwal ( Accountant member ) concluded that by invoking second limb of section 2(22)(e) of Income Tax Act, accrual of income and its taxability cannot be held to be in the hands of the assessee i.e. ASMSPL. ITAT  thus, set aside the findings of CIT(A) and deleted the addition of Rs.5,50,11,501/- added in the hands of the assessee ( ASMSPL ) by treating the amount of loan and advance as deemed dividend under Section (22)(e) of the Income Tax Act. Accordingly, ground taken by the assessee was allowed.

Taxpayer’s Document Validates Identity and Transaction Genuineness: ITAT deletes Addition u/s 68- Brightstar Vincom Pvt. Ltd vs ITO CITATION:   2024 TAXSCAN (ITAT) 543

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition under Section 68 of the Income Tax Act, 1961 after validating the taxpayer’s document, affirming the identity and genuineness of the transaction

The two member bench of the  tribunal comprising Girish Agarwal ( Accountant member ) and Sanjay Garg ( Judicial member ) held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same.

Loan Transaction Validated by Furnishing Identity and Creditworthiness of Creditors: ITAT deletes Addition u/s 68 of Income Tax Act- DCIT vs Alom Extrusions Ltd CITATION:   2024 TAXSCAN (ITAT) 542

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under Section 68 of the Income Tax Act, 1961 as the loan transaction validated by duly furnishing the identity and creditworthiness of the creditors.

The two member bench of the tribunal comprising Rajesh Kumar ( Accountant member ) and Sanjay Garg ( Judicial member ) observed that no incriminating material was found during the course of search action. Even all the creditors have duly confirmed the transactions and also established the source of the credits and the loan being also repaid in a short span of time. The

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