This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has held that the firm consisting of individual partners could not be treated as Association of People (AOP).
A Single Bench of Ravish Sood (Judicial Member) allowed the appeal and held that the observation of the A.O that the respective partnership firms had been taken as partners in the assessee firm was absolutely misconceived and misplaced. The Bench held that an individual in his representative capacity could be taken up as partner in a firm.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the software insurance charges are excludable from export turnover under Section 10AA of the Income Tax Act 1961.
The Bench held that the AO and CIT(A) had failed to appreciate that the assessee was engaged in export of computer software which were developed by the assessee in India. The said software was exported through electronic media, i.e. internet/digital media with click of a button and the same were not physically exported to get it insured.Thus the question of insuring the software exported by assessee would not arise.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it held that re-assessment based on the ground of mere change of opinion is not permitted under law.
“We notice that an identical issue has been examined by the jurisdictional Bombay High Court in the case of Indian Energy Exchange Ltd. In this case also, the AO reopened the assessment to restrict the depreciation rate to 25% as against 60% originally allowed on software. The facts being identical, following the above said decision of the jurisdictional High Court, we hold that the assessing officer has reopened the assessment of the year under consideration on mere change of opinion only and that the same is not permitted under the law.”, the ITAT Bench comprising of Rahul Chaudhary, the Judicial Member, along with Baskaran BR, the Accountant Member added. Thus, allowing the assessee’s appeal, the Mumbai ITAT held: “Accordingly, we hold that the reopening of assessment is bad in law and accordingly the impugned assessment order is liable to be quashed. Accordingly, we quash the orders passed by the tax authorities. In the result, the appeal of the assessee is allowed on the legal grounds discussed above.”
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has recently, in an appeal filed before it, imposed a cost of Rs 10,000, on non-compliance of notices and non-furnishing of evidence, even after five opportunities granted by the AO.
Thus, allowing the assessee’s appeal, the Hyderabad ITAT held: “In the light of the above, we deem it appropriate to remand back the matter to the file of ld. CIT (A) subject to cost of Rs.10,000/- (Rupees Ten Thousand only) to be deposited in the Prime Minister National Relief Fund which shall be payable within one month or from the date of receipt of this order or whichever is earlier. The ld. CIT(A) is directed to decide the case afresh in the light of the above said observation, after affording opportunity of hearing to the assessee and after seeking remand report from the Assessing Officer. In the result, the appeal of the assessee is treated as allowed for statistical purposes.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, while deleting penalty based on estimated addition, held that entire bogus purchases cannot be disallowed when sales are not disputed.
“After taking into consideration the various decisions of the Tribunal that no penalty under section 271(1)(c) is leviable on estimated additions and also after taking into consideration the decision of Rajasthan High Court in the case of CIT vs Krishi Tyre Retreading & Rubber Industries 360 ITR 580; the decision of Punjab & Haryana High Court in the case of CIT vs Sangrur Vanaspati Mills Ltd 303 ITR 53 (P&H); and the decision of Gujarat High Court in the case of CIT vs. Subhash Trading Co Ltd 221 ITR 110 (Guj), we direct the Assessing Officer to delete the impugned penalty levied on estimated addition.”, the Mumbai ITAT thus held, thereby allowing both the appeals of the assessee .
The Mumbai Bench Income Tax Appellate Tribunal (ITAT) has while deleting the addition made by the assessing officer and held that off shore supply of escalators and elevators are not taxable in India.
“All parts of the transactions in question, that is the transfer of property in goods as well as the payment, were carried out outside the Indian soil, the transaction cannot be taxed in India.” Further, in the present case, the assessee did not carry out any operations in India in respect of its scope of work, hence the income earned by the assessee from the offshore supply.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, while deleting the penalty u/s 271(1)(c) in an appeal filed before it, held that omission of income due to human error committed by accountant, is not “willful attempt to conceal income.”
“In view of the above and considering the facts in totality, I find that there was human error committed by the accountant of the assessee due to which impugned professional receipt of Rs. 5 lakhs omitted to be included in the total income. Thus, there was no willful attempt from the assessee to conceal his income. The explanation furnished by the assessee in this regard is bona fide and duly substantiated by the affidavit of the accountant. Therefore, I hereby set aside the finding of the learned CIT(A) and direct the AO to delete the penalty imposed by him. Hence the ground of appeal of the assessee is hereby allowed.”
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that none specifying of specific limb in penalty notice would not invalidate penalty proceedings when assessee had been a non-filter.
The Division Bench of Rama Kanta Panda (Accountant Member) and Laliet Kumar (Judicial Member) dismissed the appeal holding that, “We are of the considered opinion that merely for non-specifying in the notice as to under which limb the penalty is levied i.e. for concealment of income or furnishing inaccurate particulars of income thereof, the penalty cannot be canceled especially when the assessee who is a non-filer was put to notice which he has understood and has replied to such notice issued by the AO.”
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that the revisional power could not be invoked when the assessing officer had adopted a plausible view resulting in loss of revenue but the same was not unsustainable in law.
“When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue “unless the view taken by the Assessing Officer is unsustainable in law”. ‘’We note that the assessee company has not earned any exempt income during the assessment year under consideration, since the assessee has not earned any exempt income, therefore, no disallowance is attracted under section 14A,’’ the Bench further observed.
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, allowed relief of withholding tax credit in Tanzania against tax liability arising in India, on form 67 being submitted before conclusion of the assessment.
“I am of the considered view that the claim of the assessee towards withholding taxes paid in Tanzania is to be given against the tax liability on the income declared in India. Even otherwise filing of Form67 has been held to be directory in nature by the Coordinate Bench, Mumbai in the case of Sonakshi Sinhavs.CIT(A). I, therefore, respectfully following the decision referred to hereinabove and the discussion made,direct the ld. Assessing Officer to allow the claim of the assessee made in From No. 67 and give benefit of relief of withholding tax credit in Tanzania against the tax liability arising in India.” Thus, allowing the assessee’s appeal, the Kolkata ITAT held: “Accordingly, all the effective grounds raised by the assessee in the instant appeal is allowed. In the result, the appeal of the assessee is allowed.”
The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT) condoned the delay of 9 years in absence of proper intimation under section 143(1) of the Income Tax Act, 1961.
The two-member bench of Anikesh Banerjee (Judicial Member) and Dr M. L. Meena (Accountant Member) has observed that the assessee has sufficient cause for non-submission of the appeal within due time. The merit was also not considered in the appeal stage as it is decided in limine. The Tribunal remitted the issue to the CIT (A) and directed to pass the order on merits, denovo.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) quashed the proceedings under section 271(1) (c), because of the penalty notice issued without application of mind and in a stereotyped manner.
The Coram comprising Anil Chaturvedi and the judicial member N.k. Choudhry observed that the notice in this case has been issued in a stereotyped manner without applying mind which is bad in law. It cannot be considered a valid notice sufficient to impose penalty under section 271(1) (c) of the Income Tax Act 1961, and therefore the penalty is not leviable and held that “we have no hesitation to delete the penalty levied by the assessing officer and affirmed by commissioner”. The bench deleted the penalty and the appeal filed by the assessee got allowed.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that the residential status of assessee shall be determined after considering the passport. The Coram comprising the accountant member, Shamim yahya and the judicial member Anubhav sharma held that “no observation was made for not considering the passport as evidence and which does not require much verification. The commissioner of Income Tax (CIT(A)) had fallen in error and the appeal of the assessee is allowed for statistical purposes. The issue of consideration of the evidence in the form of passport entry for determination of the residential status of the assessee is restored to the files of the commissioner of Income Tax (CIT(A)).”
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that the penalty under section 271B of Income Tax Act 1961 is not leviable if the assessee was under bonafide belief that books of accounts need not be audited. The division bench of the ITAT comprising Sanjay Garg (Judicial Member) and Dr. Manish Borad (Accountant Member) allowed the appeal filed by the assessee and observed that, “assessee prima facie found to be reasonable because the assessee was under bonafide belief that he was not liable to get the books of accounts audited as the commission income was below the threshold limit and this was the first year of the business venture taken up by the assessee and thus assessee’s case is covered under section 273B of the Income Tax Act, 1961”
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that the Assessing Officer(AO) has exceeded jurisdiction in enquiring the issues beyond scope of limited scrutiny and is in violation of Central Board Direct Tax (CBDT) circular. The division bench of the ITAT comprising Rajesh Kumar (Accountant Member) and Sonjoy Sarma (Judicial Member) allowed the appeal filed by the assessee and observed that, “ AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny even prior to the date of conversion which is in clear violation of mandate given by CBDT in the said Circular Instruction No. 5/2016.”
The Delhi bench of Income Tax Appellate Tribunal (ITAT) quashed the proceedings under section 271(1) (c), because of the penalty notice issued without application of mind and in a stereotyped manner. The Coram comprising Anil Chaturvedi and the Judicial member N K Choudhry observed that the notice in this case has been issued in a stereotyped manner without applying mind which is bad in law.
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) held that the delay in filing of the appeal by 930 days by the assessee cannot be condoned and the misplacement of document is not a sufficient explanation. The Coram comprising the judicial member Laliet Kumar and the accountant member R.K. Panda observed that “the reasons given in the condonation application for the delay are not sufficient for condonation of such a huge delay of 930 days.”
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has while directing re -adjudication observed that kidney failure has a reasonable cause for non-compliance during assessment proceeding. The division bench of the ITAT comprising Shamim Yahya (Accountant Member) and Astha Chandra (Judicial Member) allowed the appeal filed by the assessee and further observed that, “there was reasonable cause of ailment that prevented the assessee to supply the documents and replies to the AO. Thus the bench directed for re-adjudication of the above matter”.
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) observed that the Expenditure incurred by Flipkart towards Employee Stock Ownership Plan (ESOP) is eligible for deduction under Section 37 of the Income Tax Act, 1961. The Two-Member Bench of the Tribunal comprising George George K. (Judicial Member) and
Padmavathy S (Accountant Member), observed that the expenditure incurred by Flipkart towards ESOP is eligible for deduction under Section 37 of the Income Tax Act, 1961. The Bench relied upon the decision of the Karnataka High Court in CIT (LTU) vs. Biocon Ltd, wherein it was held that the expression ‘expenditure’ will also include a loss and therefore, issuance of shares at a discount where the assessee absorbs the difference between the price at which it is issued and the market value of the shares would also be expenditure incurred for the purposes of Section 37(1) of the Income Tax Act.”
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that electricity load extension charges are allowable as expenditure. Further relied upon the decision of the Delhi High Court in Dart Manufacturing India Pvt. Ltd. The Bench determined that the expenditure towards installation of low tension lines for supply of electricity to its factory was revenue expenditure.
The Chennai Income Tax Appellate Tribunal (ITAT) has recently held that capital gain from sale of shares could not be treated as bogus solely on the basis of a report of the Income Tax Department. The division bench of the ITAT comprising V. Durga Rao (Judicial Member) and Manjunatha. G (Accountant Member) allowed the Appeal filed by the assessee and observed that, The long term capital gains declared under section 10(38) of the Income Tax Act 1961 has nothing to do with the survey conducted in the case of M/s. Onkar Supply Pvt Ltd and statement recorded from Ashok Kumar Kayan. Therefore, the capital gains declared by the assessee from sale of certain shares could not be considered as bogus only on the basis of a report of the Income-tax Department.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has recently held that an addition under section 68 of the Income Tax Act is not valid when the assessee proves identity, creditworthiness, and genuineness of share transaction. A two-member bench comprising of Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member found that the assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions towards the sum of Rs.4,78,50,000/- received during the impugned year.
The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT), comprising George George K., Judicial Member and Padmavathy S., Accountant Member observed that the payment for online advertisement space to Google India is not “Royalty”, thereby granting relief to Google Ireland. The Coram observed that “In view of above order of Tribunal, where it is stated that the payment made by GIPL to GIL is not in the nature of Royalty or FTS under the Act and DTAA, a different treatment cannot taken in the hands of the payee, i.e. the assessee in the instant case.”
The Amritsar bench of the Income Tax Appellate Tribunal ( ITAT ) while allowing the exemption to trust observed that the assessee rectified the defects and filed the audit report before completion of the assessment. After considering the contentions of both parties the division bench of the ITAT comprising Dr M. L. Meena (Accountant Member) and Anikesh Banerjee (Judicial Member) observed that, The assessee had rectified the defect within the stipulated time and the procedure for filing Audit Report was completed.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that the assessee is not liable to explain receipts shown in Form No.26AS. The division bench of the ITAT comprising N.K. Billaiya (Accountant Member), and Anubhav Sharma (Judicial Member) allowed the appeal filed by the assessee and observed that the Assessing Officer has put the entire burden on the assessee to show in whose hands the receipts shown in Form 26AS has been declared. Further assessee was not responsible to explain the recipients of the receipts shown in Form No. 26AS.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the employee stock option (ESOP) expenses were capital in nature and were not allowable under Section 37(1) of the Income Tax Act 1961. The Division Bench of Anil Chaturvedi (Accountant Member) and Yogesh Kumar Us (Judicial Member) dismissed the appeal filed by the revenue observing that, “We find that CIT(A) after considering the various High Courts and Tribunals decisions cited in the order held the ESOP expenses to be allowable u/s 37(1) of the Act. Before us, Revenue has not placed any material on record to point out any fallacy in the findings of CIT(A) nor has placed any contrary binding decision in ACIT vs. Cvent India Pvt. Ltd. 10 its support.”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has imposed a cost of Rs.25,000 on Jet Airways for being delinquent during income tax proceedings. The Division Bench of Prashant Maharishi (Accountant Member) and Kavitha Rajagopal (Judicial Member) allowed the appeal observing that, “The assessee may be given one last opportunity to present its case before the A.O. It is also evident that a considerable amount of time and revenue has been spent by the Exchequer in carrying out the assessment proceedings followed the appellate proceedings. The assessee is directed to pay a cost of Rs.25,000/- each in both these appeals for being delinquent before the lower authorities.”
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that amendment in section 153c Income Tax Act 1961 was prospective and the material found from premises of searched persons should belong to such person to initiate proceedings. The division bench of the ITAT comprising Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) dismissed the appeal filed by the revenue and observed that, post amended section would be applicable prospective only on the search conducted on or after 1.6.2015. Hence, prior to the amendment the material found from the premises of the searched person, should be belonging to the person in whose case the material is to be used for drawing satisfaction and for issuance of notice under section 153C Income Tax Act 1961.
The Rajkot bench of Income Tax Appellate Tribunal (ITAT) held that the Income Tax deduction under section 80P cannot be denied for non-filing of ITR within the due date. The Coram comprising the account member Waseem Ahmed and the judicial member T.R. Senthil Kumar observed that the assessee cannot be denied the deduction under section 80P of the Income Tax Act 1961, on the ground that the assessee did not file the return of income within the due date prescribed under section 139(1) of the Income Tax Act under proceedings made under section 143(1) of the Income Tax Act for the assessment year 2019-20.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently while granting relief to Shagri-LA held that payment of management fee to third party Indian hotels are not Fee for Technical Service (FTS) as per Double Taxation Avoidance Agreement (DTAA). The division bench of the ITAT comprising G.S. Pannu (President) and Saktijit Dey (Judicial Member) determined that, “marketing and reservation activities performed by the assessee are not only distinct and different from the license fee but they are done under two distinct and separate agreements. Therefore, the marketing and reservation receipts could not be treated to be ancillary and subsidiary to the license fee. Hence, such fee will not fall under Article 12(4)(a) of the treaty. Similarly, the nature of services rendered does not demonstrate that they are in the nature of managerial, technical or consultancy services.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has quashed the revision order holding that the order could not be treated as erroneous if the Principal Commissioner of Income Tax (PCIT) had opined that the order should have been written more elaborate. The Division Bench of Pawan Singh (Judicial Member) and A. L. Saini (Accountant Member) quashed the impugned order holding that there was no question of absence of any inquiry nor any point of “lack of inquiry”. The Bench further held that, “If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately.”
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the co-operative banks or co-operative societies which are carrying on banking business but not registered with RBI, are eligible for deduction under Section 80P(2)(d) of Income Tax Act 1961. The Coram comprising the account member, M.Balaganesh and the judicial member Sandeep Singh Karhail observed that the assessee society would be entitled for deduction under section 80P (2)(d) of the Income Tax Act 1961, in respect of interest received from cooperative banks.
The Jaipur bench of Income Tax Appellate Tribunal (ITAT) imposed the penalty of Rs 2000 on assessee because of the negligent attitude during the income tax proceedings. The Coram comprising the Accountant Member Rathod Kamlesh Jayantbhai and the Judicial Member Sandeep Gosain observed that while deciding the appeal of the assessee, the appellant was provided many opportunities for furnishing written submissions/documents.
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