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 January 7 to January 13, 2023

Shares held as Investment can be allowed as Long-Term Capital Gain: ITAT - 2023 TAXSCAN (ITAT) 143

In, Shri Dipakbhai Harishchandra Shah vs ITO, The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the share held as an investment can be allowed as a long-term capital gain. Shri Dipakbhai Harishchandra Shah, the assessee challenged the order passed by the Commissioner of Income Tax(Appeals), Gandhinagar (CIT(A)) under section 250(6) of the Income Tax Act, 1961. A Coram comprising of Smt Annapurna Gupta, Accountant Member observed that the basic point for the AO for rejecting the assessee’s claim of long-term capital gain being that the assessee could not have held shares both as investment and stock-in-trade was dismissed by the CIT(A).

Sale of Domain Name to Resellers Not ‘Royalty’ , Income Tax Addition was deleted by ITAT –   2023 TAXSCAN (ITAT) 145

In, PDR Solutions FZC vs Dy. Commissioner of Income Tax, The income Tax Appellate Tribunal (ITAT) of Mumbai directed the Assessing Officer (AO) to delete the addition made on Domain Sale Income, recognised it as Trademark, and charged Royalty. The applicant contended that the AO erred in alleging that income from Domain Name Registration services is taxable as ‘Royalty’ under Section 9(1)(vi) of the Income Tax Act, 1961 (Act) and under the India- UAE treaty (tax treaty). The bench noted the case of DIT v. New Skies Satellite BV, [2016] 382 ITR 114, in which the Delhi High Court held that the Finance Act, 2012, which added Explanations 4, 5, and 6 to section 9(1)(vi), by itself would not affect the meaning of the term “royalty” as mentioned in the DTAA, unless the DTAA is amended jointly by both parties.

Amount received from Sale of Software Products not Royalty as per Article 12(3) of India -USA DTAA, not Taxable in India - 2023 TAXSCAN (ITAT) 141

In,  Digite Inc. USA vs ADIT, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the Amount received from the sale of software products is not royalty as per Article 12(3) of India -USA DTAA and is not taxable in India. Digite Inc. USA, the assessee is a foreign company stated to be engaged in the business of development and sales of Project Management Software (‘PMS’) Licenses to various customers all over the world. Assessee electronically filed its return of income declaring total income at Rs. Nil.

Settlement of Dispute under VSVS Scheme on Computing Income in terms of APA between Parties - 2023 TAXSCAN (ITAT) 147

In, Assistant Commissioner of Incometax vs M/s. Calchennai Mobile Worx P.Ltd, In a recent ruling, the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has ordered adjudication when the settlement of a dispute under the Vivad se Vishwas (VSVS) Scheme on computing income in terms of APA between parties. Calchennai Mobile Worx P.Ltd., the assessee company is a digital mobile advertising company based in Chennai with offices in the USA.  The assessee owned two intellectual property rights in the name of Los Angeles & Dex Monics, Zest ADZ which essentially helps advertisers and agencies deliver targeted mobile advertising campaigns to drive brand awareness, and marketing in smartphone and feature phone platforms.

Relief to Tata Industries: ITAT allows set off of brought Forward Business Losses against Foreign Dividend Income - 2023 TAXSCAN (ITAT) 146

In, Tata Industries Limited Bombay House vs The Dy. Commissioner of Income Tax, As a relief to  Tata Industries, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) allowed the set offof brought forward business losses against foreign dividend income. The assessee challenged the order of CIT(A) in not granting set off of current year business loss against foreign dividend income and upholding the levy of tax u/s 115BBD of the Income Tax Act, 1961 on gross foreign dividend income. It was viewed that the non-obstante clause is provided in section 115BBD(1) of the Income Tax  Act itself. Hence it would cover both current year loss as well as brought forward business loss.   In light of the judicial precedents, the Tribunal held that “the assessee would be entitled to set off of brought forward business losses against foreign dividend income. Hence the assessee would also be eligible for set off of current year loss against foreign dividend income.  “

Payment of Lease Rentals on Annual basis would attract TDS u/s 194-I of Income Tax Act

- 2023 TAXSCAN (ITAT) 137

In, Ajnara India Ltd vs ITO, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the payment of lease rentals on annual basis would attract TDS under section 194-I of the Income Tax Act, 1961. Ajnara India Ltd, the assessee is a company engaged in the business of development, and construction of real estate and infrastructure projects. The assessee acquired a plot from NOIDA Authority on a perpetual lease for the development of a residential and commercial project and made payments during the year on account of annual lease rent without deduction of tax at source. A Coram comprising of shri N K Billaiya, Accountant Member and Ms Astha Chandra, Judicial Member viewed that the said payments attracted TDS liability under section 194-I of the Act and upheld the order of the CIT(A). The ITAT held that the assessee is liable for interest under section 201(1A) of the Income Tax Act and dismissed the appeal of the assessee.

Job Work Expenses can’t be disallowed in absence of Culpable Evidence with Revenue - 2023 TAXSCAN (ITAT) 138

In, United Foods Private Limited vs ACIT, In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that job work expenses can’t be disallowed in absence of culpable evidence with revenue. United Foods Private Limited, the assessee is a private limited company carrying on the business of trade of rice and other agro products. The return filed by the assessee was subjected to scrutiny assessment. A Coram comprising of Shri Pradip Kumar Kedia, Accountant Member & Shri Narender Kumar Choudhry, Judicial Member observed that in the absence of any culpable evidence in possession of revenue, the job work expenses deserve to be allowed, on a standalone basis, as incurred in the ordinary course of business.

Appeal via Electronic Mode is Procedural Requirement, Non-Compliance cannot be Hindrance to Justice - 2023 TAXSCAN (ITAT) 139

 In, Shri Hemendra Lilachand Shah vs Income Tax Officer, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that non-compliance of appeal via electronic mode cannot be a hindrance to justice as it was a procedural requirement. Shri Hemendra Lilachand Shah, the assessee filed an appeal by a delay of 874 days before the ITAT. The assessee submitted that the order of the CIT(A) was handed over to the staff namely Shri Dinesh Desai who left the organization as the assessee was facing severe financial crises. The assessee could not repay the money borrowed from Visnagar Co-operative Bank for which the case is pending before the Metropolitan Court. A Coram comprising of Shri Waseem Ahmed, Accountant Member viewed that the requirement of filing an appeal before the CIT (A) in electronic form was new and the assessee being an individual filed an appeal before CIT(A) within the time limit but in a paper dated 18th April 2016 instead of filing online as required by the CBDT notification dated 1st March 2016.

Dividend Income Earned on Shares are Exempted u/s 10(34), No Tax Liability - 2023 TAXSCAN (ITAT) 140

In, The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that disallowance under section 14A of the Income Tax Act,1961 does not apply to interest income earned from the negative capital of the partnership. Shri Dipakbhai Harishchandra Shah, the assessee challenged the order passed by the Commissioner of Income Tax(Appeals), Gandhinagar (CIT(A)) under section 250(6) of the Income Tax Act, 1961. The Tribunal viewed that the AO has rightly pointed out that Section 10(34) makes no distinction whatever between the dividend income earned on shares held as stock-on-hand and that held as an investment. In light of the Judicial precedents, the Tribunal held that the assessee is entitled to claim an exemption of dividend income of Rs.2,63,064/-.

Foreign Dividend Income Which is Chargeable to Tax is outside the provision of 14 A - 2023 TAXSCAN (ITAT) 146

In, Tata Industries Limited Bombay House vs The Dy. Commissioner of Income Tax, In a significant case of Tata Industries, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that foreign dividend income which is chargeable to tax is outside the provision of 14 A of the Income Tax Act,1961. In a significant case of Tata Industries, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that foreign dividend income which is chargeable to tax is outside the provision of 14 A of the Income Tax Act,1961. The revenue challenged the order of CIT(A) about the disallowance u/s 14A of the Act both under normal provisions of the Act as well as in the computation of book profits u/s 115JB of the Income Tax Act.

TAT allows TDS Credit for Assessment Year for Which Income is Assessable - 2023 TAXSCAN (ITAT) 148

In, Prakash Sunrise Healthcare Limited vs Income Tax Officer, The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed TDS Credit for the assessment year for which income is assessable. Prakash Sunrise Healthcare Limited, the assessee is carrying on the business of running and maintaining of Nursing Home and has been imparting medical services to various government employees including military personnel for and on behalf of the CGHS and ECHS. The Assessee filed its return of income declaring a total income of Rs.1,92,27,329/- for which the total receipts of business and profession were declared at Rs.7,58,33,708/-. It was observed that the assessee follows the accrual method of accounting whereas the corresponding deductors follow the cash method and deducted TDS in the year in which the invoice of the assessee is acknowledged and accounting entries are made in their books. The Tribunal noted that the assessee has placed threadbare details of various patients availing services of the assessee’s nursing home through the deductor agencies.

ITAT deletes Income Tax Addition u/s 68 When Assessee submitted Corroborative Evidence related to Creditors - 2023 TAXSCAN (ITAT) 144

In,  Sohanraj Khimraj Kothari vs JCIT, The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of unexplained Creditors under section 68 of the Income Tax Act,1961 when the assessee submitted Corroborative Evidence related to creditors. Sohanraj Khimraj Kothari, the assessee challenged the action of the Revenue authorities in making the addition of Rs.1,61,960/- on account of unexplained cash credit under section 68 of the Income Tax Act.  In the light of the availability of confirmation filed in physical form before the First Appellate Authority, a coram comprising of Shri N V Vasudevan, Vice President remanded the issue to the AO for consideration afresh in the light of the confirmation already filed before the First Appellate Authority in physical. The appeal of the assessee was partly allowed.

Mere Agreement to Sell Immovable Property without giving Possession to Buyer, not a Transfer of Asset u/s 2(47) - 2023 TAXSCAN (ITAT) 142

In, Assistant Commissioner of Income tax vs Shree Ami Office Owner’s Association, The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that a mere agreement to sell the immovable property without giving possession to the buyer, not a transfer of assets under section 2(47) of the Income Tax Act,1961. Shree Ami Office Owner’s Association, the assessee is an association of persons (AOP) registered under the provisions of the Bombay Non-Trading Corporation Act, purchased a property in an auction carried out by the office of the Chief Commissioner of income tax, Gujarat, Ahmedabad for a total consideration of 57 lakhs. The Tribunal held that where the assessee merely agreed to sell the immovable property without giving possession to the buyer, where there was nothing to show that possession was ever delivered by the assessee to the purchaser in part performance of the agreement for sale, there was no transfer within the meaning of section 2(47)(v) of the Act.

Disallowance u/s 14A not applicable on Interest Income earned from Negative Capital of Partnership - 2023 TAXSCAN (ITAT) 140

In, Shri Dipakbhai Harishchandra Shah vs ITO, The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that disallowance under section 14A of the Income Tax Act,1961 does not apply to interest income earned from the negative capital of the partnership. Shri Dipakbhai Harishchandra Shah,the assesseechallenged the order passed by the Commissioner of Income Tax(Appeals), Gandhinagar (CIT(A)) under section 250(6) of the Income Tax Act, 1961. A Coram comprising of Smt Annapurna Gupta, Accountant Member observed that no disallowance of interest u/s14A of the Act was warranted. It was observed that even machinery provision of computing the disallowance as per the Rule 8D of the Income Tax Rules,1962 becomes unworkable since the formula provided in the said rule for calculating the disallowance of interest is based on the investment made by the assessee for earning exempt income, which negative investment.

Shareholders failed to prove Source of their Investments - 2023 TAXSCAN (ITAT) 149

In, Income Tax Officer vs M/s. Pritham and Prathik Hospitals Pvt. Limited, The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) grants the opportunity to prove the genuineness and creditworthiness of shareholders as they file to prove the source of Investment. A survey under section 133A of the Income Tax Act, 1961 was conducted at the business premises of Pritham and Prathik, the assessee and during the survey proceedings, certain documents/loose sheets found at the business premises were impounded.   The Assessee company did not file its Return of Income for the A.Y.2014-15. A Coram comprising of Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member remanded the matter to the file of the Assessing Officer to produce the shareholders before the Assessing Officer to prove the genuineness, creditworthiness and identity of the shareholders to prove the case. The appeal of Revenue is partly allowed for statistical purposes. 

Assessing Officer cannot refer matter to DVO without rejecting Books of Account - 2023 TAXSCAN (ITAT) 149

In, The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has held that Assessing Officer (AO) cannot refer the matter to DVO without rejecting the books of account. The revenue challenged the order of CIT(A) by holding that the reference to Valuation Officer cannot be made without rejecting the books of account, by ignoring the amended provisions of 142A(2) of the Income Tax Act w.e.f. 01-10-2014 which stipulates that the AO may make a reference to the Valuation Officer, whether or not satisfied with the correctness or completeness of the accounts of the assessee. A Coram comprising of Shri R.K. Panda, Accountant Member and  Shri Laliet Kumar, Judicial Member observed that before 01.10.2014 it was essential for the Assessing Officer to reject the books of accounts of the assessee before referring the matter to the Valuation Officer which has been failed to do.

Nadiadwala Entertainment cannot Claim Loss in respect of Expenses Incurred on Film ‘Aarakshan’ - 2023 TAXSCAN (ITAT) 156

In, ACIT vs Nadiadwala Entertainment & Technologies Ltd., While holding that the investment for the purchase of distribution of a film is “intangible right,” the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has disallowed the claim of M/s Nadiadwala Entertainment to treat the expenses incurred on the film “aarakshan” as loss under the Income Tax Act, 1961. The assessee, M/s Nadiadwala Entertainment & Technologies Ltdadvanced a sum of Rs.8.9 crores to “Prakash Jha Production” on account of feature film “Arakshan”. It was claimed by the assessee that t said the investment was made for purchase of distribution rights of the film. In the assessment completed, the Assessing Officer disallowed the loss on account of operating expenses of Rs.5.90 crores holding that same being in the nature of prior period expenses and hence not allowable in the year under consideration. A bench of Om Prakash Kant (Accountant Member) and Shri Sandeep Singh Karhail (Judicial Member) has held that “the assessee has not incurred expenses for production of the film whereas, the assessee claimed that the said investment was made for purchase of distribution right of the film which are in the nature of intangible assets and therefore investment was for purchase of capital asset and loss incurred on the same is in the nature on opinion, finding of the Ld. CIT(A) on the issue reasoned and no interference is required in the same.”

Income Tax Dept cannot Avail Extended Time Limit for Re-Assessment without New or Tangible Material - 2023 TAXSCAN (ITAT) 151

In, Global Arkitekts P. Ltd. vs ITO, The Income Tax Appellate Tribunal (ITAT), Chennai bench has held the income tax department cannot avail the extended time limit for re-assessment under the Income Tax Act, 1961 without new or tangible material. The assessee, M/s. Global Arkitekts P. Ltd contended before the ITAT that the notice issued under section 148 is without any basis and without any reasonable belief. It was argued that the reopening has been resorted to based on information already available in the return of income and therefore, reopening beyond 4 years is not permissible in terms of various judicial pronouncements.

Filing of Income Tax Return within Due Date is Mandatory Not Directory to Claim Benefit u/s 10A - 2023 TAXSCAN (ITAT) 155

In, Redisolve Software P. Ltd vs The Deputy Commissioner of Income Tax, The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the filing of the income tax return under section 139 of the Income Tax Act, 1961 is mandatory not directory to claim the tax benefit under section 10A of the Income Tax Act, 1961. Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member held that “in the case of Saffire Garments v. ITO (supra), wherein, the Special Bench has held that to claim a benefit under section 10A of the Act, the return of income has to be filed under section 139 of the Act and it is a mandatory and not directory. Respectfully following the decision of the Rajkot Special Bench, we reject the arguments of the ld. Counsel for the assessee and the appeals filed by the assessee for the assessment years 2011- 12 and 2012-13 are dismissed.”

Income Tax Deduction to Manufacturing Unit cannot be Disallowed Even If Part of Activities are done Outside Unit - 2023 TAXSCAN (ITAT) 150

In, Dy. Commissioner of Income Tax vs ACE Plastics, The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench has held that the income tax deduction under section 80IB of the Income Tax Act, 1961 cannot be disallowed even if the part of manufacturing activities are being done from outside the unit. The Assessee, M/s ACE Plastics is into the business of manufacturing of plastic containers, bottles, caps etc., filed return by declaring its income at Rs.39,62,080/- and also claimed deduction under section 80IB of the Income Tax Act, 1961. The AO, while concluding the re-assessment proceedings, disallowed Rs.5,46,724/- out of the total deduction claimed by the assessee under section 80IB of the Act amounting to Rs.13,20,693/-. Dismissing the appeal filed by the income tax department, the ITAT held that “This view has also been affirmed by the Hon’ble Bombay High Court in case of Penwalt India Ltd. 196 ITR 813 (Bom.) and CIT vs. Oricon P. Ltd. 151 ITR 296. So merely because of the fact that part of the manufacturing process resulting in N products was carried on by an outside agency the assessee would still be considered as manufacturer. The coordinate Bench of the Tribunal has also taken identical view in case of Sunrise Metal Industries (supra). The Ld. D.R. for the Revenue has failed to bring on record if this settled proposition of law has been overturned by any higher forum.”

AO cannot Suspect Genuineness of Parties Once TDS Element is Reflected in Form 26AS - 2023 TAXSCAN (ITAT) 152

In, Globus Realcom Pvt Ltd vs Dy. C.I.T, The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the Assessing Officer cannot reject the genuineness of the parties once the TDS element is reflected in the form 26AS during the income tax proceedings. Considering the fact thatthe transaction wherein complete details have been furnished alongwith TDS details, the ITAT held that “once TDS element is reflected in Form No. 26AS, the Assessing Officer cannot allege that the parties are not genuine. Moreover, full details are available on record. Therefore, we do not find any reason in sustaining the disallowance. Findings of the ld. CIT(A) are set aside and the Assessing Officer is directed to delete the impugned disallowance.”

Claim of FTC can’t be disallowed merely on delay in filing Form 67 - 2023 TAXSCAN (ITAT) 157

The ITAT has held that the Claim of Foreign Tax Credit( FTC) can’t be disallowed merely on delay in filing Form 67. A Coram comprising of Shri M. Balaganesh, Accountant Member and Shri Rahul Chaudhary, Judicial Member held that the requirement of filing Form 67 is a directory in nature which is evident from the fact that Rule 128(9) does not contemplate disallowance of FTC in case of delay in complying with such condition.

The Tribunal further held that the Appellant‟s claim for FTC cannot be denied for the reasons mentioned by the CIT(A). The Appellant is entitled to claim FTC of INR 4,30,399/- on the strength of Form 67 filed along with the revised return and the Assessing Officer is directed to grant the same.

No Information as to Purchase in Books of Accounts was adjusted for Purchase Return : ITAT restores matter - 2023 TAXSCAN (ITAT) 159

The  ITAT, restored matter to the file of Assessing Officer (AO) on the ground that no information as to purchase in books of accounts was adjusted for purchase return. A Bench comprising Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “However, at the time of hearing neither the AR nor the DR has brought anything to our notice about the fact that the purchase shown by the assessee in the books of accounts was adjusted on account of purchase return. In the absence of such information, we are setting aside the issue to the file of the AO to the extent of verifying whether the purchases shown by the assessee has been adjusted on account of purchase return.”

Any Action of Income Tax Dept Violating CBDT Instructions Untenable in Law: ITAT - 2023 TAXSCAN (ITAT) 161

The ITAT, Pune bench has held that any action of the income tax department violating the instructions of the CBDT is untenable under the law. The Tribunal allowed the plea of the assessee and observed that “ the High Court held that, the instruction issued by the mother body i.e. CBDT undisputedly are binding on the department and any action in violation thereof renders it as untenable in law, consequently in the extant case, assessment been carried out in violation of instruction issued by CBDT deserves to be quashed, ergo we set-aside the first appellate order passed u/s 250 and quash the order of assessment passed u/s 143(3) of the Act as bad in law.

Order passed by TPO u/s 92CA(3A) on 30 May 2014 is barred by limitation - 2023 TAXSCAN (ITAT) 158

The Mumbai bench of the ITAT has held that the Order passed by TPO under section 92CA(3A) of the Income Tax Act,1961 on 30 May 2014 is barred by limitation and deleted the Transfer Pricing Adjustment. A Coram comprising of Shri B R Baskaran, Accountant Member and Shri Rahul Chaudhary, Judicial Member observed that sub-section (3A) to section 92CA has been inserted w.e.f. 01.06.2007 providing time limit for the Transfer Pricing Officer to pass the order i.e. within a period of 60 days before the date of completion of assessment as per section 153.

Re-Assessment cannot be based on “Reason to Suspect” - 2023 TAXSCAN (ITAT) 164

The Mumbai bench of the ITAT held that the re-assessment under sections 147/148 of the Income Tax Act, 1961 shall be based on “reason to believe” not on “reason to suspect.” Quashing the re-assessment, the Two-Member ITAT held that “the fine distinction between “right to suspect” and “right to believe” has to be kept in mind while examining the condition precedent for reopening an assessment as stipulated u/s 147 of the Act for the relevant year under consideration (AY. 2009-10). Here in this case, the DGIT (Inv.) had passed on an information regarding the assessee’s claim of expenses to the tune of Rs. 6,16,79,235/- to be bogus, which assessee has supposed to have incurred while purchasing goods from certain parties. Having received such an information from the DGIT(Inv.), it should have at best triggered “reason to suspect”, then AO should have made reasonable inquiry and collected material which would make him form a belief that there was in fact escapement of income; but in this case, we note that the reason recorded (supra) by the AO before re-opening the assessment does not satisfy the requisite requirement as necessary u/s 147 of the Act to validly reopen the assessment.”

S. 40A(3) of Income Tax Act cannot be Invoked When No Single Transaction Exceeds Rs. 20,000 - 2023 TAXSCAN (ITAT) 165

The Income Tax Appellate Tribunal (ITAT), Kolkata ruled that the provisions of section 40A(3) of the Income Tax Act, 1961 cannot be attracted when there is not a single transaction exceeded the treshod limit of Rs. 20,000. A bench of Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member observed that there is no reason to interfere with the order of the CIT(A).

No Disallowance u/s 40(a)(ia) in absence of TDS Deduction on Purchase of Trade items - 2023 TAXSCAN (ITAT) 163

The Lucknow bench of the Income Tax Appellate Tribunal ( ITAT ) has held that disallowance under section 40(a)(ia) of the Income Tax Act, 1961 is not allowable in the absence of TDS  deduction on the Purchase of trade items. The Tribunal held that “once no TDS is liable to be deducted on these purchases, no disallowance under section 40 (a)(ia) of the I.T. Act can be attracted. Hence, we delete this addition and allow this issue of the assessee’s appeal.”

Relief to Infosys: ITAT directs to delete Income Tax Addition of SEZ Book Profits u/s. 115JB - 2023 TAXSCAN (ITAT) 162

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT), directed the Assessing Officer (AO) to delete addition of Special Economic Zone (SEZ) book profits under Section 115JB of the Income Tax Act, 1961, thereby granting relief to M/s. Infosys Ltd. The Bench comprising Chandra Poojari, Accountant Member and Beena Pillai, Judicial Member observed that “This issue is no longer resintegra and the same stands settled by the decision of the Special Bench of Delhi Tribunal in case of ACIT vs. Vireet Investment (P) Ltd. We accordingly direct the AO to delete the disallowance added while computing book profits.”

Restaurant Business Eligible to Declare Income Tax on Presumptive Basis - 2023 TAXSCAN (ITAT) 166

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the restaurant is an “eligible business” to attract section 44AD of the Income Tax Act, 1961 on a presumptive basis. held that “the intention of the legislature in case of computing profit and gains of business on presumptive basis is to enhance the tax payers to declare income at the minimum rate prescribed u/s.44AD and also allows the assessee to offer income higher than the said prescribed rate, in case of business, whose total turnover or gross receipts in the previous year, does not exceed the amount prescribed under law. The lower authorities have not denied the fact that the assessee is an ‘eligible assessee’, carrying out ‘eligible business’ under the provisions of section 44AD of the Act. On this observation, we hold that the assessee’s declaration of income u/s. 44AD of the Act is justified and the A.O.’s contention that the assessee has not maintained its books of account in such case, is not warranted.”

Failure to Carry Investigation by AO: ITAT discredits Seized Loose Papers as Dumb Documents - 2022 TAXSCAN (ITAT) 1160

Income Tax Appellate Tribunal (ITAT), Pune discredited seized loose papers as dumb documents on the ground of failure to carry investigation by Assessing Officer (AO). The Bench consisting of SS Vishwanetra Ravi, Judicial Member and GD Padmahshali, Accountant Member observed that there had been no corroborative evidence and no adverse inference could be drawn against the assessee in terms of alleged entries of loose papers Even the CIT(A) clearly held that the AO squarely failed to carry out necessary investigation/enquiries from the buyer M/s Krupa Land, meaning thereby, the CIT(A) also discredited the entries alleged to have been found in the seized loose papers as dumb documents.

Relief to MUFG Bank, Comparable Uncontrolled Price method for ALP bench marking International Transactions not justified - 2023 TAXSCAN (ITAT) 167

In the case of MUFG Bank, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the Comparable Uncontrolled Price method for ALP bench marking international transactions is not justified. A Coram comprising of Shri Pradip Kumar Kedia, Accountant Member &  Shri Narender Kumar Choudhry, Judicial Member observed that the counter-guarantee with negligible risks can not per se be compared with the guarantee offered by independent parties/ banks shouldering very high-risk parameters as also observed by the co-ordinate bench in other assessment years.

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