ITAT Weekly Round Up

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 20th October 2024 to 25th October 2024.

ITAT sets aside Ex-Parte Order of CIT(A) for Fresh Hearing, upholds Principles of Natural Justice [Read Order] Bhupendra Kumar Phoolchand Bind H No. 242 vs Income Tax Officer 1(1) CITATION: 2024 TAXSCAN (ITAT) 1246

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the principles of natural justice by setting aside the ex-parte order issued by the Commissioner of Income Tax (Appeals) [CIT(A)].

The two member bench comprising Raj Kumar Chauhan(Judicial Member) and Prashant Maharshi(Accountant Member)set aside the impugned order and restored the matter to the CIT(A) for a fresh hearing, instructing that the appellant be allowed to present his case within 60 days of the order date. As a result, the appeal was allowed for statistical purposes.

Unsold Flats held as Stock-in-Trade should be Treated as Business Stock, Not Income from House Property: ITAT on Palm Grove’s Matter [Read Order] Palm Grove Beach Hotels Pvt. Ltd. vs The Deputy Commissioner of Income tax CITATION: 2024 TAXSCAN (ITAT) 1248

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) ruled in favor of Palm Grove Beach Hotels Pvt. Ltd. that unsold flats held as stock-in-trade should be treated as business stock, not income from house property.

The tribunal relied heavily on previous judgments, including the Gujarat High Court’s decision in Neha Builders Pvt. Ltd. and the Supreme Court’s ruling in Chennai Properties and Investments Ltd. Both courts established that if the property is part of a business’s stock-in-trade, income from such properties should be treated as business income. Therefore, the tribunal directed the AO to treat the income from the unsold flats as business income and not as income from house property. The appeal of the assessee was allowed.

ITAT Rules VLCC Health Care Ltd.’s Revenue-Sharing Model Not Subject to TDS, Dismisses Revenue’s Appeal [Read Order]  Addl.CIT vs VLCC Health Care Ltd CITATION: 2024 TAXSCAN (ITAT) 1249

The Delhi Bench Of Income Tax Appellate Tribunal( ITAT )dismissed the Revenue’s appeal against VLCC Health Care Ltd., ruling that the company’s revenue-sharing model under its franchise agreement was not subject to Tax Deducted at Source (TDS).

The two member bench comprising Sudhir Pareek(Judicial Member) and S.Rifaur Rahman(Accountant Member) found that the CIT(A)’s findings were appropriate and that the payments were part of a legitimate revenue-sharing model rather than deductible expenses under Sections 30 to 37 or 40(a)(ia) of the Act.

In conclusion, the bench dismissed the Revenue’s appeal, affirming that the payments made by the assessee under the franchise agreement were part of a revenue-sharing model and not subject to TDS.

AO incorrectly applied S. 37 on already disallowed Penalty: ITAT deletes Penalty to prevent Double Addition [Read Order] Ishan Equipments Pvt.Ltd vs The Dy.CIT CITATION: 2024 TAXSCAN (ITAT) 1251

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) deleted the penalty disallowance after the assessing officer (AO) incorrectly applied Section 37 of the Income Tax Act, 1961 to an amount that had already been disallowed in the original income tax return.

The Tribunal observed that the total disallowance of Rs. 21,62,259, as shown in the assessee’s income tax return, already included the penalty expenditure. The AO’s disallowance under section 37 of the Income Tax Act was indeed a duplication caused by a clerical error. Thus, the tribunal deleted the addition. The appeal of the assessee was allowed.

Onus on AO to Prove unreasonableness in Expenditure when invoking Section 40A(2)(b) of Income Tax Act: ITAT [Read Order] M/s. Patel Kenwood Pvt. Ltd. vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1252

The Ahmedabad Bench of the Income Tax Act, 1961 that for invoking Section 40A(2)(b)of the Income Tax Act, onus to prove the unreasonableness is on the Assessing Officer only.

In this case, the tribunal held that the AO must establish that the expenditure in question is not at arm’s length, based on proper comparisons and assessments. Without such evidence, the disallowance cannot be upheld, the tribunal bench of Accountant Member Ramit Kochar and Judicial Member T R Senthil Kumar stated.

ITAT invalidates Reopening under S.147 for Relying on Incorrect Facts, quashes Reassessment [Read Order] Team Global vs DCIT-11(3)(1) CITATION: 2024 TAXSCAN (ITAT) 1253

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) invalidated the reopening of an assessment under Section 147 of the Income Tax Act,1961, concluding that the Assessing Officer (AO) relied on incorrect facts.

The two member bench comprising Sunil Kumar(Judicial Member) and BR Baskaran(Accountant Member), concluded that the reopening was based on incorrect facts, rendering the reasons for reopening invalid and resulting in the appeal being allowed while quashing the reassessment without addressing the remaining issues on merit.

ITAT rules Interest Income from Cooperative Banks Eligible for Deduction u/s 80P(2)(d) of Income Tax Act [Read Order] Charkop Lands End Co-operative vs ITO CITATION: 2024 TAXSCAN (ITAT) 1254

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) ruled that interest income earned from deposits with cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act,1961.

The two member bench comprising Sunil Kumar Singh (Judicial Member) and Om Prakash Kant (Accountant Member)rejected the disallowance made by the AO and confirmed by the CIT(A). Consequently, the bench allowed the appeal in favor of the assessee, restoring the deduction for interest income and ordering the deletion of the addition made to the taxable income. To Read the full text of the Order CLICK HERE

ITAT affirms deletion of ₹43,33,606 Addition for Non-Genuine Purchases, Citing Consistent GP Rate [Read Order] Deputy Commissioner of Income Tax vs Sunder Das Sonkiya Flat Sonkia Bhawan CITATION: 2024 TAXSCAN (ITAT) 1255

The Jaipur Bench of Income Tax Appellate Tribunal(ITAT) upheld the Commissioner of Income Tax(Appeals)[CIT(A)]’s decision to delete an addition of ₹43,33,606 related to non-genuine purchases. The ITAT’s ruling emphasized that the assessee’s gross profit rate was consistent with industry standards, justifying the removal of the disputed amount from his taxable income.

The two member bench comprising Dr.S.Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member),noted that the assessee’s G.P. rate surpassed the average rate. Consequently, the tribunal found no error in the CIT(A)’s decision to delete the addition and dismissed the revenue’s appeal.

Auditor’s Incorrect Reporting of Income Already Credited to P&L Account Leads to ₹54,17,992 Addition: ITAT Orders Reassessment [Read Order] SPS Automobiles vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1250

The Allahabad Bench of Income Tax Appellate Tribunal ( ITAT ) ordered reassessment for the matter concerning the addition of Rs. 54,17,992 due to the Auditor’s misreporting of income which was already credited to the Profit and Loss Account.

The tribunal also noted that the assessee was also at fault for approving the erroneous tax audit report without revision. The tribunal emphasized the need for thorough verification by the assessing officer ( AO ), stating that the error stemmed from a technical flaw in the audit report, which should have been corrected through a revised audit report. Therefore, the tribunal remanded the matter back to the assessing officer for reassessment. The assessee’s appeal was allowed for statistical purposes.

ITAT remands Shell Energy India’s TP Determination Matter After TPO Mistakes Regasification Payment for Operational Support [Read Order] Shell Energy India Pvt. Ltd. vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 1256

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded matter concerning the Shell Energy India’s Transfer Pricing ( TP ) determination after the Transfer Pricing Officer ( TPO ) mistaken regasification payment for Operational support.

Therefore, the tribunal directed the TPO to reassess the transaction after accurately understanding the nature of the services availed by the assessee and considering all relevant evidence and documentation. The assessee’s appeal was allowed for statistical purposes.

Banking Companies Exempt from Minimum Alternate Tax u/s 115JB from AY 2013-14: ITAT rules in favour of Canara Bank [Read Order]  M/s Canara Bank (Erstwhile Syndicate Bank) vs DCIT CITATION: 2024 TAXSCAN (ITAT) 1257

The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) ruled in favor of Canara Bank that Banking Companies are exempted from Minimum Alternate Tax ( MAT ) under Section 115JB of the Income Tax Act, 1961

The tribunal also considered the Special Bench ruling from Mumbai, which reinforced the concept that banking companies are governed by their respective statutes, not by the Companies Act, and should be exempt from MAT. Therefore, the tribunal held that the bank is not liable for MAT under Section 115JB for the assessment years 2013-14 & 2014-15. The appeal of the assessee was allowed.

ITAT Upholds Legitimacy of Cash Deposits, Rejects Unexplained Classification u/s 68 of Income Tax Act [Read Order] Suwalka and Suwalka Properties and Builders Pvt. Ltd. vs Asst. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1258

The Jaipur Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the legitimacy of cash deposits made during the demonetization period and rejected their classification as unexplained under Section 68 of the Income Tax Act,1961.

The two member bench comprising Dr.S.Seethalakshmi ( Judicial Member ) and Rathod Kamlesh Jayantbhai ( Accountant Member ) held that cash deposits from recognized business income could not be classified under Sections 68 or 69A, allowing both grounds raised by the assessee and granting the appeal.

Once Cash Withdrawals are Proven, Burden Shifts to Income Tax Dept to Disprove their Use for Deposits: ITAT [Read Order] Rajendra Gadhia vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 1260

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that once cash withdrawals were proven, the burden shifts to the Income Tax Department to Disprove these funds were not available for deposits.

However, the tribunal found that the claim of Rs. 3,70,000 from the conversion of USD could not be substantiated due to a lack of forex receipts and other documentary evidence. Therefore, the tribunal allowed Rs. 8,30,000 as satisfactorily explained but upheld the addition of Rs. 3,70,000 under Section 69A of the Income Tax Act due to a lack of evidence on the USD conversion. The appeal of the assessee was partly allowed.

Failure to Prove Loan Credibility: ITAT Remands Case to AO for Fresh Adjudication [Read Order] Vallabh Pesticides Limited vs DCIT CITATION: 2024 TAXSCAN (ITAT) 1263

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case back to the Assessing Officer ( AO ) due to the assessee’s failure to prove the credibility of a loan amounting to Rs. 3.00 crores.

The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Dr.BRR Kumar (Accountant Member) found that the assessee failed to prove the identity, genuineness, and creditworthiness of the loan. The case was remanded to the AO for fresh examination, with directions to give the assessee a fair chance to present all required details for reassessment.

ITAT directs DRP to reconsider Assessee’s Objection Over Signature Irregularity [Read Order] Prabodh Mohanlal Shah vs Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1262

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) directed the Dispute Resolution Panel ( DRP ) to reconsider an objection to a long-term capital gain assessment, which had been rejected due to a signature irregularity by the Authorized Representative (AR) while the assessee was outside India.

The two member bench comprising T.R Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) in light of the principles of natural justice, set aside the DRP’s order and directed it to reconsider the objection filed by the assessee, ensuring a fair opportunity for hearing. In conclusion the appeal was allowed for statistical purposes.

No Disallowance u/s 43B for unclaimed GST due to Lack of Deduction: ITAT allows Appeal [Read Order] Munjal Auto Industries Ltd. vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1261

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT )ruled that no disallowance under Section 43B of the Income Tax Act,1961 could be imposed for unclaimed Goods and Service Tax ( GST ) due to the lack of deduction.

The two member bench comprising Siddhartha Nautiyal ( Judicial Member ) and Dr.BRR Kumar ( Accountant Member ) ruled that since the assessee had not claimed any deduction and did not route the GST through the Profit and Loss Account, the appeal was allowed, and the disallowance under Section 43B was reversed.

Purchases Supported by Bills, Entries Made in Books and Payment made by Cheque not Bogus: ITAT [Read Order] Patel Kenwood Pvt. Ltd vs Income Tax Officer Ward CITATION: 2024 TAXSCAN (ITAT) 1252

In a significant ruling, the Income Tax Appellate Tribunal ( ITAT ) in Ahmedabad has affirmed that purchases supported by proper documentation—such as bills, recorded entries in books of accounts, and payments made through cheques—cannot be deemed as bogus transactions. This decision arose from the appeals of M/s. Patel Kenwood Pvt. Ltd., challenging the additions made by the Assessing Officer ( AO ) regarding certain purchases.

In conclusion, the Income Tax Appellate Tribunal directed the deletion of the addition made by the AO, underlining that valid documentation substantiates the legitimacy of financial transactions.

Section 80P Inserted to Encourage Growth of Co-Operative Societies: ITAT [Read Order] The Sankheda Jetpur Pavi Taluka Ginning Pressing Cotton Sale Co-op. Society Ltd vs Principal Commissioner of Income Tax-3 CITATION: 2024 TAXSCAN (ITAT) 1264

The Income Tax Appellate Tribunal (ITAT) has recently upheld the provisions of Section 80P of the Income Tax Act, affirming its role in promoting the growth of cooperative societies.

However, on the contrary it was held against the assessee that, “Therefore, in light of these facts discussed above, the PCIT set-aside the assessment order is being erroneous and prejudicial to the interest of the Revenue.  On going through the contents of the assessment order, the assessee’s activities during the impugned year under consideration, and the assessee’s alternate claim for claim of deduction under Section 80P(2)(e) of the Act, we are of the considered view that there is no infirmity in the order of the Ld. PCIT, so as to call for any interference”. The tribunal bench noted the necessity for re-verification of claims to ensure compliance with statutory provisions.

Income from Ancillary Activities to Primary Operations: ITAT upholds Revision Order allowing Alternate Claim of Co-Op Society u/s 80P(2)(e) [Read Order] The Sankheda Jetpur Pavi Taluka Ginning Pressing Cotton Sale Co-op. Society Ltd vs Principal Commissioner of Income Tax-3 CITATION: 2024 TAXSCAN (ITAT) 1264

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench has upheld a revision order reaffirming the right of the assessee, a Ginning Pressing Cotton Sale Co-operative Society Ltd. to make an alternate claim for deductions under Section 80P(2)(e) of the Income Tax Act.

The ruling reiterates that the mere technicalities in the operation or equipment used should not overshadow the underlying purpose of cooperative societies, which is to support the agricultural community.

ITAT upholds CIT(A)’s deletion of Rs. 149.29 Crores Addition, Confirming Amalgamation Exemption u/s 47(vi) of Income Tax Act [Read Order] DY . Commissioner of Income Tax vs Samagra Wealthmax private Limited CITATION: 2024 TAXSCAN (ITAT) 1259

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals) [CIT(A)]’s decision to delete an addition of Rs. 149.29 crores made by the Assessing Officer (AO) for the assessment year(AY) 2018-19.

The two member bench, comprising Sandeep Singh Karhail ( Judicial Member ) and Prashant Maharishi ( Accountant Member ), concluded that the capital reserve could not be classified as income, upheld the CIT(A)’s decision to delete the addition made by the AO, and dismissed the AO’s appeal, reaffirming that the amalgamation did not incur tax under the relevant sections.

Penalty u/s 272A(1)(d) of Income Tax Cannot Be Imposed for Non-Compliance with Notices Due to Consultant’s Failure to Inform: ITAT deletes Penalty SNG Microns Private Limited vs National Faceless Assessment Centre CITATION: 2024 TAXSCAN (ITAT) 1265

The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) has deleted a penalty imposed under Section 272A(1)(d) of the Income Tax Act, 1961 stating that the penalty cannot be enforced when the non-compliance with notices arises from the consultant’s failure to inform the assessee.

The tribunal ruled in favour of the assessee, deleting the ₹20,000 penalty and emphasising the importance of proper communication in the compliance process.

ITAT Allows Deduction of Bad Debts, Holding Write-Off in Books as Sufficient Compliance u/s 36(1)(vii) [Read Order] Ishan Equipments Pvt.Ltd vs The Dy.CIT CITATION: 2024 TAXSCAN (ITAT) 1251

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the deduction of bad debts stating that written off in the books of accounts were sufficient compliance with the provisions of Section 36(1)(vii) of the Income Tax Act, 1961 and no further requirement to prove the irrecoverability of the debts.

Therefore, the tribunal concluded that the assessee had met all the conditions under Section 36(1)(vii) of the Income Tax Act. The tribunal held that the disallowance of bad debts by the AO was unjustified and deleted the addition of Rs. 24,50,304.  The assessee’s appeal was allowed.

Extended Working Hours not a Valid Reason for Assumption of Additional Income as Commission: ITAT [Read Order] Vineet Gupta vs ACIT CITATION: 2024 TAXSCAN (ITAT) 1266

The Income Tax Appellate Tribunal (ITAT) has ruled that extended working hours alone cannot be a valid basis for assuming additional income in the form of commissions where an addition made by the Assessing Officer (AO) on the grounds of alleged receipt of commissions by the assessee due to his involvement in transactions outside normal banking hours was challenged by the assessee.

The tribunal bench concluded that the AO’s addition was based purely on speculation and assumptions, leading it to allow the assessee’s appeal and strike down the addition

Disallowance of Interest Expenses: ITAT remands Matter for Fresh Adjudication [Read Order] Upendra Chinubhai Shah vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 1268

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) the matter of disallowance of interest expenses back to the Jurisdictional Assessing Officer for fresh adjudication.

The tribunal stressed the need for the appellant to provide all necessary documentation for proper adjudication. Ultimately, it partially allowed the appeal for statistical purposes, instructing a detailed review of the disallowed interest expenses based on the loans’ genuineness.

ITAT Grants Registration u/s 12AB, Clarifying That S.13(1)(b) Applies Only at the Assessment Stage [Read Order] Shree Dandhavya Chhasath Prajapati Samaj Sejal Briks vs The Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1271

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)granted registration under section 12AB of the Income Tax Act,1961 clarifying that section 13(1)(b) of the Act applies only at the assessment stage for determining exemption under section 11, not during the registration process.

The two member bench comprising Suchitra Kamble(Judicial Member) and Makarand V.Mahadeokar(Accountant Member) upon reviewing the Trust’s objectives, determined that its activities, including scholarships and social reform, served the public at large and were not limited to a particular community. Consequently, the tribunal held that the CIT (E) erred in rejecting the application for registration under section 12AB and directed that the registration be granted. Thus, the appeal of the assessee was allowed.

Relief to ICICI: ITAT Deletes Disallowance of Dividend Income Citing S.44 Overrides S.14A in Computation of Insurance Company Income [Read Order] Asst. Commissioner of Income Tax vs M/s. ICICI Prudential Life Insurance Company Limited CITATION: 2024 TAXSCAN (ITAT) 1275

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the disallowance on dividend income claimed by ICICI Prudential Life Insurance, ruling that Section 44, being a non-obstante clause, overrides the provisions of Section 14A of the Income Tax Act, 1961, in computing income for life insurance companies.

The tribunal relied on previous rulings in the assessee’s own case in earlier years ( A.Y. 2005-06 to 2008-09 ) which held Section 44, being a non-obstante clause, overrides Section 14A explaining disallowances related to exempt income do not apply to life insurance companies. Therefore, the tribunal upheld the decisions made by the CIT(A) to delete the disallowance of the assessee’s dividend income.

Revisionary Jurisdiction u/s 263 Not Invocable Solely Based on PCIT’s Differing View: ITAT [Read Order] Aadhya Infrastructure vs The Pr.CIT CITATION: 2024 TAXSCAN (ITAT) 1274

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that the revisionary jurisdiction under Section 263 of the Income Tax Act,1961 cannot be invoked solely based on the Principal Commissioner of Income Tax’s ( PCIT ) differing view.

Ultimately, it ruled that the assessment order was neither erroneous nor prejudicial to the Revenue, allowing the appeal and quashing the revision order under Section 263 of the Act.

ITAT Upholds CIT(A) Ruling on Unexplained Cash Credits Due to Acceptance of Genuineness in Remand Report [Read Order] Deputy Commissioner of Income Tax vs Minal Intermediates CITATION: 2024 TAXSCAN (ITAT) 1273

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)upheld the Commissioner of Income Tax Appeals[CIT(A)]’s ruling on unexplained cash credits, affirming the justified deletion of Rs. 2,14,53,435/- added under Section 68 of the Income Tax Act,1961.This decision relied on theAssessing Officer(AO)’s remand report, which accepted the genuineness of the transactions.

The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Dr.BRR Kumar(Accountant Member) based on this finding, concluded that no addition could be made concerning the discrepancies in the sundry creditors as alleged by the AO and upheld the order of CIT(A). In conclusion the revenue’s appeal was dismissed.

Curable Defect in Form 35A: ITAT Sets Aside DRP Order [Read Order] Rajendra Ramjibhai Patel vs Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1272

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Dispute Resolution Panel’s ( DRP ) order, ruling that the defect in Form 35A, which was initially signed by the Authorized Representative ( AR ) instead of the assessee, was curable under Section 292B of the Income Tax Act.

The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member) in the interest of natural justice,set aside the DRP’s order and directed it to reconsider the objection and pass a new order on the merits after providing the assessee with a proper hearing. In conclusion, the appeal was allowed for statistical purposes.

ITAT Quashes ₹4.27 cr Addition in Alleged Bogus LTCG from Penny Stock Transactions Citing Lack of Fair Opportunity for Senior Citizen [Read Order] Sarojben Rajkumar Bansal Legal Heir of Late Shri Rajkumar Kakaram Bansal vs The Dy.CIT Circle-1 CITATION: 2024 TAXSCAN (ITAT) 1267

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the Rs. 4,27,83,714 addition alleged bogus long-term capital gains ( LTCG ) from penny stock transactions citing the Lack of Fair Opportunity for Senior Citizen in Faceless Proceedings.

Therefore, the tribunal set aside the order passed by the CIT(A) which upheld the addition of Rs.4,27,83,714 and restored the case for fresh adjudication on merits. The CIT(A) was directed to provide a fair opportunity to the assessee to present their case, particularly concerning the challenge to the reopening of the assessment. The appeal was allowed for statistical purposes.

ITAT Rules S.56(2)(x) Inapplicable to Property Transaction Due to Execution of Agreement Before 01 April 2017 [Read Order] Deputy Commissioner of Income Tax vs Romell Housing LLP CITATION: 2024 TAXSCAN (ITAT) 1276

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) ruled that the provisions of Section 56(2)(x) of the Income Tax Act, 1961, do not apply to a property transaction where the agreement was executed before April 1, 2017.

Therefore, the tribunal held that the provisions of Section 56(2)(x) do not apply to the assessee’s case, as the deed was executed before 1 April 2017 and the addition made by the Assessing Officer under Section 56(2)(x) was deleted.

ITAT Sets Aside CIT(A) Order, Directs NFAC to Resolve Appeal Alongside Pending Assessment Matter [Read Order] Digamber Jain Swadhyay Mandir Trust Soggadh, Bhavnagar vs The Dy.CIT CITATION: 2024 TAXSCAN (ITAT) 1270

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)set aside the order of the Commissioner of Income Tax (Appeals)[CIT(A)] and directed the National Faceless Appeal Centre (NFAC) to resolve the appeal alongside the pending assessment matter

The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member)consequently set aside the CIT(A) order and instructed the NFAC to adjudicate both appeals together, ensuring the assessee was given a proper opportunity for a hearing. In conclusion, the appeal was allowed.

Filing Fee for Increased Share Capital Classified as Revenue Expenditure: ITAT Upholds AO’s Decision [Read Order] Vmobi Solutions Pvt. Ltd vs PCIT (Central) CITATION: 2024 TAXSCAN (ITAT) 1280

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) upheld the Assessing Officer’s (AO) decision to classify the filing fee for an increase in authorized share capital as revenue expenditure.

The tribunal noted precedent cases of the Mumbai Tribunal in Navi Mumbai SEZ Private Ltd., where similar expenses were treated as revenue expenditures. Therefore, the tribunal upheld AO’s decision and the assessee’s appeal was allowed.

No Bar u/s 115 BAC to Carry Forward and Set off Losses Under Capital Gains: ITAT [Read Order] Jaynt Vasudeo Aradhye vs DCIT CITATION: 2024 TAXSCAN (ITAT) 1278

The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Section 115BAC of the Income Tax Act , 1961 does not specifically bar carry forward and set off of losses under Capital Gains.

The tribunal directed the assessee is also directed to comply with the notices issued by the Addl./JCIT(A)-1 and bring this fact to the knowledge of the Addl./JCIT(A) that brought forward long term capital loss was allowed by CPC but brought forward short term capital loss was not allowed by CPC due to entry in the wrong column in income tax return.

ITAT quashes Revision Order passed without showing Prejudice to Revenue or Error by AO [Read Order] Sadhwani Wood Products Private Limited vs Principal Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 1277

The Income Tax Appellate Tribunal (ITAT) Jaipur, in a ruling dated October 16, 2024, has quashed the revision order issued by the Principal Commissioner of Income Tax (PCIT) against the assessee under Section 263 of the Income Tax Act observing that no substantial error or prejudice to revenue was established by the PCIT.

Since the PCIT could not demonstrate any error in law or establish prejudice to the revenue, the ITAT quashed the revision order, ruling in favour of the assessee.

ITAT remands Case to AO for Fresh Assessment of Unexplained Income, considering Additional Evidence [Read Order] Asrafkhan Kalndrkhan Pathan vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 1269

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case to the Assessing Officer (AO) for a fresh assessment of unexplained income, considering additional evidence submitted by the assessee.

The two member bench comprising Suchitra Kamble (Judicial Member) and Makarand V Mahadeokar (Accountant Member) set aside the CIT(A)’s order and restored the matter to the AO for de novo consideration, directing the AO to admit the new evidence and provide the assessee with a fair opportunity to present his case. In conclusion, appeal of the assessee was allowed for statistical purposes.

ITAT Deletes Interest Disallowance u/s 36(1)(iii) for Genuine Unsecured Loans, Upholding CIT(A) Decision [Read Order] Ardor Overseas Pvt. Ltd. vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 1281

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the disallowance of interest under Section 36(1)(iii) of the Income Tax Act,1961 for genuine unsecured loans provided to the assessee during the assessment year ( AY ) 2014-15.

The two member  bench comprising T.R Senthil Kumar ( Judicial Member ) and Annapurna Gupta ( Accountant Member ) deleted the disallowance of interest under Section 36(1)(iii) of the Act, affirming that the interest paid on the unsecured loans was deductible and consistent with previous assessments regarding the genuine nature of the transactions.

ITAT quashes Income Tax Assessment due to Lack of Higher Authority Approval u/s 151 for Reopening Beyond 3 Years [Read Order] DCIT-42(1)(1) vs Sunil Harischandra Keni CITATION: 2024 TAXSCAN (ITAT) 1282

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) quashed the income tax assessment order due to a lack of higher authority approval under Section 151 of the Income Tax Act, 1961 for the reopening beyond three years.

Given that the Bombay High Court had already ruled in favor of the assessee on this issue, the ITAT found no reason to interfere with the earlier decision made by CIT(A), which had followed the High Court’s ruling. Therefore, the ITAT upheld the decision of the CIT(A) and dismissed the revenue’s appeal.

ITAT Deletes Expense Disallowance u/s 14A Due to Lack of Exempt Income [Read Order] Ardor Overseas Pvt. Ltd. vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 1281

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the expense disallowance under Section 14A of Income Tax Act,1961,due to a lack of exempt income during the assessment year ( AY ) 2014-15.

The two member  bench comprising T.R Senthil Kumar ( Judicial Member ) and Annapurna Gupta ( Accountant Member ) concluded that the CIT(A)’s rationale was sound, reinforcing that without the presence of exempt income, the applicability of Section 14A was negated, leading to the affirmation of the CIT(A)’s order in favor of the assessee.

ITAT upholds Reduced Land Cost, Citing Inflated Transaction and Lack of Evidence [Read Order] Ardor Overseas Pvt. Ltd. vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 1281

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the reduction of land cost citing an inflated sale price and a lack of evidence to support the legitimacy of the transaction.

The two member  bench comprising T.R Senthil Kumar (Judicial Member) and Annapurna Gupta(Accountant Member) upheld the CIT(A)’s decision to reduce the recorded cost of land to ₹8.5 crores, affirming that the entire arrangement was structured to create a facade of legitimate transactions while enabling the assessee to inflate asset values unjustifiably.

Ad hoc addition of Unexplained Receipts without calling for records: ITAT remands matter for readjudication [Read Order] BLR Logistiks (India) Ltd. vs DCIT-6 CITATION: 2024 TAXSCAN (ITAT) 1284

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has remanded an income tax matter for readjudication on ground that the Assessing Officer ( AO ) made an ad hoc addition of unexplained receipts without calling for the necessary records.

The ITAT bench comprising of Renu Jauhri ( Accountant Member ) and Beena Pillai ( Judicial Membe ) remanded the case back to the AO to carry out the verification. The bench directed the AO to issue a notice under Section 133(6) of the Income Tax Act,1961 to the parties, and the assessee was directed to furnish all relevant information/details in support of its claim.

ITAT upholds deletion of ₹8 Crores Addition due to Lack of Evidence for Unexplained Credit [Read Order] Ardor Overseas Pvt. Ltd. vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 1281

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) upheld the deletion of the ₹8 crores addition made under Section 68 of the Income Tax Act,1961,due to insufficient evidence to support the claim of unexplained credit.

The two member  bench comprising T.R Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member) upheld the CIT(A)’s decision, asserting that the AO’s treatment of the loan as unexplained lacked merit, thereby confirming the deletion of the ₹8 crores addition and recognizing the genuine nature of the transaction and the source of funds involved.

CIT(A) accepts additional Evidence on LTCG without complying with Rule 46A: ITAT Remands to AO for Verification [Read Order] ACIT vs Sangeeta Ganpat Sawant CITATION: 2024 TAXSCAN (ITAT) 1279

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) remanded matter concerning income from long-term capital gain ( LTCG ) back to the Assessing officer for verification after the commissioner of Income Tax (Appeals) admitted new evidence without complying with Section 46A of the Income Tax Rules, 1962.

However, the Tribunal remanded the issue of the “EXTENSION” expenses back to the AO for further verification. The AO was directed to examine the evidence related to the “EXTENSION” costs and make a fresh determination based on this verification.

ITAT Upholds CIT(A) Ruling, Deleting ₹2 Crore Addition to TCGL’s Income for Non-Accrued Grants [Read Order] The DCIT Udhyog Bhavan vs M/s.Tourism Corporation of Gujarat Ltd. CITATION: 2024 TAXSCAN (ITAT) 1285

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the ruling of the Commissioner of Income Tax (Appeals) [CIT(A)], which deleted a ₹2 crore addition to the income of the Tourism Corporation of Gujarat Ltd. (TCGL) for the assessment year ( AY ) 2012-13.

The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Makarand V.Mahadeokar(Accountant Member) dismissed the Revenue’s appeal and upheld the CIT(A)’s order, finding no grounds to alter the well-reasoned decision.

ITAT Deletes ₹4.96 Crore Addition Citing Need for Fresh Valuation Instead of DVO’s Seller Valuation [Read Order] Mrs. Indu Pankaj Dhandharia vs ACIT-22(1) CITATION: 2024 TAXSCAN (ITAT) 1283

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted a ₹4.96 crore addition to the assessee’s income, citing the need for a fresh valuation rather than relying on the District Valuation Officer’s ( DVO ) valuation from the seller’s case.

The two member bench comprising Sunil Kumar Singh ( Judicial Member ) and Prashant Maharishi ( Accountant Member ) concluded that the addition made by the AO based on the seller’s DVO valuation was unjustified. It directed the deletion of the Rs. 4.96 crore addition, emphasizing that the failure to obtain a fresh DVO report for the buyer was a critical error in the assessment process. The tribunal ruled in favor of the assessee.

ITAT upholds  CIT(A) Deletion of Rs.6.43 Cr Addition, Rules Loan from Wholly Owned Subsidiary Not Deemed Dividend [Read Order] DCIT, Circle 27(1) vs Uniparts India Ltd. CITATION: 2024 TAXSCAN (ITAT) 1286

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax(Appeals)[CIT(A)]’s deletion of a Rs.6.43 crore addition, ruling that the loan received from a wholly owned subsidiary was not to be treated as a deemed dividend under Section 2(22)(e) of the Income Tax Act,1961.

The two member bench comprising Sudhir Pareek (Judicial Member) and S.Rifaur Rahman(Accountant Member) upheld the CIT(A)’s decision to delete the addition of Rs.6,43,40,824, siding with the assessee’s characterization of the transactions as current account transfers and reimbursements. Ultimately, the tribunal dismissed the revenue’s appeal, affirming the CIT(A)’s findings and rationale.

ITAT quashes Reopening of Assessment due to Procedural Flaws in issuance of Notice [Read Order] Mrs. Indu Pankaj Dhandharia vs ACIT-22(1) CITATION: 2024 TAXSCAN (ITAT) 1283

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the reopening of the assessment for the assessment year ( AY ) 2017-18 due to procedural flaws in the issuance of the notice.

The two member bench comprising Sunil Kumar Singh ( Judicial Member ) and Prashant Maharishi ( Accountant Member ) found that the AO’s reopening of the assessment was procedurally flawed, leading to the dismissal of  challenging the reopening of the assessment.

ITAT Upholds CIT(A) Deletion of Rs. 1.67 Cr u/s 14A Due to No Exempt Income[Read Order] DCIT, Circle 27(1) vs Uniparts India Ltd. CITATION: 2024 TAXSCAN (ITAT) 1286

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals) [CIT(A)] decision to delete a disallowance of Rs. 1.67 crores under Section 14A of Income Tax Act,1961. The tribunal concluded that the disallowance was inappropriate due to the absence of any declared exempt income during the assessment year ( AY ) 2014-15.

The two member bench comprising Sudhir Pareek ( Judicial Member ) and S.Rifaur Rahman ( Accountant Member ) upheld the CIT(A) decision and dismissed the Revenue’s ground regarding the disallowance under Section 14A of the Act.

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