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 August 6 to August 12, 2022
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the capital gain in respect of consideration received from the sale of a property cannot be taxed from the owner of the property as the same is already taxed from the Power of Attorney holder. The Tribunal held that “we find force in the arguments of ld. AR that it is not correct to be taxed in the hands of assessee when the same was taxed in the hands of Jayantilal Oswal. Therefore, when the assessee not received the said sale consideration of Rs.2,00,00,000/- vide registered Deed of Assignment dated 13-01-2013 and the same was received by the said Jayantilal Oswal as a consenting party which was disclosed by him under the head capital gain by Schedule 18 of his return of income, again, taxing the same in the hands of assessee is not justified. Thus, the order of CIT(A) in confirming the order of AO in taxing the assessee on account of capital gain of Rs.1,26,80,413/- is not justified and it is set aside. Thus, ground Nos. 2 to 5 raised by the assessee are allowed.”
The Chennai bench of the Income Tax Appellate Tribunal (ITAT)has held that revisional jurisdiction cannot be invoked on highly debatable issues. The Tribunal observed that the assessee disclosed the investment as per consideration declared in the sale deed at Rs.3.25 crores but the PCIT was of the view that the difference of Rs.25 lakhs given the guideline value fixed by Stamp Valuation Authority at Rs.3.50 crores is to be Seshasayee Paper and accepted and added to the return of income of the assessee.
While considering various grounds in an appeal, the Chennai bench of the Income Tax Appellate Tribunal (ITAT)has held that loss from equity shares is eligible to deduct as business loss. It was observed that the assessee has made investments in Ponni Sugars & Chemicals Ltd., and the assessee referred the matter to BIFR for the reconstruction of the assessee as a sick industrial unit. Further viewed that the BIFR declared the assessee as a sick unit and the loss or losses of investment claimed by the assessee as the write-off of investment u/s.37 of the Act can be allowed.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the loan to the Director due to urgent need of finance in the Company which is duly reflected in the journal entries will not be a violation of section 269SS of the Income Tax Act, 1961 and therefore, penalty under section 271D will not be sustained. A bench of Shri Waseem Ahmed, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member observed that the assessee clearly established that the loan availed by the Director Sivaprasad Patnam is transferred to the assessee company because of its company is urgent need of cash/finance.
While deleting an addition in respect of heavy gold jewellery received as “Streedhan”, the Income Tax Appellate Tribunal (ITAT), Jaipur bench has held that the high status and family traditions shall be considered while making addition. The Tribunal held that “Therefore, looking into the totality of the facts and circumstances of the case, we are of the considered view that the AO had ignored the factual position as well as failed to verify the fact that the assessee is living with his parents and belonged to a Rajput Family where the fact of having jewellery as Streedhan by the assessee’s mother and wife cannot be ignored. Thus after considering the overall factual position in this case and keeping in view of high status, family tradition, deduction on account of purity and the deduction towards Streedhan, the excess jewellery found were nominal.”
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has held that the Employee Welfare expenses cannot be included in the value of Fringe Benefits Tax under the provisions of the Income Tax Act, 1961. Tribunal comprising Shri P.M. Jagtap, Vice President and Ms. Suchitra Kamble, Judicial Member observed that “we have heard both the parties and perused all the relevant material available on record. The details which were given by the assessee before the Assessing Office as well as before the CIT(A) and from the perusal of the records produced before us shows that the same are related to the Employee Welfare expenses and cannot be included in the value of Fringe Benefit Tax. The details were totally discarded by the Assessing Officer as well as the CIT(A).”
The Visakhapatnam bench of the Income Tax Appellate Tribunal (ITAT) while deleting an addition, held that the mother-in-law of the assessee can be treated as a “family member” and therefore, the excess gold found during search cannot be subject to addition under the Income Tax Act, 1961 as per the circular issued by the Central Board of Direct Taxes (CBDT) on gold jewellery. The Tribunal held that “As per the list mentioned in para 4 of the assessment order it is noted that the AO has erred in disallowing the excess gold of 284.600 grams belonging to the mother of the assessee who is staying with the assessee being the only daughter, and considered as belonging to the family members of the assessee. In these peculiar circumstances, we find merit in the argument of the Ld. AR and we are of the considered view that the order of the Ld. CIT(A) needs to be quashed and allow the appeal of the assessee.”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), has held that a domestic transaction from a related party is not a specified domestic transaction under section 92BA. The Coram of Mr. Prashant Maharishi, Accountant Member, and Mr. Pavan Kumar Gadale, Judicial Member has held that “We considering the ratio of the judicial decisions discussed are of the view that the order of the Pr.CIT does not hold good on the aspects of levy of penalty.”
The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) has ruled that, the Forex t Shri. N K Saini, VP & Shri. Sudhanshu Srivastava, JM held that “the assessee was not a dealer in foreign exchange, it had entered into a forwarding contract with ICICI Bank to hedge the loss due to fluctuation of foreign exchange while implementing the export contract therefore the foreign exchange loss incurred by the assessee was not speculative one under section 43(5) of the Act and the same was allowable.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that leave and pension contributions to state government employees cannot be treated as bogus and granted relief to Vishakhapatnam Port Road Company Ltd. The Coram of Mr. Anil Chaturvedi, Accountant Member, and Mr. Anubhav Sharma, Judicial Member has held that “considering the totality of the aforesaid facts and in the absence of any evidence placed by the Revenue to demonstrate that the payment is bogus, we are of the view that no disallowance of aforesaid expenses is called for in the present case. We, therefore, direct its deletion thus the ground of the assessee is allowed”.
The Income Tax Appellate Tribunal (ITAT), Amritsar Bench has held that no tax deduction at source (TDS) on discount given to distributors on sale of prepaid sim card under section 194H. The Coram of Dr. M. L. Meena, Accountant Member, and Mr. Anikesh Banerjee, Judicial Member by relying on the decision of the Coordinate Bench in the case of Bharat Sanchar Nigam Limited Vs. Income Tax Officer has held that“the assessee had not violated the provisions of section 194H of the Act, so addition amounting to Rs.8,60,955/- is deleted”.
Income Tax Appellate Tribunal (ITAT), Jaipur Bench consisting of Sandeep Gosain, Judicial Member and Rathod Kamalesh Jayantibhai, Accountant Member held that Life membership fees received by AOP is Capital Receipt hence Not Taxable. The Tribunal held that “The issue in question is already mentioned in the Rules and Regulation of the Society which indicates that the fees like entrance fees as well as life membership are part of the corpus fund and accordingly are in the nature of capital receipt.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has held that payments made to Deloitte Global Holdings Ltd under the Shared Services Agreement are not taxable as royalty. The Coram of Mr. Pramod Kumar, Vice President, and Mr. Amit Shukla, Judicial Member while allowing the appeal has held that “we hold that in all the appeals the payments made to Deloitte Global Holdings Ltd. do not fall in the scope and definition of Royalty under Article 13(3) of India UK DTAA and consequently appellants were not required to deduct TDS while making the payment”.
Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench consisting of P.M. Jagtap, Vice President and Siddhartha Nautiyal, Judicial Member held that Replacement of parts of Rolling Mill Rolls in course of working is revenue expenditure. The Tribunal observed that “Replacement of parts of an existing machinery in the course of their working will be a revenue expenditure. We are of the considered view that the assessee in the instant set of facts is eligible to claim deduction of expenditure on purchase of Rolling Mill Rolls as revenue expenditure. The only reason why the claim of a revenue expenditure of the assessee was sought to be disallowed was that since the Income Tax Act specified rate of 80% for claim of depreciation in respect of the above assets, the assessee was not eligible to claim the same as revenue expenditure.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has held that the opening balance of the unsecured loan cannot be treated as “unexplained” and deletes addition under section 68. The Coram of Mr. M Balaganesh, Accountant Member,and Mr. Pavan Kumar Gadale, Judicial Member has held that “we find that the CIT(A) relied on the judicial decisions and also the facts, additional evidence, remand report and provisions of 68 of the Act has passed a reasoned order. Accordingly, we are not inclined to interfere with the order of the CIT(A) and upheld the same and dismiss the grounds of appeal of the revenue”.
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Allahabad sets aside extendedperiod of limitation under proviso to Section 73(1) of the Finance Act as there was no deliberate intention on the part of the assessee in late filing of ST Returns. The Bench consisting of Justice Dilip Gupta, President and P Anjani Kumar, Technical Member observed that “the confirmation of demand for the period beyond the normal period of limitation by invoking the proviso to section 73(1) of the Finance Act cannot be sustained. However, as has been stated by learned counsel for the appellant, the confirmation of demand for the period within the normal period is sustained.”
The Income Tax Appellate Tribunal, Surat bench comprising Shri Pawan Singh, JM & Dr A L Saini, AM has ruled that TDS credit disallowed without verifying fact is not sustainable. The Tribunal viewed that without verifying the real fact about the above-said difference, the disallowance of TDS credit must not be made, as income has been duly offered by the assessee. If TDS credit was disallowed then the corresponding income by the assessee has to be reduced by passing rectification order u/s 154 of the Income Tax Act,1961.
The Income Tax Appellate Tribunal (ITAT), New Delhi set aside the penalty imposed on the ground that there was a delay of 210 days in filing the Statement of Financial Transaction (STF) Return due to late receipt of advisory notice and show cause notice. The Bench consisting of Shamim Yahya, Accountant Member, and Yogesh Kumar the US, Judicial Member observed that “The assessee being a District Cooperative Bank has filed a statement of financial transaction with a delay of 210 days i.e. after receipt of the show cause notice issued by the Director of Income Tax.
Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the disallowance of total purchase under section 40 A(3) will sustain when cash is paid for purchases over the prescribed limit and ordered the AO to enquire into the applicability of the above-said section in the assessee’s case-The Tribunal observed that when the assessee acts as a commission agent and earns a commission on total sales, then even if, for practical purposes, transactions are treated as purchase & sales and in this case, the assessee claims that though he has reported purchases as his purchases, said purchases are made on behalf of the principal, and his income was only commission on net sales.
Income from Portfolio Management Services (PMS) is assessable under capital gains, so was held by Income Tax Appellate Tribunal (ITAT), Pune The Bench consisting of Inturi Rama Rao, Accountant Member and S S Vishwanetra Ravi, Judicial Member observed that “the Co-ordinate Bench of this Tribunal has held that earning under PMS should be assessable under the head “capital gains”. Accordingly, we do not find any illegality in the order of the CIT(A).”
Income Tax Appellate Tribunal (ITAT), Mumbai held that penalty levied by SEBI for shortfall in margin money eligible for Deduction u/s 37. B R Baskaran, Accountant Member observed that “In the instant case also penalty charged levied by the SEBI are related to shortfall in the margin money and is not for infraction of any law. Accordingly, the said payment cannot be considered as penalty for violation of any law falling within the ambit of proviso to section 37(1) of the Act.”
Income Tax Appellate Tribunal (ITAT), New Delhi deleted addition for deemed dividend on the ground that the transfer of amount for business purposes was made to avoid forfeiture and held that such a transfer is not loans and advances. The Bench consisting ofAnil Chaturvedi, Accountant Member and Astha Sharma, Judicial Member observed that “Before us, Revenue has not placed any material on record to demonstrate that the impugned transaction was a smoke screen to cover a benefit obtained by the assessee from the company in which the assessee is a shareholder.
Payment of interest on late deposit of TDS not allowable as deduction u/s 37(1), so was held by Income Tax Appellate Tribunal (ITAT), New Delhi. The Tribunal in a bench consisting of AD Jain, Vice President and BRR Kumar, Accountant Member held that “Hence, we have no hesitation to hold that interest payment on late payment of TDS is not eligible business expenditure for deduction and it is not compensatory in nature. Payment of interest on late deposit of TDS levied u/s 201(1A) is neither an expenditure only and exclusively incurred for the purpose of the business and therefore the same is not allowable as deduction u/s 37(1) of the Act.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench dismissed appeals as non-maintainable on failure of Resolution Professional to amend Form No: 36A. The Tribunal relied on the judgment in Orbit Corp Ltd., wherein it was held that the resolution professional was required to amend 36A for further prosecuting the appeal and in absence of which appeals were held to be non-maintainable.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has remanded the matter back to the Assessing Officer in the case of addition of reimbursement of salary to the seconded employee under section 40(a)(ia) of Income Tax Act. The Coram of Mr. Aby T Varkey (Judicial Member) and Mr. Om Prakash Kant (Accountant Member) has been restored to the file of the Assessing Officer for verification, of whether tax has been deducted by the employer M/s Alphine Samsung HCC JV in respect of salary amount reimbursed by the assessee about employee Mr. Srivastav or tax has already been paid by the seconded employee on reimbursement amount.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has held that notional valuation cannot be made a basis for addition and deletes addition of closing construction work-in-progress (WIP).The Tribunal observed that if in books of account any expenditure corresponding to the additional amount of construction of WIP is not found debited, then the amount is only in the nature of notional valuation which has been carried out by the joint venture partner purpose of consolidating in its books of account and which cannot be made a basis for addition in the hands of the assessee.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that a loan obtained of non-gratuitous nature will not fall under section 2(22)(e) of the Income Tax Act,1961. Shri Kul Bharat, judicial member & Shri Pradip Kumar Kedia, accountant member observed that the loan obtained being not gratuitous does not fall within the mischief of Section 2(22)(e) of the Act. The appeals of the assessee are allowed.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) upheld the addition for unexplained cash credit due to failure to prove the genuineness of transaction using demonetized currencies Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member held that the assessee shall furnish complete details before the Assessing Officer and directed the Assessing Officer to decide the issue afresh after verification of details as may be filed by the assessee. The appeal filed by the assessee was allowed for statistical purposes.
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