This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
This appeal by the assessee is directed against order dated 15.11.2022 passed by the Commissioner of Income-tax – National Faceless Appeal Centre (NFAC) for assessment year 2020-21 in relation to the rectification order passed by the Assessing Officer under Section 154 of the Income-tax Act, 1961.
The Bench opined that, it will be appropriate if the term ‘every month’ specified in Provident Fund scheme, whether it is the month for which salary/ wages are due or month of the payment is referred to Relevant Authorities for finding out with reference to any judicial precedent in respect of provisions of the relevant Act. Accordingly, the issue was restored back to the file of the Assessing Officer with the direction to find out from the relevant PF authorities about the term ‘every month’ as mentioned in Clause 38 of the Employees Provident Fund Scheme (EPF Scheme). He was also directed to find out the same from the ESI Authorities. In the result, the appeal of the assessee was allowed for statistical purposes by the two-member bench of Judicial Member Aby T Varkey and Accountant Member Om Prakash Kant.
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that there cannot be any addition of the regular items which were disclosed by the assessee in regular books of account.
“The completed assessment cannot be disturbed in the absence of any incriminating material or documents, whereas the assessment or reassessment can be made for abated assessment years,” the bench observed.
The two-member bench of Madhumita Roy (Judicial) and Waseem Ahmed (Accountant) observed that in the absence of any material evidence that could support the case put forth by the Appellant, the additions cannot be sustained. The assessee cannot be held to be guilty, the Court observed and upheld the order of the CIT-A.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that denial of Tax Deducted at Source (TDS) credit on mistake or misconception of assessee is impermissible.
The two-member Bench of Waseem Ahmed, (Accountant Member) and Madhumita Roy, (Judicial Member) allowed the appeal filed by the assessee directing to grant benefit of the TDS credit which was inadvertently not claimed in the return of income. The Bench following the decision of Gujarat High Court in S.R. Koshti Vs. CIT it was observed that, “Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected.”
The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has held that no disallowance could be made under Section 36(1)(iii) of the Income Tax Act, 1961, as the amount was advanced during the normal course of business.
The Single-member Bench of Ravish Sood, (Judicial Member) dismissed the appeal filed by the revenue observing that, “as the assessee had advanced the aforesaid respective amounts in question to the aforementioned parties in the normal course of its business, therefore, no part of interest expenditure corresponding to the said respective amounts was liable to be disallowed u/s.36(1)(iii) of the Income Tax Act.”
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has sustained disallowance as the contribution towards an EPF and ESI was remitted belatedly.
The two-member Bench of George Georgek (Judicial Member) And Laxmi Prasad Sahu (Accountant Member) allowed the appeal and sustained the disallowance towards s belated remittances towards employees’ contribution to EPF & ESI under the respective Acts. The Bench referred the Supreme Court judgement in Checkmate Services Ltd. Vs CIT wherein it was held that, “Section 43B(b) does not cover employees’ contributions to PF, ESI etc., deducted by employer from salaries of employees and that employees contribution has to be deposited within the due date u/s 36(1)(va) i.e. due dates under the relevant employee welfare legislation like PF Act, ESI Act etc. failing which the same would be treated as income in the hands of the employer u/s.2(24)(x).”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the compensation paid by the Board of Control for Cricket in India (BCCI) to Cricket South Africa is not taxable under termination agreement as per the India-South India Double Taxation Avoidance Agreement (DTAA).
The two-member Bench of G.S. Pannu (President) and Sandeep Singh Karhail (Judicial Member) set aside the impugned order observing that, holding that, the payment of compensation to CSA under the Termination Agreement was also not taxable under the provisions of the India-South Africa DTAA. Since the payment was not chargeable to tax in India in the hands of CSA, therefore, the Bench held that there was no obligation on the assessee to deduct tax at source. The payment to CSA was not arising from any operations carried out in India in the year under consideration and thus the same is not taxable under section 9(1) of the Income Tax Act, the Bench further observed.
The Patna bench of the Income Tax Appellate Tribunal (ITAT) removed the addition based on compliance with donation records under Section 115BBC of the Income Tax Act.
The bench consisting of two members, the Judicial Member SonjoySarma and the Accountant Member Manish Borad observed that “the assessee in the present case has duly complied with the requisites by maintaining the records of the donors in the form of their names and addresses thereby not making them anonymous donations and resultantly not attracting the rigours of the Section 115BBC of the Income Tax Act. The Assessing Officer had conducted due verifications and enquiry at his end but has failed to point out anything constructive leading to the conclusion that the donations in question were anonymous”. As a result, the appeal for the revenue was dismissed.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in appeals filed before it, refused to condone a delay of 1005 days in filling the income tax appeal without reasonable cause.
The Delhi ITAT observed: “Having regard to the principle of law laid down in various decisions and in the facts and circumstances of the assessee’s case, we decline to condone the inordinate delay of 1005 days in filing appeal before the Tribunal.” “We have enumerated the dates fixed for hearing of the appeals. Despite numerous opportunities provided to the assessee, the assessee chose not to avail them to rebut the findings of the Ld. AO/CIT(A). Resultantly, the findings of the Ld. AO/CIT(A) remain uncontroverted by the assessee before us. For the reason aforesaid, the appeals of the assessee are dismissed as time-barred and devoid of any merit”, the coram of G.S Pannu, the President and Astha Chandra, the Judicial Member thus concluded.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, allowed deduction, by holding that ESOP expenditure is Revenue in nature.
The ITAT panel comprising of ChallaNagendra Prasad, the Judicial Member and ShamimYahya, the Accountant Member thus held: “We have heard both the parties and perused the records. We find that this issue is squarely covered by the decision of the jurisdictional Delhi High Court in the case of Lemon Tree Hotels and New Delhi Television Ltd. wherein it has been held that expenditure under ESOP is an allowable expense. Hence, we find that the Ld. CIT(A) has passed a correct order and we do not need to interference on our part. Accordingly, this appeal by the Revenue is dismissed.”
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) deleted the additions on unexplained cash deposits under Sections 69A and 68 of Income Tax Act, 1961 upon receipt of proper explanation by assessee.
The two-member tribunal bench consisting of Account Member, Rama Kanta panda and Judicial Member, K. Narasimha Chary observed that there was no denial of the deposits and withdrawals. Further, such a fact was verified by the assessing officer also and admitted in the remand report. Both the appeals were dismissed and cross objections were allowed.
The Jodhpur Bench of Income Tax Appellate Tribunal (ITAT) no disallowance shall be made on the part of director’s remuneration when the business is stopped due to temporary lull.
The two-member Bench of B. R. Baskaran, (Accountant Member) and S. Seethalakshmi, (Judicial Member), in view of the decision of the DelhiTribunal in the case of Ishwar Builders P Ltd vs. DCIT the Bench allowed this ground of appeal and held that there was no requirement of disallowing part of director’s remuneration and depreciation when the business was stopped due to temporary lull.
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), deleted income tax addition and ruled that carbon credit receipt is capital receipt.
The Two- Member Bench of Manish Borad, Accountant Member and V. Durga Rao, Judicial Member observed that” Respectfully following the judicial precedents fail to find any infirmity in the findings of the CIT(A) holding the Carbon Credit receipt as a capital receipt.”
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT), quashed revision proceedings under Section 263 of the Income Tax Act, 1961 and held that the sales reversal entry is not unexplained expenditure.
“Though the policy adopted by the assessee is not at par with the settled accounting policies since the cash is entered in the books without actually receiving the cash, however, going through the flow of the transactions it is in the nature of sales reversal” the Bench concluded.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the Maharashtra State Board of Technical Education (MSBTE) would be state under the purview of Article 12 of the Indian Constitution and is exempted from income tax.
The Two-member Bench of Prashant Maharishi (Accountant Member) and Kavitha Rajagopal (Judicial Member) dismissed the appeal filed by the revenue holding that, “The objectives of the assessee board were evident to categories it to be a ‘state’ under Article 12 of the Constitution of India and the assessee would fall within the term ‘state’ as the assessee was controlled by either the Central or State Government completely and they would also become instrumentality of the Government.”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that an assessment order framed in the name of a non-existing company would be illegal and void ab initio.
The two-member Bench of Saktijit Dey, (Judicial Member) and B. R. R. Kumar, (Accountant Member), quashed the assessment order and allowed the appeal, examining the judgement of Delhi High Court in Skylight Hospitality LLP, Spice Infotainment Ltd. v. Commissioner of Service Tax, PCIT Vs. Maruti Suzuki India Ltd and in PCIT Vs. ITA. The Bench further held that since the Assessing Officer had knowledge of the dissolution of the company as established from the Assessment Order itself, the order would be void ab initio.
The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has held that Section 263 of the Income Tax Act, 1961 could not be invoked on mere non reference of cash transactions.
The two member Bench of Ravish Sood, (Judicial Member) and Arun Khodpia, (Accountant Member) allowed the appeal filed by the assessee holding that, even if the aforementioned cash transactions were to be brought within the meaning of cash loans that were raised/repaid in contravention of the prescribed modes contemplated in Section 269SS and 269T of the Income Tax Act, a mere non reference of the same by the A.O in the body of the assessment order would not render the assessment order as erroneous in so far it was prejudicial to the interest of the revenue under Section 263 of the Income Tax Act.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that no income tax penalty could be imposed on an alleged bogus purchase if the addition was made on an estimated basis.
The revenue rather made the addition on the basis of information received from the Sales Tax Department without conducting any independent enquiry as to the alleged bogus purchases, the Bench further observed.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has recently held that the provision of Section 56(2)(viia) of the Income Tax Act, 1961 shall apply to underlying investments received by amalgamated entities on account of merger.
The two-member bench of RamaKanta Panda, Accountant Member and Laliet Kumar, Judicial Member allowed the appeal of the revenue and restored the order of AO invoking the provision of Section 56(2)(viia) of the Income Tax Act.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that the incriminating statements by third parties cannot be used for addition in Income Tax assessment.
No addition can be made in the hands of the assessee based on the statement recorded by the Investigating Wing by a third party. The statement of a third party already recorded under Section 132(4) of the Income Tax Act cannot be considered as an incriminating document for the purpose of making the addition under Section 153A of the Income tax Act. Appeal of the assessee got allowed.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) restored the files to the Assessing Officer to verify the correction statement of Tax Deduction at Source linking the unconsumed challan with the instances of Tax Deduction at Source (TDS), giving an opportunity to the assessee.
Further stated that because of the pendency of this appeal, the Assessing Officer is not entertaining the application under section 154 of the Income Tax Act. The tribunal has set aside the impugned order of the CIT(A) and allowed the appeals of the assessee statistical purposes.
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that unsecured FCCDs issued to holding companies for business operations in India are debts which are not equity instruments.
Two-members bench of R.K. Panda, Accountant Member and Laliet Kumar, Judicial Member dismissed the appeal filed by the assessee and held that “FCCDs are debt, therefore, the benchmarking done by the learned lower authorities are correct by applying LIBOR plus 200 points, which is in consonance with the RBI guidelines issued for the purposes of FDI.”
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has disallowed the expenses holding that property which was not used for business purposes could not be treated as business assets.
The two-member Bench of RajpalYadav (Vice-President) and Manish Borad (Accountant Member) disallowed this ground of appeal filed by the assessee observing that, “Though the assessee has argued that these expenditures were incurred for the purpose of business but in the accounts, it has not been demonstrated as to how these properties were treated as a business asset and not as an investment. Unless the properties are being used for the purpose of the business expenditure attributable to maintaining them cannot be allowed.”
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) deletes the addition due to the disallowance of discounts or subventions in the Income Tax Assessment under Section 40 A of the Income Tax Act, 1961.
The bench of two members, the Judicial Member Manomohan Das and the Accountant Member Dr. Manish Borad observed that since the alleged payment of Rs.16,31,588/- has been paid by the assessee to M/s.Tata Motors Ltd., towards professional and technical services for developing of web-enabled software SIBIL for marketing related information, which is in the view is payment for technical services and the same is subject to deduction of tax at source.
However, since the assessee has not deducted TDS and the amount has been adjusted in the overall accounting of other transactions of purchase of goods from M/s.Tata Motors Ltd, the appeal filed by the assessee for the AY 2011-12 was partly allowed for statistical purposes.
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has declared that an assessment order issued without quoting the Document Identification Number (DIN) will be considered as non-issued under Section 263 of the Income Tax Act, 1961.
The bench consisting of two members, the Judicial Member K. Narasimha Chary and the Accountant Member Rama Kanta Panda observed that all communication must contain a computer-generated DIN. Failure to do so would render the communication invalid.
The ITAT Bench further added that the order passed under section 263 of the Act did not contain any reasons or statement in the prescribed format to explain Paragraph 4 of the circular clearly states that any communication not in conformity with paragraphs 2 and 3 shall be treated as invalid and deemed to have
never been issued. Therefore, any reason other than the exceptions mentioned in paragraph 3 would not save a communication issued without a DIN. Appeal filed by the assessee got allowed in result.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently provided opportunity of re-adjudication on TDS exemption for foreign travel Leave Travel Concession (LTC) default under Sections 201(1) and 201(1A) of the Income Tax Act due to Bonafide belief of Assessee.
The Bench consisting of two members, the Judicial Member KavithaRajagopal and the Accountant Member Om Prakash Kant remanded the issues back to the file of the Assessing Officer for verifying whether the employees have declared the said LTC in their return of income and have duly paid taxes on the same.
The tribunal bench further added that “We direct the Assessing Officer to give sufficient opportunity of being heard to the assessee. As we have not adjudicated the other grounds of appeal raised by the assessee, they are left open for adjudication if required. Therefore, the appeals filed by the assessee are allowed for statistical purposes.”
In a significant case the Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently ordered full Tax Deduction at Source (TDS) credit after the assessing office withdrew TDS benefit on advance rent and failed to carry forward for 20 years.
The two-member bench of the tribunal comprising C. M. Garg (Judicial Member) and B. R. R. Kumar (Accountant Member) allowed the appeal filed by the assessee and ordered AO to call for the record of assessment year 2002-03 and pass appropriate rectification order giving full credit for the TDS amounts to the assessee and issue refund of tax which the assessee is entitled consequent to such rectification order.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) deletes Addition under Section 68 of Income Tax Act, 1961 due to Insufficient Evidence of Bogus Transaction. The issue of the case is CIT (Appeals) had erred in confirming the addition of Rs.20,00,000/-, which was added by the Assessing Officer.
The Bench consisting of Account Member Manish Borad and Vice-President RajpalYadav directed the Assessing officer to examine the issue afresh and provide an opportunity of hearing to the assessee. The tribunal also directed that if the statement of the person recorded by the Investigation Wing is being relied upon, the assessee should be given an opportunity to cross-examine him. The information received from another ITO was also not treated as a gospel truth and had to be examined. The appeal of the assessee was allowed for statistical purposes.
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reopening of Assessment due to lack of live nexus between reasons recorded and belief formed by the Assessing Officer.
The Single Bench consisting of Judicial Member C. M. Garg observed that the Assessing Officer has acted solely on the basis of information received from the Investigation Wing without conducting an independent exercise at his own level. The tribunal bench thus held,” The reopening of assessment under Section 147 and issuance of notice under Section 148 of the Income Tax Act are therefore invalid and should be quashed, as they are based on a borrowed satisfaction and not supported by an independent assessment by the Assessing Officer.” Appeal for the assessee partly allowed and ordered for reopening of Assessment.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently held that Section 92B of the Income Tax Act, 1961, which defines International Transactions, does not apply to advertisement, marketing and promotion (AMP) expenses incurred for business purposes in India. As a result, relief was granted to L’Oreal India Private Limited, a subsidiary of the French conglomerate and leading supplier in the global cosmetic industry.
The two-member bench of Om Prakash Kant (Accountant Member) and KavithaRajagopal (Judicial Member) allowed the appeal filed by the assessee and observed that the AMP transaction incurred by the assessee for the purpose of business was not an international transaction as per Section 92B of the Income Tax Act.
The Indore bench of Income Tax Appellate Tribunal (ITAT), while deleting penalty against Bharti Airtel held that no Tax Deduction at Source (TDS) is applicabe under Section 194H of the Income Tax Act, 1961 on amount paid to distributors/dealers for sale of prepaid SIM card and recharge vouchers.
The tribunal determined that transactions of sale of SIM Card and Recharge vouchers are in the nature of sale and discount allowed by the assessee to the distributors is not in the nature of commission attracting the provision of Section 194H Income Tax Act.
It was observed that the assessee has reasonable cause not to deduct the tax at source. Therefore, the action of non-deduction of tax in the present case will not attract the penalty under Section 271C of the Income Tax Act. Thus, the two-member bench of Vijay Pal Rao, Judicial Member and B.M. Biyani, Accountant Member allowed the appeal filed by the assessee.
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that the dissolved company is exempt from Income Tax Assessment proceedings under Section 54(2) of the Insolvency and Bankruptcy Code, 2016.
The Bench, consisting of an Advocate Member, G. Manjunatha, and a Judicial Member, Mahavir Singh, noted the NCLT order and observed that the company stood dissolved under Section 54(2) of the Insolvency and Bankruptcy Code, 2016, and once the company was dissolved, the entity had come to an end. No proceedings of any sort could be kept pending once the company was dissolved because the artificial entity had come to an end. The appeal filed by the revenue was dismissed in result.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) recently ruled that the expenditure towards the Employees Stock Option Plan (ESOP) is eligible for deduction under Section 37 of Income Tax Act 1961.
The Bench consisting of Advocate Member Laxmi Prasad Sahu and Judicial Member George George K observed that “The expenditure in question was wholly and exclusively for the purpose of the business of the assessee and had to be allowed as deduction as a revenue expenditure. The facts of the instant case are identical to assessment year 2015-2016, following the co-ordinate Bench order in assessee’s own case for AY 2015-2016 (supra), we hold that the expenditure towards ESOP is an allowable deduction U/s. 37 of the Income Tax Act.” Thus, the appeal filed by the assessee was partly allowed.
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT), while directing re-adjudication observed that penalty under Section 271AAC Income Tax Act, 1961 would not be applicable if tax under Section 115BBE of Income Tax Act was mentioned at zero.
It was observed by the tribunal that AO levied a penalty U/s. 271AAC on the ground that the assessee could not explain the source of Rs.45.00 lakhs from real estate activities by producing cogent documentary evidence, for which the addition was made U/s. 69A R/w. Sec. 115BBE of the Income Tax Act. While considering the statement of the assessee the tax U/s. 115BBE is mentioned at zero and therefore, no penalty U/s. 271AAC should be levied and also assessee is in a position to substantiate before the lower authorities as to how the penalty U/s. 271AAC is not leviable. The tribunal of Shri R.K. Panda, Accountant Member and Shri Laliet Kumar, Judicial Member allowed the appeal filed by the assessee and restored the matter for re-adjudication.
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) hasquashed the invalid penalty order on deceased assessee under Section 159(2) of Income Tax Act, 1961.
The two-member Bench consisting of Judicial Member George George K and Account Member Laxmi Prasad Sahu observed that “According to Section 159(2) of the Income Tax Act, any proceedings against the deceased person are considered as being against their legal representative and can be continued from the stage they were at when the person passed away. In this case, the penalty order was issued in the name of the deceased assessee, making it invalid. Considering the aforementioned reasoning and judicial precedents, we quash the penalty order as it was imposed on a deceased person.” In result, the appeal filed by the assessee was partly allowed.
This appeal by the assessee is directed against order dated 15.11.2022 passed by the Commissioner of Income-tax – National Faceless Appeal Centre (NFAC) for assessment year 2020-21 in relation to the rectification order passed by the Assessing Officer under Section 154 of the Income-tax Act, 1961.
The Bench opined that, it will be appropriate if the term ‘every month’ specified in Provident Fund scheme, whether it is the month for which salary/ wages are due or month of the payment is referred to Relevant Authorities for finding out with reference to any judicial precedent in respect of provisions of the relevant Act. Accordingly, the issue was restored back to the file of the Assessing Officer with the direction to find out from the relevant PF authorities about the term ‘every month’ as mentioned in Clause 38 of the Employees Provident Fund Scheme (EPF Scheme). He was also directed to find out the same from the ESI Authorities. In the result, the appeal of the assessee was allowed for statistical purposes by the two-member bench of Judicial Member Aby T Varkey and Accountant Member Om Prakash Kant.
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