This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Raipur bench of Income Tax Appellate Tribunal (ITAT) has recently held that the exemption under section 11(2) of Income Tax Act, 1961 shall be allowable only if Form 10B and Return of Income are furnished within the due date specified under Section 139(1) of Income Tax Act.
After that the tribunal observed that “assessee-trust did not cumulatively satisfy the set of conditions specified in Para 4(i) of the CBDT Circular No.10 and also had not filed any application for condonation of delay under Section 119(2)(b) of the Act as provided in Para 4(ii) of the said circular, therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by the assessee beyond the stipulated time period”. Thus the single member bench of Ravish Sood (Judicial Member) upheld the declining of the assessee’s claim for exemption under Section 11 of the Income Tax Act.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT) deleted the penalty for auditing the books of account under section 44AB of the Income Tax Act,1961 due to turnover limitation.
The bench observed that in the audit of a person carrying on business the limit provided under section 44AB of the Income Tax Act was Rs. 1 Crore. The sales turnover or gross receipts as the case may be in the business exceed/exceeds Rs. 1 Crore, the assessee was liable to get books of accounts audited under section 44AB of the Income Tax Act.
It was also observed that the assessee was carrying the business activities and the turnover of the assessee was Rs. 32,38,340/- which was less than Rs. 1Cr during the year, it is out of the purview of Section 44AB of the Income Tax Act. Thus the assessee was not liable to get its books of accounts audited under section 44AB of the Income Tax Act and the penalty imposed under section 271B of the Income Tax Act was against the provision of law and is liable to be deleted while allowing the appeal filed by the assessee.
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that the interest expenses incurred for earning income from loans and advances should not be disallowed under Section 57 of Income Tax Act, 1961.
It was observed by the tribunal that the AO could not dictate the assessee about the loan and advances given to the other parties and the interest thereon charged by the assessee as the assessee is a partner in the partnership firm. The assessee within his business exigencies has paid higher interest on unsecured loans as the need in respect of partnership firm for its fund is required. Therefore the single member bench of Suchitra Kamble (Judicial Member) allowed the appeal filed by the assessee.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for rejecting the claim of Foreign Tax Credit (FTC) on payment of foreign tax due to late filing of Return of Income (ROI).
The two-member bench comprising Rama Kanta Panda(Accountant) and K.Narasimha Chary(Judicial) directed the Assessing Officer to verify the details of the foreign tax paid by the assessee on the earnings at foreign source and take a view in conformity with the established by the law while allowing the appeal filed by the assessee.
The Amritsar bench of the Income Tax Appellate Tribunal (ITAT) deleted the penalty imposed on late filing of audit reports. The two-member bench comprising Dr M. L. Meena(Accountant) and Sh. Anikesh Banerjee(Judicial) held that the penalty levied under section 271B of the Income Tax Act was against the provision of law and is liable to be deleted while allowing the appeal filed by the assessee.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made by the Assessing Officer without any justification or appealing basis in light of the Principal Tax Jurisprudence that the Assessing Officer cannot sit in the armchair of the businessmen irrationally substituting his strategy.
The Tribunal stated that the AO’s approach without any additional supporting information or evidence, only on a stand-alone basis, is not correct and justified. The AO only noted the abnormal decline in the Gross Profit rate of jewellery without pointing out any flaws or discrepancies in the assessee’s audited books of accounts.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has condoned delays caused by negligence of tax practitioners in serving notices. The two-member Bench of Suchitra Kamble (Judicial Member) allowed the appeal filed by the assessee holding that the CIT(A) had not taken cognizance of the genuine reason of the assessee for not filing the appeal within the time limit. The reason given by the assessee was justifiable and appeared to be genuine.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the Section 50C of the Income Tax Act 1961 is applicable to transfer of capital asset of land or building and not to the transfer of rights.The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the ppeal filed by the assessee holding that the provisions of Section 50C of the Income Tax Act were applicable in case of transfer of a capital asset being land or building or both.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that addition under Section 69 of the Income Tax Act 1961 is not sustainable on mere delay in deposit during demonetisation period.
A Single Bench of Chandra Mohan Garg (Judicial Member) allowed the appeal filed by the assessee holding that the assessee is a farmer earning exempt agricultural income and small interest income and has no other means of income. Also, in the absence of evidences to destroy the factual submissions of assessee and also as assessee was allowed to deposit amount up to 31st December 2016, a delay in deposit could not be a valid basis for raising any doubt against the assessee.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) granted the trust registration under Section 12AA Income Tax Act, 1961 created to manage the legal responsibilities of the employees of the parent trust, which falls under the charitable activity.
The Two-bench tribunal consisting C.M. Garg and M. Balaganesh while granting the registration under the Section 12AA of the Income Tax Act held that any trust that has been created for the purpose of managing the statutory obligations of employees of the parent trust would certainly fall within the ambit of advancement of general public utility and, hence, to be considered as a charitable activity as defined under the Section 2(15) of theIncome Tax Act.
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that material found from premises of third parties could not be utilized against assessee for assessment under Section 143(3) read with Section 153A of Income Tax Act 1961.
The two member bench of Waseem Ahmed, (Accountant Member) and Madhumita Roy, (Judicial Member) determined that the materials found from the premises of third cannot be utilized against the assessee for making assessment under Section 143(3) read with section 153A of the Income Tax Act. Therefore the bench dismissed the appeal filed by the revenue.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that assessment framed under Section 147 of Income Tax Act,1961 on information under Project Falcon regarding trading on United Stock Exchange of India not borne out of any record.
The two member bench of Dr. B. R. R. Kumar, (Accountant Member) and Astha Chandra, (Judicial Member) held that the order passed by the Assessing Officer under Section 147 Income Tax Act, is beyond logic and not borne out of any record. R. S. Singhavi, A counsel appeared for the assessee. H. K. Choudhary, counsel appeared for revenue.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the additional holding that the deemed dividends could not be taxed in the hands of non-shareholders.
The Bench held that the assessee who had received advances from the said two concerns, was not a shareholder of these concerns, therefore, even though the advances qualified as deemed dividend in terms of section 2(22)(e) of the Income Tax Act, and they could not be taxed in the hands of the assessee.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that fabrication charges received from Associate Enterprise (AE) for manufacturing glass is not Fee for Technical Services (FTS) under India-Singapore Tax Treaty.
The two member bench of the B.R. Baskaran, (Accountant Member) and Pavan Kumar Gadale, (Judicial Member) held that fabrication charges received by the assessee from its AE did not fall under the purview of fees for technical services .Thus the bench allowed the appeal filed by the appeal.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that cessation of liability under Section 41(1) of Income Tax Act,1961 cannot be treated as an income for addition.
The two member bench comprising of Kul Bharat(Judicial) and Pradip Kumar Kedia(Accountant) held that the Section 41(1) of Income Tax Act had the effect of deeming such cessation or remission of liability as income in departure with the general law where such remission or cessation was not treated as an income. It was also held that the assessee had continued to recognize the liability and one cannot say that the liability was not unenforceable against the assessee without its discharge or reversal and the addition made under section 41(1) of Income Tax Act was set aside while allowing the appeal filed by the assessee.
The Dehradun bench of the Income Tax Appellate Tribunal ( ITAT) held that the penalty imposed under section 271(1)(c ) of the Income Tax Act,1961 without proving either concealment of income or filing of inaccurate particulars of income is invalid.
The two-member bench comprising Saktijit Dey (Judicial) and Dr B. R. R. Kumar (Accountant) held that based on various decisions of the High Court the assessing officer had not been specified under section 274 of the Income Tax Act as to whether the penalty was proposed for alleged ‘concealment of income’ or ‘furnishing of inaccurate particulars of such income’ and are liable to be deleted.
The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently upheld that denial of registration filed under Section 12AB of Income Tax Act 1961 in absence of proving genuineness of charitable activity.
The tribunal issued notice by Speed post but none appeared for the assessee. Thereafter, the tribunal considered observation of the CIT(E) and held that the assessee had not provided any details thus genuineness of the activities and charitableness of the activities could not be verified. The tribunal further observed that assessee has not filed any details before this tribunal. No one has appeared on behalf of the assessee. On these circumstances, the two member tribunal of S.S.Godara, (Judicial Member) and Dr. Dipak P. Ripote, (Accountant Member) dismissed the appeal filed by the assessee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271B of the Income Tax Act, 1961 holding that the difference in non-delivery derivative transactions should be taken for determining turnover for the purpose of tax audit under Section 44AB of the Income Tax Act.
The Division Bench of Kul Bharat, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the appeal filed by the revenue holding that as per the Guidance Note issued by the ICAI for the purposes of tax audit under Section 44AB of the Income Tax Act, the turnover in the case of derivative and speculative transactions (which are non-delivery-based transactions) only the resultant difference arising to the assessee from such transaction had to be taken for the purposes of turnover instead of the gross amount.
The Income Tax Appellate Tribunal (ITAT), Amritsar Bench has invalidated the rejection of the application for registration of Charitable Trust observing that the assessee was not offered a fair and reasonable opportunity of being heard.
The two-member bench consisting of Dr. M. L. Meena (Accountant Member) and Anikesh Banerjee (Judicial Member), finding merit in assessee’s contentions, remitted back the matter to the CIT(E) for de novo adjudication, granting the assessee a reasonable opportunity for a hearing and submission of evidence. The appeal of the assessee was allowed for statistical purposes.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271E of the Income Tax Act 1961 holding that the transaction between 2 companies could not come under Section 269SS of the Income Tax Act upon amalgamation.
The Bench held that transaction between the TAPL and ACIL should be regarded as transaction between two units of the same company due to merger and transactions between the two companies were out of ambit of Section 269SS of the Income Tax Act.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition holding carat wise stock maintenance was sufficient compliance to prove genuine purchases in diamond trade.
The two-member Bench of S PRASHANT Maharishi, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) relied upon the Bombay High Court decision in Sundram gems Private Limited which categorically held that in case of Diamond trade, carat wise stock maintenance would be the sufficient compliance and therefore, the assessee could not be further burdened to show the colour and number of diamonds.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Section 44BB of the Income Tax Act could not be applied in the absence of a Permanent Establishment (PE). The Division Bench of Yahya, (Accountant Member) and Kul Bharat, (Judicial Member) allowed the appeal filed by the assessee holding that “It is settled proposition that unless Revenue is able to prove that the assessee has a PE in India, its business profits cannot be subject to tax in India.”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition for cash deposit on account past savings and agricultural operations.
The two-member Bench of B. R. R. Kumar, (Accountant Member) Yogesh Kumar US, (Judicial Member) held that a certain amount of past savings could not be discounted. An amount of Rs.27,61,000/- was explained as out of past savings, withdrawals and agricultural activities. Out of this an amount of Rs.2, 00,000/- was held to be the past savings and from the agricultural operations of the assessee.
The New Delhi bench of Income Tax Appellate Tribunal (ITAT) held that no addition could be made by the way of disallowance of capital loss on account of no change in real ownership of the company of assessee.
The two member bench comprising of N.K. Billaiya (Accountant) and Shri Challa Nagendra Prasad (Judicial) held that the assessing Officer had proceeded on a wrong assumption of facts, his entire findings became erroneous and the commissioner had the correct understanding of implication of Scheme of Arrangement and effective date relevant for the transaction for the year under consideration. The appeal filed by the revenue was dismissed.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the money borrowed for business purposes was allowable as business expenditure.
The two-member Bench of Waseem Ahmed, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) noted that the interest was paid on term loans taken for the business purpose of the company. It was explained that out of the total loan of Rs.5 crores, interest on term loan was paid to the Bank and rest of interest pertained to others on working capitals.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition to Income of elderly agriculturist based on adequate justification and proper account maintenance.
The Bench consisting of a Judicial Member Chandra Mohan Garg and an Accountant Member Pradip Kumar Kedia observed that the assessee had provided sufficient evidence and explanation regarding the holding and depositing of cash in the relevant assessment year. Considering the overall context where the assessee was an agriculturist who sold a land parcel, withdrew cash, utilized it partially for property purchases and fixed deposits over time. The Tribunal held that the burden placed on the assessee to explain the source of cash deposit has been satisfactorily fulfilled. In result, the appeal of the assessee was allowed.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) upheld the disallowance made by the assessing officer under section 143(1) of the Income Tax Act,1961 on the ground of late Deposition of Employee’s Contribution to provident fund (PF) or Employee State Insurance (ESI).
The two-member panel comprising Chandra Poojari (Accountant) and Beena Pillai (Judicial) upheld the disallowance made by the assessing officer under section 143(1) of the Income Tax Act while dismissing the appeal filed by the assessee.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that no fee shall be levied under Section 234E of Income Tax Act, 1961 on late Filing of Tax Deducted at Source (TDS) prior to 01.04.2015 and set aside the demand notice issued under Section 200A of the Income Tax Act,1961.
The ITAT bench comprising of Shri Prashant Maharishi, (Accountant Member) and Ms. Kavitha Rajagopal, (Judicial Member) relied on the decision given in case of Fatheraj Singhvi vs Union of India wherein it was held that “no computation of fee for the demand or the intimation for the fee under Section 2343E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent authority for intimation for payment of fee under Section 234E can be said as without any authority of law”.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that Employees contribution to PF/ESI deposited after due date under the Income Tax Act is not allowable as deduction under Section 36(1)(va) of the Income Tax Act, 1961.
Following the decision of the Madras High Court rejected the prayer of the counsel of the assessee for restoring the matter back to the Assessing Officer (AO). The two-bench member comprising of Om Prakash Kant (Accountant member) and Kavitha Rajagopal (Judicial member) dismissed the appeal made by the assessee.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Appeals) for deleting the addition made by the assessing officer on account of an unsecured loan due to failure to produce genuine documents.
The two-member panel comprising Amit Shukla (Judicial) and S. Rifaur Rahman (Accountant) held that there was no merit in the case built by the assessing officer and upheld the decision made by the Commissioner of Income Tax (Appeals) while dismissing the appeal filed by the revenue.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that non- compliance to the notice by the assessee cannot be a reason to disallow 15 % retention of income to charitable organization and thus ordered the First Appellate Authority to readjudicate the matter.
The Bench comprising of Shri Aby T Varkey (Judicial Member) and Shri Om Prakash Kant (Accountant Member) observed that the appeal has been decided ex-parte without taking into consideration the submission of the assessee and the assessee is willing to co-operate, therefore in the interest of substantial justice it is appropriate to restore back the appeal to the CIT(A) for readjudication of the case.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the persistent loss filter could be applied only if there was loss in three successive assessment years.
The two-member Bench of Beena Pillai, (Judicial Member) and Padmavathy S (Accountant Member) remanded the comparable to the AO for necessary verification holding that if two out of the three preceding assessment year the comparable had earned profits it could not be held a persistent loss making company.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the Common Area Maintenance charges (CAM) paid by the TCNS Clothing Company would be liable to 2% of the Tax Deducted at Source (TDS) under Section 194C of the Income Tax Act 1961.
The two-member Bench of Challa Nagendra Prasad (Judicial Member) and Pradip Kumar Kedia (Accountant Member) allowed the appeal holding that the CAM charges paid by the assessee would be liable for TDS only at 2% under Section 194C of the Income Tax Act and not at 10% under Section 194I of the Income Tax Act.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) held that the additional income cannot be treated as unexplained expenditure under Section 69C of the Income Tax Act, 1961 to attract income tax under Section 115BBE of the Income Tax Act.
ITAT confirmed the order directing the AO to tax the amount of Rs. 5, 08, 98,100/- under normal provisions of the Income Tax Act.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has held that National Faceless Appellate Center (NFAC) could not adjudicate appeals already disposed of by Commissioner of Income Tax (Appeals)[CIT(A)]. Therefore, the bench directed the department to pay the cost.
The two-member bench of Vikas Awasthy (Judicial Member) and Gagan Goyal (Accountant Member) after considering the submission of the both parties observed it is an absolute slackness on the part of the department to fix an appeal for hearing that had already been disposed of. Therefore, the bench directed the department to pay cost Rs.10,000/- i.e. equivalent to the fee paid by the assessee for filing appeal before the Tribunal.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the addition made on transfer pricing of corporate guarantee fee without proper verification of account.
The two-member bench comprising B.R. Baskaran (Accountant ) and Rahul Chaudhary (Judicial) directed the transfer pricing officer to recomputed the transfer pricing adjustment by taking a rate of 0.6% as arm’s length rate for corporate guarantee fee for all corporate guarantee given by the assessee while allowing the appeal filed by the assessee.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT) deleted an addition made by the assessing officer on unexplained investment under section 69 of the Income Tax Act,1961 without the proper application of mind.
The bench observed that the provisions of section 69 of the Income Tax Act would get triggered if the investment was made from unaccounted money having a source in India and received or deemed to receive in India or accrue or arise or deemed to accrue or arise in India. Thus the source-based taxation the assessee being NRI would be eligible for treaty benefit in respect of his income earned in Muscat. The two-member panel comprising Vikas Awasthy (Judicial) and Amarjit Singh (Accountant) held that the addition made under section 69 of the Income Tax Act on account of unexplained investment was unsustainable and is liable to be deleted while allowing the appeal filed by the assessee.
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