ITAT Weekly Round-Up

This Round-Up analytically summarises the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during August 5 to August 10, 2023.

ITAT upholds Approval Granted u/s 153D of Income Tax Act in light of Seized Material and appraisal report submitted by Investigation Wing Deputy Commissioner of Income Tax vs M/s. Natural Food Products CITATION:   2023 TAXSCAN (ITAT) 1807

The Income Tax Appellate Tribunal (ITAT) Chennai Bench upheld that approval granted under Section 153D of Income Tax Act,1961 is in light of seized material and appraisal report submitted by investigation wing.

It was observed by the tribunal that the provisions of section 153D of the Act, deals with prior approval necessary for assessment in cases of search under Section 132 or requisition under Section 132A of the Income Tax Act. Thus, there was enough proof to conclude that the Addl. CIT has given approval under Section 153D of the Income Tax Act after great deliberations with draft assessment order passed by the Assessing Officer in light of seized material and appraisal report submitted by DDIT(Inv).

After reviewing the facts and submissions of the both parties, the two-member bench of V. Durga Rao, (Judicial Member) and Manjunatha. G, (Accountant Member) dismissed the appeal and upheld approval  granted under Section 153D of Income Tax Act,1961 in the light of seized material and appraisal report submitted by investigation wing.

ITAT treats Cash Deposit during Demonetization Period u/s 69A on Failure to Produce Documentary Evidence Chandrakumari vs The Income Tax Officer CITATION:   2023 TAXSCAN (ITAT) 1809

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has treated the cash deposit made during the demonetisation period under Section 69A of the Income Tax Act 1961 on failure to produce the documentary evidence.

A Single Bench of V. Durga Rao, (Judicial Member) observed that since the assessee had produced copy of patta and crop adangal of agricultural land owned by her to the extent of 3.91 hectares, the agricultural income earned by the assessee were not in dispute. The department also did not dispute the income earned by way of TV serial story writing for which any documentary evidence could be produced.  Considering this, the Bench partly allowed the appeal directing the Assessing Officer to restrict the disallowance to the extent of ₹.15.00 lakhs and to treat the balance amount of ₹.7,60,000/- as unexplained money under Section 69A of the Income Tax Act.

No Disallowance on account of Bad and Doubtful Debts claimed u/s 36(1)(viia) of Income Tax Act with respect to Non-Performing Assets: ITAT DCIT vs M/s Yes Bank Ltd. CITATION:   2023 TAXSCAN (ITAT) 1810

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that no disallowance could be made on account of bad and doubtful debts claimed under Section 36(1) (viia) of Income Tax Act, 1961 with respect to Non-Performing Assets (NPA).

It was observed by the tribunal that the issue is already decided by the tribunal in favour of the assessee.

After reviewing the facts and submissions of the both parties, the two member bench of Om Prakash Kant (Accountant Member) and Kavitha Rajagopal (Judicial Member) Held that  no  disallowance could be made on account of bad and doubtful debts claimed under Section 36(1)(viia) of Income Tax Act with respect to Non-Performing Assets. It was also determined that deduction u/s 36 (1) (viia) of the Income Tax Act is not restricted to the banks only having the rural branches.

ITAT directs Re-adjudication in regarding of Disallowance of Deduction of Discount on issue of Shares under ESOP DCIT vs M/s Yes Bank Ltd. CITATION:   2023 TAXSCAN (ITAT) 1810

The Income Tax Appellate Tribunal (ITAT) Delhi Bench directs readjudication in regarding the disallowance of the deduction of discount on the issue of shares under Employee Stock Option Plan (ESOP).

After reviewing the facts and submissions of the both parties the two-member bench of Om Prakash Kant (Accountant Member) and Kavitha Rajagopal (Judicial Member) directed readjudication in respect of disallowance of the deduction of discount on the issue of shares under Employee Stock Option Plan.

Capital Gain Exemption shall not be Denied on Residential House Constructed on Small Area of Land: ITAT Girish Mohan vs ACIT CITATION:   2023 TAXSCAN (ITAT) 1814

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that capital gain exemption should not be denied on residential houses constructed on small areas of land.

It was observed by the tribunal that the assessee filed all records from which it is established that the assessee purchased the plot of land and constructed a residential unit/ house for his use.

After reviewing the facts and submissions of the both parties, the two member bench of M. Balaganesh(account member) and C.M. Garg,(Judicial Member) allowed the appeal filed by the assessee.

No Concealment of Particulars and Filing of Inaccurate Particulars of Income: ITAT deletes Penalty u/s Section 271(1)(c) of Income Tax Act Dineshkumar Kanjibhai Patel-HUF vs Income Tax Officer CITATION:   2023 TAXSCAN (ITAT) 1815

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 27(1)(C) of the Income Tax Act, 1961 as there was no concealment of particulars and filing of inaccurate particulars of income.

A single Bench of Suchitra Kamble, (Judicial Member) observed that t in the assessment order itself the Assessing Officer had noted that the capital gain shown by the assessee in the statement of income as a credit entry was rejected and the addition was made in respect of non-granting of LTCG. The Bench allowed the appeal filed by the assessee and deleted the penalty holding that assessee at no point of time concealed its particulars of income or filed inaccurate particulars of income at any stage of revealing its income to the revenue authorities.

Inadvertent error in filing Income Tax Return forms: ITAT directs recompute Income of Assessee Vivekananda Seva Trust vs ACIT Exemptions CITATION:  2023 TAXSCAN (ITAT) 1812

The Income Tax Appellate Tribunal (ITAT) Chennai bench directed the Assessing Officer (AO) to recompute the income of the assessee observing the inadvertent error in the income tax returns filed.

It was observed by the tribunal that deduction under Section 11 Income Tax Act has been denied only due to the fact that there was inadvertent error while filling up the schedules in Income Tax Return forms.

After reviewing the facts and submissions of the both parties, the two member bench of Mahavir Singh (President) and Manoj Kumar Aggarwal (Judicial Member) held that The object of the assessment is to determine correct income of the assessee and revenue could not gain out of errors committed by the assessee  and  directed the AO to recompute the income of assessee

Salary Paid to Vice President of Company allowable as Expenditure u/s 37(1) of Income Tax Act: ITAT ACIT vs M/s. Ebony Retail Holdings Ltd CITATION:   2023 TAXSCAN (ITAT) 1813

The Income Tax Appellate Tribunal (ITAT) Delhi held that salary paid to vice president of company should be allowed as expenditure under Section 37(1) of Income Tax Act, 1961

The tribunal after reviewing the facts and submissions of the both parties, the two member bench of N.K.Billaiya (Accountant Member ) andAnubhav Sharma ( Accountant Member) observed that dismissed the appeal filed by the revenue and held that salary paid to vice president of company has allowed as expenditure under Section 37(1) of Income Tax Act.

Reopening Beyond 4 years of Original Assessment without failure to Disclose Material Facts is Bad in Law: ITAT Crown Real Estate Pvt. Ltd. vs The Income Tax Officer CITATION:   2023 TAXSCAN (ITAT) 1811

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the reopening beyond 4 years of original assessment without failure to disclose the material facts was bad in law.

The two-member Bench of Mahavir Singh, (Vice President) and  Manoj Kumar Aggarwal, (Accountant Member) allowed the appeal filed by the assessee holding that  there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment and assessment was completed originally under Section 143(3) of the Income Tax Act and admittedly the reopening was beyond 4 years because notice under Section 148 of the Act was issued on 29.03.2019, no reopening was possible.

Issue of Share Capital through QIP with Qualified Institutional Buyers are Public Subscription: ITAT directs Re-adjudication DCIT vs M/s Yes Bank Ltd. CITATION:   2023 TAXSCAN (ITAT) 1810

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that the issue of share capital through qualified institutional placement (QIP) with Qualified Institutional buyers is public subscription. Therefore, the bench directs readjudication.

After reviewing the facts and submissions of the both parties, the two-member bench of Om Prakash Kant (Accountant Member) and Kavitha Rajagopal (Judicial Member) restored the matter to the file of AO to decide whether QIP is public or not.

Goodwill acquired on Amalgamation is Eligible for Depreciation u/s 32 of Income Tax Act: ITAT deletes Disallowance GBT India Private Limited vs ACIT CITATION:   2023 TAXSCAN (ITAT) 1816

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that Goodwill acquired on Amalgamation is eligible for depreciation under Section 32 of Income Tax Act,1961.Therefore the bench deleted the disallowance.

After reviewing the facts and submissions of the both parties, the two member bench of Shamim Yahya (account member)  and Challa Nagendra Prasad (Judicial Member) allowed the appeal filed by the assessee and observed that the previous year the tribunal decided the issue in favour of assesee.

Application for Registration u/s 12AA of Income Tax Act shall not denied on Absence of Dissolution Clause in Trust Deed: ITAT Roop V.K Jain Foundation vs The CIT CITATION:   2023 TAXSCAN (ITAT) 1817

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that application for registration under Section 12AA of Income Tax Act ,1961 should not be denied in absence of dissolution clause in trust deed.

After reviewing the facts and submissions of the both parties, the two member bench of B.R.R. Kumar (accountant member) and Chandra Mohan Garg, (Judicial Member) directed to grant registration to the assessee-trust under Section 12AA of the Income Tax Act.

Receipts from Disaster Recovery Up-Linking Services are not Royalty: ITAT deletes Addition Planetcast International Pte. Ltd. vs ACIT CITATION:   2023 TAXSCAN (ITAT) 1818

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that receipts from disaster recovery up-linking services are not Royalty. Therefore the bench deleted the addition made by the assessing officer.

After reviewing the facts and submissions of both parties, the two-member bench of B.R.R. Kumar,(account member)  and Saktijit Dey, (Vice-President) held that receipts from disaster recovery up-linking services are not Royalty.

Receipts from Provision of Disaster Recovery Up-Linking Services and Disaster Recovery Play-Out Services are not FTS under India-Singapore DTAA: ITAT deletes Addition  Planetcast International Pte. Ltd. vs ACIT CITATION:   2023 TAXSCAN (ITAT) 1818

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that receipts from provision of Disaster Recovery Up-Linking Services and disaster recovery play-out services are not Fee for Technical Service (FTS) under India-Singapore Double Taxation Avoidance Agreement (DTAA).

The tribunal observed that the receipts from disaster recovery playout services are not in the nature of FTS as they do not make available any technical knowledge, experience, skill, know-how, or process or consist of the development and transfer of any technical plan or technical design. 

After reviewing the facts and submissions of both parties, the two-member bench of B.R.R. Kumar (account member) and Saktijit Dey (Vice-President) held that payments received by the assessee as consideration for providing disaster recovery playout services are not taxable as FTS.

No Addition can be Made on Different Rates Booked By Real Estate Broker for Selling Property between Different Buyers: ITAT DCIT vs E.T. Infra Developers Pvt. Ltd. CITATION:   2023 TAXSCAN (ITAT) 1819

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that addition should not be made on different rates booked by real estate brokers for selling property between the different buyers.

After reviewing the facts and submissions of both parties, the two-member bench of N. K. Billaiya (account member) and Anubhav Sharma (Judicial Member) observed that there is no iota of evidence that the assessee has received any extra money over and above the booking rate shown by the assessee in the books of account and the entire addition is based on surmises, conjectures and presumption. Therefore, the addition should not be made on different rates booked by real estate brokers for selling property between the different buyers.

CIT(A) passed Order not on Merits: ITAT Directs Re-Adjudication taking Cognizance of Evidences Gunvantbhai Chhitubhai Nayak vs ITO CITATION:   2023 TAXSCAN (ITAT) 1820

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication taking cognizance of evidence as the Commissioner of Income Tax Appeals (CIT(A)) passed order not on merits.

A Single Bench of Suchitra Kamble (Judicial Member) allowed the appeal holding that It was pertinent to note that the CIT(A) had not passed the order on merits of the issue contested by the assessee. Therefore, in the interest of justice it was appropriate to remand back this matter to the file of the CIT(A) for proper adjudication of the issues contested therein and after taking cognizance of the evidence filed by the assessee decide the case on merit.

Interest paid on Loan for Repayment of earlier loan for Construction of property may be Deductible from House Property Income: ITAT Shyamnarayan Trades Pvt. Ltd. vs Income Tax Officer CITATION:   2023 TAXSCAN (ITAT) 1822

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case back to the Assessing Officer (AO) to decide whether interest paid on a loan taken for repayment of an earlier loan for the construction of a property is deductible from House Property Income under section 24(b) of the Income Tax Act, 1961.

The Two Bench Member comprising B.P. Singh (Judicial Member) and Rakesh Bhargava (Accountant Member) has partly allowed the assessee’s appeal for statistical purposes, the issues raised in the appeal will be reevaluated by the Assessing Officer. The final decision on the disallowances of interest expenses will be made by the AO after further examination as per the directions given by the ITAT.

Relief to Shell India: ITAT Quashes Demand of Rs 105.7crores on Ground of Limitation M/s. Shell India Markets Pvt. Ltd vs Assistant Commissioner of Income Tax (LTU) CITATION:   2023 TAXSCAN (ITAT) 1821

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Shell India quashing the demand of Rs 105 77,29,782 on the ground of limitation.

The two-member Bench of Amit Shukla, (Judicial Member) and Amarjit Singh, (Accountant Member)  quashed the final assessment order being barred by period of limitation under Section 92CA (3) of the Income Tax Act.

Sub-contracting Charges Not Taxable in India if No Technical Knowledge Transferred: ITAT      Spi Global US vs ACIT CITATION:   2023 TAXSCAN (ITAT) 1823

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that sub-contracting charges are not taxable in India if no technical knowledge is transferred to the Indian entity and held that the assessee in this case, a United States based company, did not make available any technical knowledge to its Indian subsidiary, and therefore the sub-contracting charges were not taxable in India.

The Tribunal noted that the DRP in the case of LW US had held that the sub-contracting charges in that case were not taxable in India as per the provisions of India-USA DTAA. The Tribunal found that the facts of the two cases were similar, and therefore it was bound by the decision of the DRP in the case of LW US.

The Two-member bench comprising G.S. Pannu (President) and Astha Chandra (Judicial Member) ruled that sub-contracting charges received by the assessee from SPi India are not taxable in India under the India-USA DTAA. The assessee did not provide any technical knowledge, experience, skill, know-how, or processes to SPi India, resulting in the sub-contracting charges not being considered “fees for included services” under Article 12(4) of the DTAA.

Deduction on Employees’ PF Contribution can be Claim Even if Payment was made After Due Date as per S. 36(1)(va) of Income Tax Act: ITAT ACIT vs M/s. VVDN Technologies Pvt. Ltd CITATION:  2023 TAXSCAN (ITAT) 1824

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that employers can claim a deduction on employees’ PF contributions even if the payment was made after the due date. The ITAT held that the term “month” in section 36(1)(va) of the Income Tax Act, 1961 should be considered as the month in which the salary or wages are actually disbursed, rather than the month for which the salary or wages are due.
The Two Member Bench comprising N.K. Billaiya (Judicial Member) and C.N. Prasad. (Accountant Member) has returned the issue to the Assessing Officer’s file, following Mumbai Bench directions in The Master Polishers Vs. ACIT (supra). The Assessing Officer must verify the “due date” in the PF Act. The Revenue’s claim for deduction of ESOP expenses under section 37(1) of the Act has been allowed, allowing the appeal partly for statistical purposes. To Read the full text of the Order CLICK HERE

Income from Business of Renting Equipments of Residual Management not falls under House Property Income: ITAT deletes Addition DCIT vs M/s Connect Residuary Pvt.Ltd. CITATION:   2023 TAXSCAN (ITAT) 1825

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that income from the business of renting equipment of residual management does not fall under house property income and held that the assessee’s business was not the business of renting out the equipment, but the business of acquiring and dealing in unguaranteed residuary interest in the assets rented to customers.

The ITAT observed that the assessee had followed the same accounting method in earlier years and subsequent years and that the Revenue Department had not objected to it in those years. It was also noted that the assessee had explained its business model in detail and had provided a diagrammatic presentation of the same. The ITAT was satisfied that the assessee’s explanation was clear and that the assessee’s accounting method was correct.

The Two-member bench comprising of Sandeep Singh Karhail (Judicial Member) and Prashant Maharshi (Accountant Member) dismissed the appeal of the Revenue Department and confirmed the order of the CIT(A). The ITAT held that the addition made by the Revenue Department was not justified, as the assessee’s income was not the rental income but the income earned in the business of acquiring and dealing in unguaranteed residuary interest in assets rented to customers.

Non-Compliance of Notice issued by CIT(A) during appeal proceedings: ITAT directs to Deposit Cost of Rs. 20,000 in PM Relief Fund Shri Sanjay Chandrakant Gaonkar vs Income Tax Officer CITATION:   2023 TAXSCAN (ITAT) 1826

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench directed the deposit cost of Rs. 20,000/ in Prime Minister Relief Fund due to non-compliance of notice issued by the CIT(A) during appeal proceedings. The tribunal observed that the assessee failed to substantiate the claim in respect of deposit of cash made in bank account.

It was observed by the tribunal that the CIT(A) has issued as much as four notices and thereafter issues final opportunity but no effective compliance was made on the part of the assessee. Thus, it is evident the assessee has not cooperated before the lower authorities for verification of the it’s own documents and claims

After reviewing the facts and submissions of the both parties, the two-member bench of Om Prakash Kant (Account Member) and Kavitha Rajagopal (Judicial Member) held that restore the issue back to the CIT(A), however, looking at the non-compliant conduct of the assessee and total disregard of the proceedings before the CIT(A), imposed a cost of Rs. 20,000/-. The assessee was directed to deposit the same into Prime Minister Relief Fund within seven days of receipt of this order.

ITAT Grants Registration to Punjab Plastic Waste Management Society u/s 12A of Income Tax Act Punjab Plastic Waste Management Society vs The CIT CITATION:   2023 TAXSCAN (ITAT) 1833

The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) has granted registration to Panjab Plastic Waste Management Society which is formed with the main aims and objects to set up a mechanism for collection, transportation, treatment & disposal of plastic material under Section 12A of the Income Tax Act 1961.

The two-member Bench of A.D. Jain, (Vice President) and Vikram Singh Yadav, (Accountant Member) observed that the objects of the Assessee society were charitable and the activities of the Assessee society were genuine, as provided under Section 12AA of the Income Tax Act. The bench set aside the rejection of Assessee’s application dated 19.5.2019, filed in Form No. 10A for registration, holding that was erroneous and not sustainable in the eyes of law. Hence, the bench allowed the appeal filed by the assessee granting registration to the Assessee society.

Section 115BBE of Income Tax Act not applicable on Surrendered Income on account of Excess Stock found during course of Survey: ITAT M/s.Brij Mohandas Devi Prasad vs ACIT/DCIT CITATION:   2023 TAXSCAN (ITAT) 1838

The Income Tax Appellate Tribunal (ITAT) Indore bench held that Section 115BBE of the Income Tax Act, 1961 is not applicable on surrendered income on account of excess stock found during the course of Survey. Even if excess stock found during survey was not recorded in the books of account but during the filing of return it was surrendered and entered  the books of account of assessee would not be considered as unexplained investment.

After reviewing the facts and submissions of the both parties, the two member bench of B.M. Biyani (Accountant Member) andVijay Pal Rao (Judicial Member) held that  excess stock found during survey was a part of entire lot of stock of assessee, part of which is recorded in books of account. Therefore, the assessee surrendered the excess stock and also offered to tax in the return of income then the excess stock could not be treated as deemed income under Section 69 of the Income Tax Act.

Penalty u/s 271C for Non Deduction of TDS Not Leviable on Submission of Form 15G and 15H: ITAT Unity Dye Chem Pvt. Ltd vs CIT CITATION:   2023 TAXSCAN (ITAT) 1841

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee was not required to deduct tax at source under Section 40(a)(ia) of the Income Tax Act, 1961 on submission of Form 15G and 15H.

While allowing the appeal, the two-member bench consisting of Annapurna Gupta (Judicial member) and Siddhartha Nautiyal (Accountant member) held that penalty imposed under section 271C of the Income Tax Act for failure to deduct tax at source is to be set aside.

Delay in Payment of Employer’s Contribution is not lost on basis of deferment of Deduction on Payment basis u/s.43B: ITAT dismisses plea regarding Delay of Payment during COVID Prolific HR Consultants (India) Ltd. vs Deputy Commissioner of Incometax CITATION:   2023 TAXSCAN (ITAT) 1831

The Bangalore bench of the Income Tax Appellate Tribunal held that any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer’s claim for deduction permanently forever under section 36(1)(va). Also there is no exemption regarding payment is related to April, 2020, which is during the Covid period

The two bench member consisting of Beena Pillai (Judicial member) and Chandra Poojari (Accountant member) held that regarding the plea of the assessee that payment is related to April, 2020, which is during the Covid period, in our opinion, there is no exemption granted by Government in this regard. Thus the appeal was rejected.

ITAT allows 10% of Cash Deposits as Taxable Income in Absence of Evidence of Source u/s 69A of IT Act Shri Rama Mepa Odedara vs The Income Tax Officer, Ward CITATION:   2023 TAXSCAN (ITAT) 1827

The Rajkot bench of the Income Tax Appellate Tribunal (ITAT) has allowed only 10% of the cash deposits made by an assessee as taxable income, citing a lack of evidence of the source of the deposits and held that the assessee had not been able to establish the source of the cash deposits, and therefore, only 10% of the total deposits could be taxed. 

The Two Member Bench comprising Waseem Ahmed (Accountant Member) and Siddhartha Nautiyalpartly (Judicial Member) allowed the appeal of the assessee. The Tribunal agreed with the assessee’s contention that the entire amount of cash deposits could not be treated as unexplained income.

Subsidies received from Government of Maharashtra under Package Scheme Incentive is Capital Receipt: ITAT deletes Addition Bridgestone India Pvt. Ltd vs ACIT CITATION:   2023 TAXSCAN (ITAT) 1828

The Income Tax Appellate Tribunal (ITAT), Indore bench held that subsidies received from the government of Maharashtra under package scheme incentive is capital receipt.

It was observed by the tribunal that the same issue was decided in favor of assessee for the assessment year 2015-16 as well as for assessment year 2016-17 by the Mumbai Bench of the Tribunal. It was held that the subsidy received by the assessee under PSI, 2007 is a capital receipt and thus non-taxable.

After reviewing the facts and submissions of the both parties, the two member tribunal bench of B.M. Biyani, (Accountant Member) and Vijay Pal Rao (Judicial Member) allowed the appeal filed by the assessee.

Interest u/s 24(b) of Income Tax Act allowable when Charging for Income Receivable and Income is Approved: ITAT M/s. Mansha Textiles Pvt. Ltd vs Income Tax Officer CITATION:   2023 TAXSCAN (ITAT) 1835

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest under Section 24(b) of the Income Tax Act 1961 which allows deduction of interest on home loan from the taxable income would be allowable when the charging of Income receivable and income was approved.

A Single Bench of Suchitra Kamble, (JUDICIAL MEMBER) observed that, “On merit, the assessee claim deduction under Section 24(b) on the interest paid on the loan availed against the rented property taken on lease from Noida Authority. The Noida Authority and the assessee had certain disputes but it is undisputed fact that the assessee has taken loan for the said property and was liable to pay interest to Noida Authority.” The Bench allowed the appeal filed by the assessee holding that since the Assessing Officer had assessed the income receivables from the assessee then the said income receivables was supposed to be in respect of loan taken for the property from Noida Authority for which the assessee was paying the interest.

Date of Deposit of PF Payment Allows Extension for Due Date being a Holiday: ITAT directs AO for Re-Examination Radial International vs DCIT CITATION:   2023 TAXSCAN (ITAT) 1832

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that if the last date for depositing of payment of Provident Fund (PF) is a holiday and the payment is made on the next date, the same should be allowed.
After hearing both the parties, the two bench member consisting of Astha Chandra (Judicial Member) and Shamim Yahya (Accountant Member) agreed with the submissions that if the last date for depositing of payment is a holiday and the payment is made on the next date, the same should be allowed. The tribunal also felt it appropriate to remit the issue back to the file of AO for examining the payments made on day next to due date, being holiday on due date and allow the deduction accordingly. Thus, the appeal was allowed.

Subsidy received under Industrial Promotion Scheme of Madhya Pradesh is Revenue in Nature: ITAT Bridgestone India Pvt. Ltd vs ACIT CITATION:   2023 TAXSCAN (ITAT) 1828

The Income Tax Appellate Tribunal (ITAT), Indore bench held that subsidies received under Industrial promotion scheme is revenue in nature. The subsidies are provided to assessee for initial support to the industry during the earlier days to enable it to become operational competitive with other established industries.

After reviewing the facts and submissions of the both parties, the two member tribunal bench of B.M. Biyani, (Accountant Member) and Vijay Pal Rao (Judicial Member) held that the subsidy received by the assessee under Industrial Promotion Scheme of Madhya Pradesh is revenue in nature. Therefore, the bench decided the ground against the assessee.

Excess cash found during course of Survey  shall not be  taxed under head of Business Income attracts Higher Tax Rate u/s 115BBE of Income Tax Act: ITAT M/s.Brij Mohandas Devi Prasad vs ACIT/DCIT CITATION:   2023 TAXSCAN (ITAT) 1838

The Income Tax Appellate Tribunal (ITAT) Indore bench held that excess cash found during course of survey should not be taxed under head of business income. Therefore, it would attract higher tax rate under Section 115BBE of income Tax Act, 1961

It was observed by the tribunal that the survey-officer found excess cash. When the assessee’s partner was asked to explain the difference, he himself explained the difference related to purchase and admitted his inability to explain the remaining difference of Rs. 5,82,644/- which is very much clear from the reply given by him at the very first stage of recording statement itself.

The tribunal after reviewing the facts and submissions of the both parties, the two member bench of B.M. Biyani (Accountant Member) and Vijay Pal Rao (Judicial Member) upheld that action of lower-authorities in holding excess cash as deemed income u/s 69A attracting higher rate of tax under Section 115BBE of Income Tax Act. Therefore, excess cash should not be taxed under the head of business Income. Thus, the bench decided the issue in against the assessee.

Recognition u/s 80G of Income Tax Act shall not be granted without completing Registration of Trust: ITAT directs Re-adjudication Shri Akhil Hind Mahila Parishad vs The Commissioner of Income-Tax CITATION:   2023 TAXSCAN (ITAT) 1830

The Income Tax Appellate Tribunal (ITAT) Surat Bench directed readjudication for granting recognition under section Income Tax Act and held that without completing registration recognition under Section 80G not granted. 

After eviewing the facts and submissions of the both parties the two member bench of A.L.Saini(account member)  and Pawan Singh, (Judicial Member) the file  remitted back to CIT(exemption) to grant recognition under Section   80G of the Income Tax Act in accordance with law.

Actual Sale Consideration to be taken as Basis for Computing Long-Term Capital Gain: ITAT Shri Satya Pal vs Income Tax Officer CITATION:   2023 TAXSCAN (ITAT) 1834

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the actual sale consideration should be taken as the basis for computing the long-term capital gain and upheld the assessee’s long-term capital gain calculation of Rs. 1,28,15,633/-

The Two Member Bench comprising Shamim Yahya (Accountant Member) and C. N. Prasad (Judicial Member) held that the Income Tax Officer, Ward 3(4) Gurgaon, had no jurisdiction over the Assessees, and therefore, the notice issued by him for reassessment was illegal and invalid. Consequently, the reassessment orders passed by the Income Tax Officer, Ward 3(4), for the assessment year 2010-11 in all three cases were quashed.

Concessional Rate u/s 115 not Applicable when Money Deposited in Indian Rupees and not in Foreign Exchange Currency: ITAT Pawan Kumar Agarwal vs CIT (A)-12 CITATION:   2023 TAXSCAN (ITAT) 1836

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the concessional rate under Section 115 of the Income Tax Act 1961 is not applicable when the money deposited is in Indian Rupees and not in foreign exchange currency.

The two-member Bench of Chandra Poojari, (Accountant Member) and Beena Pillai, (Judicial Member) observed that the money into this bank account had been deposited in the Indian currency and from that account assessee said to be purchased specified assets. As per Section 115E of the Income Tax Act, the concessional rate of 10% on the capital gain derived from the specified assets, which were acquired out of convertible foreign exchange was available to the assessee.

The Bench dismissed the appeal filed by the assessee pointing out from the SB account, that the assessee had deposited Indian rupees to that account and consequently purchased the specified assets and it was not on convertible foreign exchange.

Start-up Businesses Can Deduct All Revenue Expenses, Even If business has not commenced u/s 30(1) and 37(1) of IT Act: ITAT M/s. Vijay Flexible Containers Private Limited vs DCIT-1 CITATION:   2023 TAXSCAN (ITAT) 1837

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that start-up businesses can deduct all revenue expenses, even if the business has not commenced, and held that the expenses are allowable as a deduction under Section 30(1) and Section 37(1) of the Income Tax Act, as they are incurred “wholly and exclusively” for the purpose of the business.

The Tribunal observed that entries in the books of account were not relevant for computing total income, as the expenses were allowable as deductions even if not reflected in the books of account.

 The Two Bench Members comprising Rahul Chaudhari (Judicial Member) and B.R. Baskaran (Accountant Member) held that the revenue expenses incurred by the assessee were incurred “wholly and exclusively” for the purpose of the business and that they were not specifically disallowed by any other provision of the Act. Therefore, the Tribunal held that the expenses were allowable as a deduction under Section 30(1) and Section 37(1) of the Act.

Section 56(2)(viib) of Income Tax Act not Applicable to Share Premium Received from a Non-Resident Person: ITAT APCA Power Private Limited vs Dy. Commissioner of Income Tax CITATION:   2023 TAXSCAN (ITAT) 1839

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Section 56 (2)(viib) of the Income Tax Act 1961 which are crucial in preventing tax evasion and ensuring fair taxes with regard to the issuance of shares by closely-held companies would not be applicable to share premium received from a non-resident person.
The two-member Bench of Shamim Yahya, (Accountant Member) and Yogesh Kumar Us, (Judicial Member) observed that as per the provisions of Section 56(2)(viib), of the Income Tax Act the section would not be applicable to the share premium received from a non-resident Person. The Bench further noted that noted that Vivek Chaudhri had himself submitted before the AO duly noted in a note-sheet that he was a resident through the concerned period and allowed the appeal filed by the revenue and remitted back to the file of the AO to pass order after giving opportunity to the assessee.

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