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 30 to August 5, 2022

Tata Medical Centre Trust vs Commissioner of Income tax - 2022 TAXSCAN (ITAT) 1084

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench has held that revision order under section 263 without Document Identification No. (DIN) is invalid and deemed to have never been issued. The Coram of Mr. Sanjay Garg, Judicial Member, and Mr. Girish Agrawal, Accountant Member has held that “we are inclined to adjudicate on the additional ground in favour of the assessee by holding that the order passed by the CIT(E) is invalid and deemed to have never been issued as it fails to mention DIN in its body by adhering to the CBDT circular no. 19 of 2019”.

Shri Adit Rathi vs I.T.O. - 2022 TAXSCAN (ITAT) 1081

The Income Tax Appellate Tribunal (ITAT), Pune bench, while allowing a claim of deduction under section 54B of the Income Tax Act, 1961, has held that the provision does not mandate lands re-purchased have to be agricultural on the date of re-investment. A bench comprising Shri S.S. Godara, JM and Dr. Dipak P. Ripote, AM observed that “Suffice to say, there is hardly any dispute between the parties that the CIT(A) has rejected the assessee’s impugned deduction claim for the sole reason that his reinvestment made in Wagholil land had not proved to have been made in purchasing agricultural land. This is in light of the fact that the Assessing Officer’s remand report filed before the CIT(A) had cleared all objections regarding the assessee’s land sold at Bavdhan. It has further come on record that although the CIT(A) accepts the assessee to have carried out agricultural activities on the land purchased in later years in light of form 7/12, he has however affirmed the assessment findings that the reinvestment in land was not agricultural at the time of purchase.”

Toyota Boshoku Automotive India Pvt. Ltd. vs Asst. Commissioner of Income tax - 2022 TAXSCAN (ITAT) 1083

The Income Tax Appellate Tribunal, (ITAT) Bangalore bench has granted relief to Toyota by deleting the addition of 7.5 crores as Transfer Pricing adjustments. The Coram of Mr. N.V Vasudevan, Vice President and Mr. Laxmi Prasad Sahu, Accountant Member by following the view taken by the coordinate bench of the Tribunal in the case of Toyota Kirloskar has held that TNM Method is the Most Appropriate Method and the AO/TPO is directed to apply the said method in determining the ALP, after affording an opportunity of being heard to the assessee.

Mercedes-Benz India Pvt. Ltd. vs The Dy. C.I.T. Circle 9 - 2022 TAXSCAN (ITAT) 1080

The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the royalty expenses incurred by Mercedes Benz India to Daimler AG is deductible from the business income of the Company as the same constitute “revenue expenditure” under the provisions of the Income Tax Act, 1961. The Tribunal held that “Further, the assessee submitted that the facts of the ground have already been considered in A.Y. 2002-03 to A.Y. 2013-14 and A.Y. 2014-15. In respect of the said issue in A.Y. 2002-03 the co-ordinate Bench Pune held that the royalty paid MB India is revenue expenditure. Respectfully following the aforesaid decision of Pune Tribunal in assessee‘s own case on the same parity of reasoning, facts and circumstances, we hold that the royalty expenditure in this regard is revenue in nature.”

Tata Medical Centre Trust vs Commissioner of Income tax - 2022 TAXSCAN (ITAT) 1084

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that a revision order passed under section 263 of the Income Tax Act, 1961 without mentioning the DIN number is invalid and shall be deemed as never issued. The Tribunal held that “Considering the facts on record, perusal of the impugned order, submissions made by the Ld. Counsel and the department, CBDT circular and the judicial precedents including that of Hon’ble Supreme Court and the jurisdictional High Court of Calcutta, we are inclined to adjudicate on the additional ground in favour of the assessee by holding that the order passed by the Ld.  CIT(E) is invalid and deemed to have never been issued as it fails to mention DIN in its body by adhering to the CBDT circular no. 19 of 2019. Accordingly, additional ground taken by the assessee is allowed. Having so held on the legal issue raised by the assessee in the additional ground, the grounds relating to the merits of the case requires no adjudication.

Mandheshwari Urban Development Co-op. Bank Ltd. vs ACIT - 2022 TAXSCAN (ITAT) 1094

The Income Tax Appellate Tribunal (ITAT), Pune Bench has held that Cooperative bank share eligible for Tax Deduction at Source (TDS) exemption under section 194A for deposits by nominal members. The Tribunal further observed that the provisions of the Maharashtra Cooperative Societies Act provide that the members include nominal members and, therefore, no reason for the denial of the exemption under clause (v) of sub-section (3) of section194A of the Act.

Cobra Instalaciones Y Servicios SA SIPS JV vs ITO - 2022 TAXSCAN (ITAT) 1097

The assessee’s delay in filing the appeal due to his daughter’s serious medical condition is reasonable cause for condonation the Income Tax Appellate Tribunal of Delhi bench condones the delay. Shri. Shamim Yahya, accountant member and Shri Yogesh Kumar U S, judicial member condones the delay in filing the appeal before CIT(A) and set aside the matter to the file of CIT(A) to adjudicate the matter on merit by the law. The appeal of the assessee was allowed for statistical purposes.

Chanakya Mandal Pariwar vs The Income Tax Officer - 2022 TAXSCAN (ITAT) 1100

The Income Tax Appellate Tribunal (ITAT), Pune bench consisting of S S Godara, Judicial Member and Dr Dipak P Ripote, Accountant Member granted tax exemption to trust carrying out study programmes for university’s registered students. The Tribunal observed that “we are of the opinion that the CIT(A) has rightly held the assessee is eligible for the impugned exemption since it is carrying out education activities only. We draw support from Lok Shikshan Trust Saurashtra Education Foundation decisions (supra) that such educational activities resulting in university degrees in various courses indeed make it eligible for Section 11 exemption.” 

State Bank of India vs ACIT - 2022 TAXSCAN (ITAT) 1104

The Income Tax Appellate Tribunal (ITAT), Pune bench has held that State Bank of India (SBI) cannot take a defense of scarcity of advisors and imposes a cost of Rs. 1 lakh for late filing of Tax Deduction at Source (TDS) Statement. Mr. Inturi Rama Rao, Accountant Member,and Mr. S.S. Viswanethra Ravi, Judicial Member have held that “in the interest of justice, we deem it proper to remand the matter to the file of CIT(A) subject to the payment of cost Rs.1 lac (Rs.1,00,000/-) in favor of the Prime Minister Relief Fund and the assessee shall pay said amount within 30 days from the date of receipt of this order”.

Ritu Jain Vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1101

The Income Tax Appellate Tribunal (ITAT), Delhi bench has, while deleting an addition under section 69A of the Income Tax Act, 1961 has held that the cash gift from brother and sister cannot be treated as “unexplained.” Shri Anil Chaturvedi, Accountant Member observed that in the instant case the A.O. made an addition of Rs.3,55,000/- by treating gifted amount of Rs.1,80,000/- and Rs.1,75,000/- from Mrs. Kamlesh Devi and Sh. Rakesh Jain respectively as unexplained money under section 69A of the I.T. Act, 1961 without taking into consideration of the Government Instruction No.3/2017 dated 21.02.2017 and press release dated 18.11.2016 (supra) wherein the present exempt limit for income tax is Rs.2.5 lakhs.

Alfa Laval Corporate AB vs ACIT - 2022 TAXSCAN (ITAT) 1113

The Income Tax Appellate Tribunal (ITAT), Pune Bench has held that HR, Marketing Consultancy services, and Employee Training services are not chargeable to tax in India as Fees for Technical Services (FTS). The Coram of Mr. R.S. Syal, Vice President, and Mr.ParthaSarathi Chaudhury, Judicial Member has held that “we hold that that decision of the AO in treating Rs.38.16 lakh as FTS, is not correct because such consideration does not fall within the purview of FTS under Article 12(4) of the DTAA read with Article 12(4) of the DTAA between India-Portuguese. This addition is directed to be deleted”.

M/s. JK Files (India) Ltd vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1111

The Income Tax Appellate Tribunal (ITAT), Pune bench has held that subsidies granted by the government for encouraging industries are capital receipts and deletes addition. The Coram of Mr. Inturi Rama Rao, Accountant Member, and Mr. S.S. Viswanethra Ravi, Judicial Member observed that the decisive factor for considering the nature of subsidy as a capital or revenue receipt is the ‘purpose’ for which the subsidy has been granted and not the manner of its disbursal. Simply because the subsidy has been disbursed in the form of a refund of VAT and CST, it will not alter the purpose of granting the subsidy, which is nothing but the establishment of new industrial units in less developed areas of the State.

Sulzer Tech India Pvt. Ltd. vs Commissioner Of Income Tax - 2022 TAXSCAN (ITAT) 1117

The Income Tax Appellate Tribunal(ITAT), Mumbai bench has held that Transfer Pricing benchmarking is based on the functional profile of the tested party and granted interim relief to Sulzer Tech India. The Tribunal has held that “we deem it appropriate to remand the issue of comparability of the relevant segment of DesignPvt. Ltd. with assessee to the file of TPO for de novo adjudication after necessary examination of all the data”.

BMC Software Asia Pacific Pte Ltd. vs ACIT - 2022 TAXSCAN (ITAT) 1110

The Pune bench Income Tax Appellate Tribunal (ITAT) ruled that the income from IT support services and software licenses are not chargeable to tax. Shri R S Syal, vice president, and Shri Partha Sarathi Chaudhury, judicial member concluded that the income from IT Support services, even if viewed independent of software license income, is not chargeable to tax and the addition of Rs.42.42 crore and was directed to be deleted.

Dattatreya Varma Penmatsa vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1109

The visakhapatnam bench of the Income Tax Appellate Tribunal (ITAT), held that the cost of new residential house includes cost of land purchased under section 54 of the Income Tax Act,1961. It was viewed that the cost of new residential house which should necessarily include the cost of land, cost of materials used in the construction, the cost of labour and other relatable costs of construction of the residential house has to be considered for deduction U/s. 54 of the Act.

Adurjee & Bros Pvt. Ltd vs DCIT - 2022 TAXSCAN (ITAT) 1119

The Income Tax Appellate Tribunal (ITAT), Pune bench has held that surcharge, education cess, and additional surcharges are eligible for minimum alternate tax (MAT) credit under section 115JAA. The Coram of Mr. Inturi Rama Rao, Accountant Member, and Mr. S. S. Viswanethra Ravi, Judicial Member has held that “we note that the assessee claimed a minimum alternate tax credit of Rs.33,41,567/- but the AO denied to grant to an extent of Rs.2,68,295/- (Rs.1,70,968/- +Rs.97,327/-) being surcharge and education cess, respectively, in our opinion, is not justified. Therefore, the AO is directed to allow set-off credit including surcharge and education cess. Thus, the addition made by the AO and as confirmed by the CIT(A) is deleted”.

Shri R.C. Bhaskar vs Addl. CIT - 2022 TAXSCAN (ITAT) 1120

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) ruled that the addition of unexplained cash under section 68 of the Income Tax Act,1961 based on doubt is not sustainable. The Tribunal comprising Shri Chandra Poojari, accountant member and Smt. Beena Pillai, judicial member viewed that if the AO had any doubt, then he needs to very well verify with Bindu Promoters, Bangalore, which he failed to do so and held that the addition of unexplained income is not sustainable.

Ujjwal Singh vs DCIT - 2022 TAXSCAN (ITAT) 1131

The Delhi bench Income Tax Appellate Tribunal (ITAT) ruled that TDS credit on accrued income is allowable if it was not claimed in earlier years. The Tribunal observed that the income has been offered by the assessee in the year of its accrued in Assessment Year 2016-17 and the credit for TDS deserves to be allowed in Assessment Year 2016-17 as claimed in terms of Section 199 r.w. Rule 37BA (3). was observed that the assessee is entitled to TDS corresponding to the income reported in Assessment Year 2016-17 only on satisfying the condition that the assessee has not claimed any credit for TDS in earlier the Assessment Year 2015-16.

Kanodia Investments Private Limited vs Deputy Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1130

Illness of Managing Director of company not sufficient cause for condoning delay of 1473 days so was held by Income Tax Appellate Tribunal (ITAT), Allahabad. The Bench consisting of Vijay Pal Rao, Judicial Member and Ramit Kochar, Accountant Member held that “In this case, in our considered view, the ld. CIT(A) judiciously exercised its powers in most fair, reasonable and transparent manner in not condoning the substantial delay of 1473 days in filing appeal beyond time prescribed under 1961 Act, and in such cases our scope of interference is very limited to see whether this powers were judiciously exercised in fair, reasonable and transparent manner , or not , and whether the assessee had a sufficient cause or not in not presenting the appeal in time, and despite sufficient cause shown by the assessee, the ld. CIT(A) exercised its power in capricious, malicious or whimsical manner.”

Arun Kanhaiya Gupta vs ITO - 2022 TAXSCAN (ITAT) 1093

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench presided by Mr. B.R. Baskaran (AM) has quashed the Scrutiny assessment order without proof of service of notice u/s 143 (2). The single bench by relying on the decision of the Supreme Court in the case of ACIT Vs. Hotel Blue Moonhas held that “the impugned assessment order framed by the Assessing Officer is liable to be quashed for want of jurisdiction. In view of the above, I set aside the order passed by CIT(A) as well as Assessing Officer”.

Leila Advani vs ACIT-16(2) - 2022 TAXSCAN (ITAT) 1128

The Income Tax Appellate Tribunal (ITAT)of the Mumbai bench held that the amount paid for land enhancement is capital expenditure and can avail deduction under section 48 of the Income Tax Act,1961. It was observed that the amount of 4, 80, 12,787/- paid for enhancement of land is an inextricable part of the whole transaction and allowable u/s 48and A.O. was directed to delete the disallowance while computing the income of the assessee.

M/s. BLK Lifestyle Ltd vs ACIT-  2022 TAXSCAN (ITAT) 1105

The Delhi bench Income Tax Appellate Tribunal (ITAT) comprising Shri Challa Nagendra Prasad, judicial member & Shri Pradip Kumar Kedia, accountant member. The assessee, M/s. BLK Lifestyle Ltd challenged the imposition of a penalty of Rs.3,00,880/- under Section 271(1)(c) of the Income Tax Act,1961. The Tribunal held that the undisclosed income by way of difference in closing stock and disallowances of expenses based on seized material could culminate in penal action under Section 271AAA and cancel the penalty imposed.

M/s. S.P. Chips Potato Pvt. Ltd vs DY CIT - 2022 TAXSCAN (ITAT) 1115

Decision taken by authorities in previous year would not estop or operate as res judicata for subsequent year, so was held by the Income Tax Appellate Tribunal (ITAT), Ahmedabad. The Bench consisting of P M Jagtap, Vice President and Siddhartha Nautiyal, Judicial Member held that “We are not persuaded to agree with the contention of the counsel for the assessee that if an incorrect/higher claim of depreciation has been allowed to the assessee in a previous year, the same shall be allowed to the assessee in the following years as well, simply for the reason that the asset was forming part of the block of assets on which higher depreciation has been allowed (albeit incorrectly) in the previous year.”

M/s. Cowtown Software Design Pvt. Ltd vs DCIT - 2022 TAXSCAN (ITAT) 1140

Income Tax Appellate Tribunal (ITAT), Mumbai held that payments made to Social Kinnect would fall within provisions of Section 194C. The Bench consisting of Aby T Varkey, Judicial Member and M Balaganesh, Accountant Member observed that “Social Kinnect would engage various professional artists for preparation and execution of the advertisement content and Social Kinnect would provide ultimate advertisement content on behalf of the assessee in digital platform.

Anil Bhansali vs Addl.Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1141

In a major setback to the current Google Cloud India Vice President and former Microsoft employee, Mr. Anil Bhansali, the Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has dismissed an income tax appeal challenging addition under the Income Tax Act, 1961. The Tribunal comprising Shri Rama Kanta Panda (Accountant Member) & Shri K. Narasimha Chary (Judicial Member) observed that in this case, according to the assessee, he paid federal taxes on the difference between the fair market value and the grant price.

M/s. Pallava Resorts Private Limited vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1142

The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that deemed dividend under section 2(22)(e) applies only to persons who are recipients of loan and shareholders of the Payer Company. The Coram of Mr. Mahavir Singh, Vice President, and Mr. Manoj Kumar Aggarwal, Accountant Member while deleting the addition has held that “the assessee is not a shareholder of QNEI, the amount received from QNEI will not be taxable in the hands of the assessee as deemed dividend u/s.2(22)(e) of the Act and common shareholding in two companies would not attract the provisions of Section 2(22)(e) of the Act”.

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