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 22 to January 28, 2023
M/s.Piprani Equipment P.Ltd. vs ITO CITATION: 2023 TAXSCAN (ITAT) 206
The Ahmedabad Income Tax Appellate Tribunal (ITAT) deleted disallowance under section 40A(3) of the Income Tax Appellate Tribunal when the assessee made payment in cash not directly to the seller.
M/s.Piprani Equipment P.Ltd, the assessee challenged the order passed by the Commissioner of Income Tax(Appeals)-9,(CIT(A)) under section 250(6) of the Income Tax Act, 1961.
The Tribunal observed that the sellers on affidavits stated that they did not have any bank account and had therefore insisted on receiving money in cash. It was evident that the situation envisaged in clause (k) of Rule 6DD is satisfied in the present case, and therefore, the assessee is entitled to be exempt from the rigors of section 40A(3) of the Income Tax Act.
Manjush Kumar vs ACIT CITATION: 2023 TAXSCAN (ITAT) 207
The Income Tax Appellate Tribunal Recently held that assessee should file a rectification application to rectify typographical errors in Income Tax Return hence the assessee could not prefer appeal before ITAT.
The division bench of the ITAT comprising B. R. R. Kumar, (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) held that order of the CIT(A)neither erroneous nor has any legal infirmity in providing the liberty to more rectification application under section 154 of the Income Tax Act 1961.before Assessing Officer.
DCIT vs TPS Infrastructure Ltd CITATION: 2023 TAXSCAN (ITAT) 208
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT), ruled that purchase of Own Share under Buy-Back Scheme would not attract 56(2)(viia) of Income Tax Act, 1961. The assessee in the present matter is TPS Infrastructure Ltd.
The Bench comprising Shamim Yahya, Accountant Member and CM Garg, Judicial Member relying on the judgment M/s Vohra Financial Services Pvt. Ltd in observed that “The provisions of section 56(2)(viia) of the Income Tax Act are applicable only in the cases where the purchased share become property in the hands of the buyer company and, if the shares are of any other company. But, in the present case, the assessee purchased its own shares under buyback scheme, and, as per the submissions made by the ld. Counsel at the bar, the same has been extinguished by reducing the paid up capital of the assessee company.”
ASK Investment Managers Limited vs DCIT-6(1)(2) CITATION: 2023 TAXSCAN (ITAT) 209
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) in a recent ruling deleted the excess interest under Section 234C of the Income Tax Act 1961 observing that the Portfolio Management Company could not be able to determine the performance fee on an estimated basis to pay the Advance Tax.
The Mumbai Bench ofAmarjith Singh (Accountant Member) and Rahul Chaudhari (Judicial Member) observed that the assessee could not be able to anticipate the events which would take place in the next financial year and pay advance tax on the basis of those anticipated events. The bench thereby deleted the excess interest under Section 243C of the Act.
BIBA Apparels Private Ltd vs ACIT CITATION: 2023 TAXSCAN (ITAT) 210
The Income Tax appellate tribunal (ITAT) , Delhi Bench granted relief to BIBA Apparels Private Ltd. Company and held that Common Area Maintenance was not part of rent hence there is no default by the assessee for filing Tax Deduction at Source (TDS).
The Division bench of ITAT Delhi comprising Anil Chaturvedi, Accountant Member, and C.M. Garg, Judicial Member, allowed the appeal and held that Payments of rent and common area maintenance charges have been made to distinct companies, therefore, the authorities below was not right in creating the impugned liability payable by the assessee firm under the provisions of subsections (1) and (1A) of section 201 of the Income Tax Act 1961.
Jt. Commissioner of Income Tax vs Shri Sujan Azad Parikh CITATION: 2023 TAXSCAN (ITAT) 211
In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that Loss from the sale of shares and mutual funds which Securities Transaction Tax (STT) paid can’t be set off against Long Term Capital Gain ( LTCG ) arising out as per Section 70(3) of the Income Tax Act, 1961.
A Coram comprising Shri Prashant Maharishi, Accountant Member and Shri Sandeep Singh Karhail, Judicial Member observed that the application of section 703) by the assessee is incorrect and illegal. The Assessing Officer appreciated the objection, applied the law to the circumstances of the case, and recorded the findings.
Bokaro Power Supply Co. Pvt. Ltd vs Addl. CIT Special Range- 2 CITATION: 2023 TAXSCAN (ITAT) 212
The Income Tax appellate tribunal in a case recently held that no interest was levied on joint Venture companies for filing Income Tax Return and Form 3CEB on the last date of return filing.
The Division bench of ITAT Delhi comprising Narendra Kumar Billaiya, Accountant Member, and Chandra Mohan Garg Judicial Member, allowed the appeal and held that interest for delay in filing the Income Tax Return under section 234A of Income Tax Act 1961 was not liable to the assessee.
Anushree Agarwal vs A.C.I.T CITATION: 2023 TAXSCAN (ITAT) 213
Income Tax Appellate Tribunal (ITAT) Kolkata Bench ruled that the housing loan and interest paid for construction of the rented house is eligible for Deduction under the section 2(24)(b) of Income Tax Act, 1961.
The Manishborad (Accountant Member) bench overturned the CIT(A) decision and determined that the assessee is entitled to a deduction for interest paid on a loan of Rs. 4,62,710 under section 2(24)(b) of the Income Tax Act.
M/s. Google India Pvt. Ltd. vs The JDIT CITATION: 2023 TAXSCAN (ITAT) 215
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has recently held that payment by Google India to Google Ireland for the purchase of online advertisement space for onward resale to Indian advertisers does not amount to Royalty as per Article 12(3)(a) of India-Ireland Double Taxation Avoidance Agreement (DTAA).
It was observed in the earlier decision that perused the Google AdWords Program Distribution Agreement that, “When, under a non-exclusive license, an end-user gets the right to use computer software in the form of a CD, the end-user only receives a right to use the software and nothing more. The end-user does not get any of the rights that the owner continues to retain under Section 14(b) of the Copyright Act”
Shri Bharat Keshavlal Shah vs Pr. Commissioner of Income Tax-3 CITATION: 2023 TAXSCAN (ITAT) 216
Pune Income Tax Appellate Tribunal (ITAT) directed the Assessing Officer (AO) to re-do the addition under section 56(2)(vii) of Income Tax Act, 1961 as Section 50C of Income Tax is not applicable to buyers of property.
agreement.
The bench opined that the only difference in section 50C of Income Tax Act vis-a-vis under section 56(2)(vii) of Income Tax Act is that the former applies in case of transfer of a capital asset in the hands of the vendor whereas the latter one gets attracted in the purchaser/vendee’s case, respectively.
H.K. InfraventurePvt. Ltd. vs Joint Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 217
Income Tax Appellate Tribunal ( ITAT ) upheld the addition for exceeding the limit of cash transactions under section 269SS of Income Tax Act, 1961 made by the Assessing Officer (AO). The authorities of Vijay Pal Rao (Judicial Member) and Ramit Kochar (Accountant Member) observed that the private limited company and director were different persons.
The bench observed the statutory provisions of section 269SS, section 271D and section 273B were introduced as a measure to counter check evasion of taxes, which are in fact anti tax-evasion measures. The tribunal further acknowledged that the language used to define loan or deposit in Section 269SS is of the widest amplitude, and even exemptions are provided in the first and second provision to Section 269SS, which, incidentally, do not cover Directors of Private Limited Companies.
VGA Digital Printers Pvt. Ltd vs JCIT CITATION: 2023 TAXSCAN (ITAT) 218
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the assessee, VGA Digital Printers Eligible for Deduction in respect of Bad Debt from Reliance Communications.
The Pune Tribunal Bench of Vice President R S Syal and Judicial Member Partha Sarathi Chaudhury observed that, the assessee did write off Rs.19,22,610/- as Bad Debt in its books of account. Mere writing off the amount as bad debt is sufficient for claiming deduction under Section 36(1)(vii) of the Income Tax Act, 1961.
Devyani International Limited vs ACIT, Circle-74(1) CITATION: 2023 TAXSCAN (ITAT) 219
The Delhi Bench of Income Tax Appellate Tribunal (ITAT)has held that the common area maintenance charges would be subjected to 2% of Tax Deducted at Source ( TDS) under Section 194C of the Income Tax Act 1961
The Bench of Chandra Mohan Garg, (Judicial Member)and Shri Pradip Kumar Kedia, (Accountant Member) held that the action of the assessee for deduction of TDS at 2% of CAM charges under Section 194C could not be faulted per se and assessee could not be regarded as assessee in default under Section 201(1)/201(1A) of the Act. The bench allowed the appeal observing that the common area maintenance charges were not forming the part of the actual rent paid to the owner by the assessee company as a separate agreement was between the Owner, Tenant and service provider for common area maintenance.
DCIT vs Shah Bafna Associates CITATION: 2023 TAXSCAN (ITAT) 220
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has upheld the decision of Commissioner of Income Tax (CIT(A) that there were no provisions under Profits and Gains from Business or Profession which treat Rent from Unsold Flats held as Stock as ‘Business income’.
The Bench upheld the CIT(A) decision referring to Cosmopolis Construction vs. ITO that no provision was present under the heading “Profits and Gains from business or profession” which deemed the rental income from unsold flats held as stock as ‘Business income’.
Sureshbhai Vihabhai Patel vs I.T.O CITATION: 2023 TAXSCAN (ITAT) 221
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) in a recent ruling has held that the downfall in Gross Profit Ratio could not be the sole basis for making addition.
The bench of Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member)observed that the necessary details furnished by the assessee during the respective proceedings had not been appreciated in the right perspective by the lower authorities. The Bench held that the downfall in the gross profit ratio would not give any authority to the revenue to make any addition without pointing out any defect in the amount of purchases, sales stock shown in the books of accounts. The bench allowed the appeal filed by the assessee for the statistical purposes.
Unifrax India Ltd vs The Joint Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 222
The Mumbai Bench of Income Tax Appellate tribunal has held that the appellate authorities under Income Tax Act have jurisdiction to entertain the additional claim raised by the assessee.
The Mumbai Bench of Prashant Maharishi (Accountant Member) and Rahul Chaudhary (Judicial Member) observed that, “An assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims. The appellate authorities have the discretion whether or not to permit such additional claims to be raised.”. The bench held that the authorities had the jurisdiction to entertain the new claim.
M/s. Tyco Fire and Security India Private Limited vs ACIT CITATION: 2023 TAXSCAN (ITAT) 223
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench deleted disallowance under Section 40(a)(ai) of the Income Tax Act, 1961 on the ground that no availability of technical knowledge, experience, skill on services provided by non-residents.
Deleting the disallowance under Section 40(a)(ai) of the Income Tax Act, the Bench comprising Chandra Poojari, Accountant Member and NV Vasudevan, Vice President observed that “In our view the services rendered were purely managerial services and by no stretch of imagination can be considered as making available any technical knowledge, experience, skill, know-how or processes, to the assessee.”
S.R. Technics Switzerland Ltd vs ACIT CITATION: 2023 TAXSCAN (ITAT) 224
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) observed that activities by Liaison Office (LO) are proprietary in nature and hence are not Permanent Establishment (PE) under India Switzerland Double Taxation Avoidance Agreement (DTAA).
The Bench comprising Vikas Aswathy, Judicial Member and Gagn Goyal, Accountant Member observed that “We are of the opinion that the LO in India does not constitute PE in India under Article 5 of India Switzerland DTAA because. The LO does not constitute a fixed place through which business of assessee is carried out in India.”
Ms. Renu Ratnakar Bhattacharya vs Commissioner of Income Tax (Appeals)
CITATION: 2023 TAXSCAN (ITAT) 225
The Income Tax Appellate Tribunal (ITAT) recently held that capital gain exemption cannot be denied on alterations to houses as there is no ceiling on the amount of investment.
The single bench of the Tribunal of shri. Kuldip Singh (Judicial Member) allowed the Appeal filed by assessee and held that “ it is settled principle of law that when the taxpayer is otherwise allowed to purchase or construct a residential house without any ceiling on the amount of investment, the taxpayer cannot be denied benefits under section 54 of the Income Tax Act 1961.,if he has made some alterations, addition or modifications in the house purchased for taking benefit under section 54 of the Income Tax Act 1961..”
Dy. Commissioner of Income Tax vs M/s. Nipro Medical India Private Limited CITATION: 2023 TAXSCAN (ITAT) 226
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) has held that payment of contractual obligation pursuant to an arbitration award deductible from Business Income.
the division bench of the Tribunal compraising, RamaKanta Panda (Accountant Member) and K.Narasimha Chary (Judicial Member dismissed the appeal and held that , “by no stretch of imagination could it be said that the payment for breach of contractual obligation pursuant to an arbitration award in the pending litigation, cannot be said to have been incurred for any purpose which is an offense or which is prohibited by law.”
M/s. Merk Limited vs DCIT CITATION: 2023 TAXSCAN (ITAT) 227
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) in a recent ruling while allowing deduction to pharma company has held that the free samples to doctors recognised under Uniform Code of Pharmaceutical Marketing Practices by The Department of Pharmaceuticals (UCPMP) guidelines were not violative of Indian Medical Council (MCI) Rules
The bench of Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail(Judicial Member) observed that , “free samples help impart knowledge to other doctors about the new medicine/product coming into the relevant practice of their profession. Therefore, distribution of free samples is directly related to business promotion activity of the pharmaceutical company.”
Atul C. Vyas 16 vs ACIT CITATION: 2023 TAXSCAN (ITAT) 228
The Mumbai Bench of Income Tax Appellate Tribunal has deleted the disallowance holding that the hedging transactions in non-cleared securities were not illegal.
The Mumbai Bench of B.R. Baskaran (Accountant Member) & Shri Pavan Kumar Gadale (Judicial Member) deleted the disallowance observing that ,”Even though the tax authorities have stated that the impugned transactions are illegal, yet they have not referred to any of the provisions of Bye laws of Stock Exchange, which specifically state that, the hedging transactions in ‘non-cleared securities’ are illegal. Further, the broker note placed at page 103 of the paper book would show that the assessee has carried forward the hedging transactions to March, 1992 and started purchasing shares from 24th March, 1992 onwards. Hence, it cannot be said that the transactions are illegal.”
Anik Chatterjee vs ITO CITATION: 2023 TAXSCAN (ITAT) 229
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under Section 54 of the Income Tax Act 1961 would be allowed even if the sale was completed after purchase of new property.
The Delhi Bench of B. R. R. Kumar, (Accountant Member) and Yogesh Kumar US (Judicial Member) observed that the agreement for sale was signed on 08.08.2014 and the payments were completed by 08.10.2014 and the amount equivalent to the capital gains had been utilized for acquisition of a new house. The Bench allowed the appeal and permitted the assessee to avail the benefit under Section 54 of the Act.
Bhagat Motor Company Pvt. Ltd. vs ACIT CITATION: 2023 TAXSCAN (ITAT) 230
The Delhi Bench Income Tax Appellate Tribunal ( ITAT ) has held that the house loan paid by a company allotted to the directors for residential purpose would be eligible for the Income Tax Deduction.
The Delhi Bench of B. R. R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) allowed the appeal holding that the interest paid by the assessee company in connection with acquisition of fixed assets would be an allowable deduction observing that the perquisite value had been duly taxed by the assessee.
Jenendra Kumar Jain vs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 231
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that mere securing a house on rent in the USA is not the conclusive fact that the assessee is a US resident to allow DTAA benefit.
A Coram comprising of Shri Rama Kanta Panda, Accountant Member & Shri K Narasimha Chary, Judicial Member observed that merely securing a house on rent in the USA is not the conclusive fact that the assessee had become a USA resident the moment he moved from India to the USA. The Tribunal upheld the impugned order and further directed the Assessing Officer to consider the request of the assessee in respect of the grant of a foreign tax credit of the taxes paid by the assessee in the USA in accordance with law.
Hrishikesh Mega Township (P) Limited vs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 232
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) recently held that Appeal filed after four years could not be condoned without valid reason.
The Division bench of the ITAT comprising Shri Rajpal Yadav,(Vice-President) and Girish Agrawal, (Accountant Member) dismissed the appeal filed by the assessee and held that” assessee has nothing to say in support of its alleged bogus share capital claim. There is a huge gap of roughly four years, which has not been explained by the assessee, or no one has responded to the notices issued by the Tribunal”
Amore Commercial Premises Co-Op Society Ltd vs Central Processing Centre CITATION: 2023 TAXSCAN (ITAT) 233
In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that Interest Income earned by Co-operative Societies is eligible for Income Tax Deduction.
It was viewed that the High Court of Karnataka in the case of Pr. CIT & Anr. Vs. Totgars Co-operative Sale Society Ltd. (2017) and the Gujarat High Court in the case of State Bank of India vs. CIT (2016)had held that interest income earned by a co-operative society on its investment held with the cooperative bank would be eligible for claim of deduction under section 80P(2)(d) of the Income Tax Act.
The Tribunal held that the CIT(A) has erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d) of the Act and directed the AO to delete the same.
Shri Ashokbhai Amrutbhai Valand vs ITO CITATION: 2023 TAXSCAN (ITAT) 234
The Income Tax Appellate Tribunal (ITAT) has recently deleted additions made for cash gifts from close relatives to meet the emergency situation and held that uncle and aunt are considered close relatives of the assessee.
The single bench of Suchitra Kamble, (Judicial Member) allow the appeal and observed “It is pertinent to note that to meet the emergency situation of additional expenses by the assessee the assessee has obtained cash not only from assessee’s father and mother but also the close relative that is the maternal uncle, maternal aunt as well as paternal uncle and paternal aunt and the said relation cannot be doubted by the Assessing Officer and the gift offered by this relatives are appears to be genuine.”
DCIT vs State Bank of India CITATION: 2023 TAXSCAN (ITAT) 235
The Income Tax Appellate Tribunal ( ITAT ),Mumbai Bench, has recently , in the appeals filed before it, while ruling in favor of SBI, held that dominant purpose of the investment holds no consequence for the applicability of section 14A of the Income Tax Act ,read with rule 8D of of Income-Tax rules, 1962 .
the Mumbai ITAT Bench consisting of Kavitha Rajagopal, the Judicial Member, and Om Prakash Kant, the Accountant Member, commented as follows: “We have heard rival submission of the parties on the issue of disallowance u/s 14A of the Act read with rule 8D(2) of the rules. And in view of the decision of the Hon’ble Supreme Court in the case of Maxoop investment Ltd. ,the expenses incurred towards shares and securities held as stock in trade are also to be considered for disallowance u/s 14A of the Act real with rule 8D of rules, but those expenses has to be apportioned between the taxable income earned from sale or trading of those securities and non-taxable income earned by way of dividend.”
Deputy Director of IncomeTax vs M/s. Sri Vekkaliamman Educational And Charitable Trust CITATION: 2023 TAXSCAN (ITAT) 236
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that exemption under section 11 is allowable when there is no violation of section 13(1)(c) of the Income Tax Act since the civil contract is awarded to a firm in which managing trustee of the trust is the proprietor.
A Coram comprising Shri V Durga Rao, Judicial Member and Shri G Manjunatha, Accountant Member observed that civil contract has been included in the definition of services as per GST laws and also as per Erstwhile Service Tax laws. Therefore, a civil contract awarded to a firm in which the managing trustee of the trust is the proprietor is tantamount to services as defined u/s. 13(2)(c) of the Act.
Assistant Commissioner of Income-tax vs Sri.Shroff Krishnaraja Shetty Satheesha CITATION: 2023 TAXSCAN (ITAT) 237
The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the assessment under Section 153C of the Income Tax Act 1961 as the seized documents were not containing the name of the assessee.
The bench of George George K (Judicial Member) & Laxmi Prasad Sahu (Accountant Member) observed that “noted that the validity of the period of the document was five months and no extension was granted beyond five months and no further new agreement has been executed after expiry of five months . We further noted from the copy of the ledger that the name of the assessee is not noted and this has also been accepted by the A.O. during the course of assessment proceedings and AO has presumed that the entry made in the register is related / pertains to the sale of land and payment has been made by the assessee, which is not correct.”
Bhairabnala Samabay Krishi Unnayan Samity Ltd vs I.T.O CITATION: 2023 TAXSCAN (ITAT) 238
Income Tax appellate tribunal (ITAT) of Chennai Bench recently held that interest income earned by cooperative society from another cooperative bank is eligible for Income Tax Deduction under section 80P (2)(d) of Income Tax Act 1961.
Section 80P of the Income Tax Act 1961 says that if an assessee is a co -operative society, the gross total income of the society it include any income referred in subsection 2 of the section 80(P) shall be deducted in accordance with the section and for computing the total income of the co operative society the sum specified in the subsection 2 of the section 80(P) is considered.
The ITAT bench of Manish Borad (Account member) observed that “since the assessee has earned interest of Rs.16,04,004/- from another cooperative society, which in this case is a cooperative bank, is eligible for deduction u/s. 80P(2)(d) of the Income Tax Act 1961.”
PR. COMMISSIONER OF INCOME TAX vs M/S. RAJAT FINVEST CITATION: 2023 TAXSCAN (ITAT) 239
The Delhi High Court has recently set aside a notice issued to the assessee, M/s Rajat Finvest, in lieu of alleged unaccounted income in its books in the guise of bogus Long Term Capital Gains and held that the said transaction cannot be said to be “bogus” when the shares traded are on stock-exchange after Securities Transaction Taxes (STT) were paid and the money was received through banking channels.
The Division Bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that, the respondent/assessee traded in shares and the respondent had converted a part of its stock-in-trade as investment.
Yes Bank Ltd vs Add. CIT CITATION: 2023 TAXSCAN (ITAT) 240
The Dehradun Bench of Income Tax Appellate Tribunal has granted relief to Yes Bank holding that the income tax penalty could not be levied under Section 271C of the Income Tax Act 1961 on a non-taxable entity formed by an act of Government. Section 271C of the Income Tax Act 1961 deals with the imposition of penalty for failure of deducting Tax Deducted at Source.
The bench of B. R. R. Kumar (Accountant Member) Yogesh Kumar US (Judicial Member) relying on the contentions of the assessee bank held that the assessee had been formed by the Act of Government and a non- taxable entity and no penalty would be leviable under Section 271C of the act.
American Chemical Society vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 241
The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench, has recently, in an appeal filed before it, held that the subscription revenue received in chemical extract service and publication division is not Royalty u/s 9(1)(vi) of the Income Tax Act, 1961.
The Departmental Representative ( D.R.) vehemently relying upon the order of the authorities below, the ITAT Bench consisting of Prashant Maharishi, the Accountant Member ,and Sandeep Singh Karhail, the Judicial Member observed : “The issue arising raising in the assessee’s appeal, is with regard to taxability of subscription charges received by the assessee as “Royalty” under the provisions of Article–12(3) of India–USA DTAA and under section 9(1)(vi) of the Act. ” “As a similar issue has been decided in assessee’s appeal for assessment year 2018-19, the decision rendered therein will apply mutatis mutandis to this year also. And as a result, the grounds raised by the assessee is allowed”, the ITAT Bench ruled.
ACIT vs M/s. S & A Finman Ltd CITATION: 2023 TAXSCAN (ITAT) 242
The Income Tax Appellate Tribunal (ITAT),Delhi Bench, has recently, in an appeal filed before it, held that Section 43 B of the Income Tax Act , is not applicable to service tax liability. The aforesaid observation was made by the Delhi ITAT when an appeal was filed before it by the Revenue , as directed against the order of the CIT (Appeals), New Delhi, dated 09.12.2016, for the assessment year 2012-13.
The ITAT Bench composed of Shamim Yahya, the Accountant Member, along with Chandra Mohan Garg ,the Judicial Member observed: “we find that the above said issue is squarely covered. The amount of service tax has not been routed through a P & L account.” Thus, dismissing the Revenue’s appeal, the Delhi ITAT held: “Hence, the ratio of the above said decision that the provisions of section 43B are not applicable to the service tax liability, is applicable. Accordingly, we uphold the order of the ld. CIT (A).”
Deputy Commissioner of Income Tax vs Podar Education Trusts CITATION: 2023 TAXSCAN (ITAT) 243
The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench, has recently, in an appeal filed before it, held that the exemption u/s 10(23C) shall not be denied, unless the donation made to trusts, is evidentiated as bogus. The aforesaid observation was made by the Mumbai ITAT,when a bunch of 5 appeals were filed by the Deputy Commissioner of income tax, central circle, Mumbai (the AO), in case of a charitable trust by the name Podar Education & Sports Trust ,for assessment year 2014 – 15 to 2018 – 19.
The ITAT Bench consisting of Amit Shukla, the Judicial Member and Prashant Maharishi, the Accountant Member observed : “We have carefully considered the rival contention and perused the orders of the lower authorities. We find that in all these appeals, the grounds with respect to alleged bogus donation and ground with respect to the provision of leave encashment and gratuity and on both these issues the learned assessing officer has disallowed exemption claimed by the assessee u/s 10 (23C) of the act.”
Air India Ltd vs DCIT CITATION: 2023 TAXSCAN (ITAT) 244
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it by Air India, upheld the orders allowing unusable old inventory of spare and parts, as loss. The aforesaid observation was made by the ITAT when cross appeals were filed before it by M/S Air India Ltd., the assessee, and the revenue, against the separate orders of the Commissioner of Income Tax (Appeals), Mumbai, passed u/s 250 of the Income Tax Act.
The ITAT Bench comprising Baskaran BR, the Accountant Member, and Pavan Kumar Gadale, the Judicial Member observed : “The Ld. DR could not controvert the findings of the CIT(A) with new cogent evidence or material information to take a different view. Accordingly, we uphold the decision of the CIT(A) on the disputed issues and dismiss the grounds of appeal of the revenue”. “ In the result, the appeals filed by the assessee are partly allowed for statistical purposes and the appeals filed by the revenue are dismissed.”, the ITAT Bench ruled.
Income Tax Officer vs Hemant Kr. Das CITATION: 2023 TAXSCAN (ITAT) 245
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently in an appeal filed before it, held that the AO cannot work out disallowance of miscellaneous expenditure on guess work basis. The aforesaid observation was made by the Kolkata ITAT, when cross appeals were filed before it by the Revenue as well as the assessee, as against the order of the Commissioner of Income Tax (Appeals) Patna, dated 18.09.2020, passed for the assessment year 2011-12.
The ITAT Bench comprising of Rajesh Kumar, the Accountant Member, along with Rajpal Yadav, the Vice-President (KZ),observed: “On due consideration of the facts and circumstances, we do not find any merit in this ground of appeal raised by the Revenue, because ld. Assessing Officer has himself worked out the disallowance on guess work basis, which was re-appreciated by the ld. 1st Appellate Authority. Two estimated opinions ought not to be substituted with the third opinion.” “In the result, the appeal of the Revenue is dismissed and the appeal of the assessee is partly allowed for statistical purposes”, the Kolkata ITAT Bench held.
Rajdhani Institute of Information Technology vs CIT(A) CITATION: 2023 TAXSCAN (ITAT) 246
The Income Tax Appellate Tribunal ( ITAT), Cuttack Bench, has recently, in an appeal filed before it, held that the income tax return filed with defect and consequent intimation u/s.143(1) is Invalid. The aforesaid observation was made by the ITAT when an appeal filed before it by an assessee, as against the order of the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, passed in DIN & Order No.ITBA/NFAC/S/250/2022-23/1043436040(1), dated 14.06.2022, for the assessment year 2014-2015.
The ITAT Bench consisting of Arun Khodpia , the Accountant Member and George Mathan, the Judicial Member observed : “We have considered the rival submissions. A perusal of the communication dated 21.08.2015 issued to the assessee clearly shows that the CPC has issued the notice u/s.139(9) of the Act intimating defects in the return. In the notice, it has been categorically mentioned that if the defects were not removed, the return filed by the assessee would be treated as invalid return.
Arham Packaging Goods Pvt. Ltd. Vs I.T.O., Ward – 10(2), Kolkata CITATION: 2023 TAXSCAN (ITAT) 247
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has recently observed that the appeals filed in relation to share application and share premium are done by Shell Companies, devoid of any business. A shell company or corporation exists only on paper and has no office and no employees, but may have a bank account or may hold passive investments or be the registered owner of assets, such as intellectual property, or ships.
The Kolkata Tribunal bench of Vice President Rajpal Yadav and Accountant Member Girish Agrawal made the observation that, “There are a large number of appeals pending on this issue before the Tribunal and out of them, 95% are not being prosecuted or are not being filed by any genuine business concern. Basically, those appeals are filed by the shell companies and here and there, requests are being made to delay disposal of these appeals.”
Sushil Kumar Paul Vs ACIT, Circle-2, Siliguri. CITATION: 2023 TAXSCAN (ITAT) 248
The Income Tax Tribunal (ITAT) Kolkata Bench ruled that the notice proforma of levy penalty under section 271AAB of Income Tax Act, 1961 without mentioning the charge is defective and invalid. This appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals) [CIT(A)] for A.Y. 2016-17
The bench of Girish Agarwal and Sanjoy Sarma agreed with the Coordinate Bench of Chennai’s ruling in the case of DCIT v. R. Elangovan, finding that the alleged notice was defective and invalid under the facts and circumstances of the case because it did not refer to the alleged violation of section 271AAB of the Income Tax Act. As a result, the alleged notice should be quashed.
The ACIT vs Shri Vijaykumar Vasantbhai Patel CITATION: 2023 TAXSCAN (ITAT) 249
The Income Tax Appellate Tribunal (ITAT) recently held that receipt from fortis mutual fund being investment made from Non Resident External account of Non –Resident Indian not taxable in India.
The division bench of the ITAT comprising Shri Waseem Ahmed, (Accountant Member) and Shri T.R. Senthil Kumar, (Judicial Member) dismiss the appeal of the revenue and observed that Assessee had proved he was a Non-Resident Indian who borrowed for loans from Standard Chartered Bank, Chennai NRE Account and also found that the fund is coming from outside India hence it was not taxable in India.
Virgo Aluminum Ltd vs PCIT CITATION: 2023 TAXSCAN (ITAT) 250
The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) ruled that Income Tax Deduction under section 80IC of Income Tax Act, 1961 cannot be disallowed due to the bonafide mistake or error on the part of the taxpayer or assessee. Further the ITAT quashed the order issued by the Principal Commissioner of Income Tax (PCIT) under the section 263 of Income Tax Act.
The bench of Vikram Singh Yadav and Sanjay Garg noted that the assessee had duly responded to the PCIT, stating that although it was unintentionally omitted, the assessee company had provided the proper disclosure of the amount written off in the audited profit and loss account. Moreover, the issue has not only been brought to the notice of the AO, but the same has also been examined and verified by the AO and under the circumstances there remains no prejudice to the revenue of not reflecting the aforesaid amount of bad debt under the relevant column of the online ITR form.
Nan Lian Ship Management LLC vs ACIT CITATION: 2023 TAXSCAN (ITAT) 251
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) ruled that the payment received by assessee for Time Charter of ship does not come under the ambit of ‘Royalty’ and the same is not taxable under section 9(1)(vi) of Income Tax Act, 1961.
The bench of members Gagan Goyal and Amit Shukla observed that the clauses and the freight calculation clearly showed that the payment was subject to load of the cargo and it was not simply for leasing or renting out the ship for the time charter period.
Adani Properties Pvt. Ltd vs DCIT CITATION: 2023 TAXSCAN (ITAT) 252
Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) ruled that the section 115JB of Income Tax Act, 1961 does not provide a mechanism to make disallowance independently. The ITAT directed the Assessing Officer (AO) to disallow 1% of Exempted Income of Adani Properties.
The bench of Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) observed that there is no mechanism given under the clause (f) to Explanation-1 of Section 115JB of the Income Tax Act to workout/ determine the expenses with respect to the exempted income.
Mr. Ashok Madhav Rao vs Assistant Director of Income Tax CITATION: 2023 TAXSCAN (ITAT) 253
The Mumbai Bench Income Tax Appellate Tribunal ( ITAT ) has held that the credit of Dutch tax paid is allowable under Section 90 of the Income Tax Act 1961.
A single Bench of Prashant Maharishi, (Accountant Member) held that the assessee was entitled to tax deduction under Section 90 of the Income Tax Act 1961, observing that “the form no.67 of furnished by the assessee also clearly shows what is the amount of salary received by him from Netherlands and what is the amount of withholding tax paid by him through his employers in Netherlands. Now the fiscal report 2017 on behalf of the assessee is also available which is also placed at page no.30 to 37 of the Paper Book.”
Buro Happold Limited vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 254
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that cost charges are not taxable as Fee for technical service under Indo –UK Treaty.
The division bench of ITAT comprising Aby T Varkey, (Judicial Member) and M.Balaganesh, (Accountant Member) allow the appeal filed by the assessee and held that “assessee had actually offered the receipts as its income in the return of income but by way of additional ground claimed to be not taxable in India as per the Act and as well as per the Treaty.
Batuk Vithalbhai Donga vs ITO CITATION: 2023 TAXSCAN (ITAT) 255
The bench of Waseem Ahmed (Accountant Member) and Sidhhartha Nautiyal (Judicial Member) of Rajkot Income Tax Appellate Tribunal (ITAT) ruled that no addition shall be made under section 69A of Income Tax Act, 1961 on the ground of denial of deduction under section 80G.
The bench observed that the assessee has not challenged the additions made by the AO under section 80U and 80G of the Act, but has only challenged the computation of tax liability by the AO under section 115BBE of Income Tax Act. The tribunal emphasized that the section 69A of Income Tax Act can only be used in the event that the assessee is discovered to be the owner of any money, bullion, jewelry, or other valuable item that is not recorded in the books of account and the assessee makes no attempt to explain the nature and source of acquisition of such money, bullion, jewelry, or other valuable articles.
Dilshad Ahmed Rangrej vs CIT, National Faceless Appeal Centre CITATION: 2023 TAXSCAN (ITAT) 256
A single Bench of Mumbai Income Tax Appellate Tribunal (ITAT), in a recent ruling has directed to allow capital gain exemption considering the date of acquisition of property as per the allotment letter issued.
The Single Bench of Prashant Maharishi (Accountant Member) allowed the appeal relying upon principal Commissioner of income tax vs Vembu Vaidyanathan in which The High Court after considering the circular issued by the central board of direct taxes held that the allotment letter by the builder would be the date of acquisition of the property as the period of holding for the purpose of determining whether the asset was a long-term capital asset or a short-term capital asset, was to be taken therefrom.
DCIT vs M/s. Emcure Pharmaceuticals Ltd CITATION: 2023 TAXSCAN (ITAT) 257
Pune bench of Income Tax Appellate Tribunal (ITAT) ruled that interest is allowed to delay in refund in self-assessment tax under section 244A(1) of Income Tax Act, 1961. The appeal was filed by the Revenue assailing the correctness of the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in relation to the A.Y. 2007-08.
The tribunal of members S. S. Viswanethra Ravi (Judicial Member) and R. S. Syal (Vice-president) dismissed the appeal of the department and observed that if an assessee has been deprived of the amount lawfully due to him, the refund has to go with interest only unless there is an express statutory embargo.
District Marketing Officer vs ITO CITATION: 2023 TAXSCAN (ITAT) 258
The Raipur bench of Income Tax Appellate Tribunal (ITAT) quashed the order of the Assessing officer on levy of late fee for Tax Deduction at Source (TDS) default for the assessment year 2013-14.
The division bench of ITAT comprising Ravish Sood, (Judicial Member) and Dr. Dipak P. Ripote, (Accountant Member) allow the appeal filed by the assessee and held that the levy of late fee under section 234E of Income Tax Act 1961, is bad in law for the AY 2013-14. Section 234E of Income Tax Act 1961 says that if a person fails to deduct TDS he shall be liable to pay a sum of rupees by way of fee.
S.B. Patel JV Laxmi Construction vs A.C.I.T CITATION: 2023 TAXSCAN (ITAT) 259
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the credit will not be allowable on Tax Deduction at Source (TDS) deducted on receipt of the amount of advance if the corresponding income was not offered to tax.
The Ahmedabad Bench of Waseem Ahmed (Accountant Member) allowed the appeal observing that “controversy arises when the assessee can claim the benefit of TDS i.e., the year in which it offers corresponding income in the income tax return. As per the assessee, it has shown the advance money as A.Y. 2016-17 4 income in the Financial Year 2016-17 corresponding to 2017-18. In this regard, I note that sub-rule (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides that Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.”
Shergil Harjit vs Pr. CIT-1 CITATION: 2023 TAXSCAN (ITAT) 260
The Pune Branch of Income Tax Appellate Tribunal (ITAT) deleted the addition made by the Assessing Officer of ₹3,00,000 on the opinion that Children Providing Financial Support to Parents out of Moral Responsibility is Common Practice.
The panel Inturi Rama Rao (Accountant Member) and Partha Sarathi Chaudhury (Judicial Member) noted that the assessee and her spouse are both extremely elderly people from respectable social and economic backgrounds. It has been expressly reported that due to their advanced age and health issues, they have cash on hand to cover any sudden medical needs.
Kalpesh Mafatlal Patel vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 261
The Surat bench of Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made in respect of un-signed, unstamped, Satakhat, and it was found from the CD of the computer of a person who was not connected with the assessee.”
the division bench of ITAT comprising Pawan Singh, (Judicial Member) and Dr. A. L. Saini, (Accountant Member) allow the appeal filed by the assessee and observed that “documents, which was found in the possession of other person, did not bear the name of the assessee, that is, the name of the assessee is not mentioned in the statement of another person. Therefore no addition could be made in respect of un-signed, unstamped, Satakhat, which has not been registered and is found from the CD of the computer of a person who is not connected with the assessee.”
Umaxe Projects Pvt. Ltd. vs ACIT CITATION: 2023 TAXSCAN (ITAT) 262
The Income Tax Appellate Tribunal ( ITAT ) recently held that advance tax under section 234B of income Tax act 1961 is not applicable when entire income is subject to Tax Deduction at Source.
The division bench of ITAT comprising Anubhav Sharma, (Judicial Member) and Shamim Yahya (Accountant Member) allow the appeal filed by the assessee and observed that “The payer who was obliged to deduct tax at source and therefore, the assessee was not liable to pay tax and to what extent and require to tax deduct at source as per provisions of the Act, the assessee was not required to pay advance tax.
The ACIT vs Sheel Engineers CITATION: 2023 TAXSCAN (ITAT) 263
The Surat bench of Income Tax Appellate Tribunal (ITAT) recently allowed Tax Deduction at source credit because the documents of assessee were lost due to flood.
The division bench of ITAT comprising Pawan Singh, (Judicial Member) and Dr. A. L. Saini, (Accountant Member) allow the dismiss the appeal filed by the revenue and “observed that CIT(A) had gone through the Gross Profit, Net Profit chart, which are indicating the percentage of major expenses over turnover and it is observed that labor charges for current assessment year is 20.49 % of the turnover as compared to labor charges of 21.60% of the turnover in immediately preceding assessment year 2011-12. Similarly, all other major expenses did not show any major deviation when compared with immediate preceding assessment year”
M/s. Siva Industries and Holdings Ltd vs DCIT CITATION: 2023 TAXSCAN (ITAT) 264
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) ruled that the factoring charges could not be termed as ‘Interest’ under section 2(28A) of Income Tax Act, 1961 and allowed for deduction under section 40(a)(ia) Income Tax Act.
The bench of Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) observed the facts that the assessee has availed factoring facility from EAFSL against receivables and paid factoring charges. We find that factoring charges could not be termed as interest under section 2(28A) of Income Tax Act.
ACIT vs Dhar Construction Company CITATION: 2023 TAXSCAN (ITAT) 265
Gauhati Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the decision made by the Assessing Officer (AO) to sustain the disallowance of expenses made by the AO under various heads of expenses on the grounds of no proper evidence.
The bench observed that the Assessing Officer (AO) made the said disallowance since the assessee failed to file necessary evidence in the course of the hearing. Furthermore, the AO also observed that it cannot be denied that major expenses were incurred in cash. In this regard at the same time full reliance cannot be placed without any documents i.e bills/vouchers etc.
Duckwoo Autoind Pvt. Ltd., Vs Principal Commissioner- of Income Tax-1, CITATION: 2023 TAXSCAN (ITAT) 266
The Income Tax Appellate Tribunal (ITAT) has recently held that assessing officers could not travel beyond reason for selection of scrutiny for limited scrutiny as per Central Board of Direct Tax circular.
The division bench of ITAT comprising Mahavir Singh, (Vice President) and Manjunatha (Accountant Member) allow the appeal filed by the assessee and observed that “AO cannot examine any other issue except the issue as selected for limited scrutiny assessment, the PCIT can examine the only issue which was before the AO during the course of scrutiny assessment and not any other issue, which has not been subject matter of the AO for the assessment in a limited scrutiny assessment.”
Shri Ramanbhai Bholidas Patel vs The Principal Commissioner of Income Tax-3 CITATION: 2023 TAXSCAN (ITAT) 267
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) in a recent ruling has upheld the revision order observing that allowing deduction under section 54B without verification of claim amounts to erroneous assessment. Section 54B deals with exemption of income from transfer of capital gain on transfer of capital asset -agricultural land
The Division Bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) dismissed the appeal upholding the revision order observing that the “assessee had failed to furnish any supporting evidence and the land was used for agricultural purposes in the two years preceding the date of transfer. Even the copy of agreement with Shri Vaghela was not provided. The assessing officer had failed to take note of any of these facts and without verifying this issue allowed the claim of the assessee. The Bench also held that the AO order was erroneous and prejudicial to the interest of the revenue.”
Income Tax Officer vs Shivaji Hi-Tek Foods Pvt. Ltd CITATION: 2023 TAXSCAN (ITAT) 268
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance in respect of cash payment to suppliers as per rice trading practice holding that rice is an agricultural produce.
Mahavir Singh, (Vice President) and Manoj Kumar Aggarwal, (Accountant Member) dismissed the petition ,observing that the Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987 specifies ‘Rice in all forms’ as agricultural produce under Cereals. The same would support the case of the assessee in terms of Rule 6DD(e)(i). The Bench dismissed the petition.
Zhilmil Electronics Pvt. Ltd vs ITO CITATION: 2023 TAXSCAN (ITAT) 269
The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that the generation of business income is not necessary to claim business expenditure.
The division bench of ITAT comprising Yogesh Kumar U.S. (Judicial Member) and BRR Kumar (Accountant Member) allow the appeal filed by the assessee and observed that “once the business of the assessee is set up and the expenditure incurred thereafter deserves to be allowed as business expenditure under section 30 to 38 of the Income Tax Act 1961. There is no requirement of generation of income from such business activities. The business activity is a continuous process and it cannot be said that as soon as setting up the business, the income will be generated and should yield income in all years.”
Gadgil Holdings Pvt. Ltd vs ITO CITATION: 2023 TAXSCAN (ITAT) 270
Income Tax Appellate Tribunal ( ITAT ) Pune Bench ruled that the premium paid by the company towards the Life Insurance Policy of the Director in individual capacity is not Business Expenditure.
The bench of Viswanethra Ravi (Judicial Member) and Inturi Rama Rao (Accountant Member) stated that the AO observed the life insurance premium paid insuring the life of director of the appellant company. It was claimed before the AO that premium was paid under key man insurance policy, therefore, the assessee sought deduction as “revenue expenditure”.
Vineet Mittal vs ITO CITATION: 2023 TAXSCAN (ITAT) 271
The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the reassessment as the addition was not connected with the escaped income.
The Single Bench of Saktijit Dey (Judicial Member) allowed the appeal observing that , “Assessing Officer reopened the assessment for assessing a particular item of income, whereas, instead of assessing that income he has added another item of income which was not the subject matter of reopening. However, without assessing that escaped income the Assessing Officer cannot make assessment of other items of income.”
ATR Warehousing Private Limited vs DCIT CITATION: 2023 TAXSCAN (ITAT) 272
The Visakhapatnam bench of Income Tax Appellate Tribunal (ITAT) held that section 56(2) (viia) did not attract on mere conversion of share application money by allotting shares at subsequent date without change of share pattern.
The division bench of ITAT comprising Duvvuru Rl Reddy (Judicial Member) and S Balakrishnan, (Accountant Member) allow the appeal filed by the assessee and held that Merely by converting the share application money by allotting shares at a subsequent date cannot attract the provisions of section 56(2)(viia) of the Income Tax Act 1961 as there is no change in the shareholding pattern subsequent to the allotment of shares by the subsidiary company.
Blue Stampings & Forgings Ltd vs Dy. Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 273
Delhi bench of Income Tax Appellate Tribunal (ITAT) set aside the action of Commissioner of income Tax (Appeals) [CIT(A)] affirmed the additions made by the Assessing Officer (AO).
The Tribunal observed that the sole basis for making such estimated addition is that original bills and vouchers were not produced before the AO and thus the completeness of books of account is not established.
R. K. Trading Company vs Dy.CIT CITATION: 2023 TAXSCAN (ITAT) 274
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the gifts to business associates and expenditure should be considered as business promotion expenses and are deductible under Section 37 of the Income Tax Act 1961. Section 37 provides that any expenditure spent entirely and solely for the purposes of the company or profession shall be allowed in calculating the income liable to be paid under the “profits and gains of business or profession.”
The Ahmedabad Bench of, Waseem Ahmed, (Accountant Member)and Madhumita Roy (Judicial Member)allowed the appeal relying upon the contentions of assessee that gifts to business executives expenses were deductible under Section 37 of the Income Tax Act 1961.
Vijay Kashinath Jagtap vs DCIT CITATION: 2023 TAXSCAN (ITAT) 275
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently upheld the addition made by the assessing officer upon assessee failing to establish difference between 26AS form and Income Tax Returns.
the division bench of ITAT comprising Kavitha Rajagopal (Judicial Member) and Prashant Maharishi, (Accountant Member) dismiss the appeal filed by the assessee and observed that “The assessee has failed to establish the difference amount specified in Form 26AS and the returns filed by the assessee. Though several opportunities have been given to the assessee, the assessee has failed to furnish any documentary evidence for rebuttal. Hence assessee has nothing to controvert the view of the lower authorities in making the addition under section. 68 of Income Tax Act 1961.”
B. U. Bhandari Auto Pvt. Ltd. vs ACIT CITATION: 2023 TAXSCAN (ITAT) 276
Pune bench of Income Tax Appellate Tribunal ( ITAT ) chaired by Viswanethra Ravi (Judicial Member) and Inturi Rama Rao (Accountant Member) deleted the penalty for non-compliance with the notice issued under section 142(1) of Income Tax Act, 1961.
From the material on record, the bench observed that when the appellant sought time to file the details, the said application was not disposed of by the AO either rejecting the said application or granting time.
Benchmark Realty LLP vs DCIT CITATION: 2023 TAXSCAN (ITAT) 277
The Pune bench of Income Tax Appellate (ITAT) upheld the penalty imposed by the lower authorities under section 271B of the Income Tax Act, 1961. The bench stated that the assessee has been getting advice from the Chartered Accountant and failure to audit books of accounts cannot be treated as a bonafide mistake.
The tribunal noted that the assessee has merely stated that it was under bonafide belief. Further stated that the explanation is not acceptable as the assessee is a builder, having advice of professionals like Chartered Accountant. The bench of S. S. Godara (Judicial Member) and Dipak P. Ripote (Accountant Member) on the facts and circumstances of the case upheld the penalty levied by the AO under section 271B of Income Tax Act.
Amec Foster Wheeler India Pvt. Ltd vs The ACIT CITATION: 2023 TAXSCAN (ITAT) 278
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the expenses incurred as payment to parent company that issued shares to employees of assessee shall be allowed as deduction.
The Chennai Bench of Mahavir Singh, (Vice President) and Shri Manoj Kumar Aggarwal (Accountant Member) allowed the appeal observing that “we noted that the expenses incurred by assessee by way of payment to its parent company, which has in turn issued shares to the employees of the assessee, the expenditure seems towards disbursing compensation to the employees for their services and hence, the same is to be treated as revenue in nature.”
M/s CPP Assistance Services Pvt Ltd vs The C.I.T(A) CITATION: 2023 TAXSCAN (ITAT) 279
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that IT support services rendered by CPP UK from the UK to the entire group including CPP India would not be taxable as Fees for Technical Services (FTS).
The Delhi Bench of N.K. Billaiya (Accountant Member) and Yogesh Kumar (Judicial Member) allowed the appeal directing to deleting the addition observing that, “In light of Article 13(4) of the DTAA, we are of the considered view that unless the recipient of the services is enabled to provide the same services 14 without recourse to the service provider, the services cannot be said to have made available the recipient of services. 24. In our humble opinion, mere incidental advantage to the recipient of services is not enough. The real test is the transfer of technology and on the given facts of the case, there is no transfer of technology. In our considered opinion, IT support services do not satisfy the make available test as no technical know-how, skill etc were transferred to the assessee.”
M/s. Soktas Tekstil Sanayi Ve Ticaret AS vs ACIT CITATION: 2023 TAXSCAN (ITAT) 280
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the consideration for permitting right to use of brand name or trademark would be treated as Royalty and would be taxable under India Turkey Tax Treaty
The Division Bench of Sakti Jit Dey, (Judicial Member) and N.K. Billaiya, Accountant Member dismissed this ground of appeal observing that, “Through the TLA, the assessee granted an exclusive, perpetual and irrevocable license to the Indian subsidiary for creation of brand-name/trademark. Referring to OECD Model Tax Convention Commentary, learned DRP observed, where ownership right has not been alienated, the consideration is for the use of or the right to use the trademark, hence, represents royalty.”
ACIT vs M/s Wyeth Ltd CITATION: 2023 TAXSCAN (ITAT) 281
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that Income Tax benefit under section 80HHC Income Tax Act 1961 in respect of advance import license as covered under section 28(iiib) of the Income Tax Act 1961.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that Income Tax benefit under section 80HHC Income Tax Act 1961 in respect of advance import license as covered under section 28(iiib) of the Income Tax Act 1961.
TripAdvisor Travel India Pvt. Ltd. vs ACIT CITATION: 2023 TAXSCAN (ITAT) 282
The Income Tax Penalty against Tripadvisor levied under section 271(1)(c) of the Income Tax Act, 1961, was deleted by the Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ), which was presided over by members Chandra Mohan Garg (Judicial Member) and Anil Chaturvedi (Accountant Member).
The bench observed the issue in the present ground is with respect to levy of penalty under section 271(1)(c) of Income Tax Act on that transfer pricing adjustment that were initially suggested by TPO but were subsequently enhanced by CIT(A). The bench highlighted the contention of the assessee that if the directions of the Tribunal for inclusion/exclusion of comparables are carried out by the AO then there would remain no basis for making any Transfer Pricing adjustments and also stated that the revenue didn’t contravene the contention.
Chhattisgarh State Warehousing Corporation Vs Assistant Commissioner of Income Tax-1(3). CITATION: 2023 TAXSCAN (ITAT) 283
Raipur bench Of Income Tax Appellate Tribunal (ITAT) has recently held that warehousing charges are taxable as business income.
The division bench of ITAT comprising Ravish Sood (Judicial Member) and G D Padmahshali,, (Accountant Member) Observed that warehousing charges received by the assessee had rightly been offered by it to tax as its income from business.
JCIT vs Sanjana Realcon Pvt. Ltd CITATION: 2023 TAXSCAN (ITAT) 284
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) in a recent ruling,has held that the profit as per MoU could not be treated as “deemed dividend.”
The Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia (Accountant Member),allowed the appeal observing that , “claim of the assessee that the amount received was in consideration of transfer of rights in the property allotted and thus cannot be regarded as a loan transaction of ordinary nature. To support the nature of money received from Landscape, the assessee claims that such MOU has been acted upon. Where the rights in the property were sold and profits have been shared as business receipt by Land space, the other considerations fade into insignificance. The CIT(A), in our view, has examined the issue threadbare and has rightly concluded that the amount obtained from Landscape is in the nature of business transaction outside the purview of Section 2(22)(e).”
Spicejet Limited vs Addl. CIT CITATION: 2023 TAXSCAN (ITAT) 285
Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to Spicejet. The tribunal upheld the decision of CIT(A) on instructing the Assessing Officer (AO) to verify whether the amount comes under royalty and if not deletes the addition. The bench stated that payment for leasing or hiring equipment is not a royalty as per the provisions of the India-Netherlands Double Taxation Avoidance Agreement (DTAA).
The bench of G.S. Pannu (Accountant Member) and Saktijit Dey (Judicial Member) observed the definition of royalty under the new India – Netherlands DTAA, issued vide notification No. SO-6 93[E], dated 30.08.1999, the expression “royalty” has been amended with retrospective effect from 01.04.1998. It would mean payment of any kind received as a consideration for the use of or the right to use any copyright of literary, artistic or scientific work, including, cinematograph film, any patent, trademark, design or model, plan, secret formula or process or for information concerned, inter alia, commercial, scientific experience.
Dy. CIT vs Nabajuga Educational And Charitable Trust CITATION: 2023 TAXSCAN (ITAT) 286
The Cuttack Bench of Income Tax Appellate Tribunal (ITAT) has held that the Income Tax benefit to trust under Section 11 of the Income Tax Act 1961 could not be denied for mere one day delay in filing an audit report.
The Division Bench of George Mathan(Judicial Member) and Arun Khodpia (Accountant Member) dismissed the appeal noticing that the assessee had filed its audit report before the completion of the assessment. “At the outset, if the return filed on 31.10.2018 was not accompanied by the audit report, then it was incumbent upon the revenue to issue notice u/s.139(9) of the Act to treat the return filed by the assessee as defective. Admittedly, this has not been done. This could be because when intimation was issued the audit report was available on the records. Thus, the delay in filing of the audit report has already been condoned by the revenue and it no more lies in the mouth of the revenue to state that the assessee should be denied the benefit of Section 11 of the Act because the audit report has been filed delayed by one day,” the Bench observed.
M/s. Fahmida International Pvt Ltd vs ACIT CITATION: 2023 TAXSCAN (ITAT) 287
The Income Tax Appellate Tribunal (ITAT) recently held that levy of 100% of tax sought to be evaded under section 271AAA of Income Tax Act is not typographical error. Section 271AAA Income Tax Act 1961 says that penalty levied in case of failure to keep and maintain information and documents related to international transactions
The Division bench of ITAT Cuttack comprising Arun Khodpia, Accountant Member, and George Mathan, Judicial Member, allowed the appeal and observed that The penalty leviable under section 271AAA Income Tax Act 1961 was 10% of the concealed income whereas under section 271(1)(c), the penalty was leviable at 100% of the tax sought to be evaded. But the order of the assessing officer shows that the assessing officer had levied a penalty at 100% of tax sought to be evaded. That could not be held as a typographical error. Further by considering the decision of the S.M.Enterprises the penalty levied under section 271(1) (c) of the Income Tax Act 1961 by the assessing officer and confirmed by the CIT(A) stands was deleted.
ACIT (IT)-4(3)(1) vs M/s Viacom18 Media Private Limited Zion Bizworld CITATION: 2023 TAXSCAN (ITAT) 288
The Income Tax Appellate Tribunal ( ITAT) , Mumbai Bench, has recently, while granting relief to Viacom 18, held that transport charges are not royalty as Indo- US treaty and hence that there is no TDS .
The ITAT Bench consisting of Pavan Kumar Gadale, the Judicial Member , and Om Prakash Kant, the Accountant Member observed : “In view of binding precedent of the Tribunal and Hon’ble High Court followed by the Ld.CIT(A) in respective impugned orders, we do not find any error or infirmity in the impugned orders passed by the Ld.CIT(A) on the issue in dispute relevant to the orders of Assessing Officer u/s 195(2) of the Act.” “ Accordingly, we uphold the finding of the Ld. CIT(A) in impugned orders, and the grounds raised by the Revenue in these appeals are accordingly dismissed”, the Mumbai ITAT held.
M/s. Radisson Hospitality vs Asstt. CIT CITATION: 2023 TAXSCAN (ITAT) 289
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that depreciation under section 32 of the Income Tax Act, 1961 cannot be claimed in respect of Assets shared with a sister concern under a license agreement.
A Coram comprising Sh. Shamim Yahya, Accountant Member and Sh. Anubhav Sharma, Judicial Member held that “merely entering into an agreement or understanding of user of an asset, a License may be created in favor of the user, that does not vest the user with the interest of any nature akin to the owner for Section 32(1) of the Income Tax Act.” While dismissing the appeal, the Tribunal held that there is no claim of depreciation beyond the law that is allowable on mutual understanding between the owner and the user.
DCIT vs Michlin Global Mobility SA CITATION: 2023 TAXSCAN (ITAT) 290
The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ), ruled that reimbursement of Social Security, Insurance, Relocation Expenses for Employees and not Fees for Technical Services (FTS).
The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ), ruled that reimbursement of Social Security, Insurance, Relocation Expenses for Employees and not Fees for Technical Services (FTS).
Shri Poonam K.Prajapati 81/83 vs ITO – 19(2)(5) Matrumandir CITATION: 2023 TAXSCAN (ITAT) 291
In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that income tax penalty under section 271(1)(c) cannot be levied based on Information from outside agencies/departments.
A Coram comprising of Shri Baskaran BR, Accountant Member & Shri Pavan Kumar Gadale, Judicial Member observed that the disallowance of purchases on an ad-hoc/estimated basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section 271(1) (c) of the Act.
MUMTAZ ABDUL AZIZ vs ITO CITATION: 2023 TAXSCAN (ITAT) 292
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that a mere claim of interest on a housing loan in an Income Tax Return (ITR) by the son of the assessee would not absolve capital gain and its tax liability.
A Coram comprising Shri Prashant Maharishi, AM observed that there is no evidence that the son of the assessee has declared any capital gain on the above transactions. Further, held that “merely because the interest of housing loan is claimed by the son of the assessee in his computation it does not make him the owner of the property. In this case, the legal owner of the property is the assessee who has transferred the property by registering the sale deed. “The Tribunal upheld the orders of the lower authorities and dismissed the appeal of the assessee.
Shri Altaf Hussain Laskar vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 293
In Virtual mode, the Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that penalty is not demandable for bonafide mistakes in income tax returns filed without the assistance of a tax consultant.
A Coram comprising Shri Rajpal Yadav, Vice-President &Dr Manish Borad, Accountant Member observed that the assessee might have not filed the return with the assistance of the Tax Consultant. Later he explained his position and corrected the figure before completing the assessment proceedings.
ONGC Representative Assessee of Linklaters vs ADIT CITATION: 2023 TAXSCAN (ITAT) 294
The Delhi Bench of Income Tax Appellate Tribunal(ITAT) has held that the payment made by ONGC towards air injection equipment to non-residents could not be considered as FTS as per India- Canada DTAA.
The Bench of Kul Bharat, (Judicial Member) and B. R. R. Kumar (Accountant Member) held that the ONGC personnel and ONGC institute could not independently conduct the test in the absence of the research team from University of Calgary, Alberta, Canada and the invocation of make available clause was wrong on facts on record and in the absence of technical expertise , being made available by the non-resident assessee to ONGC in India , the payments could not be treated as FTS. The bench allowed the appeal observing that the ” fees for included services’ ‘ as defined in the said Article 12 had fulfilled the conditions.
DCIT vs Anand Pershad Jaiswal CITATION: 2023 TAXSCAN (ITAT) 295
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the income tax amendment to extend time limit for re-assessment is not applicable when notice was illegal.
Saktijit Dey (Judicial Member) and Shri Pradip Kumar Kedia (Accountant Member) dismissed the appeal holding that the notice issued under Section 149 was time barred and thus could not have been acted upon. Consequently, the impugned re-assessment order passed in consequence of the illegal notice under Section 148 is a nullity and bad in law. The Bench referred Hon’ble Supreme decision in S.S. Gadgil vs. Lal & Co. held that amended provisions would not reinstate the jurisdiction to reassess the return which was otherwise time-barred as per existing provisions for the relevant assessment year.
Virtual Software & Training Pvt. Ltd. vs Income-tax officer CITATION: 2023 TAXSCAN (ITAT) 296
Penalty imposed on the assessee was deleted by the Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) chaired by Anil Chaturvedi (Accountant member) and N.K. Chaudhry (Judicial Member). The bench observed that the notice given in accordance with section 271(1)(c) of the Income Tax Act of 1961 was stereotyped and hence insufficient to impose a penalty under the same.
The Court also held that the standard proforma of notice under section 274 of the Act without striking of the irrelevant clause would lead to an inference of non-application of mind by the AO and levy of penalty would suffer from non-application of mind. The appellate authority concluded that penalty notice issued in a stereotyped manner without applying mind cannot be considered as valid and it is bad in law. Thus, considering the various decisions of the High Courts, they decided not to levy the penalty.
Shri Prerak Goel vs Pr. CIT CITATION: 2023 TAXSCAN (ITAT) 297
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the revisional jurisdiction could not be invoked if the Assessing Officer (AO) had taken a plausible view after making proper inquiry.
The Mumbai bench of B. R. Baskaran (Accountant Member)& Aby T Varkey (Judicial Member) quashed the revision order and allowed the appeal filed by assessee, referring to the decision rendered by the co-ordinate bench in the case of Sureshchandra Agarwal in which the tribunal had expressed the view that the requirement of registration was not there for construing the meaning of “transfer” u/s 2(47)(v) of the Act.
Neelkanth Developers vs Assit. Director of Income Tax CITATION: 2023 TAXSCAN (ITAT) 298
The Ahmedabad bench of Income Tax Appellate Tribunal recently held Tax Deduction at Source could not be denied to developer following percentage completion method if buyer deducted Tax at the time of execution of sale deed.
The Division bench of ITAT Cuttack comprising Waseem Ahmed, Accountant Member, and Siddhartha Nautiyal, Judicial Member, allowed the appeal filed by the assessee and observed that if the assessee has offered income to tax in either in the current year or any earlier year and TDS has been deducted on the same in the current year at the time of execution of sale deed, credit for the TDS is deducted should be allowed to the assessee in the current year, subject to the assessee producing the necessary supporting to show that corresponding income has been offered in tax either during the current year or any of the earlier previous years.
Jain Irrigation Systems Ltd vs The Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 299
The Pune bench of Income Tax Appellate Tribunal (ITAT) recently held that Incentive under Rajasthan investment promotion scheme 2010 is capital receipt therefore it was not taxable. The aforesaid order was issued for assessee Jain Irrigation Systems Ltd. Who filed the appeal against the order of Commissioner of Income Tax (Appeal).
he Division bench of ITAT Pune comprising Dipak P.Ripote,, Accountant Member, and S.S.Godara (Judicial Member), allowed the appeal filed by the assessee and observed the ground relied with the decision of PCIT Vs. Nitin Spinners Ltd.
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