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 from June 25 to June 30, 2022

Roshan Lal Verma vs DCIT - 2022 TAXSCAN (ITAT) 850

The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the defect of a belated jurisdictional notice is not curable under section 292B of the Income Tax Act, 1961. the bench observed that “the Assessing Officer in the instant case has no jurisdiction to make assessment on the basis of belated notice issued under Section 143(2) of the Act. The defect, being substantive, is not curable under Section 292B of the Act. Section 292BB also does not apply as the notice issued under Section 143(2) itself has been issued after limitation period and merely served belatedly.

Vasanthan Mukundan Peedikakkandy vs ACIT - 2022 TAXSCAN (ITAT) 852

The Income Tax Appellate Tribunal (ITAT), Pune bench has condoned a delay of 931 days in filing appeal by the assessee noting that the delay was due to the fact that the tax practitioners were busy with GST compliance. The Tribunal  noted that the assessee did not intentionally file TDS returns belatedly and it was not disputed that the TDS returns were filed regularly without fail likewise, filing of appeal also before CIT(A).

DCIT vs Ambalal Sarabhai Enterprises Ltd. - 2022 TAXSCAN (ITAT) 855

The Income Tax Appellate Tribunal, Ahmedabad bench held that the claim of loss on exchange fluctuation in current assets and liabilities is allowable. Ms Annapurna Gupta, Accountant Member and Shri Mahavir Prasad, Judicial Member observed that the claim was made by the universally accepted accounting practices as an eligible claim and the same cannot be disallowed.

Guardian Nutrition & Health Supplements Pvt Limited vs ACIT - 2022 TAXSCAN (ITAT) 859

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that no disallowance on an ad hoc basis on the plank that interest-bearing funds are diverted. The Coram of Mr. Shamim Yahya, Accountant Member, and Mr. Anubhav Sharma, Judicial Member has held that “in our considered opinion, this plank is not acceptable as Revenue authorities are accepting the sales and no disallowance has ever been done in this regard. Moreover, the genuineness of the debtors cannot be doubted without any enquiry in this regard. In this view of the matter, in our considered opinion, the matter needs to be remitted back to AO. AO is directed to decide the issue afresh in the light of our observation herein above”.

Gurukrupa Developers vs D.C.I.T. - 2022 TAXSCAN (ITAT) 865

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench consisting of Waseem Ahmed, Accountant Member, and Madhumita Roy, Judicial Member granted relief to Developer as non-maintenance of Books of Account would not attract Penalty u/s 271B.

The Dy. Commissioner of Income Tax vs Sanjana Cryogenics Storages Ltd. - 2022 TAXSCAN (ITAT) 863

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench presided by Mr. Prashant Maharishi, AM, and Mr. Pavan Kumar Gadale, JM has held that shares are not intangible assets under section 32(1) (ii) and no depreciation on the purchase price of shares. The Tribunal observed that Section 32 (1) (ii) defines intangible assets as ‘know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature. Even otherwise shares are financial assets classified as tangible assets because they derive value from contractual claims. Hence, the same is not depreciable u/s 32 (1) (ii) of The Act.

M/s Deepak Industries Ltd vs DCIT - 2022 TAXSCAN (ITAT) 868

The Kolkata Bench of Income Tax Appellate Tribunal has held that extraordinary profit cannot be a criterion for adjustment in the transfer price. The Coram of Mr. Rajesh Kumar, Accountant Member, and Mr. Sonjoy Sarma, Judicial Member has held that price, as determined by the assessee, is at ALP and upholds the order of CIT(A) deleting TP adjustment and holds that CPM as MAM.

NACL Industries Limited vs Assistant Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 869

The Income Tax Appellate Tribunal (ITAT) Hyderabad Bench has held that the social welfare expenses incurred at the workplace and nearby villages are allowable deductions u/s 37(1). The Coram of Mr. Rama Kanta Panda, Accountant Member, and Mr. K.Narasimha Chary, Judicial Member has observed that winning the goodwill of the people is congenial to the working atmosphere of the assessee and cannot be said that it is something foreign to the business purposes of the assessee.

V.S. MetaCast P.Lttd vs DCIT -  2022 TAXSCAN (ITAT) 870

The Income Tax Appellate Tribunal, Ahmedabad bench held that income tax claim not included in approved resolution plan of IBC is recoverable. It was observed that the proceeding under provisions of the Insolvency and Bankruptcy Code, 2016 overrides the proceedings under the Income Tax Act, 1961. Further viewed that as per the Resolution Plan, no claim was made by the Income Tax Department before the Insolvency Professional and in the Resolution Plan approved by the NLCLT, an exgratia amount of Rs.10 lakhs only approved to the operational creditors being statutory creditors such as CGST Department and Asstt.Comm. of Sales Tax.

Shri Himanshu vs DCIT - 2022 TAXSCAN (ITAT) 864

The Income Tax Appellate Tribunal, Ahmedabad bench has held that penalty u/s 271 will not sustain on unintentional failure in disclosure of income. The Tribunal observed that the failure to disclose the income was by mistake and not deliberate as the assessee on his own suo moto disclosed the same amount by way of revised return before the revenue confront him. The Tribunal held that the assessee had bonafidely failed to disclose the surrendered income and the penalty levied of Rs.17,75,820/- was directed to be deleted.

Commissioner of Income Tax, Vs Sudal Industries Limited - 2022 TAXSCAN (ITAT) 853

The Income Tax Appellate Tribunal (ITAT), Mumbai has held that, Subsidy received as an octroi duty refund is a capital receipt and not chargeable as tax. The bench consisting of Prashant Maharishi, Accountant Member, and Pavan Kumar Gadale, Judicial Member held that “ the subsidy received by the assessee in the form of octroi duty refund of ₹ 132,07,000/– is a capital receipt not chargeable to tax.”

Sri Narsimha Reddy Pindi vs Income Tax Officer - 2022 TAXSCAN (ITAT) 872

The Income Tax Appellate Tribunal, Hyderabad bench held that money received from the house rent and agricultural land deposited during demonetization won’t attract addition u/s 69 of the Income Tax Act, 1961. Shri R K Panda, accountant member viewed that the assessee was had the source to explain the deposit of Rs.4,04,500/- during the demonetization period from his past savings from house rent and agricultural income and set aside the order by CIT(A). The appeal filed by the assessee was allowed.

M/s Kalinga Mining Corporation vs ACIT - 2022 TAXSCAN (ITAT) 857

The Cuttack Bench of Income Tax Appellate Tribunal (ITAT) has held that non-issuance of notice during appeal u/s 250(1) is procedural irregularity and restores the file to CIT(A) for re-adjudication. The Tribunal observed that an opportunity of hearing as prescribed u/s.250(1) of the Act has not been provided by the CIT(A) to the AO and there is a clear violation of the principle of natural justice in respect of the opportunity to be given to the AO against whose orders the appeals have been preferred.

M/s C.M. Jewellers vs DCIT - 2022 TAXSCAN (ITAT) 876

The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench presided by Ms Diva Singh, Judicial Member, and Mr Vikram Singh Yadav, Accountant Member has held that unexplained income offered consolidated basis under Pardhan Mantri Garib Kalyan Yojna (PMGKY) and deletes addition as unexplained money under section 69A. The Tribunal observed that the assessee is dealing in gold and silver jewellery etc. and the discrepancies in the silver jewellery cannot be arbitrarily said to be from an unexplained source as no allegation has been made in the Survey or referred to by the AO. The discrepancy in the silver stock was in the regular course of the business of the assessee.

Smt. Jayashree Sahoo vs ITO - 2022 TAXSCAN (ITAT) 882

The Income Tax Appellate Tribunal (ITAT), Cuttack bench has held that the multiple flats in different floors of the same building cannot be treated as a single residential house for the purpose of capital gain exemption under section 54F of the Income Tax Act, 1961. Denying the exemption, the Tribunal concluded that “Consequently, as the assessee has constructed one residential house being the combination of both Flat Nos.201 & 202, the assessee is entitled to the benefit of exemption u/s.54F of the Act in respect of Flat Nos.201 & 202 to be considered as one. The assessee is not entitled to the benefit of exemption u/s. 54F of the Act in respect of Flat No.301.”

Kalubhai Ranchhodbhai vs ITO - 2022 TAXSCAN (ITAT) 881

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench has held that the cash book transactions cannot be doubted when the opening balance of cash stood explained and accepted. The Coram of Ms. Annapurna Gupta, Accountant Member,and Mr.  TR Senthil Kumar, Judicial Member has held that “we hold that the impugned addition of Rs. 6,34,000/- on account of cash deposited in the bank account of the assessee remaining unexplained, has been made without any basis at all, while the assessee had duly substantiated the said deposits from his cash book. We, therefore, direct the deletion of the addition made of cash deposits of Rs. 6,34,000/-“.

Shri Jai Singh Yadav vs The ACIT - 2022 TAXSCAN (ITAT) 880

The Income Tax Appellate Tribunal (ITAT), Jaipur bench consisting of Sandeep Gosain, Judicial Member, and Dr. Meetha Lal Meena Accountant Member held that third party statement alone, not incriminating material for justifying addition made in assessment framed u/s 153A.

Archean Chemical Industries Pvt. Ltd. vs The Deputy Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 888

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that, Securities Premium can’t be Taxed as “Other Income” u/s 56(2) (viib) of the Income Tax Act. The bench consisting of V Durga Rao, Judicial Member and G Manjunatha Accountant Member held that “Therefore, we are of the considered view that the Assessing Officer cannot invoke provisions of section 56(2)(viib) of the Act, because receipt of balance consideration towards allotment of shares cannot be equated with allotment of equity shares. Hence, we are of the considered view that the Assessing Officer has erred in invoking the provisions of section 56(2)(viib) of the Act and taxed securities premium under the head ‘income from other sources’ for the assessment year in question”.

Atul Jaiprakash Goel vs DCIT - 2022 TAXSCAN (ITAT) 896

The Income Tax Appellate Tribunal Pune Bench has held that the rent from unsold flats by the developer is taxable as “income from house property” The Coram of Mr. R. S. Syal, Vice President, and Mr. S. S. Viswanethra Ravi, Judicial Member by relying on the decision of jurisdictional High Court has held that “we hold that the rental income earned by the assessee from an unsold portion of the property should be taken as ‘Income from house property. This ground is, therefore, allowed”.

M/s Times Internet Ltd vs Addl. CIT - 2022 TAXSCAN (ITAT) 894

The Income Tax Appellate Tribunal (ITAT), Delhi bench, while allowing relief to Times Internet, allowed the consultation fee paid to EY as business expenditure under the provisions of the Income Tax Act, 1961. The bench observed that “the amount has been incurred in course of regular business activity in seeking advice with respect to the website Zigwheel in relation to the project walk. Since, the nature of advice sought is in relation to the conduct of regular business, we hold that the amounts are allowable as revenue expenses.”

M/s. Samrat Builders Plot vs DCIT- 2022 TAXSCAN (ITAT) 873

Debiting service tax in profit and loss account cannot be reason for treating that assessee has not credited receipts in its books, so was Income Tax Appellate Tribunal (ITAT), Ahmedabad.

Saireddy Pruthviraj Reddy vs Income Tax Officer - 2022 TAXSCAN (ITAT) 891

The Income Tax Appellate Tribunal, Hyderabad Bench has held that when the property is acquired as a gift or will, the tax liability is calculated based on the cost of acquisition u/s 49(1) of the Income Tax Act,1961. Shri Rama Kanta Panda, accountant member & Shri K Narasimha Chary, judicial member observed that merely because of some voluntary act of the mother of the assessee in valuing the property on the higher side at the time of receiving of the same is not valid and upheld the findings of the CIT(A). The appeal of the assessee was dismissed.

M/s Escort heart Institute and Research Centre Ltd vs Asst. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 898

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the hospitals shall deduct TDS under section 194J of the Income Tax Act, 1961 in respect of the payments made to doctors engaged as retainers and consultants since there is no element of employer-employee relationship. While concluding the order in favour of the assessee, the Tribunal held that “Having gone through the provisions of section 192, Section 194J, Section 201 of the Income tax Act 1961, facts of the instant case and the judicial pronouncements on the issue involved, we are inclined to hold that the provisions of section 194J of the Act are applicable to the assessee and not those of section 192 of the Income tax Act 1961 therefore, the appellant cannot be treated as an “assessee in de fault” in so far as the question of deducting tax at source in respect of doctors engaged as retainers and consultants was concerned.”

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