ITAT Annual Digest [Part - 25]

This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in

No Addition on Regular items which were Disclosed by Assessee in Regular Books of Account: ITAT DCIT vs Shri Basant R. Agarwal CITATION: 2023 TAXSCAN (ITAT) 1002

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.

Denial of TDS Credit on Mistake or Misconception of Assessee is Impermissible: ITAT KunvarjiFincorpPvt. Ltd vs D.C.I.T CITATION: 2023 TAXSCAN (ITAT) 1003

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.”

No Disallowance u/s 36(1)(iii) as Amount was Advanced during Normal Course of Business: ITAT The Assistant Commissioner of Income Tax vs M/s. Hotel Ishika CITATION: 2023 TAXSCAN (ITAT) 1004

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.”

Belated Remittances Towards Employees’ Contribution to EPF & ESI: ITAT sustains Disallowance MTR Maiya’svs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 1005

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).”

Compensation Paid by BCCI to CSA not Taxable under Termination Agreement under India-South Africa DTAA: ITAT The Board of Control for Cricket in India vs Dy. Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 1006

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.

ITAT deletes Addition Based on Compliance with Donation Records U/s. 115BBC of the Income Tax Act Income Tax Officer vsAishwarya Foundation CITATION: 2023 TAXSCAN (ITAT) 1007

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.

ITAT Refuses to Condone a Delay of 1005 Days in Filing Income Tax Appeal without Reasonable Cause Mass Awash Private Limited vs Addl.CIT CITATION: 2023 TAXSCAN (ITAT) 1008

 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.

ESOP Expenditure is Revenue in Nature: ITAT Allows Deduction DCIT vs M/s. Process Nine Technologies (P) Ltd CITATION: 2023 TAXSCAN (ITAT) 1009

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.

TheITAT 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.”

Failure of Assessee to Comply with Provisions of Section 269T: ITAT upholds Penalty U/s. 271E Sandeep Kaur Gill vs JCIT CITATION: 2023 TAXSCAN (ITAT) 1010

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, has recently, in an appeal filed before it, on finding about the failure of the assessee to comply with the provisions of section 269T, upheld the penalty under section 271E of the Income Tax Act, 1961.

The ITAT coram of ArunKhodpia, the Accountant Member, and Ravish Sood, the Judicial Member, held: “The assessee had not only failed to comply with the provisions of section 269T of the Act, therein rendering her liable for imposition of penalty under Section. 271E of the Act, but had also failed to come forth with any reasonable cause which had prevented her to make repayment of the monthly instalments of her outstanding loans in a manner other than that prescribed under law, therefore, finding no infirmity in the penalty of Rs. 6,71,939/-imposed by the JCIT under Section. 271E of the Income Tax Act, uphold the same.” Resultantly, the appeal filed by the assessee was dismissed.

 Alimony Received on Divorce is not Unexplained Cash Credit u/s 68, not Taxable u/s. 115BBE: ITAT SaritaKonda vs The Pr. Commissioner of IncomeTax CITATION: 2023 TAXSCAN (ITAT) 1011

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, has recently held that alimony received on divorce is not unexplained cash credit under Section 68, and that the same is not taxable under Section 115BBE of Income Tax Act, 1961.

“In case the A.O finds the claim of the assessee as regards the nature and source of the aforesaid receipts in order, then no modification of the order passed by him under Section 143(3) dated 30.11.2019 shall be carried out. At the same time, in case the explanation of the assessee as regards the nature and source of the aforesaid receipts is found to be incorrect, then the aforementioned receipts shall be held as unexplained cash credits under Section 68 of the Income Tax Act and brought to tax by triggering the provisions of Section 115BBE. Thus, the Ground of appeal raised by the assessee is allowed for statistical purposes in terms of our aforesaid observations”, the Raipur ITAT concluded.

Determination of Fair Market Value of Unquoted Shares does not Prohibit Inclusion of Share Premium as part of Reserves and Surplus: ITAT deletes Addition CNR Leading Softek Pvt Ltd vs ITO CITATION: 2023 TAXSCAN (ITAT) 1012

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition holding that the determination of fair market value of unquoted shares would not prohibit inclusion of share premium as part of reserves and surplus.

The Bench observed that the share premium would be included in the ‘reserves and surplus’ even as per Rule 11UA of Income Tax Rules. While this was so, it was completely wrong on the part of the AO to ignore the same while valuing the shares of the assessee company both under ‘liability approach’ and considering the same as a liability under ‘asset approach’.

The two-member Bench of C.M Garg, (Judicial Member) and M. Balaganesh, (Accountant Member) deleted the addition made under Section 56(2) (viib) of the Income Tax Act 1961, holding that the value determined by the AO was totally flawed and no mistake was found by us in the valuation adopted by the assessee, and held that addition made by the AO would have no legs to stand.

Relief to Idea, No TDS on Discount to Distributors on sale of SIM Card and Prepaid Recharge Vouchers: ITAT Idea Cellular Ltd. vs JCIT CITATION: 2023 TAXSCAN (ITAT) 1013

The Indore Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Idea holding that no Tax Deducted at Source (TDS) would be applicable on discount given to distributors on the sale of SIM card and prepaid recharge vouchers.

The Two Member Bench of VIJAY PAL RAO, (JUDICIAL MEMBER) AND B.M. BIYANI, (ACCOUNTANT MEMBER) observed that, a good number of other decisions had held that transaction in question would not fall in the ambit of section 194H of the Income Tax Act and thereby the assessee was not liable to deduct TDS at source on these transactions. In view of the decision and facts and circumstances of the in assessee’s own case, Vodafone Idea Ltd. New Delhi vs. DCIT and Bharti Airtel Ltd. Vs. DCIT Bangalore, the Bench deleted the penalty levied under Section 271C of the Income Tax Act 1961.

Revenue can bring Expenditure Incurred in Earlier Years to be Taxed in Subsequent Years on Bogus Expenditure: ITAT Sh. Pradeep Sawhneyvs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 1014

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that revenue could bring expenditure incurred in earlier years to be taxed in subsequent years on bogus expenditure.

The two-member Bench of C. M. Garg, (Judicial Member) Dr. B. R. R. Kumar, (Accountant Member) referring to the decision of Karnataka High Court in Southern India Plywood Company Vs. ACIT, dismissed the appeal filed by the assessee holding that the revenue could bring the expenditure incurred in the earlier years to be taxed in the subsequent years if it was proved that the expenditure incurred was bogus and the revenue could deem the liabilities ceased as time went by taking into consideration, the period of non-payment of dues and the intention to pay the dues.

Default in Furnishing TDS Statement, Section 200A only applicable after 1st June 2015: ITAT M.E.S. High School vs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 1015

The Pune bench of the Income Tax Appellate Tribunal (ITAT) recently held that the levy of a fee under Section 234E of the Income Tax Act for default in TDS statements was applicable since 1st June 2015, as per the amendment to Section 200A of the Income Tax Act.

The bench consisting of two members, the Judicial Member S.S. Viswanethra Ravi and the Vice President R.S. Syal observed that the fee for default in furnishing the TDS statements has been imposed on the assessee under Section 234E of the Income Tax Act for the 3rd quarter of the financial years 2012-13 (A.Y. 2013-14) and 2013-14 (A.Y. 2014-15). Section 200A deals with processing of TDS statements of tax deducted at source and Clause (c) of sub-Section (1) of Section 200A was inserted by the Finance Act 2015 with effect from 01-06-2015 providing for the levy of fee under Section 234E of the Income Tax Act. In such circumstances, levy of such fee under Section 234E can be levied only after 01-06-2015 for the default committed by the assessee. The Bench further added that “We find that the period covered in the present subject appeals before us is Quarter 3rd of financial years 2012-13 (A.Y. 2013-14) and 2013-14 (A.Y. 2014-15). Therefore, we hold that the amendment by insertion of Clause (c)     to sub-3 ITA Nos.96 & 97/PUN/2023 Section (1) of Section 200A of the Income Tax Act is not applicable.” In result, the appeal of the assessee was allowed.

ITAT deletes Penalty for Same Defaults Under Section 271(1)(b) in Second Round Amar Bharti vsAsstt. Commissioner of Income-tax CITATION: 2023 TAXSCAN (ITAT) 1016

The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the penalty for the same default under Section 271(1)(b) of the Income Tax Act in the second round.

The bench consisting of two members, the Judicial Member Sandeep Gosain and the Accountant Member RathodKamleshJayantbhai observed that the Assessing Officer has already passed the penalty proceeding under Section 271(1)(b) of the Income Tax Act vide order dated 07.12.2017 there cannot be a second round of the penalty for the same defaults. The tribunal quashed the levy of the penalty vide order dated 12.06.2018. In the result, the appeal of the assessee was allowed.

Toyota Gets Partial Relief as ITAT Orders Investigation into Capitalized Expenses for Transfer Pricing Adjustment Computation Toyota Industries Engine India Pvt. Ltd vs NFAC CITATION: 2023 TAXSCAN (ITAT) 1017

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) recently ordered an investigation into capitalized expenses for transfer pricing adjustment computation.

The bench consisting of two members, the Judicial Member Beena Pillai and the Accountant Member Chandra Poojari observed that “we are inclined to remit this issue to the file of Assessing Officer/TPO to examine whether these two expenditures namely payment of professional and consultation charges & purchase of fixed assets are capitalized in the books of accounts of assessee. If it is so, these expenditures cannot be considered for computation of proportionate TP adjustment and the Assessing Officer/TPO has to decide the issue after giving the opportunity of hearing to the assessee.” In result,the appeal of the assessee was partly allowed.

Claim of Deduction on Freight Outward Expenses Allowable only on Submission of Actual Payment Details: ITAT Nipro India Corporation Pvt. Ltd. vs PCIT CITATION: 2023 TAXSCAN (ITAT) 1018

The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that claim of deduction on freight outward expenses would be allowable only on submission of actual payment details.

The two-member Bench of S.S. Viswanethra Ravi, (Judicial Member) and Dipak P. Ripote, (Accountant Member) upheld the order of Commissioner of Principal Commissioner of Income Tax Appeals (PCIT) as no details of payment were furnished by the assessee before the authority. “We find the action of AO is neither a mistake on facts nor deviated from law. The said conclusion arrived by the AO on his satisfaction of details furnished by the assessee cannot be found to be erroneous simply because Pr. CIT does not feel satisfied with the said conclusion,” the Bench further observed.

ITAT allows Deduction in Respect of written off Irrevocable Advances on Inextricable Link between Advances to Business and Company Assistant Commissioner of Income Tax vs Shri. V. Krishnamurthy CITATION: 2023 TAXSCAN (ITAT) 1019

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has allowed deduction in respect of written-off irrevocable advances based on the inextricable link between advances to business and company.

The two-member Bench of V. Durga Rao (Judicial Member) and Manjunatha. G (Accountant Member) dismissed the appeal filed by the revenue observing that “Since, there was an inextricable link between advances given to the company and business of the assessee, and further, the assessee has derived business advantage by lending money to said company, in our considered view, written off of irrecoverable advances given to said company partakes the nature of business loss which can be allowed as deduction.”

Undisclosed Investments in Unaccounted Stock should be Taxed Separately: ITAT Saitawadekar Jewellers vsPr.CIT CITATION: 2023 TAXSCAN (ITAT) 1020

The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that, the undisclosed investments in the unaccounted stocks of the assessee should be taxed separately.

The two-member Bench of S. S. Godara, (Judicial Member) and Dipak P. Ripote, (Accountant Member) upheld the revision order, observing that, “In this case the AO has failed to apply proper and correct section of Income Tax Act to the “Investment in the Undisclosed Stock”. The undisclosed investment in the unaccounted stock needs to be taxed separately as Income of the assessee as per the deeming provision of the Act.” The Bench further held that Sections 69B, 69A and 69 of the Income Tax Act, 1961 had introduced a deeming provision and the AO had failed to verify this aspect of the impugned excess stock declared during the survey. Therefore, the assessment order was erroneous and prejudicial to the interest of the revenue.

Adjustment Against Bad and Doubtful Debts Amounts to Actual Writing Off of Bad Debts: ITAT Integra Engineering India Ltd vsAsstt. Commissioner of Income-tax CITATION: 2023 TAXSCAN (ITAT) 1021

The Income Tax Appellate Tribunal (ITAT) of Ahmedabad bench has held that adjustment against bad and doubtful debts amounts to actual writing off of bad debts.

The two-member bench of T.R. Senthil Kumar (Judicial Member) and Waseem Ahmed (Accountant Member) has observed that any adjustment made by the assessee on account of the bad debts against the provisions created in the earlier year amounts to actual writing off of the bad Debts in the books of accounts. Further viewed that the assessee cannot be denied the benefit for the bad debts merely on the reasoning that such bad debts were not claimed in the profit and loss account but adjusted against the provision of bad debts. While allowing the appeal, the Court set aside the order of CIT(A) and directed the AO to delete the addition made by him.

Penalty u/s 271D cannot be Imposed after the Expiry of larger Period of Limitation: ITAT Jagdish Chandra Suwalkavs The JCIT CITATION: 2023 TAXSCAN (ITAT) 1022

The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has held that the penalty under Section 271D of the Income Tax Act, 1961 could not be imposed after the expiry of a larger period of limitation.

A Single Bench of Sandeep Gosain, (Judicial Member) allowed the appeal and quashed the penalty imposed holding that the penalty under Section 271D of the Income Tax Act could not be imposed after the expiry of the larger period of limitation. “At the very beginning it is observed that the provisions contained u/s 275(1)(a) are not applicable to the facts of present case for the reason that undisputedly no appeal has been filed against the assessment order passed on 28.12.2017. Therefore, it cannot be said that the relevant assessment or other order was subjected to some appellate proceeding. Consequently, the extended period of limitation of 6 months from the availability of the appellate order, will not be available to the revenue,” the Bench further observed.

ITAT upholds Penalty under Section 271AAA on Failure of Assessee to Substantiate Source and Manner of Undisclosed Income ChetanHasmukhbhai Vasa vs The ACIT (Central) Circle CITATION: 2023 TAXSCAN (ITAT) 1023

The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, on failure of the assessee to substantiate the source and manner of undisclosed income, upheld the penalty under Section 271AAA of the Income Tax Act, 1971.

The ITAT observed, “We are constrained to conclude that he has very well fallen short of substantiating the manner of having derived his undisclosed income in question i.e., the second limb in Section 271AAA of the Income Tax Act, penalty proceedings and therefore, there is hardly any reason for us to disturb both the lower authorities’ findings. The case law quoted at the assessee’s behest supports the Revenue’s case rather wherein their lordships hold in identical terms that an assessee has to substantiate the manner after the Authorised Officer puts specific queries to him regarding source and manner of the undisclosed income in issue.” The Pune

ITAT coram comprising of G.D Padmahshali, the Accountant Member, and Satbeer Singh Godara, the Judicial Member thus held: “We thus affirm CIT(A)’s findings extracted in the penalty proceedings upholding the Assessing Officer’s action imposing the impugned penalties in these twin assessment years.”

 Delay of One Day in Filing Audit Report Due to Technical Glitches of Income Tax Portal: ITAT sets aside Penalty u/s 271B Sushila Devi vs ACIT CITATION:  2023 TAXSCAN (ITAT) 1024

The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has recently, on finding that the delay of one day in filing audit report was due to technical glitches on the Income Tax Portal, set aside the penalty imposed under Section 271B of the Income Tax Act, 1961.

ITAT coram of Sandeep Gosain, Judicial Member and RathodKamleshJayantbhai, Accountant Member, held: “The delay if any is on account the reasons on the technical letches on the portal and the same is venial in nature based on the provision of the Act as reiterated herein below. Based on these deliberation of the facts as well as provision of the law and judicial precedence cited, we hold that the penalty levied under Section 271B is not justified and thus vacated.”

Addition Based on Non-Appearance of Company Directors on the basis of unproven Identity of Subscriber not Sustainable: ITAT Atlantic Dealers Pvt. Ltd. vs ITO CITATION: 2023 TAXSCAN (ITAT) 1025

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has held that the addition based on non-production of company directors on the ground that identity of the subscribers were not proved would not be sustainable.

The two-member Bench of Sanjay Garg, (Judicial Member) and Manish Borad, (Accountant Member) allowed the appeal holding that, even if the directors of the subscriber companies had not come personally in response to the summons issued by the AO, adverse inference could not be taken against the assessee solely on this ground as it was not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. The Bench placed reliance upon the decision of Bombay High Court in Panji vs. Paradise Inland Shipping Pvt. Ltd., wherein it was held that once the assessee had produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case.

ITAT deletes Addition u/s 37(1) of written off Amount Treated as Business Expenditure Addl. CIT vs Amway India Enterprises Pvt. Ltd CITATION: 2023 TAXSCAN (ITAT) 1026

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition under Section 37(1) of Income Tax Act 1961 on account of written off amount treated as business expenditure.

The two-member tribunal observed that, In light of these facts and the commercial expediency, the CIT(A) correctly concluded that the payment made by the appellant was directly related to the business activity and incurred wholly and exclusively for the purpose of the company’s business. It was allowable as a business expenditure, the tribunal further observed. The tribunal thus upheld the decision of CIT (A). In result, the appeal filed by revenue was dismissed.

ITAT quashes Assessment Order framed u/s 143(3) of Income Tax Act in Name of Non-Existent Entity M/s. Allscripts (India) LLP vs National Faceless Assessment Centre CITATION: 2023 TAXSCAN (ITAT) 1027

The Income Tax Appellate Tribunal (ITAT) of Ahmedabad bench quashed the assessment order framed under Section 143(3) of Income Tax Act 1961 in the name of non- non-existent entity.

The tribunal observed that conversion of AIPL into LLP was intimated to both the AO and the TPO much before passing of their respective orders, yet both the TPO and the AO passed the Transfer Pricing Order and the draft assessment order in the name of a nonexistent entity. Therefore the members of tribunal comprising Waseem Ahmed, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) determined that, “Once the draft assessment order and Transfer pricing order itself are bad in law, having been passed in the name of a non-existent entity, then the final assessment order based on the above orders is void ab initio as well.” Hence the bench allowed the appeal filed by the assessee.

 Salary Reimbursement for Seconded Employee Not Taxable as FTS under India-US DTAA: ITAT M/s. Juniper Networks Incvs ITO CITATION: 2023 TAXSCAN (ITAT) 1028

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that salary reimbursement for seconded employees would not be taxable as Fees for Technical Service (FTS) under the India-US tax Double Taxation Avoidance Agreement, also known as Indo-US DTAA.

Similar isuue had arisen in the case Netflix Entertainment Services India, that even if seconded employees were only loaned for a short period, they form a permanent establishment. The Goods and Services Tax obligation was a result of Netflix Inc’s employment of seconded employees to support its services in India. The matter is still to attain finality. But the Tribunal bench has taken an alternate view in this matter. The two member Bench of Chandra Poojari, (Accountant Member) and BeenaPillai, (Judicial Member) referring to the Goldman Sachs Services Pvt. Ltd allowed the appeal filed by the assessee and held that salary reimbursements for seconded employees would not be taxable as Fee for Technical Services (FTS).

 Expenses incurred for Import of Rubber Process Oil eligible for Deduction u/s 37(1) Income Tax Act: ITAT Indian Synthetic Rubber Pvt. Ltd. vs ACIT CITATION: 2023 TAXSCAN (ITAT) 1029

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that expenses incurred for import of rubber process oil is eligible for deduction under Section 37(1) of the Income Tax Act, 1961.

It was observed by the tribunal that an internal circular issued by Addl. Director, Customs & Excise in alert circular No. 12/2013 was issued only on 3.09.2013 in respect of the hazardous nature of goods declared as rubber process oil and petroleum-based greece. Rubber process oil imported by the assessee was freely importable as on the date of placing the order and also as on the date of the cargo reaching the seaport in India. Since the customs authorities were not releasing the rubber process oil imported by the assessee and further required for verifying for testing the samples by Central Research Chemical Laboratory. But the assessee avoided contesting the matter and chose to re-export the rubber process oil without incurring further demurrage charges and to avoid any further litigation the consignment was re-exported and also incurred huge loss on such re-export. These cause huge expenses to the business of assessee. These expenses were incurred in the course of carrying on business of the assessee and they are allowable as a deduction under Section 37(1) of the Income Tax Act. Therefore the two-member bench of G. S. Pannu, (President) and ChallaNagendra Prasad, (Judicial Member) allowed the appeal filed by the assessee.

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