ITAT Weekly Round-Up

This weekly summary analyses the major Income Tax Appellate Tribunal (ITAT) stories that have been published at Taxscan.in. during the previous week from June 10 to June 17, 2023. Maintenance Income from Building Let out Treats as Business Income: ITAT LPR Company Pvt. Ltd vs ACIT 2023 TAXSCAN (ITAT) 1361 The Delhi bench of Income Tax Appellate Tribunal (ITAT) ruled that the maintenance income received from building let out is treated as business income. The ITAT observed that the maintenance charges are no way connected to the rental income. Also, they are for the certain additional facilities provided to the tenants, which are unconnected to leasing out the tenanted premises. The bench further mentioned that a third party might have even supplied the amenities. Because the maintenance fees are unrelated to the rental income, they cannot be treated as income from house property since they are not included in the rental income. The Two-member bench of G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) held that maintenance income received by the assessee has to be treated as income from business. No Addition Based on Evidence not Confronted to Assessee: ITAT Dr. Shyam Sunder Doda vs The ACIT 2023 TAXSCAN (ITAT) 1364 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that no addition could be imposed based on evidence which had not been confronted to the assessee. A Single Bench of Chandra Mohan Garg, (Judicial Member) allowed the appeal filed by the assessee holding that the Assessing Officer was not correct and justified in making addition in the hands of assessee on the basis of document/books of accounts found & seized and statement of three persons including P. Mahalingam without confronting the same of the assessee. Assessee should get Reasonable Opportunity before Making Addition u/s 40A (7) before Processing Rectification Application: ITAT The Nakodar Primary Cooperative Agriculture Development Bank Ltd vs Income Tax Officer 2023 TAXSCAN (ITAT) 1363 The Amritsar Bench of Income Tax Appellate Tribunal (ITAT) has held that the assessee should be given reasonable opportunity before making addition under Section 40A (7) of the Income Tax Act, 1961 before processing the rectification application. The Two-member Bench of M.L.Meena (Accountant Member) and Anikesh Banerjee (Judicial Member) observed that the Section 154 of the Income Tax Act was not applicable in this case. But the assessee prayed that a reasonable opportunity was denied by the revenue authorities. The bench remitted back the issue to AO and directed for further adjudication. No TDS on Cost paid to Holding Company on Reimbursement of Mobilisation and Demobilisation: ITAT Van Oord ACZ India Pvt. Ltd. vs DCIT 2023 TAXSCAN (ITAT) 1365 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Tax Deducted at Source (TDS) would not be applicable on cost paid to holding companies on reimbursement of mobilisation and demobilisation. The two-member bench of G.S. Pannu (President) and Saktijit Dey (Judicial Member) allowed the appeal and deleted the disallowance made under Section 40(a)(i) of the Income Tax Act holding that there was no legal obligation under section 195(1) of the Income Tax Act on the assessee to deduct tax at source under Section 195(1) of the Income Tax Act on the reimbursement of mobilisation and demobilisation cost to the holding company (VOAMC). ITAT Rules TRC as Sole Evidence for DTAA Benefits, Deletes Tax Liability on Mauritius Company Sapein Funds Ltd vs CIT 2023 TAXSCAN (ITAT) 1366 The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that the Tax Residency Certificate (TRC) is sole evidence for Double Taxation Avoidance Agreement (DTAA) benefits and deleted Tax liability on Mauritius Company. The Bench, consisting of Judicial Member Saktijit Dey and Accountant Member Dr. B. R. R. Kumar disagreed with the CIT’s observation and ruled that the Tax Residency Certificate is sole evidence for Double Taxation Avoidance Agreement (DTAA) benefits and deleted Tax liability on assessee. The Bench noted that the assessee had engaged in various transactions beyond bonds and cash, including investments in derivatives, concluding that the income earned was not taxable in India. In result, the appeal of the assessee was allowed. Failure to Provide Details of Payee: ITAT Restricts Disallowance of Expenses to 30% u/s 40(a)(ia) Shri Niteshkumar Maganbhai Patel vs The ITO 2023 TAXSCAN (ITAT) 1318 The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has restricted the disallowance of expenses to 30% under Section 40(a)(ia) of the Income Tax Act 1961 as the assessee failed to provide details of the payee. The two-member Bench of Waseem Ahmed, (Accountant Member) and T.R. Senthil Kumar, (Judicial Member) observed that the assessee had failed to provide the details that the payee had included the amount received from the assessee in its income. Thus, the assessee could not be given the benefit of the proviso to section 40(a)(ia) of the Income Tax Act. The Bench also noted that the Finance Act had made amendment to section 40(a)(ia) of the Income Tax Act with effect from 1-4-2015. The Various benches of the Tribunals had already held that the amendment made by Finance Act to be curative in nature, that disallowance under Section 40(a)(ia) of the Income Tax Act be restricted to 30% of the expenses paid as against 100% because amended provision was curative in nature and the provisions should be applied retrospectively. The Bench partly allowed the appeal by disallowing expenses on account of non-deduction of TDS restricted to 30% of the expenses. Belated Filing of TDS Return Contemplated into Levy of fee u/s 234E of Income Tax Act is not Apparent Mistake and not Subject Matter u/s 154: ITAT Dhillon And Simran Liver Fibro Scan Centre vs Income Tax Officer (TDS)-1 2023 TAXSCAN (ITAT) 1367 The Amritsar Bench of Income Tax Appellate Tribunal (ITAT) has held that belated filing of Tax Deduction at Source return contemplated non levy of fee under Section 234E of the Income Tax Act was not an apparent mistake and could not be the subject matter under Section 154 of the Income Tax Act. The two-member Bench of M. L. Meena, (Accountant Member) and SH Anikesh Banerjee, (Judicial Member) observed that, “TDS deduction in filing of TDS return and belated filing of TDS return contemplated into levying of fee u/s 234E of the Act is subject matter of verification of facts from record which is not covered under the provisions of section 154 of the Act where an apparent mistake of the record can only be rectified”. The Bench further restored the matter to examine the issue of the levy of fee under Section 234E of the Income Tax Act after verification of facts as per law. Addition made by AO u/s 69A r.w.s 115BBE of Income Tax Act due to Non Filing of ROI : ITAT Directs Re-adjudication Kishan Singh & Associates vs Income-tax Officer 2023 TAXSCAN (ITAT) 1360 The NewDelhi bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for an addition made under section 69A of the Income Tax Act,1961 read with section 115BBE of the Income Tax Act due to non-filing of the return of income (ROI). A single-member bench comprising Kul Bharat(Judicial) held that the impugned assessment order had been framed against the non-existent entity and directed the assessing officer to delete the addition made by him while allowing the appeal filed by the assessee. Amount Received Not in respect of Transfer of Title, Rights or Interest in Property cannot be Taxable Under Head of “Capital Gains”: ITAT Mahendra Corporation vs Dy. Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1359 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the amount received not in respect of the transfer of title, rights, or interests in property cannot be taxable under the head of “capital gains”. The two-member bench comprising G.S. Pannu(President) and Sandeep Singh Karhail(Judicial) held that the amount received by the assessee was not in respect of the transfer of any right, title, or interest in the property and cannot be taxed under the head “capital gains” in the hands of the assessee while allowing the appeal filed by the assessee. Section 292BB of Income Tax Act shall not applicable if Assessee not Participated in Reassessment Proceedings: ITAT quashes Notice to Dead Person Farah Naaz vs ITO 2023 TAXSCAN (ITAT) 1357 The Delhi bench of Income Tax Appellate Tribunal (ITAT) quashed the notice issued to dead person and held that section 292B of the Income Tax Act, 1961 should not be applicable if the assessee has not participated in the reassessment proceedings. The two-member bench of Chandra Mohan Garg (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) held that “where notice seeking to reopen assessment was issued in name of deceased assessee, since she could not have participated in reassessment proceedings, provisions of section 292BB were not applicable to assessee’s case.” Therefore, the bench allowed the appeal filed by the assessee. Capital Gain Exemption u/s 54F of I.T Act shall not be Disallowed if amounts for Purchase of Property and Construction were Paid duly within Relevant Period: ITAT Subramanian Swaminathan vs ACIT 2023 TAXSCAN (ITAT) 1355 The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held capital gain exemption under Section 54F of the Income Tax Act, 1961 should not be disallowed if an amount for purchase of property and construction were duly paid within the relevant period. The two member bench of the Dr. B. R. R. Kumar, (Accountant Member) and Yogesh Kumar US, (Judicial Member) allowed the appeal filed by the assessee and hold that the CIT(A) erred in disallowing the claim by making factually incorrect observations that the assessee had not deposited any amount in the capital gains scheme account whereas the amounts were duly deposited in the capital gains scheme account and duly utilized from the said account only. Claim of Insurance on Account of Loss by Fire cannot be Disallowed: ITAT Nishant Krishna vs Joint Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1358 The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that claim of insurance on account of loss by fire could not be disallowed. The two member bench of Rajpal Yadav, (Vice President) and Girish Agrawal, (Accountant Member) allowed the appeal and observed that claim of the assessee of Rs.5,37,892/ by debiting in the Profit & Loss Account was a bona fide claim. Deduction shall not be Disallowed u/s 40(a)(ia) of Income Tax Act on ground of TDS not Deducted, if Recipient includes Income from Receipts of Assessee: ITAT Ravi Lochan Singh vs Income Tax Officer 2023 TAXSCAN (ITAT) 1356 The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that deduction should not be disallowed under Section 40(a)(ia) of Income Tax Act, 1961 on ground of Tax Deduction at Source (TDS) not deducted, if receipient include income from receipts of assessee. The two member bench of Rajpal Yadav, (Vice-President) and Girish Agrawal, (Accountant Member) observed that recipients had shown these receipts as their income. Further Assessing Officer did not dispute about the nature of expenses and their incurrence for the purpose of their business, his only grievance was that the assessee has not deducted the TDS while making the payments.The bench considering the decision in the case of Hindustan Coca Cola –vs.- CIT, allowed the appeal filed by the assessee. Disallowance of EPF Contribution due to Late Deposit u/s 36(1)(va) of Income Tax Act: ITAT Directs Re-adjudication Integrity Verification Services Pvt.Ltd vs ITO 2023 TAXSCAN (ITAT) 1353 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication for the disallowance of workers’ provident fund (PF) contributions because they were made after the deadline in accordance with section 36(1)(VA) of the Income Tax Act of 1961. The ITAT observed that according to the provisions of the General Clauses Act, it was appropriate to restore the issue to the file of the assessing officer for examining the payments made on the day next to the due date, being a holiday on the due date, and allow the deduction accordingly. The two-member bench comprising Om Prakash Kant(Accountant) and Narender Kumar Choudhry (Judicial) directed the matter for re-adjudication to allow the deduction while allowing the appeal filed by the assessee. Head Wise Bifurcation not Required for Computation of Insurance Company Income: ITAT Deletes Disallowance u/s 14A of Income Tax Act Against Oriental Insurance M/s. The Oriental Insurance Co. Ltd vs DCIT 2023 TAXSCAN (ITAT) 1351 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance under Section 14A of the Income Tax Act 1961 against oriental insurance company holding that head wise bifurcation was not required for the computing income of insurance company. The two-member Bench of Anil Chaturvedi, (Accountant Member) and SH Anubhav Sharma, (Judicial Member) observed as Section 44 of the Income Tax Act had provided a complete code for computation of profit and gain of the business of the assessee insurance company. The assessing officer could not make any adjustments in the profit of the assessee’s business when they were calculated in accordance with the rules contained in first schedule. Cash Seized can be Adjusted Against Self-Assessment Tax Payable u/s 132B of Income Tax Act: ITAT Arun Bansal vs ACIT 2023 TAXSCAN (ITAT) 1343 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the cash seized could be adjusted against self-assessment tax payable under Section 132B of the Income Tax Act, 1961. The two-member Bench of G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) deleted the interest charged under Section 234B of the Income Tax Act observing that the cash seized could be adjusted against self-assessment tax payable with the return of income. Additional Income Surrendered before 2nd Amendment to S.115BBE of IT Act chargeable at Ordinary Rate of 30%: ITAT quashes Revision Order Hema Raman vs Principal Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1354 The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that additional income surrendered before the 2nd amendment to Section 115BBE of Income Tax Act, 1961 should be chargeable at ordinary rate of 30%. Therefore the bench quashed the revision order. It was observed by the tribunal that ,while the survey was conducted prior to substitution/ modification of Section 115BBE of the Income Tax Act, the assessment year concerned continues to be assessment year 2017-18. The ROI was filed after the substituted amendment had come into force.The two member bench of the Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the appeal filed by the assessee. Issuance of Notice u/s 148 of Income Tax Act for Reassessment against Deceased Person is invalid: ITAT quashes Order Late Shri Shankar Mukund Shenai vs Income Tax Officer 2023 TAXSCAN (ITAT) 1350 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the order passed by the assessing officer against a deceased person by issuing notice under section 148 of the Income Tax Act,1961 for reassessment. The two-member bench comprising Aby T.Varkey(Judicial) and Om Prakash Kant (Accountant) held that impugned notice for reopening the assessment under section 148 of the Income Tax Act was issued in the name of the deceased assessee; and despite knowing that the assessee had passed away and proceeded to frame re-assessment, without first dropping the proceedings initiated by the issuance of the impugned notice. Cash Deposit made in Savings Bank account is Sale Consideration earned from Agricultural Land: ITAT Quashes Revision Order Smt. Satvir Kaur vs Pr. Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1344 The Amritsar bench of Income Tax Appellate Tribunal (ITAT) while quashing the revision order, held that cash deposit made in a savings bank account is sale consideration earned from the agricultural land. The tribunal of M. L. Meena, (Accountant Member) and Anikesh Banerjee, (Judicial Member) observed that there is a direct nexus between the transaction of sale and the cash deposited in the bank account of the assessee as the transaction of sale of land is registered on 26.04.2010 and the cash was also deposited by the assessee on the same date. Thus the bench allowed the appeal filed by the assessee. Support/Maintenance Services of Avaya International Taxable as FTS under Article 12 of India – Ireland DTAA: ITAT Directs De Novo Adjudication Avaya International Sales Ltd. vs ACIT 2023 TAXSCAN (ITAT) 1346 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed a new adjudication holding that the support or maintenance services of Avaya international are taxable as Fees for Technical Services (FTS) under Article 12 of the India-Ireland Double Taxation Avoidance Agreement (DTAA). The two-member Bench of G.S. Pannu (President) and Saktijit Dey (Judicial Member) following the decision in assessee’s own case restored back the issue to the Assessing Officer for de novo adjudication. Hence, the appeal allowed. Assessee Not an ”Assessee in Default” u/s 201(1) of Income Tax Act in absence of Ascertainable Amount & Identifiable Payee: ITAT Rules TDS Not Applicable on Provisions for Expenses HT Mobile Solutions Limited vs JCIT 2023 TAXSCAN (ITAT) 1349 The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that the assessee cannot be treated as an “Assessee in Default” under Section 201(1) of the Income Tax Act, 1961 in the absence of Ascertainable Amount & Identifyable Payee. Consequently, TDS is not applicable and no interest could be levied under section 201(1A) of the Act, the bench held. The two-member bench comprising of Shri Saktijit Dey (Judicial Member) and Shri M. Balaganesh (Accountant Member) held that the assessee could not be treated as an “assessee in default” under section 201(1) of the Income Tax Act, 1961 and no interest could be levied under section 201(1A) of the Act. The tribunal referred to the reversal of expenses made by the assessee in the succeeding year and the subsequent deduction of tax at source, which further supported the conclusion. As a result, the order of the CIT(A) was quashed and the appeal was allowed for statistical purposes only. Interest Subsidy received under technology upgradation fund is capital receipt, no tax chargeable :ITAT Dy. Commissioner of Income-tax vs M/s Grasim Industries Ltd. 2023 TAXSCAN (ITAT) 1352 The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has held that interest subsidy received under technology upgradation fund is capital receipt.hence no tax should be leviable. It was observed by the tribunal that interest subsidy received under technology upgradation fund scheme, though credited in the net off against the interest expenditure in the books of account is still capital in nature and therefore not chargeable to tax. Therefore the two member bench of Prashant Maharishi, Accountant Member and Kuldip Singh, (Judicial Member) allowed the appeal of the assessee. Commission Income earned from Real Estate Business shall not attract Section 44AD of the Income Tax Act: ITAT DCIT vs Sukhbir Shokeen 2023 TAXSCAN (ITAT) 1341 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that commission income earned from real estate business should not be attracted to Section 44AD of the Income Tax Act. The tribunal determined that sources of the entire amounts, the credits and debits in the bank account have been duly explained Moreover, during the search, no incriminating evidence was discovered or seized to show that the credits of the assessee’s bank statements were in the nature of income or that he was engaged in any other line of work. Therefore the two-member bench of Dr. B. R. R. Kumar, (Accountant Member) and Yogesh Kumar US, (Judicial Member) dismissed the appeal filed by the revenue. No penalty shall be imposed u/s 271B of Income Tax Act on reason of Return not Appearing E-Filing Portal: ITAT Shri Jayaraj Charles vs ITO 2023 TAXSCAN (ITAT) 1342 The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no penalty should be imposed under Section 271B of the Income Tax Act 1961 on the reason of the return not appearing in the e-filing portal.The two-member bench of V. Durga Rao, (Judicial Member) and Manoj Kumar Aggarwal,(Accountant Member) relied upon the decision of the Ramunaicker Raja vs. ACIT allowed the appeal filed by the assessee and observed that penalty should not be levied by reason of return not appearing on the e filing portal. ITAT Dismisses Issue Pertaining to Applicability of Tax Rate Provide under India-Mauritius DTAA to Dividend Declared by Ambuja Cement Ambuja Cements Limited Vs Addl. Commissioner of Income Tax Large Tax Unit 2023 TAXSCAN (ITAT) 1345 The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently dismissed an issue pertaining to applicability of tax rate provided under India-Mauritius (DTAA) to dividend declared by Ambuja Cement. The two member bench of B.R. Baskaran (Accountant Member) and Sandeep Singh Karhail (Judicial Member) observed that the issue arising in Ground No.8 is covered in favour of the Revenue by the recent decision of the Special Bench of the Tribunal in DCIT v/s Total Oil India Private Ltd. Thus, the bench dismissed the ground no.8 raised in assessee’s appeal for the assessment year 2010- 11. Mere Acceptance of Disallowance cannot Conclude Furnishing of Inaccurate Particulars of Income: ITAT Deletes Penalty u/s. 271(1)(c) of Income Tax Act Gulab Impex Enterprises Pvt. Ltd vs ACIT 2023 TAXSCAN (ITAT) 1347 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271(1)(c) of the Income Tax Act 1961 holding that mere acceptance of disallowance could not conclude furnishing of inaccurate particulars of income. The two-member Bench of G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) of ITAT deleted the penalty holding that merely because assessee had accepted the disallowance, it would not lead to the conclusion that the assessee had furnished inaccurate particulars of income. Cash Deposit Not Deemed Unexplained u/s 144 r/w 147 of Income Tax Act Without Reasonable Opportunity to Prove Source: ITAT affirms Substantial Justice & Fair Play Shri Harminder Singh vs ITO 2023 TAXSCAN (ITAT) 1348 The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench has held that Cash Deposit shall not be treated as “Unexplained” under Section 144 read with Section 147 of Income Tax Act, 1961 without affording the assessee a fair and reasonable opportunity to prove the Source of the deposit made by him in his bank account. The bench thus upheld the principles of Substantial Justice & Fair Play. The two-member bench consisting of Shri A.D. Jain (Vice President) and Shri Vikram Singh Yadav (Accountant Member) set aside the previous orders and remanded the matter to the AO for fresh consideration indicating that the decision pertained to the procedural aspects of the case rather than the merits. The bench also directed the assessee to provide necessary information and documentation to support the claim regarding the source of the cash deposit. In the result, the appeal of the assessee is allowed for statistical purposes. Proper Explanation of Income of Sales Cannot be Added u/s 68 of Income Tax Act Unless it Proved as ‘Bogus’: ITAT DCIT vs Subhash Chand Gupta 2023 TAXSCAN (ITAT) 1334 The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) held that the proper explanation of income of sales cannot be added under section 68 of the Income Tax Act,1961 unless it proved invalid. The bench observed that an order passed by the Commissioner in holding that the sales cannot be added under section 68 of the Income Tax Act unless they are proved as bogus based on some reliable evidence was valid. The two-member bench comprising Narendra Kumar Billaiya, (Accountant) and Challa Nagendra Prasad (Judicial) held that the order passed by the Commissioner was as per the law and valid while dismissing the appeal filed by the revenue. No Penalty leviable on Account of Disallowance u/s. 14A of Income Tax Act on Proper Filing of ROI: ITAT Grants Relief to ICICI Bank by Deleting Penalty DCIT vs M/s ICICI Bank Ltd 2023 TAXSCAN (ITAT) 1339 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted relief to the ICICI bank by deleting the penalty imposed under section 14A of the Income Tax Act,1961 due to improper filing of return of income. The two-member bench comprising Amit Shukla(Judicial ) and Rifaur Rahman(Accountant) held that the penalty levied on the same amount was not maintainable while dismissing the appeal filed by the revenue. Tax Exemption Allowable for Interest Income Received on Temporary FD: ITAT Allstate India Private Limited vs Deputy Commissioner of Income-tax 2023 TAXSCAN (ITAT) 1335 The Banglore Bench of the Income Tax Appellate Tribunal (ITAT) has held that Tax Exemption is allowable on interest income received on temporarily fixed deposits (FD). The two-member bench of George George K. (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) has observed that ”interest income earned by the Company of parking surplus funds with the bank by a special category of the assessee i.e. SEZ unit covered under Section 10AA of the Act. was an integral part of export business activity and business decisions taken given the commercial expediency. Hence such interest income earned incidentally could not be de-linked from its profit and gains derived from the export profit of the unit and could not be taxed separately.” AO made Addition to House hold Drawings due to Delay in filing Reply: ITAT Directs Re-adjudication Sh. Brij Kishoare vs DCIT 2023 TAXSCAN (ITAT) 1333 The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for making an addition to house hold drawings due to a delay in filing a reply to the notice issued by the assessing officer. The two-member bench comprising N. K. Billaiya(Accountant) and C.N. Prasad( Judicial) held that considering the age of the assessee does not find any merit in the addition made by the assessing officer and directed to re-adjudicate the matter while allowing the appeal filed by the assessee. Intimation order u/s 154 of the Income Tax Act issued for Disallowing Payment of Remuneration to Partners: ITAT Directs Re-adjudication Mayur Wines vs NFAC 2023 TAXSCAN (ITAT) 1332 The Pune bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication on the Intimation order passed under section 154 of the Income Tax Act,1961 for disallowing the payment of remuneration to partners. The two-member bench comprising S. S. Godara ( Judicial )And Induri Rama Rao (Accountant)held that to allow the claim for deduction of the partner’s remuneration, the return of income should be accompanied by the partnership deed and in the absence of such requirement under law, this cannot be treated as an incorrect claim. It was also directed to the re-adjudicate to amend the intimation by deleting the addition on account of the partner’s remuneration while allowing the appeal filed by the assessee. Assessment Order Passed without Proper Examination of Residential Status: ITAT Directs Re-Adjudication Shri Ajay Jain Vs Asstt. Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1338 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed adjudication as the assessment order was passed without proper examination of residential status. The two-member Bench of B.R. Baskaran, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) allowed the appeal filed by the assessee holding that the Commissioner of Income Tax Appeals (CIT(A)) neither sought any remand report from the AO nor considered any of the aforesaid documents while dismissing the assessee‟s appeal in respect of the computation of long-term capital gains. Further, there was no examination of the correct residential status of the assessee by any of the lower authorities. Addition made u/s 56(2)(x) of Income Tax Act due to Failure of Disclosure of Income on Bank Account: ITAT Directs Re-adjudication Benudhar Gokulanand Biswal vs National E assessment Centre 2023 TAXSCAN (ITAT) 1340 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication for the addition made by the assessing officer under section 56(2)(x) of the Income Tax Act,1961 due to the failure of disclosure of income on the bank account. The two-member bench comprising B.R. Baskaran(Accountant ) and Pavan Kumar Gadale(Judicial) directed the assessing officer to re-adjudicate the matter to delete the addition made under section 56(2)(x) of the Income Tax Act while allowing the appeal filed by the assessee. Addition made by AO without Understanding whole Contractual Obligations made by parties: ITAT Deletes Addition AB Insurance Brokers Pvt. Limited vs Deputy Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1336 The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made by the assessing officer without understanding the whole contractual obligations made by the parties. he two-member bench comprising Rajpal Yadav(Vice-President) and Girish Agrawal, (Accountant) held that the higher amount was to be considered as clawback payment, then a higher amount was to be allowed as a deduction not character of income. It was also held that the addition made by the AO is liable to be deleted while allowing the appeal filed by the assessee. Depreciation allowable for Computing Income Available for Accumulation u/s 11(6) of Income Tax Act: ITAT Anand Education Trust vs Assistant Commissioner of Income Tax 2023 TAXSCAN (ITAT) 133 The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that depreciation should be allowed for the computing income available for accumulation under section 11(6) of the Income Tax Act, 1961. The two-member bench comprising Rajpal Yadav( Vice-President) and Girish Agrawal, (Accountant) held that the depreciation should be allowed for computing the income available for accumulation and no further submissions were adduced to rebut the assessing officer’s findings of fact and or position of law while allowing the appeal filed by the assessee. Claim of Expenditure Incurred for Club Membership Rejected on Ground of “Non-Business Expense”: ITAT Directs Re-adjudication New Globe Logistik Pvt. Ltd. vs ITO-2(3(3) 2023 TAXSCAN (ITAT) 1331 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication for the rejection of a claim of expenditure incurred for club members on the ground of non-business expenses. A single-member bench comprising Aby T. Varkey (judicial) held that the assessee company functions through the director/shareholders and even though converted to a Limited liability partnership, still functions through the key persons and the entrance fees paid by the assessee for becoming a member of the Cricket Club of India would inure benefits for the business of the assessee. It was also directed to the assessing officer to re-adjudicate the matter and to delete the addition made by him while allowing the appeal filed by the assessee. No records with Income Tax Dept to show Actual Amount Received from AE for Marketing Service Fee : ITAT Deletes Addition Sabre Travel Network (India) Pvt. Ltd vs Deputy Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1256 The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently while providing relief to Sabre Travel Network (India) deleted additions made on account of foreign exchange loss incurred from marketing services. The two member Bench of the ITAT Vikas Awasthy, (Judicial Member) and Gagan Goyal, (Accountant Member) allowed the appeal filed by the assessee and observed that the same issue was already closed by the tribunal in assessee own case in the assessment year 2009-10. Nitesh Joshi & Ruben Menezes ,who appeared for the assessee and Vinod Tanwan who appeared for the revenue. Error of Tax Auditor in Reporting Payment Date of PF Collected from Employees: ITAT Deletes Disallowance Ernst & Young Merchant anking Services LLP vs ACIT 2023 TAXSCAN (ITAT) 1329 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance as the tax auditor had committed an error in reporting the date of payment of Provident Fund (PF) collected from the employees. The two-member Bench of B.R. Baskaran (Accountant Member) and Kavitha Rajagopal (Judicial Member) observed that the assessee had furnished a revised certificate issued by the tax auditor mentioning correct dates of payment. The assessee had also furnished copies of challans for the payment of provident fund and also relevant copy of bank statements in support of the claim of actual date of payment mentioned. The ITAT bench set aside the impugned order passed and deleted the addition made under section 36(1)(va) of the Income Tax Act. Disallowance of Expenditure u/s 40(a)(ia) of Income Tax Act for Non-Deduction of TDS restricted to 30% Considering Curative Nature of Amendment to Finance Act: ITAT Shri Niteshkumar Maganbhai Patel vs The ITO 2023 TAXSCAN (ITAT) 1318 The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the disallowance of expenditure under Section 40(a)(ia) of the Income Tax Act, 1961 for the non-deduction of Tax Deducted at Source (TDS) shall be restricted to 30% of the expenditure considering the curative nature of Amendment to the Finance Act. The two-member bench consisting of Shri Waseem Ahmed (Accountant Member) and Shri T.R. Senthil Kumar (Judicial Member) held that disallowance of expenses under section 40(a)(ia) on account of non-deduction of TDS should be restricted to 30% of the expenses and not 100%, considering the curative nature of the amendment made by Finance Act. Section 271B Penalty not Applicable when Reasonable Cause for Failure to Comply with Provision is Explained: ITAT Rasik Nemchand Pethad vs DCIT 2023 TAXSCAN (ITAT) 1330 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the penalty under Section 271B of the Income Tax Act 1961 would not be applicable when reasonable cause for failure to comply with provisions has been explained. The two-member Bench of Prashant Maharishi, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) observed that Section 271B of the Income Tax Act was very much covered by Section 273B of the Income Tax Act where if the assessee was able to substantiate that there was a reasonable cause for the failure to comply with the provision, then the penalty should not be imposed in such cases. ITAT quashes Revision Order Passed u/s 263 of Income Tax Act without Providing Sufficient Time for File Material Evidence and Documents M/s Shhlok Triton Associates vs Principal Commissioner of Incometax-1 2023 TAXSCAN (ITAT) 1328 The Surat bench of the Income Tax Appellate Tribunal (ITAT) has quashed the revision order passed under section 263 of the Income Tax Act, 1961 without providing sufficient time for file material evidence and documents. The two-member bench of Pawan Singh, (Judicial Member) and Dr. A. L. Saini, (Accountant Member) Considering the above facts held that the assessee has not been given sufficient opportunity of being heard and could not plead his case successfully before the Principle Commissioner of Income Tax, hence it is a violation of the principle of natural justice. Disallowance made u/r 8D(iii) of Income Tax Rules without giving Weightage to Credit Balance of Investment : ITAT Directs Re-adjudication Pride Purple Properties vs Dy. Commissioner Income Tax 2023 TAXSCAN (ITAT) 1321 The Pune bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication for the disallowance made under rule 8D(iii) of the Income Tax Rules, 1962 without giving Weightage to the credit balance of Investments. The bench observed that being the uncontroverted factual position and for the reason the payer of the appellant to remand the matter back for correct computation of disallowance under section 8D(iii) of the Income Tax Rules in all the fairness deserves to be approved. The two-member bench comprising S. S. Godara(Judicial) and G. D. Padmahshali (Accountant) directed the matter back to the assessing officer for re-adjudication to addition while allowing the appeal filed by the assessee. Books of Account not Liable to be Audited when Turnover of Business less than Threshold Limit u/s 44AB of Income Tax Act: ITAT deletes Penalty Radheyshyam Bisani vs I.T.O. 2023 TAXSCAN (ITAT) 1322 The Surat bench of the Income Tax Appellate Tribunal (ITAT) held that the books of Account were not liable to be audited when the turnover of the business is less than the threshold limit under section 44AB of the Income Tax Act. A single-member bench comprising Pawan Singh (Judicial) observed that the penalty proceedings initiated under Section 271B of the Income Tax Act by taking a view that the turnover of the assessee on delivery bases share transaction and intra-day transaction was more than the threshold limit for attracting audit under Section 44AB of the Income Tax Act. It was also held that turnover of the assessee for capital gain, the short-term or long-term shall not form part of the turnover and was not required to get the books of account audited and the penalty imposed under section 271B of the Income Tax Act was not as per law and are liable to be deleted while allowing the appeal filed by the assessee. ITAT upholds Assessment passed u/s 153A/144 of Income Tax Act based on Special Audit conduct u/s 142(2A) Rajan Batra vs Dy. Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1325 The Amritsar bench of Income Tax Appellate Tribunal (ITAT) has recently upheld that assessment passed under section 153A /144 of Income Tax Act based on special audit conduct under Section 142(2A) Income Tax Act, 1961. The two member bench of the Dr. M. L. Meena, (Accountant Member) and Anikesh Banerjee (Judicial Member) dismissed the appeal filed by the assessee. Addition made to Income which was Already Declared in Income Disclosure Scheme : ITAT directs Re-adjudication Ravi Kedia vs The Income Tax Officer 2023 TAXSCAN (ITAT) 1324 The Raipur bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for making the addition to Income that was already declared in Income Disclosure Scheme,2016. A single-member bench comprising Ravish Sood(Judicial) held that the assessee had declared part of the bogus purchases/gross profit of his regular business transactions in the IDS and the same could not have been once again subjected to tax by the Assessing officer and directed re-adjudication to the assessing officer while allowing the appeal filed by the assessee. Direct Expense Incurred for Purchase of Construction Material shall not be Disallowed u/s 40A(3)of Income Tax Act: ITAT ACIT vs Subhash Chand Jain 2023 TAXSCAN (ITAT) 1327 The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that direct expenses incurred for the purchase of construction material should not be disallowed under Section 40A (3) of Income Tax Act, 1961.The two member bench of B. R. R. Kumar, (Accountant Member) Sh. Yogesh Kumar US, (Judicial Member) confirmed the decision of the Commissioner of Income Tax (Appeals). Addition made u/s 69 of Income Tax Act on ground of Unexplained Investment on Bank Account: ITAT Deletes Addition Anjali Roy Vs Income Tax Officer 2023 TAXSCAN (ITAT) 1326 The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition made by the assessing office under section 69 of the Income Tax Act,1961 on the ground of unexplained investment in a bank account. The two-member bench comprising Rajpal Yadav (Vice-President) and Rajesh Kumar (Accountant Member) held that the assessee had not made any unexplained investment in the bank account and whatever deposits were made are either out of the past savings or from the loans taken from relatives and the addition made by the assessing officer was against the law and are liable to be deleted while allowing the appeal filed by the assessee. Disallowance made u/s40(a)(ia) of Income Tax Act on Ground of Violation of Non Deduction of Tax u/s 194H : ITAT Directs Re-adjudication M/s. Classic Citi Investments Pvt, Ltd vs The Dy. Commissioner of Income Tax 2023 ATXSCAN (ITAT) 1319 The Pune bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication for the disallowance made under section 40(a)(a) of the Income Tax Act,1961 on the ground of violation of non-deduction of tax under section 194H of the Income Tax Act. The two-member bench comprising Inturi Rama Rao(Accountant) and S.S. Viswanethra Ravi (Judicial) held that the order passed by the assessing officer without the application of mind and directed the assessing officer to re-adjudicate for allowing the claim of depreciation while allowing the appeal filed by the assessee. Absence of Formal Loan Agreement or Repayment Schedule Does Not Justify Treating Unsecured Loan as Unexplained Cash Credit u/s 68 of Income Tax Act: ITAT Shri Niteshkumar Maganbhai Patel vs ITO 2023 TAXSCAN (ITAT) 1318 The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the absence of a formal loan agreement or repayment schedule does not justify treating the unsecured loan as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The two-member bench consisting of Shri Waseem Ahmed (Accountant Member) and Shri T.R. Senthil Kumar (Judicial Member) held that the absence of a formal loan agreement or repayment schedule should not be the basis for treating the unsecured loan as unexplained cash credit. The bench directed the AO to delete the addition made based on the loan from Sri Salim Hamid Menon. As a result, the appeal of the assessee is partly allowed. ITAT Upholds Imposition of Penalty u/s 271B of Income Tax Act due to Non Audit of Books of Account Rupa Sanjay Nigade vs The Income Tax Officer 2023 TAXSCAN (ITAT) 1323 The Pune bench of the Income Tax Appellate Tribunal ( ITAT) upheld the imposition of penalty by the assessing officer under section 271B of the Income Tax Act,1961 due to non-audit of books of account. The two-member bench comprising Satbeer Singh Godara(Judicial) and Dr. Dipak P. Ripote (Accountant) held that the income of the assessee exceeds the prescribed threshold limit of Rs.1 crore mandatory for maintaining the books of account under section 44AB of the Income Tax Act and liable to be audited under section 44AB of the Income Tax Act while dismissing the appeal filed by the assessee. Interest Income by Cooperative Society on Deposits of Surplus Funds Eligible for Deduction u/ss 80P(2)(a)i) and 80P(2)(d) of Income Tax Act: ITAT Kai Fakira Jairam Patil Sahakari Patsansth Maryadit Shahada vs ITO 2023 TAXSCAN (ITAT) 1320 The Pune bench of the Income Tax Appellate Tribunal ( ITAT) held that the Interest income earned by the cooperative society on deposits of surplus funds by the scheduled banks is eligible for the deduction under section 80P(2)(ai) and Section 80P(2)(d) of the Income Tax Act,1961. The two-member bench comprising S. S. Godar( Judicial) and Inturi Rama Rao (Accountant) directed the assessing officer to re-adjudicate the matter to allow deduction under section 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act in respect of interest income earned from cooperative bank/scheduled bank while allowing the appeal filed by the assessee. ITAT Exempts Gold Donation of Religious Trust Towards Corpus Fund u/s 11(1)(d) of Income Tax Act Shree Swaminarayan Bhagwan vs Income Tax Officer 2023 TAXSCAN (ITAT) 1317 The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has exempted gold donation of religious trust towards corpus funds under Section 11(1)(d) of the Income Tax Act 1961. A Single Bench of Suchitra Kamble, (Judicial Member) allowed the appeal filed by the assessee holding that the ledger account of corpus fund Gold and the Annual Accounts and Audit Report was harping that the donation in Gold and actually for corpus donation. The Gold corpus fund was already accepted in the previous and the subsequent year by the Revenue and only in this year the same had been disputed. Suit or Proceeding cannot be Continued Against Corporate Debtor until Conclusion of Proceedings Under IBC 2016: ITAT Future Enterprises Limited vs Circle 9(3)(2) 2023 TAXSCAN (ITAT) 1316 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that a suit or proceedings could not be continued against a corporate debtor until the conclusion of proceedings taken place under Insolvency and Bankruptcy Code 2016 (IBC). The two-member Bench of Amarjit Singh, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) held that asper the provision of Section 14 of the Insolvency and Bankruptcy Code till the conclusion of proceedings under IBC 2016 no suit or proceedings could be continued against the corporate debtor. The ITAT bench referred to similar issues and identical facts in ACIT Vs. M/s Wizcraft International Entertainment Pvt. Ltd. dismissed the present appeal filed by the assessee in terms of the provisions of Section 14 of the Insolvency and Bankruptcy code with liberty to the assessee that as soon as the moratorium period was over the assessee may prefer the appeal afresh or recall the present appeal. “High Sea Sale” of Imported Goods are not considered as speculative transaction u/s 43(5) of Income Tax Act: ITAT Upholds Interest Income as Business Income Dy. Commissioner of Income Tax vs M/s G.G. Continental Traders Pvt. Ltd. 2023 TAXSCAN (ITAT) 1315 The Amritsar bench of the Income Tax Appellate Tribunal (ITAT) has recently held that high sea sales of imported goods are not considered as speculative transactions under Section 43(5) of the Income Tax Act, 1961. Thus the bench upheld the interest income from fixed deposits and other investments as business income. The Tribunal observed that the entire transaction is going through by proper delivery of the goods during purchase and the assessee had provided documents for evidence of delivery of goods related to high sea sale and confirmed the interest income treated as business income. Therefore the two-member bench of Dr. M. L. Meena, (Accountant Member) and Anikesh Banerjee, (Judicial Member) allowed the appeal filed by the assessee. Order Passed u/s 147 r.w.s 143(3) under Reassessment Proceedings Initiated before Search and Seizure is Void Ab Initio: ITAT Smt. Meha Jain vs DCIT(Central) 2023 TAXSCAN (ITAT) 1314 The Indore Bench of Income Tax Appellate Tribunal (ITAT) has held that the order passed under Section 147 read with Section 143(3) of the Income Tax Act 1961 under reassessment proceedings initiated before the search and seizure procedure was void ab initio. The Bench held that once the reassessment proceedings initiated vide notice under Section 148 of the Income Tax Act dated 22.03.2013 stood abated by virtue of search and seizure action under Section 132(1) of the Income Tax Act carried out on 16.05.2013 then the reassessment order dated 19.02.2014 passed by the AO under Section 147 read with Section 143(3) of the Income Tax Act was illegal and void ab initio and liable to be quashed. The two-member Bench of Vijay Pal Rao, (Judicial Member) and B.M. Biyani, (Accountant Member) allowed the appeal and quashed the impugned order. Co-operative Society shall Liable to Furnish AIR only after Amendment u/r 114 E of Income Tax Rules: ITAT deletes Penalty M/s. Suco Souharda Sahakari Bank Ltd. Vs The Joint Director of Income Tax 2023 TAXSCAN (ITAT) 1313 The Bangalore bench of Income Tax Appellate Tribunal (ITAT) has recently held that co-operative societies should be liable to furnish Annual Information Report (AIR) only after amendment under Rule 114E of the Income Tax Rule. Thus the bench deletes the penalty. The two member bench of George George K, (Judicial Member) and Laxmi Prasad Sahu, (Accountant Member) observed that the original provisions of Rule 114E of Income tax Rules did not include “cooperative bank” and it was inserted only in the amended provisions of Rule 114E, which came into effect from 1.4.2016 Therefore the bench confirmed that Rule 114E of the Income Tax Rules was substituted to include co-operative banks with effect from 01.04.2015 and allowed the appeal filed by the assessee. No Addition can be made u/s 153A of the Income Tax Act in the Absence of Seizure of Incriminating Materials during Search Proceedings: ITAT Deputy Commissioner of Income-Tax vs M/s Rigid Conductors (Raj.) Pvt. Ltd. 2023 TAXSCAN (ITAT) 1312 The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) held that no addition can be made under section 153A of the Income Tax Act, 1961 in the absence of seizure of any incriminating materials during search and seizure proceedings. The two-member bench comprising Dr. S. Seethalakshmi (Judicial) and Rathod Kamleh Jayantbhai (Accountant) held that in the absence of any incriminating material found or seized during search and seizure proceedings, the additions made by the assessing officer during reassessment under section 153A of the Income Tax Act are without jurisdiction and liable to be deleted while allowing the cross objections filed by the assessee. AO Fails to Appreciate Nature of Business Activity of INX News: ITAT allows Business Loss Claim DCIT Vs M/s. INX News Pvt. Ltd 2023 TAXSCAN (ITAT) 1311 The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) allowed the claim of Business loss in which the assessing officer (AO) failed to appreciate the nature of the business activity of the INX News. The two-member bench comprising N.K.Billaiya(Accountant) and Anubhav Sharma(Judicial) held that the Commissioner had rightly appreciated the facts in the light of the submissions of the assessee and the remand report once statutory permission was received from the competent authority of the business operations of the assessee company required the creation of content and resources for broadcasting the news. Rectification Order passed u/s 154 of Income Tax Act without Proper Verification: ITAT directs Re-Adjudication Inter Globe Air Transport vs ACIT 2023 TAXSCAN (ITAT) 1309 The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication for the rectification order passed under section 154 of the Income Tax Act, 1961 without proper verification. The two-member bench comprising Saktijit Dey ( Judicial) and Dr. B. R. R. Kumar, (Accountant) held that the dismissal of the appeal by the Commissioner of Income Tax (Appeals) against the rectification order was not per the law. The bench also directed the matter for re-adjudication while allowing the appeal filed by the assessee. Revision order passed u/s 263 of Income Tax Act without jurisdiction: ITAT sets aside Order Manohar Lal Sarraf and Sons Pvt. Ltd. vs Pr. CIT 2023 TAXSCAN (ITAT) 1310 The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) quashed the revision order passed without jurisdiction by the Commissioner of Income Tax (Appeals) under section 263 of the Income Tax Act, 1961. The two-member bench comprising Shamim Yahya (Accountant) and Astha Chandra(Judicial) observed that the assessing officer had examined all the records, evidence, supporting documents, and books of account and passed the assessment order only after due diligence and after making the necessary examination and after application of mind. It was also held that the assumption of jurisdiction by the Commissioner under section 263 of the Income Tax Act was not under the law and is liable to be quashed while allowing the appeal filed by the assessee. Shares Issued for Premium above FMV Taxable for Closely-held Company under Income from Other Sources u/s 56(2)(viib) of Income Tax Act, exempt for Investor: ITAT SIS Prosegur Holdings Pvt. Ltd vs PCIT-1 2023 TAXSCAN (ITAT) 1279 The Income Tax Appellate Tribunal (ITAT), Patna Bench has held that the differential amount received by way of the issue of shares for a Premium above the Fair Market Value (FMV) shall be taxable for a Closely-held Company under the head “Income from Other Sources” under Section 56(2)(viib) of the Income Tax Act, 1961 but the same is not taxable for the Investor. The two-member bench consisting of Shri Sanjay Garg (Judicial Member) and Shri Girish Agrawal (Accountant Member) upheld the PCIT’s decision to set aside the assessment order of AO as being erroneous and prejudicial to the interest of revenue and ordered AO to afford the assessee a reasonable opportunity to be heard before passing the appropriate order. The bench also directed AO to make the enquiries as directed by PCIT regarding the correctness of the valuation report of the accountant, may call for an independent report from an expert to confront the assessee and thereafter to pass a speaking order per law. S. 44B of Income Tax Act Not Applicable as NLU is ‘Local Authority’, Not Carrying out Business: ITAT Quashes Penalty National Law University vs Additional/Joint/Deputy/Assistant Commissioner of income Tax 2023 TAXSCAN (ITAT) 1167 While entertaining the appeal of the National Law University, Delhi (NLUD), the Delhi bench of Income tax Appellate Tribunal (ITAT) of quashed the penalty order passed under Section 271B of the Income Tax Act, 1961 by the Assessing Officer (AO) and Commissioner of Income Tax (Appeals). The bench of Anil Chaturvedi (Accountant Member) and Anubhav Sharma (Judicial Member) observed that to justify invoking the mandate of Section 44AB of the Income Tax Act, it was necessary to see if the NLU can be said to be engaged in Business as defined under Section Section 2(13) of the Income Tax Act. The ITAT bench observed that the AO had taken shelter of Proviso to section 44AB of the Income Tax Act and assumed as the NLU has not got the accounts audited for the purpose of Section 12A(1)(b) of the Income Tax Act and this was a violation of Section 44AB of the Income Tax Act. While allowing the appeal of the NLU, Delhi, the ITAT bench, the Income Tax Authorities have fallen in grave error on facts and law while invoking the penalty provisions. AO Wrongly Raises Demand on Dividend Distribution Tax Despite Submitting Proof of Payment: ITAT Directs Readjudication Catvision Ltd vs ACIT 2023 TAXSCAN (ITAT) 1308 The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently directed readjudication due to the Assessing Officer (AO) wrongly raising a demand on dividend distribution tax, despite the submission of proof of payment. The Bench consisting of Judicial Member Chandra Mohan Garg and Accountant Member Pradip Kumar Kedia restored the matter back to the file of the AO to provide one more opportunity to Assessee and for re-examination of the issue by the AO. The Assessing Officer should grant credit for taxes paid, in accordance with provisions of law, where the authority concerned was duly satisfied about appropriate recovery of tax and after taking due safeguards on any possible misuse of the e-challan purportedly bearing incorrect assessment year. No Reassessment proceedings initiated u/s. 148 of IT Act without Proper Verification of Recorded details of Documents : ITAT Salarpuria Properties Pvt. Ltd vs Deputy Commissioner of Income-tax 2023 TAXSCAN (ITAT) 1307 The Kolkata bench of the Income Tax Appellate Tribunal(ITAT) held that no reassessment proceedings were initiated under section 148 of the Income Tax Act,1961 without proper verification of recorded details of documents. The two-member bench comprising of Sanjay Garg(Judicial) and Girish Agrawal(Accountant) held that the reassessment proceedings initiated under section 148 of the Income Tax Act were against the provision of law and the addition made by the assessing officer were without proper verification of recorded details of the documents while allowing the cross objection filed by the assessee. Registration u/s 12A(1)(ac)(iii) of Income Tax Act shall not be denied if Remuneration paid to trust’s full time workers is not contravening Section 13(1)(c) : ITAT Kalumal Shorimal Nathumal Rangwala Pvt vs CIT CITATION: 2023 TAXSCAN (ITAT) 1306 The Amritsar bench of Income Tax Appellate Tribunal (ITAT) has recently held that registration under Section 12A(1)(ac)(iii) Income Tax Act, 1961 should not be denied if remuneration paid to trust’s full time workers is not contravening Section 13(1)(c) Income Tax Act. Relying upon the decision of the Supreme Court in the case of CIT vs. Radhasoami Satsang and CIT vs. Smt. Kasturbai Walchand Trust , the tribunal held that The assessee had not violated Section 13 of the Income Tax Act by paying off the remuneration to the trustee for his full-time work for the trust. Therefore the two member bench of M. L. Meena, (Accountant Member) and Anikesh Banerjee, (Judicial Member) allowed the appeal filed by the assessee. Exemption u/s 11(2) of Income Tax Act shall be allowable only if Form 10B and Return of Income are furnished within due date specified u/s 139(1):ITAT Shri Jain Shwetamber Murtipujak Sangh vs Income Tax Officer 2023 TAXSCAN (ITAT) 1305 The Raipur bench of Income Tax Appellate Tribunal (ITAT) has recently held that the exemption under section 11(2) of Income Tax Act, 1961 shall be allowable only if Form 10B and Return of Income are furnished within the due date specified under Section 139(1) of Income Tax Act. After that the tribunal observed that “assessee-trust did not cumulatively satisfy the set of conditions specified in Para 4(i) of the CBDT Circular No.10 and also had not filed any application for condonation of delay under Section 119(2)(b) of the Act as provided in Para 4(ii) of the said circular, therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by the assessee beyond the stipulated time period”. Thus the single member bench of Ravish Sood, (Judicial Member) upheld the declining of the assessee’s claim for exemption under Section 11 of the Income Tax Act. No Audit on Books of Account u/s 44AB of IT Act due to Turnover Limitation: ITAT deletes penalty Bangla Readymade Garments Mfg. & Traders Welfare Association vs ACIT 2023 TAXSCAN (ITAT) 1304 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT) deleted the penalty for auditing the books of account under section 44AB of the Income Tax Act,1961 due to turnover limitation. The bench observed that in the audit of a person carrying on business the limit provided under section 44AB of the Income Tax Act was Rs. 1 Crore. The sales turnover or gross receipts as the case may be in the business exceed/exceeds Rs. 1 Crore, the assessee was liable to get books of accounts audited under section 44AB of the Income Tax Act. It was also observed that the assessee was carrying the business activities and the turnover of the assessee was Rs. 32,38,340/- which was less than Rs. 1 Cr during the year, it is out of the purview of Section 44AB of the Income Tax Act. Thus the assessee was not liable to get its books of accounts audited under section 44AB of the Income Tax Act and the penalty imposed under section 271B of the Income Tax Act was against the provision of law and is liable to be deleted while allowing the appeal filed by the assessee. Interest Expenses incurred for earning Income from Loans and Advances shall not be Disallowed u/s 57 of Income Tax Act: ITAT Ankit Ashok Savla vs Income Tax Officer 2023 TAXSCAN (ITAT) 1301 The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that the interest expenses incurred for earning income from loans and advances should not be disallowed under Section 57 of Income Tax Act, 1961. It was observed by the tribunal that the AO could not dictate the assessee about the loan and advances given to the other parties and the interest thereon charged by the assessee as the assessee is a partner in the partnership firm. The assessee within his business exigencies has paid higher interest on unsecured loans as the need in respect of partnership firm for its fund is required. Therefore the single member bench of Suchitra Kamble, (Judicial Member) allowed the appeal filed by the assessee. Claim of FTC on Payment of Foreign Tax Rejected due to Late Filing of ROI: ITAT directs Re-Adjudication Shridhar Madhav Diwan vs DCIT 2023 TAXSCAN (ITAT) 1303 The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for rejecting the claim of Foreign Tax Credit (FTC) on payment of foreign tax due to late filing of Return of Income ( ROI). The two-member bench comprising Rama Kanta Panda(Accountant) and K.Narasimha Chary(Judicial) directed the Assessing Officer to verify the details of the foreign tax paid by the assessee on the earnings at foreign source and take a view in conformity with the established by the law while allowing the appeal filed by the assessee. Late Filing of Audit Report due to Sufficient Cause u/s 273B of IT Act: ITAT deletes Penalty Tarlok Singh vs The ITO 2023 TAXSCAN (ITAT) 1302 The Amritsar bench of the Income Tax Appellate Tribunal (ITAT) deleted the penalty imposed on late filing of audit reports. The two-member bench comprising Dr M. L. Meena(Accountant) and Sh. Anikesh Banerjee( Judicial) held that the penalty levied under section 271B of the Income Tax Act was against the provision of law and is liable to be deleted while allowing the appeal filed by the assessee. AO cannot take the position of Businessman to Replace his Strategy Irrationally: ITAT deletes Additions The ACIT vs Ashish Bansal 2023 TAXSCAN (ITAT) 1298 The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made by the Assessing Officer without any justification or appealing basis in light of the Principal Tax Jurisprudence that the Assessing Officer cannot sit in the armchair of the businessmen irrationally substituting his strategy. The Tribunal stated that the AO’s approach without any additional supporting information or evidence, only on a stand-alone basis, is not correct and justified. The AO only noted the abnormal decline in the Gross Profit rate of jewellery without pointing out any flaws or discrepancies in the assessee’s audited books of accounts. ITAT Condones Delay Caused by Negligence of Tax Practitioner in Service of Notice Sanjeev Harshadrai Sheth vs Income Tax Officer 2023 TAXSCAN (ITAT) 1300 The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has condoned delays caused by negligence of tax practitioners in serving notices.The two-member Bench of Suchitra Kamble, (Judicial Member) allowed the appeal filed by the assessee holding that the CIT(A) had not taken cognizance of the genuine reason of the assessee for not filing the appeal within the time limit. The reason given by the assessee was justifiable and appeared to be genuine. S.50C Applicable to Transfer of Capital Asset of Land or Building not to Transfer of Rights: ITAT M/s. Fashion Group International vs The ACIT 2023 TAXSCAN (ITAT) 1297 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the Section 50C of the Income Tax Act 1961 is applicable to transfer of capital asset of land or building and not to the transfer of rights.The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the ppeal filed by the assessee holding that the provisions of Section 50C of the Income Tax Act were applicable in case of transfer of a capital asset being land or building or both. S. 69 Addition not Sustainable on Mere Delay in Deposit During Demonetisation Period: ITAT Raj Kumar vs ACIT 2023 TAXSCAN (ITAT) 1299 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that addition under Section 69 of the Income Tax Act 1961 is not sustainable on mere delay in deposit during demonetisation period. A Single Bench of Chandra Mohan Garg, (Judicial Member) allowed the appeal filed by the assessee holding that the assessee is a farmer earning exempt agricultural income and small interest income and has no other means of income. Also, in the absence of evidences to destroy the factual submissions of assessee and also as assessee was allowed to deposit amount up to 31st December 2016, a delay in deposit could not be a valid basis for raising any doubt against the assessee. Trust for Managing Statutory Obligations of Employees of Parent Trust falls under Charitable Activity: ITAT Grants registration u/s 12AA of IT Act ICRW Group Gratuity Trust vs CIT (Exemptions) 2023 TAXSCAN (ITAT) 1296 The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) granted the trust registration under Section 12AA Income Tax Act, 1961 created to manage the legal responsibilities of the employees of the parent trust, which falls under the charitable activity. The Two-bench tribunal consisting C.M. Garg and M. Balaganesh while granting the registration under the Section 12AA of the Income Tax Act held that any trust that has been created for the purpose of managing the statutory obligations of employees of the parent trust would certainly fall within the ambit of advancement of general public utility and, hence, to be considered as a charitable activity as defined under the Section 2(15) of theIncome Tax Act. Material Found from Premises of Third Parties cannot be Utilized against Assessee for making Assessment u/s 143(3) r.w.s. 153A of IT Act :ITAT ACIT vs M/s. Real Marketing Private Limited 2023 TAXSCAN (ITAT) 1295 The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that material found from premises of third parties could not be utilized against assessee for assessment under Section 143(3) read with Section 153A of Income Tax Act 1961. The two member bench of Waseem Ahmed, (Accountant Member) and Madhumita Roy, (Judicial Member) determined that the materials found from the premises of third cannot be utilized against the assessee for making assessment under Section 143(3) read with section 153A of the Income Tax Act. Therefore the bench dismissed the appeal filed by the revenue. Assessment framed u/s 147 of I T Act on Information under Project Falcon regarding Trading on United Stock Exchange of India not borne out of any record: ITAT Saarthak Vanijya India Pvt. Ltd vs DCIT 2023 TAXSCAN (ITAT) 1293 The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that assessment framed under Section 147 of Income Tax Act,1961 on information under Project Falcon regarding trading on United Stock Exchange of India not borne out of any record. The two member bench of Dr. B. R. R. Kumar, (Accountant Member) and . Astha Chandra, (Judicial Member) held that the order passed by the Assessing Officer under Section 147 Income Tax Act, is beyond logic and not borne out of any record. R. S. Singhavi, A counsel appeared for the assessee. H. K. Choudhary, counsel appeared for revenue. Deemed Dividends cannot be Taxed in the Hands of Non-Shareholders: ITAT Deletes Addition DCIT vs Aaryavart Infrastructure P. Ltd 2023 TAXSCAN (ITAT) 1294 The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the additional holding that the deemed dividends could not be taxed in the hands of non-shareholders. The Bench held that the assessee who had received advances from the said two concerns, was not a shareholder of these concerns, therefore, even though the advances qualified as deemed dividend in terms of section 2(22)(e) of the Income Tax Act, and they could not be taxed in the hands of the assessee. Fabrication Charges received from AE for Manufacturing Glass is not FTS under India-Singapore Tax Treaty: ITAT Owens Corning Inc vs CIT 2023 TAXSCAN (ITAT) 1291 The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that fabrication charges received from Associate Enterprise (AE) for manufacturing glass is not Fee for Technical Services (FTS) under India-Singapore Tax Treaty. The two member bench of the B.R. Baskaran, Accountant Member) and Pavan Kumar Gadale, (Judicial Member ) held that fabrication charges received by the assessee from its AE did not fall under the purview of fees for technical services .Thus the bench allowed the appeal filed by the appeal. Cessation of Liabilty u/s 41(1) of Income Tax Act cannot be treated as Income for Addition : ITAT sets aside Addition Raunika Fashion Pvt. Ltd vs Income Tax Officer 2023 TAXSCAN (ITAT) 1287 The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that cessation of liability under Section 41(1) of Income Tax Act,1961 cannot be treated as an income for addition. The two member bench comprising of Kul Bharat( Judicial) and Pradip Kumar Kedia(Accountant) held that the Section 41(1) of Income Tax Act had the effect of deeming such cessation or remission of liability as income in departure with the general law where such remission or cessation was not treated as an income. It was also held that the assessee had continued to recognize the liability and one cannot say that the liability was not unenforceable against the assessee without its discharge or reversal and the addition made under section 41(1) of Income Tax Act was set aside while allowing the appeal filed by the assessee. Penalty imposed u/s 271(1)(c) of IT Act without proving either Concealment of Income or Filing of Inaccurate Particulars of Income: ITAT quashes Order Saraswati Dynamics Pvt. Ltd. vs ACIT 2023 TAXSCAN (ITAT) 1292 The Dehradun bench of the Income Tax Appellate Tribunal ( ITAT) held that the penalty imposed under section 271(1)(c ) of the Income Tax Act,1961 without proving either concealment of income or filing of inaccurate particulars of income is invalid. The two-member bench comprising Saktijit Dey (Judicial) and Dr B. R. R. Kumar (Accountant) held that based on various decisions of the High Court the assessing officer had not been specified under section 274 of the Income Tax Act as to whether the penalty was proposed for alleged ‘concealment of income’ or ‘furnishing of inaccurate particulars of such income’ and are liable to be deleted. ITAT upholds denial of Registration filed u/s 12AB of Income Tax Act on Absence of proving Genuineness of Charitable Activity Vashi Parivaar Foundation vs The Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1286 The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently upheld that denial of registration filed under Section 12AB of Income Tax Act 1961 in absence of proving genuineness of charitable activity. The tribunal issued notice by Speed post but none appeared for the assessee. Thereafter, the tribunal considered observation of the CIT(E) and held that the assessee had not provided any details thus genuineness of the activities and charitableness of the activities could not be verified. The tribunal further observed that assessee has not filed any details before this tribunal. No one has appeared on behalf of the assessee. On these circumstances, the two member tribunal of S.S.Godara, (Judicial Member) and Dr. Dipak P. Ripote, (Accountant Member) dismissed the appeal filed by the assessee. The difference in non-delivery derivative Transactions be taken for determining Turnover for Tax Audit u/s 44AB of IT Act: ITAT deletes Penalty u/s 271B Parag Jain vs The Income Tax Officer 2023 TAXSCAN (ITAT) 1285 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271B of the Income Tax Act, 1961 holding that the difference in non-delivery derivative transactions should be taken for determining turnover for the purpose of tax audit under Section 44AB of the Income Tax Act. The Division Bench of Kul Bharat, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the appeal filed by the revenue holding that as per the Guidance Note issued by the ICAI for the purposes of tax audit under Section 44AB of the Income Tax Act, the turnover in the case of derivative and speculative transactions (which are non-delivery-based transactions), only the resultant difference arising to the assessee from such transaction had to be taken for the purposes of turnover instead of the gross amount. Charitable Trust Registration Rejected Without Fair Hearing Opportunity: ITAT orders Reconsideration Society of Educational Assistance and Training vs CIT 2023 TAXSCAN (ITAT) 1284 The Income Tax Appellate Tribunal (ITAT), Amritsar Bench has invalidated the rejection of the application for registration of Charitable Trust observing that the assessee was not offered a fair and reasonable opportunity of being heard. The two-member bench consisting of Dr. M. L. Meena (Accountant Member) and Anikesh Banerjee (Judicial Member), finding merit in assessee’s contentions, remitted back the matter to the CIT(E) for de novo adjudication, granting the assessee a reasonable opportunity for a hearing and submission of evidence. The appeal of the assessee was allowed for statistical purposes. Transaction Between 2 Companies Cannot come u/s 269SS on Amalgamation: ITAT Deletes Penalty u/s 271E DCIT vs Trans Asia Packaging Ltd. 2023 TAXSCAN (ITAT) 1283 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271E of the Income Tax Act 1961 holding that the transaction between 2 companies could not come under Section 269SS of the Income Tax Act upon amalgamation. The Bench held that transaction between the TAPL and ACIL should be regarded as transaction between two units of the same company due to merger and transactions between the two companies were out of ambit of Section 269SS of the Income Tax Act. Carat Wise Stock Maintenance is Sufficient Compliance to Genuine Purchases in Diamond Trade :ITAT Deletes Addition DCIT vs Asian Star Company Ltd. 2023 TAXSCAN (ITAT) 1290 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition holding carat wise stock maintenance was sufficient compliance to prove genuine purchases in diamond trade. The two-member Bench of S PRASHANT Maharishi, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) relied upon the Bombay High Court decision in Sundram gems Private Limited which categorically held that in case of Diamond trade, carat wise stock maintenance would be the sufficient compliance and therefore, the assessee could not be further burdened to show the colour and number of diamonds. Section 44BB of the Income Tax Act cannot be applied in the absence of PE: ITAT Baker Hughes Energy Technologies UK Ltd. vs ACIT 2023 TAXSCAN (ITAT) 1289 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Section 44BB of the Income Tax Act could not be applied in the absence of a Permanent Establishment (PE). The Division Bench of Yahya, (Accountant Member) and Kul Bharat, (Judicial Member) allowed the appeal filed by the assessee holding that “It is settled proposition that unless Revenue is able to prove that the assessee has a PE in India, its business profits cannot be subject to tax in India.” ITAT Deletes Addition for Cash Deposit on Account of Past Savings and Agricultural Operations Sudha vs ITO 2023 TAXSCAN (ITAT) 1282 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition for cash deposit on account past savings and agricultural operations. The two-member Bench of B. R. R. Kumar, (Accountant Member) Yogesh Kumar US, Judicial Member held that a certain amount of past savings could not be discounted. An amount of Rs.27,61,000/- was explained as out of past savings, withdrawals and agricultural activities. Out of this an amount of Rs.2, 00,000/- was held to be the past savings and from the agricultural operations of the assessee. No Addition can be made by Way of Disallowance of Capital Loss on Account of no Change in Real Ownership of Company: ITAT The A.C.I.T vs BSBK Engineers Pvt Ltd 2023 TAXSCAN (ITAT) 1281 The New Delhi bench of Income Tax Appellate Tribunal (ITAT) held that no addition could be made by the way of disallowance of capital loss on account of no change in real ownership of the company of assessee. The two member bench comprising of N.K. Billaiya (Accountant) and Shri Challa Nagendra Prasad (Judicial) held that the assessing Officer had proceeded on a wrong assumption of facts, his entire findings became erroneous and the commissioner had the correct understanding of implication of Scheme of Arrangement and effective date relevant for the transaction for the year under consideration. The appeal filed by the revenue was dismissed. Money Borrowed for Business Purpose is Allowable as Business Expenditure :ITAT The DCIT vs Applitech Solution Ltd 2023 TAXSCAN (ITAT) 1280 The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the money borrowed for business purposes was allowable as business expenditure. The two-member Bench of Waseem Ahmed, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) noted that the interest was paid on term loans taken for the business purpose of the company. It was explained that out of the total loan of Rs.5 crores, interest on term loan was paid to the Bank and rest of interest pertained to others on working capitals. ITAT Deletes Addition to Income of Elderly Agriculturist Based on Adequate Justification and Proper Account Maintenance Girdari Lal vs The Income Tax Officer 2023 TAXSCAN (ITAT) 1278 The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition to Income of elderly agriculturist based on adequate justification and proper account maintenance. The Bench consisting of a Judicial Member Chandra Mohan Garg and an Accountant Member Pradip Kumar Kedia observed that the assessee had provided sufficient evidence and explanation regarding the holding and depositing of cash in the relevant assessment year. Considering the overall context where the assessee was an agriculturist who sold a land parcel, withdrew cash, utilized it partially for property purchases and fixed deposits over time. The Tribunal held that the burden placed on the assessee to explain the source of cash deposit has been satisfactorily fulfilled. In result, the appeal of the assessee was allowed. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

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