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 26 to December 2,2022

N.C. Rajagopal & Co. vs Deputy Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1748

The Chennai bench of the ITAT has held that the TDS credit should be allowed when the assessee has offered the income relating to TDS under the provisions of the Income Tax Act, 1961.

“The assessee claims that income relatingto said TDS has been offered to tax for the impugned assessment year. If, the claim of the assessee is correct then the credit for TDS should be allowed on the basis of claim of the assessee including TDS brought forward from earlier financial years. The fact needs to be verified. Therefore, we set aside the issue to the file of the AO and direct the Assessing Officer to verify the claim of the assessee and in case the AO finds that income relating to said TDS has been offered to tax for the impugned assessment year, then the credit for TDS also needs to be allowed as claimed by the assessee,” the Tribunal observed.

Shri Pujala Mahesh Babu, Vs A.C.I.T. Central Circle-2(3) - 2022 TAXSCAN (ITAT) 1749

The Mumbai Bench of the ITAT has held that the Income Tax Addition under section 68 of the Income Tax Act,1961 is not valid in the absence of any books of account. Further observed that when the assessee is undertaking certain transactions with one Shri T. Jangaiah and he was engaged in the business of real estate, he must have earned some income. Since the total amount of receipts including the cheque receipt is amounting to Rs.51,80,000/- the profit @ 10% of the addition of Rs.51,80,000/- as against Rs.51,80,000/- made by the Assessing Officer and sustained by the CIT (A) was upheld while partly allowing the appeal.

Shri Marghoob Alam vs C.I.T. - 2022 TAXSCAN (ITAT) 1032

While considering a bunch of appeals the Lucknow bench of the ITAT held that the addition of unexplained cash based on third-party statements without allowing cross-examination is not sustainable. Shri A D Jain, vice president and Shri T S Kapoor, accountant member observed that additions based on statements of third parties which has not been made available to the assessees for cross-examination despite the assessees’ specific request for the same, are not justified and held assessee as eligible for exemption of Long Term Capital Gain u/s 10(38) of the Act. The appeal of the assessee was partly allowed.

M/s.Trivitron Healthcare Pvt. Ltd vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1750

The Chennai Bench of the ITAT has held that an Amalgamated company can claim depreciation on goodwill and there is no restriction under section  32(1)(5) of the Income Tax Act,1961. The ITAT bench of Shri Mahavir Singh, vice president and Shri G Manjunatha, accountant member viewed that the assessee has rightly claimed depreciation on goodwill arising out of amalgamation, because, the 5th proviso to sec.32(1) of the Income Tax Act , has no application to the facts of the case.  While allowing the appeal, the ITAT quashed the order of PCIT. The Appellant was represented by Mr S.Sridhar and the respondent was represented by Mr M.Rajan.

M/s. Vodafone Idea Ltd vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1751

As a relief to Vodafone Idea ltd, the Mumbai Bench of the ITAT has held that the Sale of prepaid sim cards/recharge vouchers to distributors cannot be treated as commission to attract Section 194H of the Income Tax Act,1961 and no tax deductible at source(TDS).

The ITAT bench consisting of Shri Vikas Awasthy, judicial member & Shri M Balaganesh, accountant member held that the sale of prepaid sim cards/recharge vouchers by the assessee to distributors cannot be treated as commission/discount to attract the provisions of section 194H of the Act and there cannot be any obligation on the part of the assessee to deduct tax at source. Consequentially there cannot be any disallowance u/s 40(a)(ia) of the Act.  The appeal was allowed.

Conference of Religious India vs Ward Exemption 1 (3) - 2022 TAXSCAN (ITAT) 1753

The Delhi Bench of the ITAT has held that the exemption under section 11 of the Income Tax Act,1961 is allowable when a Income Tax Return is filed within the specified time limit of subsection 139 of the act. The Coram of the ITAT bench consists of Sh. N K Billaiya, accountant member held that the CIT(A) erred in misinterpreting the aforementioned circular andto that extent the order of the CIT(A) is erroneous and deserves to be set aside if the grievance of the assessee is allowed.

Eduwizards Info solutions P. Ltd vs ACIT Circle-8(1) - 2022 TAXSCAN (ITAT) 1755

The Delhi Bench of the ITAT has held that the Addition of income u/s 56(2)(viib) read with Rule 11UA (2) of the Income Tax Rules without verifying Valuation report is not permissible. The Coram consists of Shri Shamim Yahya, accountant member and Shri Yogesh Kumar U S, judicial member observed that the A.O. and the CIT(A) have rejected the valuation report in threshold without verifying. The ITAT viewed that the Lower Authorities ought to have considered the valuation report of the Chartered Accountant submitted by the assessee and should have verified whether the said valuation report is in conformity with Section 56(2) (viib) of the Act read with Rule 11UA (2) of the Income Tax Rules or not.

SaharshLaxmiratanDaga vs ACIT - 2022 TAXSCAN (ITAT) 1752

The Mumbai Bench of the ITAT has held that an appeal filed electronically within the stipulated time can’t be rejected by the Commissioner of Income Tax  (CIT(A)). A Coram of ITAT bench comprising of Shri Pramod Kumar, vice president and Sh. Anikesh Banerjee, a judicial member observed that the assessee was not negligent in filing the appeal against the order of the AO as the mode of filing was manual, and the department has accepted the said appeal. After that, the assessee filed this appeal electronically without losing any time.

M/s. Indogulf Cropsciences Ltd vs ACIT - 2022 TAXSCAN (ITAT) 1754

The Delhi Bench of the ITAT has held that the receipt not like income cannot be included in book profit for computation u/s 115JB of the Income Tax Act,1961 and the interest in power subsidy has to be excluded.

In light of various precedents, the ITAT bench consists of Sh. Anil Chaturvedi, Accountant Member and Sh. Anubhav Sharma, Judicial Memberheld that the Appellant company has rightly reduced Capital Receipts of the nature of excise refund and interest subsidy for working out Book Profits. The appeal was allowed and the AO was directed to re-compute the income.

Bholanath Precision Engineering Pvt. Ltd vs Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1756

The Mumbai Bench of the ITAT has held that for claiming reduction under section 115BAA of Income Tax Act the domestic companies should file form 10-IC within the prescribed time. Furthermore the bench observed that section 115BAA was introduced in the Act by the Taxation Laws (Amendment) Act, 2019, with effect from 01/04/2020.For getting reduction in corporate tax the domestic companies should file Form 10-IC. Therefore the due date for filing the return of income was extended to 15/02/2021, and the return of income was filed by the assessee on 15/01/2021. However, the assessee did not file Form 10–IC before the due date of filing the return of income hence assessee will not get benefit under section 115BAA of Act.

Sejal bhai G. Patel vs ITO - 2022 TAXSCAN (ITAT) 1124

The ITAT, Surat bench consisting of Pawan Singh, Judicial Member and A L Saini, Accountant Member held that there is violation of natural justice principles on non-examination of documents and evidences by the Assessing Officer (AO).The Tribunal observed that “The assessee has furnished the relevant documents and evidences to claim exemption under section 54B and 54F of the Act, however, the same have not been examined by the assessing officer, in right perspective, therefore we are of the view that assessee should be given one more opportunity to plead its case before the assessing officer. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, we deem it fit and proper to set aside the order of the CIT(A) and remit the matter back to the file of the assessing officer to adjudicate the issue afresh on merits.”

Vodafone Idea Ltd. vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1758

The Mumbai Bench of the ITAT has held that Club entrance fees paid by Vodafone Idea Ltd ( Vi )amount to revenue expenditure u/s.37(1) of the Income Tax Act,1961. The ITAT bench consisting of Shri Vikas Awasthy, judicial member & Shri M Balaganesh, accountant member observed that the assessee paid for membership of various clubs to enable the Senior Executives to socialise and develop contacts with various persons for promoting the assessee’s business.

M/s. P.R. Gold and Silver Craft vs The DCIT - 2022 TAXSCAN (ITAT) 1759

The ITAT of Chennai Bench has recently held in favour of the assessee engaged in manufacture of gold and silver jewellery that, the issue of wastage whether it is 0.5% to 1% as estimated by Revenue or it is 4.5% to 6% as claimed by assessee, it neither involves any payment or credit of such sum by way of cash, issue of cheque or draft or by any other mode and hence does not liable to deduct tax (TDS) under Section 194C of the Income Tax Act, 1961.

The Tribunal bench of Vice President Mahavir Singh and Accountant Member Dipak R Ripote observed that, “In case, no payment is debited or credited to respective parties account, then such payment cannot be considered within the ambit of section 194C or any other TDS provisions. In this case, the assessee has neither debited making charges into profit and loss account nor credit any amount to the respective parties account. Therefore, when no payment is made or amount is credited to respective parties account, then question of application of provisions of Section 194C does not arise at all.” from the decision of the Co-Ordinate Bench in the case of Siva Valli Vilas Jewellers Pvt. Ltd.

ITO vs Dr. Satish Natwarlal Shah - 2022 TAXSCAN (ITAT) 1761

While delivering an assessee-friendly ruling, the ITAT, Ahmedabad bench has held that there is no occasion required for “gift” under the Income Tax Act, 1961. A two-Member bench of the Tribunal comprising of Ms. Annapurna Gupta, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member observed that “Respectfully following the above judgments, the assessee received the gift from his own brother who is a Non-Resident from the year 1966. The allotment of shares were made under NRI quota to the assessee’s brother in USA. Thus the source and genuineness is being proved beyond doubt, the assessee having received the above gifts from his brother, who is as per the Explanation 2 to Section 56(2)(v) of the Act, there need not be any “occasion” for receipt of gift by the assessee.”

Vodafone Idea Ltd. vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1758

In a significant ruling in the case of Vodafone Idea ltd, the Mumbai Bench of the ITAT has held that the Revenue sharing license fee paid fixedly to the department of telecommunication is allowable as a deduction. It was observed that the assessee had claimed this deduction on a hybrid model, because, for one circle which was taken over by the assessee from another company, that company was claiming a deduction on an amortisation basis u/s.35ABB of the Act. This was continued by the assessee even after the takeover of the said company in respect of that one circle alone. In respect of other circles operated by the assessee, the assessee had been consistently claiming deduction as revenue expenditure u/s.37(1) of the Act.

Vodafone Idea Ltd. vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1758

As a relief to Vodafone Idea ltd, the Mumbai Bench of the ITAT has held that the deduction of discount on the Employee Stock Option Scheme ( ESOP ) over the vesting period by the Securities and Exchange Board of India ( SEBI ) Guidelines is allowable. The ITAT bench consisting of Shri Vikas Awasthy, a judicial member & Shri M Balaganesh, an accountant member observed that the entire amortisation of ESOP expenditure based on intrinsic value has been made by SEBI guidelines on the ESOP segment. The said guidelines prescribed to amortise the ESOP cost over the vesting period of the options as per Schedule J of the guidelines.

M/s.Trivitron Healthcare Pvt. Ltd vs The Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1757

The Chennai Bench of the ITAT has held that the provision for Warranty Expenses is ascertained liability and is allow able as business expenditure. Further observed that during the course of assessment proceedings, the AO has issued a specific show cause notice on the issue and the assessee vide letter dated 30.11.2016 filed a detailed reply and explained how warranty provision is allowable expenses.

Vodafone Idea Ltd. vs Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1758

As a relief to Vodafone Idea ltd, the Mumbai Bench of the ITAT has held that Foreign Exchange Gain on the acquisition of fixed assets is allowable as deduction as per Section 43A of the Income Tax Act,1961. The ITAT bench consisting of Shri Vikas Awasthy, judicial member & Shri M Balaganesh, accountant member observed that Rs.519.65 million representing foreign exchange gain relatable to the acquisition of fixed assets seem to have been adjusted with the cost of fixed assets as per Section 43A of the Act.

Sanjay Gupta vs ITO - 2022 TAXSCAN (ITAT) 1764

The ITAT of Delhi bench has held that the proceedings under the Insolvency and Bankruptcy Code(IBC) against the employer-Company cannot be a ground to deny TDS credit to the assessee. Noting that the CIT(A) failed to appreciate that there is no provision under law for creating such a liability upon any individual by attributing malice upon him for being party to the default in deposit of TDS, the Tribunal held that “the Appellant was for all purposes merely an employee who was being paid salary by the company which has a distinct and independent identity to its employees. Ld. Counsel appearing for the assessee has also established by an admitted pay slip for the December, 2015 available on page no. 62 of the paper book that in fact the assessee had left the services working for 30 days in December, 2015. Thus, at the time of end of relevant FY, the assessee was not even in position of any nature qua responsibility to deposit the TDS on behalf of the assessee in default.”

ACIT vs Aarti International Ltd. - 2022 TAXSCAN (ITAT) 1763

The Chandigarh Bench of ITAT, has held that the subsidy received under TUF Scheme is a capital receipt and allowable as a deduction. A Coram of ITAT bench consisting of Shri Sudhanshu Srivastava, JM & Shri Vikram Singh Yadav, AM observed that the TUFS subsidy received by the assessee company from the Ministry of Textiles, Government of India can be treated as capital receipt and can reduce the amount of TUFS subsidy received during the year from total assessed income.

Smt.K.Gomathi vs The Dy. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1765

The ITAT Bench at Chennai has recently held that, the claim of the assessee, K Gomati that Rs. 39 Lakhs was received as gift from husband during the assessment proceedings was merely an afterthought of search. Subsequently, the addition made by the Assessing Officer (AO) was upheld.

Janata Urban Co-op. Bank Ltd. vs Asstt. - 2022 TAXSCAN (ITAT) 1760

The Pune Bench of the ITAT refuses to condones delay of 1315 days in filing appeal in the absence of reasonable cause. The Tribunal observed that the assessee failed to show reasonable cause which prevented the assessee from filing the appeal in time.  The delay of 1315 days is not condoned and the appeal of the assessee was dismissed

Bholanath Precision Engineering Pvt. Ltd vs Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1769

The Mumbai Bench of the ITAT has held that for claiming reduction under section 115BAA of Income Tax Act the domestic companies should file form 10-IC within the prescribed time. Furthermore the bench observed that section 115BAA was introduced in the Act by the Taxation Laws (Amendment) Act, 2019, with effect from 01/04/2020.For getting reduction in corporate tax the domestic companies should file Form 10-IC.Therefor the due date for filing the return of income was extended to 15/02/2021, and the return of income was filed by the assessee on 15/01/2021. However, the assessee did not file Form 10–IC before the due date of filing the return of income hence assessee will not get benefit under section 115BAA of Act.

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