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 19 to March 25, 2023.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that the residential status of assessee shall be determined after considering the passport. The Coram comprising the accountant member, Shamim yahya and the judicial member Anubhav sharma held that “no observation was made for not considering the passport as evidence and which does not require much verification. The commissioner of Income Tax (CIT (A)) had fallen in error and the appeal of the assessee is allowed for statistical purposes. The issue of consideration of the evidence in the form of passport entry for determination of the residential status of the assessee is restored to the files of the commissioner of Income Tax (CIT (A)).”
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that the penalty under section 271B of Income Tax Act 1961 is not leviable if the assessee was under bonafide belief that books of accounts need not be audited. The division bench of the ITAT comprising Sanjay Garg, (Judicial Member) and Dr. Manish Borad, (Accountant Member) allowed the appeal filed by the assessee and observed that, “assessee prima facie found to be reasonable because the assessee was under bonafide belief that he was not liable to get the books of accounts audited as the commission income was below the threshold limit and this was the first year of the business venture taken up by the assessee and thus assessee’s case is covered under section 273B of the Income Tax Act, 1961”
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that the Assessing Officer(AO) has exceeded jurisdiction in enquiring the issues beyond scope of limited scrutiny and is in violation of Central Board Direct Tax (CBDT) circular. The division bench of the ITAT comprising Rajesh Kumar, (Accountant Member) and Sonjoy Sarma, (Judicial Member) allowed the appeal filed by the assessee and observed that, “ AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny even prior to the date of conversion which is in clear violation of mandate given by CBDT in the said Circular Instruction No. 5/2016.”
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.
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) held that the delay in filing of the appeal by 930 days by the assessee cannot be condoned and the misplacement of document is not a sufficient explanation. The Coram comprising the judicial member Laliet Kumar and the accountant member R.K. Panda observed that “the reasons given in the condonation application for the delay are not sufficient for condonation of such a huge delay of 930 days.”
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has while directing re -adjudication observed that kidney failure has a reasonable cause for non-compliance during assessment proceeding. The division bench of the ITAT comprising Shamim Yahya, (Accountant Member) and Astha Chandra,(Judicial Member) allowed the appeal filed by the assessee and further observed that, “there was reasonable cause of ailment that prevented the assessee to supply the documents and replies to the AO. Thus the bench directed for re-adjudication of the above matter”.
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) observed that the Expenditure incurred by Flipkart towards Employee Stock Ownership Plan (ESOP) is eligible for deduction under Section 37 of the Income Tax Act, 1961. The Two-Member Bench of the Tribunal comprising George George K. (Judicial Member) and Padmavathy S (Accountant Member), observed that the expenditure incurred by Flipkart towards ESOP is eligible for deduction under Section 37 of the Income Tax Act, 1961. The Bench relied upon the decision of the Karnataka High Court in CIT (LTU) vs. Biocon Ltd, wherein it was held that the expression ‘expenditure’ will also include a loss and therefore, issuance of shares at a discount where the assessee absorbs the difference between the price at which it is issued and the market value of the shares would also be expenditure incurred for the purposes of Section 37(1) of the Income Tax Act.”
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that electricity load extension charges are allowable as expenditure. Further relied upon the decision of the Delhi High Court in Dart Manufacturing India Pvt. Ltd. The Bench determined that the expenditure towards installation of low tension lines for supply of electricity to its factory was revenue expenditure.
The Chennai Income Tax Appellate Tribunal (ITAT) has recently held that capital gain from sale of shares could not be treated as bogus solely on the basis of a report of the Income Tax Department. The division bench of the ITAT comprising V. Durga Rao (Judicial Member) and Manjunatha. G (Accountant Member) allowed the Appeal filed by the assessee and observed that, The long term capital gains declared under section 10(38) of the Income Tax Act 1961 has nothing to do with the survey conducted in the case of M/s. Onkar Supply Pvt Ltd and statement recorded from Ashok Kumar Kayan. Therefore, the capital gains declared by the assessee from sale of certain shares could not be considered as bogus only on the basis of a report of the Income-tax Department.
The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has recently held that an addition under section 68 of the Income Tax Act is not valid when the assessee proves identity, creditworthiness, and genuineness of share transaction. A two-member bench comprising of Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member found that the assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions towards the sum of Rs.4,78,50,000/- received during the impugned year.
The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT), comprising George George K., Judicial Member and Padmavathy S., Accountant Member observed that the payment for online advertisement space to Google India is not “Royalty”, thereby granting relief to Google Ireland. The Coram observed that “In view of above order of Tribunal, where it is stated that the payment made by GIPL to GIL is not in the nature of Royalty or FTS under the Act and DTAA, a different treatment cannot taken in the hands of the payee, i.e. the assessee in the instant case.”
The Amritsar bench of the Income Tax Appellate Tribunal ( ITAT ) while allowing the exemption to trust observed that the assessee rectified the defects and filed the audit report before completion of the assessment. After considering the contentions of both parties the division bench of the ITAT comprising Dr M. L. Meena, (Accountant Member) and Anikesh Banerjee, (Judicial Member) observed that, The assessee had rectified the defect within the stipulated time and the procedure for filing Audit Report was completed.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that the assessee is not liable to explain receipts shown in Form No.26AS. The division bench of the ITAT comprising N.K. Billaiya, (Accountant Member), and Anubhav Sharma, (Judicial Member) allowed the appeal filed by the assessee and observed that the Assessing Officer has put the entire burden on the assessee to show in whose hands the receipts shown in Form 26AS has been declared. Further assessee was not responsible to explain the recipients of the receipts shown in Form No. 26AS.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the employee stock option (ESOP) expenses were capital in nature and were not allowable under Section 37(1) of the Income Tax Act 1961. The Division Bench of Anil Chaturvedi, (Accountant Member) and Yogesh Kumar Us, (Judicial Member) dismissed the appeal filed by the revenue observing that, “We find that CIT(A) after considering the various High Courts and Tribunals decisions cited in the order held the ESOP expenses to be allowable u/s 37(1) of the Act. Before us, Revenue has not placed any material on record to point out any fallacy in the findings of CIT(A) nor has placed any contrary binding decision in ACIT vs. Cvent India Pvt. Ltd. 10 its support.”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has imposed a cost of Rs.25,000 on Jet Airways for being delinquent during income tax proceedings. The Division Bench of Prashant Maharishi, (Accountant Member) and Kavitha Rajagopal (Judicial Member) allowed the appeal observing that, “The assessee may be given one last opportunity to present its case before the A.O. It is also evident that a considerable amount of time and revenue has been spent by the Exchequer in carrying out the assessment proceedings followed the appellate proceedings. The assessee is directed to pay a cost of Rs.25,000/- each in both these appeals for being delinquent before the lower authorities.”
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that amendment in section 153c Income Tax Act 1961 was prospective and the material found from premises of searched persons should belong to such person to initiate proceedings. The division bench of the ITAT comprising Waseem Ahmed, (Accountant Member) and T.R. Senthil Kumar, (Judicial Member) dismissed the appeal filed by the revenue and observed that, post amended section would be applicable prospective only on the search conducted on or after 1.6.2015. Hence, prior to the amendment the material found from the premises of the searched person, should be belonging to the person in whose case the material is to be used for drawing satisfaction and for issuance of notice under section 153C Income Tax Act 1961.
The Rajkot bench of Income Tax Appellate Tribunal (ITAT) held that the Income Tax deduction under section 80P cannot be denied for non-filing of ITR within the due date. The Coram comprising the account member Waseem Ahmed and the judicial member T.R. Senthil Kumar observed that the assessee cannot be denied the deduction under section 80P of the Income Tax Act 1961, on the ground that the assessee did not file the return of income within the due date prescribed under section 139(1) of the Income Tax Act under proceedings made under section 143(1) of the Income Tax Act for the assessment year 2019-20.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently while granting relief to Shagri-LA held that payment of management fee to third party Indian hotels are not Fee for Technical Service (FTS) as per Double Taxation Avoidance Agreement (DTAA). The division bench of the ITAT comprising G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) determined that, “marketing and reservation activities performed by the assessee are not only distinct and different from the license fee but they are done under two distinct and separate agreements. Therefore, the marketing and reservation receipts could not be treated to be ancillary and subsidiary to the license fee. Hence, such fee will not fall under Article 12(4)(a) of the treaty. Similarly, the nature of services rendered does not demonstrate that they are in the nature of managerial, technical or consultancy services.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has quashed the revision order holding that the order could not be treated as erroneous if the Principal Commissioner of Income Tax (PCIT) had opined that the order should have been written more elaborate. The Division Bench of Pawan Singh, (Judicial Member) and A. L. Saini, (Accountant Member) quashed the impugned order holding that there was no question of absence of any inquiry nor any point of “lack of inquiry”. The Bench further held that, “If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately.”
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the co-operative banks or co-operative societies which are carrying on banking business but not registered with RBI, are eligible for deduction under Section 80P(2)(d) of Income Tax Act 1961. The Coram comprising the account member, M.Balaganesh and the judicial member Sandeep Singh Karhail observed that the assessee society would be entitled for deduction under section 80P (2)(d) of the Income Tax Act 1961, in respect of interest received from cooperative banks.
The Jaipur bench of Income Tax Appellate Tribunal (ITAT) imposed the penalty of Rs 2000 on assessee because of the negligent attitude during the income tax proceedings. The Coram comprising the Accountant Member Rathod Kamlesh Jayantbhai and the Judicial Member Sandeep Gosain observed that while deciding the appeal of the assessee, the appellant was provided many opportunities for furnishing written submissions/documents.
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