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 14th June 2024 to 22nd June 2024.
The Calcutta Bench of Income Tax Appellate Tribunal ( ITAT ) has held that exemption under Section 80G (5)(iv) of the Income Tax Act, 1961 allowable as an application filed within the extended time limit prescribed by CBDT ( Central Board of Direct Taxes ) notification allowed the exemption registration to the income tax bar association as the registration application was not time-barred.
The two-member bench of Rajpal Yadav ( Vice President ) and Sanjay Awasthi ( Accountant Member ) has observed that the procedure adopted by the CIT ( Exemption ) was incorrect to grant a provisional certificate to the assessee at the first stage and then to deny the regular certificate under Section 80G(5)(iii) of the Income Tax Act. Section 80G of the Income Tax Act provides tax exemptions for donations made to specified charitable institutions and funds.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the reassessment proceedings, noting that the firm used a partner’s property as its address, but the property had been sold before the issuance of the notice under Section 148 of the Income Tax Act, 1961.
The two member bench of the tribunal comprising Amit Shukla ( Judicial member) and M. Balaganesh ( Accountant member) found that the assessee firm existed in the said address and was merely using the property owned by the partners as the address of the assessee firm and that since the properties were sold by the partners prior to the issuance of notice under Section 148 of the Income Tax Act, the assessee firm was not existent in that address and the notice under Section 148 of the Income Tax Act had to be returned undelivered by the postal authorities.
The Delhi bench of the Income Tax Appellate Tribunal( ITAT ) has held that assessments concluded under section 153A of the Income Tax Act, 1961 without mandatory approval are invalid.
The two-member Bench comprising G.S. Pannu (Vice President) and Anubhav Sharma (Judicial Member) observed that prior approval of competent authority under section 153D of the Act is mandatory and same is required to pass rigour of the law, to show that the approval was granted after due consideration of the assessment record and it was not a mechanical approval.
In a recent case, the Raipur Bench of the Income Tax Appellate Tribunal ( ITAT ) held that “Corporate Social Responsibility” ( CSR ) expenses are eligible for deduction under section 80G of the Income Tax Act and restored the matter to the file of Commissioner of Income Tax ( Appeals ).
The AO observed that as CSR was an application of income, therefore, the same could not be said to have been incurred wholly and exclusively to carry on business as envisaged in Section 37 of the Act. On appeal, the CIT (Appeals) upheld the disallowance of the assessee’s claim for deduction of CSR expenses under section 80G of the Act.
The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of unexplained share application money under the Income Tax Act, 1961 as the creditworthiness of share subscriber companies was proven.
The two-member bench found that all the share applicants have duly replied to the notices issued under Section 133(6) and the majority of them have appeared before the Assessing Officer for recording the statement under Section 131. It was evident that all share applicants are regularly assessed to tax and have also faced scrutiny proceedings and as per MCA Matter Data as of date, all alleged share applicants are active companies and the shares have been issued at the fair market value of the equity shares and that no excess share premium has been charged.
The Banglore Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the addition on unaccounted sales and purchases under the income tax act solely based on loose slips is invalid and deleted the income tax addition on alleged unaccounted sales and purchases.
The two member bench of Keshav Dubey ( Judicial Member ) and Chandra Poojari ( Accountant Member ) has observed that the Department failed to collect cogent evidence to corroborate the notings on the loose sheets. Therefore the additions cannot be made merely based on notings on the loose sheet papers, which are “dumb documents” having no evidentiary value.
The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the assessee has purchased agricultural land, which is outside the definition of a capital asset; therefore, the deeming provision under Section 56(2)(x) of the Income Tax Act cannot be invoked.
The two-member bench of Sudhir Pareek ( Judicial Member ) and S.Rifaur Rahman ( Accountant Member ) has observed that the assessee purchased agricultural land and paid a sum of Rs. 20,00,000 as purchase consideration. The assessee also filed the relevant information before the assessing officer.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the discrepancy in the excess stock accumulated during normal business shall be assessable as business income and section 69B r.w.s section 115BBE of the Income Tax Act shall not be applicable in such cases.
Noting the fact that the transactions including sales and purchase have taken place through bank transfer, the bench comprising Shri Manoj Kumar Aggarwal, Accountant Member and Shri Manu Kumar Giri, Judicial Member observed that “Unless, discrepancy is pointed out in the physical quantities, no case of unexplained investment, in our considered opinion, could be made out against the assessee. Further, it is undisputed fact that the assessee is assessed to tax for past several years and its only source of income is ‘Business income’ only. In such a case, whatever discrepancies are noted, the same would be part and parcel of business operations and could be considered to be Business income only and not from any other sources. It could very well be said that entire stock was accumulated out of income from business and the undisclosed business income, if any, was ploughed back into business to acquire further stock.”
In a recent ruling, a Two-Member bench of the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the date of allotment in respect of an under-construction property cannot be considered as date of purchase for the purpose of allowing capital gain deduction under section 54 of the Income Tax Act, 1961 as the provision mandates “purchase” of property.
Holding in favor of the assessee, the Tribunal held that “assessee is entitled to deduction u/s 54 of the act on purchase of new property considering the date of possession , when it is completed, as the date of purchase of property as agreement to purchase the property was for under construction property.”
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