This yearly digest analyzes all the ITAT stories published in 2023 at taxscan.in
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that Compulsorily Convertible Debentures (CCDs) are in the nature of borrowed fund and continue to be in debt till conversion thereof into shares.
The two- member bench consisting of Dr. B. R. R. Kumar (Accountant member) and Yogesh Kumar U.S. (Judicial member) held that CCDs are in the nature of borrowed fund and continued to be debt till conversion thereof into shares and consequently interest on CCDs is allowable as revenue deduction under Section 36(1)(iii) of the Income Tax Act. Thus the appeal of the assessee was allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the investment for affording financial security to wife in old age out of explained funds could not be considered as unexplained investment.
The Bench allowed the appeal filed by the assessee holding that “The factum of gift by husband on the special occasions, festivals etc and other occasions at the time of buying immovable property or other valuable articles is normal practice in the civilized society. The fact of saving the laid for further emergency time is also a well-accepted and well-adopted practice of ladies in civilized society.”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the investment for affording financial security to wife in old age out of explained funds could not be considered as unexplained investment.
A Single Bench of C.M. Garg, (Judicial Member) observed that the copies of the agreement to sale revealed that the husband of the assessee Khalid Qureshi 26.02.2007 had entered into agreements to sell his two residential plots situated in village Mirzapur with Gaurav Kumar and Usha and received Rs. 4 Lakh each from said two purchasers in cash against the agreement of sale.
The Bench allowed the appeal filed by the assessee holding that “The factum of gift by husband on the special occasions, festivals etc and other occasions at the time of buying immovable property or other valuable articles is normal practice in the civilized society. The fact of saving the laid for further emergency time is also a well-accepted and well-adopted practice of ladies in civilized society.”
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that an advance received for the sale of property is taxable under the head Income from other sources if the agreement for sale is not registered under Section 56(2)(ix) of the Income Tax Act, 1961.
The Two-member bench comprising of Amarjit Singh (Accountant Member) and Rahul Chaudhary (Judicial Member) ruled that the Rs. 5 crores advance cannot be taxed as income due to the non-registered agreement for sale, the purchaser’s failure to take possession, and the assessee’s failure to refund the advance.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty holding that the difference in perception of viewing transactions could not amount to inaccurate particulars.
The two-member Bench of Saktijit Dey, (Vice President) and Girish Agrawal (Accountant Member) allowed the appeal filed by the assessee deleting the penalty holding that the that difference in perception of viewing a transaction could not amount to furnishing of inaccurate particulars.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition holding that Section 43CA of the Income Tax Act 1961 would not apply to the sale agreement entered before 1.4.2014.
The two-member Bench of Sanjay Garg (Judicial Member) and Manish Borad (Accountant Member) relied upon the decision of the Bombay High Court in PCIT vs. Swananda Properties (P) Ltd.
The Bench held that the provisions to Section 43CA of Income Tax Act have been introduced w.e.f. 01.04.2014 and the ‘agreement to sell was entered before the 1st April 2014 and therefore, the condition of payment or part payment of consideration on or before the date of agreement could not be imposed back-dated as the assessee could not have foreseen the introduction of Section 43CA of the Income Tax Act 1961.
The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench while directing to examine previous year assessment regarding capital gain exemption held that deduction under Section 54 of Income Tax Act, 1961 is not allowable as capital gain is not taxable in the current assessment year. The sale of the residential property was occurred in the previous year.
The tribunal after reviewing the facts and submissions of the both parties, the two-member bench of Annapurna Gupta (Accountant Member) and Rajpal Yadav (Vice-President) held that since the capital gain has been held to be not taxable in the impugned year, the eligibility to claim exemption of the same is to be examined in the year to which the capital gain pertains. Thus, the tribunal directed the AO to examine the previous year.
The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) set aside penalty of Rs.5000 under Section 271F of the Income Tax Act, 1961 on grounds of non-filing of returns by the assessee bonafidely and did not witness any loss to the revenue as the proper tax was already paid.
A Single bench member consisting of Sandeep Gosain (Judicial member) held that there was no loss to revenue on account of bona fide mistake on the part of the Revenue by not filing the return. Therefore, taking the liberal view of the matter in the peculiar circumstances, the penalty of Rs.5,000/- under section 271F of the Income Tax was set aside and consequently, the appeal of the assessee was allowed .
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that businesses can avail of benefits under Section 80HHC of Income Tax Act, 1961 even if export profits are not their exclusive source of income and it promotes trade and encourages entrepreneurial endeavors without restricting eligibility for tax incentives solely to export-oriented entities.
The ITAT observed that the assessee’s other sources of income, such as interest income and dividend income, were not derived from the same business as the export profits. This means that the other sources of income were not “profits of the business” for Section 80HHC. The AO’s interpretation of Section 80HHC would defeat the purpose of the provision, which is to provide a deduction for profits derived from export.
The Two-member Bench comprising G.S. Pannu (President) and Anubhav Sharma (Judicial Member) upheld the decision of the CIT(A) and allowed the deduction claimed by the assessee. The ITAT found that the assessee’s interpretation of Section 80HHC of Income Tax Act was correct and that the AO’s interpretation would defeat the purpose of the provision.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench deleted the 5% disallowance made by the assessing officer out of repair and maintenance expenses claimed under the sanitation segment .
It was observed by the tribunal that during the course of assessment proceedings itself the assessee has explained that repairs and maintenance expenses were incurred by it on its own vehicles and not on hired vehicles. Further the explanation of the assessee was supported by bills/vouchers.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of N.K. Billaiya, (Accountant Member) and Anubhav Sharma, (Judicial Member) deleted the 5% disallowance out of repair and maintenance expenses claimed under sanitation segment.
The Income Tax Appellate Tribunal (ITAT) Mumbai Bench directed readjudication for retaining disallowance without following directions of the Dispute Resolution Panel.
The tribunal after reviewing the facts and submissions of the both parties, the two-member bench of Kuldip Singh, (Judicial Member) and Padmavathy S. (Accountant Member) observed that asessee has submitted additional evidence before the DRP and the DRP after perusing the details submitted, has given a clear direction to the AO to verify and allow the expenditure in accordance with law. AO in the final assessment order did not consider the said directions of the DRP.
Therefore, the bench remitted the issue back to the AO with a direction to consider the evidence submitted and allow the claim of the assessee in accordance with law after giving a reasonable opportunity of being heard to the assessee.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench while dismissing the appeal filed by the revenue held that issuing notices under Section 153C of Income Tax Act, 1961 should be from six Assessment Year immediately preceding the assessment year.
It was observed by the tribunal that a satisfaction note for initiating the proceedings under Section 153C by the Assessing officer having jurisdiction over the case of “other person” has been recorded on 14.10.2016 and accordingly notice was issued on 18.10.2016.
The tribunal after reviewing the facts and submissions of the both parties the single member bench of G.S.Pannu, (President) and Anubhav Sharma, (Judicial Member) observed that the assessment order passed under section 153C of the Income Tax Act, is wholly without jurisdiction. Thus, the bench confirmed that issuing notices under Section 153C of Income Tax Act, 1961 should be from six Assessment Year immediately preceding the assessment year.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the deduction of repair and maintenance expenses as revenue expenditure under Section 37(1) of the Income Tax Act, 1961. The ITAT held that the expenses were incurred for the purpose of earning income and therefore, they are eligible for deduction.
The Two Member Bench comprising, Dr. Manish Borad, (accountant member), and Sonjoy Sarma (Accountant Member) has decided the case in favor of the assessee and has allowed the appeal. The Tribunal has held that the repair and maintenance expenses are revenue expenditures and should be allowed as a deduction.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has upheld the revision order holding that not enquiring huge cash deposits in demonetized currency was a violation of provisions dealing with demonetized currency.
The two-member Bench of R.K. Panda, Vice-President AND Shri Laliet Kumar, Judicial Member It is an admitted fact that the assessee has made cash deposit of Rs.39,74,500/- during the demonetization period which was accepted by him from various hospitals in demonetized currency in violation of the extant provisions regarding dealing in demonetized currency. However, the AO in the instant case has failed to investigate this aspect and passed the order under Section 143(3) of Income Tax Act accepting the income returned.
The Bench upheld the revision order holding that “Not enquiring the huge cash deposit of Rs.39,74,500/- in demonetized currency in violation of the extant provisions regarding dealing in demonetized currency has rendered the order erroneous and prejudicial to the interest of the Revenue.”
The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that the receipts for Amazon Web Services cloud computing services rendered by amazon to Indian customers are not taxable as Fee for Technical Service (FTS) under India -US treaty.
It was observed by the tribunal that AWS Services provided by the assessee are merely standard and automated services which are all publically available online to anyone. These services are all standardised and there is no customisation done for any particular customer. Thus, the payments received by the assessee from Indian Customer(s) from rendering AWS Services do not qualify as royalty under Article 12(3) of the India-USA DTAA and hence are not taxable in India.
Further, AWS Services provided by the assessee are standardised automated services that did not provide technical services to its customers nor does it satisfy the ‘make available’ clause as the customer would not be able to make use of the technical knowledge, skill, process etc. used by the assessee in providing cloud computing services, by itself in its business or for its own benefit, without recourse to the assessee in future. Hence, rendering cloud computing service cannot be held to be liable to tax in India as FTS/FIS.
After reviewing the facts and submissions of the both parties, the two member bench of G.S.Pannu, (President) and Astha Chandra, (Judicial Member) held that receipts for Amazon Web Services cloud computing services rendered by amazon to Indian customers are not taxable as Fee for Technical Service(FTS) under India -US treaty
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the assessing officer (AO) must verify the source of cash deposits made during the demonetization period. The ITAT’s decision in the case of Jumbo Electronics Corporation Pvt Ltd. v. Pr. CIT-2 is a reminder to businesses of the importance of accurate record-keeping and transparency with the tax authorities.
The Two Bench Members comprising Justice S Rifaur Rahman (Accountant Member) and Justice Kavitha Rajagopal (Judicial Member) decision was to partly allow the appeal filed by the assessee. It upheld the order of the PCIT on the issue of cash deposits made during the demonetization period, but it set aside the order of the PCIT on the issue of discrepancy in the gross receipts reported in the service tax return, the 26AS, and the P&L account.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has dismissed an appeal filed by the revenue, i.e. the Income Tax Department, challenging the order of the Bangalore bench of the ITAT. It was held that the President of the ITAT does not have the power to transfer appeals from one Bench of the ITAT to another. The power to transfer appeals is vested with the respective Benches of the Tribunal.
The tribunal observed that the power to transfer appeals is vested with the respective Benches of the ITAT, and not with the President of the ITAT and the transfer of appeals from the Kolkata Bench to the Indore Bench was not in the interests of justice, as it would have caused inconvenience to the assessee.
The Two Member Bench comprising Dr. Manish Borad (Accountant Member), and Rajpal Yadav (Vice President) ruled that appeals cannot be maintainable before the ITAT Kolkata Bench and dismissed the appeals for statistical purposes and also advised both parties to pursue them before 2 months at the ITAT Indore Bench and held that the period of limitation at Kolkata benches will be excluded from the limitation period.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench deleted the addition made by the assessing officer on jewelry gifted on occasion of marriage before the search action.
The tribunal after reviewing the facts and submissions of the both parties the two -member bench of B. R. R. Kumar, (Accountant Member) and Saktijit Dey, Vice President) observed that the assessee has filed before the revenue authorities, the will of Sarla Sood and also the confirmation of Rajesh Sood the Paternal uncle of gifting the jewellery on the occasion of marriage. Hence, he proved the source of jewellery gifted on marriage. Also noted that the Search action was conducted after the marriage of asessee. Therefore, no addition could be made on the jewellery gifted on marriage.
The Delhi Bench of Income Tax Appellate Tribunal has deleted the addition made under Section 153A of the Income Tax Act, 1961 holding that the reopening could not be done merely based on Retracted statement in the absence of any tangible material.
The two-member Bench of Shamim Yahya, (Accountant Member) and Anubhav Sharma, (Judicial Member) considered the opinion that AO had fallen in error in relying the retracted statement of Brijesh Bhagat. If at all the statement of Brijesh Bhagat was relevant the same should have been corroborated by some material evidences from the enquiry of the AO had conducted with regard to creditworthiness of the parties.
Thus, the Bench had no hesitation but to accept that the assessments completed under Section 153A of the Income Tax Act that the retracted statement of Bhagat was not reliable piece of evidence and like making addition under Section 153A of the Income Tax Act the same could not have been the sole basis of reopening also.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that in the year under consideration when the provision for doubtful debt has been written back, the assessee is entitled for making claim of the same.
The two-member bench consisting of Aby T Varkey (Judicial member) and Om Prakash Kant (Accountant member) held that unless there is such a finding under regular provisions of section 36(1)(vii) of the Income Tax Act, the provision for doubtful debt being also in the nature of diminution in value of asset, it also attracts explanation (i) of the section 115JB of the Income Tax Act. Therefore, under the facts and circumstances, the tribunal upheld the finding of CIT(A).
2023 TAXSCAN (ITAT) 1795
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has invalidated assessment reopened after four years as there was no failure to disclose the material facts fully.
The two-member Bench of Sanjay Garg, (Judicial Member) and Manish Borad, (Accountant Member) observed that the Assessing Officer has reopened the assessment merely based on the information received from the investigation wing without verifying the veracity and truthfulness of such information. The information was wrong and the Assessing Officer reopened the assessment on the basis of borrowed satisfaction without correlating the same with the facts of the case.
The Bench allowed the appeal holding the assessment was bad in law and observed that, “Even there is no allegation that the income of the assessee has escaped assessment due to non-disclosure of the facts necessary for the assessment and since the assessment has been reopened after four years of the end of relevant assessment year, hence, the exception provided under 1st Proviso to section 147 is attracted.”
The Income Tax Appellate Tribunal (ITAT) Chennai Bench held that the assessee cannot question the power of transferring cases of authorities from one jurisdiction to another. Therefore, the bench upheld the assessment order passed by the lower authorities.
It was observed by the tribunal that under provisions of section 127 of the Income Act, it was very clear that the power to transfer cases from one Assessing Officer to another Assessing Officer rests with the Principal Director General or Principal Chief Commissioner. Thus, the assessee could not call in question the powers vested with the authorities to transfer the cases in a manner convenient to the Department.
After reviewing the facts and submissions of the both parties, the two-member bench of V. Durga Rao, (Judicial Member) and Manjunatha. G, (Accountant Member) dismissed the appeal and upheld the assessment order passed by the lower authorities.
The Mumbai bench of the Income Tax Appellate Tribunal held that taxation rate is not to exceed 10% under Article 12 of the DTAA between India and France.
The two bench member consisting of S.Rifaur Rahman (Accountant member) and Amit Shukla (Judicial member) came to the conclusion that The claim of the assessee is that as per Article 12 of the DTAA between India and France, the rate of tax shall not exceed 10% and accordingly it filed appeal before the CIT (A) claiming that rate of tax to be deducted shall be 10%. However, the aforesaid finding will also apply mutatis mutandis for this appeal also. Thus the appeal was allowed
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) sustained the addition of partial amount of Rs. 1 crore as unexplained money under Section 69A of the Income Tax Act, 1961. The tribunal noted that the assessee failed to furnish material evidence regarding the gift received on marriage.
The two-member bench consisting of Manoj Kumar Aggarwal (Accountant member) and Mahavir Singh (Vice President) held that the provisions of Section 115BBE of the income Tax Act as amended by second amendment Act by the Taxation Laws Act, 2016 will apply w.e.f 01.04.2017 on enhanced rate of tax @60% instead of @30%. The enhanced rates apply from the commencement of the assessment year relevant to previous financial year.
Hence the case of the assessee was rejected Thus, the appeal was partly allowed.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the documentary evidences validated the compensation paid to the brokerages and the settlement of disputes out of sales proceeds.
The two bench member consisting of Chandra Poojari (Accountant member) and Beena Pillai (Judicial member) did not find any infirmity in the action of the CIT(A) in the deleting the addition of Rs.3,86,040,000/- in the hands of the assessee. Accordingly, the question of law remanded to the Tribunal by the Hon’ble High Court was allowed in favour of the assessee. Thus the appeal of the revenue was dismissed.
The Income Tax Appellate Tribunal (ITAT) Bangalore Bench held that interest paid towards excess claim of the refund of duty drawback is not penalty or fine.
After reviewing the facts and submissions of the both parties, the two-member bench of George George K (Vice President) and Laxmi Prasad Sahu, (Accountant Member) determined that interest paid by the assessee towards excess claim of refund of duty drawback is not penal in nature. Therefore, Explanation 1 to section 37 would not apply and assessee is eligible for claiming it as expenditure.
The Income Tax Appellate Tribunal (ITAT) Chennai Bench upheld that approval granted under Section 153D of Income Tax Act,1961 is in light of seized material and appraisal report submitted by investigation wing.
It was observed by the tribunal that the provisions of section 153D of the Act, deals with prior approval necessary for assessment in cases of search under Section 132 or requisition under Section 132A of the Income Tax Act. Thus, there was enough proof to conclude that the Addl. CIT has given approval under Section 153D of the Income Tax Act after great deliberations with draft assessment order passed by the Assessing Officer in light of seized material and appraisal report submitted by DDIT(Inv).
After reviewing the facts and submissions of the both parties, the two-member bench of V. Durga Rao, (Judicial Member) and Manjunatha. G, (Accountant Member) dismissed the appeal and upheld approval granted under Section 153D of Income Tax Act,1961 in the light of seized material and appraisal report submitted by investigation wing.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has treated the cash deposit made during the demonetisation period under Section 69A of the Income Tax Act 1961 on failure to produce the documentary evidence.
A Single Bench of V. Durga Rao, (Judicial Member) observed that since the assessee had produced copy of patta and crop adangal of agricultural land owned by her to the extent of 3.91 hectares, the agricultural income earned by the assessee were not in dispute. The department also did not dispute the income earned by way of TV serial story writing for which any documentary evidence could be produced. Considering this, the Bench partly allowed the appeal directing the Assessing Officer to restrict the disallowance to the extent of ₹.15.00 lakhs and to treat the balance amount of ₹.7,60,000/- as unexplained money under Section 69A of the Income Tax Act.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that no disallowance could be made on account of bad and doubtful debts claimed under Section 36(1) (viia) of Income Tax Act, 1961 with respect to Non-Performing Assets (NPA).
It was observed by the tribunal that the issue is already decided by the tribunal in favour of the assessee.
After reviewing the facts and submissions of the both parties, the two member bench of Om Prakash Kant (Accountant Member) and Kavitha Rajagopal (Judicial Member) Held that no disallowance could be made on account of bad and doubtful debts claimed under Section 36(1)(viia) of Income Tax Act with respect to Non-Performing Assets. It was also determined that deduction u/s 36 (1) (viia) of the Income Tax Act is not restricted to the banks only having the rural branches.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench directs readjudication in regarding the disallowance of the deduction of discount on the issue of shares under Employee Stock Option Plan (ESOP).
After reviewing the facts and submissions of the both parties the two-member bench of Om Prakash Kant (Accountant Member) and Kavitha Rajagopal (Judicial Member) directed readjudication in respect of disallowance of the deduction of discount on the issue of shares under Employee Stock Option Plan.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that capital gain exemption should not be denied on residential houses constructed on small areas of land.
It was observed by the tribunal that the assessee filed all records from which it is established that the assessee purchased the plot of land and constructed a residential unit/ house for his use.
After reviewing the facts and submissions of the both parties, the two member bench of M. Balaganesh(account member) and C.M. Garg,(Judicial Member) allowed the appeal filed by the assessee.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 27(1)(C) of the Income Tax Act, 1961 as there was no concealment of particulars and filing of inaccurate particulars of income.
A single Bench of Suchitra Kamble, (Judicial Member) observed that t in the assessment order itself the Assessing Officer had noted that the capital gain shown by the assessee in the statement of income as a credit entry was rejected and the addition was made in respect of non-granting of LTCG. The Bench allowed the appeal filed by the assessee and deleted the penalty holding that assessee at no point of time concealed its particulars of income or filed inaccurate particulars of income at any stage of revealing its income to the revenue authorities.
The Income Tax Appellate Tribunal (ITAT) Chennai bench directed the Assessing Officer (AO) to recompute the income of the assessee observing the inadvertent error in the income tax returns filed.It was observed by the tribunal that deduction under Section 11 Income Tax Act has been denied only due to the fact that there was inadvertent error while filling up the schedules in Income Tax Return forms.
After reviewing the facts and submissions of the both parties, the two member bench of Mahavir Singh (President) and Manoj Kumar Aggarwal (Judicial Member) held that The object of the assessment is to determine correct income of the assessee and revenue could not gain out of errors committed by the assessee and directed the AO to recompute the income of assessee
The Income Tax Appellate Tribunal (ITAT) Delhi held that salary paid to vice president of company should be allowed as expenditure under Section 37(1) of Income Tax Act, 1961
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of N.K.Billaiya (Accountant Member ) andAnubhav Sharma ( Accountant Member) observed that dismissed the appeal filed by the revenue and held that salary paid to vice president of company has allowed as expenditure under Section 37(1) of Income Tax Act.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the reopening beyond 4 years of original assessment without failure to disclose the material facts was bad in law.
The two-member Bench of Mahavir Singh, (Vice President) and Manoj Kumar Aggarwal, (Accountant Member) allowed the appeal filed by the assessee holding that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment and assessment was completed originally under Section 143(3) of the Income Tax Act and admittedly the reopening was beyond 4 years because notice under Section 148 of the Act was issued on 29.03.2019, no reopening was possible.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that the issue of share capital through qualified institutional placement (QIP) with Qualified Institutional buyers is public subscription. Therefore, the bench directs readjudication.
After reviewing the facts and submissions of the both parties, the two-member bench of Om Prakash Kant (Accountant Member) and Kavitha Rajagopal (Judicial Member) restored the matter to the file of AO to decide whether QIP is public or not.
The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that Goodwill acquired on Amalgamation is eligible for depreciation under Section 32 of Income Tax Act,1961.Therefore the bench deleted the disallowance.
After reviewing the facts and submissions of the both parties, the two member bench of Shamim Yahya (account member) and Challa Nagendra Prasad (Judicial Member) allowed the appeal filed by the assessee and observed that the previous year the tribunal decided the issue in favour of assesee.
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