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 December 3 to December 9,2022

The Deputy Commissioner of Income Tax vs M/s. R. Muniraju (HUF) -2022 TAXSCAN (ITAT) 1771

The ITAT, Bangalore has confirmed the addition of CIT(A) and held that capital gain is to be taxed from the year in which the Joint development agreement (JDA) was entered. The Bench consisting of Shri Goerge Goerge K (judicial member) and Shrimathi Pathmathy (accountant member) arrived at findings that the developer had acted in furtherance of the contract, which fulfilled the condition for sec 2(47)(v) of the Income Tax Act 1961 r.w. u/.53A of the Transfer of Property act. The tribunal dismissed the appeal filed by the assessee upholding the order of CIT(A) that capital gain is to be taxed from the date on which the JDA was entered. The tribunal also dismissed the appeal filed by revenue to increase the tax rate to compute capital gain from JDA.

Abhishek Ashok Lohade vs ITO - 2022 TAXSCAN (ITAT) 1768

The ITAT of Pune Bench recently in an appeal held that income tax exemption cannot be granted since share transactions are found as sham and used as a device to make undisclosed Income accountable. After the hearing and perusal of material facts by the Division bench of the Pune ITAT,compraising Sri.  S. S. Viswanethra Ravi (Judicial Member) and Shri Inturi Rama Rao, (Accountant Member) the assessee’s appeal was dismissed and it was held that, “the transaction of purchase and sale of shares of SRK Industries under consideration before us is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account.”

Ishwar Singh Ramchandra Jangid vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1766

The ITAT of Ahmedabad Bench while condoning the delay petition filed by the assessee held that the professional lapse of tax consultant cannot be attributed to the assessee. The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench of Judicial Member Suchitra Kamble condoned the delay observing that assessee’s consultant neither took proper measures for filing the appeal nor appeared before the CIT(A), and held that professional lapse could not be attributed to the assessee. The Tribunal also held that the opportunity of being heard which is an integral part of natural justice should be granted to the assessee.

Roop Narayan Pandey vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1767

The Allahabad bench of ITAT directed the appeal of assesse shri Roop Narayan Pandey for re-adjudication on the basis of proof of misuse of bank account of assesse. The single bench tribunal of Allahabad comprising Shri Vijay Pal Rao held that contention of CIT(A) was right but as the facts, brought to the notice of the Tribunal were relevant and very crucial for deciding the issue. Accordingly, the impugned order was recalled to the extent of deciding certain grounds mentioned by the assesse. The appeal of the assessee was directed to be re-fixed for fresh hearing and adjudication, and application was allowed by the tribunal.

DCIT vs M/s. ETA General Private Limited - 2022 TAXSCAN (ITAT) 1770

The Chennai Bench of ITAT has held that Section 40A(2) of the Income Tax Act 1961, would not be applicable to trade discounts given in sales invoices. The Chennai bench of Income Tax Appellate Tribunal of judicial members Durga Rao and Manoj Kumar Agarwal held that Section 40A(2) of the Income Tax Act would not be applicable to the assessee as the trade discount had been given in the sales invoices itself.

Smt. Rashidaben Taher Morawala Badri Mohalla vsThe DCIT - 2022 TAXSCAN (ITAT) 1772

A Division Bench of the ITAT, Ahmedabad quashed assessment order passed in violation of time limit under Section 153(1) of the Income Tax Act, 1961. The Bench consisting of Waseem Ahmed, Accountant Member and T.R. Senthil Kumar, Judicial Member observed that “The AO has wrongly referred the valuation of the immovable property under section 142A of the Act which is not provided under the provisions of the Income Tax Act. However, after receipt of the Valuation Report from the DVO, the A.O. passed the assessment order which is clearly barred by limitation which is not sustainable in law.”

Deep Multiplex Pvt. Ltd. vs ITO - 2022 TAXSCAN (ITAT) 1773

The ITAT of Ahmedabad Bench held that Income from lease charges on multiplex is business income. A Bench comprising Pramod M Jagtap, Vice President and Suchitra Kamble, Judicial Member observed that “The assessee consistently followed that the income derived from the lease charges on the multiplex is a business income of the assessee in earlier years as well as in the present year. In light of the decision of the Tribunal in assessee’s own case for A.Y. 2012-13 the issue on merit has been decided in favour of the assessee, therefore, we held that it was a business exploitation by the assessee in respect of lease charges on multiplexes which tantamount to business income.”

Gujarat Mineral Development Corporation Limited vs The Dy.CIT Circle-2(1)(1) Ahmedabad - 2022 TAXSCAN (ITAT) 1774

The ITAT of  Ahmedabad Bench held that Income Tax Deduction u/s 43B of Income Tax Act, 1961 not applicable to Mine Closure Fund. A Bench comprising Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “The observation of the CIT(A) that the said Mining Closure Funds is not in the nature of tax, duty, cess, fee etc. as per Section 43B of the Income Tax Act, appears to be justifiable as the guideline of Ministry of Coal has given the procedure and time period for the closure expenses to be incurred by the coal mine owners who are operating coal mines without the approval of any Mine Closure Plan. Thus, Section 43B claim is not applicable in assessee’s case.”

Smt. Anita Jain vs The ACIT - 2022 TAXSCAN (ITAT) 879

The ITAT of Jaipur bench has deleted an addition treating LIC premium as unexplained cash deposit by accepting the rough notings by the assessee as actual transactions. The Bench consisting of Sandeep Gosain, Judicial Member and Dr Meetha Lal Meena Accountant Member held that “Accordingly, having regard to accepted facts for AY 2009-10 concerning cash balances available with the appellants and the absence of any substantive evidence brought on record by the AO/ CIT(A) that the rough notings relied upon were actual transactions carried out by theappellants, we delete the additions on account of LIC Premia treated as unexplained investment.”

Balaji Auto Enterprises Mysore Pvt. Ltd.vs The Asst. Commissioner of Income tax - 2022 TAXSCAN (ITAT) 1775

The Bangalore bench of the ITAT has deleted a penalty under section 271DA of the Income Tax Act, 1961 by holding that the cash receipt of less than two lakh rupees from different persons on different dates would not attract section 269ST of the Act. After analyzing the provisions of section 269ST of the Income Tax Act, 1961, the Tribunal held that “as per the above section, it is clear that the assessee’s case does not fall under this section. Hence, penalty cannot be levied.”

Silver Spark Apparel Ltd vs Dy.CIT - 2022 TAXSCAN (ITAT) 1778

The ITAT company is an inanimate person and there cannot be anything “personal” and therefore, allowed depreciation claim by the assessee-company in respect of a luxury sports car by the director of the Company under section 32 of the Income Tax Act, 1961. Allowing the appeal filed by the assessee, the Tribunal held that “there was one more aspect of the matter which required to be considered. The assessee, which was a private limited company, was a distinct assessable entity as per the definition of ‘person’ under section 2(31) of the Income Tax Act. Therefore, it could not be stated that when the vehicles were used by the directors ‘even if they were personally used by the directors’, the vehicles were personally used by the company, because a limited company by its very nature cannot have any ‘personal use’. The limited company is an inanimate person and there cannot be anything personal about such an entity. The view was supported by the provision of section 40(c) and section 40A (5) of the Act. Once the expenditure in question was in terms as provided in sections 309 and 198 of the Companies Act, there could not be any ‘non-business’ purpose insofar as the assessee-company was concerned.”

Devki Nandan Bindal vs ITO - 2022 TAXSCAN (ITAT) 1776

The ITAT of Delhi Bench recently in an appeal held that penalty would not be imposed under Section 44A and 44B Income Tax Act, 1961 if the commission receipt of assessee were below the threshold limit of the relevant assessment year. The Division bench of ITAT Delhi comprising Pradip Kumar Kedia, Accountant Member, and Diva Singh, Judicial Member allowed the appeal and held that “The commission being turnover/receipt for 44AA and 44AB, which is far below the threshold limit prescribed for the relevant assessment year, the assessee cannot be treated as assessee in default in terms of S. 271A and S. 271B of the Act”.

Madhu Velayudhan vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1777

The ITAT of Hyderabad bench dismissed the appeal filed by the assessee and held that the production and sale of the tissue culture plant is a business activity, not an agriculture activity. Lalite Kumar (Judicial Member) and R.K. Panda (Accountant Member) disallowed the appeal filed by the assessee and held that, “the order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Income Tax Act.”

BBC World Distribution Ltd. vs ADIT - 2022 TAXSCAN (ITAT) 1779

The Delhi Bench of ITAT has recently ruled that BBC World Distribution Limited (BBCWD) is not liable to income tax for distribution of channels in India. The Tribunal bench of G.S Pannu (President) and SakjithDey (Judicial Member) held that, BWIPL had only acquired broadcasting reproduction right as defined under Section 37 of the Copyright Act 1957 and broadcasting reproduction right was distinct and separate from copyright as defined under Section 14 of the Copyright Act. The bench also held that the distribution revenue received by the assessee could not be termed as royalty referring to DDIT Vs. SET India Pvt. Ltd and further observed that the distribution right of a channel was purely  a commercial right and was also distinct from the right to use the copyright. The Tribunal thus allowed the appeal and set aside the addition made by the assessing officer.

Corrtech International Pvt. Ltd vs Assistant Commissioner of Income Tax -2022 TAXSCAN (ITAT) 1781

The Ahmadabad Bench of the ITAT, deleted penalty as there was payment of TDS with interest to ensure no loss to revenue. A Division Bench comprising Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “The assessee has deposited TDS along with interest. Thus, it has compensated the Government for late payment of TDS which, in turn, has ensured that there is no loss to the revenue. This shows that there is no mala fide intention on the part of the assessee in filing TDS returns belatedly. Therefore, the CIT(A) was not right in confirming the penalty and it has to be deleted.”

Sanjiv Kumar Mittal vs Principal Commissioner of Income Tax PCIT -  2022 TAXSCAN (ITAT) 1783

A Division Bench of the ITAT, Delhi held that Section 115BBE of Income Tax Act, 1961 not to be triggered by modifying premise of revisional directions. The Bench of Narender Kumar Choudhry, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that “We thus find traction in the contention that where Section 68 of the Income Tax Act as alleged and invoked by the Pr CIT is not applicable, Section 115BBE of the Income Tax Act could not be triggered by modifying the premise of revisional directions. The revisional action of the PrCIT thus failed on this count.”

Sarva Haryana Gramin Bank vs ACIT - 2022 TAXSCAN (ITAT) 1782

The ITAT, New Delhi Bench held that No disallowance under Section 14A of the Income Tax Act, 1961 on tax free bonds. A Bench consisting of Shamim Yahya, Accountant Member and Anubhav Sharma, Judicial Member placed reliance on the judgment in Maxopp Investment Ltd, wherein it was held that “The proportionate disallowance of interest is not warranted, under Section 14A of Income Tax Act for investments made in tax free bonds or securities which yield tax free dividend and interest to Assessee Banks in those situations where, interest free own funds available with the Assessee, exceeded their investments.”

Dineshkumar R. Tulsyan vs I.T.O - 2022 TAXSCAN (ITAT) 1784

The Pune bench of ITAT has held that one percentage disallowance is reasonable on fraudulent Capital gain obtained by manipulating stock broker. A Coram of ITAT bench consisting of Shri Partha Sarathi Chaudhury, JM and Dr Dipak P Ripote, AM  observed that transactions involving money, paid to entry provider for fraudulent capital gains and disallowance @ 1% are held to be reasonable and upheld the order of CIT(A).  The appeal of the assessee was dismissed.

Shri P.S. Jayaraman vs ACIT - 2022 TAXSCAN (ITAT) 1788

The ITAT, Chennai recently held that mere making of claim would not be attracted Income Tax Penalty. The Division Bench Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member allowed the appeal filed by the assessee, held that “Mere making of wrong claim do not amount to furnishing of inaccurate particulars of income. In the absence of finding that any details supplied by the assessee is incorrect or false, penalty could not be levied”

Bulldog Media & Entertainment Pvt. Ltd vs CIT - 2022 TAXSCAN (ITAT) 1789

The Mumbai Bench of ITAT has allowed the Tax Deducted at Source (TDS) credit and observed that the Assessee is not liable for the noncompliance of the deductor. The Tribunal Bench of Aby T Varkey (Judicial Member) and Gagan Goyal (Accountant Member) allowed the full amount of TDS claim observing that the assessee had declared true and fair income and TDS had been denied because of the non-compliance of the deductor. The bench also held that the assessee could not be made liable for the default of deductor for late payment.

M/s Induslnd Bank Ltd vs ACIT - 2022 TAXSCAN (ITAT) 1790

The Mumbai bench of the ITAT, while allowing relief to IndusInd Bank has held that the bad debts arising from the credit card business shall be allowable as business loss, deductible under section 36(1)(vii) of the Income Tax Act, 1961. After perusing the documents, the ITAT observed that “the bad debts arising from credit card business is part and parcel of total bad debts reflected by the assessee. Hence, we have no hesitation to hold that bad debts arising from credit card business would be part and parcel of loss arising in the course of banking business and hence liable as deduction u/s.36(1)(vii) of the Act.”

Bistro Hospitality Pvt. Ltd vs Addl. Commissioner of Income-tax -  2022 TAXSCAN (ITAT) 1787

The ITAT of Delhi Bench deleted the penalty as incorrect deduction does not amount to furnishing inaccurate particulars under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal bench of Shamim Yahiya (Accountant Member) and Narendhar Kumar Choudhari (Judicial Member) held that the impugned order was not only based on logical reasoning but also based on the peculiar facts of the case. The tribunal also held that the disallowance on rejection of consumption claims and capital expenses respectively for furnishing inaccurate particulars which resulted in imposition of penalty could not be justified under Section 271(1)(c) of the Income Tax Act. The bench dismissed both the appeal and upheld the deletion made by the CIT(A).

Nagase And Company Ltd. vs Asstt. Director of Income Tax - 2022 TAXSCAN (ITAT) 1792

The Mumbai bench of the ITAT has held that the Liaison office doesn’t constitute PE in India and Income tax addition is not permissible. A Coram of Shri Prashant Maharashi, AM and Shri Sandeep Singh Karhail, JMobserved that nothing has been brought on record to suggest that the RBI has found activities of the liaison office as being non-compliant with the terms and conditions of its permission. It was observed that neither statement of the employees of the liaison office nor the agents/customers in India was recorded nor any information under section 133 (6) of the Act was sought by the AO to support its conclusion that the liaison office constitutes PE of the assessee in India. The Tribunal held that the liaison office in Mumbai does not constitute the PE of the assessee in India under the provisions of DTAA and allowed the appeal.

PKF Sridhar & Santhanam LLP vs Deputy Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1793

The Chennai bench of the ITAT has held that TDS Credit is allowable when Income is offered to tax relating to said TDS. A Coram of  Shri V Durga Rao, JM and Shri G Manjunatha, AM held that if the claim of the assessee is correct then the credit for TDS should be allowed based onthe claim of the assessee including TDS brought forward from earlier financial years.  The fact needs to be verified.

Shri Pujala Mahesh Babu vs A.C.I.T. Central Circle-2(3) - 2022 TAXSCAN (ITAT) 1797

The Hyderabad Bench of the ITAT has held that income Addition on unexplained Expenditure is valid when assessee fails to explain the source of expenditure. The ITAT bench of Shri R.K. Panda, Accountant Member and Shri K. Narasimha Chary, Judicial Memberuphold the order of the learned CIT (A) on this issue by sustaining the addition made by the Assessing Officer.  It was directed by the Assessing Officer to compute the final addition on account of unexplained receipt and give set off of the above addition if any, the surplus is available.  Needless to say that the Assessing Officer shall give the due opportunity of being heard to the assessee while computing the final addition.  The appeal of the assessee is partly allowed for statistical purposes.

M/s. Kirtilal Kalidas Jewellers Private Limited,vs The Asst. Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1794

The Chennai bench of the ITAT has held that Furniture and Maintenance expenditure does not amount to capital expenditure. In the case of Redington (India) Limited  Vs. Additional Commissioner of Income Tax, it was held that office cabins, wooden partitions, plastering, waterproofing treatment, installation charges, flooring charges, etc for leased premises are current repairs which cannot be considered as capital expenditure which gives enduring benefits to the Assessee.

Narender Kumar vs ITO - 2022 TAXSCAN (ITAT) 1796

The Delhi bench of the ITAT has held that Income tax addition u/s 69A can’t be based on doubt. The Tribunal held that the disputed addition has been made more on doubt and suspicion rather than based on evidence and thereby deleted the addition. Further held that the Assessing Officer was justified in reopening the assessment under Section 147 of the Income Tax Act and upheld the validity of reopening of assessment.

DCIT vs AMRI Hospitals Ltd - 2022 TAXSCAN (ITAT) 1799

The Kolkata Bench of the ITAT, held that Rental income from installation of IBS is Income from house property. Dismissing the appeal the Division Bench consisting of Manish Borad, Accountant Member and Sonjoy Sharma, Judicial Member observed that “Respectfully following the decision of this Tribunal, hold that the alleged rental income from installation of IBS tower has been rightly offered to tax as Income from house property. Thus, no interference is called for in the finding of the CIT(A).”

The Income Tax Officer, Ward-1 & TPS, Vs Manasa Medicals - 2022 TAXSCAN (ITAT) 1782

The ITAT, Bangalore bench, while deleting an addition under section 68 of the Income Tax Act, 1961 has held that the cash sales by the medical shops and pharmacies were permitted during the demonetization period under the circular issued by the RBI. Upholding the first appellate order deleting the addition, the Tribunal held that “the revenue is contending that there is a requirement as per the Circular that the Doctors prescriptions and identity of the persons purchasing medicines needs to be kept in record to substantiate the cash sales during demonetisation period. However, from the plain reading of the said Circular, there is no specific mention as contended by the department. Further, the AO did not reject the books of accounts of the assessee and has not brought anything contrary on record to show that cash sales is not the source for the cash deposited during demonetisation period. We are therefore of the opinion that there is no case here for making the addition as unexplained u/s.68. In view of this discussion, we see no reason to interfere with the order of the CIT(A).”

Sri.Rajkumar C (HUF) Vs Deputy Commissioner of Income-tax,­ - 2022 TAXSCAN (ITAT) 1781

The ITAT, Bangalore bench has quashed assessment proceedings against an HUF holding that the HUF was disrupted/partitioned as on the date of assessment and the assessment in the status of HUF is invalid. On further appeal by the assessee, the ITAT bench comprising of Shri George George K, JM & Ms.Padmavathy S, AM observed that the assessment is not valid and held that when HUF was not assessed in that status prior to the relevant assessment year, the Assessing Officer has erred in assessing the assessee as an HUF after the disruption of the HUF.

DCIT vs K. Dhandapani and Co. Ltd - 2022 TAXSCAN (ITAT) 1780

The Chennai Bench of the ITAT has recently held, in the case of revenue against the assessee-K. Dhandapani and Co. Ltd. that agricultural activity has been carried out by the assessee and income thereof has been declared and therefore the sale of land cannot be taxed under the head “Capital Gains”. The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has recently held, in the case of revenue against the assessee-K. Dhandapani and Co. Ltd. that agricultural activity has been carried out by the assessee and income thereof has been declared and therefore the sale of land cannot be taxed under the head “Capital Gains”.

DCIT vs M/s. VME Precast Pvt. Ltd - 2022 TAXSCAN (ITAT) 1795

The Delhi bench of the ITAT has held that No disallowance u/s 269SS when disallowance has already been made on payments for construction contract and Penalty u/s 271 D of the Income Tax Act,1961 is not leviable.It was observed that once it is established that these payments are for construction contracts and particularly the AO has made disallowance by invoking the provisions of section 40A(3) of Income Tax Act the no disallowance can be made by invoking the provisions of section 269SS of the Act for levy of penalty u/s.271D of the Income Tax Act.  The Tribunal upheld the order of CIT(A) deleting the penalty and dismissed the appeal of Revenue.

ACIT vs Trehan Promoters and Builders Pvt. Ltd - 2022 TAXSCAN (ITAT) 1791

The Delhi bench of the ITAT has held that AO can’t make addition beyond an issue which are not part of the reasons for limited scrutiny. A Coram of Dr B R R Kumar, AM and Shri Yogesh Kumar U S, JM observed that the Assessing Officer has travelled beyond his jurisdiction and made addition on the issues which are not part of the reasons for limited scrutiny. The Impugned addition was set aside by the Tribunal. The ITAT bench dismissed the appeal filed by the revenue and allowed the Additional Ground mentioned in the cross-objection by the assessee.

ACIT vs Trehan Promoters and Builders Pvt. Ltd -  2022 TAXSCAN (ITAT) 1791

The Delhi bench of the ITAT has held that a ‘Non-saleable area’ in real estate projects does not amount to suppression of closing stock and addition is not permissible. As per the certificate of the architect, and tax audit reports, the bench observed that the assessee has duly demonstrated consistency in its accounting practice and its acceptance by the Assessing Officer as well. While dismissing the appeal of the revenue, the Tribunal upheld the findings of the CIT(A).

Smt. P. Chitra vs Income Tax Officer, - 2022 TAXSCAN (ITAT) 1783

The Chennai Bench of the ITAT has recently held that the nature of capital gain as to whether short term or long term capital gain is to be determined on the basis of agreement or allotment date instead of registration date. The Tribunal of Judicial Member Durga Rao and Accountant Member G Manjunatha observed that the assessee could not complete the construction for various reasons. It was also observed that, “the assessee has spent about Rs. 88,75,400/- towards construction of another residential house which includes purchase of land, payment for labor charges and payment to M/s. Raj Constructions for material supply.”

DCIT (IT) -1(1)(1) vs M/s AC Nielsen Corporation - 2022 TAXSCAN (ITAT) 1784

The Mumbai Bench of ITAT has deleted the addition holding that non-technical services could not be treated as Fee for Included Service(FIS). The Tribunal also observed that “The assessee had not executed any contract to make any business. So, to use services independently by applying the technology. All the services undertaken by the assessee or either support service IT enable services; coordination of tax services as rendered above are not stages which request transfer of technology receipts to skill companies.”

Smt. Taraben Jayantilal Patel vs DCIT-CPC - 2022 TAXSCAN (ITAT) 1786

The Ahmedabad Bench of ITAT has held that the mistake of including service tax paid on rent which was in the form 26AS could be rectified.  The tribunal bench of Pramod M Jagtap (Vice President) and Mahumita Roy (Judicial Member) deleted the addition and held that such mistakes could be rectified observing,     “Service tax was included in the income from house property computed by the assessee but the amount mentioned in Form 26AS in inclusive of service tax. This is because the reason that assessee has deducted TDS on rent inclusive of service tax instead of exclusive service tax which has been duly reconciled by the assessee with sufficient evidence adduced before the authorities below as it appears from materials available before us, in our considered opinion, which has not been taken into consideration with its proper perspective.”

Kismet Exports & Investments Pvt. Ltd. vs DCIT - 2022 TAXSCAN (ITAT) 1787

The ITAT of Mumbai bench, recently held that payment to Non resident for buy –back of shares not considered as dividend and no TDS will be levied under section 195 of Income Tax Act, 1961. The division bench of the Pramod Kumar,Vice President  and Anikesh Banerjee, Judicial Member  allowed the appeal filed by the assessee and held that “As per the provisions of India Singapore DTAA jurisdiction for taxing the capital gains arising in the hands of Mr. Dileep Raghu Nath(NRI) is in Singapore and not in India. Therefore, the application of section 195 is not applicable for assessee-company. Accordingly, the addition for violation of section 40(a)(ia) Income Tax, Act read with section 195 Income Tax, Act amount of rupees fifteen crore Thirty Four Lakh And Sixty Eight Thousand   is quashed”

ACIT vs M/s Rex-tone Industries Ltd - 2022 TAXSCAN (ITAT) 1788

The Mumbai Bench of the ITAT, confirmed deduction under Section 35(2AB) of the Income Tax Act, 1961 on the ground that cut of date in certificate issued by Department of Scientific and Industrial Research (DSIR) has no relevance. A Coram consisting of Aby T Varkey, Judicial Member and Amarjit Singh, Accountant Member observed that “Taking into consideration the fact and findings of the CIT(A) we don’t find any infirmity in the decision of the CIT(A) in allowing the claim of deduction u/s 35(2AB).”

M/s. Rajarathnam’s Jewels vs ACIT, Circle – 1(1) - 2022 TAXSCAN (ITAT) 1793

The Bangalore Bench of ITAT has held that the deposit of gold jewellery by family members of a partner in the partnership firm would be treated as the stock in trade of the firm.The bench observing these facts held that the firm had ownership over the jewellery and held that the deposit of jewellery by the family members of the partners should be treated as the stock in trade of the firm.

Country Inn & Suites By Redisson vs ACIT, Circle 1(2)(1) - 2022 TAXSCAN (ITAT) 1794

The Delhi bench of ITAT has deleted the Addition and held that payment received under Master Franchise Agreement could not be treated as Royalty. A coram of G.S. Pannu, President and Saktijit Dey, Judicial Member observed that it cannot be said that the payment received towards centralized service fee is ancillary and subsidiary to the license fee. Hence amount received by the assessee under the Master Franchise Agreement, cannot be treated either as a royalty.

JCIT vs Rahul Rajnikant Parikh -  2022 TAXSCAN (ITAT) 1789

A Division Bench of the ITAT, Mumbai Bench observed that Interest income not to be assessed when assessee is non-resident. A Coram consisting of held that “The interest income has accrued on the deposits kept by the assessee’s in HSBC bank, Geneva and hence the said interest income cannot be said to fall under the definition of “deemed to accrue or arise in India” as given in sec. 9(1)(v) of the Income Tax Act, i.e., the interest income has actually accrued outside India. Hence the said interest income cannot be assessed in the hands of the assessee’s, since they are non-residents.”

DCIT vs Vidya Vikas Education Trust - 2022 TAXSCAN (ITAT) 1791

The ITAT of Mumbai Bench directed to allow depreciation on the ground that there was no claim of purchase of asset as application of income. A Coram consisting of Kuldip Singh, Judicial Member and Gagan Goyal, Accountant Member observed that “We found the interpretation taken by AO as wrong and found the practice being adopted by assessee consistently as correct even after the insertion of section 11(6) of the Act. In view of above, we are not inclined to interfere in the order of CIT(A) and dismissed the appeal of Revenue and directed the AO to allow depreciation amounting to Rupees six crores as application of income.”

Piyushbhai Mangalbhai Patel A-403 vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1785

The Ahmedabad Bench of ITAT has deleted the addition observing that the personal savings of government employees could not be suspected for several years. The Tribunal Bench of SuchitraKamble deleted the addition and allowed the petition. The Tribunal also observed that the personal saving of a government employee could not be doubted for several years as the assessee had been working with salary as pharmacist in Government Hospital since 1976.

M/s. Devaraj Construction vs Income Tax Office - 2022 TAXSCAN (ITAT) 1798

The Chennai bench of the ITAT has held that the mere impression that the auditor will file an appeal is not a sufficient cause and refused to condone the delay. It was evident that the assessee was not serious about pursuing the appeal either before the CIT(A) or before the ITAT. A bench consisting of Shri V. Durga Rao, JM & Shri G. Manjunatha, AM observed that there is no sufficient cause to condone the delay and the petition for condonation of delay was rejected. The appeal filed by the assessee was dismissed.

Shri H K Suresh vs Principal Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1795

The Banglore Bench of the ITAT has recently held that non-mentioning of Document Identification Number (DIN) as per the instruction of the Central Board of Direct Taxes (CBDT) in Circular 19/2019 dated 14.08.2019 invalidates the revision order and consequently set aside the impugned order. The Tribunal Bench of Judicial Member George George K and Accountant Member Padmavathy S observed that, ‘the order under Section 263 of the Income Tax Act neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals” and held that, the impugned order is not in conformity with Para 2 and Para 3 of the CBDT circular and quashed it.

Abbasbhai A. Upletawala vs Income Tax Officer Ward 16(1)(1) - 2022 TAXSCAN (ITAT) 1790

The ITAT of Mumbai Bench asked the Government to bring out Mechanism to ensure Tax Recovery from Asset Re construction Companies (ARCs)/Banks on sale of Security Assets.

A Bench consisting of Pramod Kumar (Vice President), and Pavan Kumar Gadale (Judicial Member) observed that “It is an undesirable situation, and it is time that the Government seriously considers protecting its legitimate interests by ensuring some mechanism to ensure that the tax liability on the capital gains is duly recovered from the borrower whose property is sold, and when it is not possible to do so on account of the borrower’s genuine financial difficulties, from the person who receives the proceeds of the sale of such assets. The Tribunal also pointed out that “With the increasing number of cases in which recovery measures are enforced by selling properties, held by the bankers and ARCs as collateral securities, and inevitable liquidity or bankruptcy issues with such borrowers, there must already be good amount of such avoidable losses to the revenue. Such a position must not continue.”

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