This weekly summary analyses the major Income Tax Appellate Tribunal (ITAT) stories that were covered by Taxscan.in the week before, from April 23rd to April 29th, 2023.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the ex-gratia payment received by the employee on voluntary retirement cannot be taxed as “Profit in lieu of Salary” under section 17(3)(iii) of the Income Tax Act, 1961. Deleting the addition, the ITAT held that “without establishing the letter as non-genuine or without examining the sanctity of the payment made, simply invoking the provisions of the Act for making addition is not appropriate for a quasi-judicial authority.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that repair work inextricably connected with prosecting, extraction or production of mineral oil are taxable under Section 44B of the Income Tax Act, 1961. “In case of ONGC Vs. CIT, the Hon’ble Supreme Court, while interpreting the provisions contained under section 44BB of the Act in the context of scope of work covered under the contract, has considered the entire gamut of work executed under the contract, including repair, training of personnel etc. and held that the pith and substance of each of the contracts is inextricably connected with prospecting, extraction or production of mineral oil. Thus, applying the ratio laid down in the aforesaid decision”, the bench further observed.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the distribution fee paid by the tech-giant Google India to its Associate EnterQuashing the additions and the penalty orders for the year 2008-09, a Two-Member Tribunal comprising Shri George George K. (Judicial Member) and Ms. Padmavathy S (Accountant Member) has observed that “the issue of taxing the distribution fees by treating the same as Royalty / FTS has already settled in favour of the assessee by the coordinate bench in assessee’s own case from the perspective of applicability of provisions of section 201 and accordingly there cannot be any disallowance u/s.40(a)(i) on this count.”
While deleting an addition under section 69A of the Income Tax Act, 1961, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the re-deposit of cash after the declaration of the demonetization for the purpose of the renovation of house and marriage of son is normal conduct of a man ordinary prudent which cannot be doubted unless revenue authorities bring on record positive or adverse material to establish that the amount withdrawn by the assessee from his bank account was utilized or deposited somewhere else.
The Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that the discount paid to dealers by the distributor in the nature of turnover discount is not subject to TDS u/s 194H of Income Tax Act, 1961. Sonjoy Sarma (Judicial Member), while upholding the CIT(A) order, held that “the ld. CIT(A) rightly observed that the payment of incentive are made to the various parties by the assessee leading to transfer of ownership in the goods (with complete risk and rewards) the assessee in such a situation did not have any right or control over the goods sold to the retailers, as the retailers held the goods on their own behalf and not on behalf of the assessee and therefore they did not act as an agents of the assessee as such no TDS is deductible u/s 194H of the Act as it is not applicable in the case of assessee.
In a major relief to M/s Petroleum India International (PII), the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that TDS provisions under section 195 of the Income Tax Act is not applicable on the reimbursement of reimbursed expenses to employees deputed outside India. ITAT Members Shri Prashant Maharishi, Accountant Member and Shri Kuldip Singh, Judicial Member observed that “member employer company deducts tax at source under section 192 of the Act from the Indian salary of such employee as they continue to get their salary from his employer member companies.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench has directed the income tax department to compute income tax on the rental income on the basis of municipal ratable value for computing the notional rent towards the vacant unsold flats kept by the assessee, Builder. The ITAT bench of Shri Amit Shukla, Judicial Member and Shri S. Rifaur Rahman, Accountant Member held that the assessee had unsold closing stock which was kept vacant during the current Assessment Year. The Assessing Officer has estimated the notional income by relying on the decision of the CIT v. Ansal Housing Finance and Leasing Company Limited by adopting the rent based on property tax.
The Income Tax Appellate Tribunal (ITAT), Delhi bench has quashed an ex-parte order and directed re-adjudication as the assessee did not get an opportunity to represent his case due to non-receipt of notices uploaded on the Income Tax portal.
Shri Saktijit Dey (Judicial Member) observed that “Drawing my attention to the impugned order of learned Commissioner (Appeals), learned counsel for the assessee submitted that proper opportunity of hearing was not granted to the assessee in hearing of the appeal.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, has deleted an addition under section 69A of the Income Tax Act, 1961 in respect of cash deposit during demonetization period holding that the deposit was made out of tuition fee received from the students. While deleting the addition, Shri Amarjit Singh, Accountant Member held that “the CIT(A) ought to have consider the material on record for adjudicating the issue contested in the appeal on merit. Section 250(6) contemplates that the first appellate authority would determine point in dispute and therefore, record reason on such point in support of his conclusion. Therefore, I restore this case to the file of the ld. CIT(A) for adjudicating on merit after affording opportunityto the assesse. The assesse is also directed to make due compliance before the ld. CIT(A) without any failure. Therefore, the appeal of the assessee is allowed for statistical purposes.”
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no assessment should be framed on the basis of Base Note if the assessee signed a Consent Waiver Form. Therefore, the bench set aside the order of lower authority. The tribunal of Prashant Maharishi (Accountant Member) and Kuldip Singh (Judicial Member) allowed the appeal by considering the following observations; “when “consent waiver form” has already been signed by the assessee way back on 30.07.2013 the AO is required to get all the original documents pertaining to the bank account in question maintained by the assessee with HSBC Bank, Geneva and then framed the assessment afresh.”
The Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that the penalty under section 271(1)(c) of the Income Tax Act is not sustainable when the Tribunal has deleted the quantum addition. Quashing the penalty order, the ITAT observed that “Sub-clause (iii) of section 271(1)(c) provides a method of computation of the penalty. According to this sub-clause, a penalty is to be computed either equivalent to the taxes on the additions made to the declared income or three times of taxes on such addition. In the present case, the very addition in the declared income has been deleted by the Tribunal therefore, there is no foundation to compute the penalty upon the assessee. In view of the deletion of the additions in the quantum appeal, no penalty is imposable upon the assessee. Accordingly, the present appeal is allowed and the penalty imposed upon the assessee is deleted.”
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that a co-operative bank is eligible for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 interest from staff welfare fund and interest from staff loan. Shri Sonjoy Sarma (Judicial Member) and Shri Girish Agrawal (Accountant Member) observed that “the assessee has claimed deduction of interest from staff welfare fund and interest income from staff loan totaling of Rs. 98971/- and also had earned miscellaneous income for Rs. 85047/- which represent amounts received from members for giving various services i.e. charges for closing flexi account, fine against non-payment of R/D amount due in time and those income has been duly reflected in its revenue income also.
The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the depreciation claim on goodwill cannot be denied merely on ground of adopting discounted cash flow (DFC) method when the Assessing Officer has already accepted the capital gain in respect of slump sale under section 47(iv) of the Income Tax Act, 1961. Concluding the order, the Tribunal observed that “Interestingly, in its ground of appeal, the Revenue has challenged that transaction of sale of slump sale to subsidiary company is not regarded as transfer within the meaning of Section 47(iv) of the Act. But, we find that in the hands of TIEL, while framing the assessment order dated 26.03.2015 u/s 143(3) of the Act for A.Y 2012-13, the Assessing Officer has accepted income from long term capital gain for slump sale of business, thereby accepting the transfer u/s 47(iv) of the Act.”
The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the waiver of cash loan by a holding company vide Agreement is not taxable as “Income from Profits and Gains from Business and Profession” under section 28(iv) of the Income Tax Act, 1961. A two-Member Tribunal comprising Shri S.S Godara, Judicial Member and Dr Dipak P. Ripote, Accountant Member relied on the Apex Court’s decision in the case of CIT Vs Mahindra & Mahindra and held that “the said Loan of USD 500000/- was a cash Loan. Therefore, respectfully following the Hon’ble Supreme Court’s decision in the case of CIT Vs Mahindra & Mahindra (supra), it is held that the waiver of cash Loan of Rupees equivalent to USD 5,00,000/- is not income within the purview of Section 28(iv) of the Act. Hence, the AO is directed to delete the impugned addition qua USD 5,00,000/-.”
The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the assessment order passed by the Assessing Officer even after knowing about the death of the assessee is bad in law. Shri Aby T. Varkey (Judicial Member) allowed the appeal in the light of the past judicial decisions and held that “Respectfully following the ratio laid by the Hon’ble Jurisdictional High Court wherein the similar legal issue was adjudicated and the impugned action of AO to have framed the assessment in the name of a deceased person was annulled. In the present case, the AO even after knowing about the death of the assessee has framed the assessment in the name of Dr Keshav L. Jumani which is bad in law and so the assessment framed on 17.11.2016 is annulled.”
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the deduction under section 57 of the Income Tax Act 1961 is allowable towards the net interest income received by the partner on lending a loan to the firm out of bank loan. A two-Member Tribunal comprising Shri Amit Shukla, Judicial Member & Shri Amarjit Singh, Accountant Member observed that there was direct nexus between earning of the interest income and interest paid.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench has allowed the donations made to registered Trusts by companies as CSR expenses allowable under section 80G of the Income Tax Act, 1961. “We fail to find any merit in this action of ld. AO which has been subsequently confirmed by ld. CIT(A) for the reason that CSR expenses incurred by the assessee already stand disallowed in the computation of income. Now, Section 80G of the Act comes into play if any of the donations is eligible for deduction u/s 80G of the Act. It is not in dispute before us that the organisations to which the alleged donation has been given are registered u/s 12A of the Act and holds the approval of Section 80G of the Act. This Tribunal in the case of M/s. JMS Mining Pvt. Ltd. vs PCIT in ITA No. 146/KOL/2021 order dated 22.07.2021 has allowed the deduction u/s 80G of the Act on CSR expenses,” the Tribunal observed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the provisions of section 56(2)(viia) of the Income Tax Act, 1961 is not applicable in a case where there is a mere difference in sale price and FMV where the sale price of shares at Rs.100 per share is more than FMV of the shares determined at Rs.99.13. In the facts of the present appeal, admittedly,the sale price of shares at Rs.100 per share is more than the FMV of the shares determined at Rs.99.13. Therefore, in the first place, the provisions of second 56(2)(viia) of the Act are not applicable,” the Tribunal observed.
The Income Tax Appellate Tribunal (ITAT), Kolkata bench has allowed the assessee-Company deduction under section 37 of the Income Tax Act, 1961 in respect of foreign travel expenses of an employee, who is related to the Director. Deleting the order, the ITAT observed that “Ms. Priyanka Jhunjhunwala is an employee of the assessee company and the ld. Counsel for the assessee submitted before us that the expenditure was incurred to entertain and treat the customers, clients and staff, with a view to promote the sales of the assesse company. The ld. Counsel for the assessee submitted that keeping in view the nature of business of the assessee company, the sales promotion expenses are reasonable. Considering the facts on record as well as the submission of both the sides, we are convinced that the expenses incurred were for the purpose of promoting the sales of the assessee company.”
The Income Tax Appellate Tribunal (ITAT), Pune bench has deleted an addition under section 115BBE of the Income Tax Act, 1961 considering the fact that the cash deposit during demonetization was out of the huge amount of alimony received from the husband. The bench opined that the assessee’s husband’s supportive evidence by way of documentary evidence as well as confirmation satisfactorily discharges her onus of proving source of these cash deposits of Rs.10,14,500/- in issue. The impugned addition u/s.115BBE is directed to be deleted therefore.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while upholding the deletion of addition made under section 68, held that partners are entitled to the interest on their loan accounts with the firm, at rates as prescribed under the Income Tax Act, 1961. “The assessee was clearly denied the opportunity of producing the complete set of deed of partnership during assessment proceedings. The assessee made an application under rule 46A of the Income Tax Rules, 1962 for filing complete set of deed of partnership (copies at pages 75 to 83 of the Paper Book) which the Ld. CIT(A) rightly admitted as additional evidence. Para 10 thereof mentions that the partners shall be entitled to interest on their loan accounts with the firm at such rates as are prescribed under the Act. In this view of the matter, we hold that the Ld. CIT(A) was perfectly justified in deleting the impugned disallowance”, the coram of Shamim Yahya, the Accountant Member, and Astha Chandran, the Judicial Member added.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the ex-gratia payment received by the employee on voluntary retirement cannot be taxed as “Profit in lieu of Salary” under section 17(3)(iii) of the Income Tax Act, 1961. Deleting the addition, the ITAT held that “without establishing the letter as non-genuine or without examining the sanctity of the payment made, simply invoking the provisions of the Act for making addition is not appropriate for a quasi-judicial authority.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the subscription fee received by the American Chemical Society from customers from India cannot be treated as “royalty” under the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and USA. A two-Member ITAT comprising Shri G S Pannu, President and Shri Sandeep Singh Karhail, Judicial Member observed that the subscription revenue received by the assessee in Chemical Extract Service and Publication division does not qualify as “Royalty” in terms of section 9(1)(vi) of the Act as well as Article–12(3) of the India–USA DTAA.
The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the National Faceless Appeal Centre (NFAC) cannot refuse to accept deduction claims for want of filing a revised return. The Two-Member ITAT bench, after verifying the relevant facts and the provisions, has noted that the NFAC herein has upheld sec.143(1) processing denying various deductions to the assessee for want of a revised return.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has recently held that interest income derived from business advances and fixed deposits is eligible for profit and gains deduction under Section 80IB of the Income Tax Act, 1961.The tribunal, while considering the contentions of the parties, observed that in the Assessment years 2008-09, 2009-10 and 2010-11 the issue related to interest income related to FD interest, interest from customer’s receipts and interest income from business advances, allowed by the tribunal.
In an assessee-friendly ruling, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the compensation received from the builder for facing hardships on vacating the flat for redevelopment is not taxable under the Income Tax Act, 1961 as the same constitute “capital receipt.” Relying on the ITAT decision in the case of Smt Delilah Raj Mansukhani v. ITO, the ITAT held that “the above receipt of compensation for hardship is in the nature of capital receipt. Accordingly, the addition made by the Assessing Officer is deleted.”
The Delhi Income Tax Appellate Tribunal (ITAT) while quashing the penalty held that the proceedings had been initiated by the assessing officer without requisite satisfaction. “The exercise of power for initiating penalty under Section 271(1)(c) Income Tax Act is dependent upon a categorical satisfaction of the Assessing Officer in the course of the assessment proceedings towards the nature of alleged default which is clearly absent in the present case and consequently the penalty proceedings initiated without requisite satisfaction is a nullity.”
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, while setting aside the denial of Section 11 benefit, held that a registration of trust once done under Section 12AA would continue, unless it is withdrawn by specific order. In the appellate proceedings, Adv. Shri. G. Baskar, the Counsel for the assessee, referring to paper book filed by the assessee dated 28.03.2023, submitted that the assessee trust came into existence by way of trust deed dated 20th August, 2001, and that the trust had got registration under Section 12AA of the Income Tax Act, vide order dated 03.12.2003 from the CIT(E), Madurai w.e.f. assessment year 2004-05.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently in an appeal filed before it, held that replacement of old tube light with LED lights, is revenue expenditure in hotel business. “Thus, from the nature of expenditure incurred, it is evident that they are in the nature of consumables and not for acquiring any assets of enduring nature. I am of the view, replacement of old tube light with LED lights cannot be treated as capital expenditure. Therefore, I do not find any reason to sustain the disallowance made by the Assessing Officer”, Saktijit Ray, the Judicial member concluded.
The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that disallowance made on the assumption of getting future tax free income from the investment made by the assessee would not be sustainable. Therefore the bench deleted the addition. Therefore the bench consisting Rajpal Yadav , (Vice-President) and Manish Borad, (Accountant Member) allowed the appeal filed by the assesee and observed that “As per the decision of Delhi High Court if there is no tax-free income to the assessee, then no disallowance is to be made under section 14A of the Income Tax Act”.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has recently while deleting the penalty imposed by the assessing officer held that computation of income resulting in a higher income is only difference of opinion. While considering the contentions, the tribunal observed that no penalty is imposable upon the assessee because this computation of income resulting into higher income is only a difference of opinion.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that no TDS default can be imposed on interest payments, if Income Tax Form 15G/ 15H is submitted by the assessee before year–end. “In our considered view, when the assessee has submitted necessary declaration in Form Nos.15G/15H for non-deduction of TDS and also for reversal of TDS deduction on interest payment, then, in our considered view, the AO ought to have accepted the claim of the assessee, because, as per law, if relevant declaration in Form Nos.15G/15H is submitted before the end of the relevant financial year, then, the question of deduction of TDS on interest payments does not arise. Therefore, we are of the considered view that the AO is required to reexamine the claim of the assessee in light of relevant Forms submitted by the assessee”, the Coram of Mahavir Singh, the Vice – President and Manjunatha G, the Accountant Member added.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that income tax appeal filed after moratorium period in IBC Act is not maintainable. “In view of the Hon’ble NCLT order dated 02.05.2022, pending proceedings including proceedings under Income Tax Act, 1961, relating to period prior to the NCLT order, shall abate all the admitted liabilities, and shall be dealt as per the order of the Hon’ble NCLT in terms of waterfall mechanism prescribed under Section53 of the I & B Code”, the coram of V. Durga Rao, the Judicial Member and Manjunatha. G, the Accountant Member added.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, on finding that the re-assessment notice was issued after four years of the relevant AY, quashed an order passed under Section 147 of the Income Tax Act. Thus, the Chennai ITAT held that “In this view of the matter and by considering facts of this case, and also by following the decision of Hon’ble High Court of Madras in the case of City Union Bank Ltd vs ACIT, we are of the considered view that re-opening of assessment u/s. 147 of the Act and consequent notice issued u/s. 148 dated 13.09.2017 is bad in law and liable to be quashed and thus we quash re-assessment order passed by the AO u/s. 143(3) r.w.s. 147 of the Act dated 17.09.2018. In the result, appeal filed by the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, upheld the application of section 68, on account of the assessee’s failure to explain investment made in the shares of paper company with exponential increase of share value. Thus, the Delhi ITAT held: “After filing the present Appeal even after issuing several notices by registry of this Tribunal to the registered address of the Assessee, the assessee remained absent and in the absence of any material evidence contrary to the findings of the Lower Authorities, we do not find any fault with the findings and the conclusion of the CIT(A) and we do not find any error or infirmity in the findings of the Lower Authorities. Thus, we find no merit in the Grounds of the assessee, accordingly, the Grounds of the Assessee are dismissed. In the result, the appeal of the assessee is dismissed.”
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, on finding the same to be a dept appeal below tax effect of RS 50 lacks, dismissed the same, as per a CBDT circular. With the Sr. DR having placed a copy of the said report, dated 14.11.2022, the coram of Sanjay Garg, the Judicial Member, and Girish Agrawal, the Accountant Member noted: “Considering the above report from the Ld. AO who has explicitly stated that the issue is not covered under the exception clause of the CBDT circular and OM, the present appeal is covered by the CBDT circular”.
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has recently, in an appeal filed before it, held that a failure of the assessee to maintain the books of account will not attract penalty under section 271 B, for non-furnishing of an audit report. The solitary issue is whether a penalty can be imposed under Section 271B of the Income Tax Act, on the facts of the instant case. Admittedly, in the instant case, the A.O. had imposed a penalty under Section 271A of the Income Tax Act r.w.s. 44AA of the Income Tax Act, for non-maintenance of books of account. When the assessee has admittedly not maintained the books of account, there is no question of getting the books of account audited under Section 44AB of the Income Tax Act.
The Amritsar bench of Income Tax Appellate Tribunal (ITAT) quashed the assessment order as there was no delay in the payment of the employer contribution and disallowed the addition. The bench observed the Central Board of Direct Taxes (CBDT) circular No. 22/2015 dated 17.12.2015 which covered allowability of employer’s contribution to funds for the welfare of employees in terms of section 43B(b) of the Income Tax Act, 1961.Considering the submissions of both sides, relying on the CBDT circular of 2015, the Coram of Dr. M.L. Meena and Anikesh Banerjee ruled that the addition is liable to be quashed.
The Income Tax Appellate Tribunal (ITAT), upheld the deletion of additions made on account of share application or capital received as unexplained cash credits under Section 68 of the Income Tax Act 1961. The Tribunal of Arun Khodpia, Accountant Member and Ravish Sood, Judicial Member observed that “We, thus, in terms of our aforesaid observations are of the considered view that now when the assessee company had duly discharged the onus that was cast upon it as regards proving the identity and creditworthiness of the investor company, and also the genuineness of the transaction of receipt of the share application money from the latter.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that revisional power under Section 263 of the Income Tax Act, 1961 could not be used to reopen the assessment proceedings.It was said that ”Once the assessee’s return of income has already undergone scrutiny assessment under Section 143(3) of the Income Tax Act and four years has elapsed, then AO has to specify/spell out the relevant fact which has not been disclosed by the assessee during the original assessment/return of income/balance-sheet/profit and loss account/tax audit report. Failure of the AO, not to specify it vitiates the reasons recorded”.
The Amritsar bench of Income Tax Appellate Tribunal (ITAT) ruled that the assessee is not liable for payment of tax related to sale of property which belongs to his father. Thus, the bench quashed the addition. The bench opined that the source of cash deposited in bank accounts is well explained considering the cash trial of the assessee. However, the Assessing Officer (AO) had only considered the cash deposit. Finally, the tribunal declared that the source of the cash deposit is adequately explained and upheld the arguments and supporting documentation offered by the assessee. The assessee has no tax liability because the deposit came from the sale of a father’s property.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no addition can be made to an undisclosed contract receipt from the business of purchase and sale of fish therefore the bench deleted the addition made by the assessing officer. The tribunal after considering the contentions observed that the assessee estimated the profit at 8%. Moreover, while taking the profit at 8%, he has not referred to any comparative case where an agent like an assessee has disclosed the profit at 8%. Rajpal Yadav, (Vice-President) and Manish Borad, (Accountant Member) of the tribunal allowed the appeal filed by the assessee and direct the AO to take an estimated income at 4% and credit of income disclosed by the assessee to be given Rs.6,03,762/-.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, while upholding an assessment order treating unsold flats as closing stock, held that revisional jurisdiction cannot be invoked, if AO adopted one of the two plausible views. “The principle of the law emanating from the decisions of the Hon’ble Supreme Court, and the Hon’ble Bombay High Court is that when two views are legally possible and Assessing Officer adopts one view the Assessment Order cannot be said to be erroneous for the CIT to invoke jurisdiction u/s.263 of the Act.” “In the case under consideration the AO has adopted one of the legally possible views qua Unsold Flats shown as closing stock.”, the ITAT Panel of S.S Godara, the Judicial Member, along with Dr. Dipak P. Ripote, the Accountant Member added.
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that a huge delay of 1468 days in filing an appeal, cannot be condoned without reasonable cause. The ITAT ruled that “Therefore, we are of the considered view that the reasons given by the assessee in the Affidavits for condonation of huge delay of 1468 days is neither convincing nor reasonable as provided under the Act, for condonation of delay in these appeals. Therefore, appeals filed by the assessee are dismissed for all the three assessment years.”
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam Bench, has recently, in an appeal filed before it, directed the granting of foreign tax credit, on the ground that the return of income and statement in Form-67 were filed within the due date. Thus, the ITAT finally held: “The Ld. AO is directed to give the credit to the foreign tax credit as claimed by the assessee after verifying the correctness of the claim made by the assessee. It is ordered accordingly. In the result, appeal filed by the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on finding out that the assessee was misguided by the professional in appellate proceedings, remanded a farmer’s exemption claim under section 54F. “Furthermore, as regards, the assessee claims for exemption u/s 54F of the Act, we note that Hon’ble Apex Court in Goetze (India) Ltd. (supra) the Hon’ble Apex Court has expounded that the said decision would not impinge upon the powers of ITAT in dealing with the claim otherwise than by revised return. Accordingly, we direct that the above ground be admitted and decided as per law. Needless to say, the assessee be given opportunity of being heard”, the coram of Astha Chandra, the Judicial Member, along with Shamim Yahya, the Accountant Member, added.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that mere disallowance of a claim which is not ex- facie bogus cannot lead to levy of penalty. In this case it was held that mere disallowance of a claim which is not ex-facie bogus cannot lead to levy of penalty. In these circumstances, in our considered opinion, the assessee deserves to succeed and the penalty levied is hereby deleted”, the coram of Astha Chandra, the Judicial Member, along with Shamim Yahya, the Accountant Member, added.
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, held that secondary and higher secondary education cess are part of tax and hence that no deduction is available. The bench viewed that education cess and Secondary and higher Secondary Education cess are also part of the tax and not deduction is available to the assessee. Accordingly, the ground raised by the assessee is dismissed.”
The Cochin Bench of the Income Tax Appellate Tribunal (ITAT) has recently deleted the retrospective application of disallowance under Section 40(a)(ia) of the Income Tax Act, 1961 by the Assessing Officer against the assessee-Hi-Lite Builders Private Limited. “The Hon’ble Supreme Court has clearly laid down the ratio that the amendment to section 40(a)(ia) with respect allowability of the expenses on which tax is deducted incurred during the year that is remitted to Government account on or before the due date for filing the return of income u/s.139(1) being curative in nature is retrospective.”, the Tribunal Bench of Judicial Member Beena Pillai and Accountant Member Padmavathy S observed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that External Commercial Borrowings (ECB) loans to Indian clients linked to PE in India and directed the tax levy at 10% on interest income. From the perusal of Indo Netherlands Tax Treaty,the two-member bench comprising Shri M Balaganesh, (Accountant) & Shri Sandeep Singh Karhail,(Judicial) observed that there is a separate Article provided for taxability of Interest vide Article 11 thereon.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that section S10AA deduction benefit cannot be denied merely on non-receipt of convertible foreign exchange on deemed exports. “In view of the above and after considering the facts in totality, we are of the view that there is no infirmity in the finding of the learned CIT-A. Even at the time of hearing, the learned DR has not brought anything on record contrary to the finding of the learned CIT-A. Hence, the appeal filed by the revenue is hereby dismissed”, the coram of Madhumita Roy, the Judicial Member and Waseem Ahmed, the Accountant Member, thus held.
The employer’s contribution under Section 43B of the Income Tax Act, 1961 is acceptable if the payment is made prior to the filing of returns, according to a recent decision by the Income Tax Appellate Tribunal (ITAT) Amritsar bench. The decision deleted the addition. The Tribunal bench of Dr. M.L. Meera and Anikesh Banerjee observed the CBDT circular and upheld the submissions made by the assessee. Thus the Coram deleted the addition made by the AO.
“Since the jurisdictional issue has been held in favour of the assessee, holding assessment order as not sustainable”, stated the Kolkata bench of Income Tax Appellate Tribunal (ITAT). After considering the submissions of both sides, the tribunal bench of Sonjoy Sharma (Judicial Member) and Girish Agarwal (Accountant Member) observed that there is no mention about the reasons to believe which were recorded for initiating the proceedings under Section 148 of Income Tax Act. Also, there was no mention about the supply of copies of reasons to believe as recorded by the AO, to the assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on finding about the issuance notice under Section 148 of the Income Tax Act, without approval of the higher authorities, quashed an assessment order. The ITAT held that “In the facts of the present appeal, it is evident that the Assessing Officer has failed to follow such mandatory requirement in law. That being the factual position emerging on record, the issuance of notice under Section 148 of the Income Tax Act, is wholly without jurisdiction. Therefore, the proceedings initiated in pursuance to such notice culminating in the impugned assessment order is also without jurisdiction. Therefore, I have no hesitation in declaring the assessment order null and void. Accordingly, the impugned assessment order is quashed and the order of learned Commissioner (Appeals) is set aside. In the result, the appeal is allowed.”
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that interest on fixed deposits is assessable under the head ‘income from other source’. “In this case, interest on fixed deposits is in the nature of income which is assessable under the head income from other source and this legal position is supported by the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemical and Fertilizers Ltd vs CIT”, the coram of Mahavir Singh, the Vice – president and Manjunatha.G, the Accountant Member added.
The Jaipur bench of Income Tax Appellate Tribunal (ITAT) has recently held that activities carried out by Rajasthan Para-Medical Council are not commercial hence they should be liable for registration under section 12AA of the Income Tax Act, 1961. The two member bench of Sandeep Gosain, (Judicial Member) Shri Rathod Kamlesh Jayantbhai, (Accountant Member) held that object of the appellant Council qualified as charitable purpose and covered under Section 2(15) of the Income Tax Act as applied by the appellant and given that there is no dispute on the genuineness of the activities carried on by the assessee Council in furtherance of its object.
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) held that the Section 10AA Income Tax Act, 1961 deduction could not be denied merely on the reason of the audit report in form 56F filed during the assessment proceedings. Waseem Ahmed, (Accountant Member) and Madhumita Roy, (Judicial Member) members of the tribunal observed that the assessee could not be deprived of the benefit provided under Section 10AA of the Income Tax Act, merely on the reasoning that the audit report in form 56F was filed during the assessment proceedings.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the determination of Arm’s Length Price (ALP) on reimbursement of third-party costs incurred under Comparable Uncontrolled Price (CUP) and directed the deletion of the proposed adjustment. A Coram comprising Shri M Balaganesh, AM & Shri Pavan Kumar Gadale, JM observed that when the transaction is in the reimbursement of expenses to AE, the third party cost incurred is a CUP for reimbursement. Accordingly, the CUP method chosen by the assessee considering the nature of the transaction and degree of comparability as the Most Appropriate Method is hereby upheld.
The Income Tax Appellate Tribunal (ITAT), Hyderabad bench in an appeal filed before it, held that foreign exchange fluctuation loss incurred in the business health care could not be allowed as revenue expenditure. It was observed that the additional liability on account of fluctuation in the foreign exchange rate in respect of liability incurred for the import of machinery by the assessee would not constitute revenue expenditure.
The Income Tax Appellate Tribunal (ITAT), Bengaluru, has recently, in an appeal filed before it, held that reopening of assessment is impossible beyond 4 years, once the assessment is completed under Section 143(3) of the Income Tax Act. Thus, the ITAT held that “Accordingly, we uphold that the reasons recorded by the AO for exercising jurisdiction under Section 147 are not in conformity with the provisions of Section 147 of the Act. Our decision is supported by the judgements relied on by the learned A.R. Accordingly, we uphold that the order passed by the AO is bad in law for want of fulfilling the necessary ingredients for exercising jurisdiction under Sections 147/148 of the Income Tax Act. On this basis we allow ground No. 3 raised by the assessee. Since this is a legal ground and we have decided one legal ground in favour of the assessee, we think there is no need to decide the other issues raised by the assessee which are left open. In the result, the appeal filed by the assessee is partly allowed in above terms”.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT), while dismissing the appeal filed by the revenue held that re computation of capital gains on sale of shares of subsidiary company by revising sale considerations that are genuine is invalid. The two member bench of M. Balaganesh, (Accountant Member) And Sandeep Singh Karhail, (Judicial Member) observed that “assessee with the support of the aforesaid documents has duly explained as to how the sale consideration of shares was reduced from Rs.10 crore to Rs.25 lakh.”
The Income Tax Appellate Tribunal (ITAT), Mumbai bench in an appeal filed before it, held that once addition has been made on adhoc and estimate which has been reduced by the tribunal, then no penalty should be imposed on concealment of income under Section 27(a)(c) of Income Tax Act, 1961. Further, the bench of Amit Shukla, (Judicial Member) and Prashant Maharishi (Accountant Member) held that “Once, the addition has been made on adhoc and estimate which has been reduced by the Tribunal, then it cannot be held that there is any concealment of income so as to warrant any penalty u/s 271(1)(c) Income Tax Act, 1961″.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, while setting aside an assessment order, held that the cash deposited in bank account of the assessee, is not sufficient for the formation of “belief of escapement of Income” by the AO. The ITAT finally held that “In view of the same, we hold that jurisdiction assumed by the AO to reopen the case of the assessee was not in accordance with law in the absence of formation of belief of escapement of income by the AO. The assessment order so framed is therefore not sustainable in law, and is set aside as invalid. Since we have set aside the assessment order passed under section 147 itself, adjudication of addition on merits is merely an academic exercise. Accordingly, the same are disposed off. In the result, the appeal of the assessee is allowed in above terms”.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, while upholding the deletion of additions made under Section 68, held that the A.O shall conduct independent investigation, without relying on third party statements and facts. the CIT(A) has passed a reasoned and conclusive order. The bench observed that they did not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue”, the coram of Baskaran BR, the Accountant Member and Pavan Kumar Gadale, the Judicial Member added.
Dismissing the Assessee’s appeals, the ITAT finally concluded: “Coming to the instant case, as the ld. Commissioner first should have decided the issue qua condonation of delay in filling of the appeals and on satisfying that the Assessee has failed to establish sufficient cause for not filling the appeals within the prescribed period of limitation, the appeals should have been dismissed at the very threshold only on the point of limitation, whatsoever once the appeals decided on merit, then there was no need to go into the controversy qua limitation and to decline the condonation of delay, hence we are inclined not to approve such view, however as we have already dealt with the findings on merit of the case by the ld. Commissioner and therefore decision of the ld. Commissioner on merit is upheld.”
The bench viewed that the exposition of law is correct and we agree with the same. Therefore, the DTAA does not get triggered at all when a domestic company pays DDT under Section 115O of the Act. We wish to place on record our appreciation for the assistance provided by the ld. counsels for the parties and the interveners and the ld. DR for the assistance provided to the Bench in deciding the issue referred to the Special Bench. These appeals/COs are restored to the respective Division Benches for deciding the issues raised in the respective appeals, accordingly.”
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, on the reopening of an assessment based on change of opinion, quashed the penalty against the assessee who had correctly declared the Income. “Since the quantum appeal itself is being quashed, the penalty levied as against the reassessment order for furnishing inaccurate particulars has no legs to stand and the same is liable to be quashed”, the coram of Waseem Ahmed, the Accountant Member, and T.R Senthil Kumar, the Judicial Member added.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that AO cannot arbitrarily disallow expenses for want of supporting documentation, without pointing out the defect in the vouchers. The ITAT concluded that “Therefore, considering the aforementioned judicial precedents in the extant cases, we hold that no withholding of tax is warranted from the payments of Rs.2,18,66,000/-. The appeal of the assessee on this ground is allowed. In the result, the appeal of the assessee on all grounds is allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that no tax can be levied on payments in lieu of ‘business profits’, in the absence of a PE in India. In view of the same, the payment received by the assessee is in the nature of ‘Business Profit’, which cannot be brought to tax in India, in the absence of PE. Accordingly, the grounds of both the appeals of the assessee are allowed. In the result, the appeal of the Assessee in ITA No. 1877/Del/2022 and ITA No. 1876/Del/2022 are allowed, ruled the bench.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the sale of shops below market price amounts to fraud to tax evasion and upheld the disallowances. A two-member bench comprising Shri R S Syal, Vice President and Shri Partha Sarathi Chaudhury, (Judicial) observed that knowing fully well the intention to create loss and having exclusive knowledge the assessee never explained shows that the real intention of creating artificial loss is nothing but a fraud to evade payable taxes.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has, recently in an appeal filed before it, quashed the revisional order against Lakme. “After considering the detailed submissions of the assessee, Ld.Pr.CIT abruptly completed the order under Section. 263 of the Act by merely remitting the issue back to the file of the Assessing Officer without giving any finding on the issues raised by him in notices issued under Section. 263 of the Income Tax Act”, the coram of Kuldip Singh, the Judicial Member, and S. Rifaur Rahman, the Accountant Member added.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while quashing an addition made under section 69 and 69A, held that inter- account transfer and sale of shares for loss, are not income. The bench “In view of the explanations provided, backed by bank statement of all 3 banks along with narrations, as well as the US Returns, we hold that no part of the balance in the banks should be added under Section 69 or 69A. In the result, the appeal of the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that the force of attraction rule will not apply, unless there is even a remote link between the activities of other projects with the PE in question. “Having heard the parties, we direct the Assessing Officer to factually verify the assessee’s claim and grant credit for TDS in accordance with law”, the coram of G S Pannu, the President and Saktijit Dey, the Judicial Member ruled.
The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, has recently, in an appeal filed before it, held that no addition can be made under Section 68 of the Income Tax Act, for turnover already reflected in the books of the assessee. “We further relied on order of ITAT, Mumbai Jet Freight Logistics Ltd. v. Commissioner of Income-tax Appeal (NFAC). The addition Under Section 68 is beyond jurisdiction of the ld. AO as the turnover is already reflected in the books of the assessee. So, the addition amount of Rs 2,74,00,000/- is quashed”, the coram of Dr. M. L. Meena, the Accountant Member, and Anikesh Banerjee, the Judicial Member added.
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that the income tax department has no power to recover Tax Deduction at Source (TDS) from vendors if vendee deducts tax at source for purchase of property. After considering the contentions the tribunal held that “Revenue cannot deny the TDS credit to the assessee and the only option left for the Revenue is to proceed against the deductor by holding him to be an assessee-in-default”.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that the penalty under Section 270A cannot be levied on estimated disallowance. The bench held that “In this case, the penalty has been levied on estimated disallowance. Hence, the penalty is not sustainable. Accordingly, the AO is directed to delete the penalty levied under section 270A of the Income Tax Act. Accordingly, grounds of appeal raised by the assessee are allowed. In the result, the appeal of the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, held that the loss incurred in foreign exchange for converting loan to foreign currency is allowable as business loss. Thus, upholding the decision of CIT(A), the two-member bench of ITAT consisting of Shri Rajesh Kumar (Accountant Member) and Shri Sonjoy Sarma (Judicial Member) held that the loss incurred in foreign exchange for converting loan to foreign currency is allowable as business loss and is deductible.
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