This annual digest analyzes all the ITAT stories published in 2023 at taxscan.in
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the Transfer Pricing (TP) adjustment by the Transfer Pricing Officer (TPO) towards the payment of royalty on technology paid to the Cadbury Adams USA LLC, and Cadbury Enterprises Pte Ltd.
The two-member Bench of Vikas Awasthy (Judicial Member) and Padmavathy S. (Accountant Member) observed that the co-ordinate bench in assessee’s own case for A.Y. 2009-10 (supra) had considered the issue of payment of royalty on technology to Cadbury Adams USA LLC, to Cadbury Enterprises Pte Ltd and Cadbury Schweppes Asia Pacific Pte Limited (now merged with Cadbury Enterprises Pte Ltd).
The Bench held that the payment of royalty to Cadbury Adams USA (CAUSA) was at arm‟s length holding that the royalty payment on trademark usage was within the arms‟ length and did not call for any adjustment. The Bench further noticed that the payment of royalty towards trademark for the year under consideration was based on the same agreement, which was considered by the co-ordinate bench for the assessment year 2009-10 and directed delete the TP adjustment made by the TPO towards payment of royalty on technology paid to Cadbury Adams USA LLC, and Cadbury Enterprises Pte Ltd.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that depending on auditor for uploading of the return along with return of income, is sufficient cause within the meaning of Section 273B of the Income Tax Act for failure of uploading return electronically.
After hearing both sides, the two member bench of the tribunal consisting of Mahavir Singh (Vice president) and Manoj Kumar Aggarwal (Accountant member) observed that the assessee got his accounts audited and obtained Tax Audit Report on 20-08-2017. The same was uploaded electronically on 25-11-2019. However the return of income could not be furnished due to technical issues. The assessee was depended on auditor for uploading of the return along with return of income. Therefore, the same, is sufficient cause within the meaning of Section 273B and therefore, not a fit case for imposition of penalty, the bench held. By deleting the impugned penalty, the appeal was allowed.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that purchasing of residential house property before due date for filing return of Income makes assessee eligible for deduction under section 54F of the Income Tax Act.
The two member bench consisting of Manmohan Das (Judicial Member) and Manjunatha G. (Accountant Member) held that Since, the appellant has satisfied all conditions prescribed for claiming deduction under Section 54F of the Income Tax Act, the CIT(A) ought to have allowed alternate claim made by the assessee for deduction under Section 54F of the Income Tax Act.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed Denovo adjudication as the intimation under Section 143(1) of the Income Tax Act 1961, neither contained any adjustment nor any demand nor reduction of refund regarding the exclusion of Merchandise Exports from India Scheme (MEIS) licence from the book profits under Section 115JB of the Income Tax Act.
The two-member Bench of Balaganesh, (Accountant Member) and Anubhav Sharma, (Judicial Member) observed that the CIT(A) in his order had simply observed that in the intimation under Section 143(1) of the Income Tax Act had not made any adjustment under any head of income regarding the aforesaid issue and neither refund was reduced nor any demand was created. The Bench allowed the appeal filed by the assessee holding that, “The CIT(A) further observed that once an amount was offered in the return of income by an assessee, the same cannot be sought to be reduced in the appellate proceedings.We are unable to comprehend ourselves to accept to this proposition of the CIT(A). The assessee is always at liberty to plead that a particular receipt has been erroneously offered to tax in the return.”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that the Employee Stock Option Expenses (ESOP) is revenue in nature, thus deleted the disallowance employee stock option expenses claimed of ₹ 6,065,232.
The Bench comprising of Prashant Maharishi, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that the disallowance of employee stock option expenses of ₹6,065,232, was held to be capital expenditure. The Bench relied on decision of the Karnataka High Court in CIT versus Biocon Land of Delhi High Court in case of Lemon Tree Hotels and Madras High Court in case of PVP Ventures limited, where it was held that the ESOP expenditure are revenue in nature. Accordingly the Bench directed the AO to delete the disallowance of employee stock option expenditure of ₹ 6,064,232. Hence the appeal filed by the assessee was allowed.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that in absence of any evidence placed by the Assesing Officer(AO) that the expenditure of Advertisement and Sales Promotion has resulted into benefit to the third party disallowances cannot sustain.
The Bench comprising of Prashant Maharishi, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that no adverse facts or finding of the AO was drawn to our attention. Lower authorities did not attempt to show that the assessee for its own business not wholly and exclusively incurs expenses.
The Tribunal directed the AO to delete the disallowance of the expenses as the facts in this case are no different. Therefore, according to the Tribunal’s decision in assessee’s appeal for AY 2016 – 17, The Bench directed the AO to delete the disallowance of advertisement and sales promotion expenses of ₹ 219,553,823. Hence the appeal filed by the assessee was allowed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the addition of share premium and share capital cannot be imposed by ignoring the evidence produced by the assessee.
The Two-member bench comprising of Pavan Kumar Gadale (Judicial member) and S. Rifaur Rahman (Accountant member) held that the Assessing Officer had failed to make enquiries and relied only on the statement of the key person, which was retracted subsequently. The CIT(A) has dealt on the facts, provisions of law, and Judicial decisions applied the ratio of decisions to the present case, and deleted the additions. The bench considering the facts, circumstances, and submissions of the assessee was of the view that the CIT(A) order is reasoned and conclusive. Therefore, the order of CIT(A) was upheld and the ground of the revenue was dismissed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the damage on account of the right to sue is a capital receipt and not chargeable to tax.
The Two-member bench comprising of Amit S ukla (Judicial member) and Amarjit Singh (Accountant member) held that the impugned order of the PCIT cancelling the assessment order solely relied on the judgment of M/s. Vijay Flexible Containers which is not applicable on the facts of the assessee’s case cannot be sustained and was thereby set aside and the order of the Assessing Officer accepting the claim was upheld. Thus, the appeal of the assessee was allowed.
The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) held that delayed payment of Tax collection at source (TCS) and Goods and Services Tax (GST) is not a penalty and shall be allowable as a deduction under Section 37 of the Income Tax Act, 1961.
The Two-member bench comprising of Sandeep Gosain (Judicial member) and Rathod Kamlesh Jayantbhai (Accountant member) relied on the judgment referred by the authorized representative and held that payments towards late fees for filing TCS/ GST Return is not an offence prohibited by law. Thus, the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the benefit of Arm’s Length Price (ALP) falls within the tolerance band of +/- of 5% as per Section 92C(2) of the Income Tax Act, 1961.
The Two-member bench comprising of M. Balaganesh (Accountant member) and Anubhav Sharma (Judicial member) held that the value of international transaction of Rs. 22,18,04,073/- which was mentioned in the order of TPO under Section 92CA(3) of the Income Tax Act 5% of the price charged in international transaction thereon works out to Rs. 1,10,90,204/-.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that the interest expenditure claimed by the assessee is directly related to the interest income earned during the year under consideration, thus allowed the deduction under Section 57(iii) of Income Tax Act,1961 on ‘income from other sources’.
The Bench found that the DRP after duly noting the chronology of events, i.e. borrowing of interest-bearing funds by the assessee and thereafter advancing the same as interest-bearing loan to the sister concern, came to the conclusion that the interest expenditure claimed by the assessee is directly related to the interest income earned during the year under consideration.
Further, it is pertinent to note that the violation of RBI guidelines on the usage of External Commercial Borrowings (ECB) funds for other purposes has no relevance in the allowance of deduction under section 57(iii) of the Income Tax Act. Therefore, the impugned final assessment order passed in conformity with the directions of the DRP, whereby the interest expenditure of Rs.10,25,58,218, was directed to be allowed under section 57(iii) of the Income Tax Act against the interest income offered for taxation under the head “income from other sources” was upheld. Hence this ground raised in the appeal by Revenue was dismissed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that since the document on the basis of which addition of Rs.2 crores is sought to be made is not a cogent document, the Tribunal upheld the order of Commissioner of Income Tax (Appeals) [CIT(A)] in deletion of income tax addition under Section 69 B of the Income Tax Act,1961 .
The Bench comprising of Shamim Yahya, Accountant Member and Anubhav Sharma, Judicial Member observed that the document on the basis of which addition of Rs.2 crores is sought to be made is not a cogent document, the same is unsigned photocopy on which the addition was made for the impugned amount. Furthermore, AO instead of proving that cash transaction took place rather put the burden on the assessee to prove that the said transaction did not take place. Therefore the Tribunal found that the CIT (A) has passed a correct order which does not require any interference on our part. Accordingly upheld the order of the CIT(A). Hence the appeal filed by the Revenue was dismissed.
The Income Tax Appellate Tribunal (ITAT ) Ahmedabad bench deleted the addition made towards the cash deposit in the bank account of assessee without considering the source of the cash from PG Income.
After considering the facts and circumstances, the single member bench of Annapurna Gupta (Accountant Member) deleted the addition made towards the cash deposit in the account of assessee when it was clearly substantiated the cash source was from the PG income.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that Compensation amount not having any relation with the cost towards the sale of area cannot be treated as capital expenditure under section 37 of the Income Tax Act.
The two member bench consisting of Chandra Poojari (Accountant member) and Beena Pillai (Judicial member) held that though the agreement to cancel the construction was entered into by asseseee with Shri Dev in the year 2016 but the payment was actually made in the year 2017 relevant to the assessment year under consideration. Therefore the AO was directed to allow the claim towards proportionate compensation of Rs.70,053/- made by the assessee for the year under consideration as business expenditure in the hands of the assessee. Thus the appeal was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that no penalty could be imposed under section 271(1)(c) as no concealment of income or furnishing of inaccurate particulars was done as Alleged by Revenue.
The two member bench consisting of M, Balaganesh (Accountant member) and C.N Prasad (Judicial member) held that there is no concealment of income or furnishing inaccurate particulars of such income by the assessee in any of these assessment years and thus, the bench sustained the order of the CIT(A) for the assessment years 2004-05 to 2011-12 and 2014-15 to 2016-17. Thus the appeal of the revenue was dismissed.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that an addition under Section 68 of the Income Tax Act, 1961 cannot be made in the absence of the source to use the cash deposited in the bank by the NRI.
The Two-member bench comprising of Rama Kanta Panda (Vice-President) and Laliet Kumar (Judicial member) held that once the assessee is able to demonstrate the withdrawal of cash by clinching and unrebutted evidence, then the same should have been accepted.
The Revenue has not brought out any evidence to the contrary to show that the cash withdrawals during the earlier assessment years were used for the purposes of other activities by the assessee or her husband. Moreover, when the assessee happens to be an NRI, and does not have any source of income or activity for which the cash can be utilized. Therefore, the bench do not find any reason to make the addition in the hands of the assessee. Accordingly, the addition was deleted and appeal of the assessee was allowed.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that the donation made towards Corporate Social Responsibility (CSR) shall be allowable under Section 80G of the Income Tax Act, 1961.
The Two-member bench comprising of Rama Kanta Panda (Vice-President) and K. Narasimha Chary (Judicial member) held that the assessee satisfied the conditions of Section 80G of the Income Tax Act, the assessee is entitled to claim deduction under Section 80G of the Income Tax Act in respect of such donations which formed part of the spend towards CSR. Thus, the appeal of the assessee was allowed.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to the Gemological Institute of America, as the Indian subsidiary operating in an independent manner would not constitute a Permanent Establishment (PE).
The two-member Bench of Shukla, (Judicial Member) and S. Rifaur Rahman, (Accountant Member) allowed this ground of appeal observing from the record that an identical issue was decided in favor of the assessee in the A.Y.2010-11 and held that assessee did not have a Permanent Establishment in India.
The Bench further observed that GIA India Lab was an independent/separate legal entity in which was engaged in the rendering of grading services. Further, considering the functions and the risks assumed by GIA India Lab visà-vis its business activities in India, GIA India Lab an independent entity which was rendering grading services to its clients in India. GIA India Lab also had beare service risk and all client facing risks vis-à-vis the stones sent to the assessee company for grading purposes so, GIA India Lab was not acting in India on behalf of the assessee company. The Bench also held that the Assessing Officer had erred in invoking section 9 of the Income Tax Act Act or Article 5 of the India USA DTAA to say that the assessee company had a PE in India.
The Chennai bench of the Income Tax Appellate Tribunal held that AO will re-compute the disallowance only on the investments giving rise to exempt income and exclude the investments which does not give exempt income.
The two member bench consisting of Shri Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant member) directed the AO to verify the interest free funds available and the investments giving rise to exempt income. The assessee is to produce the books of accounts and the extract of details of investment before the AO.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition against Mondelez India Foods towards the transfer pricing adjustment on account of Advertisement, Marketing and Promotion (AMP) expenditure holding that the AMP expenditure could not be treated as international expenditure.
The two-member bench of Vikas Awasthy (Judicial Member) and Padmavathy S. (Accountant Member) observed the decisions of Maruti Suzuki, Whirlpool India, Bausch & Lomb Eyecare (India) Pvt.Ltd in which the issue of AMP expenses had been deliberated upon extensively and each and every argument raised by the TPO/DRP had been analysed thread bare.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that at the time of assessment Assessing Officer (AO) observed concealment of income for which proceedings under Section 271(1)(c) of the Income Tax Act, 1961 was initiated.
The Bench comprising of G.S.Pannu, President and Anubhav Sharma, Judicial Member observed that when the case was called for hearing, non-appeared for the appellant and the record shows that after 20th March, 2023 matter has been listed repeatedly but none has appeared.
The Tribunal observed that that there is no matter on record to show as to what is the nature of ambiguity in the notice as issued. No copy of the notice is on record. It was further observed that at the time of assessment AO has observed there was concealment of income for which proceedings under Section 271(1)(c) of the Income Tax Act was initiated. Hence, the appeal of assessee was dismissed.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) held that the amended provisions of section 50C(1) of the Income Tax Act is retrospective in nature, the value adopted or assessed or assessable by the Stamp Valuation Authority on the date of agreement has to be taken for the purpose of full value of the consideration in calculating capital gain in case of immovable property.
The Bench comprising of R.K. Panda, Vice-President and K. Narasimha Chary, Judicial Member observed that it has been held in various decisions that the amendment to Section 50C of the Income Tax Act introduced by the Finance Act 2016 for determining the full value of consideration in the case of the immovable property is curative in nature and will apply retrospectively.
The Income Tax Appellate Tribunal (ITAT) Chennai bench remanded the matter before the Assessing officer for re adjudication due to nonconsideration of evidence on deduction claimed under Section 54B of the Income Tax Act, 1961 and capital gains exemption on sale of agricultural land.
After reviewing the facts and circumstance , the two member bench of Manoj Kumar Aggarwal (Accountant Member) and Mahavir Singh (Vice President) observed that It was wrong for CIT(A) to exclude new evidence since it would have significantly impacted how the assessee’s capital gains were calculated. Therefore the bench directed re adjudication due to nonconsideration of evidence on deduction claimed under Section 54B of the Income Tax Act and capital gains exemption on sale of agricultural land.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) held that the agreement was not entered between the assessee and the Government / Statutory Government and there was a violation laid down by the statute and therefore, the assessee is not entitled to claim deduction
The Bench comprising of Rama Kanta Panda, Vice President and Laliet Kumar, Judicial Member held that the statue is unambiguous and clear which only provides that the enterprise in whose favour the work has been allotted or agreement has been entered shall alone be entitled to claim deduction under Section 80IA(4) of the Income Tax Act.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has allowed deduction in respect of net exchange losses to the Mondelez India Foods as the loss arising from the cancellation of forward contracts was arising in the normal course of business.
The two-member Bench of Vikas Awasthy (Judicial Member) and Padmavathy S. (Accountant Member) noticed that the co-ordinate bench in assessee’s own case had considered a similar issue for A.Y. 2009-10in which the decision in London Star Diamond Co. (I) Pvt. Ltdwas followed.
The observation in that case was, “Broadly the loss was divided into two types and the adjudication of each subdivision of loss is given as under: (a) Loss on Cancellation of Matured FCs, relates to the FCs cancelled or terminated on or after the due date. In other words, the FCs booked as an integral part of the export invoices lived its booking period in full and they were either terminated by the Bank on or after the due date of maturity of the contract as the actual realisations were not received in time. These were not premature cancellations by the assessee and therefore, in our considered view, the said loss being related to the FCs which were integral or incidental to the exports of the diamonds, should be allowed as business loss.”
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the penalty under Section 271D of the Income Tax Act, 1961 cannot be imposed on the loan transactions made through banking channels.
The Single-member bench comprising of Suchitra Kamble (Judicial member) held that the transaction, as well as the ledger along with the certificate, was not doubted and in fact the contention of the Departmental Representative that it was mismatching appears to be not correct and thus there was no cash involved in the present transaction. Therefore, Section 269SS of the Income Tax Act will not be applicable in the present case and the penalty levied under Section 271D of the Income Tax Act does not survive. Thus, the CIT(A) as well as the Assessing Officer was not correct in levying the penalty under Section 271D of the Income Tax Act. The appeal of the assessee was allowed.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the tax deducted at source under Section 194C(2) of the Income Tax Act, 1961 shall not be applicable when there is no contractual or sub-contractual relationship exists between the joint venture and its constituencies.
The Two-member bench comprising of Rajpal Yadav (Vice-President) and Girish Agrawal (Accountant member) held that both the parties have divided the contract work between themselves and have executed their share of work at their own risk.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) grants another opportunity to the assessee in order to provide evidence in relation to the registration of trust under Section 12AB of the Income Tax Act, 1961.
The Two-member bench comprising of S.S. Godara (Judicial member) and G.D. Padmahshali (Accountant member) held that these provisions for the trust registration under Section 12AB of the Income Tax Act and granting of recognition under Section 80G of the Income Tax Act enhance the socio-economic-welfare in society. The Income Tax laws are welfare legislations and not penal in nature. Therefore, the appellant deserves one more opportunity to make good the defects/shortcomings. The appellant shall ensure necessary compliance in accordance with the law and shall adhere to timeless strictly without seeking any unreasoned adjournment. Thus, the appeal of the assessee was allowed.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication as the addition under Section 68 of the Income Tax Act 1961 due to non-consideration of unsigned reply by assessee to notice issued under Section 147 of the Income Tax Act.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer cannot impose an addition without mentioning any provision of the statute.
The Single-member bench comprising of Suchitra Kamble (Judicial member) held that the Assessing Officer failed to give a description as to how the assessee is involved in anything related to wrongly calming the Short-Term Capital Loss or Long-Term Capital Gains. The CIT(A) also failed to give the reasons as to how the transactions of the assessee while dealing with VAS Infrastructure Limited in the present case is a bogus Long-Term Capital Gain/bogus Short-Term Capital Loss/bogus Business Loss. In fact, the Assessing Officer has also not mentioned as to under which provision of the Income Tax Statute the addition has been made. Therefore, the Assessing Officer was not justified in making the addition to the extent of Rs.3,33,411/-. Thus, the appeal of the assessee was allowed.
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