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 July 9 to July 15, 2022 S.K. Agarwal (HUF) vs ITO - 2022 TAXSCAN (ITAT) 945 Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the Hindu Undivided Family (HUF) is eligible to claim capital gain exemption under section 54F of the Income Tax Act, 1961 for the property purchased in the joint-name of the members. A bench of G.S. Pannu, President and Ms. Astha Chandra, Judicial Member observed that this is unjustified on the face of the facts brought on record that the entire consideration towards purchase was financed by the funds of the HUF alone and there was no contribution by the two other members of HUF. Commandant S.R.P.F. GR-VII Welfare Fund vs The Assistant Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 949 The Income Tax Appellate Tribunal (ITAT), Pune bench has observed that the order of the income tax department imposing late fee under section 234E of the Income Tax Act, 1961 for the delay in filing TDS statement is an appealable order. A division bench of the Tribunal consists of Shri S.S.Godara, Judicial Member and Dr. Dipak P. Ripote, Accountant Member has observed that“In this case, the Appellant assessee had filed an appeal before the ld.CIT(A) against the Intimation u/s 200A of the Act. The said fact is clearly mentioned in Form-35, Column Number 2a. Therefore, as per section 246A of the Act, the assessee has a right to file an appeal before the ld.CIT(A) against the intimation under section 200A of the Act. Therefore, we are of the opinion that the ld.CIT(A) has erred in holding that the appeal is not maintainable. Hence, the issue is set aside to the file of the ld.CIT(A) to be decided afresh after giving an opportunity to the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purpose.” M/s. Sneh Developers Pvt. Ltd vs DCIT - 2022 TAXSCAN (ITAT) 947 The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that cash deposits are not corroborated with business receipts or cash withdrawals and upholds addition under section 68 of IT Act. The Tribunal observed that the assessee is facing criminal cases under section 138 of N.I. Act on 8 accounts and civil suit on 2 accounts. The Tribunal further observed that the cash deposits are not corroborated with any receipts of the business and any cash withdrawals proving the same. Bank of India vs Assistant Commissioner of Income Tax Circle 2(1)(1), Mumbai - 2022 TAXSCAN (ITAT) 950 The Mumbai bench of the Income tax Appellate Tribunal (ITAT) comprising Pramod Kumar, Vice President and, Aby T Varkey Judicial Member, while remanding a matter back to the National Faceless Appeal Centre (NFAC) has held that the denial of assessee’s specific request to attend the personal hearing through video conference is violation of the newly inserted Income Tax Rules. The division bench observed that once a request is made for the hearing through video conferencing, in the course of the faceless appellate proceedings, in our considered view, it was incumbent upon the ChiefCommissioner or the Director-General concerned to either grant the opportunity, or, if so deemed fit, decline the same for the reasons to be set out, and there cannot be any justification for not making a decision on such a request. L’Oreal India Private Limited vs Addl./Joint/Deputy/Assistant Commissioner of Income Officer - 2022 TAXSCAN (ITAT) 939 The Income Tax Appellate Tribunal (ITAT), Mumbai bench has granted relief to L’Oreal India Private Limited and deletes Transfer Pricing (TP) adjustments. The Tribunal observed that the ITAT in the assessee’s case has observed that perusal of the agreement Clause reveals that there is no agreement between the assessee and the AEs for sharing the expenses and the payments made by the assessee for the expenses of AMP. The TPO has also not brought any fact on record that there exists an agreement between the assessee and its AE to share or reimburse the AMP expenses. Moreover, there is no material change in the facts for the year under consideration. Ecocat India Pvt. Ltd vs ACIT - 2022 TAXSCAN (ITAT) 938 The Income Tax Appellate Tribunal (ITAT), New Delhi grants relief to Ecocat India Pvt Limited by allowing tax deduction toward in-house research and developments. Later qua form 3CL, the DSIR approved the claim for weighted deduction of capital expenditure while that for revenue expenditure was declined. The company, however, insisted that the revenue expenses as incurred should be allowed to it as deduction u/s 35(1) / 37(1) of the Act. On appeal, the CIT(A) held that the assessee is not entitled to claim the weighted deduction at Rs.3,85,19,630/- as it is not approved from DSIR in approval granted in Form 3CL and confirmed an amount of Rs.3,85,19,630/- and balance the addition of Rs.9,52,52,939/- was deleted. Macro Marvel Projects Limited vs ITO - 2022 TAXSCAN (ITAT) 932 The Income Tax Appellate Tribunal (ITAT), Chennai bench consisting of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member held that assessee entitled to deduction u/s 801B as extent of commercial holding in housing project undertaken less than 100 sq. m. The Tribunal held that “On going through the facts and circumstances of the case, we noted that out of the assessee’s housing project of total built up area of 15,843.85 sq.mt., this commercial built up area constituted only 98.46 sq.mt. which is negligible and marginal and hence the appeal filed by Revenue has become academic and infructuous. The Tribunal allowed the deduction claimed by the assessee”. M/s. T P D 101 Uthangarai Milk- Producers Co-operative Society Ltd vs Income Tax Officer - 2022 TAXSCAN (ITAT) 964 Income Tax Appellate Tribunal (ITAT), Ahmedabad deleted penalty imposed as there was delay due to belated audit of accounts by Department of Cooperative Audit. The bench consisting of Mahavir Singh, Vice President and G Manjunatha, Accountant Member held that “although the assessee has filed tax audit report beyond the stipulated period, but such tax audit report was made available to the AO before he completes assessment proceedings. The assessee has given reasons for delay in filing tax audit report. As per which, the audit of accounts of society done by the Dept. of Cooperative Audit, could not be completed on or before 31.10.2015 and said delay was not in the hands of the assessee. Therefore, there is a reasonable cause for not filing the tax audit report within prescribed time limit ad thus, penalty cannot be levied.” Ecorea & Kuroda Electric India Private Limited vs The Dy. CIT- 2022 TAXSCAN (ITAT) 968 The Income Tax Appellate Tribunal (ITAT), Pune bench consisting of S S Godara, Judicial Member, and Dr Dipak P Ripote, Accountant Member grants relief to Ecorea and Kuroda India Private Limited as the penalty notice provided was defective. The Tribunal held that “the Penalty Notice is defective, therefore, the penalty levied under section 271(1)(c) of the Act, is not maintainable.” M/s.Cognizant Technology Solutions India Pvt. Ltd. vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 967 Income Tax Appellate Tribunal (ITAT), Chennai bench consisting of Mahavir Singh, Vice President and G Manjunatha, Accountant Member upheld order against Cognizant Technology as payment towards buyback of shares not genuine. The Tribunal held that “the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the revenue and thus, the CIT has rightly exercised his jurisdictional powers and set aside the assessment order passed by the AO u/s.143(3) dated 31/12/2016. Hence, we are inclined to uphold the order of the CIT and dismiss the appeal filed by the assessee.” Axis Bank Ltd vs CIT(A) - 2022 TAXSCAN (ITAT) 966 Income Tax Appellate Tribunal (ITAT), Ahmedabad bench consisting of Annapurna Gupta, Accountant Member and Mahavir Prasad, Judicial Member granted relief to Axis Bank as concealment of particulars of income not proved. The Tribunal held that “All particulars, relating to the properties on which depreciation was claimed, was duly disclosed by the assessee. And the assessee itself, to align its books of accounts with an MCA notification, disclosed all particulars relating to the excess claim also. We therefore hold that the assessee cannot be charged with having concealed/furnished any inaccurate particulars of income in the present case.” Vibracoustic India Pvt. Ltd vs ACIT - 2022 TAXSCAN (ITAT) 963 Income Tax Appellate Tribunal (ITAT), New Delhi bench consisting of Anil Chaturvedi, Accountant Member and Anubhav Sharma, Judicial Member granted relief to Vibracoustic India as it allows additional depreciation claim on plant and machinery. The Tribunal held that “Considering the totality of the aforesaid facts, we are of the view that assessee is eligible for claiming additional depreciation u/s 32(1)(iia) of the Act and therefore the same should not have been denied by the AO.” Shri Kashyap Suresh Brahmbhatt vs DCIT - 2022 TAXSCAN (ITAT) 961 Income Tax Appellate Tribunal (ITAT), Ahmedabad bench consisting of Pramod M Jagtap, Vice President and Suchitra R Kamble, Judicial Member upheld addition of Income from Cricket Betting as Business Income applying 1% of Gross Profit. The Tribunal held “we are of the view that the estimate made by the Assessing Officer of the assessee’s income at 1% of the total transactions of cricket betting as found recorded in the laptops seized from the possession of the assessee is quite fair and reasonable and the learned CIT(A) was fully justified in confirming the same.” Shesh Dhar Chaube vs Income Tax Officer- 2022 TAXSCAN (ITAT) 969 The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that mandatory declaration of the number of lorry u/s 194C (6) is applicable prospectively from 1st June 2015 onwards. The Coram of Dr. B. R. R. Kumar, Accountant Member, and Mr. Yogesh Kumar US, Judicial Member has held that the relevant financial year under consideration is 2014-15, therefore, the provisions of this amendment do not apply to the present case. M/s. Sopan Developers vs Pr.C.I.T - 2022 TAXSCAN (ITAT) 972 The Income Tax Appellate Tribunal, Rajkot bench held that the order passed u/s 263 will not sustainable when no error in the assessment order by AO. It was observed that the amendment for charging the tax on the notional rent concerning the properties held as stock in trade was applicable from the assessment year 2018-19 and not applicable for the year under consideration. Shri Waseem Ahmed, AM and Shri Siddhartha Nautiyal, JM viewed that the impugned order was without satisfying necessary twin conditions for invoking jurisdiction u/s 263 of the Income Tax Act,1961. Navin Sirahmal Mukim vs ITO - 2022 TAXSCAN (ITAT) 970 The Income Tax Appellate Tribunal (ITAT), Pune Bench presided by Mr. R.S. Syal, Vice President has held that the profit element of hawala purchase would be subjected to tax, not the entire amount. The Tribunal observed that the appellant purchased diamonds through the Hawala purchase bills and thereafter utilized the same in the manufacture of the jewelry. Home Developers vs The Dy. CIT - 2022 TAXSCAN (ITAT) 977 The Income Tax Appellate Tribunal (ITAT), Pune Bench has held that deduction of compensation paid for breach of contract cannot be allowed based on bank statement alone. The Tribunal has held that “we do not find any reason to deviate from the order of theCIT(A). Accordingly, we uphold the order of theCIT(A). Therefore, the grounds of appeal raised by the Assessee are rejected”. Mayank Kumar Garg vs ITO - 2022 TAXSCAN (ITAT) 978 The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that cash deposit by a real estate agent is sustainable, not confirmed by an investor or builder. The Tribunal observed that the assessee is an inter-mediatory between the investors and the builders and some part of the admitted payments made by these investors were confirmed, the remaining amounts not confirmed by the builder can be explained, by the assessee, if these unconfirmed amounts totaling 11,01,371, were deposited by way of cheques to the respective builders, who failed to confirm. M/s. Pramukh Realty vs Pr.C.I.T - 2022 TAXSCAN (ITAT) 976 While quashing the revisional order passed by PCIT the Rajkot bench of the Income Tax Appellate Tribunal held that the assessment order passed after making necessary inquiries can’t be “Erroneous’. The Tribunal observed that there is no law which provides the extent of inquiries to be made by the Assessing Officer and the Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. It was evident that the AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. M/s Sara Investments vs ACIT - 2022 TAXSCAN (ITAT) 960 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that typographical error in the share valuation report will not attract addition and remitted the matter back to AO. The assessee failed to provide any evidence to prove that the partners have made payment for the purchase of shares in their capacities. The valuation report submitted by the appellant shows that the appellant is holding 9.38% of shares in SSPL through its partner Mr VK Dhawan and another 9.29% of the shares in the same company through the other partner Mr C. Kumar. The Tribunal observed that the assessee contended that typographical error crept into the valuation report of SSPL then the impugned addition will not arise. DCIT vs M/s. Envair Electrodyne Ltd.- 2022 TAXSCAN (ITAT) 974 The Pune Bench Income Tax Appellate Tribunal (ITAT) has ruled that the transfer of leasehold rights, the special provision for the full value of consideration under section 50C applicable if a transfer of building is involved. The Tribunal observed that section 50C does not get attracted even in the case of transfer of leasehold rights which does not come within the nature and ambit of a specified asset(s) of “land or building or both” in the statutory provision. The Tribunal further observed that the assessee appears to have transferred not only leasehold rights but also building. Gangamai College of Engineering vs ACIT - 2022 TAXSCAN (ITAT) 957 The Income Tax Appellate Tribunal (ITAT), Pune has ruled that, If delay in filing of TDS statement is proved then late fee under sections 234E and 200A is automatic. The bench consisting of Inturi Rama Rao, Accountant Member and S SViswanethra Ravi, Judicial Member held that “The issue in the present appeal relates to the levy of late fee u/s 234E and 200A of the Act. It is an undisputed fact that there is a delay in filing the submission of the Quarterly Statement of TDS. When there is a delay, a late fee u/s 234E and 200A of the Act is automatic and there is no discretion not to levy late fees with the TDS Officer. It is not the case of the appellant that there is denial of liability for late fee u/s 234E of the Act.” Narayan Industries vs ACIT - 2022 TAXSCAN (ITAT) 958 The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that income received under Focus Products Scheme (FPS) introduced under Foreign Trade Policy 2004 are capital receipts and attracts deduction under section 80IC. The Tribunal observed that Focus Product Scheme (FPS) was introduced to incentivize the export of such products which have high export intensity/ employment potential, to offset infrastructure inefficiencies and other associated costs involved in the marketing of these products. Savitri Phule Mahila Bahu Uuddeshiya Sahakari Samiti Ltd. vs ACIT - 2022 TAXSCAN (ITAT) 971 The Jaipur bench of the Income Tax Appellate Tribunal has held that surplus returned from a common fund contributed by persons together doesn’t amount to profit and ruled that no need to be taxed. It was observed that where several persons combine and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to those persons cannot be regarded in any sense as profit. Further observed that trading betweenpersons associating together does not give rise to profits which were chargeable to tax. Sh. Ghasi Lal Gurjar vs ITO - 2022 TAXSCAN (ITAT) 952 The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) ruled that failure in issuing a notice and reporting reason for reopening a case will invalidate the proceeding under section 148 of the Income Tax Act, 1961. It was observed that no notice was with the file of the Assessing Officer and no reasons were recorded for reopening. Further observed that the department has failed to issue notice and to take the approval of the appropriate authority before as initiation of proceedings u/s 147 of the I.T. Act. Narayan Industries vs ACIT - 2022 TAXSCAN (ITAT) 958 The Income Tax Appellate Tribunal (ITAT), Delhi Bench presided by Mr. Aakash Deep Jain, Vice President, and Dr. B. R. R. Kumar, Accountant Member has held that interest from the fixed deposit is an unearned passive income derived out of non-manufacturing activity and not eligible for deduction under section 80IC. The Tribunal has held that “the interest earned out of the fixed deposit made from the surplus funds is not connected to the manufacturing activity and does not form an integral part of the profits derived from the industrial unit is not eligible for deduction. Interest is an unearned passive income derived out of non-manufacturing activity”. M/s. Atul Properties vs ACIT - 2022 TAXSCAN (ITAT) 956 Income Tax Appellate Tribunal (ITAT), Mumbai bench consisting of Aby T Varkey, Judicial Member and S Rifaur Rahman, Accountant Member held that deduction u/s 80IB (10) should not be denied merely because of non-acceptance of occupancy certificate. The CIT allowed the claims of the assessee hence the Revenue is in appeal before the Tribunal. The Tribunal held that “Deduction u/s 80IB(10) of the Act should not be denied merely because MCGM did not accept/issue occupancy certificate on 05.01.2012 or before 31.03.2012”. MOL Corporation vs ACIT - 2022 TAXSCAN (ITAT) 983 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) comprising Dr. B. R. R. Kumar, Accountant Member and Sh. Yogesh Kumar U.S., Judicial Member has held that the subscription to cloud base service cannot be treated as royalty as per the India USA Double Taxation Avoidance Agreement (DTAA). The ITAT bench, after perusing all the documents, held that “the very same issue regarding the cloud service in assessee’s own case for the AY 2012- 13 came up for consideration before the Co-ordinate Bench of the Tribunal. The Co-ordinate Bench, by following the ratio laid down in the case of M/s. Salesforce.com Singapore Pte. Vs. Dy. D.I.T. Circled-2(2) ITA No. 4915/Del/2016 and also the decision of Mumbai Tribunal in the case of DDIT Vs. Savvis Communication Corporation 69 Taxman.com 106 (Mumbai- Trib.) and the Chennai Tribunal decision in the case of ACIT Vs/. Vishwak Solutions Pvt. Ltd. ITA No. 1935 & 1936/MDS/2010 dated 30/01/2015, held that the authorities fallen in error in considering the subscription received towards cloud serviced to be royalty income.” Nijhawan Travel Service Pvt. Ltd. vs ACIT - 2022 TAXSCAN (ITAT) 985 The Income Tax Appellate Tribunal (ITAT), Delhi bench held that Common Maintenance Charges (CAM) which are contractual payments made for availing services are subject to Tax Deduction at Source (TDS) u/s 194 C of the Income Tax Act,1961. The appellant alleged that the Assessing Officer (AO) wrongly held that the claim of CAM was in nature of rent liable for TDS @ 10% u/s 194-I of the Income Tax Act, 1961 (the Act) and held that the default committed by the assessee u/s 201(1) of the Act was liable for payment of tax and interest since there was a short deduction of TDS. Smt. Rita Agarwal vs Deputy Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 989 The Income-Tax Appellate Tribunal, Chennai bench held that an addition to income tax u/s 68 cannot sustain when source of credit is explained with details of creditors. It was observed that no addition can be made in the assessment framed under section 143(3) r.w.s. 153A of the Act unless, the addition was supported by incriminating material found during the search, if such assessment was unabated/concluded as on the date of search. H.T.L Ltd vs The Pr. C.I.T - 2022 TAXSCAN (ITAT) 991 The Income Tax Appellate Tribunal (ITAT), Delhi bench comprising N.K. Billaiya, Accountant Member, and Shri Yogesh Kumar, Judicial Memberhave observed thatan assessment order cannot be held as “erroneous” for failure to comply with the provisions of section 50C of the Income Tax Act, 1961 if the sale of property was made under the SARFEASI Act, 2002. Quashing the impugned revisional order, the Tribunal held that “As mentioned elsewhere, in the case in hand, sale was under SURFEASI Act and sale was not by the assessee. Considering the facts of the case in totality from all possible angles, we are of the considered view that the order framed u/s 263 of the Act deserves to be set aside in light of the peculiar facts of the case in hand. We, accordingly, set aside the order of the PCIT and restore that of the Assessing Officer dated 18.12.2016 framed u/s 143(3) of the Act.” Karamvir vs Income Tax Officer - 2022 TAXSCAN (ITAT) 992 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under section 54B of the Income Tax Act, 1961 cannot be claimed for the agricultural land purchased in the name of the wife of the assessee. A bench of Sh. Saktijit Dey, Judicial Member and Dr. B. R. R. Kumar, Accountant Member has observed that “the Hon’ble Karnataka High Court in the case of Antony Parakal Kurian Vs. ACIT 138 taxmann.com 440 held that the phrase ‘owns’ used by the proviso (a)(i) to section 54F(1) plays a significant role . What is relevant is the assessee should not own more than one residential house, other than the new asset, on the date of transfer of the original asset. The Hon’ble Court held that Section 54F encourages investment in a residential house. For qualifying for the exemption under section 54F, what is mandatory is the investment to be made in a residential house in the name of the assessee only. Section 54F shouldn’t be construed liberally to give wide and liberal interpretation to the word ‘assessee’ so as to include the assessee’s legal heirs as well.” ACIT vs PNB Housing Finance Ltd. - 2022 TAXSCAN (ITAT) 986 Income Tax Appellate Tribunal (ITAT), New Delhi bench consisting of Anil Chaturvedi, Accountant Member and Narender Kumar Choudhary, Judicial Member granted relief to Punjab National Bank Housing Finance Limited and Confirmed the order of Commissioner of Income Tax of computing rebate under Section 36(1)(viii). The Tribunal observed “Revenue has not placed any material on record to demonstrate that the decision rendered by Co-ordinate Bench in A.Y. 2015-16 has been set aside/stayed/overruled by Higher Judicial Forum nor has pointed to any distinguishing feature in the facts of the present case as compared to that of earlier year. Considering the totality of the aforesaid facts, we find no reason to interfere with the order of CIT.” Ajay Verma vs Income Tax Officer 2(1) - 2022 TAXSCAN (ITAT) 994 The Income Tax Appellate Tribunal (ITAT), Pune bench has quashed an addition relating to partner’s share of profit on the basis of the partnership deed. Quashing the impugned orders, the Tribunal observed that “However, the ld. CIT(A) accepted the claim of the assessee regarding partner’s salary of Rs.3,60,000/- but upheld the addition on account of share of profit from the above firm by holding that assessee had not disclosed such share in his income tax return. I find that the share of profit from a partnership firm is specifically exempt under the provisions of Section 10(2A) of the Act and the undisputed fact is that such share was received from the partnership firm in which the assessee was a partner. The assessee vide written submissions, placed at P.B. pgs. 7 and 8, had filed with the ld. CIT(A), copy of partnership deed as well as detailed copy of the ITR of the firm, wherein the assessee was a partner and from where he had received the share of profit. Therefore, in view of above facts and circumstances of the case, I allow the appeal of the assessee.” Sumeet Dhiman vs ACIT - 2022 TAXSCAN (ITAT) 995 The Delhi bench of the Income Tax Appellate Tribunal (ITAT), while considering an appeal regarding claim of capital gain exemption under section 54 of the Income Tax Act, 1961 wherein the assessee invested in two properties, held that the second property, being in a different location, the amount of repayment of loan borrowed for acquisitionis not eligible under the provision. After hearing parties from both sides, a bench of Dr. B. R. R. Kumar, Accountant Member and Sh. Yogesh Kumar Us, Judicial Member observed that the assessee has admittedly claimed deduction u/s 54 of the IT Act with respect to two different houses i.e. purchase of a new house and for repayment of loan borrowed for acquisition of another house which is situated not only in different building but also in a different area. Shri Natarajan Purushothaman vs ITO - 2022 TAXSCAN (ITAT) 996 The Income Tax Appellate Tribunal (ITAT), Chennai bench comprising Shri Mahavir Singh (Vice President) and Shri Manoj Kumar Aggarwal, (AM) has recently deleted an addition against a non-resident Indian by holding that the cash deposits made by him out of savings from his old aged parents cannot be treated as “unexplained” under the Income Tax Act, 1961. Deleting the addition, the division bench of the Tribunal held that “Upon careful consideration, we find that the assessee is employed in Dubai and occasionally visit India to meet elderly parents. The assessee does not have any source of income in India. Therefore, the explanation that some cash was saved by the parents and it was deposited in the bank account could be considered as valid explanation of the source. This amount could not be considered as unexplained income of the assessee considering the fact that he is a non-resident. Therefore, by deleting the addition of Rs.2 Lacs, we allow the appeal.” Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.

ITAT Weekly Round-Up

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