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 24 to December 30 ,2022
Income Tax Authorities should Charge Legitimate Taxes from Taxpayers – [ 2022 TAXSCAN (ITAT) 1899 ]
In, Kkalpana Plastick Ltd Vs ITO, Ward-10(3), Kolkata], In a recent ruling while slamming the income tax department for ignoring the grievance of the assessee, the Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that the income tax authorities should charge legitimate taxes from the taxpayers. On first appeal, the CIT(A) has dismissed the appeal observing that the assessee was aware of the second rectification order dated 30.07.2014. Whatever the case may be, it is apparent from the record that the assessee was neither served with earlier rectification order dated 11.06.2014 nor with the second rectification order dated 30.07.2014. A bench of Shri Sanjay Garg, Judicial Member and Shri Rajesh Kumar, Accountant Member held that “the facts show that it is not a case where the assessee-appellant had remained negligent in persuing its remedy before the competent authority, rather it is a case of official apathy where the genuine grievance of the assessee has been overlooked, ignored and rejected and uncalled for demand was raised from the assessee. It has been held time and against that the Income Tax Authorities should charge legitimate taxes from the taxpayers.”
Bank is ‘Agent’ of Income Tax Dept for Receiving TDS Deposits, No Interest for Delay in Payment by Bank due to Technical Glitches on Portal – [ 2022 TAXSCAN (ITAT) 1900 ]
In, National Insurance Co. Ltd Vs ACIT, CPC-TDS,Ghaziabad, The Income Tax Appellate Tribunal (ITAT), Kolkata has held that the assessee cannot be penalized for the fault of glitches on the income tax portal and therefore, deleted the interest for non-remittance of TDS amount by the bank to the Government since the same was deposited by the assessee within the due date.
Property transferred to Mother for Rs. 5 Lakhs not ‘Gift’, Taxable as ‘Capital Gain’ the ITAT Ordered to Apply RS. 50C – [ 2022 TAXSCAN (ITAT) 1902 ]
In, Jay Atulbhai Mody, Vs I.T.O., Ward-2(2)(3), Rajkot, The Income Tax Appellate Tribunal (ITAT), Rajkot bench has held that the property transferred in the name of mother for a nominal consideration of Rs. 5 lakhs cannot be treated as a “gift” as the same is taxable as “capital gain” under section 45 of the Income Tax Act, 1961.
Deduction u/s 36(1)(va) not allowable When Assessee failed to Deposit Employee’s Contribution to PF within due date – [ 2022 TAXSCAN (ITAT) 1898 ]
In, CC Engineers Pvt. Ltd vs I.T.O,The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that deduction under section 36(1)(va) of the Income Tax Act,1961 is not allowable when the assessee failed to deposit employee’s contribution to PF within due date. A Coram Shri Inturi Rama Rao, Accountant Member and Shri Partha Sarathi Chaudhury, Judicial Member observed that the payment of employees’ contribution to the provident fund was made before the due date of filing of return of income u/s 139(1) of the Act but beyond the due date as provided in the respective Statutes.
Genuineness and Creditworthiness of Creditor proven with Bank Statement and Other Evidence, Income Addition u/s 68 not allowable – [ 2022 TAXSCAN (ITAT) 1896 ]
In, ACIT vs Ashrita Construction Pvt. Ltd, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that income addition under section 68 of the Income Tax Act,1961 is not allowable when the genuineness and Creditworthiness of the creditor are proven with the Bank statement and other evidence. The Assessing Officer has not doubted the interest payment of Rs. 1,83,79,553/- as against the above loan, with appropriate TDS made by the Assessee. Therefore, the addition made by the Assessing Officer u/s. 68 of the Act is not sustainable in law.
Assessing Officer can’t invoke jurisdiction u/s 153C and Seize material belonging to a Third Party before 1-6-2015 – [ 2022 TAXSCAN (ITAT) 1896 ]
In, ACIT vs Ashrita Construction Pvt. Ltd, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the Assessing Officer can’t invoke jurisdiction under section 153C of the Income Tax Act,1961 and seize material belonging to a third party before 1-6-2015. A Coram comprising of Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member observed that search action has been taken place on 10.03.2015 much before 01.06.2015 and the seized material does not belong to the assessee. The basic requirement to justify the assumption of jurisdiction u/s. 153C of the Income Tax Act does not exist, therefore the issuance of notice u/s. 153C is not valid. The Cross objection filed by the assessee was allowed.
Commodity Transactions carried out during Regular course of Business cannot be treated as ‘Speculative Business’ – [ 2022 TAXSCAN (ITAT) 1890 ]
In, Asst. Commissioner of Income Tax vs M/s. Clothing Culture Ltd, The Mumbai Bench of Income Tax Appellate Tribunal has allowed the deduction holding that the commodity transactions carried out during the regular course of business could not be treated as speculative business. The Tribunal Bench of Vikas Aswathy (judicial Member) and M Balaganesh (Accountant Member) held that the commodity transactions could not be treated as a speculative business carried on by the assessee as it had been carried out in the regular course of the business. The Bench further held that the business expenditure would be allowable as deduction under Section 37 of the Income Tax Act 1961.
Brokerage not part of Income unless Received – [ 2022 TAXSCAN (ITAT) 1889 ]
In, Harmeet Singh vs ACIT, The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition holding that the brokerage would not be treated as income unless it was actually received by the assessee. The Bench of NK Billaiya (Accountant Member) and Kul Bharath (Judicial Member) held that the brokerage could not be treated as income as the evidence had not been produced on actual receival of the brokerage on the sale of the property. The bench further deleted the impugned addition.
Unsubstantiated Personal Expenses of Directors not allowable as Business Promotion Expenses – [ 2022 TAXSCAN (ITAT) 1886 ]
In, Gryphon Appliances Ltd vs DCIT, The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ), constituted of Anil Chaturvedi (Accountant Member) and Anubhav Sharma (Judicial Member) held unsubstantiated personal expenses of directors are not allowable as Business Promotion Expenses. The tribunal noted that in case of business promotion expenses, the assessee is expected to show that the expenses intended to achieve any specific or general business target or how it could have helped the promotion of business or business interest of the assessee.
No Evidence to prove Nature and Source of Property: ITAT upholds Income Addition u/s 69 A – [ 2022 TAXSCAN (ITAT) 1887 ]
In, The DCIT vs M/s. Shivram Consultants India Pvt. Ltd,The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has upheld the addition under section 69 of the Income Tax Act,1961 in the absence of evidence to prove the nature and source of property. A Coram Shri Anil Chaturvedi, Accountant Member and Shri Anubhav Sharma, Judicial Member observed that the AO noted that the Draft Deed retrieved from the hard disk showed that the major constituents like the Vendor, Vendee, the name of the shareholders and their shareholdings, the sale consideration was exactly similar in the Draft Deed and original Sale Deed executed by the assessee.
Transfer Pricing Order passed beyond the period of Limitation ITAT quashes order u/s 92CA(3) – [ 2022 TAXSCAN (ITAT) 1895 ]
In, Intrado EC India Private Ltd vs Deputy Commissioner of Income Tax, The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) quashed the order under section 92CA(3) of the Income Tax Act,1961 as the transfer pricing order was passed beyond the period of limitation. A Coram comprising of Smt. Beena Pillai, Judicial Member and Ms Padmavathy S, Accountant Member noticed that the DRP has held that the order dated 31.10.2019 which was issued without DIN is made good by the order dated 01.11.2019 which is issued without DIN since the contents of both the orders are same.
Non-Speaking Disallowance of Written off TDS on Unrealized Rental Income – [ 2022 TAXSCAN (ITAT) 1901
In, Idea Estate Pvt. Ltd, Vs DCIT, Circle-12(1),The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) directs the Commissioner of Income Tax (Appeals) [CIT(A)] to re-adjudicate and also orders to record the reasons for the disallowance of written off Tax Deduction Source (TDS) on unrealised rental income of the assessee. The bench observed that the Tax Authorities below have disallowed written off TDS on rental income it was earlier allowed in the assessment order under section 143(3) of the income Tax Act on the basis that since the expenses pertain to the income from house property and does not pertain to income under the head business and profession therefore, same is not allowable under the section 37 of the Act nor 36(1)(vii) of the Income Tax Act.
Income derived from Training Fee and related Course Material, not entitled to Deduction u/s.10B – [ 2022 TAXSCAN (ITAT) 1904 ]
In, Pentasoft Technologies Ltd vs The Income Tax Officer (OSD), In a recent ruling, the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the rental income derived from the lease of plant & machinery or equipment is taxable under the head ‘income from other sources’.
Rental Income derived from Lease of Plant & Machinery or Equipment Taxable under Head ‘Income from Other Sources’ – [ 2022 TAXSCAN (ITAT) 1904 ]
In, Pentasoft Technologies Ltd vs The Income Tax Officer (OSD), the case of Penta soft technology, the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the rental income derived from the lease of plant & machinery or equipment is taxable under the head ‘income from other sources’. A Coram comprising of Shri V Durga Rao, Judicial Member and Shri G Manjunatha, Accountant Member observed that there are no details as regards whether rental income is derived from leasing of land & building or any plant & machinery or equipment. Further, even in the assessment order, there are no details about the nature of the rental receipt.
Claim of Writing Off old dues cannot allow in the Absence of Evidence, old due payable is Taxable – [ 2022 TAXSCAN (ITAT) 1903 ]
In, Shri Nirav Dilipkumar Desai vs ITO, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that claim of writing off old dues cannot allow in the absence of evidence and old due payable are taxable. A single member Coram comprising of Ms Suchitra Kamble, Judicial Member observed that the assessee has shown in the return in respect of old dues not payable as income from other sources and was never shown the same as debts and liabilities by the assessee in the previous year. It was viewed that merely stating that it is wrongly treated under income from other sources cannot show the genuineness of the assessee related to old dues. The assessee has not brought on record a particular instance where the assessee has the right to approach Shri Rasik C. Patel.
Provisions of Section 43CA of Income Tax Act can invoke only When Sale Value of Property price lesser than Stamp Value – [ 2022 TAXSCAN (ITAT) 1907 ]
In, Asstt. Commissioner of Income vs Shri Debashis Roy, The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has held that provisions of Section 43CA of Income Tax Act,1961 can invoke only when sale value of property price lesser than stamp value. The Tribunal viewed that provisions of Section 43CA of the Income Tax Act do not apply to the purchase of property but section 43CA of the Income Tax Act deals with the case where the sale value of property held as stock-in-trade is sold during the year at a price lesser than stamp value. While dismissing the appeal of revenue upheld the order of the CIT(A) on this issue by dismissing the ground raised by the revenue.
Trading Liabilities incurred with Corresponding Purchases cannot be the subject matter of Addition u/s 68 – [ 2022 TAXSCAN (ITAT) 1907 ]
In, Asstt. Commissioner of Income vs Shri Debashis Roy, The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that trading liabilities incurred with corresponding purchases cannot be the subject matter of addition under section 68 of the Income Tax Act,1961. A Coram consisting of Shri Rajpal Yadav, Vice President & Shri Rajesh Kumar, Accountant Member observedthat these liabilities were incurred as trading liabilities with corresponding purchases and therefore can not be the subject matter of addition u/s 68 of the Act as the provisions of section 68 of the Act apply to the credits in the books of accounts of the assessee which could not be explained with respect to identity, creditworthiness and genuineness. The Tribunal dismissed the appeal of the revenue.
Income Tax Matters settled under DTVSV scheme cannot be Revised u/s 263 – [ 2022 TAXSCAN (ITAT) 1905 ]
In, Shri Pavan Kandkur vs Principle Commissioner of Income Tax, The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the revisional jurisdiction under section 263 of the Income Tax Act, 1961 cannot be invoked in respect of matters settled under the amnesty scheme, DTVSV.
Interest Income earned on FD kept as Security for Performance Guarantee is Taxable as Business Income Can be set off against Project Expenses – [ 2022 TAXSCAN (ITAT) 1906 ]
In, NCML Varanasi Private Limited vs ITO, The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that interest income earned on Fixed Deposit (FD) kept as security for performance guarantee is taxable as business income Can be set off against project expenses. It was observed that the interest income earned by the assessee has to be treated as income from business and can be set off against the cost of construction. There is no doubt that the interest income pertained to the impugned assessment year and the concerned banks have deducted tax at source while crediting the interest income to the account of the assessee. The departmental authorities have rejected to grant a refund of the TDS amount as the interest income has been adjusted against the construction expenses.
CIT(A) can’t disallow Deduction claimed u/s 80P(2)(d) When Assessee filed Independent Auditor’s Report under Maharashtra Co-operative Societies Act – [ 2022 TAXSCAN (ITAT) 1876 ]
In, Neptune Snowden Peak Co-op. Housing Society Ltd,vs ITO Ward 26(1)(1), The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that CIT(A) can’t disallow deduction claimed u/s 80P(2)(d) of the Income Tax Act,1961 when assessee filed an independent auditor’s report under Maharashtra Co-operative Societies Act.The Tribunal observed that the CIT(A) also has invoked the provisions contained under section 44AB of the Act that the assessee has not filed audited accounts under the Income-tax Act. Since the assessee society is not required to file areport under section 44AB, the order passed by CIT(A) is not sustainable in the eyes of law.
Right to Personal Hearing is a Vested Right of Assessee under Income Tax Law – [ 2022 TAXSCAN (ITAT) 1908 ]
In, Parmjit Kaur Vs Income Tax Officer, Ward-2, Faridkot, In a significant ruling, the Amritsar bench of the Income Tax Appellate Tribunal (ITAT) has held that the right to personal hearing is a vested right of the assessee under section 144B(1)(xvi) of the Income Tax Act, 1961.
Non-Compete Agreement is an Intangible Asset, Depreciation allowable – [ 2022 TAXSCAN (ITAT) 1909 ]
In, Pentasoft Technologies Ltd. vs The Income Tax Officer (OSD), The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that a non-compete agreement is an intangible asset and depreciation is allowable on the same. A Coram comprising of Shri V Durga Rao, Judicial Member and Shri G Manjunatha, Accountant Member viewed that under the composite agreement, the transferor had transferred all its rights, copyrights, and trademarks in respect of the word ‘pentasoft’ as well as the training and development division exclusively to be exploited by the assessee.
MSME registered for Skill Development not eligible for Income Tax Exemption under Section 12AA of Income Tax Act – [ 2022 TAXSCAN (ITAT) 1911 ]
In, J.K. Council for Social Welfare And Information Technology vs CIT (Exemption), The Amritsar Bench of Income Tax Appellate Tribunal (ITAT) presided over by M.L.Meena (Accountant Member) and Anikesh Bnerjee (Judicial Member) upheld the decision of the Commissioner of Income Tax (Appeals). It was observed by the bench in the order of the CIT (A) that the objects in the case of the applicant are based merely on skill enhancement and no systematic education is involved. The aims of the applicant trust are to promote skill development among youth, school children in order to be eligible for suitable employment opportunities.
Development Expense and Exchange Fluctuation Loss deducted from Export Turnover must be deducted also from Total Turnover – [ 2022 TAXSCAN (ITAT) 1909 ]
In, Pentasoft Technologies Ltd. vs The Income Tax Officer (OSD), The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that Development expense and exchange fluctuation loss deducted from export turnover needs to be deducted from total turnover.The ITAT held that the AO & the CIT(A) erred in not excluding expenses deducted from export turnover from total turnover and further directedthe AO to exclude expenditure incurred towards software development and foreign exchange loss from total turnover also.
ITAT grants Opportunity to Assessee for Appearance before CIT(A) being Senior Citizen and not aware Digital Communication – [ 2022 TAXSCAN (ITAT) 1912 ]
In, Abdul Muqeet Mohammed vs The Asst. Commissioner of Income Tax, The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT), granted opportunity to assessee for appearance before Commissioner of Income Tax (Appeals) (CIT(A)) being Senior citizen and not aware digital communication.
Delay in filing TDS would attracts Late Fee u/s 243E of Income Tax Act – [ 2022 TAXSCAN (ITAT) 1913 ]
In, Reshma Devi vs CPC (TDS) Ghaziabad, Income Tax Appellate Tribunal (ITAT) of Amritsar bench, entertained by M.L. Meera (Accountant Member) and Anikesh Banerjee (Judicial Member) upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] National Faceless Appeal Centre (NFAC) that to levy the late fee on the assessee on filing Tax Deduction Source (TDS) late. The bench upheld the decision of the CIT(A) who justified in confirming the finding of the CPC (TDS) in levying late fee under section 234E of Income Tax Act amounting to Rs 30,600/- as per the law. Accordingly, the bench dismissed the appeal.
Depreciation can be allowed on Factual aspects under CBDT Instruction, even If the Value is not Recorded in Books of Account – [ 2022 TAXSCAN (ITAT) 1915 ]
In, Pathankot Hindu Urban Co-operative Bank Ltd vs Dy. CIT, The Amritsar bench of the Income Tax Appellate Tribunal ( ITAT ) has held that depreciation can be allowed on factual aspects under CBDT instruction, even if the value is not recorded in the books of account A Coram comprising of Dr M L Meena, Accountant Member and Sh. Anikesh Banerjee, Judicial Member observed that only the reflection in the books of account during the year cannot be the reason for the nonacceptance of the depreciation. The depreciation in stock or the selling investment has a clear effect on the net profit which is after all taken into the computation of the assessee. The provision of depreciation/diminution in the value of the investment is acted through an “investment fluctuation reserve account”.
Interest Paid is allowable u/s 36(1)(iii) of Income Tax Act When Funds are Borrowed for Construction Project – [ 2022 TAXSCAN (ITAT) 1916 ]
In, Keystone Realtors Pvt. Ltd. vs Dy. Commissioner of Income Tax Circle– (2)4, The Income Tax Appellate Tribunal( ITAT ), Mumbai Bench consisting of Prashant Maharshi, Accountant Member and Sandeep Singh Karhail, Judicial Member ruled that interest paid is allowable under Section 36(1)(iii) of the Income Tax Act when funds are borrowed for construction project. A Division Bench observed that “In the present case, since the funds were borrowed for the purpose ofprojects undertaken by the assessee, therefore, the interest paid on such borrowing is allowable under section 36(1)(iii) of the Income Tax Act. Accordingly, the AO is directed to grant the deduction under section 36(1)(iii) of the Income Tax Act in respect of the interest expenditure claimed by the assessee.”
Income Tax penalty levied u/s 271(1)(C) not attract as TDS already deducted under DTAA – [ 2022 TAXSCAN (ITAT) 1920 ]
In, Shri Karnail Singh vs Joint Commissioner of Income Tax, Income Tax Appellate Tribunal ( ITAT ) of Chandigarh bench ruled that the penalty under section 271(1)(c) does not attract as the Tax Deduction Source (TDS) already deducted under Double Taxation Avoidance Agreements ( DTAA ). Bench of Sudhanshu Srivatsava (Judicial Member) and Vikram Singh (Accountant Member) directed that the penalty levied and sustained by the Commissioner of Income Tax (Appeals) under section 271(1)(C) be deleted and the matter was decided in favour of the assessee.
Relief to CRI Group Royalty paid to Holding Company for Using Brand Name Deductible from Total Income, rules ITAT -[ 2022 TAXSCAN (ITAT) 1919 ]
In, Assistant Commissioner of Incometax vs M/s. CRI Pumps Pvt. Ltd., The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the amount of royalty paid to the Holding Company for using the brand name, being a revenue expenditure, shall be deductible under the Income Tax Act, 1961. A bench of Shri Mahavir Singh, Vice President and Shri G. Manjunatha, Accountant Member held that “In this view of the matter and consistent with the view taken by the co-ordinate bench in assessee’s own case for earlier assessment years, we are of the considered view that the assessee is entitled for deduction towards royalty payment to holding company for using brand name CRI and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the Revenue.”
Brand Promotion Expenditure to Force India are Revenue in Nature, allowable as Deduction – [ 2022 TAXSCAN (ITAT) 1917 ]
In, United Breweries Limited vs Deputy Commissioner of Income-tax, In a significant ruling in favour of United Breweries, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has held that advertisement expenses for brand promotion are revenue in nature and are allowable as deduction. It was observed that in the case of United Spirits Limited, the Tribunal held that “merely because the advantage may endure for an indefinite future would not mean that the expenditure would be on capital account and not revenue.”
Non-Submission of Documents due to Long Distance and Age, ITAT quashes Proceedings against Senior Citizen – [ 2022 TAXSCAN (ITAT) 1922 ]
In, ITO, Ward-(3) vs Sh. Subash Chander Saggi, Proceedings against a senior citizen on non-submission of the document were quashed by the Amritsar bench of the Income Tax Appellate Tribunal (ITAT) by considering the long distance and age. Further held that “the CIT(A) shall provide the proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidence/explanation submitted by the assessee in its defence shall be admitted by the CIT(A)and adjudicated by the CIT(A) on merits by law.”
Commission Agent not obliged to get Account Audited, Penalty u/s 271 B not leviable -[ 2022 TAXSCAN (ITAT) 1923 ]
In, Bablu Kumar Harinarayan Gupta vs ITO, The Pune bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the commission agent is not obliged to get the account audited and the penalty under section 271 B of the Income Tax Act,1961 is not leviable. Further observed that the appellant is only commission agent and there is no obligation on the part of the assessee to get the accounts audited as he was under the bonafide belief that it is only commission receipt, which can be considered as turnover for section 44AB of the Act.
Treating Share Subscription by One Party as Unexplained Cash Credit, ITAT deletes Income Tax Addition -[ 2022 TAXSCAN (ITAT) 1925 ]
In, A.G. Ferro Cast P Ltd vs ITO, The Income Tax Appellate Tribunal ( ITAT ), Kolkata Bench consisting of Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member deleted addition as there was treating share subscription by one party as unexplained cash credit. The Bench observed that “The Assessing Officer without pointing out any defect or infirmity in the evidences or details furnished by the assessee or any contradiction in the statement recorded u/s 131 of theAct has made the impugned addition only in the case of one party and having accepted the share subscription/share premium in the case of other parties. As observed above, the Assessing Officer even has not given any reasoning in the impugned assessment order for making the impugned addition.”
ICAI Guidelines for Calculating Turnover in Transactions related to Future and Options Reliable in the Absence of Statutory Provision -[ 2022 TAXSCAN (ITAT) 1926 ]
In, Shri Sanjay Marotrao Modak F-503 vs Dy. CIT, Circle 29(3), The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the ICAI ICAI Guidelines for calculating turnover in transactions related to future and options can be relied on in the absence of statutory provision under the Income Tax Act, 1961. Allowing relief to the assessee, the ITAT held that the validity of the ICAI guidance for calculating the turnover in case of derivatives has been reiterated by various judicial precedence.
Excess Claim of Expenditure not be proved by relevant Bills -[ 2022 TAXSCAN (ITAT) 1930 ]
In, Print Plus Private Limited 212 vs Income Tax Office 7(1)(4) Income Tax Office, The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), confirmed addition as the excess claim of expenditure not be proved by relevant bills. A Coram consisting of Aby T Varkey, Judicial Member and Om Prakash Kant, Accountant Member observed that “The assessee had already claimed expenses on various counts VIZ travelling, fuel expenditure and other expenses separately and the directors in their return of income has shown only remuneration at a total of Rs.23 lakhs and since the excess claim of expenditure on behalf of directors could not be provedby relevant bills, we agree with the impugned action of the CIT(A) on this issue and are inclined to confirm the same.”
NFAC bound to Follow CBDT Circular -[ 2022 TAXSCAN (ITAT) 1934 ]
In, Telangana Working Journalists Welfare Fund vs ITO, The Income Tax Appellate Tribunal ( ITAT ), Hyderabad bench has held that the National faceless Appeal Centre (NFAC) is bound to follow the circulars of the Central Board of Direct Taxes (CBDT). ITAT bench comprising Shri Rama Kanta Panda, Accountant Member and Shri K. Narasimha Chary, Judicial Member observed that “Since the above instruction dated 23.04.2019 and subsequent circular No.2/2020 vide F.No.197/55/2018-ITA-I dated 03.01.2020 were not considered by the CIT(A)/NFAC, although, these are instructions/circulars issued by the Board and are binding on the revenue authorities, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of CIT(A)/NFAC with the direction to adjudicate the issue afresh in the light of the circulars/instructions issued by the CBDT clarifying the time allowed for filing of return of income subsequent to the insertion of clause(ba) in sub-section (1) of section 12A of the Act. Needless to say, the CIT(A)/NFAC shall give due opportunity of being heard to the assessee and decide the issue as per fact and law.”
Relief to Doloo Tea Company – [ 2022 TAXSCAN (ITAT) 1932 ]
In, Doloo Tea Company (India) Ltd vs ACIT, Circle-4, The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT), deletes addition made by taxing sale of tea bushes and shade trees, thereby granting relief Doloo Tea Company (India) Ltd, the assessee. A Coram comprising Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member observed that “The action of the lower authorities in taxing compensation received on account of sale of tea bushes and shade trees cannot be held to be justified. The addition made by the lower authorities by taxing the sale of tea bushes and shade trees is ordered to be deleted.”
‘Tax Authorities should stop functioning with the colonial mindset dispensing justice to the colonies’ -[ 2022 TAXSCAN (ITAT) 1936 ]
In, Shri Rajbir Singh vs Pr. CIT, The Chandigarh Bench of the Income Tax Appellate Tribunal ( ITAT ) has recently observed “Tax Authorities should stop functioning with the colonial mindset dispensing justice to the colonies” and held that, “An assessee who is in possession of a validly passed assessment order cannot be required to again face the AO to support the return filed.”
Payment of Rs. 22 Lakh in Cash to Wholesale Dealer attracts Disallowance u/s 40A(3) -[ 2022 TAXSCAN (ITAT) 1933 ]
In, Shri Kalimuthu Harichandran vs ACIT, The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) disallowed the tax deduction on grounds that an amount of 22 Lakhs payment to the whole sale dealer was made fully in cash which is contrary to the provision of Section 40A(3) of Income Tax Act, 1961. The bench noted that the assessee, is a trader i.e.,retail and wholesale trader of dhall and oil and he admitted that he is making payment in cash in excess of Rs.20,000/- for purchase of dhall and oil and for which, he has made total payments to the extent of Rs.22,58,09,550.
Sec 69 of Income Tax Act not applicable when amount represents Sale Proceeds realized by Company -[ 2022 TAXSCAN (ITAT) 1940 ]
In, N.K. Proteins Pvt. Ltd. vs DCIT, The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ), ruled that Sec 69 of the Income Tax Act, 1961 not applicable when amount represents sale proceeds realized by company. A Coram consisting of Pramod M Jagtap, Vice President and Suchitra Kamble, Judicial Member observed that “We find merit in this contention of the Counsel for the assessee and since the DR has not been able to dispute the position that the amount in question represented sale proceeds realized by the assessee-company, we accept the contention of the Counsel for the assessee that Section 68 of the Income Tax Act has no application and the addition made by the Assessing Officer and confirmed by the learned CIT(A) on this issue by invoking Section 68 of the Income Tax Act cannot be sustained.”
Sale of CWO proved and recorded as Income in Books of Account -[2022 TAXSCAN (ITAT) 1940]
In, N.K. Proteins Pvt. Ltd. vs DCIT, The Income Tax Appellate Tribunal ( ITAT ), Ahmedabad Bench deleted addition on the ground of alleged non-genuine purchase as the sale of Cotton Wash Oil (CWO) was proved and recorded as income in books of account. A Coram consisting of Pratap M Jagtap, Vice President and Suchita Kamble, Judicial Member observed that “The said sale recorded and recognized by the assessee-company in its books of account was accepted by the authorities below and we find merit in the contention raised by the learned Counsel for the assessee that the corresponding purchases cannot be disallowed when the sale was accepted.”
VAT collected Separately from Customer differ from Charges u/s 40 (a) (iib), Deduction allowable -[ 2022 TAXSCAN (ITAT) 1924 ]
In, Tamilnadu State Marketing Corporation Ltd vs The ACIT, The Chennai bench of the Income Tax Appellate Tribunal (ITAT) VAT collected separate from customers different from charges u/s 40 (a) (iib) of the Income Tax Act,1961 and deductionis allowable. It was observed that the power of the State Government to levy tax on the sale and purchase of liquor and the power to levy fees are two different powers and are derived from two different entries in the State list. The fees levied under the power granted under Entry 69 cannot encompass tax levied by Entry 54. The appeal of the assessee was allowed.
Owner Selling Property through GPA Holder -[ 2022 TAXSCAN (ITAT) 1941 ]
In, Dr. Sabesan Parameswaran vs The ACIT, The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), confirmed income as Long Term Capital Gain in the case of owner selling property through General Power of Attorney (GPA). The Tribunal also noted that the PoA and sale deed both are executed on the same day by assessee as well as the GPA. It means the PoA holder has no legal right or interest in the property and entire consideration belongs to assessee or other co-owner. Even otherwise, S. Ramaswamy has not accounted for this consideration in his return of income or no capital gain is declared either short term or long term by S. Ramaswamy, the PoA holder in his return of income.
Exemption u/s 11 allowable on Income derived from Property held under Trust wholly for Charitable Purpose -[ 2022 TAXSCAN (ITAT) 1935 ]
In, Ghaziabad Development Authority vs JCIT, Exemption Range, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that Exemption u/s 11 of the Income Tax Act,1961 is allowable on income derived from property held under trust wholly for a charitable purpose. A Coram consisting of Sh. N. K. Choudhary, Judicial Member Dr B. R. R. Kumar, Accountant Member held thatthe assessee is found to be eligible for exemption u/s 11 for all the years pre and post-A.Y.2008-09, by the orders of the Tribunal and upheld the action of the Assessing Officer denying the exemption u/s 11 cannot be supported.
Concluded Assessment/ Reassessment cannot be disturbed in Absence of Incriminating Material during Search -[ 2022 TAXSCAN (ITAT) 1938 ]
In, Essel Mining & Industries Limited vs Deputy Commissioner of Income Tax, The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that concluded assessment/ reassessment cannot be disturbed in absence of incriminating material received during the search. The ITAT bench concluded that none of the additions that were made by the AO was based on reliance placed on search materials received from the Assessing Officer of the searched person and the assessment for A.Y.2010-11 had originally been completed u/s.143(3) of the Income Tax Act dated 28/03/2013.
Lack of Guidance by Tax Professionals in Filing Audit Report with Income Tax Return -[ 2022 TAXSCAN (ITAT) 1942 ]
In, Shardaben Education Trust vs Income Tax Officer, The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ), granted exemption under Section 11 of the Income Tax Act, 1961 to educational trust on lack of guidance by tax professionals. The Tribunal of Waseem Ahmed, Accountant Member observed that “Thus, the cumulative effect from the reading of the above facts reveals that there was lack of guidance on the part of the assessee by the tax professionals. Thus, in the event of any disallowance of the benefits available to the assessee, it will cause undue hardship to it in the given facts and circumstances.”
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