This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Delhi bench of B.R.R. Kumar, (Accountant Member) and Yogesh Kumar U.S (Judicial Member) Income Tax Appellate Tribunal (ITAT) has held that no disallowance can be made on expenditure on account of accumulated service tax of rent
The tribunal while considering the submission of the parties observed that the AO disallowed the amount of service tax paid on the rent on the ground that the ‘reply of the assessee found to be not satisfactory’.
The observed that rent paid for the purpose of business of assessee is covered under Section 30 of the Income Tax Act and allowed the appeal filed by the assessee.
The Delhi bench of G.S. Pannu, (President) and Astha Chandra, (Judicial Member) Income Tax Appellate Tribunal (ITAT) has held that the amount advanced for business transactions between parties would not fall within the definition of deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961.
The tribunal viewed that the amounts advanced for business transactions between the parties would not fall within the definition of deemed dividend under section 2(22)(e) of the Income Tax Act. Therefore, the two-member bench allowed the appeal filed by the assessee.
The Chennai bench of Mahavir Singh (Vice President) and Manjunatha. G, (Accountant Member), Income Tax Appellate Tribunal (ITAT) has held that revision of the assessment order passed without enquiry into CFS charges paid to continental warehousing corporation is valid and good in law under Section 263 of the Income Tax Act.
The tribunal observed that AO has not carried out any enquiries on the issue of CFS charges paid to Continental Warehousing Corporation in light of relevant provisions of the Income Tax Act.
Therefore, they found that the assessee neither appeared nor filed any details to justify its case . Hence, relying upon the above observation, the two-member tribunal confirmed the revision order passed by the PCIT.
The Hyderabad bench of K. Narasimha Chary, (Judicial Member), Income Tax Appellate Tribunal (ITAT) held that interest income of Farmers service co-operative society from fixed deposits in Union Bank of India is deductible under Section 80P(2)(a)(i) of Income Tax Ac , 1961.
It was observed by the tribunal that funds deposited by the assessee with the Union Bank of India are undoubtedly the own funds of the assessee and none of such funds represents any liability of the assessee to its members or anyone else.
Therefore the tribunal held that assessee is a primary agricultural co-operative society, thus surplus fund invested in the union bank of India was their own fund therefore, the assessee is entitled to claim the deduction under Section 80P(2)(a)(i) of the Income Tax Act
The Hyderabad Bench Of K.Narasimha Chary, (Judicial Member) Income Tax Appellate Tribunal (ITAT)has recently held that interest income of co-operative credit societies from credit balances deductible under section 80P(2)(a)(i) of the Income Tax Act, 1961.
The tribunal observed that interest arose on the credit balances with reference to the regular course of business of the assessee. The bench held that disallowed interest Income of Co-operative Credit Societies is eligible for deduction under section 80P(2)(a)(i) of the Act.
The Hyderabad bench of Laliet Kumar, (Judicial Member), Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made under Section 69 of Income Tax Act 1961, on cash received on sale of ancestral agricultural land.
The tribunal observed that once the assessee has disclosed the source of the cash on account of sale of agricultural land, then it is the bounden duty of the lower authorities to examine the purchaser and ask the purchaser to disclose the source of the cash. So, the AO violated the provisions of section 269SS/269ST against the seller and purchaser. By considering the above facts tribunal of deleted the addition made by the Assessing Officer along with the confirmation made by the CIT(A).
The Hyderabad Bench of Inturi Rama Rao, Accountant Member, the Income Tax Appellate Tribunal (ITAT) has held that employees of state government undertakings could not be treated as state government employees. Therefore the bench upheld the restricting exemption made under Section 10(10) and 10(10AA) of Income Tax Act, 1961.
The tribunal relied upon the decision of the Supreme Court in case of Indian Institute of Science vs. DCIT observed that “State Government Undertaking may be considered as a State instrumentality within the definition of article 12 of the Constitution of India, the same cannot be treated as Central or State Government, consequently the employees of such undertakings cannot be treated as a Central or State Government employee”.
The tribunal observed that action of the AO in restricting the exemption under Section 10(10) and Section 10(10AA) of the Income Tax Act to the extent applicable to a non-State Government employee has been correct in law.
The Pune bench of R.S. Syal, (Vice President) and Partha Sarathi Chaudhury, (Judicial Member), Income Tax Appellate Tribunal (ITAT) has allowed increase in proportionate capital gain deduction under Section 54F of the Income Tax Act, 1961 for disallowance of index cost of improvement.
Thus the bench determined that “even if it is presumed that the development work was actually carried out as claimed through the estimate/Bill of the developer, it is hard to accept that the development of the property was done by the assessee before the date of its purchase itself”.
The Chennai bench of Aby T. Varkery, (Judicial Member) and Manjunatha. G, (Accountant Member), Income Tax Appellate Tribunal (ITAT) has recently held that income generated from production and sale of white button mushrooms is agriculture activity hence shall be exempt from tax.
The tribunal observed that operations which are undertaken for the production of mushrooms are nothing but agricultural operations.
The Tribunal held that “cultivation and sale of white button mushroom is an agricultural activity and income derived from said activity comes under the head agricultural income, which is exempt from tax”.
The Delhi bench of B.R.R. Kumar, (Accountant Member) and Yogesh Kumar Us,(Judicial Member) Income Tax Appellate Tribunal (ITAT) has held that capital gain exemption under Section 54 of Income Tax Act, 1961 benefit could be availed in respect of basement property.
The tribunal found that exemption under section 54 of the Income Tax Act has been denied in respect of the basement floor on the ground that the benefit of exemption under section 54 Income Tax Act could be passed on the assessee only in respect of one residential property instead of claim of 3 properties.
The appellate tribunal held that acquisition of more than one residential house by assessee out of capital gains would not disentitle assessee from availing benefit conferred under Section 54 of the Income Tax Act.
The Delhi bench of C.M. Garg, (Judicial Member) and B.R.R. Kumar, (Accountant Member) Income Tax Appellate Tribunal (ITAT) held that additions made on loan amount under Section 68 of the Income Tax Act 1961 are based on uttar suspicion and conjectures. Therefore the bench deleted the addition made by the assessing officer.
The tribunal observed that Assessee has successfully demonstrated by way of sufficient documentary evidence that he has also repaid the loan amount to the respective creditors during subsequent financial periods and this fact has also not been disputed or controverted by the authorities below.
The Ahmedabad bench of Annapurna Gupta, (Accountant Member), Income Tax Appellate Tribunal (ITAT) has while allowing the appeal filed by the assessee remanded assessee’s matter to the assessing officer for fresh adjudication and observed that reassessment order passed by the authority was without considering the submission of assessee.
The tribunal observed that orders passed by the authorities below had ignored the submissions of the assessee. Therefore the tribunal restored the matter back to the file of the Assessing Officer to be decided afresh after giving due opportunity of hearing to the assessee and considering all the contentions and explanation
The Chennai bench of Aby T. Varey, (Judicial Member) and Manjunatha. G, (Accountant Member) Income Tax Appellate Tribunal (ITAT) has held that income offered towards excess stock could not be treated as unexplained investment under Section 69B of the Income Tax Act, 1961. Thus it ruled that no tax is to be levied under Section 115BBE of the Income Tax Act, 1961.
The tribunal observed that, “when the assessee has explained source for excess stock found during the course of survey, is out of income generated from current year business and explanation offered by the assessee is plausible explanation, then income offered towards excess stock could not be treated as unexplained investment under Section 69B of the Income Tax Act, and also provisions of section 115BBE of the Income Tax Act.”
The Mumbai bench of S. Rifaur Rahman, (Accountant Member) the Income Tax Appellate Tribunal (ITAT) has recently held that no addition can be made on unexplained cash credit from sale and purchase of shares.
The tribunal relied upon the decision of Rajiv Rameshchander v. Income Tax Officer and held that “once assessee is found to be a trader, the loss incurred during business need to be allowed as business loss” therefore the bench allowed the appeal filed by the assessee.
The Mumbai bench of Prashant Maharishi, (Accountant member) and Kavitha Rajagopal, (Judicial Member) Income Tax Appellate Tribunal (ITAT) recently upheld the addition made under Section 69 of the Income Tax Act 1961 on unaccounted, undisclosed income on the basis of the seized loose papers.
The tribunal observed that assessee has failed to furnish the details of Shri Salim Babaji to prove the identity, genuineness and creditworthiness mandated as per the provisions of the law.
The Mumbai bench of Aby T. Varkey, (Judicial Member), Income Tax Appellate Tribunal (ITAT) has held that re-assessment order framed without issuance of notice under Section 143(2) of Income Tax Act, 1961 is invalid.
The tribunal set-aside the impugned order of CIT(A) and restored the appeal back to his file with a direction to examine the re-assessment records and record a finding of fact as to whether the AO during the reassessment proceedings had issued/served the notice /issued/served the notice under Section 143(2) of the Income Tax Act on assessee before he framed the reassessment order under Section 143(3)/147 of the Income Tax Act.
The Delhi bench of G.S Pannu, (President) and Astha Chandra, (Judicial Member) the Income Tax Appellate Tribunal (ITAT)has held that interest income derived from the business of manufacturing and export of rice is eligible for deduction under Section 10B of the Income Tax Act 1961.
It was observed by the tribunal that all income that arises essentially during the course of running of the eligible business would qualify for deduction under Section 10B of the Income Tax Act. Therefore, the bench determined that “Once an income forms part of the business of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction under Section 10B of the Income Tax Act.”
The Ahmedabad bench of Waseem Ahmed, Accountant Member Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made on account of an unexplained closing case filed under Section 44AD of Income Tax Act 1961.
The tribunal held that the “revenue failed to discharge the onus imposed upon it to disprove the contention of the assessee. Thus, it is transpired that whatever cash was available with the assessee was out of the agricultural activity of the earlier years carried out by him.”
The Delhi bench of Shamim Yahya, (Accountant Member) and Astha Chandra, (Judicial Member), the Income Tax Appellate Tribunal (ITAT) has held that capital gain exemption under Section 54F of the Income Tax Act, 1961 is available for purchase of property along with husband and son.
The tribunal relied upon the decision of In Sunil Sachdeva’s case, the Delhi Bench of the Tribunal also held that section 54F Income Tax Act, 1961 did not require one to one correlation between capital gain arising out of transfer of long term capital asset and utilization thereof for purchase /construction of residential house.
In a significant case the Pune bench of S.S. Viswanethra Ravi, (Judicial Member) and G.D. Padmahshali, (Accountant Member), Income Tax Appellate Tribunal (ITAT) held that no addition could be made under Section 23(4) of Income Tax Act, 1961 on deemed rent on unsold flats declared as stock in trade .
The tribunal relied upon the decision in the case of M/s Cosmopolis Constructions observed that, no addition is maintainable on account of deemed rent on unsold flats which are treated at stock-in-trade. Therefore, the bench held that no addition is justified under deemed rent under Section 23(4) of the Income Tax Act.
While entertaining the appeal filed by the Cricket Club of India (CCI), the Mumbai Bench of Income Tax of Appellate Tribunal (ITAT) upheld the view of the Assessing Officer (AO) which restricted the 2% disallowance of exempt income under Section 14A of the Income Tax Act, 1961 for the Assessment Year 2013-14 with due application of mind.
The bench held that “the view taken by the Assessing Officer to restrict the disallowance under Section 14A of the Act to 2% of the exempt income for the Assessment Year 2012-13 was a plausible view taken by the Assessing Officer after due application of mind which cannot be interfered with by the PCIT in the exercise of powers under Section 263.”
By allowing the claim of unabsorbed brought-forward depreciation to be adjusted against the income from other sources, the Ahmedabad Bench of member Annapurna Gupta of Income Tax Appellate Tribunal (ITAT) granted relief to Petrofils Co-operative Limited.
The bench noted that the Commissioner of Income Tax (Appeals) has misappreciated the facts of the case.
One of the reasons for the Commissioner of Income Tax (Appeals) denying the benefit of set-off of unabsorbed depreciation was the assessee’s acceptance or rejection of set-off of brought forward- depreciation in Asst.Year 2004-05.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the proceeds from licence of Build-Operate-Transfer (BOT) Projects are taxable as business income and not rental income.
It was thus held that the AO had fallen in error in considering the proceeds of licence to be rental income, dismissing the appeal of the revenue as the grounds raised were groundless in fact and in law.
The Chennai bench of Income Tax Appellate Tribunal (ITAT) has recently held that revision of the assessment order passed without enquiry into CFS charges paid to continental warehousing corporation is valid and good in law under Section 263 of the Income Tax Act.
Hence, relying upon the above observation, the two-member tribunal confirmed the revision order passed by the PCIT.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the re-assessment order passed under Section 147 of the Income Tax Act, 1961 on account of mere change of opinion is not valid.
The tribunal observed that the Assessing Officer has doubted the assessment only on the basis of observation that from the perusal of case records itself he has observed certain aspects which lead to the reopening. Hence, this was observed to be a clear case of change of opinion and the reassessment was held to be not valid. Therefore, the two-member bench of tribunal comprising Shamim Yahya, (Accountant Member) and Anubhav Sharma, (Judicial Member) allowed the appeal filed by the assessee and quashed the reassessment order.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that no additions can be made de hors any incriminating material for assessment under Section 153A of the Income Tax Act.
The Delhi ITAT held: “Hence, we set aside the orders of the authorities below and delete the additions in all the four appeals. In the result, all the four appeals filed by the assessee are allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on finding that no notice was send to the Assessee, and that ex- parte decision was arrived at, in case of addition and conformation of cash deposits, restored the matter to the AO.
Thus, the ITAT finally held: “We thus set aside the order of the CIT(A) and restore the matter back to the file of the Assessing Officer. It shall be open to the Assessing Officer to make such inquiry as he may consider it expedient and pass an assessment order afresh in accordance with law. In the result, the appeal of the assessee is allowed for statistical purposes.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on finding that the basic condition as stipulated under Section 271 (1) (c) is not fulfilled, deleted the penalty imposed by the Revenue.
Thus, the ITAT finally held: “Considering the facts of the present case in the light of the aforesaid decision of Hon’ble Bombay High Court in the case of Samson Perinchery (supra) we are of the view that in the present case, the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power of AO. Considering the totality of the aforesaid facts, we are of the view that the conditions stipulated under Section 271(1)(c) for the levy of penalty are not attracted in the present case. We therefore, direct its deletion. The ground of assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that the levy of fees under Section 234E for delayed furnishing, in the absence of enabling provision of Section 200A (1) (c), is unlawful.
Thus, the Pune ITAT finally held: “In the absence of any contrary facts brought to our notice by the Ld. DR, all these appeals shall also succeed mutatis mutandis. Resultantly, this bunch of four appeals stands allowed.”
In a significant case the Mumbai bench of Income Tax Appellate tribunal (ITAT) has recently upheld the quashing time -barred scrutiny assessment order passed under Section 143(3) of the Income Tax Act, 1961.
The tribunal observed that “assessment order passed under Section 143(3) of the Income Tax Act in the case of the assessee ought to be passed on or before 12.09.2015 in view of the provisions of section 153(1) read with Explanation 1 and proviso to the said explanation. The assessment order, having been passed on 30.03.2016 is clearly beyond the time limit of 12.09.2015 and hence we have no hesitation to conclude that the assessment order is time barred and bad in law”.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that disallowance of donations made to the trust under section 35 AC of the Income Tax Act, 1961 without conducting enquiry is invalid.
The assessee has duly discharged the onus cast upon him and it was incumbent upon AO to refute the same. The Tribunal directed to delete the disallowance as made by AO and to grant the deduction under section 80GGA of the Income Tax Act.
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) recently while condoning the delay of 217 days prior to covid period, observed that old accountant filed the returns without consideration of income tax demand orders and tax position.
The single member bench of Suchitra Kamble, (Judicial Member) remanded back the issues contested by the assessee society to the file of the CIT(A) for proper adjudication.
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