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 May 12 to May 19, 2024.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer to disallow Asian Paints’ consulting fee paid for a feasibility study report, to the extent that it pertains only to home improvement and decor business expenditure.
The two member bench of the tribunal comprising Prashanth Maharishi (Accountant member) and Sandeep Singh Karhail (Judicial member) found no infirmity in the findings of the CIT (A) on this issue. However, from the details of expenditure, further found that the entire expenditure of Rs.1, 74, 40,000 was not incurred on obtaining a feasibility report in respect of home improvement and decor business.
In a recent case, the Bangalore bench of the Income Tax Appellate Tribunal(ITAT) held that deduction under section 36(1)(va) of the Income Tax Act, 1961 is not allowable if employees’ contributions are not paid within due dates specified under Provident Fund (PF) Act.
The two-member Bench of George George K (Vice President) and Laxmi Prasad Sahu (Accountant Member) affirmed with the Apex Court wherein it was held that “if the employees’ contributions are not paid within the due dates specified under the respective Acts, assessee will not be entitled to deduction under section 36(1)(va) of the Act”.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that ALP Adjustment is not permissible on a notional amount of royalty paid by an overseas subsidiary and confirmed the CIT(A)’s action in deleting the addition made on account of waiver of royalty received from two subsidiaries.
The Bench observed that the Coordinate bench in assessee’s own case deleted a similar addition by holding that when only 1% Royalty is payable by overseas subsidiaries, AO has no authority to make an addition of balance 2% Royalty waived by the parties, which is nothing but a notional income considered taxable by the AO in assessee’s hands.
In a recent ruling the Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 4.76 lakhs after the taxpayer, an agriculturalist, presented evidence of land ownership by their wife and children.
The tribunal, acknowledging the taxpayer’s agricultural background and providing evidence of land ownership, noted that the deposits during demonetization likely included proceeds from agricultural produce sales and past savings. However, the Assessing Officer had not adequately considered these facts. Given the permissible limit for cash deposits during demonetization and the likelihood of agricultural income, the tribunal restricted the addition to Rs. 2,00,000/- thereby granting relief of Rs. 4,76,000/- to the taxpayer.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted unexplained credits under Section 68 of the Income Tax Act, 1961, as it found the deposit transactions by the Assessee Company to be genuine.
The two-member bench of the tribunal concluded that based on loan confirmation, certificate of incorporation, PAN registration, copy of the ITR, balance sheet, profit & loss account, and bank statement of the creditors, the transactions of deposit received by the assessee company were genuine. No question of law arises based on the Tribunal’s findings.
The Two member bench of Mumbai Income Tax Appellate Tribunal ( ITAT ) directs readjudication for determining the municipal rateable value of the flats held as stock in trade.
After reviewing the facts the ITAT bench of Aby T Varkey, ( Judicial Member ) and S. Rifaur Rahman,(Accountant Member) allowed the claim made by the assessee by filing the additional evidence before us wherein the assessee has submitted the status of the closing stock of flats held by the assessee as stock-in-trade.
The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that a ratification application under section 154 of the Income Tax Act,1961 cannot be termed as time-barred if the taxpayer responded to notice issued under section 143 of the act.
The Bench observed that the entire profits of the assessee did not comprise only interest earned from nationalized banks and it included even profits earned from its activity of providing credit facilities to members, and therefore, the intimation made under Section 143(1) of the Act contained mistake apparent from the record which needed rectification.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has nullified the addition of Rs. 25 lakhs under Section 56 of the Income Tax Act, stating that the taxpayer is not the rightful owner of the property under scrutiny.
The two member bench of the tribunal comprising Astha Chandra Judicial member and Dr. B. R. R. Kumar (Accountant member) concluded that the seized documents being agreement to sale and purchase were required to be considered in entirety, not in piece meal. Hence, the view formed by the lower authorities to treat the assessee as real beneficiary of Rs.44,00,000/- (Rs.25 ,00 ,000/- during FY 2018-19 and Rs.19,00,000/- during FY 2019-20) was arbitrary and cannot be affirmed, Accordingly, the appeals of the assessee are allowed.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has granted relief to Shell Information Technology, ruling that payments for IT support services were not considered fees for technical services under the provisions of Article 12 of the India-Netherlands Double Taxation Avoidance Agreement ( DTAA ).
The bench found that the tribunal had held that payment for IT Support Services were not in the nature of ‘Fee for Technical Services’ under the provisions of Act read with Article 12 of the DTAA in view of decisions of the coordinate Bench of the Tribunal in the case of the Appellant for preceding assessment years.
The Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer ( AO ) to delete the addition of Rs. 4.71 crore after observing the AO’s failure to recompute book profit under Section 115JB of the Income Tax Act, 1961.
The bench observed that the appellant company was declared as sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 by the BIFR vide order, dated 22.01.2003. Since, the appellant company was a sick industrial company for the impugned assessment year, any profit derived from said industrial companies can be deducted while computing book profit.
The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has ordered a reconsideration, noting substantial evidence indicating that a taxpayer engaged in a money transfer business utilizing platforms such as M-Pesa and other mobile wallets, as evident from the bank statement.
The two member bench of the tribunal comprising Beena Pillai (Judicial member) and Laxmi Prasad Sahu (Accountant member) noted that the assessee was engaged in the business of money transfer through M-Pesa and other mobile wallets. It is evident from the bank statements that the assessee is getting commission for discharging the assigned works.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has granted relief to Shell Information Technology, specifying that interest on income tax refund would be categorized as taxable interest income under Article 11 of the India-Netherlands Double Taxation Avoidance Agreement ( DTAA ).
The bench, examining the decision of the special bench of the tribunal in Clough Engineering Ltd case, found that the Special Bench of the Tribunal has held that interest on refund received by tax resident of Australia from Indian Tax Authorities shall be liable to tax at the rate specified in Article 11 of Double Taxation Avoidance Agreement between India and Australia.
The Two member bench of Bangalore Income Tax Appellate Tribunal ( ITAT ) directed readjudication regarding the commission and brokerage sale credited to Profit and Loss Account of distributorship to Reliance Jio and Sun Directs.
After reviewing the facts the ITAT bench of Beena Pillai, ( Judicial Member ) and Chandra Poojari (Accountant Member) directed re adjudication regarding the commission and brokerage declared as part of sale credited to Profit and Loss Account of distributorship to Reliance Jio and Sun Directs.
The Two member bench of Delhi Income Tax Appellate Tribunal (ITAT) upheld the addition made on account of non submission of PAN and confirmation of parties regarding the advances received for Dish Installation.
After reviewing the facts the ITAT bench of Astha Chandra, (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member) upheld the addition made on account of non submission of PAN and confirmation of parties regarding the advances received for Dish Installation.
The two member bench of Bangalore Income Tax Appellate Tribunal ( ITAT ) directed re adjudication regarding the cash deposited during the demonetisation period under the business of purchases and sale of biscuits and confectioneries.
It was observed by the tribunal that the turnover shown as per VAT return is Rs.1,88,15,594/- and from the statement of facts that the assessee has filed return of income on 25/09/2019.
The Two member bench of Bangalore Income Tax Appellate Tribunal ( ITAT ) while deleting the retrospectively canceled trust registration observed that in income-tax matters, law to be applied is the law in force in the assessment year unless otherwise stated or implied.
After reviewing the facts the ITAT bench of Beena Pillai, (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) observed that “it is a cardinal principle of the tax law that law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication”.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that loss arising from sale of govt securities by banks is business loss and the income tax deduction is allowable under Section 37 of the Income Tax Act,1961.
The division bench of T.R. Senthil Kumar (Judicial Member) and Narendra Prasad Sinha (Accountant Member) have observed that the depreciation of government securities was a deterioration in the value of security. As clarified by the CBDT in Circular No. 599, the loss claimed by the banks on the valuation of their securities was a business loss and an allowable deduction.
In a ruling in favour of the State Bank of India ( SBI ), the Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that no deduction of deduct tax at source (TDS) can be made on transactions related to the assignment of loans by non-banking financial companies ( NBFC ).
The two-member bench of Om Prakash Kant (Accountant Member) and Sandeep Singh Karhail (Judicial Member) has observed that since the NBFC is not acting as an agent of the assessee in respect of the loans advanced to the borrowers, therefore no question arises of deduction of tax at source under Section 194H of the Income Tax Act.
The Two member bench of Delhi Income Tax Appellate Tribunal (ITAT) upheld the deletion of addition made on account of expenditure incurred on e-stamp duty expenses paid towards Non-Convertible Debenture issued by the Dish Infra Services.
After reviewing the facts the ITAT bench of Astha Chandra, (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member) upheld the deletion of additions made on account of expenditure incurred on e-stamp duty expenses paid towards Non-Convertible Debenture issued by the Dish Infra Services.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that a non-resident’s salary or allowance for services rendered abroad is not taxable in India.
The two member bench of the tribunal comprising Anubhav Sharma ( Judicial member) and Dr. B. R. R. Kumar ( Accountant member) held that no taxability arises on the salary/allowances received by the assessee since the assessee is a non-resident and has rendered services outside India.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the reopening of assessment, ruling that the notice issued under Section 148 of the Income Tax Act, 1961 was held to be wholly without jurisdiction and bad in law.
Therefore, the two member bench of the tribunal comprising Pathmavathy S (Accountant member) and Aby.T. Varkey (Judicial member) relied on the decision of the High Court in the case of M/s. Aditi Construction v DCIT (supra), the re-opening was held to be invalid in the eyes of law.
The Income Tax Appellate Tribunal ( ITAT ) has deleted the addition of 5 crore, citing the absence of corroborative evidence to prove that the taxpayer had indeed made any payment of Rs. 5 crores.
The bench found that only basis of the addition is email dated 19.05.2011 which does not indicate in any manner that the sum of Rs. 5 crores was actually paid by the assessee to Mr. Gulbir Madan.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the appeal as the timeline prescribed for filing Form No. 10AB for recognition under section 12A of the Income Tax Act, 1961 has been extended up to 30.09.2023.
The two member bench of the tribunal comprising Mahavir Singh ( Vice President) and Manoj Kumar Agarwal ( Accountant member) observed that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No.10AB for recognition under Section 12A of the Income Tax Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to Section 80G of the Income Tax Act also.
The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) remitted the case to the Assessing Officer ( AO ) for fresh consideration stating that not every deposit during the demonetization period would fall under the category of unaccounted cash.
The two member bench of the tribunal comprising George George K (Vice President) and Chandra Poojari (Accountant member) observed that not every deposit during the demonetization period would fall under the category of unaccounted cash. Therefore, in these cases, the source not being known, such deemed income covered under the provisions of Section 69A of the Income Tax Act in view of the scheme of those provisions.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the Section 68 addition under Income Tax Act, 1961, noting that the Assessing Officer ( AO ) failed to investigate the evidence and relied solely on the non-production of the directors of the subscribing companies.
The two member bench of the tribunal comprising Sanjay Sharma ( Judicial member) and Rajesh Kumar ( Accountant member) noted that the assessee has furnished all the evidences before the AO but the AO has failed to conduct any further enquiry into these details /evidences and merely relied on the theory of non-production of directors of the subscribing companies by the assessee while issuing no summons under Section 131 or notices under Section 133(6) of the Income Tax Act, 1961 to the subscribers.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) granted deduction under Section 37 as Rs. 4.41 crore expenditure justified for Research and Development ( R&D ) unit operations under Section 35 (2) AB of the Income Tax Act, 1961.
The bench noticed that the assessee had claimed deduction of Rs.4,41, 39,054/- under Section 35(2) AB of the Income Tax Act, 1961. The assessee was asked to produce the relevant approval of the competent authority.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under Section 69 of the Income Tax Act, 1961 ruling that a transaction under a family settlement agreement does not amount to a transfer.
Considering these facts, the two member bench of the tribunal comprising Vikas Aswathy ( Judicial member) and Pathmavathy S ( Accountant member) observed that there was merit in the submission the assessee company was part of the settlement agreement though not specifically mentioned in the agreement and that the transaction took place consequent to the family agreement.
The Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer ( AO ) to allow exemption under Section 11 of the Income Tax Act, 1961 acknowledging that profit derived from services rendered as a public utility service was very meager.
The two member bench of the tribunal comprising Sonjoy Sarma (Judicial member) and Rajesh Kumar (Accountant member) inclined set aside the order of CIT (A) and further uphold that the assessee was entitled to exempt under Section 11 of the Income Tax Act during the year on the ground that the profit derived from the services rendered as public utility service is very meager or there is deficit.
The Jodhpur bench of the Income Tax Appellate Tribunal (ITAT) granted the assessee’s appeal, acknowledging that the delay in filing the TDS return was due to a technical issue rather than negligence.
Therefore, the two-member bench of Dr. S. Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayantbai (Accountant Member) acknowledged the technical error and took into account that the delay did not cause any loss as the TDS was ultimately lodged.
The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that interest is not leviable from the assessee for short payment of tax due to payer’s default in Tax Deduct at Source ( TDS ). It was evident that no interest under Section 234B of the Income Tax Act, 1961 could be levied upon the assessee.
The tribunal held that the proviso to Section 209(1) issued by the Finance Act, 2012, was applicable prospectively after FY 2012–13; there was no liability for the assessee to pay interest under Section 234B of the Act for the impugned DAYs since the entire income was tax deductible at source in the hands of the payer.
The Bangalore bench of the Income Tax Appellate Tribunal allowed the appeal filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), disallowing the deduction under Section 80P(2)(d) of the Income Tax Act, 1961.
After reviewing the facts and records, the bench of Beena Pillai (Judicial Member) and Waseem Ahmed (Accountant Member) observed that if the Co-operative Bank is not carrying out any banking business, the deduction on account of interest on the investment made in such Co-operative Bank cannot be denied for the reason that such Cooperative Bank is not a bank
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer ( AO ) to delete the addition of Rs. 4.38 lakhs, as no violation was found by the Securities and Exchange Board of India ( SEBI ) on the broker or the taxpayer concerning the alleged Client Code Modification ( CCM ) transactions.
The two member bench of the tribunal comprising C.N Prasad (Judicial member) and Balaganesh ( Accountant member) concluded that there was no hesitation to quash the reassessment proceedings and accordingly directed the AO to delete the addition made in the reassessment.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 57.5 Crores under Section 68 of Income Tax Act, 1961 after the subscribers affirmed their investments in equity shares of the company and explained the source of funds.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) remanded Rs. 40 lakhs in addition while calculating Long-Term Capital Gains ( LTCG ) from the sale of property as the taxpayer filed copies of bills and bank transactions as evidence.
The two member bench of the tribunal comprising Manomohan Das (Judicial member) and Manjunatha. G (Accountant member) concluded that the matter needs to go back to the file of A.O to give one more opportunity to the assessee to substantiate his claim of cost of new house including sum of Rs.40, 00,000/- paid to Builder for construction of building including improvements to the property
The Two member bench of Pune Income Tax Appellate Tribunal ( ITAT ) held that constructing and maintaining houses, housing colonies for the low income group people are not charitable purposes under Section 2(15) of the Income Tax Act,1961
It was observed that the assessee trust was formed on 13.02.2009 by Shri Mohammad Shafi Haji Chand Bagwan as Settler of the Trust. The said trust was registered with Assistant Charity Commissioner, Sangli on 24.03.2014. Thus, as per the said object, one of the objects of the assessee is to construct and maintain houses, housing colonies for the low income group people. To construct houses or housing colonies, even if it is for low-income groups, is a business activity. Therefore, such activity cannot be considered as “Charitable Purpose” as defined in section 2(15) of the Income Tax Act.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs.2.70 lakhs, ruling that employees’ salary reimbursement is not taxable in India as Fees for Technical Services ( FTS ) under Article 12(4) of the India-Japan Double Taxation Avoidance Agreement ( DTAA ).
The bench considered the reliance placed by the revenue on Northern Operating Systems (P.) Ltd. ‘s case (supra) to substantiate its claim to tax the impugned receipts as FTS in the hands of the assessee is misplaced.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 3.86 crores under Section 69 of the Income Tax Act, 1961 determining that the alleged increases in short-term loans and advances were duly explained.
The two member bench of the tribunal comprising Sanjoy Sarama ( Judicial member) and Dr Manish Board ( Accountant member) found that firstly it was not a case of unexplained investment because the entries are duly recorded in the books.
The Two member bench of Bangalore Income Tax Appellate Tribunal ( ITAT ) held that the receipt of Interconnect Utility Charges ( IUC ) charges cannot be taxed as Royalty under Article 12 India- Japan DTAA.
It was observed that various service providers in India entered into agreement with assessee for international carriage and connectivity services against which interconnectivity charges are received by the assessee.
The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) directed readjudication after finding that the lower authority failed to examine the ownership and leasehold rights of property sold on behalf of the assessee.
After reviewing the facts the ITAT bench of Astha Chandra (Judicial Member) and Dr. B. R. R. Kumar(Accountant Member) directed readjudication after finding that the lower authority failed to examine the ownership and leasehold rights of property sold on behalf of the assessee.
The two member bench of Pune Income Tax Appellate Tribunal ( ITAT ) canceled the application of registration filed under Section 12A of the Income Tax Act, 1961 after observing that the income earned from leasing of trust building is a commercial business activity.
It was observed that the On perusal of the Income & Expenditure Account assessee has not shown any rental income; though assessee has entered into lease agreement in the year 2019. Thus the Objects of the Trust fall in the last limb of the Section 2(15) which is General Public Utility(GPU).
The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) held that no addition warranted under Section 56(2)(viib) of the Income Tax Act, 1961 as difference between issue price and value adopted by the Assessing Officer is minuscule.
It was observed that where the difference between the issue price and value adopted by the AO is 10% or less, in such cases issue price will be deemed to be the fair value of shares for the purpose of Rule 11UA of the Income Tax Rules, 1962.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271(1) (c) of the Income Tax Act, 1961 concluding there was no furnishing of inaccurate particulars of income or deliberate attempt to conceal the income.
The two member bench of the tribunal comprising M. Balaganesh (Accountant member) and Kul Bharat (Judicial member) noted that the appellant had given an explanation, there was no furnishing of inaccurate particulars of income or deliberate attempt to conceal income.
The two member bench of Bangalore Income Tax Appellate Tribunal ( ITAT ) allowed the deduction claimed under Section 54F of the Income Tax Act, 1961 with respect to all apartment units received pursuant to Joint Development Agreement ( JDA).
It was observed that the AO had denied the exemption under section 54F of the Income Tax Act in respect of 14 apartment units for the reason that pursuant to the JDA, assessee had received multiple residential units and not a single residential unit.
The Two member bench of Bangalore Income Tax Appellate Tribunal (ITAT) addition under Section 69A of the Income Tax Act , 1961 cannot be made in respect of monies which are recorded in the assessee’s bank statements.
It was observed that in the present case, the assessee has deposited money amounting to Rs.11,79,000/- in his bank account during the demonetisation period. The assessee has submitted before the authorities below that the source of cash deposited are withdrawals from the bank.
The Two member bench of Bangalore Income Tax Appellate Tribunal ( ITAT ) directed readjudication of disallowance of depreciation claimed on acquisition of assets.
After reviewing the facts the ITAT bench of Soundararajan K (Judicial Member) and Chandra Poojari (Accountant Member) directs readjudication of disallowance of depreciation claimed on acquisition of the assets.
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