ITAT Weekly Round-Up

This weekly round-up analytically summarises the key stories related to the Income Tax Tribunal (ITAT)  reported at Taxscan.in during the previous week from March 13th to March 20th, 2022.

Shri Deepak Valji Karia vs Income Tax Officer

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has quashed the assessment order for the reason that the Assessing Officer has failed to provide the copies of statements on which he relied for making assessments. Quashing the order, the Tribunal held that “Facts and circumstances being identical respectfully following the decision of the Hon'ble Supreme Court, we hold that the assessment order passed u/s. 143(3) of the Act by the Assessing Officer is bad in law and has to be quashed as the Assessing Officer has failed to provide the copies of statements on which he relied on for making assessments and also for not providing cross-examination of those persons in spite of specific request made by the assessee. Thus, we quash the assessment orders passed u/s. 143(3) of the Act on this ground.”

ACIT vs Baker Hughes Singapore Pte.

The Dehradun Bench of ITAT has held that interest on income tax refund received by a foreign enterprise is not effectively connected to its Permanent Establishment in India and therefore it cannot be taxed as its business income under Income Tax Act, 1961. The ITAT also held that receipts from Service Tax and VAT could not be included in the gross taxable receipts of an assessee under the Act.

Seven Jewels vs Asstt. Commissioner of Income Tax

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the addition for unexplained expenditure under section 69C of the Income Tax Act, 1961 cannot be made merely on the assumptions without documents. The Tribunal bench consists of Shri G.S. Pannu, President and Shri Sandeep Singh Karhail, Judicial Member held that the apprehension / allegation of the AO that M/s. Artview Gems Pvt. Ltd., is not a genuine entity, the AO neither discussed nor denied the submission dated 24th November 2017, filed by the entity before the AO at Mumbai, wherein the return of income for the assessment year 2015–16 of the said entity, copy of ledger account of the assessee as well as PAN details of the entity were furnished.

DCIT vs Ganpat Singhvi

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that there is no tax liability for NRI being a joint signatory to the bank account of the foreign company without direct beneficial interest. It was held that “from the above, it is evident that the same issue has been decided in favor of the assessee. It is not the case that the Honorable jurisdictional High Court has reversed the decision of ITAT. Hence, respectfully following the precedence from the ITAT in assessing own case on the same facts, we do not find any infirmity in the order of CIT (A). Hence, we uphold the same”.

Late Shri Jayantilal Kalidas Shah vs ITO

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, while quashing a re-assessment notice under section 148 of the Income Tax Act, 1961, has held that there is no statutory duty upon the legal of the assessee to inform the death of the latter to the income tax department.

Deputy Commissioner of Income Tax vs Shri Vipul Suresh Kumar Modi

The Income Tax Appellate Tribunal (ITAT) Mumbai bench has held that long term capital gains arising from a penny stock transaction cannot be denied exemption under the Income Tax Act, 1961 on the ground that the said transaction is bogus and pre-arranged in the absence of any incriminating material.

M/s Hindustan Aeronautics Ltd vs The Asst. Commissioner of Income Tax

The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the payment made for flight testing services by Hindustan Aeronautics Ltd to CGTM France cannot be treated as Fee for Technical Services (FTS). Deleting the addition, the Tribunal said “In view of the above, we are of the considered opinion that fees paid by the assessee to CGTM France is not in the nature of fees for technical services and hence does not attract the provisions of sec. 195 with regard to the requirement for deduction of tax at source on payment of fees for technical services of a resident outside India. As a result, no disallowance is warranted u/s 40(a)(ia) of the expenses claimed by the assessee towards payment of service charges to CGTM France. Accordingly, we allow the appeal in favour of the assessee.”

The Andaman & Nicobar State Corporation Bank Ltd. vs DCIT

In a major relief to Andaman & Nicobar State Corporation Bank, the Income Tax Appellate Tribunal, Kolkata bench has held that deduction is allowable on the payment towards LIC Group Gratuity Scheme under section 37 of the Income Tax Act, 1961.

M/s Arman Advisory Pvt. Ltd vs PCIT

The Income Tax Appellate Tribunal (ITAT), Kolkata bench has quashed a revisional order passed under section 263 of the Income Tax Act, 1961 on the ground that the Commissioner failed to mention the reason how the action of AO while framing the assessment order is not accordance with the law.

Bhagyalaxmi Nagri Sahakari Patsanstha Meryadit vs ITO

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the interest on security deposit with MSEDCL is eligible for income tax deduction under section 80P(2) of the Income Tax Act, 1961. Allowing the claim of the assessee, the Tribunal held that “In view of the fact that the activity of collection of bills has been held by the Tribunal in Banganga Nagri Sah. Patsanstha Ltd. (supra) as a business activity, whose income is eligible for deduction u/s.80P(2), the instant interest income of Rs.20,000/- on security deposit with MSEDCL for carrying on the business of bill collection, which is a part and parcel of the overall activity of such business, cannot be accorded a different character. I, therefore, order to grant deduction on interest on security deposit with MSEDCL amounting to Rs.20,000/-.”

Shri Akashoy Das vs ITO

The ITAT, Kolkata bench has held that the addition made on the basis of the statement made on oath by the assessee during the course of the survey cannot be the sole reason for income tax addition unless the same is supported by evidence.

Mysore Minerals Ltd vs The Deputy Commissioner of Income Tax

The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the expenditure allowed for corporate social responsibility (CSR) of the assessee shall be allowed as business expenditure under section 37(1) of the Income Tax Act, 1961.

Shri N.R. Kumaraswamy vs Asst. Director Income Tax CPC, Bangalore

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the amended provisions of section 43B and 36(1)(va) of the Income Tax Act, 1961 relating to employees’ contribution towards ESI and PF are not applicable to the Assessment Years 2018-19.

M/s Karur Jayaprakash vs The Dy. Commissioner of Income Tax

In an assessee-friendly ruling, the Income Tax Appellate Tribunal (ITAT), Bangalore bench has directed the Assessing Officer to conduct the proceedings afresh accepting the contention of the assessee that the Consultant who was handling the case did not conduct the proceedings properly.

M/s. 42 Hertz Software India vs The Assistant Commissioner of Income Tax

The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the foreign tax credit (FTC) cannot be denied to the assessee as per the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and Japan.

M N Dastur & Co Pvt. Ltd vs The Deputy Commissioner of Income Tax

The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the Addl. Commissioner is not a ‘Proper Officer’ for re-opening of assessment after 4 years under the Income Tax Act, 1961. Quashing the re-assessment order, the Tribunal held that “In the present case also the reopening beyond 4 years has been done by getting the approval of Addl. Commissioner and not from the Commissioner or Pr. Commissioner or Pr. Chief Commissioner. Therefore, the initiation of the proceedings u/s 148 of the Act was invalid. In view of the above discussion, we are of the opinion that assumption of jurisdiction is improper in the present case so as to reopen the assessment. Accordingly, we quash the reassessment order u/s. 115WE(3) r.w.s. 115WG of the Act.”

M/s Chartered Housing Pvt Ltd vs M/s Chartered Housing Pvt Ltd

A two-Member bench of the Income Tax Appellate Tribunal (ITAT), Bangalore has held that the amount collected towards corpus fund cannot be treated as perquisites under section 28 of the Income Tax Act, 1961. The Tribunal bench comprising Shri Chandra Poojari, Accountant Member and Smt. Beena Pillai, Judicial Memberobserved that the amount collected towards corpus fund was lying with assessee and it is not perquisites in the hands of the assessee as to apply the provisions of section 28(iv) of the Act.

M/s.Malla Foundation vs The Commissioner of Income Tax

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the donations are the lifeline for starting charitable activities of the assessee trust and the CIT(E) cannot deny approval without verifying the activities.

Sh. Ashok Kumar Tyagi vs ACIT

The Income Tax Appellate Tribunal (ITAT), Delhi bench has deleted an addition under section 153C of the Income Tax Act, 1961 on the ground that the addition was not on the basis of incriminating materials found as a result of search.

Nagesh Knitwears Pvt. Ltd vs Addl ACIT

The ITAT, Delhi bench has held that CENVAT credit receivables which could not be set off are allowable as deduction under the Income Tax Act, 1961.

Shri. Joison Kundu Kulam Johny vs ITO

The Income Tax Appellate Tribunal (ITAT) Chennai bench has deleted penalty under section 271(1)(c) of the Income Tax Act, 1961 against the assessee by holding that assessee cannot be penalized for false refund claims made by income tax practitioner.

G. D. Builders vs JCIT

The ITAT, Delhi bench, relying on a catena of decisions, has observed that amendment to Section 36 (1)(va) and Section 43B effected by Finance Act 2021 is having prospective effect, cannot be applied retrospectively.

Mattapalli Ram Kumar vs Asst.Commissioner of Income Tax

The Vishakhapatnam bench of the ITAT, comprising Shri Duvvuru Rl Reddy, Judicial Member & Shri S Balakrishnan, Accountant Member has held that the department cannot impose income tax on the amount of compensation received on account of compulsory acquisition of land under RFCTLARR Act.

Shri. Omprakash Pandey vs ITO

The Income Tax Appellate Tribunal (ITAT), Chennai bench, while granting relief to a 71 year old assessed, has held that the delay due to medical condition is a reasonable cause for the non-filing appeal.

Vandana Maruti Pathare vs ITO

The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the exemption under section 54B of the Income Tax Act, 1961 is not available if the assessee purchased new agricultural land in the name of sons out of the sale consideration received for transferring the old agricultural land.

Deputy Commissioner of Income Tax vs M/s. Quippo Oil and Gas Infrastructure Ltd

The ITAT Delhi bench has held that the Assessing Officer cannot make disallowance merely on a hypothesis basis without any reasonable ground. Quashing the impugned order, the Tribunal held that “The only dispute is whether such expenditure is eligible for deduction or being capital in nature. At this juncture, we take note of the plea of the assessee that there is no reimbursement of expenses and such expenses are an integral part of the execution of the contract as demonstrated. Hence, the expenditure incurred requires to be set off against the revenue income arising from the contract as per rudimentary principles of accountancy. The assessee has taken a plea that no new asset is created or no benefit of enduring nature has been derived. We do not see any rebuttal on this score from the revenue. The Assessing Officer has merely proceeded on a hypothesis of such expenditure being capital in nature without showing any justifiable grounds for doing so. The Assessing Officer has capitalized such expenditure without showing any reasonable grounds.”