This annual digest analyzes all the ITAT stories published in 2023 at taxscan.in
The Surat bench of the Income Tax Appellate Tribunal (ITAT) allowed another opportunity to the assessee for non-compliance of notice due to a different email ID on Form 35 and the Income Tax Return (ITR).
The Single-member bench comprising of Pawan Singh (Judicial member) held that the CIT(A) had dismissed the appeal in ex parte order without discussing the merit of the case. The impugned order passed by CIT(A) was not in accordance with the mandate of Section 250(6) of the Income Tax Act. Therefore, the bench restored the appeal back to the file of the Assessing Officer to pass the assessment order afresh. And the Assessing Officer was also directed to provide a reasonable opportunity to the assessee. Thus, the appeal of the assessee was allowed.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest received by the cooperative societies from cooperative banks is eligible for deduction under Section 80P of the Income Tax Act 1961.
The two-member Bench of Prashant Maharishi, (Accountant Member) and Narender Kumar Choudhry, (Judicial Member) observed that assessee was a cooperative society more precisely a housing society and not a cooperative bank therefore the provision Section 80P (4) of the Income Tax Act would not apply to assessee and therefore assessee was held to be eligible for deduction under Section 80 P (2) of the Income Tax Act.
Here the assessee had invested in saraswat Cooperative bank, shamrao Vithal cooperative bank and Maharashtra District cooperative bank limited. There was no doubt that the assessee was not a cooperative bank. Section 80P (4) of the Income Tax Act denies deduction to cooperative banks only. This view was upheld by the supreme court in the case of Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. V Assessing Officer. The Bench allowed the appeal filed by the assessee.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, held that entries in the books of account prior to amalgamation could not be part of additions made under Section 153A of the Income Tax Act, 1961, in the hands of the assessee. Therefore, the bench deleted the addition.
After reviewing the facts and records, the two-member bench of Padmavathy S. (Accountant member) and Kuldip Singh (Judicial Member) held that additions made under section 37(1) and section 50C based on the transactions in the books of Citygold Farming Pvt Ltd and Headland Farming P Ltd in the assessee’s hands shall not be sustained.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, held that payments towards employees’ contributions on account of Provident Fund and Employee State Insurance Contributions made after the due date prescribed under relevant statutes should attract disallowance under section 36(1)(va) of the Income Tax Act, 1961.
After reviewing the facts and records, the single bench of N. K. Choudhry (Judicial Officer) held that payments towards employees’ contributions on account of Provident Fund and Employee State Insurance Contributions made after the due date prescribed under relevant statutes should attract disallowance under section 36(1) (va) of the Income Tax Act.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, held that the disallowance of the claim of write-off made in an individual entity’s financials prior to amalgamation could not be added as income in the hands of the assessee.
After reviewing the facts and records, the two-member bench of Padmavathy S. (Accountant member) and Kuldip Singh (Judicial Member) held that the disallowance of the claim of write-off made in an individual entity’s financials prior to amalgamation could not be added as income in the hands of the assessee. Therefore, the bench deleted the addition made by the assessing officer.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench remitted the file of the assessee back to CIT(E) for de novo consideration due to the failure to substantiate the genuineness of the activities of the assessee trust for obtaining registration under Section 12A of the Income Tax Act, 1961.
After reviewing the facts and records, the two-member bench of G. D. Padmahshali (Accountant Member) and Partha Sarathi Choudhury (Judicial Member) has remitted the matter back to the CIT(E) for de novo consideration.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the addition under Section 69B of the Income Tax Act, 1961 cannot be made by the Assessing Officer purely based upon the conjectures/surmises and without considering the evidence produced.
The Single-member bench comprising of Rajesh Kumar (Accountant member) held that the addition made by the Assessing Officer is purely based upon conjectures and surmises as the Assessing Officer has failed to take note of the evidence filed by the assessee before the Assessing Officer in the form of purchase bills, stock register, etc. and also the fact that the wastage and breakage sustained by the assessee in the ordinary course of business. Thus, the order of the Commissioner of Income Tax Act (Appeal) was set aside and the Assessing Officer was directed to delete the addition which was made under Section 69B of the Income Tax Act. Therefore, the appeal of the assessee was allowed.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that additions cannot be allowed on unsecured loans incurred wholly and exclusively for the purpose of business.
The Single-member bench of Rajesh Kumar (Accountant member) held that the observations of the Assessing Officer that the interest paid on the unsecured loan was personal in nature was without any substantive finding whereas, on the other hand, the assessee has vehemently argued before us by referring to the balance sheet and profit and loss account that the said loan was in fact taken for the purpose of business and interest was incurred wholly and exclusively for the purpose of business of the assessee. There was merit in the contentions of the assessee that the loan was taken only for the purpose of business and not for any personal objectives. Accordingly, the order of CIT(A) was set aside and the Assessing Officer was directed to delete the addition.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) restored the matter to the file of the Assessing Officer (AO) for verification and examination to allow claim of capital gain deduction under Section 54/54F of Income Tax Act,1961 towards purchase of two adjacent and joint flats for the purpose of one residence unit.
The Bench comprising of G.S Pannu, President and Chandra Mohan Garg, Judicial Member restored the matter to the file of the AO for verification and examination of fact as to whether the assessee has purchased two adjacent and joint flat for the purpose of using the same as one residential unit and after being satisfied to allow the benefit of exemption under Section 54 and 54F of the Income Tax Act. The appeal of assessee was allowed for statistical purposes.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition under Section 69A of the Income Tax Act 1961 as it was imposed based upon the maintenance of cash of company at residence mixed with cash of family members during the search proceedings.
The two-member Bench of C. M. Garg, (Judicial Member) and B. R. R. Kumar, (Accountant Member) observed that the argument of the CIT(A) that if at all the cash was kept at residence , then the same must be kept separately and not mixed with cash of the family members could not be accepted. The Bench owing to the availability of the cash in the accepted books of accounts of the company as well as accepted statement affairs filed by the family members ,allowed the appeal filed by the assessee holding that no further addition was required on account of cash found at the premises.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that services rendered are not in relation to any manufacturing activity, therefore the receipts cannot be treated as Fee for Included Services (FIS) under Article 12(4)(b) of the India – USA Double Taxation Avoidance Agreements (DTAA), and the Assessing Officer (AO) was directed to delete the addition.
The Bench comprising of Saktijit Dey, Vice-President and Dr. B.R.R. Kumar, Accountant Member observed that the AO has treated the receipts from support services as FIS and brought it to tax. Thus, on overall consideration of facts and materials on record the Tribunal was of the view that the Revenue has not brought on record any materials to establish the fulfillment of make available condition of Article 12(4)(b) of India – USA DTAA.
The decision of the Coordinate Bench in case of H.J. Heinz Company Vs. ADIT which the DR relied on is distinguishable on facts as the services rendered in case of that assessee is in relation to manufacture of products. Whereas, in the facts of the present appeal, services rendered are not in relation to any manufacturing activity. Therefore in this view of the matter, the receipts cannot be treated as FIS under Article 12(4)(b) of the India – USA DTAA, and the AO was directed to delete the addition. Hence, appeal of the assessee was allowed.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has allowed the vacancy allowance holding that the Annual Lettable Value (ALV) of vacant property in unsold flats forms which were held as stock in trade and retained vacant during the year would be NIL.
The two-member Bench of Sanjay Garg, (Judicial Member) and Manish Borad, (Accountant Member) observed that that sub-Section 5 of Section 23 of the Income Tax Act had been inserted from 01.04.2018 which was specifically for those properties which were held as stock-in-trade and a moratorium period of two years was given from the end of the financial year in which certificate of completion of construction was obtained from the competent authority and if in these two years the property was vacant the annual value was to be taken at Rs. NIL, but the year under appeal is AY 2017-18 and though the assessee was also having the vacant units/flats as stock-in-trade but Section 23(5) of the Income Tax Act would not be applicable on the assessee.
The Bench allowed the appeal filed by the revenue holding that the annual lettable value of the vacant property in the form of unsold units/flats held as stock-in-trade by the assessee which were let out in the past but remained vacant during the year should be computed at Rs. NIL.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed the foreign exchange fluctuation loss holding that the Market to Market (M2M) loss on future and forward contracts were not notional loss of contingent nature.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) observed that the issue was squarely covered in favour of the assessee by plethora of judgments which in unequivocal terms had held that ‘mark to market’ loss on such future and forward contracts were not a notional loss of contingent nature and the loss stands crystallised at the end of the year notwithstanding the continuance and spilling over of the contract to next year. The Bench dismissed the appeal filed by the revenue holding that loss occurred due to such fluctuation in forward contract was an ordinary business loss and not merely a notional loss of provisional nature.
The Income Tax Appellate Tribunal (ITAT), Delhi bench held that credit entries in the savings account in a bank could not be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
After reviewing the facts and records, the two-member bench of Dr. B.R.R. Kumar (Judicial Member) and Saktijit Dey (Vice-President) quashed the reassessment proceedings and held that credit entries in the savings account in a bank could not be treated as unexplained cash credit under Section 68 of the Income Tax Act. Therefore, the bench deleted the addition made by the Assessing Officer and allowed the appeal of the assessee
The Income Tax Appellate Tribunal (ITAT), Delhi bench deleted the addition made towards the gift of cash amount deposited in the ICICI Bank, received from the father-in-law and mother-in-law of the wife. The assessee, Parminder Singh, was engaged in the business of sale and purchase of old mobile phones and the distribution of milk supply in his locality. Such a business mostly deals in cash. While filing the return of income, he declared that he had earned income from the business and agriculture. Subsequently, the assessee’s case was reopened under Section 148 of the Income Tax Act due to cash deposits of Rs. 17,30,110 in the bank account
After reviewing the facts and records, the single member bench of Challa Nagendra Prasad (Judicial Member) quashed the reassessment proceedings and held that the donors of the gifts, being the father-in-law and mother-in-law, were closely related to the assessee, and the sources were explained. The gifts cannot be disbelieved.
The Income Tax Appellate Tribunal (ITAT), Pune bench held that income from twin land transactions is taxable under Business Income, not Capital Income.
After reviewing the facts and records, the bench of Satbeer Singh Godara (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) held that profit from twin land transactions is taxable under Business Income, not Capital Income.
The Income Tax Appellate Tribunal (ITAT), Pune bench, allowed a deduction on the cost of acquisition of land acquired from allottees of the government for the rehabilitation dam project.
After reviewing the facts and records, the bench of Satbeer Singh Godara (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) granted a deduction for the cost of acquisition of land acquired from allottees of the government for the rehabilitation dam project.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench upheld the addition made by the CIT(A) under section 56(2)(viib) of the Income Tax Act, 1961, on account of excess consideration received on allotment of shares. After reviewing the facts and records, the two-member bench of G.S. Pannu (Vice President) and Sandeep Singh Karhail (Judicial Member) held that shares allotted by the assessee in excess of the price determined by the valuation report were held to be covered within the ambit of section 56(2)(viib) of the Income Tax Act. Therefore, the bench dismissed the appeal of the assessee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication on failure to make enquiries on proprietary of sale consideration based on seized documents.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) observed that the controversy in the present case related to additions on account of understated sale consideration on sale of property by the assessee in the factual matrix. The issue was essentially factual in nature and is thus wholly dependent upon the examination of facts threadbare.
The bench allowed the appeal filed by the revenue CIT(A) ought to have made suitable enquiries on the proprietary of sale consideration declared in the light of documents seized instead of brushing aside the action of the AO in a lopsided manner.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the upheld income addition on failure to explain the source of cash deposit in bank account.
The two-member Bench of Manjunatha G, (Accountant Member) and Manmohan Das, (Judicial Member) observed that the assessee failed to furnish any agreement to purchase of land so as to prove that cash was withdrawn from bank account for purchasing of land. Why the land could not be purchased was also not explained. Further, the cash book of the assessee told a different fact. The assessee’s cash book was either ‘very less cash balance’ or ‘negative cash balance’ during the relevant period. The Bench dismissed the appeal filed by the assessee holding that assessee did not furnish any reason why land could not be purchased. Even there was no agreement to purchase land and the cash book showed a negative cash balance.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that it is difficult to hold that the action of the AO is unintelligible as the revisionary proceeding was intiated in the event of ‘absence of inquiries or verifications which should have been made’, thus set aside the order under Section 263 of Income tax Act,1961.
The Tribunal comprising of Chandra Mohan Garg, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that clause (a) of Explanation (2) to Section 263 of the Income Tax Act inserted by Finance Act, 2015 seeked to clarify that the order passed by the lower authorities to be erroneous in so far as prejudicial to the interest of the Revenue in the event of ‘absence of inquiries or verifications which should have been made’.
The assessment order passed under Section 143(3) of the Income Tax Act could not be frustrated in the circumstances. The impugned revisional order passed under Section 263 of the Income Tax Act thus quashed and set aside. The appeal of the assessee was allowed.
The Chennai Bench of Income tax Appellate Tribunal (ITAT) held that due to no explanation of assessee for allowability of freight expenditure and labour charges, claimed by assessee in closing stock.
The bench comprising of Mahavir Singh, Vice President and Manjunatha.G, Accountant Member noted that the assessee could not explain how these expenses which are claimed by assessee in the closing stock is allowable i.e., provision in regard to freight expenses payable and labour charges payable. The assessee has not made any payment during the year and even there is no liability incurred for this, rather this is merely a provision. Hence the Tribunal confirmed the order of CIT(A), and dismissed the appeal filed by assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, while directing the matter of the assessee for readjudication, held that prior period income from the sale of property shall be chargeable to tax in the year in which the sale was undertaken.
After reviewing the facts and records, the two-member bench of M. Balaganesh (Accountant member) and Chandra Mohan Garg (Judicial Member) observed that the assessee did not engage in a property or land sale transaction during AY 2012–13; however, by passing book entries only, the assessee documented book entries related to the property/land sale transaction, which was actually completed during AY 2007–08. Therefore, the bench directed the AO to tax the income/profit accrued to the assessee from the sale of land/property in AY 2007-08.
The Income Tax Appellate Tribunal (ITAT), Kolkata bench, held that the assessing officer could not direct the assessee to produce a profit and loss account to show the source of expenditure when the gross receipt under Section 44AD of the Income Tax Act, 1961, was not recorded.
After reviewing the facts and records, the two-member bench of Rajesh Kumar (Accountant member) and Rajpal Yadav (Vice-President) allowed the appeal filed by the assessee. Samit Kumar, counsel, appeared for the assessee, and Rupesh Agrawal, counsel, appeared for the revenue.
The Income Tax Appellate Tribunal (ITAT), Raipur bench, observed that goods supplied to a sister concern under a discount amount had been credited to the books of account of the assessee. Therefore, the bench upheld the CIT(A) order that quashed the reassessment order of the AO.
After reviewing the facts and records, the two-member bench of Rajesh Kumar (Accountant member) and Rajpal Yadav (Vice-President) held that goods supplied to the sister concern under a discount amount had been credited to the books of account of the assessee. Therefore, the bench dismissed the appeal of the revenue.
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, while quashing the revision order passed under Section 263 of the Income Tax Act, held that the transporting of petroleum products from Indian Oil station to the petrol pump through tankers is not a contractual receipt.
After reviewing the facts and records, the two-member bench of Rajesh Kumar (Accountant member) and Rajpal Yadav (Vice-President) quashed the revision order passed by the PCIT. Therefore, the bench allowed the appeal filed by the assessee.
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam bench held that the assessee failed to produce evidence in support of the claim of credit liabilities towards labor groups. Therefore, the bench upheld the disallowance made by the CIT(A) under Section 40(a)(ia) of the Income Tax Act, 1961.
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam bench held that the assessee failed to produce evidence in support of the claim of credit liabilities towards labor groups. Therefore, the bench upheld the disallowance made by the CIT(A) under Section 40(a)(ia) of the Income Tax Act, 1961.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) held that the condition of “make available” has not been satisfied in the instant set of facts and hence, the services do not qualify as Fees for Technical Services(FTS).
There is nothing in the hand of the Tax Treaty or the judicial precedents on the subject to come to any such conclusion. In the result it was held that the services do not qualify as “fee for technical services” under Section 9(1)(vii) of the Income Tax Act read with Article 12 of the India-Netherlands Tax Treaty. Hence the assessee’s appeal was allowed.
The Ahmedabad Bench of Income tax Appellate Tribunal (ITAT) held that all income relating to entries noted in the diary stood disclosed by the partnership to and accepted by the settlement commission, thus upheld the decision of Commissioner of Income Tax (Appeal) [CIT(A)] in deleting the income Tax Addition.
The Bench comprising of Annapurna Gupta, Accountant Member and T.R. Senthil Kumar, Judicial Member observed that CIT(A) has found that all income relating to entries noted in the diary stood disclosed by the partnership to and accepted by the settlement commission. It was further observed that the assessee had stated the notings in the diary as relating to his business and which stood disclosed by its partnership firm to the settlement commission, who in turn accepted the same also, thus the Tribunal found no reason to interfere in the order of the CIT(A) deleting the addition made in the hands of the assessee finding the said income to be doubly assessed to taxed. Hence the appeal of the Revenue was dismissed.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, held that Tax Deduction at Source under Section 194C of the Income Tax Act, 1961, should not be applicable to purchase expenses claimed under the head “contract expenses”.
After reviewing the facts and records, the two-member bench of Waseem Ahmed (Accountant Member) and Siddhartha Nautiya (Judicial Member) directed to re-adjudicate the purchase expenses claimed under the head of “contract expenses”.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, while observing that excess interest paid to the partners of the firm was due to a mistake in the Tax audit report, directed it for readjudication.
After reviewing the facts and records, the two-member bench of Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) restored this issue to the file of the CIT(A) for de novo adjudication as per law after considering all the material available on record.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, held that third-party statements cannot be used against the assessee until and unless the opportunity of cross-examination is afforded. Therefore, the bench deleted the addition made under Section 68 of the Income Tax Act towards the receipt of interest-free unsecured loans.
After reviewing the facts and records, the two-member bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) held that third-party statements cannot be used against the assessee until and unless the opportunity of cross-examination is afforded. Therefore, the bench deleted the addition made under Section 68 of the Income Tax Act.
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