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 May 26 2024 to June 1st 2024.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 40 lakhs under Section 68 of the Income Tax Act, 1961 as the identity, creditworthiness of the share-subscribing companies, and the genuineness of the transactions were proven.
The AO observed that during the relevant year the assessee had raised share application money of Rs. 20 lakh each from Terminal Sales Pvt. Ltd. and Vanaspati Vinimay Pvt. Ltd. These two companies were allotted 20000 shares each of face value of Rs. 10/- each with a premium of Rs. 90/- each. The AO also noted that both the share subscribing companies had replied under Section 133(6) vide their letter dated 27.10.2017 whereby they had explained the source of their investment made into the assessee company.
The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition on grounds that the Assessing Officer ( AO ) failed to issue a notice under Section 148 of the Income Tax Act, 1961 to all legal heirs, issuing it only against the deceased.
The single member bench of the tribunal comprising Laliet Kumar (Judicial member) found that there was jurisdictional error in issuing the notice under Section 148 of the Income Tax Act against the deceased person. Hence, ITAT does not find any reason to uphold the addition made by the Assessing Officer, as everything was flowing from the notice under Section 148 of the Income Tax Act.
The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 3.07 lakhs, stating that Section 115BBDA of the Income Tax Act, 1961 does not apply to a domestic company.
A single member bench of the tribunal comprising Laliet Kumar (Judicial member) found that the assessee to be a domestic company, therefore, the provision was not applicable. It was only applicable and in fact, the limit was only applicable if the total income of an assessee, being an individual, Hindu Undivided Family or a firm resident of India, exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies.
The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer to limit the addition of Rs. 16.8 crores, indicating that the profit-embedded amount from the purchase would be subjected to tax.
The two member bench of the tribunal comprising K.Narasimha Chary ( Judicial member) and R.K Panda ( Vice president) found that the CIT (A) NFAC deleted the addition made by the Assessing Officer but directed the Assessing Officer to apply the rate of profit on other genuine purchases, the reasoning of which have already been reproduced in the preceding paragraph. It found any infirmity in the order of the CIT (A) NFAC on this issue. Further found that the assessee in the instant case has filed the details of stock, copies of purchases invoices, E-waybills, computerized receipts from weigh bridges etc. The payments were also made through banking channels and the sales have not been doubted by the Assessing Officer.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted an addition under Section 68 of the Income Tax Act, 1961 concluding that the source of funds was prima facie sufficiently explained.
Further the two member bench of the tribunal comprising Girish Agrawal (Accountant member) and Sonjoy Sarma (Judicial member) concluded that the assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. ITAT therefore, delete the addition made in this regard. Accordingly, the appeal of the assessee was allowed.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that absence of liability in books of account, provision of Section 41(1) of Income Tax Act, 1961 cannot be invoked as cessation of trading liability.
The two member bench of the tribunal comprising Sanjay Garg (Judicial member) and Dr. Manish Board (Accountant member) inclined to restore the issue to the file of the jurisdictional Assessing Officer for a fresh adjudication in light of the submissions of the assessee as well as the additional evidence adduced by the assessee. Needless to mention that the assessee shall produce all necessary documents/evidence, in support of its claim before the Assessing Officer and shall cooperate till the disposal of its appeal. Accordingly, this ground relating to addition under Section 41(1) of the Income Tax Act raised by the assessee was allowed for statistical purposes.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the Transfer Pricing Officer (TPO) failed to apply the industry filter while determining the Arm’s Length Price ( ALP ) of interest, leading to the deletion of the addition and the dismissal of the revenue’s appeal.
The two member bench of the tribunal comprising Shamim Yahya ( Accountant member ) and Anubhav Sharma ( Judicial member) concluded that the CIT(A) has thoughtfully taken into consideration the facts in wholesome manner and has adopted a judicious approach by considering median @16% based on 49 comparables i.e. 47 comparables selected by assessee company as well as 2 by TPO. Even if the 2 comparables were not of the same industry but as the assessee does not object to their inclusion, the order of CIT (A) cannot be faulted. There is no apparent infirmity requiring our indulgence. Accordingly, the grounds so raised have no substance. Accordingly, appeal of the revenue was dismissed. To Read the full text of the Order CLICK HERE
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that Tax Deducted at Source ( TDS ) has been duly deducted on the entire salary payments to expats and deposited into the government, resulting in the deletion of the Rs. 1.83 crore addition.
Further the two member bench of the tribunal comprising G.S.Pannu (Vice President) and Astha Chandra (Judicial member) noted that the disallowance of salary cost reimbursement by Branch Office to the assessee by the AO under Section 40(a)(i) was not justified as TDS has been duly deducted on entire salary payments to the expats and deposited into the Government account within the prescribed time limit. Consequently addition of Rs. 1,83,71,951/- and Rs. 2,53,00,714/- for AY 2020-21 and 2021-22 respectively to the returned income of the assessee is hereby deleted. This ground raised by assessee was allowed .
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) granted relief to Karur Vysya Bank by allowing deduction under section 36(1)(viii) of the Income Tax Act, 1961 as the reserve was created out of profit for the year 2013-2014, resulting in the deletion of the addition.
The bench found that the assessee had earned a profit of Rs. 429.59 Cr during the previous year 2013-14. It had transferred an amount of Rs. 157 Cr to Revenue & Other Reserves. During the Financial Year 2014-15, from out of the Revenue Reserve, the appellant transferred an amount of Rs. 30 Cr to Special Reserve. From these facts it can be seen that the assessee has transferred Rs. 30 Cr to Special Reserve from the profits of the previous year 2013-14 and therefore was eligible to claim the deduction under Section 36(1)(viii) of the Income Tax Act.
The two member bench of Ahmedabad Income Tax Appellate Tribunal ( ITAT ) ruled that no addition should be made on the basis of documents found from third party’s premises during the survey proceedings .
It is observed that the assessee was having 60% share in the land.Therefore, considering that the undisclosed amount of Rs.3,17,46,320/- has escaped assessment as per the observation of the Assessing Officer and, therefore, the case was reopened. Accordingly, notice under Section 148 of the Income Tax Act was issued and served upon the assessee.Accordingly the assessee informed that he was fielding a return of income .
The Delhi Bench Income Tax Appellate Tribunal ( ITAT ), while granting relief to the Oravel Stays Private Limited, the company which runs OYO Rooms, has ruled that the company is not obligated to pay Tax Deduction at Source ( TDS ) on Minimum Guarantees Paid to Hotels. The ITAT ruled against the disallowance of Rs. 1,08,59,584 under Section 40(a)(ia) of the Income-tax Act, 1961, related to minimum guarantee expense.
The two-member bench of Khul Bharat (Judicial Member) and N. K. Billaiya (Technical member) observed that “The contention of the ld. DR that in furtherance of its business objectives/model, the assessee is providing service, cannot be accepted as neither the Assessing Officer nor the ld. CIT(A) have invoked the relevant provisions of the Act applicable for provisions of service. On the facts of the case, we hold that section 194C of the Act is not applicable.”
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition made under Section 68 of the Income Tax Act, 1961 on unsecured loan obtained from a firm by the Assessee on the ground that the identity, creditworthiness, and genuineness of the transaction stands proved. It was found that the Cash deposits In Bank account of the lender firm is accepted.
The two member bench of comprising Amit Shukla ( Judicial Member ) and M. Balaganesh ( Accountant Member ) observed that “once the cash deposits made in the bank account of the lender firm had been accepted as coming from explained sources by the revenue under scrutiny assessment of the lender, the revenue cannot take a divergent stand in the case of the Assessee that those cash deposits had emanated out of undisclosed sources of the Assessee which had been deposited in the lender’s bank account and monies received by Assessee in the form of unsecured loan”.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) recently held that the final assessment order passed after expiry of one month from the end of the month in which the DRP directions were received by the Revenue is barred by limitation. It was found that the order was passed wholly without jurisdiction and therefore, null in the eyes of law.
The two member Bench comprising Aby T. Varkey (Judicial Member) and Jagadish (Accountant Member) observed that “as per Section 144C(13), Revenue had to complete the final assessment without providing any further opportunity of being heard to the Assessee within one month from the end of the month in which such directions are received and hence, the last date to pass final assessment order, in the present case, is Oct 31, 2017”.
The Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer ( AO ) to quash the assessment order issued under Section 143(3) of the Income Tax Act, 1961 stating that the issuance of a notice in the name of a deceased person was not valid.
Thus, The two member bench of the tribunal comprising Rathod Kamlesh Jayant Bhai ( Accountant member) and Dr. S Seethalakshmi ( Judicial member) respectfully, following the ratio of judicial precedent cited by the AR of the assessee that once the AO came to his knowledge that the assessee was no more the subsequent issuance of the notice in the name of dead person was not valid and consequently framing the assessment without there being bringing the legal heirs on record and when these information was shared by the legal heirs time and again with the AO framing the assessment and raising the demand on the dead person was not legal and thus directed to be quashed. Accordingly, the appeal of the assessee was allowed.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) allowed a deduction of Rs. 34.2 lakhs under Section 57 of the Income Tax Act, noting that the taxpayer consistently followed the mercantile system of accounting.
The two member bench of the tribunal comprising Irish Agarwal ( Accountant member ) and Rajpal Yadav ( Vice President ) found that there was no dispute with regard to the fact that the assessee has been consistently following a mercantile system of accounting. It has accounted its interest income on the mercantile system and not on receipt basis. This stand of the assessee was not disputed by the Assessing Officer.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal under Section 68 of the Income Tax Act,1961 due to the absence of an explanation for the transactions.
The two member bench of the tribunal comprising Girish Agarwal (Accountant member) and Rajapal Yadav (Vice President) observed that the assessee has been contesting that it had made all the submissions in support of the transaction in which additions have been made which have not been considered.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment under Section 153A of the Income Tax Act, 1961 as no incriminating material was found during the course of the search proceedings.
The two member bench of the tribunal comprising G. Manjunatha ( Accountant member) and Mahavir Singh (Vice president) noted that there was no incriminating material or seized material pertaining to assessment years 2011-12 to 2013-14 and the estimated additions made by the AO on account of disallowances of unexplained investment under Section 69, unproved expenditure, annual day and food expenses, other expenses, disallowance of excess claim of depreciation and disallowance of claim of deduction under Section 10 & 11 of the Income Tax Act on the basis of amounts extrapolated on the basis of incriminating material found relating to assessment year 2014-15 and onwards.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer (AO) to delete the addition of Rs. 6.69 crore after ruling that debt written off in the books of accounts should be allowed as bad debts.
The two member bench of the tribunal comprising V.Durga Rao (Judicial member) and Manjunatha G (Accountant member) found merit in this claim of the assessee. The debt written off by the assessee in the books of account is to be allowed as bad debts and accordingly, the ITAT allowed the grounds taken by the assessee. However, as already held that it is to be allowed as bad debt.
The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) comprising Saktijit Dey, (Vice-President) and M. Balaganesh, (Accountant Member) while upholding the addition made under Section 68 of the Income Tax Act, 1961 observed that the assessee failed to prove identity,creditworthiness and genuineness of receipt of Gift received from father in law.
The tribunal observed that the assessee has not furnished any cogent evidence to prove the alleged receipt of gift from father-in-law thus the addition made by the lower authorities was confirmed by the tribunal.
The Income Tax Appellate Tribunal ( ITAT ), Bangalore bench recently directed the Assessing officer to tax at 8% towards the cash deposit as coming out of the store business.
The tribunal observed that cash deposit of Rs.12,17,200/- into the assessee’s bank account during the demonetization period is out of the business conducted in her name.However assessee was not aware of the business conducted by her assessment in her name .
The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) comprising Yogesh Kumar Us (Judicial Member) and Pradip Kumar Kedia. (Accountant Member) while deleting the addition made by the assessing officer held that jewelry collection of married life of 25 to 30 years not treated as abnormal for levying tax.
The tribunal observed that assessee and her family members are high net worth individuals and having regard to their high status, holding such jewelry found in the custody of members of their families cannot be seen to be abnormal and consequently unexplained.
The Chennai Bench, Income Tax Appellate Tribunal ( ITAT ) held that when recoveries of farmers advances were duly reflected in cash book of assessee it would not be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961
After analyzing the submission of both parties, the bench of V. Durga Rao (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) observed that during the impugned years, the assessee has received back these advances which have been reflected in the cash book of the assessee. The cash balance has been used to make the deposits in the bank account which has ultimately been used in settling the bank loan as availed by the assessee. Therefore, the claim of the assessee was based on books of accounts and financial statements which could not be negated by AO.
The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) comprising Rahul Chaudhary (Judicial Member) and Prashant Maharishi. ( Accountant Member ) directed to recompute the Arm Length Price (ALP) by including excluded comparable chosen for transfer pricing .
After observing the submissions of both parties the tribunal determined that “any director of the company could have filed an appeal challenging the assessment order on the ground that the liability arising out of the impugned assessment order, under the circumstances pointed out in Section 179 of the Income Tax Act, could be fastened upon him”
The Income Tax Appellate Tribunal ( ITAT ) of Bangalore bench while observing the rejection of the application of exemption claimed under Section 80G of the Income Tax Act, 1961 on account of failure to produce the documentary evidence directed readjudication.
The tribunal observed the purpose of the provisions for registration of trust u/sec. 12AA and for granting exemption u/sec. 80G, all these sections derive their spirit from the Directive Principles of State Policy enshrined in the Constitution of India.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the Section 69 addition, ruling that the company’s books, including the manual cash book, were deemed non-incriminating under Section 153A of the Income Tax Act, 1961.
The two-member bench of the tribunal, consisting of M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member), reviewed the case and concluded that the CIT(A) had correctly upheld the AO‘s findings. They determined that no substantive addition was necessary for the Company based on the manual cash book. The cash transactions were verified to be from known sources and matched the existing books, which were deemed final in the Company’s assessment. Therefore, the same set of books, including the manual cash book found at the Company’s premises, cannot be considered incriminating material under Section 153A of the Income Tax Act for making an addition in the hands of the assessee as a searched person for the two assessment years in question.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the taxpayer was entitled to a deduction for the Central Value Added Tax ( CENVAT ) credit written off from assets acquired through a slump sale from Global Auto Parts Alliance India Private Limited ( GAPAIL )
The two member bench of the tribunal comprising Yogesh Kumar US (Judicial member) and M. Balaganesh (Accountant member) held that the assessee would be entitled for deduction of CENVAT Credit written off in the sum of Rs 89, 55,542/- during the year under consideration. Accordingly, the grounds raised by the assessee were allowed.
The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the Assessing Officer ( AO ) after noting that the Income Tax Authorities failed to discuss the difference in sundry creditors before confirming the addition under Section 41(1) Income Tax Act, 1961.
The single member bench of the tribunal comprising Manjunatha G (Accountant member) set aside the order of the CIT (A) and restore the issue back to the file of the Assessing Officer and direct the Assessing Officer to verify the claim of the assessee with reference to the evidences that may be filed to explain the difference in certain parties account
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that Section 249(4)(b) of Income Tax Act, 1961 does not apply when there is no question of advance tax payment in the income tax reassessment proceedings.
The bench found that the case was initially selected for scrutiny, which was completed on 29.03.2015, and there was no change in the returned income of Rs.51,80,800/- in the absence of any additions being made. It is a matter of record that originally the return was filed for the relevant year under consideration on 29.09.2012. It was not disputed during the course of hearing that the advance tax has per the assessed income of Rs.51, 80,800/- has been paid.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the Income Tax Assessment Order, emphasizing that an Investment Source, once accepted by the Assessing Officer ( AO ), cannot be rectified under Section 154 of the Income Tax Act, 1961.
The bench found that AO wants to change his view in the garb of rectification of mistakes under Section 154 of the Income Tax Act, which was not permissible under the law. Further find that the impugned order of the AO was passed under Section 154 of the Income Tax Act and Section 154 of the IT Act mandates rectification of mistakes apparent from record. The Apex Court in the case of ITO vs. Volkart Brothers and others have held that “a mistake apparent on record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning, on points on which there may be conceivably two opinions. A decision on a debatable point of law was not a mistake apparent from the record.
The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) directed re adjudication after considering the documentary evidence related to the genuine activities of assessee trust.
After reviewing the facts the ITAT bench of Siddhartha Nautiyal ( Judicial Member ) and Annapurna Gupta ( Accountant Member ) directed readjudication after considering the documentary evidence related to the genuine activities of assessee trust.
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) while allowing the appeal filed by the assessee observed that the assessee condoned the delay in filing of Form No.10IC as per the CBDT circular No.19/2023.
The tribunal observed that assessee has fulfilled all the conditions as mentioned in the aforesaid Circular and the assessee has also filed Form No. 10-IC within the stipulated timelines as specified in the aforesaid Circular, and accordingly is eligible for claim of being taxed under Section 115 BAA of the Act.
The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) upheld the reassessment proceedings after finding that the assessee did not file the income tax return.
After reviewing the facts the ITAT bench of Siddhartha Nautiyal (Judicial Member) and Makarand V. Mahadeokar (Accountant Member) upheld the reassessment proceedings after finding that the assessee did not file the income tax return.
The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) after deleting the addition made by the assessing officer held that reopening of assessment is not permissible in respect of protective addition when reasons are only of assumption.
It was observed that As regards reopening not permissible in respect of protective addition, since the substantive addition has already been made in case of the firm, the assessing officer cannot make protective addition in the present assessee’s case which tantamount to double taxation.
The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) held that the assessee failed to produce the documents with respect to Long Term Capital Gain ( LTCG ) arising out of the purchase and sale of shares hence the bench upheld the addition made by the assessing officer.
After reviewing the facts the ITAT bench of Mahavir Singh, (Vice President) and S.R. Raghunatha, (Accountant Member) held that the assessee failed to produce the documents with respect to Long TermCapital Gain ( LTCG ) arising out of the purchase and sale of shares.
The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) while remitting the issue of transfer pricing adjustment regarding interest on overdue trade receivables held that working capital adjustment on outstanding trade receivables has to be verified while making Arm’s Length Price ( ALP ) adjustment on notional interest.
The two-member Bench comprising Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) observed that working capital adjustment given by the assessee company while fixing the sale price has an impact on outstanding trade receivable on profitability while having sale proceeds realization which is incidental to the transaction of sale of finished goods were not verified by the AO/TPO.
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