This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently held that waiver of loan is not business Income, therefore it is not taxable under section 28(i) of Income Tax Act 1961. The Tribunal comprising S.S.Viswanethra Ravi, (Judicial Member) and Dipak P. Ripote, (Accountant Member) dismissed the appeal filedby the revenue and held that the Assessee is in the business of construction, therefore, waiver of loan amount of Rs.1,43,71,02,003/- is not business income of the assessee.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that income tax addition could not be made due to misreporting by insurance companies. The division bench of the tribunal comprising Kuldip Singh E (Judicial Member) and S. Rifaur Rahman (Accountant Member) allowed the appeal of assessee and observed that “as far as subscription of insurance is concerned assessee has accepted and brought on record that assessee has in fact made the payment and not through the bank reported by the Insurance Company and it is from the branch in which assessee is maintaining bank account.”
In the case of Kerala Gramin Bank, the Cochin bench of the Income Tax Appellate Tribunal (ITAT) has held that late fee interest under section 234E(1) is not leviable for processing on the period before the amendment. A Coram comprising Shri Sanjay Arora, AM & Shri Sandeep Gosain, JM found that the orders by the Revenue authorities were not sustainable in law.
The Pune Income Tax Appellate Tribunal (ITAT) has recently held that the right to use a trademark is royalty as per Indo- Netherland Double Taxation Avoidance Agreement (DTAA). After considering the contentions of the both parties the division bench of the ITAT comprising the Partha Sarathi Chaudhury, (Judicial Member) and G.D. Padmahshali, (Accountant Member) set aside the order of CIT(A) and remand the matter to the file of the A.O for re-adjudication as per law after complying with principles of natural justice.
The Cochin Income Tax Appellate Tribunal ( ITAT ) has recently held that the Tax Deduction at Source credit in respect of interest received from the deceased wife’s deposit could not be denied to the assessee. The division bench of the ITAT comprising George George K (Judicial Member) and Padmavathy S. (Accountant Member) allowed the appeal filed by the assessee and observed that after the death of the assessee’s wife the assessee enjoyed the interest received from the deceased wife’s deposit. The assessee dutifully declared the same to tax in his return of income. Hence, the assessee is eligible to get the credit of his deceased wife’s TDS as he has declared the income pertaining to the said TDS.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that reopening of the Income Tax Assessment of the assessee and recalculation of Capital Gains without issuing fresh Notice under Section 148 of the Income Tax Act is invalid. The observations of the jurisdictional High Court in CIT vs Jet Airways India Ltd was quoted and it was held that the reopening of assessment in the present case is unsustainable in law, thereby quashing the impugned assessment proceedings.
The Cochin Income Tax Appellate Tribunal (ITAT) has recently held that the security deposit for the freezer was taxable only on the year of termination of distributor agreement. After considering the contentions of the both parties the division bench of the ITAT comprising the George George K. (Judicial Member) and Padmavathy S. (Accountant Member) dismissed the appeal filed by the revenue and held that security deposit is taxable only on the year of termination of the agreement between the assessee and the dealer/distributor.
The Income Tax Appellate Tribunal (ITAT) Mumbai Bench, has recently, in an appeal filed before it, held that Atos IT Solutions and Services Inc, is not liable to tax, for support services provided to Atom India. Allowing the assessee’s appeal, the Mumbai ITAT held: “It is a receipt which will fall under the Article 7 of the treaty. Hence, the additions proposed and sustained by the Ld.DRP are beyond the scope.”
The Income Tax Appellate Tribunal (ITAT) Rajkot Bench, has recently, in an appeal filed before it, by relying on the CBDT circular, held that rectification application cannot be rejected in case of apparent and obvious mistakes in ITR. Allowing the assessee’s appeal, the Rajkot ITAT held: “In view of the above, we direct that rectification sought by the assessee of excluding the exempt income from its computation of income be done by the AO and necessary relief to that extent be granted to the assessee”.
The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, has recently, in two appeals filed before it by the assessee, held that no addition can be made on account of the amount against bearer cheque having forged signatures of the assessee. The tribunal bench held “In view of the above, we accept the grievance of the assessee as genuine and hold that the Id. CIT(A) was not justified confirming the aforesaid addition of Rs.41 lacs. Accordingly, addition of Rs.41 lacs is deleted. In the result, appeal of the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that capital gain exemption u/s 54 cannot be denied on acquiring new house property in the Name of Wife. Dismissing the Revenue’s appeal, the Chennai ITAT, held: “However, the same, in our considered opinion, would not jeopardise the claim of the assessee considering the fact that the utilisation of sale proceeds towards construction of house property has not been disputed by Ld. AO. Therefore, we do not find any reason to interfere in the impugned order. In the result, the appeal stands dismissed.”
The Income Tax Appellate Tribunal (ITAT) Amritsar Bench, has recently, in an appeal filed before it, while deleting the addition u/s 68 of the income tax act, held that agriculturalists need not maintain books of accounts. A Coram composed of Dr. M. L. Meena, the Accountant Member, along with Anikesh Banerjee, the Judicial Member, noted: “In our considered view the cash deposited by assessee is income from agriculture which is not come under purview of the taxable income. The opening balance of cash was also not considered during determination of peak by the ld. AO.”
The Income Tax Appellate Tribunal (ITAT), Rajkot bench has held that the benefit of the Double Tax Avoidance Agreement (DTAA) between India and UAE cannot be denied to a Company registered in the UAE merely because the directors are of different nationality and the same shall be granted if the company is a tax resident of UAE. The Tribunal held In the present case, the company is incorporated in UAE and is managed and controlled only in UAE. In fact, the company and its business is operational from the UAE only. Thus, it is a tax resident of UAE and, therefore, a treaty between India and UAE (DTAA) is applicable in the present case. Thus, Article 8 where Shipping Business and its profit has been determined in respect of taxability the same is applicable in the present case and thus the assessee is entitled for the treaty benefit. The Assessing Officer was not right in denying the exemption and hence the addition does not sustain.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that benefit of s. 10AA is allowable, if the consideration in respect of exports was received in India or brought into India. The Mumbai ITAT held: “In the present case the Appellant had filed the details of realisation of export sales with the Assessing Officer and the CIT(A). Therefore, we direct the Assessing Officer to allow deduction to the Appellant under Section 10AA of the Act by taking into account the export sales realised by the Appellant.”
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has recently, in an appeal filed before it, held that FTC cannot be denied, if requirements of rule 128(9) of the income tax rules are not violated. The ITAT Panel of K. Narasimha Chary, the judicial member observed: “Having gone through the record in the light of these two notifications, I am satisfied that whereas the due date for furnishing the return of income for the assessment year 2019-20 stood extended till 30/09/2020, the assessee filed her return of income on 27/07/2020 along with Form No. 67 and thereby there is sufficient compliance with the requirement of Rule 128(9) of the Rules. However, these two notifications missed the attention of the learned CIT(A), when the impugned order was passed.” “In these circumstances, I hold that there is no violation of the requirements of Rule 128(9) of the Rules and the assessee is entitled to claim the FTC. Learned Assessing Officer is directed to consider the same and grant relief.”
The Income Tax Appellate Tribunal ( ITAT ), Hyderabad Bench, has recently, in an appeal filed before it, held that late fee and interest in respect of the TDS statements cannot be levied prior to 01/06/2015. The Hyderabad ITAT held: “Same is the view of the Hon’ble Gujarat High Court in the case of Rajesh Kourani vs. UOI reported in (2017) 83 taxmann.com 137. Further, a Coordinate Bench of this Tribunal in the case of Nirmala Infra Projects India (P) Ltd., Vs. Dy. CIT in ITA Nos. 666 to 669/Hyd/2022, dated 12/12/2022 while noticing the above decisions, reached a conclusion that the levy of late fee and the interest in respect of the TDS statements prior to 01/06/2015 cannot be sustained. We accordingly direct the learned Assessing Officer to delete the same.”
The Income Tax Appellate Tribunal (ITAT) Visakhapatnam Bench, has recently, in an appeal filed before it, held that rent from sub-letting property is taxable as “income from other sources”. The Visakhapatnam ITAT held: “We, therefore, direct the AO to delete the addition made under 143(1) intimation. Hence, the grounds raised by the assessee are allowed.”
The Pune bench of the Income Tax Appellate Tribunal (ITAT) chaired by R.S. Syal (VP) directed the Commissioner of Income Tax (Appeals) to adjudicate the appeal filed manually as they rejected the appeal filed by the assessee on the reason that it was not filed electronically. The single bench of tribunal ordered to dispose of the appeal on merits afresh after allowing a reasonable opportunity of hearing to the assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently in an appeal filed before it, held that the entire expenses connected with setting up of business are “capital” in nature, and hence that the same is not allowable as deduction.The Delhi bench of ITAT held: “The Assessee before us, failed to controvert the findings of the authorities below and even otherwise we also do not find any reason/material to controvert such findings. Hence, we are inclined not to interfere in the conclusion drawn by the learned Commissioner. Consequently, an appeal filed by the Assessee is liable to be dismissed.”
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), observed that the Revisional Jurisdiction under Section 263 of the Income Tax Act, 1961 cannot be Invoked for “Inadequate Enquiry”. The assessee,M/s. Jakhau Salt Co. Pvt Ltd, filed its return of income for the AY 2017-18 declaring a net loss of Rs.72 crores. The Coram comprising Mahavir Singh, Vice President and Manjunatha G, Accountant Member observed that “The amount advanced by the assessee to various industries were towards working capital and real character of transaction was those akin to loan and not equity investment. In this case, as held by us, it is not a case of lack of enquiry, but it can be at best considered as inadequate enquiry and for this purpose, the powers under Section 263 of the Act, cannot be exercised.”
The Surat Bench of the Income Tax Appellate Tribunal (ITAT), comprising Pawan Singh, Judicial Member, quashed the Penalty Order under Section 271(1)(b) of the Income Tax Act, 1961 on the ground of non-compliance due to Bonafide Reason. The Bench observed that “Thus, considering the fact that assessment in the present case was completed under Section 153A/143(3) in accepting return of income, I find that it was sufficient compliance, merely because the assessee could not make compliance due to some bonafide reason, no penalty under Section 271(1)(b) of the Income Tax Act could be levied on the assessee.”
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), observed that the Revisional Jurisdiction under Section 263 of the Income Tax Act, 1961 cannot be Invoked for “Inadequate Enquiry”. The Coram comprising Mahavir Singh, Vice President and Manjunatha G, Accountant Member observed that “The amount advanced by the assessee to various industries were towards working capital and real character of transaction was those akin to loan and not equity investment. In this case, as held by us, it is not a case of lack of enquiry, but it can be at best considered as inadequate enquiry and for this purpose, the powers under Section 263 of the Act, cannot be exercised.”
The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ), ruled that initiating a penalty under Section 271(1)(c) of the Income Tax Act, 1961 without valid notice is invalid. The Bench comprising Prashant Maharishi, Accountant Member and Kuldip Singh, Judicial Member observed that “We are of the considered view that since the AO has failed to initiate the penalty proceedings under section 271(1)(c) of the Income Tax Act by issuing the valid notice, the penalty levied by the AO and confirmed by the CIT(A) is not sustainable in the eyes of law as the assessee has never been informed about the charges framed to initiate the penalty proceedings through statutory notice.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently in an appeal filed before it, held that CAM charges paid as part of rent, is subject to TDS u/s 194I of Income Tax Act. The aforesaid observation was made by the tribunal bench, when an appeal was filed before it by the assessee, as against the order of the CIT(A), Delhi, dated 20.08.2020.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently observed that the reasons, as recorded for reopening the reassessment, are to be examined on a standalone basis to determine the validity of proceedings under Section 147 of the Income Tax Act. A Bench of Sandeep Singh Karhail (Judicial Member) and M. Balaganesh (Accountant Member) relied on the Bombay High Court’s decision in the case of Hindustan Lever Ltd. vs. R. B. Wadkar, which held that it is for the AO to record his opinion in black and white. The reasons recorded for the assessment should be clear and unambiguous and should not suffer from any vagueness.
The Surat Bench of the Income Tax Appellate Tribunal (ITAT), comprising Pawan Singh, Judicial Member and AL Saini, Accountant Member observed that a delay of One Minute in filing of Return due to Technical Snags in Income Tax Website can be condoned. The Tribunal observed that “We note that delay of one minute in filing the return was due to technical snags in the website of department, and therefore return could not be uploaded. Therefore, we note that there is only a negligible delay (one minute only) which is due to bonafide reasons as has explained above, therefore, delay in filing return of income is hereby condoned.”
The Indore Bench of the Income Tax Appellate Tribunal (ITAT), ruled that the Reassessment under Section 147 of Income Tax Act, 1961 cannot be invoked to make a Protective Addition. The Two-member Bench comprising Suchitra Kamble, Judicial Member and BM Biyani, Accountant Member observed that “We find that in the present case the addition has been made on protective basis by invoking section 147 of the Income Tax Act which is not a valid action as per aforesaid decisions.”
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has recently, in an appeal filed before it, held that payment to contract teachers does not amount to ‘Fee for Professional Services’, and therefore that TDS u/s 194J, is not Applicable. The Hyderabad ITAT, held: “In these circumstances, we are of the considered opinion that the payments made to the contract teachers do not answer the description of ‘fee for professional services’ and the impugned order in ITA No. 32/Hyd/2023 does not require any interference. On the same analogy, we find it difficult to sustain the impugned order in ITA No. 726/Hyd/2022 is liable to be reversed. Respective learned Assessing Officers are directed to delete the said additions.”
The Income Tax Appellate Tribunal, Delhi Bench, has recently, in an appeal filed before it, held that M/s. Uptodate is not taxable under “royalty” for allowing access to online databases of journals and books, on the grounds that the same has no PE in India. It was observed that, “In view of the aforesaid, we hold that the amount received by the assessee, being not in the nature of royalty under Article 12(3) of the treaty, cannot be brought to tax in India in absence of a Permanent Establishment. Accordingly, we direct the Assessing Officer to delete the addition.
The other grounds, being consequential or premature, are dismissed.”
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has recently, in an appeal filed before it, held that TDS Credit cannot be Denied when Form 26AS along with Reconciliation of Income as per Books, are Produced before the AO. It was observed that, “When form 26AS along with the reconciliation of income as per books and form 26AS was produced before him, the learned Assessing Officer cannot accept the income for tax purpose and refuse to allow credit of corresponding TDS. Both must go hand in hand.”
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) deleted the addition made by the Assessing officer (AO) and ruled that the salary received by the assessee in India for the services rendered in USA are not liable to tax in India. The assessee, an employee of Wells Fargo (EGS) India Pvt. Ltd (“Wells India”) and was sent on short-term assignment to Wells Fargo Bank N.A., USA (Wells USA) from 20th October 2017 and such short term assignment continued in the 18th October 2018 and thereafter the assessee was directly employed by the Wells USA. During his short-term assignment to Wells USA, the assessee made on the payrolls of Wells India and his salary for the services rendered was credited to his Indian bank account by Wells India after deducting tax at source. The tribunal of Rama Kanta Panda (Accountant Member) and K. Narasimha Chary (Judicial Member) decided that though the provision under section 5(2)(a) of the Income Tax Act fastens tax liability on the assessee, but, because of the overriding effect of section 90 of the Act, article 16 of the DTAA would prevail over the 5(2)(a) of the Income Tax Act.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT)has ruled that Huawei is liable to pay tax on income from the provision of Technical Services to Huawei India as ‘FTS’. Respectfully following the consistent view of the Tribunal in the assessee’s case in past assessment years, the Coram comprising Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member upheld the decision of the Departmental authorities on these issues.
In a significant case, the New Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that receipt by Adobe from the supply of software and automated services is not taxable in India. The Coram comprising of Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member deleted the additions made on the reasoning that the transactions between the assessee and its AE in Indian being at arm’s length as no further profit can be attributed to the PE.
In the case of Vodafone Idea, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that TDS is not deductible on payment of roaming charges since the payment for interconnection is not fees on technical service under section 194j of the income tax act, 1961. The ITAT held that “the payments made for interconnection are not fees for rendering any technical services as envisaged in section 194J of the Act. Therefore, no tax is deductible at source u/s 1943 of the Act on payment of roaming charges to the OTOS and the assessee therefore cannot be treated as an assessee in default.”
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) in its ruling which was in favour of Vodafone Idea Ltd has held that there cannot be any disallowance under section 40 (a)(ia) of the Income Tax Act, 1961 on Sale of Prepaid Sim card/Recharge Vouchers to distributors. The tribunal held that the sale of prepaid sim cards/recharge vouchers by the assessee to distributors cannot be treated as commission/discount to attract the provisions of section 194H of the Act and hence there cannot be any obligation on the part of the assessee to deduct tax at source thereon and consequently there cannot be any disallowance u/s 40(a)(ia) of the Act.
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