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 17 to December 23,2022 Assignment Agreement not Registered, Can’t ignore Actual flow towards Property Acquisition while Computing Capital Gain In RaviKumar Tirupati Parthasarathy vs The Deputy Commissioner of Income Tax , the Bangalore bench of the Income Tax Appellate Tribunal(ITAT) has held that “merely for the reason that the assignment agreement is not registered, the actual outflow from the hands of the assessee towards the acquisition of the property cannot be ignored for computing the capital gains.” Assessee claimed Deduction under Wrong Section,Tax Department can’t take advantage on the Right of Assessee In J. Doshi & Co., Manek Mansion vs The ITO, Ward-3(1)(2), the Rajkot bench of the Income Tax Appellate Tribunal(ITAT) has held that the tax Department can’t take advantage of the right of the assessee when claiming a deduction under the wrong section. A Coram comprising of Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member observed that in the case of DevendraPai it was held that “AO is not supposed to take advantage of the assessee’s ignorance to collect tax more than legitimate tax.” A Solitary Opportunity of one day given to respond with Show Cause Notice is not valid, Revisional Order Quashed In R.N. Khemka Enterprises Private Ltd vs Pr. Commissioner of Income Tax the Delhi bench of the ITAT while quashing the revisional order held that a solitary opportunity of one day given to respond with show cause notice is not valid. The Tribunal held that such lackadaisical action of the Pr.CIT is in the negation of overriding principles of natural justice inbuilt into the power conferred under Section 263 itself. Further held that an opportunity to answer to show cause is not a gift but an absolute right which cannot be bypassed. No Nexus between Information and belief of Escapement of Income, Assessment by AO invalidated In Bhavi Leasing & Finance Ltd vs ITO, the Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT), invalidated assessment by the Assessing Officer (AO) on the ground that there is no nexus between information and belief of escapement of income. Objection to Scheme of Amalgamation can raise only before sanctioning by High Court In, Deputy Commissioner of Income-tax vs M/s. G. K. & Sons Pvt. Ltd,the Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that an objection to scheme of Amalgamation can raise only before sanctioning by High Court and allowed adjustment on business loss and set off of capital loss. No Reassessment in absence of failure to fully & truly disclose all material facts In, Deputy Commissioner of Income Tax vs G.S. Atwal & Company (Engineers) Pvt. Limited,the Kolkata bench of the Income Tax Appellate Tribunal(ITAT) has held that the Reassessment is not valid in absence of failure to fully & truly disclose all material facts. A Coram of ITAT comprising of Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member observed that there is no evidence with the Revenue to demonstrate that assessee has failed to disclose all material facts fully and truly for assessments of its income in A.Y. 2011-12 and 2012-13. Bitumen and its by products are ‘Mineral Oil’ u/s 80IB(a) of Income Tax Act In, Hindustan Coals Private Limited vs National Faceless Assessment Centre,the Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that Bitumen and it’s by-products are “mineral oil” under Section 80IB(a) of Income Tax Act, 1961. A Coram consisting of Kuldip Singh, Judicial Member and Amarjit Singh, Accountant Member observed that “Based upon factual, scientific and legal input, we are of the considered view that bitumen, bitumen emulsion, cut back bitumen, modified bitumen produced by the assessee certainly fall in the category of “mineral oil” for the purpose of section 80IB(a) of the Income Tax Act, 1961.” Relief to Jindal India: ITAT treats Incentives under West Bengal Incentives Scheme as ‘Capital Receipts’, not Taxable Jindal (India) Ltd. vs ACIT,the Income Tax Appellate Tribunal ( ITAT ), New Delhi Bench granted relief to M/s. Jindal (India) Ltd, the appellant by holding that incentives paid under West Bengal Incentives Scheme are to be treated as ‘capital receipts’ and hence not taxable. A Bench comprising N K Billaiya, Accountant Member and Kul Bharat, Judicial Member relying on the judgment in Ankit Metal and Power Limited observed that “Incentive subsidies are ‘capital receipts’ and is not an ‘income’ liable to be taxed in relevant assessment year 2010-11taking into consideration the definition of Income under Section 2(24) of the Income Tax Act, 1961, where sub-clause (xviii) has been inserted including ‘subsidy’.” Income earned by Co-operative Society on Investment held with Co-operative Bank can be allowed as Deduction u/s 80P(2)(d) In, Jal Ratan Deep Co-operative Housing Society Ltd vs Income-tax Officer,the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that income earned by a Co-operative society on investment held with Co-operative Bank can be allowed as a deduction u/s 80 2)(d) of the Income Tax Act,1961. The Tribunal observed that the High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), concluded that “interest income earned by co-operative society on its investment held with the co-operative bank would be eligible for claim of deduction under section 80P(2)(d) of the Act.” Charges of Clandestine Removal cannot be Confirmed without Corroborative Evidence, No Addition under VAT In, Crystal Glaze Vs Deputy Commissioner of Income-tax ,the Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that addition under VAT is not sustainable when the charges of clandestine removal cannot be confirmed without corroborative evidence.A Coram comprising of Shri Pramod M Jagtap, Vice President & Ms Madhumita Roy, Judicial Member “the order passed by the CIT(A) in deleting the addition holding reopening based on the show cause issued by Excise Department not justified is just and proper to warrant interference.” Notional Income from Interest-Free Loans is not taxable in the absence of a specific provision in the Income Tax Act Dy. CIT vs Shri Girish R. Tanti,the Rajkot bench of the Income Tax Appellate Tribunal( ITAT ) has held that notional income from interest-free loans is not taxable in the absence of a specific provision in the Income Tax Act, 1961. In light of judicial precedents,a Coram comprising of Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member that interest having neither been accrued to the assesseeand neither any interest having being received by the assessee, such interest cannot be subject to tax in the hands of the assessee on purely “notional basis”. No Suggestion by Tax Auditor to disallow EPF u/s 143(1): ITAT directs to delete Additions In, P R Packaging Service vs Assistant Commissioner of Income Tax,in a recent ruling, Mumbai Bench of Income Tax Appellate Tribunal (ITAT) while entertaining an appeal directed the Assessing Officer (AO) to delete the additions made in respect of Employees’ Contribution to Provident Fund (EPF). IHC is part of Income from Operation of Ships in International Traffic under India- France DTAA, not Taxable In, CMA CGM SA vs Asstt. Commissioner of Income Tax International Taxation,the Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ), held that Inland Haulage Charges (IHC) is part of income from operation of ships in International Traffic under India- France Double Taxation Avoidance Agreement (DTAA) and is not taxable in India. A Bench consisting of Pramod Kumar, Vice President and Sandeep Singh Karhail, Judicial Member relied on the judgment in CMA CGM SA vs ACIT wherein it was observed that “IHC, since, forms part of income from operation of ships in International Traffic, is covered under Article-9 of the India-France Tax Treaty, accordingly, not taxable in India.” No Disallowance u/s 40a(ia) of Income Tax Act when due Tax has been made by Recipient of Income In, Umananda Rice Mill Ltd. vs ACIT,the Income Tax Appellate Tribunal (ITAT), Kolkata Bench ruled that no disallowance under Section 40a(ia) of the Income Tax Act, 1961 can be claimed when due tax has been made by recipient of income. The Bench consisting of Rajesh Kumar, Accountant Member and Sonjoy Sarma, Judicial Member observed that “We are of the view, the crux of the ratio laid down in the said decision is that where the assessee has made any payment and the payee has duly disclosed the said receipt in the return of income and has paid taxes thereon, no disallowance u/s 40a(ia) of the Income Tax Act to be made. Repairs and Maintenance Expenditure in Rented Showroom and Workshop amounts to Revenue Expenditure, can allow Disallowance u/s 30(a )(i) In, Garve Motors Pvt. Ltd. vs Asst. Commissioner of Income Tax, The Pune bench of the Income Tax Appellate Tribunal ( ITAT ) has held that repairs and maintenance expenditure in rented showrooms and workshop amounts to revenue expenditure and can allow disallowance Under Section 30(a )(i) of the Income Tax Act,1961. A Coram of Shri S. S. Godara, Judicial Member and Shri G. D. Padmahshali, Accountant Member disapproved the contention of the department for treating the revenue expenditure as a deferred expenditure. Addition u/s 68 based on Cash Deposit not allowable in the Absence of Corroborative Evidence In, Prashant Pratap Ahir vs Asst. Commissioner of Income Tax, the Pune bench of the Income Tax Appellate Tribunal(ITAT) has held that addition under section 68 of the Income Tax Act,1961 based on Cash deposit is not allowable in the absence of the Corroborative evidence. Employee’s contribution towards PF has to be Deposited before due date mentioned in Employee’s Provident Funds and Miscellaneous Provisions Act In, The Joint Commissioner of Income Tax (OSD) vs Subhash Deshmukh and Company, the Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that Employee’s contribution towards PF has to be deposited before the due date mentioned in the Employees’ Provident Funds and Miscellaneous Provisions Act,1952. A Coram of ITAT comprisingof Shri S S Godara, Judicial Member and Dr Dipak P Ripote, Accountant Member observed that since the assessee has not deposited the amount by the respective statute, the impugned amount has been rightly disallowed by the AO. Relief to Mahindra and Mahindra: ITAT directs AO to delete Disallowance made u/s 40(a)(ia) of Income Tax Act In, Mahindra & Mahindra Ltd. vs Asstt. Commissioner of Income Tax Central Circle–2(2)(2),, Mahindra & Mahindra Ltd, the appellant, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), directed the Assessing Officer (AO) to delete disallowance made under Section 40(a)(ia) of the Income Tax Act, 1961. A Coram comprising Pramod Kumar, Vice President and Sandeep Singh Karhail, Judicial Member observed that “We further find that in assessment years 2011-12 to 2013-14, the coordinate bench of the Tribunal, decided this issue in favour of assessee by following the order passed in assessee’s own case for assessment year2009–10. Proceedings u/s 153C of Income Tax Act in absence of any Incriminating Material is Bad in Law In, ACIT vs Sri Mathikere Ramaiah Seetharam Gokula House,, the Income Tax Appellate Tribunal (ITAT), Bangalore Bench held that Proceedings under Section 153C of the Income Tax Act, 1961 in absence of any incriminating material is bad in law. A Bench comprising Chandra Poojari, Accountant Member and Beena Pillai, Judicial Member observed that “In the present search and impugned assessment proceedings no new or hidden fact has come to light. Amount Received as Compensation for Pre-closure of BOT projects is Capital Receipt In, Rohan and Rajdeep Infrastructure vs DCIT , the Income Tax Appellate Tribunal (ITAT), Pune Bench held that amount received as compensation for pre-closure of Build Operate Transfer (BOT) projects is capital receipt. A Bench consisting of SS Godara, Judicial Member and GD Padmahshali, Accountant Member observed that “We thus conclude that both the learned authorities have erred in law and on facts in invoking section 28(ii)(d) qua assessee’s impugned compensation of Rs.18 crores thereby holding it as a revenue receipt.” Executive Search Fee is not ‘Fee for Technical Services’ under India Netherlands Tax Treaty In, Spencer Stuart International B.V. C/o Spencer Stuart India Pvt. Ltd vs Asstt. Commissioner of Income Tax International Taxation , A Division Bench of the Income Tax Appellate Tribunal (ITAT), Mumbai held that Executive search fee is not ‘fee for technical services’ under India Netherlands Tax Treaty. The Bench of Pramod Kumar, Vice President and Sandeep Singh Karhail, Judicial Member observed that “We are of the considered view that findings rendered in preceding assessment year are equally applicable to the year under consideration even though it is not covered by the aforesaid APA.” Agricultural Land used for Agricultural purposes is entitled for Exception u/s 2(14) of Income Tax Act In, Shri A. Ramesh vs Deputy Commissioner of Income , the Chennai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that agricultural land used for agricultural purposes is entitled for exception under Section 2(14) of the Income Tax Act, 1961. A Bench consisting of V. Durga Rao, Judicial Member and G. Manjunatha, Accountant Member observed that “The sugar factory is situated nearer to assessee’s land as there is sizeable agricultural activities are carried out and it is clear that it is an agricultural belt as sugar mill was established. Therefore, it cannot be said that the land is not an agricultural land.” Interest on Income Tax Refund not connected with PE, Taxable under India Malaysia DTAA In, Aker Solutions India SDN BHD vs Dy. Commissioner of Income Tax ,the Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that Interest on income tax refund not connected with Permanent Establishment (PE), taxable under India Malaysia Double Taxation Avoidance Agreement (DTAA). A Bench comprising Pramod Kumar, Vice President and Vikas Ashwathy, Judicial Member relied on the judgment in Clough Engineering Ltd, wherein it was observed that “Interest on income tax refund would be taxable under Article-11 and not as business profits connected with the PE of assessee.” No Addition u/s 69 of Income Tax Act when Cash Deposit, genuinely made in Bank Account In, Shri Dashrathbhai Shivabhai vs ITO ,a Division Bench of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench held that no addition can be made under Section 69 of the Income Tax Act, 1961 when cash deposit, genuinely made in bank account. Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “The assessee has explained through evidences during the remand proceedings that the cash deposit was genuinely made in the bank account. No Disallowance of Entire purchases when Sale of Finished product is Taxed In, Accra Pac(India) Pvt. Ltd vs D.C.I.T, Circle-1, a division Bench of the Income Tax Appellate Tribunal (ITAT), Ahmedabad ruled that no disallowance of entire purchases when sale of finished product is taxed. The Bench comprising Waseem Ahmed, Accountant Member and Siddhartha Nautiyal, Judicial Member observed that “There is always an element of guesswork on the quantum of disallowance that should be made in case in the case of purchases made from parties whom the assessee is unable to identify. However, we also note that it would not be justifiable to disallow the entire purchases when the corresponding sale of finished product (in which such which the purchases so made were utilised for making the final finished product) have been subject to tax.” Relief to Ambuja Cement: ITAT directs AO to exclude Sales Tax Incentive Subsidy for Computing Book Profit In, Ambuja Cement Limited vs Additional Commissioner of Income Tax Large Tax Payer Unit , The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), directed Assessing Officer (AO) to exclude sales tax incentive subsidy for computing book profit, thereby granting relief to Ambuja Cement Limited, the appellant. A Coram consisting of Pramod Kumar (Vice President), and Sandeep S Karhail (Judicial Member) observed that “We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Amount in Nature of Debt Claim, till possession was actually handed over is Taxable under India UK DTAA Karnail SinghYew Lodge vs The Asst. DIT (International Taxation),, The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT), ruled that amount in nature of debt claim till possession of was actually handed over is taxable under India-UK Double Taxation Avoidance Agreement (DTAA). A Bench comprising Sudhanshu Srivastava, Judicial Member and Vikram Singh Yada, Accountant Member relied on the judgment in Shri Mohinder Singh Sanghera vs. Astt. DIT, wherein it was observed that “the assessee had a claim of debt against M/s Omaxe Ltd. till the proposed property is constructed and possession handed over to the assessee and conveyance deed executed and registered. It was accordingly held in that case that theassured return received by the assessee was in the nature of interest and has been rightly brought to tax as per Indo-UK DTAA.” UPS and Printers are part of Computer Systems, 60 % Depreciation allowable In,Eversendai Construction Pvt. Ltd vs The Dy. Commissioner of Income Tax ,the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that UPS and Printers are part of computer systems and 60 % depreciation allowable. A Coram consisting of Shri V. Durga Rao, Judicial Member and Shri G Manjunatha, Accountant Member viewed that in the case of Sundaram Asset Management Co. Ltd. v. DCIT, it has been held that UPS and Printers are part of computer systems and eligible for higher depreciation of 60%. Capital Gains derived from Sale of Property set off under current year Business Loss In, Gem Spinners India Limited vs The Assistant Commissioner of Income Tax ,the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has upheld the disallowance of loss on account of write-off inventory of cotton when the capital gains derived from sale of property set off under current year business loss. A Coram consisting of Shri V Durga Rao, Judicial Member and Shri G Manjunatha, Accountant Member observed that the assessee could not satisfactorily explain with necessary evidence the loss claimed on account of write-off inventory but is only to offset capital gain derived from the sale of property as brought out by the AO and CIT(A). Forex Loss from Trade Debtors/Creditors is Operating in Nature, No Tax Deduction In, Eversendai Construction Pvt. Ltd.vs The Dy. Commissioner of Income Tax ,the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the foreign exchange loss can be treated as operating in nature when the loss was in connection with debtors and creditors which bear the operating margin and tax deduction not allowable. A Coram consisting of Shri V. Durga Rao, Judicial Member and Shri G Manjunatha, Accountant Member viewed that the assessee has incurred foreign exchange loss on account of creditors for purchase and debtors for sales and services. Expenditure incurred during setting up of New Business and its Commencement is allowable as a Deduction In, Messung Systems Private Limited vs ITO ,the Income Tax Appellate Tribunal (ITAT), Pune Bench has held that expenditure incurred during the setting up of the new business and its commencement is allowable as a deduction. A Coram comprising of Shri Inturi Rama Rao, Accountant Member and Shri S S Viswanethra Ravi, Judicial Member observed that the Assessing Officer, as well as the CIT(A), had failed to examine the nexus of the expenditure incurred and the new business stated to have been set-up. LIBOR cannot always be rate at which Intra-Bank Transactions take place In, Shinhan Bank vs Deputy Commissioner of Income-Tax (IT) 4(2)(1) ,the Income Tax Appellate Tribunal (ITAT), Mumbai Bench deleted Arm Length Price (ALP) adjustment as London Inter-Bank Offered Rate (LIBOR) cannot always be rate at which intra-bank transactions take place.A Bench comprising Pramod Kumar (Vice President), and Sandeep S Karhail (Judicial Member) observed that “We deem it fit and proper to delete the impugned ALP adjustments for the short reason that the LIBOR, even amongst the independent banks, cannot always be the rate at which the intra-bank transactions must take place.” Land received in lieu of Business Loan is Business Asset, not Capital Asset In, TVS Finance & Services Ltd. Vs ACIT ,the Income Tax Appellate Tribunal (ITAT) of Chennai, chaired by Mahavir Singh, Vice President, Judicial Member, and Manoj Agarwal, Accountant Member of has ruled that the land came into the possession of the assessee in lieu of a business loan foregone in the normal course of finance business, the income earned from that land shall be a business income and not a capital gain. Advertisement Expenses incurred at the Time of Installation of Additional Machinery will result in an enduring benefit, allowable as Revenue Expenditure In, ACIT vs Rosebys Interiors India Ltd , the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the advertisement expenses incurred at the time of installation of additional machinery will result in an enduring benefit and are allowable as Revenue Expenditure. A Coram consisting of Shri P.M. Jagtap, Vice President And Shri Siddhartha Nautiyal, Judicial Member observed that there is no concept of deferment of revenue expenditure in the Income Tax Act. No Effort by AO to Send Draft Assessment Order to Correct Address In, DSV Solutions Pvt Ltd vs Deputy Commissioner of Income Tax Circle 11(1)(2) The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), quashed assessment order on the ground that no effort has been made by Assessing Officer (AO) to send draft assessment order to correct address. A Bench consisting of Pramod Kumar, Vice President and, Pavan Kumar Gadale, Judicial Member observed that “There was no forwarding, not even an effort to forward, the draft assessment order to the correct address, or at least the address furnished to the Assessing Officer under proviso to rule 127(2), within the permitted time frame under Section 153 r.w.s 144C of the Income Tax Act, 1961. Stamp Duty Value to be considered If Date of Agreement and Registration is different In, Income Tax Officer vs Rajni D.Saini,the Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench held that as per the provisions of Section 56(2)(vii)(b) of the Income Tax Act, 1961 if the date of agreement fixing the consideration and date of registration are not in same, the stamp duty value may be taken as on the date of agreement fixing the consideration, instead of that on the date of registration. Relief to SBI: ITAT allows Income Tax Deduction on Bad and Doubtful Debts In, The State Bank of India vs Asstt. Commissioner of Income Tax Circle–Patiala , the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), deduction on bad and doubtful debts thereby granting relief to the State Bank of India (SBI). A Coram consisting of Pramod Kumar, Vice President and Aby T Varkey, Judicial Member observed that “we decide the question referred for our adjudication in favour of the assessee and held that the deduction under section 36(1)(viia) r/w Rule 6 ABA is to be allowed on the total outstanding advances at the end of each month considering the opening balances.” Capital Gain fully utilised for Acquisition of new Residential House Eligible for Income Tax Exemption u/s 54 of Income Tax Act In, Anik Chatterjee vs ITO, Ward-1(2) , The Delhi Income Tax Appellate Tribunal (ITAT) chaired by Yogesh Kumar US (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member) held that the equivalent amount of capital gain utilised for acquisition of new residential house is eligible or allowable for Tax Exemption under Section 54 of the Income Tax Act, 1961. S. 201 Income Tax Act is not to punish or Prosecute Assessee for his lapses for TDS Responsibilities In, ICICI Securities Limited vs Income Tax Officer ,the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), rued that Section 201 Income Tax Act, 1961 is not to punish or prosecute assessee for his lapses for TDS responsibilities, thereby granting relief to ICICI Securities Ltd. The Bench comprising Pramod Kumar (Vice President) and Amit Shukla (Judicial Member) observed that “Provisions of Section 201 of the Income Tax Act are not to punish or prosecute an assessee for his lapses in respect to tax deduction at source responsibilities; there is a separate set of provisions for that purpose, e.g. under section 271C and 276B, and the provisions of section 201 of the Income Tax Act are merely compensatory in nature.” Forfeited Commission Expenses cannot be disallowed If TDS is Paid In, Gryphon Appliances Ltd vs DCIT , Income Tax Appellate Tribunal ( ITAT ) bench of Delhi, constituted of Anil Chaturvedi (Accountant Member) and Anubhav Sharma (Judicial Member) held that the forfeited commission expenses cannot be disallowed if Tax Deduction Source ( TDS ) is paid. No TDS on CAM Charges paid in Addition to Rent In, Johnson Watch Company Pvt. Ltd vs ACIT , As a relief to Johnson watches, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that no Tax Deductible at Source (TDS) on common area maintenance charges (CAM) charges paid in addition to rent. A Coram comprising of Shri Anil Chaturvedi, Accountant Member and Shri Anubhav Sharma, Judicial Member observed that merely because a single agreement is executed between lessor and lessee creating liability on lessee for both rent and CAM charges does not discard the distinguishing nature of the two payments. No Records found on Receipt of Unaccounted Cash or Incriminating Material during Search In, DCIT, Central Circle-27 vs AGC Reality Pvt. Ltd , Delhi Bench of Income Tax Appellate Tribunal (ITAT) presided over by Dr. B. R. R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) dismissed the appeals filed by the Revenue on the grounds that no records was found on receipt of unaccounted cash or incriminating material during search conducted by Assessing Officer (AO) under Section 132(1) of the Income Tax Act, 1961. ITAT deletes Addition on Proof of Identity and Creditworthiness of Shareholders and Genuineness of Transactions In, Sitka Mercantile vs ITO , A Division Bench of the Income Tax Appellate Tribunal (ITAT), Kolkata deleted addition on proof of identity and creditworthiness of shareholders and genuineness of transactions. The Bench of Rajesh Kumar, Accountant Member and Sonjoy Sarma, Judicial Member observed that “The assessee has furnished all the details/evidences qua the share applicants furnishing the names and addresses, PAN cards, share application forms, share allotment advices, confirmations, audited financial statements and also proof of source of source by furnishing necessary documents of the third parties.” Delay in filing of TDS Return due to Lack of Professional Assistance is Mere ‘Technical Breach’ In, Hi Techno Control System Pvt. Vs Commissioner of Income Tax National Faceless Appeal Centre , The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the delay in the filing of TDS returns due to lack of professional assistance is a mere “technical breach” for which penalty under section 272A(2)(k) of the Income Tax Act, 1961 cannot be imposed. No TDS on regular Management Services relating to Business Administration In, Intrado EC India Private Ltd vs Deputy Commissioner of IncomeTax , The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that Tax Deductible at source (TDS) does not apply to regular management services relating to business administration as it is not a technical service. Education Cess including Secondary and Higher Secondary Education Cess is not allowable as a Deduction In, CC Engineers Pvt. Ltd vs I.T.O , The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the education Cess including secondary and higher secondary education cess is not allowable as deduction. While dismissing the appeal, the Tribunal held that “the Amendment taken place in the Statute with retrospective effect to section 40(a) of the Income Tax Act,1961 Act ITAT dismisses Plea for Restoration of Income Tax Registration of Popular Front of India Post Ban In, Popular Front of India Vs C.I.T Delhi , The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently upheld the order of Commissioner of Income Tax (Exemptions) , in verification of cancellation of the Income Tax registration of the assessee-Popular Front of India (PFI) under Section 12AA(3) of the Income Tax Act, 1961. Tax Exemption can’t be allowed in the absence of Evidence substantiating Claim of Reimbursement of Expense as Cost to Cost Basis In, Eversendai Construction Pvt. Ltd. vs The Dy. Commissioner of Income Tax , The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that tax exemption can’t be allowed in the absence of evidence substantiating the claim of reimbursement of expense on a cost-to-cost basis. A Coram consisting of Shri V. Durga Rao, Judicial Member and Shri G Manjunatha, Accountant Member observed that the assessee, although, claimed before the DRP that reimbursement of expenses is on a ‘cost to cost’ basis without any mark-up, but no details or explanation was submitted by the assessee. Production of Proof for Cash deposit during Demonetization In, Umamaheswari vs Income Tax Officer , In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ), Chennai bench has deleted the addition on the basis of production of proof for cash deposit in the bank account during demonetization period. Revenue Expenditures on ERP software ‘Capital’ in nature In, Indo British Garments P. Ltd vs ACIT , The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently allowed the assessee, Indo British Garments Pvt Ltd to claim depreciation on the revenue expenditures incurred on license agreement of ERP software as the transaction was of capital nature. The tribunal of Judicial Member N K Choudhary and Accountant Member B R R Kumar observed that the same has been capitalized in the books of accounts. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates.

ITAT Weekly Round-Up

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