This yearly digest analyzes all the Income Tax Appellate Tribunal (ITAT) stories published in the year 2023 at taxscan.in.
In, Ajnara India Ltd vs ITO, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the payment of lease rentals on annual basis would attract TDS under section 194-I of the Income Tax Act, 1961. Ajnara India Ltd, the assessee is a company engaged in the business of development, and construction of real estate and infrastructure projects. The assessee acquired a plot from NOIDA Authority on a perpetual lease for the development of a residential and commercial project and made payments during the year on account of annual lease rent without deduction of tax at source. A Coram comprising of shri N K Billaiya, Accountant Member and Ms Astha Chandra, Judicial Member viewed that the said payments attracted TDS liability under section 194-I of the Act and upheld the order of the CIT(A). The ITAT held that the assessee is liable for interest under section 201(1A) of the Income Tax Act and dismissed the appeal of the assessee.
In, United Foods Private Limited vs ACIT, In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that job work expenses can’t be disallowed in absence of culpable evidence with revenue. United Foods Private Limited, the assessee is a private limited company carrying on the business of trade of rice and other agro products. The return filed by the assessee was subjected to scrutiny assessment. A Coram comprising of Shri Pradip Kumar Kedia, Accountant Member & Shri Narender Kumar Choudhry, Judicial Member observed that in the absence of any culpable evidence in possession of revenue, the job work expenses deserve to be allowed, on a standalone basis, as incurred in the ordinary course of business.
In, Shri Hemendra Lilachand Shah vs Income Tax Officer, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that non-compliance of appeal via electronic mode cannot be a hindrance to justice as it was a procedural requirement. Shri Hemendra Lilachand Shah, the assessee filed an appeal by a delay of 874 days before the ITAT. The assessee submitted that the order of the CIT(A) was handed over to the staff namely Shri Dinesh Desai who left the organization as the assessee was facing severe financial crises. The assessee could not repay the money borrowed from Visnagar Co-operative Bank for which the case is pending before the Metropolitan Court. A Coram comprising of Shri Waseem Ahmed, Accountant Member viewed that the requirement of filing an appeal before the CIT (A) in electronic form was new and the assessee being an individual filed an appeal before CIT(A) within the time limit but in a paper dated 18th April 2016 instead of filing online as required by the CBDT notification dated 1st March 2016.
In, The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that disallowance under section 14A of the Income Tax Act,1961 does not apply to interest income earned from the negative capital of the partnership. 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. The Tribunal viewed that the AO has rightly pointed out that Section 10(34) makes no distinction whatever between the dividend income earned on shares held as stock-on-hand and that held as an investment. In light of the Judicial precedents, the Tribunal held that the assessee is entitled to claim an exemption of dividend income of Rs.2,63,064/-.
In, Tata Industries Limited Bombay House vs The Dy. Commissioner of Income Tax, In a significant case of Tata Industries, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that foreign dividend income which is chargeable to tax is outside the provision of 14 A of the Income Tax Act,1961. In a significant case of Tata Industries, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that foreign dividend income which is chargeable to tax is outside the provision of 14 A of the Income Tax Act,1961. The revenue challenged the order of CIT(A) about the disallowance u/s 14A of the Act both under normal provisions of the Act as well as in the computation of book profits u/s 115JB of the Income Tax Act.
In, Prakash Sunrise Healthcare Limited vs Income Tax Officer, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed TDS Credit for the assessment year for which income is assessable. Prakash Sunrise Healthcare Limited, the assessee is carrying on the business of running and maintaining of Nursing Home and has been imparting medical services to various government employees including military personnel for and on behalf of the CGHS and ECHS. The Assessee filed its return of income declaring a total income of Rs.1,92,27,329/-for which the total receipts of business and profession were declared at Rs.7,58,33,708/-. It was observed that the assessee follows the accrual method of accounting whereas the corresponding deductors follow the cash method and deducted TDS in the year in which the invoice of the assessee is acknowledged and accounting entries are made in their books. The Tribunal noted that the assessee has placed threadbare details of various patients availing services of the assessee’s nursing home through the deductor agencies.
In, Sohanraj Khimraj Kothari vs JCIT, The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of unexplained Creditors under section 68 of the Income Tax Act,1961 when the assessee submitted Corroborative Evidence related to creditors. Sohanraj Khimraj Kothari, the assessee challenged the action of the Revenue authorities in making the addition of Rs.1,61,960/- on account of unexplained cash credit under section 68 of the Income Tax Act. In the light of the availability of confirmation filed in physical form before the First Appellate Authority, a coram comprising of Shri N V Vasudevan, Vice President remanded the issue to the AO for consideration afresh in the light of the confirmation already filed before the First Appellate Authority in physical. The appeal of the assessee was partly allowed.
In, Assistant Commissioner of Income tax vs Shree Ami Office Owner’s Association, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that a mere agreement to sell the immovable property without giving possession to the buyer, not a transfer of assets under section 2(47) of the Income Tax Act,1961. Shree Ami Office Owner’s Association, the assessee is an association of persons (AOP) registered under the provisions of the Bombay Non-Trading Corporation Act, purchased a property in an auction carried out by the office of the Chief Commissioner of income tax, Gujarat, Ahmedabad for a total consideration of 57 lakhs. The Tribunal held that where the assessee merely agreed to sell the immovable property without giving possession to the buyer, where there was nothing to show that possession was ever delivered by the assessee to the purchaser in part performance of the agreement for sale, there was no transfer within the meaning of section 2(47)(v) of the Act.
In, Shri Dipakbhai Harishchandra Shah vs ITO, The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that disallowance under section 14A of the Income Tax Act,1961 does not apply to interest income earned from the negative capital of the partnership. Shri Dipakbhai Harishchandra Shah,the assesseechallenged 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 no disallowance of interest u/s14A of the Act was warranted. It was observed that even machinery provision of computing the disallowance as per the Rule 8D of the Income Tax Rules,1962 becomes unworkable since the formula provided in the said rule for calculating the disallowance of interest is based on the investment made by the assessee for earning exempt income, which negative investment.
In, Income Tax Officer vs M/s. Pritham and Prathik Hospitals Pvt. Limited, The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) grants the opportunity to prove the genuineness and creditworthiness of shareholders as they file to prove the source of Investment. A survey under section 133A of the Income Tax Act, 1961 was conducted at the business premises of Pritham and Prathik, the assessee and during the survey proceedings, certain documents/loose sheets found at the business premises were impounded. The Assessee company did not file its Return of Income for the A.Y.2014-15. A Coram comprising of Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member remanded the matter to the file of the Assessing Officer to produce the shareholders before the Assessing Officer to prove the genuineness, creditworthiness and identity of the shareholders to prove the case. The appeal of Revenue is partly allowed for statistical purposes.
In, The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has held that Assessing Officer (AO) cannot refer the matter to DVO without rejecting the books of account. The revenue challenged the order of CIT(A) by holding that the reference to Valuation Officer cannot be made without rejecting the books of account, by ignoring the amended provisions of 142A(2) of the Income Tax Act w.e.f. 01-10-2014 which stipulates that the AO may make a reference to the Valuation Officer, whether or not satisfied with the correctness or completeness of the accounts of the assessee. A Coram comprising of Shri R.K. Panda, Accountant Member and Shri Laliet Kumar, Judicial Member observed that before 01.10.2014 it was essential for the Assessing Officer to reject the books of accounts of the assessee before referring the matter to the Valuation Officer which has been failed to do.
In, ACIT vs Nadiadwala Entertainment & Technologies Ltd., While holding that the investment for the purchase of distribution of a film is “intangible right,” the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has disallowed the claim of M/s Nadiadwala Entertainment to treat the expenses incurred on the film “aarakshan” as loss under the Income Tax Act, 1961. The assessee, M/s Nadiadwala Entertainment & Technologies Ltdadvanced a sum of Rs.8.9 crores to “Prakash Jha Production” on account of feature film “Arakshan”. It was claimed by the assessee that t said the investment was made for purchase of distribution rights of the film. In the assessment completed, the Assessing Officer disallowed the loss on account of operating expenses of Rs.5.90 crores holding that same being in the nature of prior period expenses and hence not allowable in the year under consideration. A bench of Om Prakash Kant (Accountant Member) and Shri Sandeep Singh Karhail (Judicial Member) has held that “the assessee has not incurred expenses for production of the film whereas, the assessee claimed that the said investment was made for purchase of distribution right of the film which are in the nature of intangible assets and therefore investment was for purchase of capital asset and loss incurred on the same is in the nature on opinion, finding of the Ld. CIT(A) on the issue reasoned and no interference is required in the same.”
In, Global Arkitekts P. Ltd. vs ITO, The Income Tax Appellate Tribunal (ITAT), Chennai bench has held the income tax department cannot avail the extended time limit for re-assessment under the Income Tax Act, 1961 without new or tangible material. The assessee, M/s. Global Arkitekts P. Ltd contended before the ITAT that the notice issued under section 148 is without any basis and without any reasonable belief. It was argued that the reopening has been resorted to based on information already available in the return of income and therefore, reopening beyond 4 years is not permissible in terms of various judicial pronouncements.
In, Redisolve Software P. Ltd vs The Deputy Commissioner of Income Tax, The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the filing of the income tax return under section 139 of the Income Tax Act, 1961 is mandatory not directory to claim the tax benefit under section 10A of the Income Tax Act, 1961. Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member held that “in the case of Saffire Garments v. ITO (supra), wherein, the Special Bench has held that to claim a benefit under section 10A of the Act, the return of income has to be filed under section 139 of the Act and it is a mandatory and not directory. Respectfully following the decision of the Rajkot Special Bench, we reject the arguments of the ld. Counsel for the assessee and the appeals filed by the assessee for the assessment years 2011- 12 and 2012-13 are dismissed.”
In, Dy. Commissioner of Income Tax vs ACE Plastics, The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench has held that the income tax deduction under section 80IB of the Income Tax Act, 1961 cannot be disallowed even if the part of manufacturing activities are being done from outside the unit. The Assessee, M/s ACE Plastics is into the business of manufacturing of plastic containers, bottles, caps etc., filed return by declaring its income at Rs.39,62,080/- and also claimed deduction under section 80IB of the Income Tax Act, 1961. The AO, while concluding the re-assessment proceedings, disallowed Rs.5,46,724/- out of the total deduction claimed by the assessee under section 80IB of the Act amounting to Rs.13,20,693/-. Dismissing the appeal filed by the income tax department, the ITAT held that “This view has also been affirmed by the Hon’ble Bombay High Court in case of Penwalt India Ltd. 196 ITR 813 (Bom.) and CIT vs. Oricon P. Ltd. 151 ITR 296. So merely because of the fact that part of the manufacturing process resulting in N products was carried on by an outside agency the assessee would still be considered as manufacturer. The coordinate Bench of the Tribunal has also taken identical view in case of Sunrise Metal Industries (supra). The Ld. D.R. for the Revenue has failed to bring on record if this settled proposition of law has been overturned by any higher forum.”
In, Globus Realcom Pvt Ltd vs Dy. C.I.T, The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the Assessing Officer cannot reject the genuineness of the parties once the TDS element is reflected in the form 26AS during the income tax proceedings. Considering the fact thatthe transaction wherein complete details have been furnished alongwith TDS details, the ITAT held that “once TDS element is reflected in Form No. 26AS, the Assessing Officer cannot allege that the parties are not genuine. Moreover, full details are available on record. Therefore, we do not find any reason in sustaining the disallowance. Findings of the ld. CIT(A) are set aside and the Assessing Officer is directed to delete the impugned disallowance.”
The ITAT has held that the Claim of Foreign Tax Credit( FTC) can’t be disallowed merely on delay in filing Form
67. A Coram comprising of Shri M. Balaganesh, Accountant Member and Shri Rahul Chaudhary, Judicial Member held that the requirement of filing Form 67 is a directory in nature which is evident from the fact that Rule 128(9) does not contemplate disallowance of FTC in case of delay in complying with such condition.
The Tribunal further held that the Appellant‟s claim for FTC cannot be denied for the reasons mentioned by the CIT(A). The Appellant is entitled to claim FTC of INR 4,30,399/- on the strength of Form 67 filed along with the revised return and the Assessing Officer is directed to grant the same.
The ITAT, restored matter to the file of Assessing Officer (AO) on the ground that no information as to purchase in books of accounts was adjusted for purchase return. A Bench comprising Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “However, at the time of hearing neither the AR nor the DR has brought anything to our notice about the fact that the purchase shown by the assessee in the books of accounts was adjusted on account of purchase return. In the absence of such information, we are setting aside the issue to the file of the AO to the extent of verifying whether the purchases shown by the assessee has been adjusted on account of purchase return.”
The ITAT, Pune bench has held that any action of the income tax department violating the instructions of the CBDT is untenable under the law. The Tribunal allowed the plea of the assessee and observed that “ the High Court held that, the instruction issued by the mother body i.e. CBDT undisputedly are binding on the department and any action in violation thereof renders it as untenable in law, consequently in the extant case, assessment been carried out in violation of instruction issued by CBDT deserves to be quashed, ergo we set-aside the first appellate order passed u/s 250 and quash the order of assessment passed u/s 143(3) of the Act as bad in law.
The Mumbai bench of the ITAT has held that the Order passed by TPO under section 92CA(3A) of the Income Tax Act,1961 on 30 May 2014 is barred by limitation and deleted the Transfer Pricing Adjustment. A Coram comprising of Shri B R Baskaran, Accountant Member and Shri Rahul Chaudhary, Judicial Member observed that sub-section (3A) to section 92CA has been inserted w.e.f. 01.06.2007 providing time limit for the Transfer Pricing Officer to pass the order i.e. within a period of 60 days before the date of completion of assessment as per section 153.
The Mumbai bench of the ITAT held that the re-assessment under sections 147/148 of the Income Tax Act, 1961 shall be based on “reason to believe” not on “reason to suspect.” Quashing the re-assessment, the Two-Member ITAT held that “the fine distinction between “right to suspect” and “right to believe” has to be kept in mind while examining the condition precedent for reopening an assessment as stipulated u/s 147 of the Act for the relevant year under consideration (AY. 2009-10). Here in this case, the DGIT (Inv.) had passed on an information regarding the assessee’s claim of expenses to the tune of Rs. 6,16,79,235/- to be bogus, which assessee has supposed to have incurred while purchasing goods from certain parties. Having received such an information from the DGIT(Inv.), it should have at best triggered “reason to suspect”, then AO should have made reasonable inquiry and collected material which would make him form a belief that there was in fact escapement of income; but in this case, we note that the reason recorded (supra) by the AO before re-opening the assessment does not satisfy the requisite requirement as necessary u/s 147 of the Act to validly reopen the assessment.”
The Income Tax Appellate Tribunal (ITAT), Kolkata ruled that the provisions of section 40A(3) of the Income Tax Act, 1961 cannot be attracted when there is not a single transaction exceeded the treshod limit of Rs. 20,000. A bench of Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member observed that there is no reason to interfere with the order of the CIT(A).
The Lucknow bench of the Income Tax Appellate Tribunal ( ITAT ) has held that disallowance under section 40(a)(ia) of the Income Tax Act, 1961 is not allowable in the absence of TDS deduction on the Purchase of trade items. The Tribunal held that “once no TDS is liable to be deducted on these purchases, no disallowance under section 40 (a)(ia) of the I.T. Act can be attracted. Hence, we delete this addition and allow this issue of the assessee’s appeal.”
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT), directed the Assessing Officer (AO) to delete addition of Special Economic Zone (SEZ) book profits under Section 115JB of the Income Tax Act, 1961, thereby granting relief to M/s. Infosys Ltd. The Bench comprising Chandra Poojari, Accountant Member and Beena Pillai, Judicial Member observed that “This issue is no longer resintegra and the same stands settled by the decision of the Special Bench of Delhi Tribunal in case of ACIT vs. Vireet Investment (P) Ltd. We accordingly direct the AO to delete the disallowance added while computing book profits.”
The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the restaurant is an “eligible business” to attract section 44AD of the Income Tax Act, 1961 on a presumptive basis. held that “the intention of the legislature in case of computing profit and gains of business on presumptive basis is to enhance the tax payers to declare income at the minimum rate prescribed u/s.44AD and also allows the assessee to offer income higher than the said prescribed rate, in case of business, whose total turnover or gross receipts in the previous year, does not exceed the amount prescribed under law. The lower authorities have not denied the fact that the assessee is an ‘eligible assessee’, carrying out ‘eligible business’ under the provisions of section 44AD of the Act. On this observation, we hold that the assessee’s declaration of income u/s. 44AD of the Act is justified and the A.O.’s contention that the assessee has not maintained its books of account in such case, is not warranted.”
Income Tax Appellate Tribunal (ITAT), Pune discredited seized loose papers as dumb documents on the ground of failure to carry investigation by Assessing Officer (AO). The Bench consisting of SS Vishwanetra Ravi, Judicial Member and GD Padmahshali, Accountant Member observed that there had been no corroborative evidence and no adverse inference could be drawn against the assessee in terms of alleged entries of loose papers Even the CIT(A) clearly held that the AO squarely failed to carry out necessary investigation/enquiries from the buyer M/s Krupa Land, meaning thereby, the CIT(A) also discredited the entries alleged to have been found in the seized loose papers as dumb documents.
In the case of MUFG Bank, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the Comparable Uncontrolled Price method for ALP bench marking international transactions is not justified. A Coram comprising of Shri Pradip Kumar Kedia, Accountant Member & Shri Narender Kumar Choudhry, Judicial Member observed that the counter-guarantee with negligible risks can not per se be compared with the guarantee offered by independent parties/ banks shouldering very high-risk parameters as also observed by the co-ordinate bench in other assessment years.
In,Vipin Madanlal Thapar 502 vs DCIT, The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), consisting of Amit Shukla, Judicial Member and Amarjit Singh, Accountant Member held that no income tax addition can be made when expenses are shown under Work in Progress (WIP) and not added in trading account.
Return of income declaring total income was filed by the assessee, Vipin Madanlal Thapar. The case was subject to scrutiny assessment and notice under Section 143(2) of the Income Tax Act was issued. The assessee was a proprietor of Shubham Builder and Developers and a director in Swaraj Formulation Pvt Ltd.
The Bench observed that “We have considered the judicial pronouncements referred by the Counsel wherein it is held that since the expenses were shown by the assessee under the head work in progress and has not been reflected in the trading account, therefore, no addition can be made.”
In the case Motorola Solutions India Pvt. Ltd. vs ACIT,The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT), invalidated the assessment order in the name of a non-existent entity. The Counsel for the assessee submitted that as per the order passed by the High Court of Punjab & Haryana, M/s. Motorola India Pvt. Ltd., as it was then, merged with M/s. Motorola Solutions India Pvt Ltd., the present assessee.
The Bench comprising GS Pannu, President and Saktijit Dey, Judicial Member observed that “Thus, in our view, in the facts of the present case, the ratio laid down by the Supreme Court in case of PCIT Vs. Suzuki India Ltd would squarely apply. Thus, respectfully applying the ratio laid down by the Hon’ble Supreme Court in case of PCIT Vs. Maruti Suzuki India Ltd, we hold that the assessment order, having been passed in the name of a non-existent entity, is invalid.”
The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ), ruled that the Principal Commissioner of Income Tax ( PCIT ) cannot order conditional approval under Section 80G of the Income Tax Act, 1961. M/s. Lady Tata Memorial Trust and M/s. Lady Meherbai D. Tata Education Trust, the assessees being a charitable trust sought to grant the registration with effect from 23.03.2022 to A.Y. 2024-25 under section 80G of the Income Tax Act, 1961 for the assessment year 2022-23 after complying with the requisite formalities.
A Bench comprising Kuldip Singh, Judicial Member and S Rifaur Rahman, Accountant Member noted that “Consequently, approval granted by the PCIT/CIT under section 80G of the Act to the assessees is made absolute sans conditions of the impugned order. Hence, both the appeals filed by the assessee are allowed.
In,ACIT vs Tupelo Builders Pvt. Ltd,The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that income earned by the Builder from letting out of the property is assessable under the heading of “Income from Business” when the objective in MOA is letting out of Property.
M/s Tupelo Builders Pvt. LtdThe Assessee a Private Limited Company e-filed its original return of income for the assessment year under consideration on 19.09.2015 declaring a loss of Rs.7,07,00,678/- under the head “Income from Business”.
A Coram comprising of Shri G S Pannu, President and Shri Challa Nagendra Prasad, Judicial Member observed that as from the MOA, it was evident that the main objects of the assessee company are to construct, acquire hold buildings, tenements and such other movable and immovable property and to rent let on hire and managed immovable property.
In,Deputy Commissioner of Income Tax vs M/s Vinati Organics Ltd 1102, The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) granted relief to M/s Vinati Organics Ltd, the assessee and confirmed treating sale tax subsidy received as capital receipt The return of income declaring total income of Rs.71 crores was filed and the case was subject to scrutiny assessment and notice under Section 143(2) of the Income Tax Act was issued. Dismissing the appeal filed by the Revenue a Bench comprising Amit Shukla, Judicial Member and Amarjit Singh, Accountant Member observed that during the course of appellate proceedings the Counsel also submitted that in subsequent year assessment year 2013- 14 the CIT(A) allowed the appeal of the assessee treating sale tax subsidy as capital receipt and department has not raised any ground before the ITAT.
In,Kishor Ganpatrao Karande vs The Income Tax Officer,The Pune bench of the Income Tax Appellate Tribunal (ITAT) deleted the income tax addition as the compensation on compulsory acquisition of land is exempted under section 10(37) of the Income Tax Act,1961.
A Coram comprising of Shri S S Viswanethra Ravi, Judicial Member observed that the assessee was into agricultural activity by sowing Bajara in his land for F.Y. 2008-09 and the same has been shown as paid in the revenue records in 7/12 extract due to lack of rain and drought. The assessee establishes the reasons for classification as barren land due to the non-availability of irrigation facilities. Therefore, the assessee is entitled to claim an exemption under section 10(37) of the Income Tax Act.
in,Sonicwall Technology System India Pvt. Ltd vs Asstt. Commissioner of Income,The Mumbai Income Tax Appellate Tribunal (ITAT) instructed the Assessing Officer (AO) to delete the addition of Rs. 22,43,401 made on marketing expenses, because of 2 out of 17 parties failed to respond to the notice sent under section 133(6) of the Income Tax Act.
The well-known hotel chains India M/s EHL Ltd and The Lalit Golf & Spa Resort are the 2 parties who failed to respond to the notice.
The bench of Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) observed that it is no doubt true that payment through the bank channel is not conclusive proof of the transaction.
The bench of Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) observed that it is no doubt true that payment through the bank channel is not conclusive proof of the transaction.
In Ducere Technologies Private Limited vs Deputy Commissioner of Income Tax,The Income Tax Appellate Tribunal ( ITAT ), Hyderabad bench has deleted an addition by the National Faceless Assessment Centre ( NFAC ) by holding that the “Company” cannot have salary income under the provisions of the Income Tax Act, 1961.
Shri K. Narasimha Chary, Judicial Member observed that “It is therefore clear that the assessee is not disputing the additions made but only prays for verification of the brought forward losses for the purpose of setting-off the additions now made against such losses. Since the assessee is a company as is established by the 143(1) intimation, the question of assessing its income under the head ‘salary’ does not arise. Impugned order is, therefore, liable to be set aside. The aspect of availability of brought forward losses needs verification at the end of the 2019-20 resulting in raising demand to Rs. 2,55,650/-.”
In Purushothama Reddy Vankireddy vs ADIT, The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has held that Rule 128(9) of the Income Tax Rules regarding the disallowance of foreign tax credit (FTC) in cases where filing Form 67 is delayed is in contradiction with the double taxation avoidance agreement (DTAA) between India and USA and shall be read down.
A bench of Shri Rama Kanta Panda, Accountant Member & Shri K.Narasimha Chary, Judicial Member observed that the Apex Court including the case in Union of India Vs. Azadi Bachao Andolan, reached a conclusion that since Rule 128(9) of the Rules does not provide for disallowance of FTC in the case of delay in filing Form 67 and such filing within the time allowed for filing the return of income under section 139(1) of the Act is only directory, since DTAA overrides the Act, and the Rules cannot be contrary to the Act.
Relying on the above decision, the ITAT held that “We find from Article 25(2)(a) of the DTAA that where a resident of India derives income which, in accordance with the provisions of the convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of the resident an amount equal to the income tax paid, paid in the United States, whether directly or by deduction.
In M/s. Toyota Kirloskar Motor (P) Ltd. vs ACIT LTU Circle-1 The Income Tax Appellate Tribunal (ITAT), Bangalore Bench comprising Beena Pillai, Judicial Member and Laxmi Prasad Sahu, Accountant Member, in a major setback to M/s. Toyota Kirloskar Motor (P) Ltd, rejected the depreciation claim on a provisional basis.
The Bench observed that “Accordingly, we uphold the order of the lower authorities. The assessee admitted that there was excess claim of depreciation on the provisions created, which has been reversed subsequently. Considering the totality of the facts and circumstances of the case, we uphold the order of the revenue authorities.
In Deputy Commissioner of Income Tax vs M/s. S.G.P. Exim Pvt Ltd,The Chennai bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition under section 50C of the Income Tax Act,1961 as the difference between the Sale Consideration and Stamp Duty Valuation is Less that The revenue challenged the order passed by the Commissioner of Income Tax (Appeals) which deletes the disallowance of interest expenses of Rs. 6,29,504/- which was decided in favour of the assessee.
It was observed that as per the 3rd proviso to section 50C(1) of the Act, inserted by the Financial Act, 2018 w.e.f. 01.04.2019, if difference the between stated consideration and guideline value does not exceed 10% of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall be deemed to be the full value of consideration.
In Michael Page International Pte Limited vs Deputy Commissioner of Income-tax,The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition made by the Assessing Officer (AO) stating addition made on account of fee for technical services is unsustainable.
The assessee Michael Page International Pvt Limited filed the appeal against the assessment order passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 for the A.Y. 2018-19.
The bench observed that the AO held that the fees paid by Indian entities to the assessee is covered under “fees for included services” as the “make available” clause is duly satisfied.
In Karnataka Vikas Grameena Bank vs Asst. Commissioner of Income Tax,The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT), granted relief to Karnataka Vikas Grameena Bank and allowed deduction on income from cooperative society.
The assessee is Karnataka Vikas Grameena Bank and the Counsel for the assessee also argued on the legal issue in regard to eligibility of claiming deduction under Section 80P of the Income Tax Act by holding that the assessee is not cooperative bank and it is a cooperative society, therefore, the Section 80P(iv) will not affect the eligibility for claiming deduction under Section 80P(2a)(i) of the Income Tax Act on the profits earned
A Coram comprising George George K, Judicial Member and Laxmi Prasad Sahu, Accountant Member observed that “The assessee is a regional rural bank and formed with the merging of four regional banks into a single regional rural bank. As per the Regional Rural Bank Act 1976 notification dated 12/09/2005, the shareholders were the Central Government, State Government and sponsored Bank.”
In Turbo Energy Private Limited vs Deputy Commissioner of Income Tax Counsel for Appellant: Shri. R. Vijayaraghavan,The Income Tax Appellate Tribunal (ITAT) Chennai bench held that Tax Deduction at Source not applicable to payment made to Non-Residents.
Assessee Turbo Energy Private Limited company is a manufacturer of turbochargers and components for engine application in passenger cars, commercial vehicles, off highway vehicles and industrial engines. After filing the income tax return Assessing officer disallowed additions under section 40(a) (i) of the Income Tax Act 1961 towards logistic service a payment for non-deduction of TDS under section 195 of the Act. Against the order
assesse filed appeal before CIT (A).CIT (A) deleted the addition made towards disallowance u/s. 40(a)(i) of the Income Tax Act 1961 for non-deduction of TDS on payment made to non-resident.Aggrieved revenue appeal before ITAT
The ITAT bench comprising G. Manjunatha, Vice President and V. Durga Rao, Judicial Member deleted additions made towards disallowance of payment made to non-resident service providers.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the mere entry in the books of account could not be a ground to delete the addition when the sources were not explained.
The Delhi Bench of B R R Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) held that the mere reflection of the unexplained cash in the books of accounts in the absence of any supportive documents, could not be a ground for deletion of the addition. The bench set aside the deletion of addition by the Commissioner of Income Tax (Appeals)(CIT(A)) and allowed the appeal.
In Warner Bros. Distributing Inc C/Of the Act Warner Bros. Pictures India Pvt. Ltd.vs Assistant Commissioner of Income Tax,The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition as Warner Bros had no permanent establishment in India.
The Mumbai Bench of Vikas Avasthy (Judicial Member) and Gagan Goyal (Accountant Member) observed that the Indian company who had obtained the rights were acting independently and also held that the assessee could not be said to have any permanent establishment in India . The bench allowed the appeal and deleted the addition.
In M/s Sagitarius Securities Pvt Ltd vs The I.T.O Ward -22(3), Delhi Bench of Income Tax Appellate Tribunal (ITAT) upheld the rejection of valuation report submitted by the assessee on the grounds that it violated the rule 11UA of Income Tax Rules.
The appeal was preferred against the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] on upholding the addition made by the Assessing Officer (AO) amounting to Rs. 1,49,60,000 under section 56(2) (viib) of the Income Tax Act, 1961.
The bench of Kul Bharat (Judicial Member) and N.k. Billaiya (Accountant Member) found that there is no fault with the AO that the assessee violated the Rule 11UA and shall be entitled to the addition made.
In Dy. Commissioner of Income Tax vs Ashrita Construction Pvt. Ltd, The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT )has held that the income from sale of unsold flats by the builders should be taxable under the head of income from business.
Section 22 of Income Tax Act, 1961 says that the annual value of property consisting of building or land apparent other than property conducting business or profession to which assessee is the owner shall be calculated under the head of income from house property and section 23 deals with the determination of the annual value of the property.
The Income Tax Appellate Bench of Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) dismissed the appeal upholding the deletion of addition by the CIT(A) observing that the assessee was a developer and held the unit in questions income from such unit could be taxed only under business income and not under income from house property.
In Shri H K Suresh vs The Principal Commissioner of Income Tax (Central), According to the Income Tax Appellate Tribunal (ITAT) Bangalore bench of George George K. (a judicial member) and Padmavathy S. (an accountant member),a revision order is invalid ,Without a Director Identification Number (DIN).
The appeal was against the order under section 263 of the Income Tax Act, 1961 passed by the Principal Commissioner of Income Tax (PCIT).
The assessee, an individual is a contractor earning business income from contract receipts apart from rental income and interest income and filed return of income Rs. 2,58,15,614 for the A.Y. 2011-12.
The authority noted that it is obvious that neither the section 263 of the Income Tax Act order nor the specific format specified in Paragraph 3 states that the communication is issued manually without a DIN after receiving the required approvals. As a result, they conclude that the challenged order does not conform with paragraphs 2 and 3 of the Central Board of Direct Taxes (CBDT) circular.
In Longia Engineers vs Pr. CIT,the Chandigarh Bench of Income Tax Appellate tribunal ( ITAT )has held that the issue not subjected to limited scrutiny could not be raised in revisionary proceedings
The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT)of Vikram Sing Yadav AM observed that the matters related to wages/labor expenses which were not subjected to the of limited scrutiny could not be raised in revisionary proceedings u/s 263 of the Income Tax Act 1961 for the first time. The bench also observed that the order passed by the AO could not be treated as erroneous and prejudicial to the interest of the Revenue. The bench thereby upheld the decision of the AO and set aside the revision order.
In ACIT vs TCIL Bina Toll Road Ltd , The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) found that incorrectly entering a Tax Deduction Account Number (TAN) in a Tax Deduction Source (TDS) deposit Challan will not result in a demand under section 200A of the Income Tax Act, 1961.
The appeal was filed by the revenue against the order passed by the CIT(A) arised from the order of Assessing Officer (AO) under Section 200A(1) of the Income Tax Act, 1961 for the A.Y. 2014-15.
The assessee, TCIL Bina Toll Road Ltd, a subsidiary of Telecommunication Consultants India Ltd. (TCIL), a Government of India Undertaking under the administrative control of the Ministry of Communication.
The bench of Saktijit Dey (Judicial Member) and Pradeep Kumar Kedia (Accountant Member) observed that the order of the CIT(A) in granting relief to the assessee is founded on fair play and natural justice.
In Rohan Hattangadi vs CIT,Mumbai Bench of Income Tax Appellate Tribunal (ITAT) ruled that delay in filing the Form 67 was not a reason to deny the claim of the Foreign Tax Credit (FTC) under Double Taxation Avoidance Agreements (DTAA). The appeal was filed by the assessee, Rohan Hattamgdi, challenging the order of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (‘NFAC’) passed under section 250 of the Income Tax Act, 1961.
The Tribunal of M. Balaganesh (Accountant Member) and Kavitha Rajagopal (Judicial Member) has held that delay in filing Form No. 67 should not deny the claim of FTC enumerated in the DTAA and the intention of the legislation in the said case has to be construed in a manner which benefits the assessee.
In Dy. Commissioner of Income Tax Central Circle 1(3) vs M/s NIBR Bullion Pvt. Ltd,The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently in an appeal filed before it, held that the addition against a company based on the statement of the director during the search, cannot be confirmed without supporting evidence.
The aforesaid observation was made by the Mumbai ITAT when an appeal was preferred before it by the Revenue, as against the order of Commissioner of Income Tax Appeals, Mumbai [CIT(A)], dated 30/05/2011, for the assessment year 2009-10.
Thus dismissing the Revenue’s appeal, the ITAT held: “In the light of the facts of the case, various decisions and CBDT instructions, we see no infirmity in the impugned order granting partial relief to the assessee. Hence, the impugned order is upheld and appeal of the Revenue is dismissed.”
In Ramdas Pandharinath Kale vs Income Tax Officer,The Income Tax Appellate Tribunal, Pune Bench, has recently, in an appeal filed before it, held that the beneficial provision of section 54 B of the Income Tax Act shall be interpreted liberally.
The aforesaid observation was made by the Pune ITAT when an appeal was preferred before it by the assessee, an HUF named Ramdas Pandharinath Kale, as against the order dated 17-12-2018, passed by the Commissioner of Income Tax (Appeals), Pune [CIT(A)], for the assessment year 2013-14.
Thus, allowing the assessee’s appeal the Pune ITAT held: “Following the order of Surat Bench of Tribunal in the case of Babubhai Arjanbhai Kanani (HUF), I hold that the assessee is entitled to claim deduction u/s. 54B of the Income Tax Act and that the enhancement made by the CIT(A) is not justified. Thus, the order of AO is restored in allowing deduction u/s. 54B of the Income Tax Act to an extent of Rs.80,85,572/”.
In M/s. Miracle Cars India Pvt Ltd. vs Deputy Commissioner of Income Tax,The Income Tax Appellate Tribunal (ITAT), Chennai, has recently, in an appeal filed before it, held that advertisement expenses are not allowable without a valid agreement for the transfer of the dealership.
The aforesaid observation was made by the Chennai ITAT when an appeal was preferred before it by the assessee, M/s. Miracle Cars India Pvt Ltd., as against the order passed by the learned Commissioner of Income Tax (Appeals), Chennai, dated 03.01.2022, pertaining to the assessment year 2012-13.
THe ITAT Bench consists of V. Durga Rao, the Judicial Member, and G. Manjulatha, the Accountant Member observed : “We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The Ld. Counsel for the assessee rested his arguments on the basis of agreement between the appellant and M/s. DRS Industries Ltd., and argued that the assessee has incurred advertisement expenses, because it was supposed to takeover dealership business from M/s. DRS Industries Ltd.”
In Smt. Nagina Kochar vs The PCIT-1,The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, has recently in an appeal filed before it, held that the revisional authority shall avoid the attitude of “I have the power and I shall exercise”.
The aforesaid observation was made by the Chandigarh ITAT, when an appeal was preferred before it by an assessee, wherein the correctness of the order dated 26.03.2021, of the Pr .CIT, Chandigarh, pertaining to the assessment year 2016-17 had been assailed, on the grounds that the Principal Commissioner of Income Tax has wrongly assumed jurisdiction under section 263 of the Income Tax Act, to set aside the assessment order dated 26.11.2018 passed by the Assessing Officer, in as much as the order is neither erroneous nor prejudicial to the interest of Revenue, that as such the assumption of jurisdiction under section 263 of the Income Tax Act is beyond his competence, and further that the Principal Commissioner of Income Tax, has erred in failing to consider the various replies and submissions placed on record in proceedings before her in the correct perspective, which is arbitrary and unjustified.
In Menzies Aviation Bobba (Bangalore) Pvt. Ltd. vs Assistant Commissioner of Income Tax,In a significant ruling, the Income Tax Appellate Tribunal ( ITAT ), Bangalore bench has held that the rental income which is inseparably connected with the business of cargo handling services shall be eligible for income tax deduction under section 80IA of the Income Tax Act, 1961
ITAT held that the rental income derived by the assessee from Cargo Agents, Airlines, Banks etc., is derived from the cargo business and eligible for deduction u/s. 80IA,”
In M/s. AstraZeneca Pharma India Ltd vs DCIT,The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT), restored matters on disallowance of contribution towards gratuity funds, thereby granting relief to M/s. AstraZeneca Pharma India Ltd, the assessee.
The assessee incurred Rs.4 crores towards contribution to the gratuity fund and paid to the said fund before the due date for filing return of income. The same was also disclosed in the tax audit report. It was therefore submitted that the entire amount is eligible for deduction u/s. 36(1)(va) of the Income Tax Act.
The Bench comprising Beena Pillai, Judicial Member and Padmavathy S, Accountant Member noted that “The AO has made disallowance considering the provisions of Section 144C(8) of the Act and sustained the disallowance. Since the AO has not verified the details of gratuity based on the details furnished by the assessee, we remit the issue back to the AO with a direction to examine the details of payment of gratuity and decide the allowability accordingly.”
In Allsec Technologies Ltd. Vs DCIT,The Income Tax Appellate Tribunal (ITAT) of Chennai Bench ruled that the disallowance imposed under Section 40(a)(i) of the Income Tax Act, 1961, prohibiting Tax Deduction Source (TDS) on payments to Non-Residents, cannot be applied retroactively.
The tribunal referred to the case of M/s. TVS Electronics Ltd. v. ACIT, wherein, the Tribunal under identical facts held that the assessee cannot be fastened liability on the basis of subsequent amendment to the law with retrospective effect, because the assessee cannot be expected to do impossibility of performance and thus, for non-deduction of TDS under section 195 of IT Act, payment made to non-residents, cannot be disallowed under section 40(a)(i) of IT Act. The bench of Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant member) dismissed the appeal filed by the respondent and stated that the disallowance made under section 40(a)(i) of Income Tax Act would be unwarranted.
In HV Global Pvt. Ltd vs ITO,The Delhi Bench of Income Tax Appellate Tribunal (ITAT)has held that the payment of rent and maintenance charges to different entities under a single agreement could not be treated as Tax Deduction at Source (TDS) default.
Section 201 (1) of the Income Tax Act 1961 deals with the consequence of non-payment of TDS, that is if any person failed to deduct TDS or failed to pay to the government then such person shall be deemed to be assessee default and he shall be liable to pay penalty unless AO is not satisfied with the reasonableness or sufficient ground for such failure. Section 201(1A) says that such person under (1) shall be liable to pay a simple interest on the amount failed to pay or deduct.
The Delhi Bench of CM Garage (Judicial Member) and Pradip Kumar Kedia (Accountant Member) observed that the assessee couldn’t be made liable under the provisions of subsections (1) and (1A) of section 201 of the Income Tax Act 1961 as the payments of rent and common area maintenance charges had been made to distinct entities/companies.
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