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 September 11 to September 16, 2022

Arun Garg vs ITO - 2022 TAXSCAN (ITAT) 1257

The Income Tax Appellate Tribunal (ITAT), Chandigarh bench held that addition in respect of unexplained cash credit under sections 68 and 69A of the Income Tax Act, 1961 cannot be made when documents and books of account submitted by assessee accepted by Assessing Officer (AO) in respect of cash credits during demonetization period. The Bench consisting of NK Saini, Vice President, and Sudhanshu Srivastava, Judicial Member observed that “the opening stock, purchases, sales and closing stock in the hands of the assessee have been accepted by the Assessing Officer and the books of accounts of the assessee have also not been rejected u/s 145(3) of the Act and as such the entries relating to the related parties in effect stand accepted and, as such, the confirmation of the two additions i.e. both in regard to the number of Rs. 28 lacs and Rs. 48.50 lacs are not justified.”

M/s. Novartis Healthcare Pvt. Ltd vs DCIT - 2022 TAXSCAN (ITAT) 1281 

The Income Tax Appellate Tribunal (ITAT), Mumbai held that expenses incurred for the license of software, revenue in nature. The Bench consisting of Pramod Kumar, Vice President, and Aby T Varkey, Judicial Member observed that “the CIT(A) has rightly held that the expenses incurred for the license of the software to be of revenue nature and took note of Tribunal’s decision in assessee’s own case for earlier years AY 2008-09 (supra) and has followed the same.

Shri Parmanand Gupta vs Income Tax Officer -   2022 TAXSCAN (ITAT) 1242

The Raipur bench of the Income Tax Appellate Tribunal (ITAT) has held that the re-opening of the assessment order under section 147 of the Income Tax Act, 1961 based on a mere change of opinion is not sustainable and quashed the order passed by the CIT(Appeals), Bilaspur, dated 30.11.2016 The Tribunal observed that the case of the assessee had been reopened with the purpose to re-visit the assessment based on a mere change of opinion, which was not permissible in the eyes of law, thus, the assessment framed by the AO is liable to be struck down for want of jurisdiction on his part on the said count.

Dy. Commissioner of Income Tax vs M/s. Continental Warehousing Corporation (Nhava Sheva) Ltd- 2022 TAXSCAN (ITAT) 1136

The Income Tax Appellate Tribunal (ITAT), Pune bench consisting of Inturi Rama Rao, Accountant Member and SS Viswanethra Ravi, Judicial Member held that Container Freight Station can claim deduction under Section 80 1 A (4). The Tribunal held “we hold that the assessee is entitled to claim deduction u/s. 80 IA(4) of the Act in respect of Container Freight Station.

M/s. Rasi Seeds Pvt.Ltd vs Deputy Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1229

The Income Tax Appellate Tribunal (ITAT), Chennai recorded re opening assessment as invalid on the ground that satisfaction was recorded in a mechanical manner without application of mind for issuing notice under Section 148 of the Income Tax Act, 1961. The Bench consisting of V Durga Rao, Judicial Member, and G Manjunatha, Accountant Member observed that “Mere mentioning ‘Yes, I am satisfied’ is considered to be mechanical action, if learned CIT did not apply his mind on the issue of reopening of assessment without referring to reasons recorded by the Assessing Officer for reopening of assessment, contrary to provisions of section 151 of the Income Tax Act, 1961.”

M/s. HS Finish Profiles India Pvt. Ltd vs DCIT - 2022 TAXSCAN (ITAT) 1282

Income Tax Appellate Tribunal (ITAT), New Delhi bench consisting of Shamim Yahya, Accountant Member and Yogesh Kumar US, Judicial Member condoned delay of 135 days occurred due to misplacement of Assessment Order by Advocate. The Tribunal observed that “by considering the reasons assigned by the Assessee for condoning the delay in filing appeal before the CIT (A), the CIT (A) ought to have taken liberal view and condoned the delay of 135 days in filing the Appeal and should have decided the Appeal on merit. We are of the view that, if the delay in filing the Appeal is condoned and remand the matter to the CIT(A) for deciding the Appeal on merit, the substantial justice would be render. Therefore, we condone the delay in filing the Appeal before the CIT (A).”

Anush Infrastructure (P) Ltd vs ACIT - 2022 TAXSCAN (ITAT) 1283

An Addition of 2 crores was deleted by the Income Tax Appellate Tribunal (ITAT), Chennai due to fraudulent action of director of assessee-company to sell property without valid authorization. The bench consisting of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that “The director of the assessee-company misused the position as director which ultimately led to declaration of sale agreement as null and void. Therefore, the money as allegedly paid under the agreement could not be considered to be received by the assessee and held as unaccounted money of the assessee. Taxation of Rs.2,00,00,000 in the hands of the assessee is not correct and justified. The Assessing Officer is directed to delete the additions made.”

ITO vs Shri Suresh Prasad - 2022 TAXSCAN (ITAT) 1250

The Income Tax Appellate Tribunal (ITAT), Patna Bench has held that no Income tax on compensation is received for compulsory acquisition of land by the government as per the provisions of the Income Tax Act, 1961. A Coram of Mr. Manish Borad, Accountant Member & Shri Sonjay Sarma, Judicial Member has observed that the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dated 25/10/2016. Therefore, after considering the totality of the fact as the division bench dismissed the revenue appeal and held that the CIT(A) was justified by not confirming the action of the A.O.

Ramgopal Thirani Family Trust vs D.CIT -  2022 TAXSCAN (ITAT) 1261

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that the claim of the assessee to be taxed individually is not sustainable when no evidence to prove their status as a private beneficiary trust. The Tribunal bench comprising Shri Rajpal Yadav, Vice President and Shri Manish Borad, Accountant Member observed that the assessee failed to file any evidence to establish that it was a private beneficiary trust with a determinate percentage of share.

RBS Business Services Pvt. Ltd vs DCIT - 2022 TAXSCAN (ITAT) 1285

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the payment made towards internet and telecom charges does not attract TDS under section 194J of the Income Tax Act, 1961. Dr. B. R. R. Kumar, Accountant Member, directing the TDS authorities to re-compute TDS and held that the lease rentals are governed by Section 194-I whereas the maintenance charges are governed by Section 194-C.

Uniglobal Paper Private Limited vs Commissioner of CGST & CX - 2022 TAXSCAN (CESTAT) 475

The Single Member Bench of Kolkata Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that cess on paper is not a duty of excise and refund rejected on limitation under section 11B of the Central Excise Act, 1944 will not sustain. In light of the case of Joshi Technologies International v. Union of India,Shri P K Choudhary, Member (Judicial) has held that“since Cess on Paper is not a duty of excise, the provisions of Section 11B of the Central Excise Act would not apply.” The Tribunal allowed the Appeal filed by the Appellant with consequential relief.

Heera Lal Bhasin vs DCIT -   2022 TAXSCAN (ITAT) 1286

The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) upheld the CIT(A) order which allowed the deduction under section 54 of the Income Tax Act,1961 on multiple residential houses built in same physical location and contiguous place. A Coram comprising of Shri Shamim Yahya, accountant member and Ms Astha Chandra, judicial member upheld the CIT(A) order which allowed the claim of deduction under section 54 of the Act for a residential house built up on three adjacent contiguous plots and dismissed the appeal of the Revenue.  The department was represented by Ms Anupama Singla.

M/s Forum Projects Pvt. Ltd vs DCIT -   2022 TAXSCAN (ITAT) 1287

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench held that payment made to non- resident not having permanent establishment in India not royalty. A coram consisting of Rajpal Yadav, Vice-President and Rajesh Kumar, Accountant Member observed that “We set aside the order of ld. CIT(A) by holding that the payment made to non- resident recipient not having any permanent establishment in India and also that the services provided are not in the nature of royalty and fee for technical services. Accordingly we direct the AO to delete the demand.”

Dhanesh Mulji Gala Vs ITO, Ward- 19(1)(4) Mumbai. - 2022 TAXSCAN (ITAT) 1290

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the profit element from bogus purchases made through the hawala dealers are subject to income tax.After considering submissions, Shri B.R. Baskaran (AM) held that the Ld CIT(A) has confirmed the additions by following the decision rendered by Hon’ble Gujarat High Court in the case of Simit P Sheth  wherein it has been held that the profit element involved in the bogus purchases should be brought to tax.

M/s. Rishi Kiran Logistics Pvt. Ltd vs Principal Commissioner of Income Tax -   2022 TAXSCAN (ITAT) 1288

The Income Tax Appellate Tribunal (ITAT), Rajkot Bench quashed the revisionary order and held that the Principal Commissioner of Income Tax (PCIT) cannot impose his own understanding of the extent of inquiry under Section 263 of the Income Tax Act, 1961. The Bench consisting of Waseem Ahmed, Accountant Member, and Siddhartha Nautiyal, Judicial member observed that “PCIT erred in taking the course of such provisions while deciding the issue against the assessee. Secondly, the learned PCIT has also not specified the nature and the manner in which the inquiries should have been conducted by the AO in the assessment proceedings. Thus, in the absence of any specific finding of the learned PCIT with respect to the inquiries which should have been made, we are not convinced by his order passed under section 263 of the Act.’’

Shri Mukund Bhavan Trust vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1289

The Income Tax Appellate Tribunal (ITAT), Pune Bench held that the application of income from surplus funds on additions to building for charitable, liable to an exemption under Section 11 of Income Tax Act, 1961. A Coram consisting of Inturi Rama Rao, Accountant Member, and S SViswanethra Ravi, Judicial Member took into consideration the decision of the Kerala High Court in St. George Forana Church reported in 170 ITR 62 wherein it was held that where surplus funds were utilized for additions to a building, which was let out and the income thereof applied for charitable or religious purposes, the utilization of such surplus was held to amount to the application of income for religious or charitable purposes.

Asst. Commissioner of Income Tax vs Sri K V Madhava Verma -   2022 TAXSCAN (ITAT) 1137

The Income Tax Appellate Tribunal (ITAT), Visakhapatnam held that disallowance u/s14A is not required when assessee has not earned any exempt income. The Bench consisting of held that “We find from the record that the assessee has not earned any exempt income to invoke the provisions of section 14A and 8D of the IT Rules, 1962. Various High Court and Coordinate Benches of the Tribunal have laid down the ratio that there is no requirement for disallowance U/s. 14A of the Act where the assessee has not earned any exempt income. We, therefore respectfully following the judicial precedents on this issue, find no infirmity in the order of the CIT(A), and this ground raised by the Revenue is dismissed.”

Bigfoot Retail Solution Pvt. Ltd. vs ACIT - 2022 TAXSCAN (ITAT) 1091

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that payment made for the usage of the software is revenue expenditure and deduction is allowable. Shri Anil Chaturvedi, accountant member, and Ms. Astha Chandra, judicial member held that the impugned expenditure is of a revenue nature and is allowable as a deduction and set aside the order of the CIT(A).

sChandaka Chinnam Naidu Thangudubilli vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1108

The Visakhapatnam bench of the Income Tax Appellate Tribunal (ITAT) held that the addition of unexplained capital will sustain in the absence of evidence to prove the source of capital. Shri Duvvuru R L Reddy, judicial member & Shri S Balakrishnan, accountant member observed that in the absence of any evidence, the order passed by the lower authorities will sustain and the appeal of the assessee was dismissed.

M/s. Mohammad Bhai Esufali & Sons vs ITO -   2022 TAXSCAN (ITAT) 1088

The Income Tax Appellate Tribunal (ITAT), Pune deleted disallowance as reasons for wastage properly provided on wastage of oil due to Diesel and Petrol tank breakage. R S Syal, Vice President, observed that “The assessee agave separate reasons for the excess wastage, being, breakage of diesel and petrol tank. In my considered opinion, though the general standards of evaporation/breakage given by the oil companies apply as a rule but they are not without exception. Where the assessee demonstrates specific reasons for excess wastage/evaporation, such reasons cannot be thrown to the dustbin. They need to be examined on case to case basis.

Archana Sharma vs DCIT - 2022 TAXSCAN (ITAT) 1086

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) presided by Mr. Anil Chaturvedi, Accountant Member, and Ms. Astha Chandra, Judicial Member has held that gratuitous loan by the company to shareholders in return to an advantage cannot be treated as a deemed dividend and deletes addition u/s 2(22)(e). The Tribunal while allowing appeal has held that “we are of the view that the CIT(A) was not justified in upholding the addition made by AO by invoking the provisions of s. 2(22)(e) of the Act. We, therefore, set aside the addition made by AO and confirmed by CIT(A)”.

Mr. Rahil Mahesh Kumar vs Deputy Commissioner of Income-tax - 2022 TAXSCAN (ITAT) 1085

The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that deduction under section 54F is allowable on the purchase of property outside India. The Coram of Mr. Chandra Poojari, Accountant Member and Smt. Beena Pillai, Judicial Member has held that “we allow the claim of assessee u/s 54F of the Act in respect of investment made in property situated in Newton MA, USA”.

Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.