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 filed by 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. Hence, it is not taxable under section 28(i) of the Income Tax Act 1961.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has allowed the Tax Deducted at Source (TDS) credit to Owens Corning holding that the charges received for carrying out re-fabrication of bushing are not taxable under Indo-Singapore Treaty.
The Bench further observed that, “Tribunal has held that the charges received by the assessee for carrying out re-fabrication of the bushings does not tantamount to “make available of technical knowledge, experience, skill, know-how or process”. The Tribunal has also held that as there is no transfer of technology involved in the said process, it cannot be taxed under Article 12 of the Indo Singapore tax treaty.”
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the profit margin forgone by Flipkart India while selling goods could not be treated as expenditure in creating intangible or goodwill.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has quashed the penalty under Section 271(1)(C) asthe appropriate words were not deleted in the penalty notice.
The Division Bench of S.S. Godara, (Judicial Member) and Dipak P. Ripote, (Accountant Member) allowed the appeal holding that the penalty under Section271(1)(c) was not maintainable as the inappropriate words were not been struck out in the penalty notice, by the AO.
The Bangalore bench of Income Tax Appellate Tribunal (ITAT) has recently held the National Faceless Appeal Centre (NFAC) bound by decisions of the jurisdictional High Court where the Assessing Officer (AO) is situated.
N.V. Vasudevan, (Vice President) and Laxmi Prasad Sahu, (Accountant Member) of the division bench of the Tribunal after considering the submissions held that the NFAC was bound by the binding decision of the jurisdictional High Court, where the AO was situated.
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that the landlord is not liable for deduction of Tax Deduction at Source (TDS) under wrong provision of the Income Tax Act by the tenant.
The division bench of the Kolkata tribunal comprising Rajpal Yadav, (Vice-President) and Dr. Manish Borad, (Accountant Member) while allowing the appeal of the assessee observed that in making a best judgment assessment the Assessing Officer must not act dishonestly or vindictively. He must make what he honestly believes to be a fair estimate of proper figure of assessment and for this purpose he must be able to take into consideration local knowledge, business of the assessee and his own knowledge of the previous return of income by the assessee.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that the landlord was not liable for deduction of Tax Deduction at Source (TDS) under wrong provision by the tenant.
The single bench of the tribunal of C.M. Garg, (Judicial Member) found that the disallowance made by the assessing officer was invalid and held that the landlord, who is declaring rental income in hisreturn of income, could not be blamed for deduction of TDS under wrong provision by the submission of incorrect return of TDS by the tenant.
The Jaipur bench of Income Tax Appellate Tribunal (ITAT) has recently held that penalty under section 271 B of Income Tax Act 1961 would not applicable once the penalty levied for non- maintenance of books of accounts.
Further the bench observed that “once the penalty is levied for non-maintenance of book of accounts, there cannot be further default for not getting the same audited as required under section 44AB of the Income Tax Act and therefore, the penalty levied under section 271B of the Income Tax Act 1961 is not justified and thus vacated.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, ruled that addition made against housewife for having a deposit of Rs.2,40,000/, during demonetization period, is against CBDT Circular.
“In view of the foregoing discussion, I hold that the Instruction No.1 of CBDT Circular No.03/2017 dated 21.02.2017 provides that no further clarification or verification is required to be made in a case of an individual when the deposited amount during demonetization period is upto Rs.2,50,000/-. In the present case, the assessee who is a housewife having no other source of income has deposited Rs.2,40,000/- during demonetization period. Therefore, in view of the CBDT Circular and the order of ITAT in the case of Neeru Jain vs. ITO (supra), the addition made by the AO and confirmed by the ld.CIT(A) cannot be held as sustainable as the same is clearly against the instructions issued by the CBDT. Therefore, the sole grievance of the assessee is allowed and the AO is directed to delete the addition. In the result, the appeal filed by the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT) Pune Bench, has recently, in an appeal filed before it, ruled that the filing of Form 67 is a procedural requirement, and hence that the non-compliance of the same, cannot attract denial of FTC.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while allowing DTAA benefit, held that income from foreign assignment is not taxable, merely because the assessee owns a house in India.
Thus, allowing the assessee’s appeal, the Delhi ITAT held: “So, the Bench is of firm opinion that the concept of ‘permanent home available’ has been wrongly interpreted by the Ld. Tax Authorities. Ld CIT(A) has further fallen in error to not consider the applicability of other parameters of Article 4 (2)(b), which Ld. AO had infect taken note of and determined against the assessee. The findings of the Tax Authorities below in regard to taxing the income of assessee earned from foreign assignment are liable to be reversed. The grounds are sustained and the appeal is allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on account of the appellant’s failure to prove the genuineness of heavy denomination cash gifts, upheld the addition Under Section 69A of the Income Tax Act, 1961
The Income Tax Appellate Tribunal ( ITAT ), Hyderabad Bench has recently, in an appeal filed before it, while granting relief to S & P Global India, held that payment for the use of shrink wrap computer software is not royalty.
Thus, allowing the assessee’s appeal, the Hyderabad ITAT held: “With this view of the matter, we direct the learned Assessing Officer to delete the same. Grounds raised by the assessee are allowed accordingly. In the result, the appeal of the assessee is allowed.”
The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Section 50C of the Income Tax Act is not applicable to the transfer of property which is held as “stock-in-trade”.
The Division Bench of V. Durga Rao, (Judicial Member) and Manjunatha. G (Accountant Member) allowed the appeal observing that, “We are of the considered view that provisions of section 50C cannot be applied when an asset transferred is not a capital asset. Thus, we are of the considered view that the AO and CIT(A) erred in applying provisions of section 50C of the Act and determination of full value consideration to compute short-term capital gains from the transfer of property. Thus, we direct the AO to delete additions made towards computation of short-term capital gains from transfer of property.”
The Bangalore bench of Income Tax Appellate Tribunal (ITAT) while deleting the penalty under section 271D of Income Tax Act 1961 held that reasonable cause under section 269SS of Income Tax Act 1961 should be related to meet exigency of business.
The tribunal consisting the members of Chandra Poojari, (Accountant Member) and Beena Pillai, (Judicial Member) allowed the appeal filed by the assessee and observed that “provisions of section 269SS of the Income Tax Act 1961 Act could not be applied as the assessee’s transaction is genuine and also constituted with “reasonable cause” and in such case, default on the part of assessee is merely a technical and venial nature and no penalty under section 271D of the Income Tax Act, 1961 could be levied”.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that disallowance shall not be made to a chargeable sum paid to a foreign company without deduction of tax.
It was viewed that the proviso was inserted to remove an anomaly and was therefore curative and declaratory in nature. While allowing the appeal, the ITAT quashed the disallowance/addition made by the A.O. which was sustained by the CIT(A).
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has while allowing the appeal held that expenditure towards wage settlement is deductible in the tear of actual payment.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the service charges are part of rental income and are includable while allowing standard deduction.
The Division Bench of ABY T. VARKEY, (Judicial Member) and AMARJIT SINGH, (Accountant Member) allowed the appeal, observing that, “Since the AO view after enquiring is plausible view, it could not have been interfered with unless the Ld CIT(E) has conducted during revisional proceedings enquiry or verified the facts in order to come to a conclusion that AO’s view was erroneous/un-sustainable in law. once AO has conducted enquiry (on an issue) then the Ld Pr. CIT before holding the order of AO to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the AO on that issue is erroneous/unsustainable in law”
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the non-inclusion of surrendered income book profits under Section 115JB of the Income Tax Act 1961 is not rectifiable under Section 154 of the Act.
“We are in agreement with the ld. counsel for the assessee in this regard that it is surely not a clear case of the amount being invariably included in the book profits of the assessee on the basis of the facts before us. In the absence of any incriminating material found, substantiating the surrender made, the same cannot invariably be said to represent the profit of the assessee for disclosure to its shareholders,” the Bench further observed.
The Bangalore bench of income tax appellate tribunal has recently held that a firm is not taxable for interest on borrowed capital paid to partners when the same is already taxed from partners under Section 28(v) of the Income Tax Act, 1961.
The Two-member bench of tribunal comprising Chandra Poojari, Accountant Member and Anikesh Banerjee, Judicial Member allowed the appeal filed by the assessee and observed that what is allowed in the hands of these assessees under Section 40(b)(iv) of the Income Tax Act Act as a deduction, same to be taxed in the hands of the respective partners under Section 28(v) of the Act and directed the AO to allow the deduction to the extent of limit prescribed in Section 40(b) of the Income Tax Act.
Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that addition could not be made merely because the assessee’s name appeared in documents found during the course of search.
The Division Bench of Vikas Awasthy, (Judicial Member) and Amarjit Singh, (Accountant Member) allowed the appeal and set aside the impugned addition holding that Addition could not be made in the hands of assessee only for the reason that the name of the assessee was appeared in the documents found during the search in case of third party. The identity of the person had to be established and the reason for making such payment had to be linked.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the disallowance of Corporate social responsibility (CSR) expenses under Section 37 of the Income Tax Act 1961.
B.R. Baskaran (AM) & Shri Rahul Chaudhary (JM) observed that, these expenses had been incurred towards community welfare activities as required under the Companies Act as CSR activities only, i.e., the assessee had not demonstrated as to how these expenses have nexus with the business carried on by the assessee. Further Explanation 2 to section 37(1) specifically provided for disallowance of the expenditure incurred towards corporate social responsibility.
The Delhi Income Tax Appellate Tribunal (ITAT), while deleting orders against Marks and Spencer India recently found that the income tax department derived Arm Length Price (ALP) without resorting to methods prescribed under the Income Tax Rules.
The tribunal of Dr. B. R. R. Kumar, (Accountant Member) Yogesh Kumar US, (Judicial Member), while allowing the appeal of the assessee, observed that revenue has derived ALP without resorting to any method prescribed as per the Income Tax Rules. The disallowance of 6% during the current year has been merely made on the pretext that in the earlier year, the royalty paid was at 1%.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that complete absence of notice could not be cured by invoking Section 292BB of Income Tax Act 1961.
The division bench of tribunal comprised of Dr. B. R. R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) dismissed the appeal filed by the revenue and relied upon the decision of Supreme Court in the case of Commissioner of Income Tax vs. Laxman Das Khandelwal, while it was observed that “Section 292BB Income Tax Act to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself.”
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that Section 54F Deduction under the Income Tax Act, 1961 can be allowed even if amount not Deposited in Capital Gains Account Scheme.
The Bench concluded by noting that the provisions of section 54F of the Act are beneficial provisions and are to be considered liberally in the aspect of the limitation period. But the investment in residential property is a must, which the assessee has proved with evidence and complied before the lower authorities.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while deleting the addition for payment of capitation fee to medical college, held that no opportunity for cross examination can be provided. the ITAT Panel comprising of Chandra Mohan Garg, the Judicial Member, observed: “The Sr. DRhas not controverted the factual position and the facts and the circumstances of the present case are quite identical and similar to the facts in the said case of Shri Naresh Pamnani and Shri Manjit Singh Gahlot”.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that income tax penalty under Section 270A of the Income Tax Act, 1961 cannot be levied, when disallowance is made on estimate basis. The Chennai ITAT held that “Therefore, the penalty levied by the Assessing Officer and confirmed by the ld. CIT(A) is unsustainable and thus, the penalty levied under section 270A of the Act is deleted.”
The Division bench of Delhi Income Tax Appellate Tribunal (ITAT) has recently held that 10 percent Tax Deduction at Source would not applicable on common area maintenance charges. The tribunal of N. K. Billaiya, Accountant Member and Anubhav Sharma, Judicial Member observed that, Tax Authorities below have primarily considered the provisions of explanation (i) of section 194 of the Income Tax Act to conclude that any payment made to the landlord, other than under the head rent, falls into the category of rent. Further the bench found that Tax Authorities below have fallen in error in holding that the assessee was required to pay TDS at 10% towards the common area maintenance charges.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that expenses towards clinical trials for promotion and sales of cardio products are allowable as expenditures. The bench further observed that ”clinical trials are an integral part of the feedback system on the efficiency of the products of the assessee and hence it is intricately connected with the business of the assessee and hence it cannot be said that the expenses have not been incurred solely and exclusively for the business purpose.”
Recently, the Delhi Income Tax Appellate Tribunal (ITAT) while granting relief to Fiber Home India held that the final assessment order issued beyond of limitation under Section 144C of the Income Tax Act, 1961 is null and void. Assessee Fiber home India Pvt. Ltd is engaged in the business of manufacturing telecommunication equipment and providing maintenance and other allied services o f telecommunication equipment in India. Against the final order passed by the assessing officer, assesee filed the appeal before the Tribunal. The ground for appeal was that the order passed by the Assessing Officer is beyond the period of limitation. The tribunal, after considering the records found that the final order passed by the Assessing Officer is beyond the period of limitation as provided under section 144C of the Income Tax Act and hence, the same was declared as null and void. The two member bench of B. R. R. Kumar, (Accountant Member) and Yogesh Kumar US, (Judicial Member) allowed the appeal of the assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on there being no document to prove that assessee is merely a Power of Attorney (POA) holder, upheld the addition of capital gain. “The assessee has failed to prove these relevant facts. Therefore, benefit of said judgment is not available for the assessee in the peculiar facts and circumstances of the present case. Accordingly, grounds of assessee being devoid of merits are dismissed. In the result, appeal is dismissed.”
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has recently in an appeal filed before it, allowed deduction of expenditure by Flipkart India towards ESOP u/s 37 of income tax act. “Respectfully following the above decision of the Tribunal, we find no reason to interfere with the order of the CIT(Appeals) and uphold the same. The grounds taken by the revenue are dismissed.In the result, appeal of the assessee is allowed and appeal of revenue is dismissed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently in an appeal filed before it, held that eligible deductions cannot be disallowed, merely on ground of technicalities. “In view of the above discussion, we allow the assessee’s Grounds of appeal and direct the authorities to allow the benefit of accumulation u/s 11 sub-Clause 2 of the Act amounting to Rs.34,73,760/- to the assessee. Ordered accordingly. In the result, the appeal of the assessee is allowed.”
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has recently held that exemption under Section 10(38) of Income Tax Act, 1961 could not be disallowed when a transaction is not declared as penny stock. It was also observed that the assessee had filed statement of scrip wise purchase and sales, stocks summary, copy of assessee’s ledger in broker’s books and copy of broker’s ledger in books of assessee for Assessment year 2011-12 along with bank statements and bank book. The single bench of Suchitra Kamble (Judicial Member) allowed the appeal filed by the assessee.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has recently held that mere non – production of original bills would not make purchase Bogus. The tribunal of Suchitra Kamble, Judicial Member, while allowing the appeal filed by the assesee, observed that assessee through its bills has established that there is a co-relation between the sales and the purchase and merely not producing original bills cannot make the purchase bogus.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the penalty under section 271(1)(c) is not attracted when income tax is payable based on book profit hence the bench granted relief to Havells India. The two member bench of tribunal Chaturvedi, (Accountant Member) and Yogesh Kumar Us, (Judicial Member), after considering the contentions dismissed the appeal filed by the revenue and observed that CIT(A) after considering the submissions of the assessee has given a finding that assessee was subjected to pay taxes under Section 115JB of the Act, even after taking into consideration all the additions made by the AO in the assessment order. Thereafter by relying on the CBDT circular, held that the penalty under Section 271(1)(c) Income Tax Act was not leviable.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that race promotion fee paid to formula one world championship should not be disallowed under Section 40(i) of the Income Tax Act, 1961. The two-member Bench of N. K. Billaiya, (Accountant Member) and Yogesh Kumar U.S., (Judicial Member) quashed the impugned order observing that, “In our considered opinion, no part of the RPC fee paid by the assessee is liable to be disallowed under clause (i) of s. 40(a) because the second proviso clause (i) of Section 40(a) has been inserted w.e.f. 1.4.2020. The said proviso essentially provides that where the relevant income has been declared by the payee and tax thereon has been paid by him then no disallowance shall be made in the hands of the payer.”
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that termination of employment due to misconduct is not beyond the control of assesses and refused to allow an exemption under section 10 (38) to the employee-assessee.
A Coram comprising N V Vasudevan, Vice President and Shri Chandra Poojari, Accountant Member observed that the termination of the employee cannot be said that it is beyond the control of the assessee.
The Allahabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that an addition under section 68 of the Income Tax Act, 1961 based on incriminating material found during the survey is valid. The AO found that the assessee has not kept proper and adequate records to substantiate the quantity of the stock at any given date and time, and it was observed by the AO that the arguments were extended by the assessee. Since the CIT(A) on appeal deleted the addition without considering the sustainability of Incriminating material, the Tribunal set aside the decision of CIT(A) and allowed the appeal.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that project expenses are revenue in nature therefore it is deductible under Section 37 of the Income Tax Act 1961. The division bench of the tribunal after observing the issues raised by the revenue found that the tribunal has already allowed the assessee’s claim in the assessment years 2008-09 & 2009-10 by treating the same expenditure as the “revenue in nature” instead of “capital in nature” as held by the AO.
The Chandigarh bench of Income Tax Appellate Tribunal (ITAT)has recently held that income surrendered by way of account receivable was not taxable under deeming provisions of Section 69 read with Section 115BBE of Income Tax Act 1961.
A survey operation was conducted at business premises of M/s Shankar Agro Foods and M/s Bindal Agro Foods Pvt. Ltd. C/o Shankar Rice and General Mills. Thereafter the assessee, Bal Krishan who is a partner/director in these concerns filed his return of income which was selected for scrutiny.Therefore the assessment completed.
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