This Round-Up analytically summarizes the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan. from October 21 to October 28, 2023
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has allowed the vacancy allowance holding that the Annual Lettable Value (ALV) of vacant property in unsold flats forms which were held as stock in trade and retained vacant during the year would be NIL.
The two-member Bench of Sanjay Garg, (Judicial Member) and Manish Borad, (Accountant Member) observed that that sub-Section 5 of Section 23 of the Income Tax Act had been inserted from 01.04.2018 which was specifically for those properties which were held as stock-in-trade and a moratorium period of two years was given from the end of the financial year in which certificate of completion of construction was obtained from the competent authority and if in these two years the property was vacant the annual value was to be taken at Rs. NIL, but the year under appeal is AY 2017-18 and though the assessee was also having the vacant units/flats as stock-in-trade but Section 23(5) of the Income Tax Act would not be applicable on the assessee.
The Bench allowed the appeal filed by the revenue holding that the annual lettable value of the vacant property in the form of unsold units/flats held as stock-in-trade by the assessee which were let out in the past but remained vacant during the year should be computed at Rs. NIL.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed the foreign exchange fluctuation loss holding that the Market to Market (M2M) loss on future and forward contracts were not notional loss of contingent nature.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) observed that the issue was squarely covered in favour of the assessee by plethora of judgments which in unequivocal terms had held that ‘mark to market’ loss on such future and forward contracts were not a notional loss of contingent nature and the loss stands crystallised at the end of the year notwithstanding the continuance and spilling over of the contract to next year. The Bench dismissed the appeal filed by the revenue holding that loss occurred due to such fluctuation in forward contract was an ordinary business loss and not merely a notional loss of provisional nature.
The Income Tax Appellate Tribunal (ITAT), Delhi bench held that credit entries in the savings account in a bank could not be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
After reviewing the facts and records, the two-member bench of Dr. B.R.R. Kumar (Judicial Member) and Saktijit Dey (Vice-President) quashed the reassessment proceedings and held that credit entries in the savings account in a bank could not be treated as unexplained cash credit under Section 68 of the Income Tax Act. Therefore, the bench deleted the addition made by the Assessing Officer and allowed the appeal of the assessee
The Income Tax Appellate Tribunal (ITAT), Delhi bench deleted the addition made towards the gift of cash amount deposited in the ICICI Bank, received from the father-in-law and mother-in-law of the wife. The assessee, Parminder Singh, was engaged in the business of sale and purchase of old mobile phones and the distribution of milk supply in his locality. Such a business mostly deals in cash. While filing the return of income, he declared that he had earned income from the business and agriculture. Subsequently, the assessee’s case was reopened under Section 148 of the Income Tax Act due to cash deposits of Rs. 17,30,110 in the bank account of the assessee.
After reviewing the facts and records, the single member bench of Challa Nagendra Prasad (Judicial Member) quashed the reassessment proceedings and held that the donors of the gifts, being the father-in-law and mother-in-law, were closely related to the assessee, and the sources were explained. The gifts cannot be disbelieved.
The Income Tax Appellate Tribunal (ITAT), Pune bench held that income from twin land transactions is taxable under Business Income, not Capital Income.
After reviewing the facts and records, the bench of Satbeer Singh Godara (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) held that profit from twin land transactions is taxable under Business Income, not Capital Income.
The Income Tax Appellate Tribunal (ITAT), Pune bench, allowed a deduction on the cost of acquisition of land acquired from allottees of the government for the rehabilitation dam project.
After reviewing the facts and records, the bench of Satbeer Singh Godara (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) granted a deduction for the cost of acquisition of land acquired from allottees of the government for the rehabilitation dam project.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench upheld the addition made by the CIT(A) under section 56(2)(viib) of the Income Tax Act, 1961, on account of excess consideration received on allotment of shares.
After reviewing the facts and records, the two-member bench of G.S. Pannu (Vice President) and Sandeep Singh Karhail (Judicial Member) held that shares allotted by the assessee in excess of the price determined by the valuation report were held to be covered within the ambit of section 56(2)(viib) of the Income Tax Act. Therefore, the bench dismissed the appeal of the assessee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication on failure to make enquiries on proprietary of sale consideration based on seized documents.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) observed that the controversy in the present case related to additions on account of understated sale consideration on sale of property by the assessee in the factual matrix. The issue was essentially factual in nature and is thus wholly dependent upon the examination of facts threadbare.
The bench allowed the appeal filed by the revenue CIT(A) ought to have made suitable enquiries on the proprietary of sale consideration declared in the light of documents seized instead of brushing aside the action of the AO in a lopsided manner. To Read the full text of the Order CLICK HERE
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the upheld income addition on failure to explain the source of cash deposit in bank account.
The two-member Bench of Manjunatha G, (Accountant Member) and Manmohan Das, (Judicial Member) observed that the assessee failed to furnish any agreement to purchase of land so as to prove that cash was withdrawn from bank account for purchasing of land. Why the land could not be purchased was also not explained. Further, the cash book of the assessee told a different fact. The assessee’s cash book was either ‘very less cash balance’ or ‘negative cash balance’ during the relevant period. The Bench dismissed the appeal filed by the assessee holding that assessee did not furnish any reason why land could not be purchased. Even there was no agreement to purchase land and the cash book showed a negative cash balance.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that it is difficult to hold that the action of the AO is unintelligible as the revisionary proceeding was intiated in the event of ‘absence of inquiries or verifications which should have been made’, thus set aside the order under Section 263 of Income tax Act,1961.
The Tribunal comprising of Chandra Mohan Garg, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that clause (a) of Explanation (2) to Section 263 of the Income Tax Act inserted by Finance Act, 2015 seeked to clarify that the order passed by the lower authorities to be erroneous in so far as prejudicial to the interest of the Revenue in the event of ‘absence of inquiries or verifications which should have been made’.
The assessment order passed under Section 143(3) of the Income Tax Act could not be frustrated in the circumstances. The impugned revisional order passed under Section 263 of the Income Tax Act thus quashed and set aside. The appeal of the assessee was allowed.
The Chennai Bench of Income tax Appellate Tribunal (ITAT) held that due to no explanation of assessee for allowability of freight expenditure and labour charges, claimed by assessee in closing stock.
The bench comprising of Mahavir Singh, Vice President and Manjunatha.G, Accountant Member noted that the assessee could not explain how these expenses which are claimed by assessee in the closing stock is allowable i.e., provision in regard to freight expenses payable and labour charges payable. The assessee has not made any payment during the year and even there is no liability incurred for this, rather this is merely a provision. Hence the Tribunal confirmed the order of CIT(A), and dismissed the appeal filed by assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, while directing the matter of the assessee for readjudication, held that prior period income from the sale of property shall be chargeable to tax in the year in which the sale was undertaken.
After reviewing the facts and records, the two-member bench of M. Balaganesh (Accountant member) and Chandra Mohan Garg (Judicial Member) observed that the assessee did not engage in a property or land sale transaction during AY 2012–13; however, by passing book entries only, the assessee documented book entries related to the property/land sale transaction, which was actually completed during AY 2007–08. Therefore, the bench directed the AO to tax the income/profit accrued to the assessee from the sale of land/property in AY 2007-08.
The Income Tax Appellate Tribunal (ITAT), Kolkata bench, held that the assessing officer could not direct the assessee to produce a profit and loss account to show the source of expenditure when the gross receipt under Section 44AD of the Income Tax Act, 1961, was not recorded.
After reviewing the facts and records, the two-member bench of Rajesh Kumar (Accountant member) and Rajpal Yadav (Vice-President) allowed the appeal filed by the assessee. Samit Kumar, counsel, appeared for the assessee, and Rupesh Agrawal, counsel, appeared for the revenue.
The Income Tax Appellate Tribunal (ITAT), Raipur bench, observed that goods supplied to a sister concern under a discount amount had been credited to the books of account of the assessee. Therefore, the bench upheld the CIT(A) order that quashed the reassessment order of the AO.
After reviewing the facts and records, the two-member bench of Rajesh Kumar (Accountant member) and Rajpal Yadav (Vice-President) held that goods supplied to the sister concern under a discount amount had been credited to the books of account of the assessee. Therefore, the bench dismissed the appeal of the revenue.
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, while quashing the revision order passed under Section 263 of the Income Tax Act, held that the transporting of petroleum products from Indian Oil station to the petrol pump through tankers is not a contractual receipt.
After reviewing the facts and records, the two-member bench of Rajesh Kumar (Accountant member) and Rajpal Yadav (Vice-President) quashed the revision order passed by the PCIT. Therefore, the bench allowed the appeal filed by the assessee.
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam bench held that the assessee failed to produce evidence in support of the claim of credit liabilities towards labor groups. Therefore, the bench upheld the disallowance made by the CIT(A) under Section 40(a)(ia) of the Income Tax Act, 1961.
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam bench held that the assessee failed to produce evidence in support of the claim of credit liabilities towards labor groups. Therefore, the bench upheld the disallowance made by the CIT(A) under Section 40(a)(ia) of the Income Tax Act, 1961.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) held that the condition of “make available” has not been satisfied in the instant set of facts and hence, the services do not qualify as Fees for Technical Services(FTS).
There is nothing in the hand of the Tax Treaty or the judicial precedents on the subject to come to any such conclusion. In the result it was held that the services do not qualify as “fee for technical services” under Section 9(1)(vii) of the Income Tax Act read with Article 12 of the India-Netherlands Tax Treaty. Hence the assessee’s appeal was allowed.
The Ahmedabad Bench of Income tax Appellate Tribunal (ITAT) held that all income relating to entries noted in the diary stood disclosed by the partnership to and accepted by the settlement commission, thus upheld the decision of Commissioner of Income Tax (Appeal) [CIT(A)] in deleting the income Tax Addition.
The Bench comprising of Annapurna Gupta, Accountant Member and T.R. Senthil Kumar, Judicial Member observed that CIT(A) has found that all income relating to entries noted in the diary stood disclosed by the partnership to and accepted by the settlement commission. It was further observed that the assessee had stated the notings in the diary as relating to his business and which stood disclosed by its partnership firm to the settlement commission, who in turn accepted the same also, thus the Tribunal found no reason to interfere in the order of the CIT(A) deleting the addition made in the hands of the assessee finding the said income to be doubly assessed to taxed. Hence the appeal of the Revenue was dismissed.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, held that Tax Deduction at Source under Section 194C of the Income Tax Act, 1961, should not be applicable to purchase expenses claimed under the head “contract expenses”.
After reviewing the facts and records, the two-member bench of Waseem Ahmed (Accountant Member) and Siddhartha Nautiya (Judicial Member) directed to re-adjudicate the purchase expenses claimed under the head of “contract expenses”.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, while observing that excess interest paid to the partners of the firm was due to a mistake in the Tax audit report, directed it for readjudication.
After reviewing the facts and records, the two-member bench of Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) restored this issue to the file of the CIT(A) for de novo adjudication as per law after considering all the material available on record.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, held that third-party statements cannot be used against the assessee until and unless the opportunity of cross-examination is afforded. Therefore, the bench deleted the addition made under Section 68 of the Income Tax Act towards the receipt of interest-free unsecured loans.
After reviewing the facts and records, the two-member bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) held that third-party statements cannot be used against the assessee until and unless the opportunity of cross-examination is afforded. Therefore, the bench deleted the addition made under Section 68 of the Income Tax Act.
The Indore bench of the Income Tax Appellate Tribunal (ITAT) held that the claim of credit of Tax Collected at Source (TCS) by individual license holders can’t be allowed when it has already been allowed to the partnership firm.
The Two-member bench comprising of Vijay Pal Rao (Judicial member) and B.M. Biyani (Accountant member) held that the credit of the tax deducted at source/tax collected at source be given to the de-facto prayer/recipient of the amount which is subjected to the collection/deduction of tax as in whose hands the corresponding income is going to be assessed.
The relevant facts regarding the purchase and sales of liquor by the assessee and consequential income offered to tax by the assessee as well as the undertaking/indemnity from the individual license holders are required to be produced and verified/examined. Therefore, the matter was set aside to the record of the Assessing Officer for the limited purpose of examining the factual aspect of carrying out the transactions of purchase and sales and corresponding income offered to tax by the assessee as well as production of the undertaking/indemnity on behalf of the individual license holders for not claiming the credit of the said amount of TCS. The Assessing Officer shall allow the claim of credit of TCS subject to verification of the above record and facts. Thus, the appeal of the assessee was allowed.
The Income Tax Appellate Tribunal (ITAT), Kolkata bench, held that an addition should not be made under Section 44AD of the Income Tax Act without rejecting the books of accounts produced during the assessment proceedings.
After reviewing the facts and records, the two-member bench of Dr. Manish Borad (Accountant Member) and Sonjoy Sarma (Judicial Member) deleted the addition made by the assessing officer under Section 44AD of the Income Tax Act without rejecting the book of accounts. Therefore, the bench allowed the appeal
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that the capital gain deduction under Section 54F of the Income Tax Act, 1961 cannot be allowed without holding flats for a minimum period of 3 years.
The Two-member bench comprising of R.K. Panda (Vice-President) and Laliet Kumar (Judicial member) held that the assessee has not held the flats for a minimum period of 3 years, the provisions of Section 54F of the Income Tax Act are not fulfilled and therefore, by allowing the claim of deduction under Section 54F of the Income Tax Act, the order of the Assessing Officer has become erroneous as well as prejudicial to the interest of the Revenue. Therefore, the bench does not find any infirmity in the order of the PCIT invoking the jurisdiction under Section 263 of the Income Tax Act. Accordingly, the order of the PCIT was upheld and the appeal of the assessee was dismissed.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition under Section 69 of the Income Tax Act holding that the books of account could not be rejected based on non-maintenance of stock register in desired format.
The two-member Bench of Waseem Ahmed, (Accountant Member) and T.R. Senthil Kumar, (Judicial Member) observed that as per the provisions of section 145(3) of the Income Tax Act, the AO was empowered to reject the books of accounts of the assessee and make best judgement assessment in the manner as specified under section 144 of the Income Tax Act if he was not inter-alia satisfied with the completeness or correctness of the books of accounts of the assessee.
The Bench allowed the appeal filed by the assessee holding that, “In this documentary evidence no defect was pointed out by the AO except non maintenance of stock register in the desired format. Therefore, without bringing any corroborative material on record suggesting specific defect in the books of account the book result cannot be rejected merely for not providing certain detail which the AO requires to verify.”
The Raipur bench of the Income Tax Appellate Tribunal (ITAT) held that the income earned by way of interest and claimed under income from other sources shall be allowable expenditure under Section 57(iii) of the Income Tax Act, 1961.
The Two-member bench comprising of Ravish Sood (Judicial member) and Arun Khodpia (Accountant member) held that expenditure incurred by the assessee, the genuineness of which was not disputed by the Assessing Officer are allowable expenditure in terms of provisions of Section 57(iii) of the Income Tax Act. Therefore, the additions made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeal) [CIT(A)] are not sustainable. Thus, the appeal of the assessee was allowed.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, while granting relief to Havells India, deleted the disallowance of sales incentives payable to dealers and distributors under the Shahenshah Scheme.
After reviewing the facts and records, the two-member bench of Dr. B. R. R. Kumar (Accountant member) and Saktijit Dey (Vice-President) granted relief to Havells India and deleted the disallowance of sales incentives payable to dealers and distributors under the Shahenshah Scheme. Therefore, the bench allowed the appeal of the assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi bench held that the identity and creditworthiness of transactions of purchase and sale of shares at par value, without earning any capital gain, were duly explained. Therefore, the bench deleted the addition made under Section 68 of the Income Tax Act, 1961.
After reviewing the facts and records, the two-member bench of Dr. B. R. R. Kumar (Accountant Member) and Chandra Mohan Garg (Judicial Member) held that the identity and creditworthiness of transactions of purchase and sale of shares at par value without earning any capital gain were duly explained. Therefore, the bench deleted the addition made by the AO under Section 68 of the Income Tax Act.
The Income Tax Appellate Tribunal (ITAT), Pune bench held that the assessment order passed under Section 144, read with Section 147 of the Income Tax Act, without a Document Identification Number (DIN), should be treated as invalid.
After reviewing the facts and records, the two-member bench of Dr. Dipak P. Ripote (Accountant member) and S.S. Godara (Judicial member) relied upon the decision of Bombay High Court in the case of Ashok Commercial Enterprises Vs. ACIT, observed that assessment orders without DIN shall be treated as invalid and deemed never to have been issued. Therefore, the bench allowed the above ground raised by the assessee.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench held that contractual or compulsive transfer of donation funds did not fall under voluntary donation, which could not be treated as an application of funds towards the object of the trust. Therefore, after observing the above, the bench directed readjudication in respect of granting registration for the assessee trust.
It was observed by the tribunal that the application could not have been rejected by CIT(E) on the grounds that 30% of the total donation that the assessee Trust would receive would be transferred to the Red Cross Society’s State/Union Territory Branch and National Headquarters. This is because the transfer of donation funds is contractual or compulsive, does not fall under the category of voluntary donation, and cannot be regarded as an application of funds towards the assessee Trust’s objectives. Therefore, the CIT(E) rejected the registration application without confronting the issue and affording a proper opportunity of hearing to the assessee Trust. After reviewing the facts and records, the two-member bench of Annapurna Gupta (Accountant member) and T.R. Senthil Kumar (Judicial member) directs readjudication for granting registration under Section 12AB of the Income Tax Act.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) held that additions under Section 68 of Income Tax Act,1961 would be made for the cash credits received by an assessee in its accounts during the year relevant to Assessment Year (AY).
The bench comprising of Rajpal Yadav, Vice-President and Rajesh Kumar, Accountant Member observed that a perusal of Section 68 of the Income Tax Act would indicate that additions would be made for the cash credits received by an assessee in its accounts during the year relevant to A.Y. 2012-13. No amount was received by erstwhile M/s. Kasa Contrade Pvt. Limited and, therefore, being a successor company, it cannot be assessed in the hands of the assessee in A.Y. 2012-13. The Tribunal held that since no assessment was reopened in A.Y. 2011-12, therefore, addition is not sustainable.Thus allowed the appeal of the assessee and deleted the addition.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) confirmed the addition under Section 60 of the Income Tax Act, 1961 due to the failure of the assessee to prove the creditworthiness of the creditor and genuineness of the transaction.
The Two-member bench comprising of Shamim Yahya (Accountant member) and Yogesh Kumar U.S. (Judicial member) held that the assessee has not produced any document before the CIT(A) or before the bench to prove the identity to the creditworthiness of the creditor and the genuineness of the transaction. The CIT(A) has also observed that ‘the assessee has failed to explain cash credit of Rs.50,00,000/- within the meaning of Section 68 of the Income Tax Act. Therefore, the lower authorities have committed no error and the bench finds no infirmity in the order of the CIT(A). Thus, the appeal of the assessee was dismissed.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the disallowances/additions of loss cannot be raised when it has not been claimed in the computation of income.
The Single-member bench comprising of Rajesh Kumar (Accountant member) held that the assessee has not claimed this loss and therefore, there is no question of disallowance of loss or addition of loss when the same is not claimed in the computation of income. The Assessing Officer has wrongly appreciated the facts of the case which is also in appellate proceedings by CIT(A). In view of the above facts, the bench set aside the order of CIT(A) and directed the Assessing Officer to delete the addition. Thus, the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the provision of Section 269SS and 269T of the Income Tax Act, 1961 imposed statutory liability and cannot be stated as a mere technical violation.
The Two-member bench comprising of M. Balaganesh (Accountant member) and Anubhav Sharma (Judicial member) held that the violation was of Section 269SS of the Income Tax Act which deals with the modes of accepting certain loan deposits and specified sums and Section 269T of the Income Tax Act which deals with the modes of repayment of certain loans for deposits are violation which are not to be examined from the perspective the person who has given the loan or to whom the loan was returned but from the perspective of the recipient of the loan.
Thus, the innocence pleaded on account of ignorance of the law of Directors who are claimed to be non-residents is insignificant. There is no question of any benefit to the assessee company on the basis of the claim of bona fides of the Directors. The provisions of Section 269SS and 269T of the Income Tax Act imposed statutory liability and cannot be said to be held to be mere technical violations in the case of companies. Therefore, the appeal of the assessee was dismissed.
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