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 March 13 to March 18, 2023.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that no addition could be made under Section 153C of the Income Tax Act 1961 as the dumb documents found from the third party were not containing the assessee’s name.
“In the present case, material found at the premises of Rajiv Gupta has been taken as if they are material found during a search at the assessee, Atul Kumar Gupta, which is not at all correct. The assessee’s plea that the assessee’s name is nowhere directly mentioned in these documents found at Rajiv Gupta place whereas it is mentioned as Dildar (Atul sir) which ipso facto cannot mean the assessee.”
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) recently held that the valid satisfaction is required to initiate reopening of assessment under section148 of Income Tax Act.
The Coram comprising the judicial member V. Durga Rao and the account member G. Manjunatha observed that on the basis of reasons submitted by the assessing officer, ‘the said satisfaction’ constitutes a valid satisfaction as required under law. Therefore we reject the argument of the assessee.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the trust was not eligible for section 12AB registration under pre amended deed.
The Coram comprising Kavitha Rajagopal(Judicial member) ,B.R. Basakaran (Accountant Member) provided one more opportunity to furnish the details of registration of the amendment carried out by the assessee to the trust deed with the charity commissioner and set aside the impugned order passed by commissioner of Income Tax (CIT(E)).The appeal filed by assessee got allowed.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that late fee u/s 234E, is not leviable for belated filing of TDS statements, filed prior to 01.06.2015
Thus, allowing the assessee’s appeals, the Delhi ITAT held: “Since the demand under charging Section 234E for late filing of TDS return arising from belated TDS statements filed prior to 01.06.2015, the impugned late fee imposed requires to be deleted. In the result, all the three captioned appeals of the assessee are allowed.”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the application of General Anti-Avoidance Rule (GAAR) provisions could not take away the tax benefit under Double Taxation Avoidance Agreement (DTAA).
The Division Bench of N. K. Billaiya, (Accountant Member) And S.H. Anubhav Sharma, (Judicial Member) directed the AO to delete the impugned disallowance and allow the treaty benefit to the assessee as per the relevant provisions of the treaty. “The AO has also invoked the doctrine “substance over form” to deny the benefit of Article 13 (4A)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that State cannot clutch the undue benefit of mistake committed by the taxpayer
“The fact that the exempt income received by the assessee of Rs. 2,093 (Rupees Two thousand and ninety-three only) has not been in dispute. The disallowance, in any case, cannot be more than the exempt income earned. The state cannot clutch the undue benefit of the mistake committed by the taxpayer. Hence, we decline to interfere with the order of the CIT (A). As a result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 14/02/2023.”
The Income Tax Appellate Tribunal ( ITAT ), Jaipur Bench, has recently, in an appeal filed before it, held that penalty u/s 271B of Income Tax Act cannot be imposed for not getting books of accounts audited for violation of S. 44AB.
Allowing the assessee’s appeal, the Jaipur ITAT held: “Therefore, while summing up the entire discussion and while relying upon the different decisions as mentioned supra, I am also of the view that in the instant case since assessee was not found to have maintained the books of account, therefore, no penalty can be imposed for not getting the books of accounts audited as prescribed under section 271B of the Act for violation of section 44AB of the Act. Thus, keeping in view, the binding precedent and principles laid down by the High Courts, I set aside.”
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has recently, in an appeal filed before it, held that penalty u/s 271F cannot be levied, if there is “reasonable cause”
“The Bench has deeply considered the submissions of the ld. AR of the assessee and found that it does not suffer from any infirmity as no building approval is required for construction area of 870 Sq Ft and property tax was not leviable on the residential house property. The assessee has shown the investment of source like (i) Rs.1,80,000/- (given by the wife of the assessee out of her Istri Dhan (ii) Rs.90,000/- (given by the father of the assessee in installments) (iii) Rs.78,000/- (out of the funds available with the assessee) for which the assessee has filed an affidavit (PB 30-31). The assessee has also filed an affidavit of Contractor Shri Om Prakash Kumawat (PB 32-33). The Bench has also given its verdict in the assessee’s case in ITA No.95/JP//2022 dated 15-09-2022 for the assessment year 2011-12 on the issue of penalty u/s 271F of the Act.”, the ITAT Panel consisting of Sandeep Gosain, the Judicial Member, further observed.
The Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, has recently, in an appeal filed before it, deleted the penalty proceedings, on finding that the notice issued u/s 271(1)(c) of Income Tax Act is omnibus.
“From the above, it is evident that non-specification of the limb of the notice would render the penalty proceedings invalid. Accordingly, respectfully following the precedent, we set-aside the orders of the authorities below holding that notice u/s 271(1) (c) is omnibus notice, thus defective which goes to the root of the matter. Accordingly, the appeal of the assessee stands allowed.”
The Mumbai Income Tax Appellate Tribunal (ITAT) while providing relief to Linklaters LLP ruled that remuneration received by a law firm for providing legal services is not taxable as Fee for Technical Service (FTS) as per the Indo-UK treaty.
After considering the contentions of both the parties the division bench of the ITAT comprising B. R. Baskaran, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) allowed the appeal filed by the assessee and observed that revenue has failed to prove that the same would fall under the category of ‘fee for technical services’ as envisaged in Article 13 of the India-UK DTAA and thereby holding that the same cannot be brought to tax as ‘FTS’ as per section 90(2) of the Income Tax Act,1961.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the revision order observing that the Assessing Officer (AO) had failed to conduct investigation regarding cash deposits during the demonetization period.
The Division Bench of Mahavir Singh, (Vice President) and Manoj Kumar Aggarwal, (Accountant Member) noted that the cash deposited by assessee in specified bank notes were received during demonetization period and nothing was examined by the AO while framing assessment. The appeal filed by the assessee was dismissed accordingly.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under Section 54F was allowable to the purchase of undivided share of land.
The division Bench of Mahavir Singh, (Vice President) and Manoj Kumar Aggarwal, (Accountant Member) upheld the decision of Commissioner of Income Tax Appeal (CIT (A)) and dismissed the appeal filed by the revenue holding that “The CIT (A) has allowed exemption u/s.54F by noting that the exemption is not hit because the assessee has actually purchased undivided share of land on 22.12.2011.”
The Mumbai Income Tax Appellate Tribunal (ITAT) recently held that market to market loss in forex business has no notional loss which was allowable as expenditure.
After considering the contentions of both the parties the division bench of the ITAT comprising Prashant Maharishi, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) allowed the appeal filed by the assessee and observed that “marked to market loss is not a notional loss and is, therefore, allowable expenditure”
The Mumbai Income Tax Appellate Tribunal (ITAT) has recently held that the assessment order passed without complying with the procedure of section 144B of Income Tax Act 1961 is invalid.
After considering the contentions of the both sides the division bench of the ITAT comprising Prashant Maharishi, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) allowed the appeal filed by the assessee and the bench observed that, “The mandatory procedure prescribed under section 144B of the Income Tax Act 1961 if not followed the same would make the assessment order and the draft assessment order as non-est.”.
The Delhi Income Tax Appellate Tribunal has recently held that sale of software is not royalty under article 12(3) of Indo –US treaty.
After considering the contentions of the both sides the division bench of the ITAT comprising G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) allowed the appeal filed by the assessee and the bench observed that, amount received by the assessee from sale of software is not in the nature of royalty under Article 12(3) of India USA DTAA.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that no Tax Deducted at Source (TDS) shall be deducted on fee paid by Hindustan Aeronautics to CGTM France for availing flight test services.
The Division Bench of Chandra Poojari, (Accountant Member) and George George K., (Judicial Member) allowed the appeal observing that, “The Tribunal has already held that there was no question of deduction of TDS on the payment made to CGTM, France for the service rendered by them to the assessee and the payment made to them does not fall under the “fees for technical service.” Hence, it does not attract the provisions of section 195 of the Act so as to deduct TDS.”
The Income Tax Appellate Tribunal (ITAT), New Delhi Bench quashed disallowance on lottery expenses as the Assessing Officer (AO) traveled beyond jurisdiction.
The Tribunal of Anil Chaturvedi, Accountant Member and Challa Nagendra Prasad, Judicial Member observed that “We hold that the Assessing Officer traveled beyond his jurisdiction and made disallowances under Section 37(1)/40A (3) of the Income Tax Act which were not the items for consideration in the limited scrutiny and, therefore, the assessment order passed under Section 143(3) of the Act is liable to be quashed.”
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed re-assessment proceedings and noted that “Mere putting of seal as approving statement is not sufficient”.
The Tribunal further said that “I am unable to agree with the contention of the Senior DR that the putting seal as statement of approval is sufficient as the any exercise in the part of the PCIT for application of mind towards the said material which was gathered by the AO and the reasons recorded by him for the purpose of initiation of reassessment proceedings and issuance of notice under Section 148 of the Income Tax Act.”
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that assessment and rectification order does not contain DIN and that order number is invalid.
Thus, allowing the assessee’s appeals, the Pune ITAT held: “We reiterate that the foregoing sole seized document is totally “dumb” as there are no clear-cut entries which could suggest any payments or receipts, as the case may be, involving this assessee. Faced with the situation, we accept the assessee’s pleadings as well as the main appeal ITA No.47/PUN/2021 and dismiss the Revenue’s cross appeal ITA No.59/PUN/2021 as the necessary corollary.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that CAM charges are subject to TDS u/s 194C of the Income Tax Act.
Thus, allowing the assessee’s appeals the Delhi ITAT held: “Hence, we hold that the provisions for rent are governed by Section 194I and CAM charges by Section 194C of the Act. The AO is directed to re-compute the CAM charges, taking into consideration the two sections mentioned above.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while granting relief to Travelport, held that the assessee not responsible to explain recipients of receipts shown in Form No.26AS.
Thus, allowing the assessee’s appeal, the Delhi ITAT held: “In our considered opinion, by putting the onus on the assessee, the Assessing Officer has grossly erred as the assessee is not responsible to explain the recipients of the receipts shown in Form No. 26AS. The Assessing Officer should have asked the payer, details of the payee to whom payments have been made by the payer on which it could deduct tax at source. Therefore, on merit also, addition cannot survive as facts are not identical to the facts of earlier Assessment Years.”
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has recently, in an appeal filed before it, held that registration to trust cannot be canceled for mere non-compliance of notice during the covid-19 period.
“The assessee is having sufficient cause for not replying to the notices issued by the Revenue. As regards the contention of the ld. DR we are not considering his prayer to restore this issue to the file by the ld. CIT(E) as the subsequently the ld. CIT(E) has already granted the registration to the assessee trust and there is no adverse observation by the ld. CIT(E). In light of these facts and circumstances of the case, we see no reason to sustain the order under appeal and in the absence of any controversial finding on record we vacate the order passed by the ld. CIT(E) dated 04.0“The assessee is having sufficient cause for not replying to the notices issued by the Revenue. As regards the contention of the ld. DR we are not considering his prayer to restore this issue to the file by the ld. CIT(E) as the subsequently the ld. CIT(E) has already granted the registration to the assessee trust and there is no adverse observation by the ld. CIT(E). In light of these facts and circumstances of the case, we see no reason to sustain the order under appeal and in the absence of any controversial finding on record we vacate the order passed by the ld. CIT(E) dated 04.03.2021.”
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) held that no income tax is to be levied on compensation from builders in lieu of a consumer court order as the same is in the nature of capital receipt.
The Coram comprising the account member Waseem Ahmed and the judicial member T.R Senthilnkumar observed that the assessment order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. The coordinate benches of the tribunal held that the compensation received by the assessee from the proposed building by way of allotment is actually the extinguishment of a right in relation to a capital asset, in view of the provisions of section 2(47)(vi) of the Income Tax Act,1961.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has granted interim relief to Amazon Web Services (AWS) by staying recovery of Rs 549 Crores towards addition of income from cloud computing services.
The Division Bench of Saktijit Dey, (Judicial Member) and B.R.R Kumar, (Accountant Member) stayed the recovery of the balance outstanding demand for a period of 180 days on certain conditions. The assessee was directed to pay 10% of the outstanding demand for both the assessment years under dispute on or before 31.03.2023 and the assessee had to furnish bank guarantee so as to cover further 10% of the outstanding demand. The bank guarantee must be furnished before the Assessing Officer on or before 30.04.2023.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that revisional jurisdiction could not be invoked on the ground of uncertain issue of entitlement of treaty benefit.
After considering the contentions of the both parties the division bench of the ITAT comprising Saktijit Dey, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the appeal filed by the assessee and observed that, In the course of hearing, the Departmental Representative has made extensive arguments on the issue of treaty shopping, non-reporting of transactions with AEs in Form 3CEB report and various other issues. we are not able to take cognizance of such arguments as such issues were neither dealt with by learned CIT in the show-cause notice, nor in the revision order, hence, are extraneous for the purpose of adjudicating the validity of the order passed under section 263 of the Income Tax Act,1961.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Netafim holding that the income from Systems Applications and Products in Data Processing (SAP) and Information Technology support services were not in the nature of Fees for Technical Services (FTS) as per treaties.
Abhishek Kumar, on behalf of the revenue submitted that the Most Favored Nation (MFN) clause as per the Protocol to India – Israel DTAA for applying a more restrictive meaning to FTS as per a treaty between India and a third country could not be made applicable unless a specific notification regarding applicability of MFN clause was issued by the Government. Applying the restricted meaning of FTS as per India – Portugal and India – Canada DTAAs, the Division Bench of Saktijit Dey, (Judicial Member) and B.R.R. Kumar, (Accountant Member) held that the amounts received by the assessee from providing SAP and IT support services were not in the nature of FTS, hence, not taxable in India in absence of a Permanent Establishment.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has quashed the reassessment order against the Bharat Sanchar Nigam Ltd (BSNL).
The Division Bench of NK Billaiya, (Accountant Member) and Anubhav Sharma, (Judicial Member) observed that in the earlier case disallowance made u/s 40(a)(ia) was held to be not sustainable and quashed the reassessment order.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently upheld the addition made by the assessing officer upon the income received on arbitration settlement.
Gangadhar Panda counsel for the revenue opposed these submissions and supported the orders of the authorities below. After considering the contentions of the both parties the division bench of the ITAT comprising Kul Bharat, (Judicial Member) and Narendra Kumar Billaiya, (Accountant Member) allowed the appeal filed by the assessee and observed that, “the assessee had a PE in India during the period he assessee was engaged in the project only through its PE in India. In view of the complete involvement of the PE as above, the settlement amount, arising out of the MOU consequent upon project termination is also effectively connected to the PE. The said sum falls within the Scope of Article 21 (2) of the DTAA and will be taxable in India under Article 7 of the DTAA.”
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently granted partial tax relief to Adani Power Limited.
Further before the bench assessee submitted that, the” AE’s mentioned above were incorporated with the capital that the assessee company advanced sums towards its equity obligations. M/s Adani Power Pte Ltd was incorporated with the object of investing in coal mines and also carried on the business of an investment holding company while M/s Adani Shipping Pte Ltd was incorporated with the object of carrying on business of chartering and owning ships.” Mohd. Usman, confirmed the decision of the lower authorities. After considering the contentions of the both parties the division bench of the ITAT comprising Annapurna Gupta, (Accountant Member) Siddhartha Nautiyal, (Judicial Member) dismissed the appeal filed by the revenue and confirmed the Order of CIT (A) and provided partial relief to the assessee company.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, deleted the proceedings against Saif Partners India IV Limited, on the ground that conditions invoking revisional jurisdiction u/s 263 are not satisfied.
Thus, allowing the assessee’s appeal the Delhi ITAT held: “Considering the facts of the case in hand in light of judicial decisions discussed hereinabove, we set aside the order of the ld. CIT and restore that of the Assessing Officer dated 09.12.2019 framed u/s 143(3) of the Act.”
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has recently, in an appeal filed before it, held that income tax addition cannot be made merely based on assumption and presumption.
Thus, dismissing the Revenue’s appeal, the Jaipur ITAT held: “Even based on these facts, the ld. CIT (A) has also considered the claim of the assessee accordingly. Thus, we see no fault in the detailed finding of the ld. CIT (A), while allowing the claim of the assessee for an amount of Rs. 53,742/- as the revenue has not been placed on contrary evidence or facts expressly demonstrating why the claim is disallowable. Based on those observations we are of the considered view that the ground raised by the revenue fails and thus is dismissed.”
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the business profits of a financial year gets accrued only at the end of the year, deleting the addition under Section 2(22)(e) of the Income Tax Act, 1961.
Taking note of the reasoning in CIT Vs. M. B. Stockholding (P) Ltd., the Tribunal Bench of Judicial Member Aby T Varkey and Accountant Member Amarjit Singh observed that, “the Hon’ble High Court has upheld the action of the Tribunal directing the Assessing Officer not to include the current year profit to be part of accumulated profit while determining the amount of deemed dividend under Section 2(22)(e) of the Act after considering Explanation-2 to Section (2(22)(e) of the Act (which defines the accumulated profit). And the Hon’ble High Court specifically observed that while determining the amount of deemed dividend under Explanation 2 to Section 2(22)(e) of the Act, the current profit was not required to be included to be part of accumulated profit.”
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) overturned the order of the Commissioner of Income Tax (Appeals) CIT (A)] providing relief to M/s PVR Pictures Limited.
The bench of Pradip Kumar Kedia (Accountant Member) and Yogesh Kumar US (Judicial Member) observed that the expression employed in the provision is the “unabsorbed depreciation” and not the “depreciation”. According to ITAT, the phrase “unabsorbed depreciation” rather than “depreciation” accurately captures the Legislature’s intent that any earlier year’s depreciation should be adjusted to the extent of any standalone book profit that year and that any remaining unabsorbed depreciation, if any, should only be used for Section 115JB adjustment purposes.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that no addition could not be made for deposit in Non-Resident External (NRE) account when the assessee had no source of income in India.
The income of the assessee was not subjected to tax in India and accordingly, he had not filed any return of income. This fact had not been appreciated by AO since AO had treated the assessee as resident only. The assessee was maintaining an NRE account as well as NRO account at Erode to remit foreign savings. The assessee, apparently, had no source of income in India. To Read the full text of the Order CLICK HERE
The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that the 2 % of Tax Deducted at Source (TDS) is applicable to Common Area Maintenance charges under section 194C and the provisions of section 194I of the Income Tax Act 1961, is not applicable to this payment.
The Coram comprising the account member Pradip Kumar Kedia and the judicial member C M Garg held that the assessee was right in deducting tax at 2% under section 194C of the Act on payment of common area maintenance charges and the provisions of section 194I of the Income Tax Act is not applicable to this payment. Therefore, the assessee cannot be treated as an assessee in default and the assessee is not liable to pay any amount under section 201(1) and under section 201(1A) of the Income Tax Act. The appeal filed by the assessee got allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the advance tax would not be payable by the assessee if he is above 60 years having no business income.
The Division Bench of G.S. Pannu (President) and Anubhav Sharma, (Judicial Member) set aside the impugned order and restored it to the Commissioner of Income Tax Appeal (CIT(A)) to decide the question of applicability of section 249(4) of the Income Tax Act. on merits of claim of the assessee, after giving an opportunity of hearing to the Assessee observing that, “Here no advance tax was payable as the assessee was over 60 years of age and not having any income from P&G and the assessee was not given an opportunity of being heard.”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT)has quashed the re assessment holding that usurping jurisdiction could not be a mere technical defect curable under Section 292B of the Income Tax Act 1961.
“The Assessing Officer, in the instant case, has drawn belief based on the transactions carried out through brokers namely ‘S.S. Corporate Securities Ltd.’ which was later found to be totally non-existent. Such defect in the reasons cannot be ascribed as a mere technical irregularity and consequently defect cannot be cured by applying Section 292B of the Act. The instant case is the case of the jurisdictional defect which cannot be rectified by invoking the provisions of Section 292B of the Act.” the Bench further observed.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that ceremonial expenses performed as part of tradition would be allowable as business expenditure.
The Division Bench of R.S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial Member) upheld the decision of Commissioner of Income Tax Appeal (CIT (A)) and dismissed the appeal of revenue observing that, “These ceremonies are required to be performed on account of tradition and to a certain extent as compulsion since these functions are followed in every sugar factory. The expenses have to come from the account of assessee only. It cannot be expected to be collected from the employees. These expenses take the color and character of business expenses.”
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that provisions of deemed gift under section 56(2) (vii)(b) of Income Tax Act 1961 could not be applied retrospectively.
After considering these points the division bench of the ITAT comprising G.S.Pannu, President and Anubhav Sharma, Judicial Member allowed the appeal filed by the assessee and observed that “In the context of “deemed gift” on the basis of inadequate consideration, the series of documents executed between the assessee and her maternal uncle indicate that the transaction was Gift only and had completed before 01.10.2009. So the provisions of Section 56(2)(vii)(b) of the Income Tax Act 1961 which were introduced in the Act by Finance Act, 2010, with retrospective effect from 01.10.2009 are wrongly applied”.
The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT), quashed the revision order holding that there is no ‘lack of investigation by the Assessing Officer (AO). The appeal of the assessee, Hoshiarpur Traders, is directed against the order of the Pr. Commissioner of Income Tax [PCIT] for the order passed under Section 263 of the Income Tax Act 1961 for the A.Y. 2017-18. The assessee is a partnership firm and the dealer of the liquor. The assessment was completed under Section 143(3) of the Act
The Tribunal of Dr. M. L. Meena, Accountant Member and Anikesh Banerjee, Judicial Member observed that “Though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer, the record showed that the Assessing Officer had applied his mind. Once such application of mind is discernible from the record, the proceedings under Section 263 would fall into the area of the Commissioner having a different opinion.”
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently, while allowing depreciation on hired cars, held that vehicles are forming part of plant and machinery.
After considering these points the division bench of the ITAT comprising M.Balaganesh, Accountant Member and Sandeep Singh Karhail, Judicial Member allowed the appeal filed by the assessee and held that, “Income received from car rental of Rs.6,00,000/- is to be assessed as “income from business” and consequently, the assessee would be eligible for deduction of all expenses including depreciation as deduction under the head “business” Further the bench determined that the plant includes vehicles, which fact is evident from depreciation rate chart provided in the Income Tax Rules as vehicles are forming part of the block of assets of plant and machinery.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently deleted the addition made by the assessing officer against ESPN star sports.
After considering the contentions of the both parties the division bench of the ITAT comprising Narendra Kumar Billaiya, Accountant Member and Kul Bharat Judicial Member allowed the appeal filed by the assessee and directed the Assessing Officer to delete the impugned addition.
The Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, has recently in an appeal filed before it, held that vague notice invalidates penalty proceedings u/s 271(1)(c) of income tax act.
Hearing the opposing contentions of either side, the Bench comprising G.S. Pannu, the President, along with Anubhav Sharma, the Judicial Member, noted: “Giving a thoughtful consideration to the submission and to the matter on record it can be observed that the copy of penalty notice available at page NO. 5 of the paper book makes it apparent that the ld AO had failed to distinguish and inform the Assessee as to it the notice was issued for concealment of income or furnishing inaccurate particulars and a proforma in a mechanical manner the notice was issued. The judgment relied on by the counsel for the Assessee in the case of Ganga Iron & Steel Trading Co. Vs. CIT (supra) reiterates the settled provision of law that if notice is vague then the penalty proceedings initiated on that basis were vitiate and for that purpose Hon’ble High court relied its full bench judgment in Mohd. Farhan A Shaikh vs. CIT (2021) 424 ITR 1.”
The Income Tax Appellate Tribunal (ITAT), Cuttack Bench, has recently, in an appeal filed before it, held that penalty cannot be levied u/s 271(1)(c) of income tax act, when sustainability of addition is debatable.
Hearing the opposing contentions of either side and thereby perusing the materials available on record, the ITAT Bench consisting of Arun Khodpia, the Accountant Member, along with George Mathan, the judicial member held: “We have considered the rival submissions. As it is noticed that the appeal against the order of the Tribunal upholding the order u/s.263 representing the quantum addition has already been admitted by the Hon’ble Jurisdictional High Court of Orissa referred, respectfully following the principles laid down by the Hon’ble Karnataka High Court in the case of Harsha N Billiangady , the penalty as levied by the Pr. CIT stands quashed. In the result, appeal of the assessee stands allowed”.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) while quashing the revision order observed that Standard Operating Procedures guidelines issued by Central Board of Direct Tax (CBDT) are not applicable to unlisted scripts.
“Revision order passed by the PCIT only says that Aditi and Finance Pvt Ltd is a penny stock and that SOP guidelines issued by CBDT had not been followed by the AO while framing the reassessment. But penny stock SOP guidelines have been issued by CBDT only in respect of listed scrips. In the instant case, Aditi and Finance Pvt Ltd scrip is not listed in any stock exchange. We hold that the SOP guidelines issued by CBDT cannot be made applicable for unlisted scripts.”
The Chennai Income Tax Appellate Tribunal (ITAT) has recently held that deemed dividend would not be applicable to payment by company on behalf of shareholder for purchase property as a stop gap arrangement subsequently Re-paid.
After considering the contentions of the both parties the division bench of the ITAT comprising V. Durga Rao, (Judicial Member) and G. Manjunatha, (Accountant Member) allowed the appeal filed by the assessee and observed that, “At no point of time, M/s. IEIL has given any loan or advance to the assessee either by way of cash payment or through account transfer. Although, the company has given some payments to the third party on behalf of the assessee, but said payments have been subsequently re-paid by the assessee or his family members either on the same day or within a short period that is less than one month without there being any outstanding balance in the books of accounts of the company.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has recently held that interest paid on borrowing by assessee carrying out business in investing in shares allowable as business expenditure.
Moreover when the assessee has borrowed the funds for the purpose of making investment in shares and that investment is one of the business activity of the assessee company amount borrowed for such investment is for the purpose of business and the interest incurred on such borrowers to be wholly and exclusively for the purpose of business and it has been fulfilled the condition laid down in section 36(1)(iii) of the Income Tax Act 1961. Thereafter the bench held that the business of the assessee is to invest in shares and that the borrowing was for the purpose of business, the entire interest has to be allowed under s. 36(l)(iii) of the Income Tax Act 1961.
The Allahabad bench of the Income tax appellate tribunal has recently held that the assessee was not willing to remove the defect regarding the deficient appeal fee and hence the appeal of the assessee has been treated as not a valid appeal and liable to be dismissed.
After providing so much time for rectifying the defect in appeal filed by the assessee, the division bench of the ITAT comprising Vijay Pal Rao, (Judicial Member) and Ramit Kochar, (Accountant Member) dismissed the appeal. The bench observed that “assessee was not willing to remove the defect regarding the deficient appeal fee and consequently the appeal of the assessee was treated as not a valid appeal and liable to be dismissed in limine”
The Chennai Income Tax Appellate Tribunal (ITAT) has recently held that 60 percent depreciation would not be allowed on robotix kits.
Further the bench determined that, computer or software attached was used for operation of robotic kits. Therefore, it cannot be construed as if the Robotix kit itself is a computer. Computers are totally different which comprises processing data and not the machinery which undertakes work as per the instruction given through the computer. Therefore, the computer is a different one and robotics kits are entirely different machines.
The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has held that the Malviya National Institute of Technology (MNIT) employee being a government employee would be eligible for full exemption of earned leave encashment at the time of retirement.
“The CIT (A) while rejecting the claim of the assessee has solely relied upon the decision of Hon’ble Delhi High Court in the case of Kamal Kumar Kalia vs Union of India (supra). However, the para materia contained in the said judgment of the facts are altogether different from the facts of the present case as in the case of Kamal Kumar Kalia vs Union of India,” the Bench further held.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT)has recently quashed the disallowance for payment done in lieu of race promotion contract expenses as the same was taxable at the hands of the payee and not the assessee.
The Bench of Judicial Member Yogesh Kumar U S and Accountant Member N K Billaiya observed that, “no part of the RPC fee paid by the assessee is liable to be disallowed under clause (i) of s. 40(a) because the second proviso clause (i) of Section 40(a) has been inserted w.e.f. 1.4.2020.” It was further observed that “The said proviso essentially provides that where the relevant income has been declared by the payee and tax thereon has been paid by him then no disallowance shall be made in the hands of the payer. “ Resultantly, the disallowance was set aside in favor of the assessee.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the Assessing Officer (AO) could not change the method which was followed by the assessee from discounted cash flow to Net Asset Value method.
AO has completely erred in arriving at a conclusion that DCF method followed by the assessee is incorrect only on the basis of one element, difference in projected financials and actual performance of the company for two financial years, because DCF method is mainly on the basis of projected financials of future years and depends upon various estimations and assumptions. Therefore The AO is free to examine the method followed by the assessee, however, he did not have power to change the method followed by the assessee from DCF method to NAV method, and to decide the issue in accordance with law.
The Allahabad bench of the Income Tax Appellate Tribunal (ITAT) has recently directed the centralized processing center (CPC) to ensure compliance with natural justice principles mandatory under faceless schemes.
“Appeal was decided under faceless scheme, but adherence to Principles of natural justice is one of the most important pillar of the effective judicial delivery system, as no person should be condemned unheard Thus, CIT (A) ought to have given an opportunity to the assessee so that the assessee may put forward his claim/contentions before CIT (A) as per the scheme/guidelines of faceless proceedings”. Hence in the instant case, there was a clear breach of principles of natural justice, as the assessee was condemned by CIT (A) without providing proper opportunity to the assessee to explain its case.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has allowed the depreciation claim holding that once a trust is assessed as Association of Persons (AOP) has been denied exemption under Section 11 of the Income Tax Act 1961, the entire receipts should be assessed as business income.
A Single Bench of Mahavir Singh, (Vice President) allowed the appeal observing that it was clear that the assessee was running an educational institute which meant that the assessee was engaged in the business and it had been assessed as AOP. The Bench held that once the assessee was assessed as an AOP and no exemption had been allowed under Section 11 of the Act, the entire receipts were to be assessed as business receipt and consequently, depreciation had to be allowed.
The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has held that the firm consisting of individual partners could not be treated as Association of People (AOP).
A Single Bench of Ravish Sood, (Judicial Member) allowed the appeal and held that the observation of the A.O that the respective partnership firms had been taken as partners in the assessee firm was absolutely misconceived and misplaced. The Bench held that an individual in his representative capacity could be taken up as partner in a firm.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the software insurance charges are excludable from export turnover under Section 10AA of the Income Tax Act 1961.
The Bench held that the AO and CIT (A) had failed to appreciate that the assessee was engaged in export of computer software which were developed by the assessee in India. The said software was exported through electronic media, i.e. internet/ digital media with click of a button and the same were not physically exported to get it insured.Thus the question of insuring the software exported by assessee would not arise.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it held that re-assessment based on the ground of mere change of opinion is not permitted under law.
“We notice that an identical issue has been examined by the jurisdictional Bombay High Court in the case of Indian Energy Exchange Ltd. In this case also, the AO reopened the assessment to restrict the depreciation rate to 25% as against 60% originally allowed on software. The facts being identical, following the above said decision of the jurisdictional High Court, we hold that the assessing officer has reopened the assessment of the year under consideration on mere change of opinion only and that the same is not permitted under the law.”, the ITAT Bench comprising of Rahul Chaudhary, the Judicial Member, along with Baskaran BR, the Accountant Member added. Thus, allowing the assessee’s appeal, the Mumbai ITAT held: “Accordingly, we hold that the reopening of assessment is bad in law and accordingly the impugned assessment order is liable to be quashed. Accordingly, we quash the orders passed by the tax authorities. In the result, the appeal of the assessee is allowed on the legal grounds discussed above.”
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has recently, in an appeal filed before it, imposed a cost of Rs 10,000, on non-compliance of notices and non-furnishing of evidence, even after five opportunities granted by the AO.
Thus, allowing the assessee’s appeal, the Hyderabad ITAT held: “In the light of the above, we deem it appropriate to remand back the matter to the file of ld. CIT (A) subject to cost of Rs.10,000/- (Rupees Ten Thousand only) to be deposited in the Prime Minister National Relief Fund which shall be payable within one month or from the date of receipt of this order or whichever is earlier. The ld. CIT (A) is directed to decide the case afresh in the light of the above said observation, after affording opportunity of hearing to the assessee and after seeking remand report from the Assessing Officer. In the result, the appeal of the assessee is treated as allowed for statistical purposes.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, while deleting penalty based on estimated addition, held that entire bogus purchases cannot be disallowed when sales are not disputed.
“ After taking into consideration the various decisions of the Tribunal that no penalty under section 271(1)(c) is leviable on estimated additions and also after taking into consideration the decision of Rajasthan High Court in the case of CIT vs Krishi Tyre Retreading & Rubber Industries 360 ITR 580; the decision of Punjab & Haryana High Court in the case of CIT vs Sangrur Vanaspati Mills Ltd 303 ITR 53 (P&H); and the decision of Gujarat High Court in the case of CIT vs. Subhash Trading Co Ltd 221 ITR 110 (Guj), we direct the Assessing Officer to delete the impugned penalty levied on estimated addition.”, the Mumbai ITAT thus held, thereby allowing both the appeals of the assessee .
The Mumbai Bench Income Tax Appellate Tribunal (ITAT) has while deleting the addition made by the assessing officer and held that offshore supply of escalators and elevators are not taxable in India.
“All parts of the transactions in question, that is the transfer of property in goods as well as the payment, were carried out outside the Indian soil, the transaction cannot be taxed in India.” Further, in the present case, the assessee did not carry out any operations in India in respect of its scope of work, hence the income earned by the assessee from the offshore supply o
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, while deleting the penalty u/s 271(1)(c) in an appeal filed before it, held that omission of income due to human error committed by accountant, is not “willful attempt to conceal income.”
“In view of the above and considering the facts in totality, I find that there was human error committed by the accountant of the assessee due to which impugned professional receipt of Rs. 5 lakhs omitted to be included in the total income. Thus, there was no willful attempt from the assessee to conceal his income. The explanation furnished by the assessee in this regard is bona fide and duly substantiated by the affidavit of the accountant. Therefore, I hereby set aside the finding of the learned CIT(A) and direct the AO to delete the penalty imposed by him. Hence the ground of appeal of the assessee is hereby allowed.”
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that none specifying of specific limb in penalty notice would not invalidate penalty proceedings when assessee had been a non-filter.
The Division Bench of RamaKanta Panda, (Accountant Member) and Laliet Kumar, (Judicial Member) dismissed the appeal holding that, “We are of the considered opinion that merely for non-specifying in the notice as to under which limb the penalty is levied i.e. for concealment of income or furnishing inaccurate particulars of income thereof, the penalty cannot be canceled especially when the assessee who is a non-filer was put to notice which he has understood and has replied to such notice issued by the AO.”
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that the revisional power could not be invoked when the assessing officer had adopted a plausible view resulting in loss of revenue but the same was not unsustainable in law.
“When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue “unless the view taken by the Assessing Officer is unsustainable in law”. ‘’We note that the assessee company has not earned any exempt income during the assessment year under consideration, since the assessee has not earned any exempt income, therefore, no disallowance is attracted under section 14A,’’ the Bench further observed.
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, allowed relief of withholding tax credit in Tanzania against tax liability arising in India, on form 67 being submitted before conclusion of the assessment.
“I am of the considered view that the claim of the assessee towards withholding taxes paid inTanzania is to be given against the tax liability on the income declared in India. Even otherwise filing of Form67 has been held to be directory in nature by theCoordinate Bench, Mumbai in the case of Sonakshi Sinhavs.CIT(A). I, therefore, respectfully following the decision referred to hereinabove and the discussion made,direct the ld. Assessing Officer to allow the claim of the assessee made in From No. 67 and give benefit of relief of withholding tax credit in Tanzania against the tax liability arising in India.” Thus, allowing the assessee’s appeal, the Kolkata ITAT held: “Accordingly, all the effective grounds raised by the assessee in the instant appeal is allowed. In the result, the appeal of the assessee is allowed.”
The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT) condoned the delay of 9 years in absence of proper intimation under section 143(1) of the Income Tax Act, 1961.
The two-member bench of Anikesh Banerjee (Judicial Member) and Dr M. L. Meena (Accountant Member) has observed that the assessee has sufficient cause for non-submission of the appeal within due time. The merit was also not considered in the appeal stage as it is decided in limine. The Tribunal remitted the issue to the CIT (A) and directed to pass the order on merits, denovo.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) quashed the proceedings under section 271(1) (c), because of the penalty notice issued without application of mind and in a stereotyped manner.
The Coram comprising Anil Chaturvedi and the judicial member N.k. Choudhry observed that the notice in this case has been issued in a stereotyped manner without applying mind which is bad in law. It cannot be considered a valid notice sufficient to impose penalty under section 271(1) (c) of the Income Tax Act 1961, and therefore the penalty is not leviable and held that “we have no hesitation to delete the penalty levied by the assessing officer and affirmed by commissioner”. The bench deleted the penalty and the appeal filed by the assessee got allowed.
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