ITAT Weekly Round Up

A Round Up of the ITAT Cases Reported at Taxscan Last Week

Service of Notice through E-mail despite Opting ‘No’ is Improper: ITAT remands Matter [Read Order] Akshaykumar Lathiya vs I.T.O. CITATION: 2024 TAXSCAN (ITAT) 1202

The Surat bench of Income Tax Appellate Tribunal ( ITAT ) has directed to pass fresh income tax assessment order as the CIT(A) and AO passed ex-parte order. No physical notice for hearing or order was issued to the assesse despite opting ‘No’ to receiving notices or orders through E-mail. It condones the delay of 159 days.

Considering the facts, the bench of Pawan Singh ( Judicial Member ) restored the case to the AO, directing them to pass a fresh assessment order after granting the assessee a fair opportunity to present their evidence and arguments. The tribunal also cautioned the assessee to be more vigilant in future proceedings.

Sales of ‘Kaccha Arahtia’ for Principal excluded from Turnover u/s 44AB: ITAT directs to Credit Entire TDS [Read Order] Lakshmi Sai Traders vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1205

The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam recently directed an Assessing Officer ( AO ) to forgo the amount generated by Kaccha Arahtias from sales conducted for their Principal as part of their own turnover, while directing the grant of entire Tax Deducted at Source ( TDS ) collected by the Kaccha Arahtia.

Identifying the position of the Appellant as a licensed commission agent in the Agricultural Market Committee Yard, Guntur, ITAT proceeded to set aside the order of the Revenue Authorities while directing the AO to grant credit of the entire amount deducted as TDS, back to the Assessee.

Ex-Parte Dismissal citing Absenteeism by NFAC: ITAT Reverts Income Tax matter for Meritorious Adjudication [Read Order] Bhavani Shankar Rao vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1204

The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam recently reverted an Order passed by the Commissioner of Income Taxes (Appeal) – National Faceless Appeals Centre ( CIT(A)-NFAC ) citing the failure of Appellant to appear before the NFAC during proceedings despite multiple intimations.

However, the ITAT laid reference to principles of natural justice to opine that the Appellant should be given another opportunity to contest the matter afresh before the CIT(A)-NFAC, and remitted the matter back to the file of the NFAC for meritorious jurisdiction while reprimanding the Appellant to co-operate in the proceedings.

ITAT Remands Unexplained Investment Matter Due to Non-Appearance Linked to Income Tax Notices issued During COVID Period [Read Order] Trupti Ashishkumar Desai vs I.T.O CITATION: 2024 TAXSCAN (ITAT) 1207

The Surat Bench of Income Tax Appellate Tribunal (ITAT) remanded unexplained investment under Section 69A of the Income Tax Act, 1961 matter due to notices issued during COVID period which led to the assessee’s non-appearance.

Therefore, the tribunal set aside the order of the lower authorities and remanded the matter back to the file of the assessing officer. The assessee’s appeal was allowed for statistical purposes.

Circular Transactions within Group Entities not Considered Income for Assessee: ITAT [Read Order] M/s V.V. Titanium Pigments Pvt.Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 1208

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) ruled that circular transactions within group entities would not be considered income for the assessee.

The two member bench comprising Mahavir Singh(Vice President) and Manoj Kumar Aggarwal(Accountant Member) consequently directed the AO  to exclude these amounts when calculating profits for the respective years, leading to a partial allowance of the assessee’s appeal.

NFAC dismisses Appeal in-limine for Non-appearance: ITAT Remands Case [Read Order] Anuradha Reddy vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1209

The Income Tax Appellate Tribunal (ITAT), Visakhapatnam recently remanded a case dismissed in limine by the Commissioner of Income Taxes (Appeal) – National Faceless Appeals Centre (CIT(A)-NFAC) for non-appearance of the Assessee, while directing the CIT(A) to consider the appeal afresh.

Concludingly, the Bench remanded the matter back to the file of the CIT(A)-NFAC to consider the appeal afresh while directing the NFAC to pass an appropriate order in accordance with law and on merits while cautioning the Assessee to promptly co-operate in the proceedings.

AO Wrongly allowed Posco India’s set-off of Brought-Forward Loss of ₹1.4 cr: ITAT directs Disallowance, Citing Adjustments made in Previous Years [Read Order] Posco India Private Limited VS DCIT CITATION: 2024 TAXSCAN (ITAT) 1203

The Cuttack Bench of Income Tax Appellate Tribunal ( ITAT ) directed disallowance of set-off of the brought-forward loss of Rs.1,47,26,425 citing that adjustments had already been made in previous years.

The tribunal agreed with the PCIT’s observation that the AO had incorrectly allowed the set-off of the business loss for the assessment year 2018-2019. Therefore, ITAT directs AO to disallow the assessee’s set-off of business losses.

ITAT upholds CIT(A) Decision, Dismissing Additions for AY 2015-16 Due to Lack of Evidentiary Value in Excel Sheet [Read Order] M/s V.V. Titanium Pigments Pvt.Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 1208

The Chennai Bench of Income Tax  Appellate Tribunal(ITAT)  upheld the decision of the Commissioner of Income Tax (Appeals)[CIT(A)],dismissing the additions made for Assessment Year(AY) 2015-16 due to a lack of evidentiary value in an unsigned Excel sheet.

The two member bench comprising Mahavir Singh(Vice President) and Manoj Kumar Aggarwal(Accountant Member) concluded that the sheet was unauthenticated and had no evidentiary value, affirming the CIT(A)’s findings and dismissing the revenue’s grounds for AY 2015-16.

Unsigned, Undated and Unstamped Satakhat has No Evidentiary value in Eyes of Law: ITAT deletes Rs. 1.19 crore Addition [Read Order] Chandrakant Chhaganbhai Gondalia vs D.C.I.T CITATION: 2024 TAXSCAN (ITAT) 1201

The Surat bench of Income Tax Appellate Tribunal ( ITAT ) has ruled that an unsigned, undated, and unstamped Satakhat has no evidentiary value in the eyes of law, thereby deleting an addition of ₹1.19 crores made by the Assessing Officer.

The tribunal cited this precedent and directed the Assessing Officer to delete the entire addition of ₹1.19 crores. Consequently, the ITAT allowed the appeal in favour of the assessee.

Partnership Firm Converted into LLP: ITAT quashes Revision Proceedings Due to Non-Existence of Entity [Read Order] Shree Neelkanth Quarry Works LLP vs The PCIT CITATION: 2024 TAXSCAN (ITAT) 1206

The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the revision order passed under Section 263 of the Income Tax Act, 1961 because the entity in question did not exist during the assessment year under review.

Therefore, the tribunal quashed the revision order passed by the PCIT under Section 263, declaring that the reassessment was invalid. The assessee’s appeal was allowed.

ITAT upholds CIT(A) Ruling on Accounting Manipulation and Tax Evasion Due to Insufficient Evidence [Read Order] M/s V.V. Titanium Pigments Pvt.Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 1208

The Chennai Bench of Income Tax  Appellate Tribunal(ITAT) upheld the ruling of the Commissioner of Income Tax (Appeals) [CIT(A)] regarding accounting manipulation and tax evasion due to insufficient evidence.

The two member bench comprising Mahavir Singh (Vice President) and Manoj Kumar Aggarwal(Accountant Member) found no reason to overturn the CIT(A)’s decision, dismissing the grounds  raised by the revenue.

CIT(A) Deletion of Bogus Expenditure Additions upheld: ITAT affirms need for Substantive Evidence [Read Order] M/s V.V. Titanium Pigments Pvt.Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 1208

The Chennai Bench of Income Tax  Appellate Tribunal(ITAT) upheld the deletion of bogus expenditure additions made by the Commissioner of Income Tax (Appeals) [CIT(A)]. This decision reinforced the principle that any disallowance of expenses must be supported by substantial evidence.

The two member bench comprising Mahavir Singh(Vice President) and Manoj Kumar Aggarwal(Accountant Member) dismissed the revenue’s appeal, confirming the CIT(A)’s conclusions.

ITAT Grants Interest on Self-Assessment Tax Refund, Rules Adjustment of Tax Liability Affects Character of Tax Payment [Read Order] Nirma Limited vs The Dy. Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 1210

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) granted interest on a refund of self-assessment tax .The tribunal ruled that once self-assessment tax is adjusted against a tax demand from an assessment order, it loses its original character and becomes tax paid under assessment.

The two member bench comprising Suchitra R.Kamble ( Judicial Member ) and Annapurna Gupta ( Accountant Member ) allowed the appeal and directed the AO to compute the eligible interest accordingly.

Registration of House 24 months after Sale not ground to deny Exemptions u/s 54F: ITAT [Read Order] Assistant Commissioner of Income Tax vs Siva Jyothi Palam CITATION: 2024 TAXSCAN (ITAT) 1211

The Visakhapatnam Bench of the Income Tax Appellate Tribunal ( ITAT ) recently held that a delay above 24 months to conduct registration of house after sale does not vitiate an Assessee’s ability to avail Exemptions under Section 54F of the Income Tax Act, 1961.

In light of the observations made, ITAT referred to the decision of the Delhi High Court in Balraj vs. CIT (2002) among other decisions to rule the lack of infirmity in the order passed by the CIT(A)-NFAC, vitiating any need for interference. Since the main Appeal was dismissed, ITAT ruled that the grounds raised by the Assessee in the cross-objection thereby become infructuous in nature.

ITAT upholds Sun Pharma Labs Ltd.’s Deduction for Consultancy fees paid to McKinsey & Company, Classifying it as Revenue Expenditure [Read Order] Sun Pharma Laboratories Ltd vs The D.C.I.T CITATION: 2024 TAXSCAN (ITAT) 1194

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the decision of the Commissioner of Income Tax(Appeals)[CIT(A)] regarding Sun Pharma Laboratories Ltd.’s deduction for consultancy fees paid to McKinsey & Company, classifying these expenditures as revenue in nature.

The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member) after thorough examination, upheld the CIT(A)’s order, affirming that the consultancy charges were revenue in nature and allowable under Section 37(1) of the Act. In conclusion, the revenue appeal was dismissed.

ITAT Addresses Non-Compliance by Assessee, Grants Opportunity to Present Case with Cost Imposed [Read Order] Pareshkumar Patil vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1213

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) addressed the issue of non-compliance by the assessee, granting him an opportunity to present his case and also imposed a nominal cost of Rs. 2,000 due to the previous non-compliance.

The two member bench comprising Siddhartha Nautiyal ( Judicial Member ) and Annapurna Gupta ( Accountant Member ) determined that the assessee should be given another opportunity to present his case before the Assessing Officer. However, due to the assessee’s ongoing non-compliance, the tribunal imposed a nominal cost of Rs. 2,000, to be deposited into the Prime Minister’s Relief Fund, before sending the case back to the AO. In conclusion the appeal filed by the assessee was allowed.

ITAT invalidates Addition u/s 56(2)(vii) and deletes Deemed Gift due to Incorrect Valuation Date [Read Order] Partha Pratim Chakrabarty vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1214

The Kolkata Bench ofIncome Tax Appellate Tribunal ( ITAT ) invalidated the addition made under Section 56(2)(vii) of the Income Tax Act,1961 and deleted the deemed gift classification due to the incorrect valuation date.

The two member bench comprising Rajpal Yadav ( Vice-President ) and Manish Borad ( Accountant Member ) ruled that the addition made under Section 56(2)(vii) was unjustified, allowing the appeal and deleting the addition. In conclusion,the appeal filed by the assessee was allowed.

ITAT Invalidates PCIT’s Hasty Revision u/s 263 and Remands Case for Fresh Hearing [Read Order] Dineshbhai Dahyabhai Patel vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1216

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) invalidated the Principal Commissioner of Income Tax’s (PCIT) hasty revision under Section 263 of Income Tax Act,1961 and remanded the case for a fresh hearing, ensuring the assessee would have a fair opportunity to address the issues raised comprehensively.

The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Annapurna Gupta(Accountant Member) remanded the matter to the PCIT for a fresh hearing, ensuring that the assessee would have the opportunity to address the issues raised comprehensively. In conclusion,the appeal filed by the assessee was allowed.

Unit-Wise Deductions u/s 80IA must be Granted without considering Losses from other Eligible Units: ITAT [Read Order] Assistant Commissioner of Income Tax Circle-3(1)(1) vs Rajkamal Builders Infrastructure Pvt. Ltd.

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that unit-wise deductions under Section 80IA of the Income Tax Act,1961,must be granted without considering losses from other eligible units.

The two member bench comprising T.R. Senthil Kumar(Judicial Member) and Narendra Prasad Sinha(Accountant Member),found that the grounds of appeal raised by the Revenue lacked merit, leading to the dismissal of both appeals.

Addition Made as Undisclosed Foreign Income and Asset under Black Money Act not Repeated Under Income Tax Act: ITAT [Read Order] Captain Vilas Waman Katre vs Additional Commissioner of Income tax CITATION: 2024 TAXSCAN (ITAT) 1217

In a recent case, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that any addition made as undisclosed foreign income and assets under the Black Money Act (BMA), shall not be repeated under the Income Tax Act, 1961.

The bench observed that the Accountant Member should ought to have contested the issue within the four walls of BMA and has failed to render any findings on other issues, which stands decided by the Judicial Member, which shall prevail. Hence, the ITAT allowed assessee’s appeal and directed the assessee to submit requisite declaration pertaining to undeclared foreign assets.

Capital Gain arising out of Transfer of shares of an Indian entity cannot be Taxed at Hands of Foreign Entity in India: ITAT [Read Order] India Opportunity Fund I F.C.R DE REGIMEN COMUN vs DCIT-2(2(1) CITATION: 2024 TAXSCAN (ITAT) 1218

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT )  held that capital gain arising out of transfer of shares of an Indian entity cannot be taxed at hands of foreign entity in India when foreign entity has less than 10% shareholding in such an Indian entity.

The two member Bench of Padmavathy S (Accountant Member) and Sunil Kumar Singh (Judicial Member) clarified that capital gain in hands of Spanish company (assessee/ appellant) from sale of shares of IMI Investments (Indian company) cannot be taxed in India, since assessee has no controlling interest in said Indian company. The Bench refused to accept that such holding is towards any controlling interest. While allowing the appeal, the ITAT directed the AO to delete the additions of capital gains, made in the hands of assessee.

AO erred in Adding ₹12.10 Lakh to Income instead of ₹27 Cr: ITAT upholds Revision Order [Read Order] Naveen Narang vs PCIT (Central)-3 CITATION: 2024 TAXSCAN (ITAT) 1221

The Income Tax Appellate Tribunal ( ITAT ) upheld the revision order under Section 263 of the Income Tax Act, which was initiated because the Assessing Officer ( AO ) had made an addition of ₹12.10 lakh to the assessee’s income, instead of ₹27 crore, which was found during a search action.

Thus, the tribunal bench of Sudhir Kumar, Judicial Member and Dr. B. R. R. Kumar,  Accountant Member upheld the revision order by PCIT correcting the error in limiting the addition to ₹12.10 lakh, instead of ₹27 crore, warranted correction under the powers provided by Section 263 of the Income Tax Act.

No Material on Record to Prove Earlier Rejection of Income Tax Exemption Registration: ITAT remands Matter to CIT(E) [Read Order] Acharya Nagarjuna University vs Commissioner of Income Tax (Exemptions) CITATION: 2024 TAXSCAN (ITAT) 1220

The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam recently remanded a matter to the Commissioner of Income Tax (Exemptions) ( CIT(E) ) citing the dearth of material on record to prove prior rejection of Income Tax Exemption Registration.

In light of the observations made, the ITAT proceeded to remit the case back to the file of the CIT(E) to meritoriously re-examine the case to decide on the approval of registration under Section 10(23C) of the Income Tax Act, 1961.

Adjudication of Income Tax Appeal by CIT(A) w/o waiting for Remand Report from AO: ITAT Remands Matter ACE URBAN DEVELOPERS PRIVATE LIMITED Module No. A1 vs THE ASST. CIT- CIRCLE-2(1) CITATION: 2024 TAXSCAN (ITAT) 1223

The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam recently remanded a case arising from the decision of the Commissioner of Income Taxes (Appeals), National Faceless Appeal Centre, Delhi ( CIT(A) ) in light of the failure of CIT(A) to wait for the Remand Report from the Assessing Officer before passing an Order.

In light of the procedural irregularity, ITAT remanded the case back to the file of the CIT(A) advising meritorious adjudication while directing the CIT(A) to call for the concerned Remand Report from the AO.

ITAT Rejects Plea to Condone One-Day Delay in PF and ESI Contributions, Upholds Disallowance [Read Order] Mohmed Hasib Tejamul Shaikh vs I.T.O CITATION: 2024 TAXSCAN (ITAT) 1222

The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) rejected the assessee’s plea to condone the one-day delay in PF and ESI contribution and upheld the lower authorities’ decision of disallowance.

As there was an admitted delay in the deposit of employees’ PF and ESI contributions, the tribunal upheld the disallowance. Thus, the appeal regarding the disallowance under Section 36(1)(va) of the Income Tax Act for delayed payment of employees’ provident fund (PF) and employee state insurance (ESI) contributions was dismissed.

Own-Occupancy and Usage of Office Space: ITAT Remands Matter for Production of Lease Agreement and other Evidences [Read Order] ACE URBAN DEVELOPERS PRIVATE LIMITED vs THE ASST. CIT CITATION: 2024 TAXSCAN (ITAT) 1223

The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam in a recent case regarding self-occupancy and usage of office, proceeded to remand the matter back to the Commissioner of Income Taxes (Appeals), National Faceless Appeal Centre, Delhi ( CIT(A) ) while calling for the production of lease agreement among other evidence,

However, the Bench alluded to the observation of CIT(A) that the Assessee failed to adduce any documentary evidence such as lease agreement to substantiate the own-occupancy and usage of the remaining 17,112 Square Feet by the Assessee themselves. In light of such finding, the Tribunal remitted the case back to the file of the CIT(A) to reconsider its decision on the allowability of rental expenditure, while directing the Assessee to produce the lease agreement and other documentary evidence to substantiate their use of the office space

ITAT quashes Reassessment due to Invalid S.148 Notice, Deletes ₹6.93 Crore Additions [Read Order] Regalia Laminates MCD Buliding vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1212

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the reassessment initiated under an invalid notice issued under Section 148 of the Income Tax Act,1961 and deleted additions amounting to ₹6.93 crore.

The two member bench comprising Sudhir Kumar (Judicial Member) and S.Rifaur Rahman( Accountant Member) allowed the appeal, concluding that the AO incorrectly assessed under Section 148, leading to the deletion of the additions upheld by the CIT(A).

ITAT Deletes ₹55,14,076 Penalty for Concealment of Income, Citing Inconsistencies in Income Assessment Estimates [Read Order] Asian Granito India Ltd vs The Dy./Joint Comm.Of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1224

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the penalty of ₹55,14,076 imposed under Section 271(1)(c) of the Income Tax Act,1961, for concealment of income, citing significant inconsistencies in the income assessment estimates at various appellate stages.

Citing judicial precedents, including CIT vs. Valimkbhai H. Patel and CIT vs. Subhash Trading Co., the appellate tribunal concluded that penalties could not be imposed when income discrepancies were due to estimation differences. The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member) deleted the penalty of ₹55,14,076 under Section 271(1)(c) of the Act, allowing the appeal filed by the assessee.

ITAT Grants Full Deduction u/s 80P: Rules Income from Cooperative Banks Eligible for Tax Relief [Read Order] Gandhinagar District Coop.Milk Producers Union Ltd. vs The Asst.CIT CITATION: 2024 TAXSCAN (ITAT) 1225

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) ruled in favour of the assessee allowing full deductions under Section 80P of the Income Tax Act,1961  for income earned from cooperative banks.It emphasized that this income fosters cooperative financial activity and should qualify for tax relief, contradicting the Assessing Officer ( AO )’s decision to exclude cooperative banks from the definition of “co-operative society.”

The two member bench comprising T.R Senthil Kumar ( Judicial Member ) and Makarand V.Mahadeokar ( Accountant Member ) regarding Section 80P(2)(c), noted that the assessee qualified for a standard deduction of ₹50,000, as its activities did not fall under the explicit categories listed in Section 80P(2)(a) or (b). The CIT(A) had denied this deduction without sufficient reasoning. Consequently, the tribunal set aside the disallowance of the ₹50,000 deduction under Section 80P(2)(c)(ii) and allowed it in full. In conclusion,the ITAT set aside the orders of the lower authorities and granted the appeal of the assessee in full.

ITAT Cancels ₹20,29,394 Penalty u/s 271AAA, Highlighting Variations in Income Assessment Calculations [Read Order] Asian Granito India Ltd vs The Dy./Joint Comm.Of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1224

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) canceled a penalty of ₹20,29,394 imposed under Section 271AAA of the Income Tax Act,1961 emphasizing the significant variations in income assessment calculations during the proceedings for Assessment Year ( AY ) 2008-09.

It emphasized that the varying estimates indicated a lack of clear evidence for concealment of income. The bench concluded that penalties could not be imposed when income assessments relied on speculative estimates that differed across authorities. The two member bench comprising T.R.Senthil Kumar ( Judicial Member ) and Annapurna Gupta ( Accountant Member ) ultimately allowed the appeal and deleted the penalty.

No Due Date for Employees’ Contributions to NPS in PFRDA Act, Deposits before ITR Filing Valid: ITAT rules in Favor of Adani Electricity [Read Order] Adani Electricity Mumbai Ltd. vs AO CPC CITATION: 2024 TAXSCAN (ITAT) 1227

The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the Pension Fund Regulatory and Development Authority ( PFRDA ) Act does not prescribe a specific due date for employees’ contributions to the National Pension System ( NPS ), and contributions made before the filing of the income tax return ( ITR ) are valid.

Therefore, the tribunal deleted the disallowance of Rs. 3,34,28,177, and the amount was allowed as a deduction, provided it was paid before the return filing deadline under Section 139(1) of the Income Tax Act. The assessee’s appeal was allowed.

S. 80IA Claim Disallowance w/o Verification of Nature of Assessee as Developer or Works Contractor by AO: ITAT returns Matter [Read Order] T and T Infra Limited vs ACIT CITATION: 2024 TAXSCAN (ITAT) 1226

Recently, the Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) dealt with a significant issue regarding the denial of a deduction claim under Section 80IA(4) of the Income Tax Act, 1961.

The Tribunal thus directed the AO to consider the CBDT Circular and the decision in the case of CIT vs. ABG Heavy Industries Ltd., where the Bombay High Court ruled in favour of developers in similar circumstances. The AO must now analyse the nature of each project and the involvement of the assessee, taking into account CBDT guidelines and relevant case law.

ITAT upholds NFAC Order for Recomputation of Income as ‘Capital Gains’ due to Improper Classification u/s68 r.w.s. 115BBE [Read Order] Asst. Commissioner of Income Tax vs Sri Jiyyana Venkatarayudu CITATION: 2024 TAXSCAN (ITAT) 1228

The Income Tax Appellate Tribunal (ITAT), Visakhapatnam recently upheld an order passed by the Commissioner of Income Taxes – National Faceless Appeals Centre (CIT(A)-NFAC) directing an Assessing Officer (AO) to recompute the Income declared by Assessee as ‘Capital Gains’ under Section 68 read with Section 115BBE of the Income Tax Act, 1961.

In light of such findings, ITAT held that mere failure to discharge tax liability under the IDS does not call for the change of the character of income declared; further noting that the IDS, 2016 is silent on the nature of income to be taxed upon failure of the Declarant to pay the taxes. Concludingly, the Bench ruled that the CIT(A)-NFAC had rightly directed the AO to re-compute the total income of the Assessee under the HUF status under the head of ‘capital gains’, vitiating the need for any interference in the order of the CIT(A)-NFAC.

ITAT Overturns Disallowance of Unpaid Service Tax Due to Lack of Deduction in P&L Account [Read Order] Mohmed Hasib Tejamul Shaikh vs I.T.O. CITATION: 2024 TAXSCAN (ITAT) 1229

The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) overturned the disallowance of Rs. 14,43,922/- under Section 43B of Income Tax Act,1961 concerning unpaid service tax, citing the lack of a deduction in the assessee’s Profit and Loss(P&L) Account .The Tribunal directed the Assessing Officer(AO) to verify the mercantile system of accounting and allow relief if the assessee’s claims were confirmed.

A single member bench of Pawan Singh(Judicial Member) directed the AO to verify whether the appellant followed the mercantile system of accounting and ensured that no deduction was claimed in the Profit and Loss Account. If this verification confirmed the assessee’s claim, the AO was instructed to allow relief accordingly. In conclusion, the appeal was allowed thereby overturning the disallowance under Section 43B of this Act.

Non-Submission of crucial Evidence on Unexplained Cash Credits due to COVID-19 disruptions: ITAT accepts delayed Evidence, remands matter [Read Order] Narottamprasad Surajdin Pandey vs I.T.O CITATION: 2024 TAXSCAN (ITAT) 1219

The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) accepted new evidence submitted by the assessee regarding unexplained cash credit, acknowledging the delays caused by the COVID-19 pandemic. The tribunal remanded the matter to the Assessing Officer (AO) for further investigation and verification of this newly submitted evidence.

The tribunal decided that the evidence filed by the assessee, including details of unsecured loans, sundry creditors, and labor wages, was crucial and should be reviewed to ensure a fair assessment. Therefore, the tribunal remanded the matter back to AO directing to verify the additional evidence and pass a fresh assessment order. The assessee’s appeal was allowed for statistical purposes.

Higher Tax Rate u/s 115BBE not Applicable as per Earlier Rulings for Assessee: ITAT [Read Order] Dhirajlal Bhagwanbhai Talaviya vs The ITO CITATION: 2024 TAXSCAN (ITAT) 1230

The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that the higher tax rate under Section 115BBE of the Income Tax Act, 1961, was not applicable to the assessee, for Assessment Year (AY)2017-18.

A Single member  bench of Pawan Singh(Judicial Member) allowed the assessee’s ground of appeal regarding the taxation under Section 115BBE, providing relief by ruling that the addition should not be subjected to the higher tax rate.

ITAT Partially reduces addition of Unexplained Cash Deposits to ₹6,50,000, upholding CBDT Guidelines [Read Order] Dhirajlal Bhagwanbhai Talaviya vs The ITO CITATION: 2024 TAXSCAN (ITAT) 1230

The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) partially reduced the addition of unexplained cash deposits to ₹6,50,000 while upholding the Central Board of Direct Taxes ( CBDT ) guidelines noting the lack of evidence for the source of the remaining cash deposits and recognizing the assessee’s consistent income reporting.

A single member bench of Pawan Singh(Judicial Member) recognized the assessee’s consistent income reporting and granted a further benefit of ₹1,50,000, resulting in a total deletion of ₹4,00,000 from the addition. The remaining ₹6,50,000 was sustained, and the appeal was partly allowed.

ITAT quashes Reassessment Order u/s 147 due to Lack of Jurisdiction and Procedural Defects [Read Order] Montreaux Resorts Pvt. Ltd vs ITO CITATION: 2024 TAXSCAN (ITAT) 1231

The Delhi Bench of Income Tax Appellate Tribunal(ITAT) quashed the reassessment order under Section 147 of the Income Tax Act,1961 due to lack of jurisdiction and procedural defects.

The two member bench comprising Yogesh Kumar US(Judicial Member) and Pradip Kumar Kedia(Accountant Member) quashed the reassessment thereby allowing the appeal of the assessee without needing to delve into the merits of the additions made.

ITAT restores Assessment for Fresh Consideration due to Lack of Fair Opportunity [Read Order] Trupti Ashishkumar Desai vs I.T.O CITATION: 2024 TAXSCAN (ITAT) 1232

The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) restored the assessment for fresh consideration due to a lack of fair opportunity provided to the assessee during the proceedings.

A single member bench of Pawan Singh ( Judicial Member )  instructed the AO to give the assessee a chance to be heard before making a decision. It also directed the assessee to respond promptly and avoid delays in providing necessary documents and evidence.

ITAT deletes Addition of ₹2.30 Crore u/s 68, upholds Assessee’s Burden of Proof [Read Order] Shankar Traders & Distributors Pvt. Ltd. vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1235

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) deleted an addition of ₹2.30 crore made under Section 68 of the Income Tax Act,1961.It found that the assessee had successfully established the identity, creditworthiness, and genuineness of the share transactions, despite the Assessing Officer (AO) initially concluding otherwise based on the company’s low revenue and profits.

The two member bench comprising Sanjay Garg(Judicial Member) and Dr. Manish Borad(Accountant Member) set aside the CIT(A)’s findings, deleted the addition, and allowed all effective grounds raised by the assessee confirming that the identity, creditworthiness, and genuineness of the share applications were sufficiently established.

ITAT invalidates Deemed Gift Addition u/s 56(2)(vii)(b)(ii) based on Allotment Letter Validity [Read Order] Tamojit Das vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1234

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) invalidated the deemed gift addition made under Section 56(2)(vii)(b)(ii) of the Income Tax Act,1961, emphasizing that an allotment letter issued by a developer constitutes a valid agreement for the purpose of assessing such gifts.

The two-member bench comprising Rajpal Yadav (Vice-President) and Rakesh Mishra (Accountant Member) concluded that the allotment letter in this case constituted a valid agreement, aligning with the provisions of the Income Tax Act. Thus, the addition made under Section 56(2)(vii)(b)(ii) was invalidated, and the appeal was allowed, resulting in the deletion of the addition.

Re-Deposits of Cash in Hand during Demonetisation: ITAT deletes ₹18.25 Lakh Addition [Read Order] New Arbuda Builders 601C vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 1236

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) checked cash deposits made during the demonetisation period, ultimately deleting an addition of ₹18.25 lakh imposed by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961.

The ITAT observed that the AO had failed to consider the full cash withdrawal history and had unjustly limited the scope to a narrow timeframe. It was noted that, “the addition made mainly on the presumption by the Ld. A.O. is not sustainable in law.”

No Deduction for Delay in Deposit of Employees’ Contributions to ESIC and PF: ITAT Upholds Disallowance u/s 36(1)(va) [Read Order] Mohmed Hasib Tejamul Shaikh vs I.T.O. CITATION: 2024 TAXSCAN (ITAT) 1229

The Surat Bench of Income Tax Appellate Tribunal(ITAT) upheld the disallowance of deductions for delayed employee contributions to the Employees’ State Insurance Corporation (ESIC) and provident fund (PF) under Section 36(1)(va) of Income Tax Act,1961.

After considering both parties’ submissions and reviewing the relevant legal precedents, the Tribunal concluded that the appellant’s arguments lacked merit. It emphasized that the Supreme Court’s ruling in Checkmate Services Pvt. Ltd. vs. CIT clearly established that delays in the deposit of employees’ contributions do not permit deductions under Section 36(1)(va) of the Act. A single member bench of Pawan Singh(Judicial Member) confirmed the disallowance of the deduction for delayed employee contributions, resulting in the dismissal of appeal.

ITAT Condones Delay in Filing Appeal and Restores Matter for Fresh Assessment to AO [Read Order] Akshaykumar Lathiya vs I.T.O CITATION: 2024 TAXSCAN (ITAT) 1233

The Surat Bench of Income Tax Appellate Tribunal(ITAT)condoned the delay in filing an appeal by the assessee and restored the matter for fresh assessment to the Assessing Officer (AO).The 159-day delay was not intentional or deliberate, as the assessee had opted out of receiving notices via email, which led to his unawareness of the proceedings.

A single member bench Pawan Singh(Judicial Member) acknowledged the assessee’s claim of not receiving notices via email but determined that substantial rights were involved. It restored the case to the AO for a fresh assessment, directing that a fair opportunity for hearing be granted. The tribunal instructed the assessee to be more vigilant in future compliance and to provide all necessary details and evidence promptly. Ultimately, the appeal was allowed for statistical purposes .

ITAT directs Reassessment of JCB India’s ₹166.09 Crore TP Adjustment for Royalty Payments to Non-UK Entities in AY 2017-18 [Read Order] JCB India Ltd. vs DCIT CITATION: 2024 TAXSCAN (ITAT) 1237

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) directed the reassessment of JCB India’s transfer pricing ( TP ) adjustment of Rs. 166.09 crore for royalty payments made to non-UK associated enterprises ( AEs ) for the assessment year 2017-18.

Therefore, the tribunal decided to remit the case back to the TPO for fresh consideration. The TPO was directed to follow similar lines as in previous rulings where adjustments were made for non-UK transactions. The assessee’s appeal partly allowed for statistical purposes.

Income Classified as Business Income, not Taxable in India for Non-Resident Assessee: ITAT upholds CIT(A) Ruling [Read Order] DCIT vs Transkor Global Pte Ltd CITATION: 2024 TAXSCAN (ITAT) 1238

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax(Appeals)[CIT(A)] ruling that the income received by a non-resident entity should be classified as business income and not taxable in India.

The two member bench comprising Saktijit Dey (Vice President) and M.Balaganesh(Accountant Member)dismissed the revenue’s appeal, upholding the CIT(A)’s ruling that the nature of the receipts did not constitute FTS, thereby confirming the classification of the income as business income and supporting the respondent-assessee’s claim for relief.

ITAT restores Matter to AO for Examination of Taxability of AMC Payments by Bharti Airtel Ltd. as FTS [Read Order] M/s. Bharti Airtel Limited vs Assistant Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 1239

The Delhi Bench of Income Tax Appellate Tribunal(ITAT) restored the matter to the Assessing Officer (AO) for a detailed examination of the taxability of annual maintenance contract (AMC) payments made by Bharti Airtel Limited. as Fees for Technical Services (FTS). The tribunal noted that the technical nature of the services had not been adequately examined.

The two member bench comprising Saktijit Dey(Vice President) and Naveen Chandra (Accountant Member) observed that the claim had not been previously examined, thus restoring the issue to the AO for verification and allowing the appellant an opportunity to present its case, with the ground permitted for statistical purposes.

Sun Pharma Labs. Ltd.’s Software Upgradation Expenses classified as Revenue Expenditure: ITAT upholds CIT(A) Ruling [Read Order] Sun Pharma Laboratories Ltd vs The D.C.I.T CITATION: 2024 TAXSCAN (ITAT) 1194

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals) [CIT(A)] ruling regarding Sun Pharma Laboratories Ltd.’s software upgradation expenses, classifying them as revenue expenditures.

The two member bench comprising T.R. Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) dismissed the Revenue’s appeal, confirming that the AO’s disallowance of the expenses was rightly deleted by the CIT(A). This ruling reinforced the acceptability of certain software-related expenditures as revenue expenses eligible for immediate deduction.

Bandwidth Charges Exempt from TDS as They Do Not Constitute Royalty: ITAT Favors Bharti Airtel Ltd [Read Order] M/s. Bharti Airtel Limited vs Assistant Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 1239

The Delhi Bench of Income Tax Appellate Tribunal(ITAT)  ruled in favor of Bharti Airtel Ltd., stating that bandwidth charges were exempt from Tax Deducted at Source (TDS) as they do not constitute royalty under Section 9(1)(vi) of the Income Tax Act,1961 or relevant Double Taxation Avoidance Agreements (DTAAs).

The two member bench comprising Saktijit Dey(Vice President) and Naveen Chandra (Accountant Member) held that the bandwidth charges paid by the assessee were not classified as royalty under either the treaty provisions or Section 9(1)(vi) of the Act, concluding that the assessee was not required to deduct TDS.

Revisionary Proceedings u/s 263 Income Tax Act cannot be invoked merely on Stock Valuation on Second Opinion: ITAT [Read Order] Sona Alloys Private Limited vs Jurisdictional Officer CITATION: 2024 TAXSCAN (ITAT) 1240

In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that the revisionary proceedings under Section 263 Income Tax Act, 1961, cannot be invoked merely on stock valuation on second opinion.

The ITAT bench observed that the invocation of Section 263 by the PCIT regarding the Rs. 6,38,93,218, discrepancy in stock valuation, is unjustified, as the Assessing Officer has already considered the matter, and that simply seeking a second opinion does not warrant Section 263’s application. The ITAT bench, comprising  Makrand Vasnat Mahadeokar ( Accountant Member ) and Suchitra Kamble ( Judicial Member ), partly allowed the appeal of the assessee.

Relief for Genpact India: ITAT Allows 60% Depreciation Citing Printers and Routers as Part of an Integrated System with Computers [Read Order] DCIT vs Genpact India (now merged with Genpact India Pvt. Ltd.) CITATION: 2024 TAXSCAN (ITAT) 1241

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to Genpact India by allowing depreciation at the rate of 60% on certain computer peripherals such as printers, routers etc., citing that they are all part of an integrated system with computer.

The tribunal observed that peripherals like printers and routers are part of an integrated computer system and would not be useful independently. The Tribunal referenced the High Court’s ruling in BSES Yamuna Power and Orient Ceramics, which upheld the classification of such peripherals as part of the computer system, thereby justifying the 60% depreciation rate. Therefore, the tribunal ruled that the assessee is entitled to claim depreciation at the rate of 60% for the computer peripherals. The revenue’s appeal was dismissed.

ITAT Quashes Tata’s Penalty Notice u/s 271(1)(c) Due to AO’s Vague Justification & Non-Application of Mind [Read Order] ACIT vs Tata Teleservices ltd CITATION: 2024 TAXSCAN (ITAT) 1242

The New Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) quashed Tata Teleservice Penalty Notice Due to Assessing Officer ( AO )’s vague justification and Non-application of mind.

The tribunal referenced Apex Court rulings, which emphasized that such ambiguity in a penalty notice reflects non-application of mind and is fatal to the penalty proceedings. Therefore, the tribunal ruled that the penalty notice was indeed invalid because of the lack of specificity. Thus, the tribunal directed the AO to delete the penalty imposed under section 271(1)(c). The assessee’s cross-objection was allowed.

ITAT Upholds Deletion of Demand for Non-Deduction of Tax on Agency Fees by Bharti Airtel Ltd [Read Order] M/s. Bharti Airtel Limited vs Assistant Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 1239

The Delhi Bench of Income Tax Appellate Tribunal(ITAT) upheld the deletion of demand for non-deduction of tax on agency fees paid by Bharti Airtel Limited. The tribunal dismissed the Revenue’s appeal and confirmed that the assessee had no obligation to deduct tax on the agency fees.

The two member bench comprising Saktijit Dey(Vice President) and Naveen Chandra (Accountant Member) upheld the decision of the first appellate authority. Accordingly, the appeal was dismissed, confirming that the assessee was not liable to deduct tax on the agency fees paid to the foreign banks.

Relief to Louis Berger Group: ITAT allows Bad Debts Deductions Citing Debts Written Off as per S. 36(1)(vii) [Read Order] The Louis Berger Group Inc vs ACIT CITATION: 2024 TAXSCAN (ITAT) 1243

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the Louis Berger Group Bad Debts deduction claim citing debts were written off as per Section 36(1)(vii) of the Income Tax Act, 1961

The tribunal acknowledged that the AO’s concerns were more about the business decision of not adjusting receivables against payables but emphasized that as long as the statutory conditions were met, the deduction must be allowed. Therefore, the tribunal allowed a deduction for bad debts written off.

ITAT Dismisses Revenue Appeal as Infructuous Due to Tax Effect Below ₹60 Lakhs [Read Order] Income Tax Officer (E)-2(2) vs Old Girtonians Association CITATION: 2024 TAXSCAN (ITAT) 1245

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the Revenue’s appeal as infructuous due to the tax effect being below ₹60 lakhs, as outlined in the recently issued Circular No. 9/2024.

The two member bench comprising Raj Kumar Chauhan ( Judicial Member ) and Narendra Kumar Billaiya ( Accountant Member ) concluded that since the tax effect was below the updated monetary threshold, the appeal could not be maintained and was dismissed as infructuous. In conclusion, the appeal was dismissed on the grounds of not meeting the revised monetary limit for filing appeals.

ITAT Restores Appeal to CIT(A) for Fresh Consideration, Citing COVID-19 Impact on Limitation Periods [Read Order] Ivan Santosh Fernandes vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1244

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) restored the appeal of the assessee to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh consideration, emphasizing the impact of the COVID-19 pandemic on limitation periods.

The two member bench comprising Raj Kumar Chauhan ( Judicial Member ) and Narendra Kumar Billaiya ( Accountant Member ) restored the matter to the CIT(A) for reconsideration, directing that the appeal be evaluated on its merits while ensuring the appellant was given a fair opportunity to present his case. In conclusion the appeal was consequently allowed for statistical purposes.

ITAT Condones Delay Due to Rectification Efforts and CA’s Death, Restores Case to CIT(A) [Read Order] Shree Sejal Tower Co-operative Housing Society Limited vs CPC CITATION: 2024 TAXSCAN (ITAT) 1247

The Mumbai Bench of Income Tax Appellate Tribunal(ITAT)condoned the delay in filing an appeal by the assessee due to ongoing rectification efforts and the death of its Chartered Accountant(CA) and restored the matter to Commissioner of Income Tax(Appeals)[CIT(A)] for fresh hearing.

The two member bench Sunil Kumar Singh(Judicial Member) and BR Baskaran (Accountant Member)allowed the appeal and set aside the order dated February 9, 2024. They condoned the delay in filing the first appeal before the CIT(A) and restored the matter for a fresh decision on merit, ensuring compliance with the principles of natural justice.

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