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 November 1 to November 7, 2021.

InterGlobe Aviation Vs. JCIT

In a major relief to the  InterGlobe Aviation, the Delhi Bench of Income Tax Appellate Tribunal (ITAT) deleted disallowance on Lease Rental Payments to the tune of Rs. 366.32 Crores. The coram of Judicial Member, Suchita Kamble, and Accountant Member Prashant Maharishi ruled that the Lease Agreement defines “Rent” as “means collectively Base Rent and Supplementary Rent”. Therefore, respectfully following the decision of Tribunal for A.Y. 2007- 2008 which has also been followed in subsequent years, we hold that payment of Supplementary Rent of Rs.61,81,04,551/- is exempt from tax in hands of Lessors as per provisions of section 10(15A) and hence, the disallowance under section 40(a)(i) is not called for.

M/s.GMR Enterprises Pvt. Ltd. Vs. DCIT

The Banglore Bench of Income Tax Appellate Tribunal (ITAT) ruled that Section 14A Disallowance cannot exceed the exempt income earned during the Assessment Year. The coram of Accountant Member B.R.Baskaran and Judicial Member George George K held that the amount of disallowance u/s 14A of the I.T.Act needs to be restricted to the extent of exempted income earned during the relevant assessment year. As would be evident that in the facts and circumstances of the present case the amount of exempted income of Rs.27,37,47,187 was earned on an investment and consequently the amount of disallowance, if at all, to be made is to be restricted to Rs.27,37,47,187.

TUV Rheinland NIFE Academy Private Limited Vs. ACIT

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) restored the issue of eligibility of assessee to claim depreciation on Goodwill to AO after affording an adequate opportunity of hearing. The coram of Judicial Member, Beena Pillai, and Accountant Member, B.R. Baskaran ruled that the facts are not clear in the instant case. Accordingly, in the interest of natural justice, we are of the view that the assessee should be provided with an opportunity to present the relevant facts. Accordingly, the order passed by CIT(A) on this issue is set aside and restored the same to the file of the A.O. for examining afresh. After considering the information and explanations furnished by the assessee and also after affording an adequate opportunity of being heard, the AO may take appropriate decisions in accordance with the law.

M/s. Lite-on Mobile India Pvt. Ltd. Vs. DCIT

In a major setback to  Lite-on Mobile, the Chennai Bench of Income Tax Appellate Tribunal (ITAT)  disallowed the grossed-up portion of TDS deducted on interest paid to AE on External Commercial Borrowings. The coram of Judicial Member, Duvvuru RL Reddy, and Accountant Member, G.Manjunatha observed that as per the agreement, any tax liability including income tax, if any, on interest accrued to the lender under the agreement would be borne by the lender. The agreement further states that the borrower will compute the appropriate amount of taxes required to be withheld and deposit the same to the credit of the Indian Govt. treasury. The borrower will provide the lender with a certificate evidencing the deposit of such taxes. Therefore, from the conditions of the agreement between parties, it is very clear that tax liability, if any, on interest paid to the lender is the responsibility of the lender. However, the assessee should deduct applicable tax deducted at source as per law, remit the same to Govt. treasury, and furnish proof to the lender.

Qualcomm India Vs ACIT

In a major relief to Qualcomm India, the Delhi Bench of Income Tax Appellate Tribunal (ITAT) allowed a deduction of Education Cess as it does not fall under capital expense and personal expenditure.