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 29 to February 4, 2023
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) chaired by Saktijit Dey (Judicial Member) deleted the addition sustained by the Commissioner of Income Tax (Appeals) [CIT(A)].
On examining the additional evidence, the AO reported that out of the claim of income from sale of agricultural produce amounting to Rs. 24,00,000, an amount of Rs.10,36,305 appears to be genuine. Accordingly, out of the addition of Rs.31,00,000 made by the AO, CIT(A) deleted an amount of Rs.10,36,305 and confirmed the balance amount.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the centralized services fee received by Starwood Asia Pacific is not taxable as royalty under India-Singapore Treaty.
A Coram comprising of Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member viewed that the Coordinate bench in an identical issue held that “the centralized service fee received by the assessee cannot be treated as FIS under Article 12(4)(b) due to failure of ‘make available’ condition, has made an unsuccessful attempt to bring it within the ambit of Article 12(4)(a) of the Treaty and in the processes has misrepresented certain facts.”
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the consultancy charges paid by Kuiper Compagnons to overseas entities are taxable as Fee for Technical Service (FTS).
A Coram comprising Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member observed the assessee was unable to furnish any cogent explanation supported by evidence to establish that the consultancy charges paid are not like FTS.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that gifts to dealers and “Shagun” during the marriage of dealers and staff are effective tools for business promotion and social welfare and are a deductible expense.
A Coram Comprising Dr B. R. R. Kumar, Accountant Member and Sh. Yogesh Kumar US, Judicial Member observed that “the issue has been decided in favor of the assessee for the AY 2006-07, 2007-08, 2008-09, 2009- 10, 2010-11, 201112, 2012-13, 2013-14, 2014-15 and 2015-16 by the CIT (Appeal), Rohtak which was upheld by the Coordinate Bench of ITAT.
In a recent judgment, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the distribution revenue received by Cable News Network (CNN) is not “Royalty
A Coram comprising of Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member observed that in the assessment year 2003-04, the competent authorities of India and USA reached an agreement under Mutual Agreement Procedure (MAP) holding that 10% of the advertising and subscription revenue received from India shall be deemed to be the net profit chargeable to tax in India.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) clarified the taxability of the sum received from ICC events in India and held that 25% of the Licence Fee paid by SET Satellite (Singapore) Pte Ltd (SET) to Global Cricket Corporation Pvt Ltd (GCC) is a fair estimate.
The Tribunal observed that the Heads Agreement does not provide any break-up of the consideration and noted that the CIT(A) had, while deciding the appeal for the Assessment Year 2003-04, attributed 75% of the consideration for use of copyright in the live feed and balance 25% for use of copyright in non-live feed/transmission such as highlights, telecast of recorded matches etc.
In a significant ruling, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the Race Promotion Contract (RPC) fee is an additional income by Formula One and is taxable.
A Coram comprising of Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member observed that the TDS credit partakes the character of original income, i.e., the RPC fee and has to be taxed in the same manner in which the Assessing Officer taxed the RPC fee.
Delhi Bench of Income Tax Appellate Tribunal (ITAT) allowed the capital gain exemption under section 54B of Income Tax Act, 1961. The tribunal stated that such deduction shall not be denied merely stating that the agricultural land was purchased in the name of the wife of the taxpayer.
The single appeal bench of Saktijit Dey (Judicial Member) drew on various High Court rulings in reaching its conclusion that investments in real estate bought in the wife’s name are eligible for a deduction under Section 54B of the Income Tax Act.
Addition made under section 69A of the Income Tax Act, 1961 was deleted by the Delhi Bench of Income Tax Appellate Tribunal (ITAT) as the cash deposit was kept for the medical emergency.
The single bench of Saktijit Dey (Judicial Member) observed that the department does not have any contradictions on the illness of the assessee and also it’s a serious matter that should be considered. Furthermore, considering the fact that the assessee face a serious medical condition, her explanation that cash withdrawals made earlier were kept at hand for meeting any medical emergency, to some extent, is believable and thus directed to delete the addition.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that sale proceeds of agricultural land is not taxable as capital gain.
Thus finally allowing the assessee’s appeal in part, the Chennai ITAT concluded : “At this stage, when pointed out to ld.counsel, whether he want to file the details before AO to prove the creditor, he undertook to file complete details and to produce whatever evidence the AO wants in regard to this. On this, the ld.CIT-DR has not objected. Hence, in view of the concession given by both the sides, we remit this issue back to the file of the AO, who will examine the creditor and then will decide accordingly.”
The Income Tax Appellate Tribunal (ITAT), Surat Bench, has recently, in an appeal filed before it, held that there can be no deemed registration, if the income tax department is not deciding registration application u/s 12AA, within a period of six months.
“The case law relied on ld. CIT-DR for the revenue in Harshit Foundation Vs CIT ,wherein the Hon’ble Supreme Court has held that there is no specific provision in the Income Tax Act that by non-deciding the registration application under Section 12AA within a period of six months there shall be a deemed registration. Thus, the ratio of this decision is directly applicable on the facts of the present case.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that the levy of surcharge and cess cannot exceed the tax rate of 10%, as per India – Japan DTAA.
“Having considered the rival submissions, in principle, we accept the assessee’s contention that levy of surcharge and cess cannot exceed the tax rate of 10% as per India – Japan DTAA. Article 12 of India – Japan tax treaty provides that the tax to be charged on royalty and FTS shall not exceed 10% of the gross amount of royalty or FTS. Article 2 of the tax treaty defines tax in India as income tax including any surcharge thereon. Therefore, Article 12 read with Article 2 of the tax treaty makes it clear that the rate of tax at 10% would encompass surcharge and education cess as it is also in the nature of surcharge.”, the ITAT Bench further added.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) observed that re-assessment based on information from the Investigation Wing of Income Tax Department is valid.
The Tribunal of Aby T Varkey, Judicial Member observed that “I hold that the appeal of the Revenue is not maintainable because the source of information on which AO re-opened the assessment was emanating from the investigation wing of the Income Tax Department and not from the external law enforcement agencies to fall in the exception to agitate before this Tribunal despite hit by low tax effect.”
The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench held that Premium Expenses on Foreign Currency Convertible Bonds ( FCCB ) is Revenue Expenditure and hence is deductible.
The Coram consisting of Om Prakash Kant, Accountant Member and Rahul Chaudhary, Judicial Member observed that “We find that identical issue of expenses of premium on FCCB are in the nature of liability whether ascertained and revenue expenditure, has been decided by the Coordinate Bench of the Tribunal in the case of Strides ShasunLimited v. ACIT.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that bringing evidence on what basis income has escaped and re-opening of assessment is required, is a procedural requirement to invoke section 147/148.
The Mumbai ITAT concluded: “The assessment itself becomes bad in law and therefore does not survive. The appeal of the assessee is allowed on the legal issue and therefore there is no need to comment on the merit of the case”.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that section 263 is not a mechanism available for PCIT for taking Second Opinion.
The Mumbai ITAT ruled : “ In this particular case, the Pr. CIT has given the different opinion and different treatment to the share investment made by the assessee which amounts to second opinion. This is not permissible u/s 263 as the assessment order does not amount to erroneous and prejudicial to the interest of the Revenue. Hence, the order u/s 263 does not sustain and the appeal of the assessee is allowed.”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the assessment order passed against the dead person would be invalid.
The Divisional Bench of Prashant Maharishi (Accountant Member) and Pavan Kumar Gadale, (Judicial Member) allowed the appeal quashing the impugned order and observed that “In the assessment order itself, the learned Assessing Officer has mentioned that he has come to know through e-portal that the assessee have expired in the month of January, 2019. The 263 order is invalid as the same is passed in the name of the deceased person. It was also stated that an assessment order is also passed in the name of the dead person.” To Read the full text of the Order CLICK HERE
The Mumbai bench of Income Tax appellate tribunal (ITAT) recently held that addition under section 153C of Income Tax Act 1961 could not be made based on documents found during the survey.
The Division bench of ITAT comprising Prashant (Maharishi Accountant)t Member, and Pavan Kumar Gadale(Judicial Member), allowed the appeal filed by the assessee and observed that search under Section 132(1)Income Tax Act 1961 as well as survey under Section 133A of the Income-tax Act, 1961 was carried out at various premises of Ameya Group,and also There is no order required to be passed under Section 133A of the Act if the documents are found and seized during the course of search .
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Non-resident’s income or deposit in foreign bank accounts could not be taxed in India.
The Bench of S. Rifaur Rahman (Accountant Member) and Amit Shukla (Judicial Member) allowed the appeal, held that the assessee could not be treated as resident and income or deposit in the foreign bank account of the assessee who is not resident in India could not be taxed in India. The Bench observed that, merely mentioning the status as resident in the original return of income does not make the assessee as resident in India. Here in this case, assessment has been made u/s 153A and the assessee has declared the status as non-resident in return of income filed in response to the notice u/s 153A and the assessment has been completed in the status of non-resident.”
The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that profit from the sale of Carbon Credit is “Capital Receipt” and held as not taxable.
The Tribunal held that the profit earned by the assessee for Carbon Credits is capital in nature; and, the addition made by the Revenue by treating them as revenue in nature is directed to be deleted.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) observed that “ a right tax has to be collected from the right person” and held that the Centralised Processing Centre (CPC) is bound to correct wrong adjustments made through an automated process.
A Coram composed of Dr B. R. R. Kumar, Accountant Member and Sh. Yogesh Kumar US, Judicial Member held that “a right tax has to be collected from the right person and though the CPC has processed the return based on the information given by the assessee, and when the information given by the assessee itself is incorrect in filling of the relevant column, the same needs to be allowed to be rectified in the interest of justice.”
The Income Tax Appellate Tribunal (ITAT), Rajkot Bench, has recently, in an appeal filed before it, held that road construction expenses incurred to provide easy and smooth access from highway to factory are allowable as business expenditure.
The Rajkot ITAT ruled : “Based on the above, it seems to us that the assessee is not enjoying any benefit of enduring nature out of the expenditures discussed above. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him.”
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has allowed Tax Holiday relief under Section 10A to IBM India.
Chandra Poojari (Accountant Member) and Beena Pillai (Judicial Member) allowed the appeal observing that the assessee had produced a letter of RBI dated 28/02/2014, the Competent Authority, mentioned u/s. 10B (3) of the Act and it clarifies that the assessee was granted post facto extension. The assessee company had also subsequently realized the said amount. The Bench observed that “The assessee has obtained post facto approval from RBI coupled with the fact that it has also realized the said amounts, it is entitled to the deduction u/s. 10A/10B of the Act on the said amounts.”
Bangalore bench of Income Tax Appellate Tribunal (ITAT) recently held that the income tax notice served on wife assessee is valid .
The ITAT bench comprising Chandra Poojari (Accountant Member) and Beena Pillai, (Judicial Member) dismiss the appeal filed by the assessee and conclude that penalty order has been properly passed within due date and has been properly served to the assessee.
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that no Tax Deducted at Source (TDS) shall be deducted as payment to vendors for procuring goods including clothes and footwears were not treated as work contracts.
The Mumbai Bench of Aby T. Varkey (Judicial Member) and OM Prakash Kant (Accountant Member) dismissed the appeal filed by the revenue and observed that the term ‘work’ has been defined in an inclusive manner and only if the ‘work contract’ undertaken by the payee falls within the above definition of ‘work’, as specifically defined in the section itself, that the provisions of Section 194C would become applicable. We thus agree with the findings of the Ld. CIT(A) that these SOR arrangements were on principal-to-principal basis and therefore in the nature of contract for sale of goods and thus, such an arrangement cannot be categorized as ‘works contract’ as defined in Section 194C of the Act.”
The Income Tax Appellate Tribunal (ITAT) Pune Bench recently held that builders are eligible for income tax deduction under section 37 of income tax act 1961 in respect of compensation to flat buyers on cancellation of booking. Section 37 of the Income Tax Act 1961 provides that for the progress of a company or profession the person who spends any expenditure shall be considered for calculating income under the head of profits and gains of business or profession.
The ITAT bench comprising GD Padmashali (Accountant Member), and Satbeer Singh Godara, (Judicial Member), allowed the impugned sum of Rs.7, 51,068/- as an allowable business expenditure deduction under section. 37 of the Income Tax Act 1961 and held that “neither the Assessing Officer nor the CIT(A) reject genuineness of the impugned compensation amounts paid by the assessee wholly and exclusively for the purpose of its day-to-day business activity in line of development and building construction etc.”
The Income Tax Appellate Tribunal ( ITAT ) recently held that section 54 of the Income Tax Act 1961 are benevolent provisions therefore, requires liberal interpretation and the assessee is entitled to get the benefit of the benevolent provisions.
The division bench of the ITAT compraising Pradip Kumar Kedia, (Accountant Member) and Choudhry, (Judicial Member) allowed the appeal filed by the assessee and observed that “There is no doubt that the provisions of section 54F of the Act are benevolent provisions and therefore, requires liberal interpretation. In that sense, the assessee is entitled to get the benefit of the benevolent provisions”. Therefore just because the assessee could not deposit the consideration amount/capital gains in specified bank account that did not entail levy of penalty automatically.
The Income Tax Appellate Tribunal ( ITAT ), Chandigarh Bench, has recently, in an appeal filed before it, held that the income tax authorities should charge legitimate taxes from the assessee and that penalty cannot be imposed for bonafide mistakes.
l the Chandigarh ITAT commented: “It has been time and again held that the Income Tax Authorities should charge legitimate taxes from the assessee.The assessee should not be punished for his/ her bonafide mistake. The Instructions in this respect have also been issued by the CBDT from time to time that the Income Tax Authorities should assist the assessee in correctly making their claim in the return.”
The bench of Amit Shukla and Gagan Goyal of Mumbai Income Tax Appellate Tribunal ruled that Income from carriage of goods and for operating ships is taxable under section 44B of the Income Tax Act, 1961.
The bench observed that the assessee, since it is a non resident company engaged in the business of operation of ships, i.e., the ship of the assessee is used for transporting coal and has operated a ship on time charter basis by PSCL, therefore it has been subjected to tax under the special provision of section 44B of the Income Tax Act.
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) chaired by Aby T. Varkey (Judicial) and Amarjit Singh (Accountant Member) deleted the addition of Rs.278 crores made by the Assessing Officer (AO).
The bench upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] holding that the amount of compensation received was a capital receipt.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that a mere making claim which is not sustainable by law does not amount to furnishing inaccurate particulars of income and Penalty under section 271(1)(c) of the Income Tax Act, 1961 is not imposable.
A Coram comprising Shri Inturi Rama Rao, Accountant Member and Shri S S Viswanethra Ravi, Judicial Member found that the addition u/s 36(1)(iii) was made by the Assessing Officer because the appellant had failed to demonstrate the advances to sister concern were made for the business purpose.
The Cuttack Bench of the Income Tax Appellate Tribunal (ITAT), observed that expenditure incurred towards Computer Software and Stationery are Revenue in nature.
The Bench comprising Arun Khodpia, Accountant Member and George Mathan, Judicial Member observed that “A perusal of the ledger account clearly shows that the expenditure incurred towards computer software and stationery which are nothing but revenue in nature. This being so, the findings of the CIT(A) are confirmed and the ground of the revenue stands dismissed.”
In Favour of RapipayFinvest, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that the inability to generate income from software is not a ground to deny a depreciation claim.
A Coram comprising of Shri Anil Chaturvedi, AM and Shri N K Choudhry, JM observed that the holding company was duly authorized for sub-contracting to the Subsidiary company and the breach of terms and conditions of the contract between parties will not change the nature of revenue generated from the said transactions.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that Advertising Marketing and Promotion (AMP) Expenditure is not an International Transaction and thereby ruled in favor of M/s Mattel Toys (India) Pvt. Ltd.
The Bench comprising Vikas Aswathy, Judicial Member and Om Prakash Kant, Accountant Member observed that “AMP expenditure is not an international transaction therefore, adjustment to said transaction for arm’s length price is rendered infructuous and no adjustment could have been made.”
The Delhi bench of the Income Tax Appellate Tribunal (ITAT)has held that receipt from management support services by Wolters Kluwer is not taxable as FTS under India-UK Treaty.
A Coram comprising Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member held that the nature of services provided by the assessee does not give any impression that they are not like managerial services.
In a recent ruling, the Cuttack bench of the Income Tax Appellate Tribunal (ITAT) has held that the revisional order passed under 263 of the Income Tax Act, 1961 against a deceased assessee is not valid and quashed the order.
A Coram comprising of Shri George Mathan, Judicial Member and Arun Khodpia, Accountant Member observed that there was no provision under which the legal heir could have intimated the revenue regarding the death of the assessee as they had no certificate issued by the statutory authorities to prove the death. The legal heir certificate can be applied only after obtaining the death certificate.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has quashed the income tax proceeding as the non-compliance with communication under Section 143(1)(A) of Income Tax Act 1961 due to technical glitches in income tax portal was unintentional.
The Bench of S.S. Godara,(Judicial Member) and G. D. Padmahshali, (Accountant Member) observed that “ the appellant got its books audited, prior to filing of ITR for the impugned and the non-compliance with communication u/s 143(1)(a) of the Act due to IT Website technical glitches was unintentional and beyond the control of the appellant t is sufficient to form a reasonable cause for non-compliance and since the procedural compliance has been duly made good by fling the audit report on record, we see no reason to deny the exemption.”
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) removed the Assessing Officer’s addition and determined that the sum given to the LLP partner from the remaining Accumulated Profits due to Commercial Expediency was not taxable as “Capital Gain.”
The bench of Sandeep Singh Karhail and Om Prakash Kant observed CIT(A) have duly considered that the clause (c) operates only till the date of conversion i.e. 17/03/2016 and it is clear from the balance sheets pre conversion and post conversion that the shareholders have not received any consideration or benefit directly or indirectly.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that statutory provisions of S. 244A of the Income Tax Act cannot be altered by CBDT circular.
Further observing, the Bench comprising S. S. Godara, the Judicial Member, and G. D. Padmahshali, the Accountant Member, commented: “We are heedful to voice that, even if an order u/s 119 issued with such direction, the same shall be repugnant for two reasons, viz firstly being prejudicial to the interest of the assessee and secondly circumvential to statutory provisions, and this view can be witnessed in the judgment of Hon’ble High Court of Karnataka in Dinkar Ullal Vs CIT”
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that CPC cannot go beyond return of income.
The Pune ITAT commented: “We heard the rival submissions and perused the material on record. We find that the appellant had filed the return of income in Form No.5. However, no documents were filed along with the return of income justifying the claim for exemption u/s 11 of the Act. It is only after receipt of intimation; the appellant took a plea that its income was exempt u/s 11 by virtue of registration u/s 12A of the Act. Even the audit report was admittedly not filed along with the petition u/s 154 or before the NFAC.”
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that relinquishment of right in land earmarked for common utility purposes as per regulatory requirements is not taxable as capital gain or business income.
A Coram Shri V Durga Rao, JM and Shri G Manjunatha, AM observed that the reasons given by the AO are not subscribed because, relinquishment of right in land earmarked for common utility purpose, cannot be considered as an extinguishment of any right in property which can be considered as transfer within the definition of Sec.47(iii) of the Income Tax Act, 1961.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
