This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the income portion of on-money could be assessable in the year in which the sale of flats has been declared.
The two-member Bench of B.R. Baskaran (Accountant Member) and Kavitha Rajagopal (Judicial Member) set aside the impugned order holding that, the income portion of the on-money was assessable in the year in which the sale of the concerned flat is declared by the assessee.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for the disallowance made on the ground of the nonsubmission of business vouchers.
The two-member bench comprising S.S. Viswanethra Ravi ( Judicial ) and G.D. Padmahshali (Accountant) directed the assessing officer to re-adjudicate the matter and directed to restrict the disallowance to 5% in the interest of justice while allowing the appeal filed by the assessee.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) upheld the revisionary order passed by the assessing officer on the ground of twin satisfaction envisaged under section 263 of the Income Tax Act,1961.
The two-member bench comprising S.S Godara (Judicial) and G. D. Padmahshali (Accountant) held that no inquiries into the substantial deposits at the first instance and further failure to carry out analysis in terms of directions were adequately sufficient to attract twin satisfaction as envisaged under section 263 of the Income Tax Act.
It was also held that the revisionary power done by the assessing officer under section 263 of the Income Tax Act was as per the law and is not liable to be deleted while dismissing the appeal filed by the assessee.
The service tax paid by the contractor for the value of the work is not included in gross receipts for the purposes of computing the assessee’s presumptive tax under Section 44AD of the Income Tax Act of 1961, according to the Kolkata bench of the Income Tax Appellate Tribunal (ITAT).
The Single Member Bench of Aby T. Varkey, (Judicial Member) observed that “service tax collected by assessee from its customers is on behalf of the Government and it needs to be deposited by the assessee in the relevant account of the Government. Therefore ‘service tax’ collected by assessee does not partake the character of income as referred to in section 5 of the Income Tax Act; and therefore, cannot be included in the gross receipt of assessee for the purpose of computing the presumptive taxation under Section 44AD of Income Tax Act.” Therefore, the bench allowed the appeal filed by the assessee.
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has held that no penalty should be levied under section 271B of Income Tax Act, 1961, if the assessee proved the reasonable cause for failure to furnish audit report on loss suffered from share trading.
The Two-member bench of Rajpal Yadav (Vice President) and Girish Agrawal(Accountant Member) held that no penalty shall be imposed on the person if he proved that there was a reasonable cause for the failureas provided under Section 273B of the Income Tax Act.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that no addition could be made under Section 69A of the Income Tax Act 1961 if repaid loan transactions are recorded in book of accounts of the assessee.
The Two-member bench of Pavan Kumar Gadale (Judicial Member) and Padmavathy S. (Accountant Member) held that the assessee has recorded the impugned transactions in the books of accounts and has also provided explanations/evidence explaining the source of the loan transaction. Thus, AO was not correct in treating the loan transaction as an income under Section 69A Income Tax Act.
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) allowed exemption under section 11 of Income Tax Act 1961 on delayed filing of return of income and Form 10B due to the outbreak of Pandemic of Covid-19.
The Two-member bench of Rajpal Yadav, (Vice President) and Girish Agrawal, (Accountant Member) observed that the assessee has filed belated return under Section 139(4) of the Income Tax Act which the department has not held to be a defective return under Section 139(9). Also, it was processed by accepting the revenue and capital expenditure though denying the exemption claimed under Section 11 Income Tax Act and computed the total income equal to the total receipts of the assessee for the year. Moreover, regarding the claim under Section 11 of Income Tax Act, the CPC failed to issue prior intimation to the assessee before making an adjustment. There fore the bench allowed the appeal filed by the assessee.
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition on disallowance of subcontract expenses on ground of lack of evidence.
The Tribunal concluded that the sub-contractual payments made by the appellant were genuine in the given circumstances, and the Assessing Officer erred in treating them as non-genuine. Consequently, the revenue’s appeals were rejected. No other grounds or arguments were presented during the proceedings. Therefore, the appellant’s seven appeals were partly allowed, and the revenue’s four cross-appeals were dismissed.
The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made by the assessing officer by treating the agriculture income as income from the undisclosed sources.
A single-member bench comprising Sanjay Garg (Judicial) held that the addition made by the assessing officer to the agricultural income as income from undisclosed sources was liable to be deleted while allowing the appeal filed by the assessee.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) held that the residuary provisions which are present under the Income Tax Act are not applicable to disallowances for late payment of Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI).
The one-bench comprising of Manoj Kumar Aggarwal (Accountant Member) observed that provisions of Section 37(1) are residuary provisions. Any expenditure which falls within the ambit of Sec.30 to 36 and if it is found not to be fulfilling the conditions laid under those provisions, the same could not be claimed alternatively u/s 37(1).
The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently quashed the revision order passed under Section 263 of Income Tax Act 1961 during covid-19 pandemic.
The two member bench of Inturi Rama Rao (Accountant Member) and S.S. Viswanethra Ravi, (Judicial Member) observed that the assessee could not represent the matter before the Principal commissioner of Income Tax on account of difficulties faced on account of Covid-19 Pandemic which constitute a reasonable and sufficient cause for non-appearance. Therefore, the bench allowed the appeal filed by the assessee.
The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication to the assessing officer for rejecting the claim of legal and professional expenses on grounds of the nonexistence of taxable business in the form of permanent establishment (PE).
The two-member bench comprising G.S. Pannu(President )and Saktijit Dey (Judicial) directed re-adjudication to the assessing officer to decide the assessee’s claim of disallowance of brought forward loss and set off the current year’s loss against the current year’s income while allowing the appeal filed by the assessee.
The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently held that interest income earned on fixed deposits with the cooperative /scheduled bank is eligible for deduction under Section 80P (2)(a)(i) of Income Tax Act 1961.
A single member bench of Inturi Rama Rao, (Accountant Member) allowed the appeal filed by the assessee and held that interest income earned on fixed deposits with cooperative/scheduled banks partakes the character of the business income, which is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT) dismissed the appeal filed by the assessee for rejecting the claim of deduction under section 40)a)(ia) of the Income Tax Act,1961 on the ground of non deduction of Tax deducted at source (TDS).
The two-member bench comprises Mahavir Singh(Vice President) and Manjunatha. G(Accountant) held that the claim made by the assessee was not as per the law and is liable to be dismissed.
The Raipur bench of Income Tax Appellate Tribunal (ITAT) has held that there is no disallowance under Section 40A (3) of Income Tax Act, 1961 on payment made towards purchase of beer from state government.
The two member bench of Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) restored the matter to the file of AO and set aside the order of disallowance regarding the payment made towards purchase of beer from state government .
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has quashed a time barred reassessment notice issued under Section 148 of Income Tax Act 1961 based on information from investigation wing regarding bogus expenses.
The two-member bench of Chandra Mohan Garg (Judicial Member) and Pradip Kumar Kedia (Accountant Member) find that the income chargeable to tax has escaped assessment ‘by reason of the failure on the part of the assessee to disclose fully and truly all material facts’ necessary for assessment. In the absence of such allegation, the jurisdiction assumed under Section 148 Income Tax Act to reopen a completed assessment is clearly void ab initio.
Thus, the issuance of notice under Section 147/148 Income Tax Act is time barred and void ab initio. Further, the reassessment order framed was without jurisdiction and is illegal. Therefore, the bench allowed the appeal filed by the assessee.
The Raipur bench of Income Tax Appellate Tribunal (ITAT) has ruled that no addition could be made on the basis of a rejected book of account by the Assessing Officer.
The two-member bench of Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) relied upon the decision of supreme court in case CIT Vs. K.Y Pilliah & Sons held that “once the books of account of an assessee are rejected as unreliable then it is open to the AO to estimate the assessee’s profits considering the profit which was earned in similar business.” R.B Doshi, counsel appeared for the assessee. Piyush Tripathi, counsel appeared for the revenue.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has directed the Commissioner for de novo adjudication, by condoning the delay of 379 days in filing the appeal due to the default of Charted Accountant (CA) in complying with the income Tax notices.
The bench observed that the reasonable opportunity for the assessee to be heard before the appeal was dismissed was not made clear in the commissioner’s contested ruling. As a result, there was a flagrant violation of the Principles of Natural Justice. Hence the Tribunal affirms the assessee’s right to a fair and reasonable opportunity to be heard while setting aside the CIT(A)’s order and directed for a new adjudication of the case.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that the direction by Commissioner of Income Tax (Appeals) [CIT(A)] to take appropriate action on tax perquisites under Section 17 of the Income Tax Act, 1961 exceeds the jurisdiction conferred by section 251 of Income Tax Act.
The Two-member bench of N. K. Billaiya (Accountant Member) and C.N. Prasad (Judicial Member) held that the direction of CIT(A) exceeds the jurisdiction conferred by Section 251 of the Income Tax Act,1961.
This weekly summary analyses the major Income Tax Appellate Tribunal (ITAT) stories that have been published at Taxscan.in. during the previous week from June 24 to 30, 2023.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) quashed the assessment order passed by the assessing officer for calculating the tax amount for the pre-clinical laboratory services rendered by the non-resident to the customers in India.
The two-member panel comprising Chandra Poojari (Accountant) and Beena Pillai (Judicial) held that the pre-clinical laboratory services rendered by a non-resident to customers in India would not be taxable in India and the assessment order made by the assessing officer was not as per the law and are liable to be quashed while allowing the appeal filed by the assessee.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the credits to capital account shown as gift from assessee’s aunt are not unexplained credits. Therefore, the bench deleted the addition made by the lower authorities.
The two-members bench of Annapurna Gupta ( Accountant Member) and Madhumita Roy (Judicial Member) after considering the submissions of the both parties observed that the credit is from maturity of old FDRs made by his aunt who was taken care of by the assessee only in the absence of her relative staying abroad Therefore the bench allowed the appeal filed by the assessee.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has quashed reassessment order passed without issuing notice under Section 148 of Income Tax Act, 1961.
The single member bench of Chandra Mohan Garg (Judicial Member), after considering the submissions of the both parties observed that the assessment order under section 143(3)/147 of the Income Tax Act is not validly sustainable in the absence of a valid notice under section 148 of the Income Tax Act by the Assessing Officer having jurisdiction over the assessee. Therefore the same was deserved to be quashed being bad in law. Thus, the bench allowed the appeal filed by the assessee.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that deduction for revenue from onsite services could not be denied on the ground of not connected to eligible units located in India.
The two member bench of B.R. Baskaran, (Accountant Member) Rahul Chaudhary, (Judicial Member) held that for the Assessment Year 2009-10 deduction claimed by the assessee under Section 10A of the Income Tax Act in respect of revenue from onsite services could not be denied on the ground that the onsite services are not connected to the eligible units located in India.
The Raipur bench of the Income Tax Appellate Tribunal (ITAT) held that the mistakes that are apparent from the records under Section 254(2) of the Income Tax Act, 1961 can be rectified by the tribunal.
The two-bench member comprising of Ravish Sood (Judicial member) and Dipak P. Ripote (Accountant member) concluded that the orders passed while disposing off the respective appeals as suffering from a mistake, which being apparent from record had therein made those amenable for rectification under sub-section (2) to Section 254 of the Income Tax Act, 1961. The orders which were filed by the department and were passed by the tribunal while disposing off the appeals were recalled.
The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the rejection of a claim of loss against the surrendered business income as unexplained income.
The bench observed that the action of the lower authorities in denying the set off of losses to the assessee cannot be held to be justified and are liable to be deleted. A single-member bench comprising Sanjay Garg ( Judicial) directed the assessing officer to re-adjudicate for allowing the claim of set-off of losses in respect of income determined under section 115BBE of the Income Tax Act while allowing the appeal filed by the assessee.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that additional income tax pay by domestic companies to resident shareholders should be at the rate mentioned under Section 115-O of the Income Tax Act, 1961.
The two member bench of Amit Shukla, (Judicial Member) and Amarjit Singh, (Accountant Member)held that dividend distribution tax is not on the shareholder but a tax on the domestic company. Therefore, the bench dismissed the appeal filed by the assesee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed depreciation claims under Section 32 of the Income Tax Act, 1961 holding that the term used for the Purpose of business would include assets which had been kept ready for use but actually had not been put to use.
The Bench further relying upon the decision in National Thermal Power Corporation Ltd. vs. Commissioner of Income-tax which held that ‘used for the purposes of the business’ would include the asset which is kept ready for use but actually not put to use, allowing the appeal filed by the assessee.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that Deemed Income under Section 11(3) of the Income Tax Act, 1961 can’t be claimed as an exemption under Section 11(1)(a) and Section 11(2) of the Income Tax Act.
The two-bench member comprising of Annapurna Gupta (Accountant member) and Siddhartha Nautiyal (Judicial member) directed the Assessing Officer (AO) to re-compute the exemption available to the assessee under Section 11(1)(a) and Section 11(2) of the Act by excluding “deemed income” under Section 11(3) of the Income Tax Act, 1961. And the appeal of the assessee is dismissed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the Assessing Officer (AO) could not withdraw or modify or substitute assessment order passed under Section 143(3) of the Income Tax Act, 1961 with another assessment order.
The two-member Bench of G.S. Pannu (President) and Saktijit Dey, (Judicial Member) observed that as per the scheme of the Act, once an assessment order had been passed under Section 143(3) of the Income Tax Act in respect of any assessment year, the Assessing Officer could not tinker with that assessment. He could either reopen the assessment or rectify the assessment order after strictly complying with the conditions of section 147 and 154 of the Income Tax Act respectively. The Bench allowed the appeal holding that the statute had not conferred any powers on the Assessing Officer to either withdraw or modify or substitute the assessment order passed under Section 143(3) of the Income Tax Act with another assessment order.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that telecommunication charges incurred for delivery of computer software outside India should be excluded from export turnover for computing deduction under Section 10A of Income Tax Act,1961. Therefore, the bench remanded the issue to the file of the Assessing Officer.
The two member bench of B.R. Baskaran (Accountant Member) Rahul Chaudhary (Judicial Member) remanded the issue to the file of the Assessing Officer to identify and excluded from “Export Turnover” the expenses incurred in foreign exchange which are connected to providing services of software development outside India for the purpose of computing deduction under Section 10A of the Act.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that a penalty can’t be imposed under Section 271D of the Income Tax Act, 1961 if there is no satisfaction in the assessment order.
The two-bench member comprising of R.K. Panda (Accountant member) and Laliet Kumar (Judicial member) held that since there is no recording of satisfaction by the Assessing Officer (AO) in the body of the assessment order for initiating penalty proceedings under Section 271D of the Income Tax Act. In reference to the decision of the jurisdictional High Court in the case of Srinivas Reddy Reddeppagari vs. Jt. CIT the penalty levied by the Assessing Officer (AO) and sustained by the Commissioner of Income-tax (Appeals) [CIT (A)] is liable to be quashed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the services rendered under IT & SAP service agreement are different from technical collaboration agreement. Thus the receipt of IT & SAP service is not treated as Fees for Technical service (FTS) under India-Israel Double Taxation Avoidance Agreement (DTAA).
The ITAT Bench comprising of Shri G.S. Pannu, President and Shri Saktijit Dey, Judicial Member observed that to qualify FTS under Article 12(4)(a) of India – Portugal Tax Treaty therein, two conditions have to be satisfied. Firstly, the services giving rise to the fees must be ancillary and subsidiary, and secondly, it must be connected to the application or enjoyment of right, property, or information which results in payment of royalty.
The Tribunal noted that IT and SAP support service agreement are completely different in nature and have no connection with the services rendered under the Technical Collaboration Agreement. Thus, the bench concluded that the IT and SAP Service receipts cannot be treated as FTS under Article 12(4)(a) of India – Portugal DTAA.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that no deduction should be allowed if payment of employee contribution towards Provident Fund (PF) and Employee State Insurance (ESI) is not made due date as per PF and ESI Act .
The two member bench of Vikas Awasthy (Judicial Member) and S. Rifaur Rahman, (Accountant Member) observed that the auditor in the audit report specifies the due date as prescribed under Section 36(1)(va) of the Income Tax Act and the date on which deposit has been made, then in the computation of income, the same cannot be claimed as deduction, because the law envisages that such payment is disallowable, because it has not been paid within the due date.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the additional income tax on dividends paid domestic companies to non-resident shareholders should be at rate prescribed under Section 115-O of Income Tax Act, 1961and not as per Double Taxation Avoidance Agreement (DTAA).
The two-member Bench of B R Baskaran, (Accountant Member) and Kuldip Singh, (Judicial Member) referred to Total Oil India Pvt. Ltd. vs. CIT & ors. which held that “Where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec.115-O of the Act, such additional income tax payable by the domestic company shall be at the rate mentioned in Section 115 O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income.” The Bench dismissed the cross objection filed by the assessee.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) while confirming the disallowance of payment of agency commission held that the assessee failed to justify the service render to Associated Enterprise. the two member bench of Mahavir Singh, (Vice President) And Manjunatha.G, (Accountant Member) considering above observation held that assessee could not file any evidence to prove that AEs have rendered services to justify payment of agency commission.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has quashed disallowance of payment made to subcontractors workers on basis of admissions or confessions made during survey proceedings .
The two member bench of Satbeer Singh Godara (Judicial Member) and Dr. Dipak P. Ripote, (Accountant Member) held that once the departmental survey action even could not find anything specific against the assessee or his sub-contracts despite having the benefit of Section 292C of the Income Tax Act. Therefore, the bench allowed the appeal filed by the assessee.
The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) held that set-off of any loss or deduction of any expenditure of business income, prior to Assessment Year (AY) 2016-17 cannot be denied under Section 115BBE of Income Tax Act, 1961.
The Single Bench of SH. Sanjay Garg, Judicial Member observed that in this case the assessment year involved is A.Y. 2013-14 and that the amendment to the provisions of Section 115BBE of Income Tax Act have been introduced vide Finance Act, 2016 w.e.f. 01.04.2017, the action of the lower authorities in denying the set off of losses to the assessee cannot be held to be justified. Hence, the Tribunal allowed the appeal and directed the AO to allow the assessee set off of losses in respect of income determined under Section 115BBE of the Income Tax Act.
The Amritsar bench of the Income Tax Appellate Tribunal ( ITAT) quashed the assessment order passed by the assessing officer by quoting the wrong section on jurisdiction and declared the order as void ab-initio.
The two-member bench comprising Dr. M. L. Meena ( Accountant) and Anikesh Banerjee (Judicial) held that the assessment framed under section 153A of the Income Tax Act was a mistake of quoting a wrong section on jurisdiction and defect of mentioning a wrong section on jurisdiction by the assessing officer was not a curable mistake or defect under section 292B of the Income Tax Act and declared as void ab initio while allowing the appeal filed by the assessee.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the investment in the Unit Linked Insurance Policy (ULIP) of Life Insurance Corporation of India (LIC) shall be treated as a “Capital Asset” under Section 2(14) of the Income Tax Act, 1961 and the accretion on surrender of the policy shall be taxable under the head “Income from Capital Gains” and not under “Income from Other Sources”.
The two-member bench comprising of Shri Prashant Maharishi (Accountant Member) and Ms Kavitha Rajagopal (Judicial Member) held that ULIP shall come under the purview of ‘capital asset’ as per section 2(14) of the Income Tax Act, 1961 and directed the AO to tax the accretion on surrender of the policy under the head ‘income from capital gains’ instead of ‘income from other sources.’ In result, the bench allowed the appeal filed by the assessee.
The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) held that Non-mentioning of the business income in the books of account cannot be the sole reason to invoke the provisions of Section 115BBE of the Income Tax Act, 1961.
The one-bench member comprised of Sanjay Garg (Judicial member) made the view that the additional income surrendered by the assessee was not from any other unexplained source and same was out-of-business proceeds of the assessee. Therefore, on the part of the lower authorities in applying the provisions of Section 115BBE of the Income Tax Act to the surrendered business income of the assessee was not justified. The Assessing Officer was redirected to tax the assessee on the surrendered income at normal rates as applicable to the business income. The appeal of the assessee was allowed.
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