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 February 5 to February 11,2023.
The Income Tax Appellate Tribunal (ITAT), New Delhi, has recently, in an appeal filed before it, held that statutory notice should not be issued in a casual and mechanical manner.
the Bench comprising of Pradip Kumar Kedia, the Accountant Member, along with Kul Bharat, the Judicial Member observed: “Looking to the totality of the facts and circumstances of the case, we are of the considered view that the assessing authority ought to have served notice at the correct address as mentioned in income tax return. The statutory notice should not be issued in a casual and mechanical manner. The Assessing Authority should verify the records placed before it and ensure the statutory notice is served on the current address of the assessee.”
The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) has while dismissing the appeal held that Tax Deduction at Source shall not be applicable to trade discount to customers.
The Chennai Bench of V. Durga Rao (Judicial Member) and G. Manjunatha (Accountant Member) dismissed the appeal observing that, “the assessee changed his stand and argued it is trade discount and it is outside the scope of section 194C of the Act. If at all it is trade discount, the assessee should prove his claim with relevant material including sales invoice to prove that trade discount has been allowed to customers in the invoice itself. But no such details have been furnished before us.”
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that Limited Liability Partnership (LLP) receiving share of profit from other firms shall be eligible for income tax exemption under Section 10(2A) of the Income Tax Act 1961.
A single Bench of Laxmi Prasad Sahu (Accountant Member) allowed the appeal observing that,” The section 10(2A) of the Act grants exemption to a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm. The firm has been defined in section 2(23) of the Act, which includes LLP also. The Act is very clear that the LLP is to be treated as a firm. A firm can be a partner in other partnership firms. There is no restriction in the income tax Act for becoming partner by firm in other partnership firms. The assessee is an LLP and has received share of profit from other partnership firms which has been claimed as exempt income” referring the decision in Radha Krishna Jalan Vs. CIT.
The Allahabad Bench of Income Tax Appellate Tribunal (ITAT) has while deleting the addition observed that the mother keeping jewelry of married daughter is not uncommon in India.
The Allahabad Bench of Vijay Pal Rao, (Judicial Member) And Ramit Kochar (Accountant Member) deleted the addition and observed that, “if the undisputed quantity of the jewelry / gold bars of 623 grams as well as the benefit of the CBDT Circular dated 11th May, 1994 in respect of 250 grams gold jewelry of each daughter and 100 grams for the husband of the assessee is given then no addition on account of unexplained investment in the jewelry is called for. Hence, the addition sustained by the CIT(A) on account of 499.85 grams jewelry is liable to be deleted.”
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that Security charges are not subject to Tax Deduction at Source under section 194C of Income Tax Act 1961.
The division bench of ITAT comprising Kavitha Rajagopal (Judicial Member) and B.R. Baskaran, (Accountant Member) allowed the appeal filed by the assessee and observed that the security charges involve supply of manpower only and the same did not involve “carrying on of any work” within the meaning of the definition of the term “work” given in the Explanation III. Hence the provisions of sec.194C are not attracted for expenses claimed as “security charges”. Supply of manpower may not fall under the provisions of sec. 194J relate to “professional fees”.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the burden of proof is on the assessee to establish genuineness of deposit during the demonetization period.
Judicial member Perbeena pillai observed that, “We are aware of the fact that not every deposit during the demonetisation period would fall under the category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash.”
The Rajkot bench of Income Tax Appellate Tribunal (ITAT) recently held that overloading charges paid under Motor Vehicles Act Compensatory in nature .
Section 37 of Income Tax Act 1961 provides that any expenditure spent for the progress of business and profession shall be considered for calculating income under the profits and gains of business or profession.
After considering the contentions of the both parties the division bench of ITAT comprising Waseem Ahmed, (Accountant) and. Madhumita Roy, (Judicial Member) allowed the appeal filed by the assessee .
The Income Tax Appellate Tribunal ITAT) recently held that repayment of debt is application of income if such debt was taken as part of receipts of charitable trust.
After considering the contentions of the both parties the division bench of ITAT comprising N. K. Billaiya, (Accountant) and. Kul Bharat, (Judicial Member) dismiss the appeal filed by the assessee and observed that circular has not made clear about whether the loan at the time of being taken should be treated as income but unless such debt is taken as part of receipts by the charitable trust only then the repayment of such debt would be accepted as application of income.
The Bangalore bench of Income Tax Appellate Tribunal (ITAT) recently held that interest under section 234A of income tax act 1961 could not be levied if income tax return filed within the due date.
After considering the contentions of the both parties the division bench of ITAT comprising N.V. Vasudevan, (vice president) and. Chandra Poojari, (Accountant Member) allowed the appeal filed by the assessee and observed that assessee filed return of income within the time stipulated in section 139(1) of the Income Tax Act 1961 and as such there was no delay in filing the return of income.
The Chennai bench of Income Tax Appellate Tribunal (ITAT) recently denied revenue expenditure claim and held that replacement expenditure could not be treated as current repairs.
After considering the contentions of the both parties the division bench of ITAT comprising Mahavir Singh, (vice president) and. Manoj Kumar Aggarwal, (Accountant Member) disallowed the appeal filed by the assessee and observed that “the assessee therein replaced components of a boiler and not the entire boiler. These parts were not capable of functioning independently and the expenditure was incurred to preserve and maintain an existing boiler. The same is not the case here since in the present case, the assessee has replaced entire HF Reactor.’’
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT ) has granted relief to the builder observing that the on-money received on sale of property at 50% booked price was on a “Palpably very high Side”.
Annapurna Gupta (Accountant Member) and Suchitra Kamble (Judicial Member) allowed this ground of appeal and granted relief to the appellant. “We agree that it is highly improbable in this line of business to make profits up to the extent of 50% or more of the turnover that too on sale of such small sized properties. Even the Ld.DR was unable to enlighten us with statistics showing otherwise. We therefore agree with the ld.counsel for the assessee that making addition of the entire on-money received by the assessee would not be justified”, the Bench observed.
The Allahabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest paid to legal heirs of deceased partners could not be disallowed if the TDS had already been deducted.
A single Bench of Vijay Pal Rao (Judicial Member) observed that, “The AO has made the disallowance by considering the entries made on 31st March, 2011 without considering the fact that after the death of the partner of the firm this amount ceases to be the credit in the capital account of the partner and consequently takes the character of loan from the deceased partner / legal heirs of the deceased partner. The capital introduced by a partner of the partnership firm is always for business purposes and it is not an amount which is kept with the partnership firm only for earning the interest because it was also the need of the partnership firm for doing the business by utilizing the said amount”.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that mere delay in filing form no.6 u/r 128 (9), is not a ground to deny foreign tax credit.
The Mumbai ITAT observed: “We find that in another decision in Anuj Bhagwati vs DCIT, the coordinate bench of the Tribunal vide order dated 20/09/2022, while deciding a similar issue, has held that section 90/91 of the Income tax Act has not been amended insofar as grant of foreign tax credit is concerned and Rules cannot override the Act and therefore filing of Form No. 67 is not mandatory but it is directory”.
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has allowed the carry forward of loss of rental income against other income as the interest on house loan was deductible.
Sandeep Singh Karhail (Judicial Member) and Gagan Goyal, (Accountant Member) observed that “as per the agreement the said property can only be used for the purpose of setting up the IT office as per the IT Park Policy of the Government of Maharashtra. It is evident that the property in respect of which the assessee claimed interest under section 24(b) of the Income Tax Act is only a commercial property, and therefore the restriction on deduction as provided in 2 and provision to section 24(b) of the Income Tax Act shall not be applicable. Therefore, we are of the considered view that the AO has erred in restricting the deduction of interest paid on the loan to Rs.2 lakh vide intimation issued under section 143(1) of the Income Tax Act.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that defect in statutory notice in not striking out of irrelevant ground vitiates penalty proceedings.
The Mumbai ITAT concluded: “By respectfully following the above decision, we are of the considered view that the defect in the statutory notice in not striking out of the irrelevant ground vitiates the penalty proceedings for the reason that the assessee has not given sufficient notice for preparing his defenses, as to the grounds on which the penalty proceedings have been initiated.”
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently held that no tax is required to be deducted at source on software trading if sales tax is already remitted.
The division bench of ITAT comprising Prashant Maharishi, (Accountant member) and Pawan Kumar Gadale, (Judicial Member) allowed the appeal filed by the assessee and observed that “If the purchases of software is traded goods and supplied to another client and not for the use of the assessee, no tax is required to be deducted at source”
In a recent case, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that branding expenses by a Start-Up before the commencement of business constitute “Business Loss” and a claim by the assessee was allowed.
It was observed that as a start-up company, the assessee has incurred costs for branding the company which creates popularity and helps the promotion of content at the time of its product launch. The assessee company has also appointed a chief marketing officer during the financial years.
The Bangalore Bench of Income Tax Appellate Tribunal has allowed approval under Section 80G of the Income Tax Act 1961, holding that the activities of donation to Veda Pathashalas, Veda Pandits, Medical Assistance etc. would be treated as “charitable” in nature.
The Bench further observed that, ” The assessee-trust has carried on other charitable activities in the nature of relief of the poor. The Vedic Scholars were identified and felicitated irrespective of their caste, creed or religion. The Trust has given financial assistance to various people, irrespective of caste, creed or religion, involved in Indian Heritage Education. The Income and expenditure ledger account for expenses incurred in achieving the objects like donation to veda patasalas, veda pandits, medical assistance etc demonstrates the charitable activities carried on by the assessee Trust.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), observed that initiation of revision jurisdiction on mere conjectures, suspicions and surmises is invalid.
The Bench comprising BR Baskaran, Accountant Member and Aby T Varkey, Judicial Member observed that “the CIT (E) has not conducted any such enquiry or verification. In such a scenario, we have to hold that he has initiated revision jurisdiction on mere conjectures, suspicions and surmises, which is not permitted.”
The Indore bench of Income Tax Appellate Tribunal (ITAT ) recently held that in case of “loan given” Penalty under section 271D Income Tax Act 1961 would be invalid.
section 271D Income Tax Act 1961 provides that if any person accepts any loan in contravention of the provision of 269SS Income Tax Act 1961 he shall be liable to pay an amount by way of penalty.
P.K. Mitra counsel for the revenue contented that dutifully supported the penalty order, though he agrees that penalty under section 271D was not applied to the transaction of loan given.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that interest on late payment of direct taxes is not deductible under the Income Tax Act.
Hearing the contentions of Shri AR.V. Sreenivasan, Addl. CIT, on behalf of the Revenue, with no representation on the assessee’s behalf ,and perusing the materials available on record, the ITAT Bench consisting of G. Manjunatha, the Accountant Member, along with Mahavir Singh, the Vice- President observed: “We have heard ld. Senior DR and gone through the case records. There is no disallowance by the AO. However, the CIT(A) has disallowed this interest paid on TDS of Rs.69,058/- and debited to the profit & loss account as interest paid.”
The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that the principle of estoppels is not applicable to income tax proceedings.
The bench observed that assessing officer has not decided the issues involved before him on its merit and passed the assessment order only based on the admissions/surrender made by the assessee representative he ought to have decided the matter on merit in accordance with law, not based on the admission or refusal of the assessee. Also the principle of estoppels is not applicable to income tax proceedings and the authorities should bear in mind that the right income of the assessee to be taxed in the right assessment year and well within the limitation as prescribed in the Act.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that no addition of notional income can be made from vacant flats held as stock- in trade by builder.
The Mumbai ITAT consisting of M. Balaganesh, the Accountant Member, along with Vikas Awasthy, the Judicial Member observed: “It is a well settled law that where two views are possible and the Assessing Officer has taken one of the possible views, the PCIT cannot substitute his view in exercise of revisional jurisdiction u/s. 263 of the Act. In the instant case the PCIT has tried to superimpose his view in exercise of powers u/s. 263 of the Act over one of the possible views taken by the Assessing Officer. This is not in accordance with the settled law. Thus, the PCIT has exceeded his jurisdiction in exercise of revisionary powers.”
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, held that the sale proceeds of software are not taxable under Indo- Ireland DTAA.
“We have heard the rival contentions and perused the relevant material available on record including the impugned order in assessee’s own case in ITA No.313/KOL/2017 for A.Y. 2013-14, and we find that the identical issue has been decided in favor of the assessee.”, the ITAT Bench comprising of Rajpal Yadav, the Vice-President (KZ) and Rajesh Kumar, the Accountant Member observed.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that Income Tax exemption to trust u/s 11 cannot be denied in respect of income from letting out of school auditorium for public.
the Bench consisting of Shri Mahavir Singh, the Vice Presidentand Shri G. Manjunatha, the Accountant Member, held: “Once the assessee falls under the category of education in term of section 2(15) of the Act, assessee is eligible for exemption u/s.11 of the Act because letting out of auditorium is incidental to fulfillment of the object of the trustee., education. Hence, we allow the appeal of assessee for AY 2010-11. Consequently, all the four appeals of assessee are allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that deeming provision cannot be applied mechanically, ignoring the facts of the case and surrounding circumstances.
The Bench consisting of Astha Chandra, the Judicial Member, along with Anil Chaturvedi, the Accountant Member held: “The deeming provision cannot be applied mechanically ignoring the facts of the case and the surrounding circumstances. Considering the totality of the aforesaid facts, we are of the view that in the present case, no addition of the impugned amounts is called for. We, therefore, direct the deletion of the additions made by AO and upheld by CIT(A)”.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that a delay of 7 days in filing of appeal can be condoned since CA was busy with income tax and GST compliance.
The ITAT Bench consists of Shri Mahavir Singh, the Vice President and Shri G. Manjunatha, the Accountant Member, held: “We see that the delay is very small and the cause seems reasonable, which was not contested by the Revenue. Since the delay is very small, we condone the delay in filing of these appeals by assessees and admit the appeals for adjudication.”
The Chandigarh bench of Income Tax Appellate Tribunal (ITAT) recently held that the Assessing Officer could not disturb assessment order or re-assessment order which has attained finality except during the proceedings under section 153A of Income Tax Act 1961.
the division bench of ITAT comprising Vikram Singh Yadav, (Accountant) and. Sanjay Garg, (Judicial Member) allowed the appeal filed by the assessee and held that the original assessment proceedings stood completed under section 143(3) Income Tax Act 1961 was not abated as on the date of search no incriminating material has been found during the course of search proceedings basis which the addition towards unexplained expenditure under section 69C Income Tax Act 1961 has been made Nothing has been brought on record by the Assessing officer either in the reassessment proceedings. Hence there is nothing to justify on the part of the Assessing Officer for making the impugned addition under section 69C Income Tax Act 1961 in the case of the assessee.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the cash deposits could be accepted during the demonetization period if the source has been explained.
The Division Bench of Mahavir Singh (Vice President) and G. Manjunatha, (Accountant Member) deleted the addition, allowing the appeal observing that “We find that, the AO as well as CIT(A) never disputed fact that the assessee has furnished necessary evidence with regard to maturity proceeds of fixed deposits and insurance policy. However, disregarded evidence filed by the assessee only for the reason that cash has been deposited during the demonetization period.”
The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has held that no income tax shall be levied on unsold flats held by a builder.
The Division Bench of Inturi Rama Rao(Accountant Member) and S.S. Viswanethra Ravi (Judicial Member) allowed the appeal holding that the addition was maintainable on account of deemed rent on unsold flats which were treated as stock-in-trade by the assessee.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has while allowing the revenue expenditure observed that the repairs and renovation expenses were ‘revenue’ in nature.
The Pune Division Bench of S.S.Godara, (Judicial Member) And Dipak P. Ripote, (Accountant Member) allowed the appeal referring to the Hon’ble Bombay High Court decision in the Oxford University Press case. The Bench held that the expenditure incurred on repairs and renovation was revenue in nature would be allowable as revenue expenditure.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has held that the service tax penalty is not deductible as business expenditure under Section 37(1) of the Income Tax Act 1961.
The Division Bench of Sonjoy Sarma, (Judicial Member) and Girish Agrawal, (Accountant Member) dismissed the appeal observing that, “We find that addition made by the authorities below by disallowing the claim of the assessee towards payment made on account of penalty of Rs. 40,000/- under service tax is in the form of penal in nature and it was levied for violation of law, therefore, the said penalty of Rs. 40,000/- is not admissible as an expenditure as per Explanation 1 to Section 37(1) of the Act.”
The Delhi Bench of Income Tax Appellate Tribunal has held that the valuation of agricultural lands as ‘Non-Agricultural’ for stamp papers could not be a ground to deny the tax benefit under Section 54B of the Income Tax Act 1961.
The Division Bench of Shamim Yahya, (Accountant Member) and Anubhav Sharma, (Judicial Member) allowed the petition observing that the, “It appears that Ld. AO has not taken any inquiry to ensure that when there were various co-sharers holding different title in a survey number to which assessee was also a co-sharer, then if the whole land in the survey number was converted to non-agricultural purpose or land falling in the share of assessee was not converted to non-agriculture purpose.”
The Bangalore bench of Income Tax Appellate Tribunal ( ITAT ) recently held that inflated sales during the demonetization period to be computed after considering average sales of prior one year.
69A of the Income Tax Act 1961 provides that if any money or jewelry or bullion found from the assessee and which was not recorded in the book of accounts of the assessee and the assessee has not such explanation about the nature of the asset such asset shall be considered as the income of the assessee .
The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) recently allowed 50 percent as capital gain exemption under section 54 of the Income Tax Act 1961 to joint owners of property.
division bench of ITAT comprising Dr. B. R. R. Kumar (Accountant Member) and Yogesh Kumar U.S (Judicial Member) confirmed the addition made the assessing officer and observed that “Since the assessee and her son have jointly invested the house property and are the joint owners of the house property having 50% right, title and interest over the property, the Assessing Officer is, therefore, correct in restricting the claim of the assessee under section 54 of the Income Tax Act 1961 to Rs. 1,79,23,884/- by making an addition of Rs. 74,49,302/- to the total income of the assessee.”
The Income Tax Appellate Tribunal (ITAT ) ruled that the Rule 37BA of Income Tax Rules is applicable to claim of both Tax Deduction Source ( TDS ) and Tax Collected Source (TCS ). The bench directed the Assessing Officer (AO) to give credit to TCS.
The bench observed that what is applicable for TDS should also be applicable for TCS and merely because there is no Rule identical to Rule 37BA(2)(i) of the Rules with reference to TCS provisions, it cannot be the basis for the Revenue to deny the legitimate claim for credit of TCS made by an assessee.
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