This Round-Up analytically summarises the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during August 11 to August 18, 2023.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that is trite law that in order to invoke Section 263, the assessment order must be erroneous and also prejudicial to revenue, also impugned revisionary proceedings invoked under section 263 of the Act cannot be upheld.
The two-member bench consisting of G.S Pannu (President) and Sandeep Singh Karhail (Judicial member) held that the revisionary proceedings have been found to be without jurisdiction and thus the impugned order passed by the learned PCIT under Section 263 of the Income Tax Act has already been set aside, the tribunal expressed no findings and the same is left open. Thus the appeal was allowed.
The Delhi bench of the Income Tax Appellate Tribunal held that no interest under section 234B of the Act can be charged as the assessee, being a non-resident company was not liable to pay advance tax, since, the payer is under an obligation to withhold tax under section 195 of the Act while making payment to the assessee. Also the receipts from sale of software licenses are not in the nature of royalty income. Thus, though such income may be in the nature of business profit, however, no part of which can be attributed to the PE in India
The two-member bench consisting of G.S pannu (President) and Saktijit Dey (Vice President) came to the conclusion that the receipts from sale of software licenses are not in the nature of royalty income. Thus, though such income may be in the nature of business profit, however, no part of which can be attributed to the PE in India. Thus, the tribunal’s decision in the said appeal will apply mutatis mutandis to the appeal. Thus, the appeal of the assessee was allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 68 of the Income Tax Act 1961 holding that a separate Permanent Account Number (PAN) and filing of return would not be needed when receipts of institutions had been included in the financial statement of the controlling entity.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the appeal filed by the assessee holding that if an institution was owned and run by some society or trust then every institution need not to take separate PAN number and thus not required to file separate return of income particularly in a situation when the receipts of such institution are taken care and included in the income and expenditure account or controlling entity or society or trust.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act 1961 which deals with unexplained cash deposits in the absence of any incriminating material.
From the perusal of the order passed under Section 143(3) read with Section 153C of the Act, the two-member Bench comprising of Amarjit Singh, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) found that the AO made the addition under Section 68 of the Income Tax Act only on the basis of AIR information. Therefore, it was discernible that the aforesaid addition was not based on the material found during the course of the aforesaid search, pursuant to which proceedings under Section 153C of the Income Tax Act were initiated in the case of the assessee.
The Bench further referred to the decision in DCIT v/s U. K. Paints (Overseas) Ltd and allowed the appeal and deleted the penalty holding that the assessment year under consideration was an unabated/concluded year.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that the weight of diamonds should be excluded to determine the gross weight of jewellery seized by the Income Tax Department.
A Single Bench of Pawan Singh, (Judicial Member) allowed the appeal filed by the assessee holding that merely because jewellery consisted diamond could not be added in the hands of assessee particularly when the jewellery had forming part of gross weight jewellery found from the residence as well as locker was within permissible limit prescribed by CBDT in Circular No.1916 dated 11.05.1994.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the services rendered by Indian Company to non-resident assessee on principal-to-principal basis based on Canvasser Agent Agreement not taxable in India.
The two-member Bench of S. Rifaur Rahman, (Accountant Member) and Rahul Chaudhary, (Judicial Member) dismissed the appeal filed by the revenue holding that, “when the Agreement was in operation, concluded that the Indian Company was acting in ordinary course of business rendering services to the Assessee on principal-to-principal basis; the Assessee did not have a business connection in India; no operations were carried out by the Assessee in India; and therefore, no income was liable to tax in India in terms of Section 5(2) and Section 9(1)(i) of the Act.”
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that no penalty can be levied against an agriculturist for accepting a loan of more than Rs. 20,000/- in cash if the loan is received through a banking channel.
The Tribunal observed that the assessee submitted a bank statement and a certificate from the society confirming the loan was received through a banking channel. The revenue authorities did not doubt the bank statement or other documentary evidence.
The Single Bench Member Suchitra Kamble (Judicial Member) held that the revenue authorities had not discharged their burden of proof to show that the loan was not received through the banking channel and held that the penalty levied under Section 271D of the ITA was not sustainable in the absence of any reasonable doubt about the genuineness of the loan transaction.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that expenses incurred in relation to exempt income are not deductible under Section 14A of the Income Tax Act, 1961 (the Act) and dismissed the appeal filed by the assessee against the order of the Assessing Officer (AO) disallowing the expenses incurred by the assessee in relation to the exempt income received by it from the partnership firm.
The Tribunal observed that the assessee, an equity share investment company, received exempt income from a partnership firm in 2018-19. However, the assessee argued that expenses were related to its overall business activities and that the partnership firm’s profit was already taxed.
The Two Bench Members comprising Karitha Rajagopal (Judicial Member) and S. Rifatur Rahman (Accountant Member) dismissed the assessee’s appeal and upheld the AO’s order disallowing expenses related to exempt income from a partnership firm and ruled that the assessee’s business model is solely to earn exempt income, and any expenses incurred will be considered for such income.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that the name of the partner in which a motor vehicle is registered is not relevant for the purpose of claiming depreciation on the vehicle. The ITAT ruled that the important factor is that the vehicle is purchased with the funds of the partnership firm and is used exclusively for the business purposes of the firm.
The Tribunal observed that the treatment provided by the partnership firm to the new motor vehicle acquired as well as the old motor vehicle sold plainly demonstrated that the partnership firm’s finances were utilized for the acquisition of the aforementioned motor vehicle and the car was only ever utilized for the partnership firm’s commercial purposes.
A Single Bench Member Suchitra Kamble (Judicial Member) allowed the appeal of the assessee and restored the claim of depreciation on the vehicle. The Tribunal held that the mere fact that the vehicle was registered in the name of the partner did not deny the partnership firm the depreciation on the said vehicle.
The Income Tax Appellate Tribunal (ITAT) Surat bench held that charitable activities of trust should not be confined to a particular caste. The trust has two types of objects, one exclusively for assessee caste and second ‘other objects’ which are for the benefit of the public in general, that is open for all sections of society. Thus for verifying this the bench directs readjudication.
The tribunal observed that the argument of assessee that school is run by assessee- trust, which is open for all sections of the society/caste, this fact has not been examined by CIT(E), as there is no reference in the entire order of CIT(E), hence it is a fresh argument which needs examination by CIT(E). The assessee-trusts have other objects like: to help the poor, to give medical aid and to help the public in general, in case of fire, flood and earthquake.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Dr. A. L. Saini, (Accountant Member) and Pawan Singh (Judicial Member) remit the issue back to the file of the CIT(E), to adjudicate the afresh regarding the objects of assessee.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) restored the file back to the Assessing Officer (AO) with the direction to provide the requisite documents as asked for the Assessee and a reasonable opportunity to the Assessee to substantiate its case.
After hearing both the parties, the tribunal observed that it was clear that the Assessee had specifically requested for the details or copy of any incriminating documents found against the Assessee as alleged during the search of Cosmos Group or Concorde Developers qua booking of flat. The Assessee had also claimed that no enquiries were made with the Assessee or no such information was gathered by the AO during the search proceedings of Cosmos Group however both the authorities below failed to provide the requisite documents.
The two member bench consisting of B R Baskaran (Accountant member) and N.K Chodhry (Judicial member) ordered to remand the instant case to the file of the Assessing Officer with the direction to provide the requisite documents as asked for the Assessee and a reasonable opportunity to the Assessee to substantiate its case. Thus the appeal was allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the indexation benefit against cost of acquisition should be available based on the index of the year in which payments actually had been made.
The two-member Bench of G.S. Pannu, (President) and Astha Chandra, (Judicial Member) the observation of assessee referring the tripartite agreement and the sale deed, that the ownership of the property got transferred from the builder to joint owners in the F.Y. 2003-04 itself. The total cost of acquisition was also paid in F.Y. 2004-05 which had not been disputed by the AO. If that be so, the AO was not justified in disallowing indexation of the cost of acquisition from F.Y. 2004-05. The Bench allowed the appeal filed by the assessee holding that, “The judicial consensus is that indexation benefit against cost of acquisition shall be available to the assessee on the basis of index of the year in which the payments were actually made.”
Further the AO was directed to compute the long-term capital gain keeping in view the facts of the assessee’s case, in the light of the definition of “indexed cost of acquisition” and “indexed cost of any improvement” contained in Explanation (iii) and (iv) to Section 48 of the Income Tax Act.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the demand for service tax of approximately 3.5 crores which was imposed on the services of maintenance and repair of vehicles on the ground of limitation. The Bench granted relief to Ford India Private Limited by quashing the demand for service tax.
The Bench observed that after the insertion of section 65B(54) in the Finance Act from 01.07.2012 onwards, the definition of ‘works contract’ was expanded to include repair and maintenance services of movable properties also and the composite contracts for repair and maintenance of motor vehicles are leviable to service tax from 01.07.2012 onwards and the demand for service tax was time-barred.
The two-member bench comprising P.Dinesha (Judicial) and Ajit Kumar (Technical) quashed the demand for service tax and penalty imposed on the assessee while allowing the appeal filed by the assessee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed Commissioner of Income Tax Appeals (CIT(A)) re-adjudication holding that the debts claimed would be allowable only if nexus with carrying on of business or trade was established.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) noted that the assessee despite opportunities given by the authorities below did not file details regarding its claim of bad debts on account of non-recovery of amounts due from left employees on account of notice period not served by them. The Bench held that for claiming bad debts the debt should be related to the business of assessee. The debts claim should have direct nexus with the carrying on of business or trade of assessee and it should be incidental to it. The Bench held that factual position the claim of assessee seems to be allowable but the revenue authority should be allowed to verify and examine the details of claim of assessee restored to the file of ld. CIT(A) to adjudicate the same after allowing due opportunity of hearing to the assessee.
The Income Tax Appellate Tribunal (ITAT) Raipur bench held that reassessment order passed on the basis of invalid assumption of jurisdiction could not be revised under Section 263 of Income Tax Act, 1961. The bench observed that the assessment order was null and void as it was based on a non-est return, therefore, the Commissioner could not have exercised his jurisdiction under section 263 of the Income-Tax Act.
It was observed by the tribunal that jurisdiction over assessee case at the stage of issuance of notice under Section 143(2) of the Income-Tax Act was admittedly vested with the ITO, Ward-4(1), Raipur, therefore, in absence of any notice issued by the letter under Section 143(2) of the Income-Tax Act , the assessment framed by him vide his order passed under Section 143(3) of the Income-Tax Act could not be sustained and is liable to be struck down on the said count itself. Therefore, if the original re-assessment order itself was not validly passed, the subsequent revisional order by the PCIT was required to be held invalid.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Arun Khodpia,(Accountant Member ) and Ravish Sood,( Judicial Member) quashed the order passed by the Pr. CIT under Sec. 263 of the Act on account of invalid assumption of jurisdiction by Pr. CIT . Thus the bench allowed the appeal filed by the assessee.
The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench held that leave encashment of employees working in the department of telecommunication exempted under Section 10(10AA) of Income Tax Act,1961, .The period for leave encashment was calculated in respect of assessee’s working in the Department of Telecommunication and the same is fully exempted under Income Tax Act.
The tribunal after reviewing the facts and submissions of the both parties, the single member bench of Suchitra Kamble, ( Judicial Member) allowed the appeal filed by the assessee Thus the bench decided the issue in favour of the assessee.
Quashing the Income Tax addition, the Delhi Bench of Income Tax Appellate Tribunal (ITAT), held that no reassessment of income under Section 147 of the Income Tax Act 1961 can be allowed if incriminating articles against any “other person” is found during search other than person being searched under Section 153C of Income Tax Act.
The Bench held that the incriminating material was found and seized during the search carried out of ‘some other person’ that a sum of Rs. 7,00,000/- had been paid by the assessee during the Financial Year 2011-12 to Santosh Medical College, Ghaziabad, and since the assessee was not assessed under Section 153C of Income Tax Act, which provision specifically exclude the operation under Section 147 of Income Tax Act, the A.O erred in invoking provision to Section 147 of Income Tax Act instead of those of Section 153C of Income Tax Act.
Hence, ground of the assessee that person relating to whom some material is found in the search of some ‘other person’, should be assessed under Section 153C of the Income Tax Act and not under Section 147 of Income Tax Act was allowed and consequently assessment order and the order of the CIT (A) were quashed.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT), held that no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 of the Income Tax Act,1961.
The Bench comprising of V. Durga Rao, Judicial Member and Manjunatha. G, Accountant Member, relied on the decision of the Supreme Court in the case of PCIT v. Abhisar Buildwell (P) Ltd. where it was held that in respect of completed assessment/unabated assessment, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 of the Income Tax Act, or requisition made under Section 132A of the Income Tax Act. Thus the Bench set aside the issue of addition made towards unsecured loans for to the file of the AO and direct the AO to re-examine the claim of the assessee.
The Income Tax Appellate Tribunal (ITAT) Jaipur bench dismissed the assessment order passed under Section 153 of the Income Tax Act , 1961 without recording proper satisfaction. As per Section 153C of the Income Tax Act, it would also be appropriate to understand that before issuing notice, the TO (Tax Officer) of the searched person must be ‘’satisfied’’ that inter alia, any document seized or requisitioned ‘’belongs to‘’ a person other than the searched person.
After reviewing the facts and submissions of the both parties, the two member bench of Rathod Kamlesh Jayantbhai, (Accountant Member ) and S. Seethalakshmi ( Judicial Member) held notice issued under Section 153C of the Income Tax Act as bad in law and consequently whole proceedings including the assessment order passed under Section 143(3) r.w.s. 153C of the Income Tax Act void ab initio.
The Income Tax Appellate Tribunal (ITAT) Kolkata Bench held that there was no disallowance on account of the bonus outstanding paid before the due date of filing of return. As per the audit report it was concluded by the bench that the assessee was paid the amount before the due date of filing of return of income.
The tribunal after reviewing the Tax audit report , other evidences and submissions of the both parties, the two member bench of Rajesh Kumar,(Accountant Member ) and Sonjoy Sarmal,(Judicial Member) observed that outstanding amount of bonus was paid after 29.09.2018 but on or before 29.10.2018. Thus the bonus was paid before the due date of filing of return . Therefore the bench upholds the outstanding bonus amount paid before the due date of filing of return should not be disallowed .
The Income Tax Appellate Tribunal (ITAT) Bangalore bench held that revenue expenditure incurred for the scientific research is allowed as deduction under Section 37 of the Income Tax Act, 1961.The bench determined that even if it was not certified by the Department of Scientific & Industrial Research the expenditure would be considered for deduction.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Chandra Poojari ,(Accountant Member ) and Beena Pillai ,(Judicial Member) held that revenue expenditure incurred for the scientific research is allowed as deduction under Section 37 of the Income Tax Act. Therefore the bench dismissed the appeal of revenue.
The Income Tax Appellate Tribunal (ITAT) Bangalore Bench held that Interest income earned from deposits made on other cooperative banks are eligible for deduction under section 80(2)(d) of Income Tax Act, 1961.
It was observed by the tribunal that co-operative society is a broad and larger umbrella under which the co-operative banks do perform. Section 80P(2)(d) of the Income Tax Act, allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society.
The tribunal after reviewing the facts and submissions of the both parties,the two member bench of Chandra Poojari,(Accountant Member ) and Beena Pillai,(Judicial Member) observed that assessee is eligible for deduction under section 80P(2)(d) in respect of interest earned from deposits made on other Cooperative banks, Therefore the bench allowed the appeal of the assessee.
The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench held that the penalty under Section 271D of Income Tax Act for exceeding cash transactions limit should not be imposed on loans taken from through account payee cheques. It was observed that all the amounts were received by way of account payee cheques and the amounts so received were deposited in the bank account of the assessee.
It was observed by the tribunal that no amount was received by the assessee otherwise than by way of account payee cheques. The only ground/basis for imposing penalty under section 271D of the Income Tax Act, was that both the accounts of the lender and his proprietorship concern were merged, leading to violation of the provisions of section 269SS of the Income Tax Act.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Waseem Ahmed,(Accountant Member ) and Siddhartha Nautiyal,(Judicial Member) held that no amount otherwise than by way of account payee cheques was received by the assessee.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that as per provisions of 3rd proviso to Section 147 of the Income Tax Act, 1961, the Assessing Officer (AO) may assessee or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.
The two bench members consisting of V. Durga Rao (Judicial member) and Majunatha G (Accountant member) held that it is very clear that the issue on which the assessment has been re-opened was subject matter of appeal and thus, in the bench’s view as per 3rd proviso to Section 147 of the Income Tax Act, re-opening of assessment and consequent assessment order passed by the Assessing Officer was bad in law and liable to be quashed. Thus, the bench quashed the reassessment order passed by the Assessing Officer under section. 144 read with Section 147 of the Income Tax Act dated 21.09.2021. And the appeal was allowed
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer (AO) providing to treat the discount charges on prepaid SIM Card as not allowable in terms of Section 40(a)(ia) of the Income Tax Act, 1961 is not allowable since no tax was deducted on the said transaction.
The two-member bench consisting of Anubhav Sharma (Judicial member) and M. Balaganesh (Accountant member) upheld the order of CIT(A) as the issue was covered in assessee’s own case by the decision of the Tribunal in assessment year 2015-16.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently upheld the imposition of a cost of Rs. 10,000 on a foreign portfolio investor (FPI) for failing to respond to notices issued under section 142(1) of the Income Tax Act and found that the FPI’s non-response to the notices had prevented the assessing officer (AO) from conducting a proper assessment of the FPI’s income.
The Tribunal observed that the AO did not provide the assessee with a fair opportunity to submit, and the assessee was not negligent in not responding to notices. The ITAT also found that the assessee provided the correct email address but the notices were not sent to it. Additionally, the assessee was not informed about the assessment order’s pendency.
The Two Bench Members comprising Vikas Awasthy (Judicial Member) and Padmavathy S (Accountant Member) ruled that the taxpayer failed to respond to multiple show-cause notices issued by the Assessing Officer. The ITAT imposed a cost of Rs. 10,000 on the taxpayer, directing them to pay within three weeks. The ITAT allowed the taxpayer’s appeal for statistical purposes and set aside the impugned order, requiring proof of deposit and correct email address.
The Income Tax Appellate Tribunal (ITAT) Delhi bench deleted additions made on account of trading loss on sale of tools and dies for car manufacturing.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of N.K.Billaiya ,(Accountant Member ) and Anubhav Sharma,(Judicial Member) observed that the Tax Authorities had failed to take into consideration the business prudence of the assessee for incurring certain losses in initial year for a sustainable and longer partnership with HCIL and which has given rise to generation of profits in subsequent years and which have been tendered for taxation. Thus the bench determined that there is substance in the contention of Counsel that the major purchase of dies were from Tri Inter Thailand and not from Honda Trading Corporation India Pvt. Ltd.
The Income Tax Appellate Tribunal (ITAT) Delhi bench held that the sale proceeds of shares credited in bank accounts entered in the book of accounts could not be treated as unexplained cash credit under Section 68 of Income Tax Act, 1961.All the sale transaction has been recorded in the assessee companies books of account.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Waseem Ahmed,(Accountant Member) and Siddhartha Nautiyal, (Judicial Member) observed that credit found in the books of assessee company were only towards sale of shares and that they are neither loan, deposit nor share capital/ share application money, is found to be correct. Therefore sale proceeds of shares credited in bank accounts entered in the book of accounts cannot be treated as unexplained cash credit under Section 68 of Income Tax Act.
The Indore bench of the Income Tax Appellate Tribunal (ITAT) held that the mere mistake in form 35 does not result in a deficient appeal hence allowed one more opportunity to the assessee to rectify the mistake in form 35.
The Two-bench member comprising of Vijay Pal Rao (Judicial member) and B.M. Biyani (Accountant member) set aside the impugned order of the Commissioner of Income Tax (Appeals) and remanded the matter to the record of the Commissioner of Income Tax (Appeals) to grant one more opportunity to the assessee to rectify the mistake in form 35 and then decide the appeal of the assessee on merits. Thus, the appeal of the assessee was allowed for statistical purposes.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has quashed the order passed by Transfer Pricing Officer (TPO) under Section 92CA(3) of the Income Tax Act against Frost and Sullivan on the ground of limitation.
The two-member Bench of Amit Shukla, (Judicial Member) and Gagan Goyal, (Accountant Member) observed that the order under Section 92CA(3) of the Income Tax Act had been passed by the TPO on 30/01/2014 in view of Section 92CA(3) of the Income Tax Act , the time limit to pass the order was 29/01/2014 which was evident from the aforesaid chronology of events. The AO was required to pass final order on or before 31/03/2014 which here in this case it was passed on 31/12/2014.
Referring to the decision of Madras High Court in Pfizer Healthcare India Pvt. Ltd which held that, “TPO order has been passed on 30/01/2014 which is clearly barred by limitation by one day by virtue of time limit provided u/s.92CA (3) and consequently, the same has to be treated as bad in law and the same is hereby quashed. Thus, in such a situation, if there is no TPO order, consequently the entire transfer pricing adjustment proposed by the ld. TPO in international transactions becomes non-est and to be quashed and being barred by limitation.” The Bench quashed the final assessment order being barred by period of limitation under Section 92CA (3) of the Income Tax Act 1961.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that an assessment order in the name of a non-existent entity is void ab initio, meaning the assessment order is invalid from the beginning and cannot be upheld by the court.
The Tribunal observed that the assessee company ceased to exist on October 1, 2009, due to amalgamation. The AO was aware of the amalgamation but still passed assessment orders in the assessee company’s name. The ITAT ruled that the assessee’s participation in the proceedings did not invalidate the validity of the assessment orders.
The Two Bench Members comprising Kavitha Rajagopal (Judicial Member) and B.R. Baskaran (Accountant Member) quashed the assessment orders, stating they were invalid as they were passed in the name of a non-existent entity. The Tribunal also ruled that the assessee’s participation in the proceedings did not constitute an estoppel against challenging the order’s validity.
The Lucknow Bench of Income Tax Appellate Tribunal (ITAT) has reduced the disallowance as the quantum of disallowance made by the Assessing Officer (AO) was excessive and unreasonably high.
The two-member Bench of Sudhanshu Srivastava, (Judicial Member) and Anadee Nath Misshra, (Accountant Member) partly allowed the appeal filed by the assessee holding that some disallowance out of assessee’s claim of expenses was justified. What remained to be seen was whether the quantum of disallowance made by the Assessing Officer was excessive or unreasonably high having regard to facts and circumstances of the present case it was noted that the Assessing Officer and CIT(A) had not pointed out any specific item of expenditure which were to be disallowed.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has held that the foreign tax credit could not be denied for technicality of not filing form 67 within the due date of return under Section 139(1) of the Income Tax Act 1961.
The two-member Bench of Yadav, (Vice President) and Rajesh Kumar, (Accountant Member) noted the assessee served abroad and some foreign tax to some was deducted in United Kingdom under DTAA between India and UK and provision of Section 90(2) of the Act. We also note that Rule 128 sub-Rule 9 provides that Form-67 should be filed on or before the due date of filing the return of income The Bench allowed the appeal filed by the assessee the credit in respect of foreign tax cannot be denied to the assessee for the technicality of not filing the form 67 within the due date of return under Section 139(1) of the Income Tax Act.
The Income Tax Appellate Tribunal (ITAT) Mumbai bench held that donations received for capital projects of trust are corpus donations.
It was observed by the tribunal that donation received for capital projects are Corpus donations. When the wording of “CHF” is stated in the receipt, it can safely be presumed that the said wording has been mentioned as per the direction of the donor.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of B.R. Baskaran, (Accountant Member ) and Narendra Kumar Choudhary, (Judicial Member) held that donations given for capital projects should be considered as Corpus donations, which are not liable to be taxed. However copies of receipts/details of corpus donations have not been examined by the tax authorities. Thus the bench directed to restore the matter to the file of AO for examining sample copies of receipts and compute Corpus donations and allowed exemption.
The Income Tax Appellate Tribunal (ITAT) Lucknow bench held that addition under Section 69 of Income Tax Act should not be made on the basis of a ledger account seized from the third party in the absence of clinching evidence of cash payments towards purchase of flat.
The tribunal reviewed the facts and submissions of the both parties and the single member bench of Saktijit Dey, ( Vice President ) held that the addition was made on the cash payments on purchase of flat in absence of clinching evidence.
The Income Tax Appellate Tribunal (ITAT) Mumbai bench upheld the addition made under Section 69 of Income Tax Act on payment received from sale of shares of paper companies barred by Stock Exchange Board of India(SEBI).
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Om Prakash Kant,(Accountant Member ) and Sandeep Singh Karhaill,(Judicial Member) held that upheld the addition made on the payment payment received from sale of shares of paper companies barred by Stock Exchange Board of India.
The Income Tax Appellate Tribunal (ITAT) Delhi bench held that receipts from sale of offshore supply of trains are not taxable in India as transfer of title over the goods taken place outside India. According to offshore supply the project office of the assessee in India not constitutes a fixed place PE in India in terms of Article 5(1) of India – Germany DTAA.
It was observed by the tribunal that the DMRC executed a single contract with the Consortium partners, however, the scope of work to be performed by each Consortium partner has been well defined and demarcated.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of G.S. Pannub.R. Baskaran ,(President ) and Saktijit Dey ,(Vice President ) held that receipts from offshore supply of rolling stock could not be taxable in India as the transfer of title over the goods has taken place outside India.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the purchases reflected in the books of accounts cannot be treated as unexplained investments.
The Two-bench member comprising of B.R. Baskaran (Accountant member) and Narender Kumar Choudhry (Judicial member) held that there is no scope for treating the above said purchases as unexplained investment warranting addition of under Section 69 of the Income Tax Act. Therefore, the order passed by the Commissioner of Income Tax (Appeal) was set aside and the Assessing Officer was directed to delete the disallowance under Section 69 of the Income Tax Act. Thus, the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the Income Tax deduction cannot be denied on the ground of a return filed belatedly under Section 139(4) of the Income Tax Act, 1961.
The Two-bench member comprising of Kul Bharat (Judicial member) and Pradip Kumar Kedia (Accountant member) held that Central Processing Centre (CPC), Bengaluru has committed prima facie error in making adjustments to the returned income on account of deduction claimed under Section 80P of the Income Tax Act while drawing intimation under Section 143(1) of the Income Tax Act. Therefore, the order of the Commissioner of Income Tax (Appeal) was set aside and the designated authority/CPC, Bengaluru was directed to restore the deduction claimed under Section 80P of the Income Tax Act. Thus, the appeal of the assessee was allowed.
The Income Tax Appellate Tribunal (ITAT) Kolkata bench held that Fee for providing supervisory services for manufacturing of linear polyethylene under composite contract are Fee For Technical Service (FTS) under UK and India Double Taxation Avoidance Agreement. Thus the bench upheld the revision order Asseesee entered into a composite contract, which could not be segregated in parts and, therefore, rightly found the assessment order as erroneous.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Rajesh Kumar ,(Accountant Member ) and Rajpal Yadav, (Vice-President) observed that Fee for providing supervisory services for manufacturing of linear polyethylene under composite contract are Fee For Technical Service (FTS) under Uk and India Double Taxation Avoidance Agreement.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) held that Assessing Officer has no power to review by reopening assessment under Section 147 of the Income Tax Act,1961 if no addition is made by AO during original assessment.
The single Bench comprising of Pawan Singh, Judicial Member held that Section 147 of the Income Tax Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Further it was held that reopening under Section 147 of the Income Tax Act is nothing but based on changed of opinion on same set of facts, which is not valid. Thus, the action of reopening of assessment is set aside.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) held that reopening of the assessment recorded by an Authority, who does not having territorial jurisdiction over the assessee is bad in the eyes of law and consequently the assessment order is not sustainable.
The Bench comprising of Rajpal Yadav, Vice-President Girish Agrawal, Accountant Member relied on the case of Ashok Devichand Jain v. Union of India, where it was held that if an Officer, who has issued notice under Section 148 of the Income Tax Act was not having jurisdiction over the assessee, then, subsequent assessment order upon the assessee by the Officer, who is having territorial jurisdiction will not be valid. Hence the reopening is bad in the eyes of law and consequently the assessment order is not sustainable. Accordingly the Tribunal allowed the appeal of the assessee and quashed the orders of both the Revenue Authorities.
The Ahemdabad Bench of Income Tax Appellate Tribunal (ITAT) held that assessee did not get the right over the income as per accrual accounting system as provided under the provisions of section 145 of the Income Tax Act, 1961. Therefore, the assessee cannot be made subject to tax on the reasoning that the income has accrued to it upon the transfer of development rights.
Thus it is drawn from the facts of the case that the assessee did not get the right over the income as per accrual accounting system as provided under the provisions of section 145 of the Income Tax Act. Therefore, the assessee cannot be made subject to tax on the reasoning that the income has accrued to it upon the transfer of development rights in the given set of facts and circumstances. Hence upheld the decision of CIT(A) and dismissed the appeal of Revenue.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the provisions of Section 69A of the Income Tax Act cannot be applied to the cash deposits which have been duly recorded in the books of account.
The Two-bench member comprising of Amarjit Singh (Accountant member) and Sandeep Singh Karhail (Judicial member) held that the Commissioner of Income Tax (Appeals) has correctly held that the provision of Section 69A of the Income Tax Act cannot be applied in respect of cash deposited which have been duly recorded in the books of account and had already been declared income in the return of income filed by the assessee. Therefore, the grounds of appeal of the revenue was dismissed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that all the three necessary ingredients of Section 68 of the Income Tax Act, 1961 having been been proved in respect of the loan transaction, the loan received from M/s Godavari Pvt. Ltd. is to be treated as genuine.
The two-member bench consisting of Chandra Mohan Garg (Judicial member) and M. Balaganesh (Accountant member) held that lender company had supplied Carpets and Wools to the assessee company and the said trading liability together with sundry expenses of Rs.2670 has been converted into loan by the assessee company. Hence, identity of the lender, creditworthiness of the lender, and genuineness of the transactions are proved beyond doubt and hence no addition could be made for the same under Section 68 of the Income Tax Act. Thus, the appeal was dismissed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the impugned income is not taxable in India as it is covered under Article 8(2) r.w. Article 8(1) of India-France Double Tax Avoidance Agreement (DTAA), interest income will be covered under Article 8(3) of the India-France DTAA and hence not taxable. And penalty proceedings under section 271(1)(c)/271A & 271B being pre-mature does not require adjudication.
On the issue of taxability of interest income the two bench member consisting of G.S Pannu (President) and Astha Chandra (Judicial member) in its decision held that the fixed deposits made by the assessee are out of funds connected with the operation of aircraft in international traffic covered under Article 8(1) of India-France DTAA as the assessee has no other business. Therefore, the interest income will be covered under Article 8(3) of the India-France DTAA and hence not taxable.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that setback to Ernst & Young EMEIA Limited, no Tax Deducted at Source (TDS) is applicable on reimbursement of salary on a cost-to-cost basis.
The two-bench member comprising of Saktijit Dey (Judicial member) and N.K. Billaiya (Accountant member) are of the considered view that cost-to-cost reimbursement on account of secondment of employees cannot be treated as FTS as defined under Article 12 of India USA-DTAA and seconded personnel are employees of EY India firms whose income has been taxed as salary in their respective hands. Therefore, the very same amount could not, in law, be subjected twice – firstly in the hands of the seconded employees working in India and secondly again in the hands of the assessee. The Assessing Officer was directed to delete the impugned addition. Thus, the appeal of the assessee was partly allowed.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that the gross business receipts was less than the threshold limit of Rs.1.00 crore prescribed under Section 44AB of the Income Tax Act,1961 for getting the accounts audited, thus quashed the said defect notice and the return of income filed by the assessee should be considered as valid return.
The Tribunal observed that the gross business receipts was Rs.92,95,722/-, which is less than the threshold limit of Rs.1.00 crore prescribed under Section 44AB of the Income Tax Act for getting the accounts audited. Therefore, there was merit in the submission of the assessee that it is not required to get its accounts audited under Section 44AB of the Income Tax Act. Hence, it was held that the defect notice issued by CPC under Section 139(9)of the Income Tax Act is not in accordance with law thus quashed the defect notice, and directed the AO/CPC to treat the return of income filed by the assessee as valid return and process the same in accordance with law.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the penalty proceedings for concealment of income are not sustainable when the notice issued by the Assessing Officer is vague and ambiguous.
The Two-bench members comprising of N.K. Billaiya (Accountant member) and Anubhav Sharma (Judicial member) held that the notice issued by the Assessing Officer is bad in law being vague and ambiguous having not specified under which limb of Section 271(1)(c) of the Income Tax Act the penalty notice has been issued, the penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act are not sustainable. Thus, the appeal was allowed and the impugned orders were set aside.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) allowed necessary corrections when the appeal failed in the absence of the name of the assessee in Form 26AS.
The Single-bench member comprised of Manish Borad (Accountant member) gave one more opportunity to the assessee to appear before the Assessing Officer and in the meantime make necessary efforts by approaching the employer to make necessary corrections in the TDS return in case the amount has been deposited or in the alternative ask the employer to deposit the tax deducted at source from the salary of the assessee and file it in the TDS return so that credit appears in Form 26AS.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) allowed deduction of expenditure and held that the income shall be determined on net profit even though the society is not registered under Section 12A of the Income Tax Act, 1961.
The Two-bench member comprising of Rajpal Yadav (Vice-President) and Girish Agrawal (Accountant member) held that gross receipts under the third category, namely other income does not deserve to be taxed. The expenditures are to be set off against gross receipts, even if an assessee is not registered under section 12A, then also, its income is to be determined at net and not on gross. Therefore, the directions given by the Commissioner of Income Tax (Appeals) are set aside along with the orders of the Assessing Officer. The issue was remitted to the file of the Assessing Officer to re-adjudicate this aspect and allow the deduction of expenditure incurred by the assessee for earning the other income. Thus, the appeals of the assessee were partly allowed for statistical purposes.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that the Demand Collection Balance (DCB) reports are relevant evidence in respect of the non-existence of demand on proper payment of Central Sales Tax (CST) and Value Added Tax (VAT).
The Two-bench member comprising of Rama Kanta Panda (Vice-president) and K. Narasimha Chary (Judicial member) directed the Assessing Officer to take into consideration the DCB reports and to consider the same in the light of the submissions of the assessee that the non-existence of any demand for the relevant period towards CST and VAT amounts proper payment. Thus, the appeal of the assessee was allowed for statistical purposes.
The Indore Bench of Income Tax Appellate Tribunal (ITAT), held that instead of conducting any verification in compliance of the direction of the Tribunal, the Assessing Officer has made straight away the addition as it was made in the original assessment order.
The Bench comprising of Vijay Pal Rao, Judicial Member and B.M. Biyani, Accountant Member observed that it is specifically made clear by the Tribunal that the AO has to decide the matter afresh after considering assessee’s submission and observation made by the Tribunal with regard to the genuineness of the assessee being engaged in agricultural produce and holding huge agricultural land.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT), condoned delay of 319days in filing the appeal and held that when once Assessing Officer (AO) took one of the possible views and chose not to make any addition the Commissioner of Income Tax (CIT) was not justified in directing fresh assessment by referring the valuation to valuation officer.
The Bench observed that when once AO took one of the possible views and chose not to make any addition, Pr. CIT was not justified in directing fresh assessment by referring the valuation to valuation officer. The Pr. CIT has not rendered any finding that the market value of the property was higher than the one shown by the assessee. Further the bench stated that merely because guideline value was higher than sale consideration shown in deed of conveyance, it cannot be sole reason for holding that assessment was erroneous and prejudicial to interest of revenue. Hence quashed the impugned order of the CIT(A).
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), held that delayed payment of Employees Contribution to PF (Provident Fund) and ESIC (Employees’ State Insurance Corporation) after the due date prescribed under the relevant Acts even if paid before filing of the return of income was not an allowable deduction, hence upheld the disallowance by Commissioner of Income Tax (Appeals) [CIT(A)].
The Two Member Bench comprising of Om Prakash Kant, Accountant Member and Ms. Kavitha Rajagopal, Judicial Member observed that the assessee has deposited the employee’s contribution towards PF and ESIC after the due date prescribed under the relevant Acts nevertheless before filling of the return of income. The Tribunal relied on the decision of the Apex Court in the case of Checkmate Services Pvt. Ltd. where it laid down that delayed payment of Employees Contribution to PF and ESIC after the due date prescribed under the relevant Acts even if paid before filing of the return of income was not an allowable deduction. Thus the tribunal upheld the decision of CIT(A) and dismissed the appeal on this ground.
The Jaipur Bench of Income Tax Appellate Tribunal (ITAT), held that the expenditure in relation to increase in authorized share capital is of capital expenditure or revenue expenditure is out of the purview of Section 154 of the Act because this issue is not a mistake apparent on record.
The Bench comprising of DR. S. Seethalakshmi, Judicial Member and Rathod Kamlesh Jayantbhai, Accountant Member observed that whether to disallow or not the expenditure named ROC ((Registrar of Companies) filing fee amounting to Rs.9,38,000/- is outside the purview of Section 154 of the Act as provisions of Section 154 of the Income Tax Act for rectifying the order can be invoked only for making mistake apparent on record.
The Tribunal further stated that invocation of section 154 of the Income Tax Act as made by the AO in the case of the assessee is not justifiable because Section 154 of the Income Tax Act talks about mistake apparent on record that has to be a mistake which is apparent on the face of the record without involving any debatable question of law Hence taking into consideration the entire facts of the case, the Bench did not concur with the findings of the CIT(A) and the Grounds of the appeal of the assessee was allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Hitachi by deleting the addition holding that the activity related to the offshore portion of the contract was not attributable to Permanent Establishment in India.
The two-member Bench of Shamim Yahya, (Accountant Member) and Kul Bharat, (Judicial Member) allowed the appeal filed by the assessee referring to the decision submitted by assessee. The Bench also observed that the moot question that arises was the role of the Project Office. Lower authorities had not specified the role of the Project Office. What was the role of the Project Office for the transaction in question and what was the basis for attributing the profit at 35% to the PE. Moreover, before AO it was stated by the assessee company that the goods were passed through the Project Offices purely for the purpose of customs duty compliances.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the re-assessment order passed by the Assessing Officer (AO) is null and void, as the AO had failed to dispose of the objections filed by the assessee before passing the re-assessment order and this failure to comply with the procedural safeguards required has resulted in the re-assessment order being set aside.
The Two Bench Members comprising ruled that the Assessing Officer (AO) was obligated to address the objections of the assessee before a re-assessment order was passed. The decision was based on previous cases, such as GKN Driveshafts (India) Ltd. v. ITO (2003) and Asian Paints Ltd. v. ITO (2007). The Tribunal found that the AO’s failure to address the objections was arbitrary, whimsical, and against the rule of law. The AO’s arbitrary and whimsical actions, including rejecting objections and passing the re-assessment order, were deemed against the rule of law. Therefore, the re-assessment order was deemed null and void.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), held that deduction of tax at source has to be made by the assessee for the payment of professional services for payment exceeding Rs.30,000/- for relevant Financial Year.
The Two Member Bench comprising of Om Prakash Kant, Accountant Member and Kavitha Rajagopal, Judicial Member observed that The AO under Section 143(1) (a) of the Income Tax Act has disallowed the impugned amount of Rs. 37,500/- for the reason that the assessee has failed to deduct TDS for the payment for professional services rendered for the purpose of the assessee company.
It was observed that the CIT(A) confirmed the addition on the ground that Section 194J of the Income Tax Act provides that deduction of tax at source has to be made by the assessee for the payment of professional services for payment exceeding ₹30,000/- . The Tribunal further stated that the ground of appeal requires factual verification whether the assessee was in obligation to deduct such TDS or as to whether the payee has paid tax on such income has to be verified for this purpose. Hence, the Bench remanded the case to AO for verifying the factual aspects of this ground and allowed the ground of appeal for statistical purpose.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that a partnership firm is not entitled to the tax deduction on Long-term capital gain (LTCG) under Section 48(i) of the Income Tax Act, 1961 for mortgaging property as collateral securities.
The Two member bench comprising of O.P. Kant (Accountant member) and Kavitha Rajagopal (Judicial member) remand the issue to the file of the Assessing Officer for the limited purpose of verifying the expenses claimed by the assessee and the assessee is directed to furnish all the documentary evidences pertaining to the expenses incurred in support of its claim. Thus, the appeal filed by the assessee was partly allowed for statistical purposes.
The Delhi Income Tax Appellate Tribunal (ITAT) has ruled that TDS is not applicable to payments made to the Haryana Urban Development Authority (HUDA) on behalf of the State Government and the tribunal argued that HUDA is an executing agency, and funds for development works are released after Finance Department sanction, so TDS is not required.
The Tribunal observed that HUDA is an executing agency for the State Government, released funds for development works after the Finance Department sanction. Payments made to HUDA are considered payments to the State Government, and TDS is not required. The Directorate of Town and Country Planning, Haryana’s clarification is binding on the ITAT, issued by a competent authority in line with the Act’s provisions.
The Two Bench Members comprising Kul Bharat (Judicial Member) and Pradip Kumar Kedia (Accountant Member) have ruled that TDS is not applicable to payments made to HUDA on behalf of the State Government, in line with the Directorate of Town and Country Planning, Haryana’s clarification that HSVP is an executing agency for the State Government for carrying out External Development Works (EDW), and therefore, no TDS is required.
The Surat bench of the Income Tax Appellate Tribunal (ITAT) has ruled that trusts with minor mismatches in their names will not be denied registration under section 12AB of the Income Tax Act, 1961. The ITAT held that such mismatches are not fatal and that the trusts should be granted registration if they are otherwise eligible.
The Tribunal observed minor mismatches in trust names were not fatal, as they still indicated their charitable purpose. The assessee-trusts were registered with the Charity Commissioner, proving their authenticity and track record of charitable activities. The CIT(E) did not provide evidence to suggest these mismatches would mislead the public or hinder the trusts’ charitable activities.
The Two Bench members Pawan Singh (Judicial Member) and Dr. A.L. Saini (Accountant Member) allowed the appeals of the assessee-trusts and held that they were eligible for registration under section 12AB of the Income Tax Act and also directed the CIT(E) to go through the relevant documents and evidence to verify the objects of the trust and activities of the trust.
The Income Tax Appellate Tribunal (ITAT), Chandigarh bench directed readjudication for granting exemption under Section 10(23c)(iiiab) of Income Tax Act, 1961 in respect of imparting the education through Charitable trust.
It was observed by the tribunal that the case of the assessee has been that it is involved in education activity and is entitled to grant registration as a charitable Institution involving educational activity, but CIT(E) granted registration to the assessee as an Institution involved in “advancement of other objects of public utility”.
The tribunal review of the facts and submissions of the both parties The two member bench of Vikram Singh Yadav, (Accountant Member) and Sanjay Garg, (Judicial Member) that restored the matter to the file of the CIT(E) with a direction to decide regarding the claim of the assessee being a charitable Institution involved in the activity of imparting education.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that a chartered accountant or advocate cannot verify Form 35A, which is used to file objections to a draft assessment order under the Dispute Resolution Panel (DRP) scheme, and held that the verification of Form 35A is a personal statement by the assessee that what is stated in the form is true to the best of their knowledge and belief. A chartered accountant or advocate cannot make such a statement on behalf of the assessee.
The Tribunal observed that a chartered accountant or advocate cannot verify Form 35A, as it is a personal statement by the assessee that is true to the best of their knowledge and belief. The tribunal also found that the DRP did not violate natural justice principles by dismissing objections without giving the assessee an opportunity to address the verification issue. The assessee had been given a fair opportunity to file objections and did not take advantage of it.
The Two member bench comprising Rahul Chaudhary (Judicial Member) and Prashant Maharishi (Accountant Member) held that a chartered accountant or advocate cannot verify Form 35A, which is used to file objections to a draft assessment order under the Dispute Resolution Panel (DRP) scheme. The Tribunal held that the verification of Form 35A is a personal statement by the assessee that what is stated in the form is true to the best of their knowledge and belief. A chartered accountant or advocate cannot make such a statement on behalf of the assessee.
The Income Tax Appellate Tribunal (ITAT), Kolkata has upheld the deduction for expenditure incurred by the appellant, for non-fulfilment of a contractual obligation, deeming it as non-penal and not in violation of any law or regulation.
The two-member bench comprising Shri Rajpal Yadav (Vice-President) and Shri Girish Agrawal (Accountant Member) held that even though the agreement did indeed use the term “penalty”, it was not related to any violation of law, but rather stemmed from the non-fulfilment of a contractual obligation.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that no initiation of disallowances is required under Rule 8D(2)(i) if direct expenses are not debited to the profit and loss account of the business.
The Two-bench member comprising of B.R. Baskaran (Accountant member) and Narendra Kumar Choudhury (Judicial member) held that there is merit in the submissions of the assessee and the assessee is having own capital at Rs.17.80 crores, while the investment made by the assessee stands at Rs. 4.65 crores.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) set aside the order of Principal Commissioner of Income-Tax (PCIT) and allowed tax deduction under Section 54 of Income Tax Act for income from sale of land assessable under Capital gains and not business income.
The Bench comprising of Annapurna Gupta, Accountant Member and Madhumita Roy, Judicial Member referred the case of Venkataswamy Niadu v CIT which it was explained that the purport of the term “adventure in the nature of trade“as having some but not all characteristics of trade or business,The Apex court in this case held that all surrounding factors needed to be considered for drawing any inference regarding the nature of the transaction.
The Tribunal observed that PCIT has relied only on the fact of conversion of the land sold from agricultural to non-agricultural, as the basis of his finding that the assessee indulged in the activity of sale of land during the year as an adventure in the nature of trade, and has completely given a goby to other conditions and circumstances. Thus, it was held that there is no error in the assessment of AO and allowed deduction under Section 54 of Income Tax Act for Income from sale of land assessable under Capital gains and not business income, and set aside the order of PCIT. The appeal of the assessee is allowed.
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