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 12 to November 18, 2022
M/s Piyush Overseas Pvt. Limited vs DCIT – 2022 TAXSCAN (ITAT) 1667
The Chandigarh Bench of ITAT held that, the assessee cannot be said to have not maintained stock register and books of accounts on account of not uploading them in the Income Tax Portal that does not allow bulk uploads and allowed manual submission of the required documents.
The Tribunal observed that, the AO has the right to examine the books of accounts that the representative for the assessee had stated at the Bar that if so allowed, the assessee shall produce the books of accounts before the AO for necessary verification and set-aside the matter to the AO for fresh examination of documents that may be physically submitted by the assessee.
M/s. Puma Sports India Pvt. Ltd vs JCIT -2022 TAXSCAN (ITAT) 1664
In a ruling in favour of Puma, the Bangalore Bench of ITAT has held that Retail trading and wholesale trading companies have to consider separately while deciding Comparables. An ITAT bench consisting of Shri George George K., Judicial Member and Ms Padmavathy S., Accountant Member has observed that Rule 10B(2)(d) of the Act provided that the company is in the wholesale trading and retail trading have to be considered separately for comparison.
ACIT vs Rajasthan State Road Transport Corporation – 2022 TAXSCAN (ITAT) 1665
The ITAT of Jaipur Bench, has recently in appeals filed before it, held that the activities of Rajasthan State road transport corporation do not fall under “Charitable nature”, and hence that they are entitled to section 11 exception of the Income Tax Act.
Dismissing the Revenue’s appeals the ITAT Bench ruled that “We therefore concur with the view of the CIT(A) and hold that the Assessee is entitled to the benefits of Sec.11 of the Income Tax Act. Accordingly, the A.O. is directed to grant benefit of exemption u/s 11 of the Income Tax Act for the relevant assessment year. And taking into consideration the facts and circumstances of the case, we hold that the ld. CIT(E) has rightly and fairly allowed of the assesse.”
Shyama Sharma Charitable Trust vs CIT – 2022 TAXSCAN (ITAT) 1666
The ITAT of Chandigarh Bench, has recently in an appeal filed before it, held that an order by the CIT(E) accepting or refusing registration under section 12 AA shall be made in writing.
Finally giving its ruling while allowing the assessee’s appeal, the Chandigarh ITAT held that “Taking into consideration the entirety of facts and circumstances of the case, we deem it appropriate that the matter be set-aside to the file of the Ld CIT(E) to examine the matter a fresh after calling for books of accounts and other documents as so desired and pass a speaking order recording his satisfaction or otherwise regarding the objects and genuineness of the activities of the assessee society after providing reasonable opportunity to the assessee society.”
M/s. Well Wisher Construction Pvt. Ltd vs Deputy Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1672
The ITAT of Mumbai bench, while deleting a disallowance, has held that the reimbursement of sales promotion expenses incurred through Credit Card to the directors of the Company is allowable under the provisions of the Income Tax Act, 1961. “It is not personal in nature. Moreover, payment to Ambey Valley City has been made through Cheque No. 003239 from the bank account of the assessee company in the sum of Rs 1,55,411/-. The entire bills issued by various vendors were duly placed by the assessee before the ld. AO.Without looking into any of those bills, the old.AO by mere suspicion, surmise and conjecture, proceeded to treat the entire expenses as personal in nature and disallowed them. We hold that the action of the ld. AO and ld. CIT(A) is certainly unsustainable in the eyes of law. The observations made by us hereinabove for Ground No.1 supra together with case laws relied upon thereon would hold good for this ground also. Accordingly, we direct the ld.AO to delete the disallowance made on account of business promotion expenses in the sum of Rs 2,42,514/-,” the ITAT said.
Smt. Neelima Pravinkumar Khamkar vs Income Tax Officer – 2022 TAXSCAN (ITAT) 1671
The ITAT of Pune Bench, has recently in an appeal filed before it, held that construction of house if couldn’t be completed within 3 years, the capital gain exemption under Section 54 F, is liable to be denied.
“The Inspector submitted report on 19-12-2016 stating that no construction or residential house is existing at House No. 4, Ward No. 12, Ichalkaranji which clearly establishes the assessee could not construct a house within three years from the date of sale of its assets on 17-03-2011 till 19-12-2016.”, the ITAT Bench further observed.
Annapurna Polymers Pvt. Ltd. vs DCIT – 2022 TAXSCAN (ITAT) 1670
In a recent ruling, the Ahmedabad Bench of ITAT has held that expenses incurred for business are allowable as a deduction until the actual liquidation of firm. The ITAT bench consists of Ms Annapurna Gupta, Accountant Member and Ms Madhumita Roy, Judicial Member observed that the assessee was carrying on business during the year. Also as noted above by us, the assessee has incurred several expenses during the year. Further observed that the CIT(A) disallowed based on the fact noted by him that the assessee company went into voluntary liquidation vide Board resolution passed on 25-03-2014.
Ruikar Trust vs ACIT – 2022 TAXSCAN (ITAT) 1669
The ITAT of Pune Bench granted exemption under Section 11 of the Income Tax Act, 1961 on the ground of proper filing of Form 10 manually with Income Tax Return. A Single Bench consisting of SS Viswanethra Ravi, Judicial Member held that “There is no dispute with regard to availability of Resolution on Form 10 with the assessee manually which is noted by the Commissioner of Income Tax (Appeals) (CIT(A)) in the impugned order. Admittedly, the availability of Form 10 manually with the assessee is before due date of filing of Income Tax Return under Section 139(1) of the Income Tax Act, 1961 as the assessee filed Income Tax Return on the proper date.
Sikandar And Company vs The Income Tax Officer – 2022 TAXSCAN (ITAT) 1668
A Single Bench of ITAT held that the Assessing Officer (AO) cannot reopen assessment in absence of tangible material showing escapement of income. The Benchconsisting of SS Viswanethra Ravi, Judicial Member observed that “Admittedly, there is no date reflected on the order sheet on which day the AO has recorded the reasons for initiating proceedings under Section 147 of the Income Tax Act, 1961.In the present case, I find no such tangible material came to the knowledge of AO which resulted in a conclusion that there is an escapement of income from original assessment.”
Deven Supercriticals Pvt. Ltd vs Deven Supercriticals Pvt. Ltd – 2022 TAXSCAN (ITAT) 1673
The ITAT of Pune Bench, has recently in an appeal filed before it, held that disallowance under rule 8D shall not be warranted when investments are made from own funds. finally partly allowing the assessee’s appeal, S.S. Viswanethra Ravi, the Judicial member of the of ITAT concluded: “I note that the AO did not examine the said disallowance on this aspect and proceeded to disallow at 0.5% on an average value of investments concerning the first day and last day of previous year to an extent of Rs.10,80,79,007/-. It is settled principle to restrict the disallowance to those investments earned dividend income. Therefore, following the same I direct the AO to compute the disallowance taking into consideration those investments which yielded exempt income. The assessee is liberty to file evidence, if any, in this regard.”
Patwa Abhikarna Private Limited vs ACIT – 2022 TAXSCAN (ITAT) 1674
The Indore bench of ITAT has held that the deduction of TDS on net salary instead of gross salary is permissible under the Income Tax Act, 1961. Ruling in favour of the assessee, the Tribunal held that “We observe that the approach of assessee is in accordance with the provisions of TDS as prescribed in Income tax Act, 1961, which permit the consideration of deductions under Chapter VIA while computing deductible amount of TDS. Therefore, we do not find any mistake in assessee’s action. That brings us to observe that the revenue authorities have wrongly computed short-deduction of Rs. 56,650/- and consequently interest thereon of Rs. 28,590/-. We do not find any merit in these demands created by revenue which are not as per law.”
Shri Paras Kuhad vs The DCIT – 2022 TAXSCAN (ITAT) 1675
The Jaipur bench of the ITAT has held that since the intimation under section 143(1) of the Income Tax Act, 1961 is not reflected in the tax portal, there cannot be any consequent grievances with regard to the assessment.
Allowing the appeal of the assessee, Shri Sandeep Gosain, JM & Shri Rathod Kamlesh Jayantbhai, AM observed that “since, the very basis being the intimation dated 25.03.2019 is not reflected on the system and the consequent demand or adjustment already merged into the order of the AO passed u/s. 143(3) of the Act. There cannot remain any grievance on account of intimation dated 25.03.3019. Even the ld. AO has submitted a factual report and submitted that the intimation u/s. 143(1) dated 25.03.2019 is not reflected in to the online system and consequent demand there upon also. Thus, once the intimation which the very cause of the grievance of the assessee is not reflected and existed on records the consequent grievance also not existed and thus the appeal of the assessee becomes infructuous.”
Hanuman Prasad & Sons vs DCIT/ACIT, Income Tax Officer – 2022 TAXSCAN (ITAT) 1473
The ITAT of Allahabad Bench, has recently, in an appeal filed before it, held that no subsequent imposition of penalty can be made once the assessee has complied with the notice and has also filed the documents while framing the assessment.
Allowing the assessee’s appeal, the Tribunal commented that “Even otherwise, when this is the year of changing the mode of assessment proceedings from physical to digital /electronically, then, the delay in compliance due to change in the mode of communication and proceedings is a bonafidereason and not deliberate. Accordingly, the penalty levied by the Assessing Officer under section 272A(1)(d) is deleted”.
Mahesh Urban Co-Operative Bank Ltd vs Asst. CIT – 2022 TAXSCAN (ITAT) 1676
The ITAT of Pune bench has held that a co-operative bank has no obligation to deduct TDS on the interest payments made to the members. Rejecting the arguments of the department, Shri S.S.Godara, JM And Shri G.D. Padmahshali, AM observed that “the factual position is hardly different on merits as well wherein Mr. Jasnani strongly supported the learned lower authorities’ conclusion that the assessee had failed to deduct TDS on its interest payments. We find no merit in the Revenue’s instant arguments as we are in assessment year 2010-11 whereas “a cooperative bank” has been excluded from the purview of section 194(A)(3)(v) vide Finance Act 2015 w.e.f. 01.06.2015 only.”
Shri Arun Mittal vs Pr. CIT – 2022 TAXSCAN (ITAT) 1677
The ITAT quashed revision order since no taxable capital-gain from Joint Development Agreement (JDA). A Coram consisting of Suchitra R Kamble, Judicial Member and BM Biyani, Accountant Member observed that “, we agree that the impugned “Agreement” does not effect transfer as required u/s 2(47) of the Income Tax Act and, therefore, no taxable capital-gain accrued to the assessee from the said “Agreement” in AY 2014-15. Hence, the assessment order passed by AO cannot be said to be prejudicial to the interest of revenue.”
Radheyshyam Mandir Trust vs CIT – 2022 TAXSCAN (ITAT) 1682
The Jaipur Bench of ITAT has held that Self-certified copy of documents seeking registration of charitable trust under Section 12 AA of the Income Tax Act,1961 is sufficient for verification under amended Rule 17A.
Dr S. Seethalakshmi, JM & Shri Rathod Kamlesh Jayantbhai, AM observed that the CIT(E) has failed to observe that the activities carried out by the trust are genuine in nature. The ITAT held that as per amended Rule 17A of the Income Tax Rules which are applicable in the case of the assessee, the assessee was not required to fulfil any original copy of the documents rather self-certified copy/instrument was sufficient for verification by the CIT(E) and the appeal of the assessee was allowed.
Ashish Manoj Bhatia vs DCIT – 2022 TAXSCAN (ITAT) 1684
The ITAT of Ahmedabad Bench, has recently in an appeal filed before it, held that exemption u/s.10(38) for long term capital gain earned on shares is claimable only on Payment made through cheque. “The findings of the ld. Commissioner Income Tax(A), we find are very detailed, who has made further inquiry with respect to the issue and found entire transaction to be bogus. Since the assessee has not come before me in support of his appeal, I have no option but to confirm the concurrent finding of both the Revenue authorities on the issue. Accordingly, grounds of appeal of the assessee are rejected. And in result, the appeal of the assessee is dismissed.”
ITO vs Shri Kalpesh C. Shah – 2022 TAXSCAN (ITAT) 1685
The ITAT of Mumbai Bench deleted income tax disallowance as reliance was made by Assessing Officer (AO) on bald statement and dumb document extracted from laptop. A Coram consisting of Om Prakash Kant, Accountant Member and Kavitha Rajagopal, Judicial Member confirmed the observations of FAA wherein it was held that “It is noted that inspite of the glaring infirmities and defects pointed out by the appellant in the excel-sheet as well as thestatements provided by the AO, the AO himself never examined Akshay Doshi on this aspect nor opportunity of cross examination the appellant. Onthese facts therefore, the AO’s relianceon the bald statement of Doshi and the dumb document extracted from laptop of Vasumati Modi to justify the impugned addition is held to be erroneous and unjustified.”
ACIT vs M/s Motisons Jewellers Ltd – 2022 TAXSCAN (ITAT) 1679
The Jaipur Bench of ITAT, observed that Books of account cannot be rejected on insignificant defect. A Bench consisting of S Seethalakshmi, Judicial Member and Rathod Kamlesh Jayanthbhai, Accountant Member observed that “In the instant case, it was not the case that the assessee had not followed either cash or mercantile system of accounting. It was also not the case that the Central Government had notified any particular accounting standard not followed by assessee. Further the assessee maintains proper books of account audited by Chartered Accountant and the profit may be derived from the audited books of account therefore there is no justification in estimation of income by applying NP rate.”
Income Tax Officer vs Shubham Mouth Freshner Private Limited – 2022 TAXSCAN (ITAT) 1690
The ITAT of Indore Bench, has recently in an appeal filed before it, held that the issuance of notice u/s 143(2), should be within the statutorily prescribed time limit. Dismissing the Revenue’s appeal, the Indore ITAT held that “Under these circumstances, since, there is admittedly a violation of mandatory provision, the assessment order passed was found to be illegal and liable to be set aside. In that view of the matter, respectfully relying upon the same, we find that the issuance of notice and the service of the same is beyond time as prescribed under the statutory provision and the proceeding, therefore, itself became void-ab-initio and hence quashed.”
Ripley And Company Stevedoring & Handling (P) Limited vs Deputy Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1687
The Kolkata Bench of ITAT, held that disallowance under Section 143(1) of the Income Tax Act, 1961 cannot be in mechanical manner and directed to verify whether TDS needs to be deducted or not. A Bench consisting of Rajpal Yadav, Vice-President (KZ) and Rajesh Kumar, Accountant Member observed that “The disallowance cannot be made in a mechanical manner. The CIT(Appeals) failed to consider this aspect and did not make an analytical observation, rather simply observed that it is seen from the details mentioned in Form 3CD Report submitted by the assessee, it has not deducted the TDS on the expenses paid. Hence, AO, CPC has correctly added a sum of 30%.”
M/s. Novartis India Limited vs Addl. CIT – 2022 TAXSCAN (ITAT) 1686
The ITAT of Mumbai allowed tax neutral disallowance thereby granting relief to M/s. Novartis India Limited. The issue is in relation to the adjustment of excess and short year-end provision.
Allowing the appeal, a Bench consisting of Amit Shukla, Judicial Member and Rifaur Rahman, Accountant Member held that “The assessee regularly follows the procedure of creating provisions and suo moto disallows the expenditure which are excessive in the next assessment year. The historical data shows that the assessee makes the adjustment every year which are in the range of 7-8% and it consistently follows the same and if there is short, it accounts the same in the with next assessment year. It will have tax neutral effect considering the fact that the same rate of tax is applicable.”
Sir Ratan Tata Trust vs Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1689
The ITAT of Mumbai Bench, has recently, while deciding an appeal filed before it and thereby granting relief to Sir Ratan Tata Trust, held that no conditions can be imposed by PCIT under clause 1 of section 80g (v), for granting registration to trusts.
“In the instant case, the assessee has come up under clause I of sub section v of section 80G, no such condition can be imposed by the Ld. PCIT. So we are of the considered view that impugned order passed by the Ld. PCIT is not sustainable to the extent of imposing conditions in para 10(a) to (j) of the impugned order, in the eyes of law.”
Shri Manish Ambalal Patel vs ITO – 2022 TAXSCAN (ITAT) 1681
The Ahmedabad Bench of ITAT has held that exemption on Income from the sale of non-agricultural land is not allowable on failure to fulfil twin conditions for not being a capital asset.
The twin conditions of the land being agricultural land and land being situated beyond a specified limit from the municipal boundary,both have to be fulfilled for the asset to qualifyas not being a capital asset. The ITAT observed that the asset was not agricultural land, since the assesses fails to fulfil the criteria of being an agricultural land fornot qualifying as a capital asset.
ACIT vs Shri Sunil Hingorani – 2022 TAXSCAN (ITAT) 1691
The ITAT of Mumbai Bench, has recently in an appeal filed before it, held that no addition u/s 68, can be made when there is no fresh receipt of money during the year under consideration. Dismissing the Revenue’s appeal, the Mumbai ITAT held that “In view of the documents which remained uncontroverted before us and in view of the aforesaid observations, we have no hesitation in confirming the order of the ld. CIT(A) granting relief to the assessee in this regard.”
ITO vs M/s KDG Projects Pvt. Ltd – 2022 TAXSCAN (ITAT) 1683
Income Tax Addition u/s 68 of the Income Tax Act,1961 is not permissible when the assessee furnished all evidence proving the identity and creditworthiness of the investors, the Kolkata Bench of the ITAT of upheld the order of the CIT(A). It was observed by the ITAT that the AO has made the addition that no compliance was made to the summons issued to the assessee as well as the investors which cannot be the basis for making an additionas the assessee has filed all the necessary documents before the authorities below proving the identities, creditworthiness of the investors and genuineness of the transactions.
Green Twig Estate Management Pvt. Ltd. vs ITO – 2022 TAXSCAN (ITAT) 1678
The Mumbai Bench of ITAT of held that onus is on assessee to establish that expenditure was incurred for business. A Bench consisting of Om Prakash Kant, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that “The lower authorities hasmainly rejected the genuineness of the expenditure incurred againstpayment to tenanted authorized/unauthorized dwellers mainly on the ground thatin the registered deed of transfer, purchase value was recorded atnil as compared to the value recorded in unregistered agreementsand declaration of seller parties.”
Sareen Sports Industries, Vs DCIT, Circle 2, – 2022 TAXSCAN (ITAT) 1693
The ITAT of Delhi bench has held that commission paid to partners is not covered under Section 194H of the Income Tax Act and therefore, the same is not subject to TDS deduction.
Dismissing the plea of the department, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) and held that “The only addition which, therefore, remains is commission to partners amounting to Rs.3,68,305. As righty observed by learned Commissioner (Appeals), commission paid to partners is not covered under Section 194H of the Act as there is no employer and employee or principal agent relationship between the partners and the firm. Thus, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on the issue.”
Bharat Agri Fert & Realty Ltd Vs Assistant Commissioner of Income-tax-2(1)(1), – 2022 TAXSCAN (ITAT) 1692
The Mumbai bench of ITAT has held that the sales proceeds of car parking spaces being an integral part of the housing project shall be eligible for income tax deduction under section 80-IB(10) of income tax Act, 1961. A bench of Shri B.R Baskaran (Accountant Member) & Smt. Kavitha Rajagopal (Judicial Member) observed that the assessee company has declared income of Rs. 28,80,000/- on sale of car parking and had claimed deduction on the same under section 80IB (10).
Yum Restaurants India (P) Ltd vs ACIT (TDS) – 2022 TAXSCAN (ITAT) 1695
While granting relief to the KFC owner, Yum Restaurants India, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that TDS on payment of rent and CAM charges are paid to be separately under sections 194I and 194C of the Income Tax Act, 1961 respectively. A Two-Member bench of Dr. B. R. R. Kumar, Accountant Member Sh. Anubhav Sharma, Judicial Member held that the undisputable fact in this case is that while the lease rentals are paid based on a fixed percentage on the net revenue, the CAM charges are based on the per sq . ft. area.
Smt. Perminder Kaur Matharoo vs I.T.O – 2022 TAXSCAN (ITAT) 1696
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that Income Tax Addition for cash deposits duly explained with cash flow statements is not permissible. While allowing the appeal, the ITAT directed the Assessing Officer to delete the impugned addition under the Income Tax Act,1961. Shri Kapil Goel appeared for the assessee and Shri Sanjai Kumar Yadav appeared for the department. It was viewed that the cashbook clearly shows the opening balance as of 01.04.2016 at Rs. 8,34,821/– which has been duly verified and accepted by the Assessing Officer. The cash flow statement exhibited explains the cash deposit in the impugned bank account.
M/s Sudhir Forgings (P) Ltd vs The Pr. – 2022 TAXSCAN (ITAT) 1688
The ITAT, Chandigarh Bench, has recently in an appeal filed before, held that revisionary powers under section 263 can be invoked on account of lack of enquiry by A.O. The ITAT Bench consisting of Vikram Singh Yadav, the Accountant Member, along with Sudhanshu Srivastava, the Judicial Member observed as follows: “In our considered opinion, it is a case where the AO did not make any inquiry vis-a-vis the share premium and simply accepted the details filed by the assessee and, thus, the AO had failed miserably to carry out the duty cast upon him. Therefore, it is our considered view that it is a case of complete lack of inquiry by the AO.And hence we hold that the Ld. PCIT was absolutely correct in invoking the revisionary powers u/s 263 of the Act.”
Shri Trivikram Singh Toor vs Pr.CIT – 2022 TAXSCAN (ITAT) 1680
The Chandigarh Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the revisionary order entirely on presumptions, conjectures and surmises is not valid. On a careful consideration of the entire facts, and circumstances and considering the evidence which was filed before the AO and the PCIT, the ITAT bench comprise of Smt Diva Singh, judicial member & Shri Vikram Singh Yadav, accountant member observed that the Revisionary order in the peculiar facts and circumstances proceeds entirely on presumptions, conjectures and surmises. The impugned order was quashed by the ITAT and the appeal of the assessee was allowed.
DCIT vs Gopuram Developers – 2022 TAXSCAN (ITAT) 1697
The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the percentage completion method of Revenue recognition practised by Builder is acceptable as per Accounting Standards. The ITAT bench consists of Shri Om Prakash Kant (Accountant Member) & Smt. Kavitha Rajagopal, (Judicial Member) observed that the appellant is following the mercantile system of accounting and the appellant is recognizing the revenue based onthe percentage competition method since the inception of the firm. The method of revenue recognition adopted by the appellant is as per the Accounting Standards. Both themethodof Project Completion Method and Percentage Completion Methodare being followed in the cases of Real Estate Development / Builders.
L&T Infra Debt Fund Limited vs CIT – 2022 TAXSCAN (ITAT) 1700
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), in a recent decision held that theallowing income tax claim without proper examination by the AO amounts to erroneous assessment and therefore, the CIT can invoke revisional jurisdiction under section 263 of Income Tax Act, 1961. The Tribunal bench comprising Shri B R Bhaskaran (Accountant Member) and Mr. Pawan Kumar Jadale (Judicial Member) upheld the revisional order by Commissioner of Income Tax, observing that the assessment order passed by the assessing officer without application of mind is erroneous and the exception so allowed without examining the claim would be prejudicial to the interest of revenue. While observing the scope of revision proceeding the tribunal referred the observation made in Malabar industrial co. Ltd v CIT made by the SC. The CIT was justified in setting aside the order of assessing officer.
Anchor Health & Beauty Care Pvt Ltd vs Deputy Commissioner of Income-tax – 2022 TAXSCAN (ITAT) 1699
The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench has held that professional fee paid to Earnest & Young deductible as business expenditure. After considering the contetion of the both side the division bench of Tribunal compraising Smt. Kavitha Rajagopal (Judicial Member) and Shri B.R Baskaran (Accountant Member) observed that “expenses incurred by the assessee as professional fee to Earnest & Young is in the nature of revenue expenditure as opposed to capital expenditure”.
Govind Ramprashad Baheti vs ITO – 2022 TAXSCAN (ITAT) 1698
The Income Tax Appellate Tribunal (ITAT), Pune Bench held that the Overwhelming Genuine Business Transactions cannot be Disallowed under section 40(3) Income Tax Act 1961 where the overwhelming genuineness of assesse is proved. The Tribunal comprising of Shri S. S. Godra (Judicial member) and Shri G. D. Padmahshali, (Accountant member) noticed the decision of, high court in Tele Services vs. ITO [2014] 366 ITR 122 (Guj.) which held that the overwhelming genuine business transactions are nowhere sought to be covered u/s 40A (3) of the Act. The Tribunal also found that the transactions made by the assesse are genuine, the identity of the receiver is established beyond doubt and the payment is made in the bank account of the payee carrying similar agricultural product selling business and overwhelming business expediency. According to the Tribunal, since the genuineness of the seller is not doubted, the provisions of section 40A (3) could not be made applicable to the facts of the instant case.
Sathyanarayanan Radhika, Vs Asst. Commissioner of Income Tax, – 2022 TAXSCAN (ITAT) 1416
The Chennai Bench of Income Tax Appellate Tribunal has held in favour of the appellant-assessee, Sathyanarayanan Radhika that, the deduction of interest on loan amount taken by him in the previous year cannot be treated as unexplained and reassessed. The Bench comprising Mahavir Singh and Manoj Kumar Aggarwal observed that, “the loan amount of Rs.1.25 Crores was taken in the previous year from Shri R. Sathyanarayanan and the balance amount of Rs.17,00,690/- was interest on the loan amount and this cannot be treated as unexplained and moreover, there is no failure of the provisions of Section 269SS of the Income Tax Act, 1961 because the assessee has not received any cash loan.” and held that “ we quash the revision order and allow the appeal of the assessee.”
M/s. Express Industrial Services Pvt. Ltd vs ACIT – 2022 TAXSCAN (ITAT) 1701
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the travelling expenses being incurred wholly and exclusively for business can be allowed as a deduction. The ITAT bench of Shri Amit Shukla, judicial member & Shri M Balaganesh, accountant member observed that the assessee had incurred travelling expenses to meet various customers and to go along with various customers coming from various parts of the country for evaluation of mining prospects. It was held by the bench that the entire travelling expenses were incurred wholly and exclusively for the business of the assessee only and there cannot be any Adhoc disallowance towards the same. Further directed to delete the same.
M/s. Hewlett Packard (India) Software Operation Pvt. Ltd vs Deputy Commissioner of Income-tax – 2022 TAXSCAN (ITAT) 1702
While granting relief to M/s. Hewlett Packard (India) Software Operation Pvt Ltd (HP) the Bangalore Bench of the Income Tax Appellate Tribunal (ITAT), held that Employee Stock Option Plan (ESOP)paid to Overseas Ultimate Holding Company are allowable as expenditure. A Bench consisting of N V Vasudevan, Vice President and Chandra Poojari, Accountant Member observed that “The ESOP expenditure incurred is a compensation/incentive to the employee and has direct nexus with his/her employment. Such compensation to the employees in the form of ESOP are included in salary of the employees under Section 17 of the Income Tax Act, 1961. Therefore, such expenses are incurred for the purposes of business and hence allowable expenditure under section 37 of the Income Tax Act in the hands of the employer i.e. the Company.”
Yaminiben Sandkumar Bhatt vs DCIT – 2022 TAXSCAN (ITAT) 1705
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that Income Tax Addition for Cash deposits is not valid when certificates from the Bank denies the existence of Bank accounts. The ITAT restored both cases to the AO to first establishthe basic issue of the existence of actual bank accounts of the assessesand thereafter proceed to determine the issue of cash deposits whether explained or not, bythe law. The appeals of the assessees are allowed forstatistical purposes.
Sh. Tejinder Singh vs DCIT – 2022 TAXSCAN (ITAT) 1704
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has held that the deduction of expenditure u/s 57(iii) of the Income Tax Act,1961 can be for negative or positive income. The ITAT bench of Shri Sudhanshu Srivastava, judicial member & Shri Vikram Singh Yadav, accountant member observed that depreciation, interest on loan, repairs and maintenance expenses as well as insurance expenses were directly relatable to the earning of lease rental which was shown by the assessee under ‘income from other sources’.
Seema Promoters and Builders Pvt. Ltd vs Dy.CIT – 2022 TAXSCAN (ITAT) 1703
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), deleted income tax addition and held that no application of Sec 43CA of the Income Tax Act, 1961 on absence of element of transfer. A Bench consisting of Shrivikas Ashwathy, Judicial Member and Gagan Goyal, Accountant Member held that “In view of the above action of AO in applying sec 43CA of the Income Tax Act. On the given facts of case was unlawful. AO and CIT(A) committed a mistake by ignoring the facts of the case and provisions of other civil laws applicable in the present case. In our considered opinion assessee being party of cancellation deed, do not tantamount to entering the transaction of sale /transfer. In absence of element of transfer sec 43CA of the Income Tax Act can’t be applied.”
CALCUTTA UROLOGY RESEARCH CENTRE PVT. LTD vs COMMISSIONER OF INCOME TAX – 2022 TAXSCAN (HC) 893
The Calcutta High Court (HC) directed AO to calculate the profit estimated in its entirety when AO failed to follow the direction by ITAT to estimate net profit. As could be seen from the giving effect to the order passed by the assessing officer dated 18th March 2014, the assessing officer had given effect to the order of the tribunal by understanding as if the tribunal directed the net profit estimation only in respect of the disclosed income. The tribunal having clarified that the profit has to be estimated in its entirety, the view taken by the assessing office in its order dated 18th March 2014 is incorrect. The appeal filed by the assessee was allowed and the assessing officer is directed to apply the net profit rate as ordered by the tribunal in its order dated 17th January 2014 therein to the entire receipts of the appellant/assessee both disclosed and undisclosed
DCIT vs Serum Institute of India Ltd. – 2022 TAXSCAN (ITAT) 1574
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) deleted proceedings against Serum Institute of India by upholding the order of CIT(A) which deletes the disallowance as the AO failed to record the satisfaction envisaged under section 14A(2) of the Income Tax Act,1961. The Tribunal held that the disallowance of Rs.7,81,83,703/- as made by the AO was deleted by the CIT(A) is correct, as the AO had failed to record the satisfaction as envisaged u/s 14A(2) of the act. The appeal for the Revenue got dismissed.
M/s. Arm Embedded Technologies Pvt. Ltd vs Deputy Commissioner of Income Tax – 2022 TAXSCAN (ITAT) 1434
The Income Tax Appellate Tribunal ( ITAT ), Bangalore, has recently while deciding an appeal filed before it by an assessee, held that net profit margin arising in comparable uncontrolled transactions should be adjusted to take into account the differences, if any, between the international transaction and the comparable uncontrolled transactions which could materially affect the amount of net profit margin in the open market.
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