This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
In, Sabara Impex Ltd. Vs ITO, Ward-2(3)(2), The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the Penalty under section 271(1) (c) of the Income Tax Act, 1961 when the assessee failed to make full and true disclosure of the facts in the Income Tax Return. A Coram comprising of Shri Vikas Awasthy, Judicial Member and Shri Gagan Goyal, Accountant Member observed that the assessee has filed inaccurate particulars of income at the time of filing the return to conceal its income and the provisions of section 271(1)(c) is attracted in the assessee’s case While filing the return of income, the assessee failed to offer the said incomes for taxation with a dishonest intention to conceal its income.
In, Income-tax Officer vs Shri. Arun Gupta, The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), granted exemption under Section 54 of the Income Tax Act, 1961 (capital gain exemption) on depositing unutilized capital gain in Deposit account scheme. A Coram consisting of Mahavir Singh, Vice President and G Manjunatha, Accountant Member observed that “When the assessee has satisfied all conditions including depositing unutilized portion of capital gain in capital gain deposit account scheme, then for minor technical breach, benefit of deduction under Section 54 of the Income Tax Act cannot be denied.”
In, Lifestyle International Pvt. Ltd. Vs Deputy Commissioner of Income Tax, The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the sale of an Entire business amounts to a slump sale and is taxable under capital gain. A Coram comprising of Smt Beena Pillai, Judicial Member and Shri Laxmi Prasad Sahu, Accountant member concluded that a transaction is a slum sale or not is not only based on the interpretation of terms and conditions of the entire agreement but is also based on how the gains have been accounted by the assessee in its books of accounts.
In, Sri.Thayappa Balakrishna vs The Assistant Commissioner of Income-tax, The Bangalore bench of the Income Tax Appellate Tribunal (ITAT), while dismissing a second appeal by the assessee, held that an unfinished building is included within the meaning of “capital asset” under the Income Tax Act, 1961 and the same is subject to income tax on its sale along with the land. A bench of Shri George George K, JM & Ms.Padmavathy S, AM upheld the view of the income tax department holding that the claim of the assessee to include the cost of unfinished building to cost of improvement cannot be accepted for two reasons. Firstly, the assessee had only sold vacant site and the same is evident from the sale deed dated 19.07.2010. Secondly, the assessee himself submitted a receipt on stamp paper showing a receipt of Rs.96,04,899 towards sale of building material and fixtures from demolished building.
In, Fourrts (India) Labs Pvt. Ltd vs Assistant Commissioner of Income Tax, The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that leave encashment and employee provision for Gratuity is ascertained liability and allowable in book profit computation. A Coram comprising of Shri Mahavir Singh, Vice President and Shri G Manjunatha, Accountant Member observed that as per clause (c) of explanation (1) of section 115JB, only amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities are added back to the book profit computed u/s. 115JB of the Act. It was observed that provisions for leave encashment and provision for gratuity are ascertained liability which is created based on actuarial valuation for service rendered by the employees and cannot be considered as an unascertained liability.
In, Fourrts (India) Labs Pvt. Ltd vs Assistant Commissioner of Income Tax, The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that freebies to medical practitioners are prohibited by law and deduction under section 37(1) of the Income Tax Act,1961 is not allowable. It was observed that the Supreme Court in the case of Apex Laboratories Pvt Ltd vs DCIT (2002) has held that since the acceptance of freebies by medical practitioners was punishable as per the circular issued by Medical Counsel of India under MCI Regulations, 2002, gifting of such freebies by assessee Pharma Companies to medical practitioners would also be prohibited by law and thus, expenditure incurred for such freebies would not be allowed as deduction in terms of section 37(1) of the Act.
In, Nagalambika Pattina Souharda Sahakari Niyamita vs ITO Ward-1, The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has held that TDS is not applicable in respect of payment of interest to its member by Co-operative Bank. A Coram comprising of Shri Chandra Poojari, Accountant Member and Smt. Beena Pillai, Judicial Member while allowing the appeal has held that in respect of payment of interest to its members regarding which section 194A of the Act is not applicable in respect of payment of interest to its members.
In, Lifestyle International Pvt. Ltd. vs Deputy Commissioner of Income Tax, The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has held that foreign currency is not a “commodity” and that addition based on the speculative transaction is not permissible. A Coram comprising of Smt Beena Pillai, Judicial Member and Shri Laxmi Prasad Sahu, Accountant member held that foreign currency does not fall within the purview of the term “commodity” and cannot be characterised as a speculative transaction. Further held that as a requirement of the conditions specified under section 43(5) of the Income Tax Act,1961 does not stand fulfilled and the addition made by the AO cannot be sustained. The appeal for the revenue was dismissed.
In, Nagarjuna Oil Corporation Ltd. vs ACIT, As a relief to Nagarjuna Oil corporation, the Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that Section 271(1)(c) of the Income Tax Act,1961 penalty cannot be imposed on a debatable issue. A Coram comprising of Shri Mahavir Singh, Vice President and Shri Manoj Kumar Aggarwal, Accountant Member observed that the assessee has made complete disclosure of facts and the only issue is whether the interest received on idle funds lying with banks in the shape of fixed deposits is a capital receipt or revenue receipt which is a highly debatable issue.
In, Ranjit Shivram Raut vs ITO, Ward 3, The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee failed to prove property as stock in trade with Corroborative Evidence and upheld the applicability of 56(2)(vii)(b) of the Income Tax Act,1961. A Coram comprising of Shri Amit Shukla (Judicial Member) and Shri Om Prakash Kant (Accountant Member) viewed that the assessee,before this transaction of purchase was never engaged in trading plots of land. While dismissing the appeal, the Tribunal upheld the order of CIT(A) on the issue in dispute in upholding the applicability of section 56(2)(vii)(b) of the Act in the case of the assessee.
In, Parry Phytoremedies Private Limited vs Dy. Commissioner of Income Tax, The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ), quashed disallowance of customs duty drawback written-off relating to preceding assessment years ‘as prior period item’. A Coram consisting of SS Viswanethra Ravi, Judicial Member and GD Padmahshali, Accountant Member observed that “We leaving no iota of doubt hold the orders of both the Ld. TAB as contra legem; ergo we set aside the order of FAA and quash the order of assessment.”
In, DCIT vs G.K. Ispat Pvt. Ltd, The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has held that Protective addition made to save interest of revenue is not permissible and the assessment can’t be reopened based on contingent reason. A Coram comprising Shri Sanjay Garg, Judicial Member & Shri Rajesh Kumar, Accountant Member observed that the protective addition is made in order to safeguard the interest of revenue where the revenue itself is not sure to whom the said income belongs to. The CIT(A) has held that no protective addition can be made in the hands of the assessee in the assessment proceedings by following the decision in the case of DHLF Venture Capital Fund vs. ITO (supra). While dismissing the appeal of revenue, the Tribunal held upheld the order of CIT(A).
In, D.C.I.T. vs Swastik Enterprises, The Surat Bench of the Income Tax Appellate Tribunal (ITAT), held that income from Sale of land held as stock in trade taxable under business income when expenses incurred shown under Work In Progress (WIP). A Bench comprising Pawan Singh, Judicial Member and Dr Arjun Lal Saini, Accountant Member observed that “When the expenses were incurred, it was shown at WIP, however, when the asset is sold, the partners claimed that it was as investment only and not business asset, which cannot be allowed. Thus, in our view the CIT(A) erred in treating / directing the assessing officer to treat the gain on sale of asset of firm as capital gain in place of business income.”
In, Tikona Trust vs Assistant Director of Income Tax, The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the Principal Portion of the loan amount waived by lender credited to Profit & Loss account is not liable to tax. A Coram comprising of Shri Baskaran B R, AM and Shri Aby T Varkey, JM held that the principal portion of the amount waived by the lender amounting to Rs.2,00,18,970/- credited to the Profit and Loss account is not liable to taxation under the Income-tax Act. Further while allowing the appeal, the assessing officer was directed to exclude the amount while computing the total income of the assessee.
In, Tikona Trust vs Assistant Director of Income Tax, The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee failed to prove the audit books under any law and clause (a)(ii) of section 139(1) of the Income Tax Act,1961 not applicable. It was observed that CIT(A) has given a clear finding that the accounts of the assessee are not required to be audited under the Income Tax Act or any other law. It was observed by the CIT(A) that there is no legal requirement to get the books of account audited either under the Income Tax Act or the Indian Trust Act in the case of the assessee for any of the relevant assessment years.
In, Mothers Pride Educational Personna Pvt. Ltd.vs ACIT, Central Circle-9, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that penalty under section 271AAA of the Income Tax Act can be imposed when the assessee accepted undisclosed income in the statement under section 132(4) of the Income Tax Act,1961. A Coram comprising of Shri Narendra Kumar Billaiya, Accountant Member and Shri Kul Bharat, Judicial Member observed that the penalty u/s 271AAA of the Act can be imposed against the assessee where the assessee has accepted the additional/undisclosed income during the statement recorded u/s 132(4) of the Act.
In, United Breweries Limited vs Deputy Commissioner of Income-tax, As a relief to United Breweries, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has held that disallowance under section 14A of the Income Tax Act,1961 is restricted to exempt income earned by the assessee. It was viewed that the co-ordinate Bench of the Tribunal in the assessee’s case held that the disallowance should be restricted to the amount of exempt income earned by the assessee. Further observed that the amendment to section 14A of the Income Tax Act, which states that disallowance u/s 14A of the Income Tax Act is to have resorted, whether the assessee earns exempt income or not is only prospective and does apply to the relevant assessment year. The appeal was allowed.
In, Equitas Development Initiatives Trust vs Deputy Director of Income-tax Exemption) –III, The Chennai Bench of Income Tax Appellate Tribunal (ITAT) directed for re-adjudication as there were no records to prove that the trust charges a nominal fee from the weaker sections to claim the tax exemption under sections 11 and 12 of the Income Tax Act 1961. The Tribunal observed that to ascertain whether the assessee falls in any of specific clauses of the term charitable purpose, one has to see the activities conducted by the appellant trust for the relevant assessment years.
In, Assistant Commissioner of Income-tax Central Circle-1 vs Shri Laxmi Ram Khandelwal, The Jaipur Bench of the Income Tax Appellate Tribunal ( ITAT ), quashed order as there was recording different findings on same of set of evidence. The Respondent in the present appeal is Shri Laxmi Ram Khandelwal. A Coram comprising Sandeeep Gosain, Judicial Member and Rathod Kamlesh Jayatbhai, Accountant Member observed that “We are of the view that on the same of the set of evidence the CIT(A) recorded a complete different finding subsequently which is contrary to the facts, evidences and contentions raised earlier.”
In, Keystone Realtors Pvt. Ltd. vs Dy. Commissioner of Income Tax Circle – (2)4, The Mumbai Bench of the Income Tax Appellate Tribunal( ITAT ) held that there is no application of Section 14A Income Tax Act, if no exempt income received or receivable during relevant previous year, A Coram comprising Prashant Maharshi, Accountant Member and Sandeep Singh Karhail, Judicial Member placed reliance on the judgment in Cheminvest Ltd. v. CIT wherein, it was held that “Section 14A of the Income Tax Act will not apply if no exempt income is received or receivable during the relevant previous year. Therefore, respectfully following the aforesaid decision, the AO is directed to delete the disallowance made under section 14A of the Income Tax Act read with Rule 8D.”
In, Rajasthan Patrika Private Limited vs Asstt. Commissioner of Income Tax, The Jaipur Bench of the Income Tax Appellate Tribunal ( ITAT ), held that Marketing and Survey expenses are allowable as deduction under Section 37(1) of the Income Tax Act, 1961. A Bench comprising Dr S SeethaLakshmi, Judicial Member and Rathod Kamlesh Jayantbhai, Accountant Member observed that “we are of the considered view that the expenditure claimed by the assessee isduly supported by the required evidence so as to substantiate the expenditure to the extent of Rs. 60 lakhs and is allowable under section 37(1) of the Income Tax Act.”
In, M/s.Kavithalayaa Productions (P) Ltd. vs The Asst. Commissioner of Income Tax, The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that prior period expense can’t be added back while computing profit & gain of business and profession. A Coram comprising of Shri Mahavir Singh, Vice President and Shri G Manjunatha, Accountant Member observed that if advances received by the assessee from customers on which TDS Credits have been claimed have been offered as income of subsequent financial years, then the same needs to be recognized as income as and when such income accrues to the assessee. The ITAT bench rejected the ground taken by the assessee and sustain the additions made by the AO towards ‘prior period expenses’ items to be excluded while computing book profit u/s.115JB of the Act. The appeal filed by the assessee was partly allowed.
In, Shri Falgun N. Sheth vs ITO, The Rajkot bench of the Income Tax Appellate Tribunal (ITAT) has held that no limitation for filing a declaration claiming exemption from TCS under section 206C(1A) of the Income Tax Act,1961. A Coram comprising of Smt Annapurna Gupta, Accountant Member and Shri T R Senthil Kumar, Judicial Member observed that no limitation is prescribed in the Act for filing of declaration as required under section 206C(1A) of the Income Tax Act, and the assessee has filed a delayed declaration under a bona fide belief. Further viewed that these declarations, which have been acknowledged as received by the Department, ought to have been considered by the CIT(A) for adjudicating the issue.
In, Asst. Commissioner of Income Tax vs M/s.Balkrishna Shanmugham Chettiar Alias S. Balan, The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the addition of notional rent in respect of residential assets held as stock-in-trade by the Builder is not valid. It was observed that section 5 of the Act stipulates that a person who is a resident can be subjected to tax in respect of income from whatever source which is received or is deemed to be received in India or accrues or arises or deemed to accrue or arise to him in on outside India during such year.
In, Minakshi Builders vs CIT(A)-2, The Income Tax Appellate Tribunal (ITAT), Pune Bench validated re assessment on the ground that there was tangible information to form belief of escapement of income. A Bench comprising Inturi Rama Rao, Accountant Member and SS Viswanethra Ravi, Judicial Member observed that “The information constitutes a tangible information enabling the Assessing Officer to form a belief that the income chargeable to tax had escaped assessment and the proceedings of the re-assessments are justified and valid in law.”
In, M/s. Arch Hydro Power Projects Pvt. Ltd vs Dy. Commissioner of Income-tax, The Pune Bench of the Income Tax Appellate Tribunal (ITAT) ruled that profits from transfer of interest in Hydro Projects is income from business. A Bench consisting of Inturi Rama Rao, Accountant Member and Partha Sarathy Chaudhury, Judicial Member observed that “We find that the CIT(A) has held that the gains are taxable under the head ‘income from business’ and not under the head ‘short term capital gains‟. The reasoning assigned by the CIT (A) is cogent and we find no infirmity with the findings and the decisions rendered by the CIT (A).”
In, The Income Tax Appellate Tribunal (ITAT), Pune Bench consisting of Inturi Rama Rao, Accountant Member and
SS Viswanethra Ravi, Judicial Member dismissed appeal holding fraud as there was evidence of withholding information to establish genuineness of transactions. The Bench noted that “We are inclined to confirm the addition made by Assessing Officer, in view of the well settled principle of law that fraud vitiate everything and even principles of natural justice have no application and such transaction is void ab initio.” Concluding the
Tribunal observed that “In the present case also, the appellant deliberately withheld the information from the Assessing Officer as well as the CIT(A) which is within exclusive knowledge of appellant to establish the genuineness of transactions of purchase of shares of that company. It is nothing but a fraud played by the appellant.”
In, Smt. Mayuri P. Patel vs Income Tax Officer, While directing a re-adjudication of a matter under section 68 of the Income Tax Act, 1961, the Income Tax Appellate Tribunal ( ITAT ), Ahmedabad bench has held that mere fact that the amount received through banking channel does not make the transaction as genuine for the purpose of section 68 of the Income Tax Act, 1961 if the assessee needs to explain the transaction properly based on the documents within the parameters of the said section 68 of the Act.
In, Smt. Varshaben Vipulbhai Bhalani 401 vs DCIT Central Circle – 2, In an assessee-favouring ruling, the Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the addition under section 50C, being a deeming provision cannot be a sole ground to attract penalty under section 271(1)(c) of the Income Tax Act, 1961. A two-Member bench of Shri Waseem Ahmed, Accountant Member & Ms. Madhumita Roy, Judicial Member, while granting relief to the assessee, held that “Before the authorities and the Tribunal, the assessee contended that the addition to the income of the assessee with the aid of Section 50C of the Act is only under deeming condition which may vary in the event a reference is made to be District Valuation Officer under Sub-Section (2) to Section 50C of the Act. Under these circumstances, the assessee cannot be held to be liable for concealment of income or furnishing inaccurate particulars of income.”
In, Shri. Ananthakrishna Vasudev Aithal vs ITO, The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the provisions of section 142A of the Income Tax Act, 1961 regarding the estimation of value of assets by a Valuation Officer is not applicable in cases where the assessee purchased a ready built house. Deleting the order of the NFAC, the ITAT held that “the provisions of section 142A of the Income Tax Act are applicable only when the assessee has made investment in construction. In the present case, the assessee purchased a ready built house and therefore the provisions of section 142A of the Income Tax Act are not attracted to the facts and circumstances of the present case. Hence, I am of the view that the reference to the DVO by the AO was not valid and consequently, the addition made by the AO on the report of the DVO cannot be sustained. The same is directed to be deleted and the appeal of the Assessee is allowed.”
In, Abhishek Ashok Lohade, Vs ITO, Ward-1(5), Nashik, The Pune Bench of the Income Tax Appellate Tribunal (ITAT), slammed ‘suspicious transactions’ made by assessee, Abhishek Ashok Lohade, and ruled that Assessing Officer (AO) and Commissioner of Income Tax (Appeals) (CIT(A)) are quasi-judicial authorities employed for
execution of Income Tax Act, 1961. A Bench comprising Inturi Rama Rao, Accountant Member and SS Viswanethra Ravi, Judicial Member lashed against the assessee and commented that “The principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application. Applying the said doctrine, the transaction of purchase and sale of shares of SRK is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account.”
In, Sri Rajput Yuvak Mandal Sarvajanik Trust vs CIT, The Ahmedabad bench of the Income Tax Appellate Tribunal
(ITAT) has ruled that the object of the trust beneficial to a section of the public also amounts to a charitable purpose and exemption as a trust allowable under section 12 AA of the Income Tax Act,1961. A Coram comprising of Ms Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member restored the issue to the file to the CIT (Exemption) for fresh adjudication, after giving due opportunity of hearing to the assessee to present its case on merits. The appeal of the assessee was allowed for statistical purposes.
In, ACIT, CC-13 vs A.B. Hotels Limited, The Income Tax Appellate Tribunal (ITAT), New Delhi Bench ruled that disallowance without identifying expenses on rental income not sustainable. A Coram consisting of C M Garg, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that “In the present case, the assessee has not discharged its onus and we are of the view that blindly following the rule of consistency a mistake cannot be allowed to be persisted when the leakage of revenue is clearly discernible.”
In, The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ), deleted addition on the ground that TDS not applicable on Wages and that the Assessing Officer (AO) Ignored Certificate by Deputy Director of Income Tax (Exemptions)(DDIT(E)). A Bench consisting of Pradip Kumar Kedia, Accountant Member and Chandra Mohan Garg, Judicial Member observed that “The CIT(A) had only restricted the addition to the extent TDS which was deductible and deleted the balance addition out of the total addition of Rs.54 lakhs made by the A.O. Since the order of the CIT(A) on this issue is in accordance with the provisions of Income Tax Act.”
In, Nickunj Eximp Enterprises Pvt. Ltd vs ACIT Cen. Cir, – 2(4), The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that an addition under head of undisclosed stock can’t be made based on incomplete tally data from discrepancies. The AO has made the addition of Rs. 10,58,30,961/- which he has noted that it pertains to the period 01.04.16 to 31.03.17. Even if the same tally data is considered to be the premise for an addition made by AO, then the addition of Rs. 10,58,30,961/- could not have been added u/s 69 as the same did not pertain to AY 2018-19. The Tribunal directed to delete the addition.
In, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that income tax deduction is not allowable, as the expenses to musical programmes and Garbaevents are personal in nature. A Coram comprising of Smt Annapurna Gupta, Accountant Member and Shri Siddhartha Nautiyal, Judicial Member observed that in the case of Sayaji Industries Ltd., it was held that expenses incurred towards social obligations in respect of staff members during the course of business would be allowed as business expenditure.
In, Shri Ravindrakumar Hiralal Shah vs Pr.CIT-3, The Income Tax Appellate Tribunal ( ITAT ), Ahmedabad Bench quashed revision order on the ground that there was no demonstration as to how order passed by the Assessing Officer (AO) is erroneous. A Coram consisting of Annapurna Gupta, Accountant Member and T.R. Senthil Kumar, Judicial Member observed that “The PCIT has not demonstrated in his order how the order passed by the Assessing Officer as erroneous order. Therefore in our considered view, the invocation of Revision proceedings under Section 263 of the Act itself unjustifiable, against the provisions of law and therefore, the same is hereby quashed.”
In, The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has held that failure to pay within due date under Provident Fund (PF) Act will be negating the employer’s claim for deduction permanently forever under section 36(1)(va) of Income Tax Act, 1961. The Tribunal held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates. The result of any failure to pay within the prescribed dates also leads to different results. In the case of an employee’s contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating the employer’s claim for deduction permanently forever u/s.36(1)(va).
In, Shri Gurdeep Singh vs PCIT, The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) quashed the revisional order when PCIT failed to point out any error which can be prejudicial to interest of Revenue. While allowing the appeal of the assessee the Tribunal held that “for the assumption of jurisdiction u/s 263, the PCIT is bound to point out the error in the order and that too such an error which is prejudicial to the interests of the Revenue. “ The lack of enquiry or inadequate enquiry is an incorrect presumption and the order is directed to be quashed.
In, Ace Datamatics Pvt. Ltd vs ITO Ward-73(1), The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that liability under section 201 of the Income Tax Act,1961 will not arise when payment of rent and common area maintenance charges have been made to distinct companies. While allowing the appeal, the Tribunal held that “payments of rent and common area maintenance charges have been made to distinct entities/companies, therefore, the authorities below were not right in creating the impugned liability payable by the assessee firm under the provisions of sub-sections (1) and (1A) of section 201 of the Act.” In light of the decision by the coordinate Bench of the Tribunal in the case of Kapoor Watch Company Pvt. Ltd. (supra), the Tribunal directed the AO to delete the impugned liability u/s 201(1) and 201(1A) of the Act.
In, Munish Babaji Sawant Vs ITO 15(3) (2) Mumbai, The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that Capital gain exemption cannot be denied when investment made within due date of filing Income Tax Returns (ITR). The Tribunal of Amit Shukla, Judicial Member observed that “I hold that if the investment under Section 54 has been made within the time limit of date specified under Section 139(4), exemption cannot be denied. Thus, the claim of exemption under Section 54 is allowed to the Assessee.”
In, Mukesh Gupta Vs ACIT – Central Circle – 1 Thane, The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that income tax addition not maintainable in the hands of the employee when the employee was merely handling the cash on behalf of the employer. Granting relief to the assessee, the ITAT held that “Therefore, it clearly indicates that assessee has no means to make such undisclosed payments and any addition has to be made only in the hands of his employer or the Assessing Officer has to bring on record a cogent material in support of making the addition that assessee has direct relationship with above said parties. Considering the fact on record it can only be presumed that assessee has acted on the behest of Mr. PAK only, therefore these payments are also to be added in the hands of the employer not in the hands of the employee, who does not have any means.”
In, In a ruling granting relief to the assessee, the Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the ill-health of the wife would constitute “reasonable cause” for the non-compliance of the provisions of section 44B of the Income Tax Act, 1961. Accordingly, the ITAT has deleted the penalty imposed under section 274B of the Income Tax Act. Allowing the second appeal filed by the assessee, a bench of Shri R.S. Syal, Vice President and Shri Partha Sarathi Chaudhury, Judicial Member observed that “It is seen that there is an infringement of provisions of section 44AB inasmuch as the assessee failed to get the accounts audited and furnish the necessary report before the stipulated period. The assessee pleaded a reasonable cause before the AO that the audit could not be carried out because of ill-health of his wife, which further worsened the family problems. Section 271B is subject to provisions of section 273B which provides that in case of a reasonable cause, penalty under the concerned section need not be imposed. In the given set of facts and circumstances,
we are satisfied that there was a reasonable cause which prevented the assessee from complying with the necessary provisions in getting the accounts audited and furnishing the report to the AO before the due date. We, therefore, order to delete the penalty.”
In, In a major relief to M/s. Infosys Ltd, the Income Tax Appellate Tribunal ( ITAT ), Bangalore deleted disallowance on brand building expenditure. A Bench comprising Chandra Poojari Accountant Member and Beena Pillai, Judicial Member observed that “We note that Coordinate Bench in case of the sister concerns of assessee, considered identical issue on similar facts. Nothing has been brought on record by the revenue to the expenses incurred by the assessee is towards any capital asset. Respectfully following the same, we direct the disallowance to be deleted.”
In, J.M. Morgan Stanley Securities Pvt. Ltd vs Asstt. Commissioner of Income Tax, The Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that entries in books of account not conclusive in determining income. A Bench comprising Prashant Maharishi, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that “It is trite that entries in the books of account alone are not conclusive in determining the income of the assessee. Further, the Revenue has also not denied that such assets were acquired by way of lease and the same were not purchased by the assessee. Thus, we are of the considered view that the lease rental paid by the assessee is in Revenue nature.”
In, Institute of Chemical Technology vs National Faceless Assessment Centre, The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), remanded back matter to the Assessing Officer (AO) and ruled that Income Tax Exemption under Section 10(23C) of the Income Tax Act, 1961 is available to Payments Received for Consultancy Services provided by University. “In view of the aforesaid observations and respectfully following the judicial precedents, we deem it fit to restore this appeal to the file of the ld. AO to decide the issue” the Tribunal concluded.
In, The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that addition on account of estimated gross profit is not permissible in the absence of evidence to prove a bogus purchase. A Coram comprising of Shri Amit Shukla, JM & Shri S Rifaur Rahman, AM observed that none of the purchases can be held to be bogus. Further held that “no addition can be made nor any addition on account of estimated gross profit because all the purchases and corresponding sales have been fully tallied and verified and no discrepancy has been found.” The appeal of the assessee got allowed and the appeal of the revenue in this regard was dismissed.
In, Dr.Keyur Parikh vs DCIT, The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that advertisement expenses incurred for personal purposes are not allowable as a deduction under section 37(1) of the Income Tax Act,1961. A Coram comprising Smt Annapurna Gupta, Accountant Member and Shri Siddhartha Nautiyal, Judicial Member observed that these expenses were incurred for advertising in the member’s directory of the society where he resided and for sponsoring a musical event in a medical college. It was observed that the advertisement expenses incurred by the assessee amounting to Rs.61,000/- are personal in nature and not incurred wholly and exclusively for the profession of the assessee and not allowable as per section 37(1) of the Income Tax Act,1961.
In, Ardor Chemicals Pvt. Ltd. vs Income Tax Officer, The Ahmedabad bench of the Income Tax Appellate Tribunal
( ITAT ) has held that disallowance under section 36(1)(iii) of the Income Tax Act,1961 is not permissible on the ground of the absence of business-related activity. t was held that since the assessee has also given details related to borrowings and simply on the ground of no activities were related to business, the borrowing should not be allowed and cannot be the sole ground for making disallowance under Section 36(1)(iii) of the Act.
In, Chintan Niketan Bhandari vs DCIT, Central Circle-1(4), The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the secret commission paid to the middlemen in cheque discounting business shall be eligible for income tax deduction under the Income Tax Act, 1961. “In view of the facts of the case, where the assessee has clearly submitted that he has no records of parties to whom such “secret commission”, but also considering the fact that the assessee submitted that payment of such commission helped in generating the“cheque discounting” business, we are directing that 50% of such “secret commission” may be allowed, in the interests of justice,” the ITAT said.
In, Danone Asia Pte Limited vs ACIT, The Income Tax Appellate Tribunal (ITAT), Delhi bench, while quashing an income tax assessment passed in violation of the norms of the limited scrutiny, has held that the instructions/circulars issued by the Central Board of Direct Taxes (CBDT) are binding on the Assessing Officer. A bench of Shri G.S. Pannu, President and Shri Saktijit Dey, Judicial Member observed that “Admittedly, in the facts of the present appeal, the assessing officer has not taken any such approval of the concerned authorities. Therefore, the assessment order passed is in violation of CBDT Instructions, referred to above. Therefore, the question which arises for consideration is, what will be the fate of such an order passed in violation of the extant CBDT Instructions/circulars.”
In, Shri Dipakbhai Harishchandra Shah vs ITO, The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the share held as an investment can be allowed as a long-term capital gain. Shri Dipakbhai Harishchandra Shah, the assessee challenged the order passed by the Commissioner of Income Tax(Appeals), Gandhinagar (CIT(A)) under section 250(6) of the Income Tax Act, 1961. A Coram comprising of Smt Annapurna Gupta, Accountant Member observed that the basic point for the AO for rejecting the assessee’s claim of long-term capital gain being that the assessee could not have held shares both as investment and stock-in-trade was dismissed by the CIT(A).
In, PDR Solutions FZC vs Dy. Commissioner of Income Tax, The income Tax Appellate Tribunal (ITAT) of Mumbai directed the Assessing Officer (AO) to delete the addition made on Domain Sale Income, recognised it as Trademark, and charged Royalty. The applicant contended that the AO erred in alleging that income from Domain Name Registration services is taxable as ‘Royalty’ under Section 9(1)(vi) of the Income Tax Act, 1961 (Act) and under the India- UAE treaty (tax treaty). The bench noted the case of DIT v. New Skies Satellite BV, [2016] 382 ITR 114, in which the Delhi High Court held that the Finance Act, 2012, which added Explanations 4, 5, and 6 to section 9(1)(vi), by itself would not affect the meaning of the term “royalty” as mentioned in the DTAA, unless the DTAA is amended jointly by both parties.
In, Digite Inc. USA vs ADIT, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the Amount received from the sale of software products is not royalty as per Article 12(3) of India -USA DTAA and is not taxable in India. Digite Inc. USA, the assessee is a foreign company stated to be engaged in the business of development and sales of Project Management Software (‘PMS’) Licenses to various customers all over the world. Assessee electronically filed its return of income declaring total income at Rs. Nil.
In, Assistant Commissioner of Incometax vs M/s. Calchennai Mobile Worx P.Ltd, In a recent ruling, the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has ordered adjudication when the settlement of a dispute under the Vivad se Vishwas (VSVS) Scheme on computing income in terms of APA between parties. Calchennai Mobile Worx P.Ltd., the assessee company is a digital mobile advertising company based in Chennai with offices in the USA. The assessee owned two intellectual property rights in the name of Los Angeles & Dex Monics, Zest ADZ which essentially helps advertisers and agencies deliver targeted mobile advertising campaigns to drive brand awareness, and marketing in smartphone and feature phone platforms.
In, Tata Industries Limited Bombay House vs The Dy. Commissioner of Income Tax, As a relief to Tata Industries, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) allowed the set offof brought forward business losses against foreign dividend income. The assessee challenged the order of CIT(A) in not granting set off of current year business loss against foreign dividend income and upholding the levy of tax u/s 115BBD of the Income Tax Act, 1961 on gross foreign dividend income. It was viewed that the non-obstante clause is provided in section 115BBD(1) of the Income Tax Act itself. Hence it would cover both current year loss as well as brought forward business loss. In light of the judicial precedents, the Tribunal held that “the assessee would be entitled to set off of brought forward business losses against foreign dividend income. Hence the assessee would also be eligible for set off of current year loss against foreign dividend income. “
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