ITAT Weekly Round-Up

This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal ( ITAT ) reported at Taxscan.in during the previous week from April 06, 2024 to April 12, 2024. Read More: ITAT Weekly Round-Up of previous week from March 30, 2024 to April 5, 2024. Calculation of Fair Market Value of Equity Shares based on Book Value by AO: ITAT deletes Addition of Rs. 46.52 Lakhs on Share Premium Maa Biddeswari Agro Products Pvt. Ltd vs ITO, Ward-3(4) CITATION: 2024 TAXSCAN (ITAT) 512 The Income Tax Appellate Tribunal ( ITAT ), Kolkata Bench recently deleted the addition of Share Premium as calculation of Fair Market Value ( FMV ) of equity shares based on book value by the Assessing Officer was carried out without due consideration of the valuation report furnished by the assessee. The appellate tribunal noted that the valuation report obtained from a registered valuer meticulously considered both movable and immovable properties, a crucial aspect overlooked by the lower authorities. Taxpayer voluntarily clarifies discrepancy in Lease Equalization Disallowance without Malicious Intent: ITAT deletes Penalty u/s 271(1)(c) of Income Tax Act Eureka Outsourcing Solutions Pvt. Ltd vs CIT CITATION: 2024 TAXSCAN (ITAT) 513 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 as the taxpayer voluntarily clarified the discrepancy in lease equalization disallowance without any malicious intent. The two member bench of the tribunal comprising S.Rifafur Rahman ( Accountant member ) and Kavitha Rajagopal ( Judicial member ) observed that the taxpayer voluntarily clarified discrepancy in lease equalization disallowance without malicious intent. Therefore, the bench further deemed it fit to direct the AO to delete the impugned penalty levied. Hence, the grounds raised by the assessee are allowed. AO made No Reference to any Incriminating Material while Making Addition on TDR Transactions: ITAT dismisses Revenue’s Appeal DCIT Faridabad vs Martial Buildcom P. Ltd CITATION: 2024 TAXSCAN (ITAT) 514 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the Revenue’s appeal as the Assessing Officer ( AO ) made no reference to any incriminating material while adding on TDR transactions. The Coram of Saktijit Dey ( Vice President ) and N.K Billaiya ( Accountant member ) observed that the addition on account of EDC to HUDA is concerned the same is made on examination of the entries in the books of account, therefore, this is also devoid of any incriminating material. Jurisdiction Challenge of Assessing Authority shall be filed within 1 Month as u/s 124(3) of Income Tax Act: ITAT dismisses Appeal M/s. Regional Oilseeds Growers Co-operative Societies Union Ltd vs The Joint Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 515 The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal as the jurisdiction challenge of the assessing authority was not filed within one month as per Section 124(3) of the Income Tax Act, 1961. The two member bench of the tribunal comprising Chandra Poojari ( Accountant member ) and Beena Pillai ( Judicial member ) observed that this issue had already become time barred by virtue of the provisions of Section 124(3) of the Income Tax Act. Trust mistakenly applies for Registration u/s 12A (1)(ac)(ii) instead of 12A(1)(ac)(iii) of Income Tax Act: ITAT directs Readjudication Sri Jeyamkonda Choleeswara Soundaranayaki Amman Kumbhabisheka Malar Kuzhu vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 516 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the order of the Commissioner of Income Tax (Exemption) and directed re-adjudication after a trust mistakenly applies for registration under Section 12A(1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Income Tax Act, 1961. The bench noted that the assessee has simpliciter made a technical mistake in applying under Section 12A (1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Income Tax Act. It was informed to the Bench by the AR for the assessee that even now the assessee has filed fresh Form No.10AB seeking registration under Section 12A(1)(ac)(iii) of the Income Tax Act, which can also be considered. Non-Competition Fee received under Restrictive Covenants Restrains Source of Income: ITAT deletes Addition of Rs. 64 Cr M/s SIEL Limited vs The A.C.I.T. CITATION: 2024 TAXSCAN (ITAT) 517 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled to delete the addition of Rs. 64 crore after determining that the non-competition fee received under restrictive covenants restrained the source of income. The two member bench of the tribunal comprising Sakti Jit Dey ( Vice President ) and N.K.Billaiya ( Accountant member) concluded that whereas compensation received for loss of agency is taxable as revenue receipt, however, receipts attributable to the negative covenants for not to carry on a business are capital receipts not liable to tax. Accordingly, the Assessing Officer was directed to delete the same. Appeal of the assessee was allowed. Printing, Publishing and Subscription of books of Vedas, Gita, Upanishads for imparting education is not Commercial activity: ITAT allows exemption u/s 11 of Income Tax Act Income Tax Officer vs Satvichar Darshan CITATION: 2024 TAXSCAN (ITAT) 518 The Mumbai bench Income Tax Appellate Tribunal (ITAT) while allowing the exemption under section 11 of the Income Tax Act, 1961 held that printing, publishing and subscription of books of vedas, gita, upanishads for imparting education is not commercial activity. The tribunal observed that the assessee trust is not merely engaged in the business of printing, publication and subscription of books, but rather incidental to the main activity of the trust which is nothing but the spreading the message of Rev Dada. Failure to appeal before Lower Authorities due to sudden resignation of Accountant without intimation: ITAT directs Readjudication Ramakushna Kiritbhai Tripathi vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 519 The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) on account of failure to appeal before the lower authorities due to the sudden resignation of accountant without intimation directed readjudication the assessee case. The tribunal observed that the in the present assessee’s peculiar case wherein the assessee’s accountant who was looking after the assessee’s case left the job without intimating the notices as well as the assessee not being able to know the intricacies of Income Tax Act and its compliances could not represent his case either before the Assessing Officer or before the CIT(A). Waiver of Loan for Acquiring Capital Assets cannot be taxed as a Perquisite u/s 28 (iv) of Income Tax Act: ITAT The Great Eastern Shipping Co. Ltd vs The Asst. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 520 In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the waiver of loan for acquiring capital assets cannot be taxed as a perquisite under Section 28 (iv) of Income Tax Act, 1961. The bench observed that the Supreme Court in the case of Mahindra & Mahindra Ltd wherein the Supreme Court held that waiver of loan for acquiring capital assets cannot be taxed as a perquisite under Section 28(iv) of the Income Tax Act as receipt in the hands of the assessee are in the form of cash / money and further, the same cannot be taxed as a remission of liability under Section 41(1) of the Income Tax Act as waiver of loan does not amount to cessation of trading liability. No Legal Proceedings during Resolution Process against CD, Only IRP can file Appeal with Creditor Committee Approval: ITAT dismisses Appeal M/s Infrastructure Leasing and Financial Services Ltd vs Addl. Joint/Deputy/Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 521 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal, affirming that no legal proceedings can be initiated during the resolution process against the Corporate Debtor (CD), and only the Interim Resolution Professional ( IRP ) can file an appeal with approval from the Creditor Committee. Consequently, the two member bench of the tribunal comprising Gagan Goyal (Accountant member) and Kuldip Singh (Judicial member) concluded that the appeal filed by the assessee was hereby dismissed with liberty to file the fresh one in proper format duly verified the person authorized or to get the present appeal restored by moving an application. Routine establishment Expenses and Interest on Loan taken for General Business Purposes is required to be allowed as Deduction: ITAT sets aside order passed by CIT(A) Gauri Construction Company vs ACIT CITATION: 2024 TAXSCAN (ITAT) 522 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) sets aside the order passed by CIT (A), emphasizing that routine establishment expenses and interest on loans taken for general business purposes must be allowed as deductions. The bench observed that the assessee had acquired land in previous years with plans for constructing five towers. Despite completing construction and selling all flats in Tower D1 in the preceding year, the assessee did not declare any income from the sale of Tower D1 flats during that period. Deduction u/s 80 IA of Income Tax Act not available only to Persons Executing Works Contract: ITAT rejects Deduction Claim AJR Infra and Tolling Limited vs DCIT CITATION: 2024 TAXSCAN (ITAT) 523 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) rejected the claim of deduction under Section 80IA of the Income Tax Act, 1961 stating that it is not available to individuals engaged in executing works contracts. The two member bench of the tribunal comprising Pavan Kumar Gadale ( Judicial member) and B.R.Baskaran ( Accountant member) observed that the AO was right in holding that the assessee has only executed a works contract allotted to it by the SPVs. There should not be any dispute that the deduction under Section 80IA of the Income Tax Act, is not available to the persons executing works contract. Share profit From Partnership Firm exempted u/s 10 (2A) of Income Tax Act: ITAT Kanti Thermo Equip Pvt. Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 524 In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that share profit from partnership firms is exempted under Section 10 (2A) of Income Tax Act, 1961. The two member bench of the tribunal comprising Aby T. Varkey (Judicial member) and B.R.Baskaran (Accountant member) observed that the share of profit received from a partnership firm is exempted under section 10(2A) of the Income Tax Act. AO fails to consider Sale Consideration of Immovable Property as per Sale Agreement with Stamp Duty Valuation: ITAT sets aside u/s 56(2)(x) of Income Tax Act Smt. Mohini Bharat Kumar Ludhani vs National E-Assessment Centre 2024 TAXSCAN (ITAT) 525 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) set aside assessing officers' decisions under Section 56(2) (x) of the Income Tax Act, 1961 due to failure to consider sale consideration of immovable property as per sale agreement with stamp duty valuation. The tribunal, consisting of Om Prakash Kant (Accountant member) and Rahul Chaudhary (Judicial member), set aside the addition of INR 56,00,022/- under Section 56(2)(x) of the Income Tax Act was set aside. Material /document Uncovered during Search Raises no doubt or suspicion against Taxpayer: ITAT deletes addition u/s 153A Shri Renukamata Multi–State Co–operative vs Asstt. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 526 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted addition under Section 153A of the Income Tax Act, 1961 as material uncovered during search raises no doubt or suspicion against the taxpayer. The ITAT concluded that the material/documents found during the course of the search are not of such a nature which incriminates or militates against the assessee. Further, viewed that the material/documents found during the course of search also do not raise any doubt or suspicion against the assessee, and if at all the material/documents may only incriminate against the members in whose account the money was deposited. AO cannot Pass Final Assessment Order without Passing Draft as Prescribed u/s 144C (1) of Income Tax Act: ITAT quashes Order M/s Welspun Global Brands Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 527 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the Assessing Officer’s ( AO ) final assessment order for failing to pass a draft assessment as required under Section 144C(1) of the Income Tax Act,1961. The two member bench of the tribunal comprising Mrs. Pathmavathy (Accountant member) and Narendar Kumar Choudhri (Judicial member) observed that the final assessment order dated 13/03/2015 under Section 143(3) read with section 92CA (4) of the Income Tax Act passed by the Assessing Officer, without passing the draft assessment order as prescribed Under Section 144C (1) of the Income Tax Act, 1961, was without jurisdiction and void-ab-initio. Hence, the assessment order itself was quashed. Passing Intimation u/s 143 without Reasonable Opportunity to Taxpayer Deemed Unlawful: ITAT against AO Aashirvad Villa Limited vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 529 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that passing intimation under Section 143 of the Income Tax Act, 1961 without affording the taxpayer a reasonable opportunity is deemed unlawful, opposing the action of the Assessing Officer (AO). The two member bench of the tribunal comprising Rajesh Kumar (Accountant member) and Anikesh Banerjee (Judicial member) observed that the assessee has claimed this loss in the return of income, which was rejected by the Assessing Officer without giving reasonable opportunity to the assessee and issued intimation under Section 143(1) of the Income Tax Act, 1961. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

ITAT Weekly Round-Up

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