The most important stories on the Income Tax Appellate Tribunal (ITAT) that were published at Taxscan between November 12, 2023 to November 17, are critically summarized in this Round-Up.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that merely on the basis of the statement of the director of the vendor company an addition under Section 69B of the Income Tax Act, 1961 cannot be made by ignoring the facts of the assessee company.
Therefore the Two-member bench comprising of Manjunatha G (Accountant member) and Manomohan Das (Judicial member) held that merely on the basis of the statement of the Director of the vendor company, additions cannot be made ignoring the fact that the appellant company had categorically stated during the post-search investigation that, balance consideration has been paid on subsequent dates.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that an addition cannot be made towards disallowance of bonus as payment made for bonus doesn’t fall under Section 40A(3) of the Income Tax Act, 1961.
The Two-member bench comprising of Mahavir Singh (Vice-President) and Manjunatha G (Accountant member) held that there was no error in the reasons given by the CIT(A) to restrict the disallowance of bonus to the extent of 20% on actual expenditure disallowed by the Assessing Officer and thus, the order of the CIT(A) was upheld and the appeal of the revenue was dismissed. To Read the full text of the Order CLICK HERE
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the issuance of notice under Section 153C of the Income Tax Act, 1961 shall be invalid ab-initio when there is no incriminating material found during the search.
The Two-member bench composed of BRR Kumar (Accountant member) and Astha Chandra (Judicial member) held that the addition was not based on any incriminating document found as a result of the search. Therefore, the order of the CIT(a) was upheld and the appeal of the revenue was dismissed.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the disallowance of expenses under Section 43B of the Income Tax Act, 1961 cannot be denied when the ex-gratia and employee benefits are shown under the appropriation of funds.
The Two-member bench comprising Waseem Ahmed (Accountant member) and TR Senthil Kumar (Judicial member) observed that the question of making any payment towards staff ex-gratia and staff benefit arises in relation to employees/management of the assessee. These employees/management persons are paid salary, remuneration which has nowhere been disallowed by the authorities below. Based on the salary structure the amount of ex-gratia and employee staff benefits are determined.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, has annulled the disallowance of a long-term capital loss arising from the sale of shares of a private company to its initial promoters
The two-member bench, consisting of M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member), found that the assessee, facing challenges, had genuinely sold the shares to Smt. Sunita Jain at a negotiated price of Rs. 3 per share, considering FPTPL’s significant losses. The tribunal, based on its review of facts and records, deleted the disallowance of the long-term capital loss incurred on the sale of shares to the initial promoters. Consequently, the tribunal allowed the appeal of the assessee.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) granted relief to Apollo Pharmacies and held that sufficient time shall be given to the assessee when the pending petition and a request to keep in abeyance appeal proceedings till the disposal is made.
The Two-member bench comprising of Manjunatha G (Accountant member) and Manomohan Das (Judicial member) held that when the petition filed by the assessee before the Chairman, CBDT, was pending for disposal, and the assessee requested to keep in abeyance the appeal proceedings till disposal of its petition, the CIT(A) ought to have given sufficient time to the appellant to pursue its application filed before the Chairman, CBDT and keep the appeals in abeyance till disposal of petition by Chairman, CBDT.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, deleted the secondary adjustment made towards the upfront discount payment by Tech Mahindra to secure contracts for software and IT services provided to non-resident venture partners.
The Tribunal consisting of Padmavathy S (Accountant Member) and Amit Shukla (Judicial Member),observed that the TPO made the secondary adjustment by recharacterizing the upfront discount payment as an interest-free advance and charging interest on it. The bench highlighted the provision to section 92CE(1), stating that no secondary adjustment shall be carried out if the primary adjustment is made in respect of an assessment year commencing on or before April 1, 2016.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, held that the appropriate LIBOR rate should be applied to determine the Arm’s Length Price (ALP) for loans borrowed in foreign currency. The bench directed considering an interest rate of LIBOR plus 80 basis points.
The Tribunal observed that, for loans borrowed in foreign currency, the appropriate LIBOR rate should be applied, considering the lower risk in the case of loans to a subsidiary compared to third parties (ECB). The bench held that LIBOR plus 80 basis points is appropriate in the assessee’s case, dismissing the revenue’s appeal
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication as late fee under Section 234E of the Income Tax Act 1961, was without giving opportunity for submitting reasons for delay in filing appeal.
The two-member Bench of Om Prakash Kant, (Accountant Member) and Rahul Chaudhary, Judicial Member noted that the appeal was instituted on 05/07/2019 and clearly, there was a delay in filing the appeal. On perusal of the order passed by the CIT(A), it appeared that the Appellant was not given an opportunity to explain the delay in filing the appeal or make submission on maintainability thereof.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that the proposed addition made under Section 50C of the Income Tax Act, 1961, concerning Long-Term Capital Gain, could only be processed under Section 143(3) of the Income Tax Act, 1961.
the tribunal of two-member bench of S. Rifaur Rahman (Accountant Member) and Kuldip Singh (Judicial Member) observed that the proposed addition under Section 50C of the Income Tax Act exceeds the mandate under Section 143(1) of the Income Tax Act and can only be processed under Section 143(3) of the Income Tax Act. Thus, the Centralized Processing Centre cannot make an addition without providing a proper opportunity to the assessee, which is only possible under Section 143(3) of the Income Tax Act.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has quashed the revision order holding that levy of interest under Section 115P of the Income Tax Act, 1961 and Dividend Distribution Tax (DDT) liability under Section 115O of the Income Tax Act would not arise out of the assessment order under Section 143(3) of the Income Tax Act.
The two-member Bench of Rajpal Yadav, Vice President and Shri Girish Agrawal, Accountant Member set aside the revision order observing that, “An assessment order passed u/s. 143(3) requires the AO to make an assessment of ‘total income or loss’ of the assessee which has to be assessed in reference to section 5. AO is required to look into the income received or deemed to be received or accrued or deemed to be accrued or arisen while determining total income of the assessee for making an assessment u/s 143(3)
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has annulled the disallowance under Section 36(1)(vii) of the Income Tax Act, 1961, pertaining to bad debts written off by non-rural branches of Canara Bank.
tribunal of the two-member bench comprising Laxmi Prasad Sahu (Accountant Member) and George George K. (Vice President) observed that a similar issue had been decided in favor of the Assessee by a coordinate bench of the Tribunal. Therefore, the provision to Section 36(1)(vii), which necessitates the adjustment of bad debts against provisions allowed under Section 36(1)(viia), would not apply to non-rural advances as well.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) upheld the order of the Commissioner of Income Tax (Appeal) [CIT(A)] due to disallowance of loss due to incorrect comprehension of Section 43(6) of the Income Tax Act, 1961.
The Two-member bench composed of G.S. Pannu (President) and Chandra Mohan Garg (Judicial member) held that the CIT(A) rightly held that the disallowance of loss was due to incorrect comprehension of the provisions of Section 43(6) of the Income Tax Act which provides reduction of Written Down Value by the ‘money payable’ in the case of sold assets.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, while directing the reassessment of the assessee’s case, held that the notice for reopening the assessment regarding the issue of capital gains was issued in the name of a deceased person.
the two-member bench of G.S. Pannu (Vice President) and C.V. Bhadang (President) noted that the CIT(A) did not determine the appeal in the manner mandated by the statute. The appeal was dismissed solely based on the assessee’s failure to appear, ignoring the fundamental point raised by the assessee regarding the notice for reopening being issued in the name of a deceased person. Consequently, the bench directed readjudication.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to portfolio deleting the income tax addition against the consignment agent on account of purchase return.
The two-member Bench of Kuldip Singh, (Judicial Member) and S. Rifaur Rahman, (Accountant Member) observed from the record that assessee’s main as well as major income was from commission and assessee had to declare purchases and sales received from Sabyasachi products which was on consignment basis. However, as per the requirement of VAT, assessee had to declare both the purchases as well as sales in its Books of Accounts and assessee had to declare the goods kept under its control i.e., opening goods on consignment basis and total purchases for the year less purchase returns during the year under consignment.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the benefit of Article 8 of the India Singapore DTAA shall be allowed when vessel handling charges were allowed to be taxed by the Indian Entity.
The Two-member bench comprising of Mahavir Singh (Vice-President) and Manoj Kumar Aggarwal (Accountant member) held that the reassessment proceedings as well as the consequential assessment framed therein were unsustainable in law and accordingly, liable to be quashed
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) set aside the impugned assessment order and held that income other than business/professional mismatch falls within scope of limited scrutiny.
The Two-member bench comprising Rajpal Yadav (Vice-President) and Rajesh Kumar (Accountant member) held that the counsel for the assessee was misplaced and that the two items could not be looked into by the Commissioner because it is a case for limited scrutiny.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed the disallowance under Section 40(a)(i) of the Income Tax Act, 1961, and held that the sale agents rendered services outside India and payment made directly or wholly through foreign exchange are not taxable under India-USA Double Taxation Avoidance Agreement (DTAA).
The Two-member bench comprising M. Balaganesh (Accountant member) and Anubhav Sharma (Judicial member) held that following the findings of the Co-ordinate Bench in favor of the assessee, the issue with regard to disallowance under Section 40(a)(i) of the Income Tax Act stands decided in favor of the assessee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that interest on enhanced compensation was taxable as income from other sources.
The two-member Bench of M. Balaganesh, (Accountant Member) and Anubhav Sharma, (Judicial Member) relied upon the observation of CIT(A) which held that, “considering the provisions of section 28 of Land Acquisition Act, 1894 and also the decision of Punjab & Haryana High Court which is the Jurisdictional High Court for the assessee in the case of Manjeet Singh (HUF) Karta Manjeet Singh V/s Union of India and held that the said interest received u/s 28 of Land Acquisition Act would be taxable as income from other sources in the hands of the assessee.”
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has set aside the revision order as inadvertent mistake was due to the typographical error in calculating the total income.
The two-member Bench of Rajpal Yadav, (Vice President) and Girish Agrawal, (Accountant Member) set aside the revision order observing that, “We find that on this issue, present case is purely on facts which are verifiable from the records of the assessee, examination and verification of the original computation of income and tax vis-à-vis the revised computation of income and tax placed on record. We find that it is a case of bonafide mistake committed by the assessee, which effectively does not result in prejudice caused to the revenue in the year under consideration. Liability of tax for the year under consideration is duly discharged by the assessee which has been evidently demonstrated from the two computations placed on record.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, deleted the disallowance made towards the rental expenses incurred for a property taken on rent for business purposes.
the two-member bench of Dr. B.R.R. Kumar (Accountant Member) and Saktijit Dey (Vice-President) observed that one of the properties taken on rent was actually used for the business of the assessee. Consequently, the bench directed the deletion of the disallowance made towards the rental expenses incurred for the property taken on rent for business purposes
The Income Tax Appellate Tribunal (ITAT), Delhi bench held that rental income received from letting out property is taxable under the heading “Income from house property.” Therefore, the bench allowed a deduction under Section 24(a) of the Income Tax Act, 1961.
the two-member bench of Dr. B.R.R. Kumar (Accountant Member) and Saktijit Dey (Vice-President) held that rental income received from letting out property is taxable under the heading “Income from house property.” Therefore, the bench allowed a deduction under Section 24(a) of the Income Tax Act. Consequently, the bench dismissed the appeal filed by the revenue
The Income Tax Appellate Tribunal (ITAT), Hyderabad bench directed to delete 75% of total addition made towards the overburden removal expenditure incurred for mining operations.
the tribunal of the two-member bench of K.Narasimha Chary,(Judicial Member) and RamaKanta Panda, (Vice President)
observed that assessee has been in the mining contracts, and in mining contracts, for extracting the required ore or minerals the overburden has to be removed involving expenditure, which goes on decreasing year after year. Further, in respect of the overburden removal expenditure of the earlier years, the assessee voluntarily made a disclosure in respect of such expenses
The Income Tax Appellate Tribunal (ITAT), Chennai bench deleted the addition made towards the bogus interest expenditure based on sworn statements as well, as reconciliation statements filed by the assessee during the course of assessment proceedings.
The tribunal of the two-member bench of Manoj Kumar Aggarwal (Accountant Member) and Mahavir Singh (Vice President)observed that the additions are based on sworn statements as well as reconciliation statements filed by the assessee during the course of assessment proceedings. Also the KROLL’s claim of bogus purchases has been accepted for all the years except for AY 2016-17 by the Income Tax Settlement Commission.
The Income Tax Appellate Tribunal (ITAT), Hyderabad bench while observing the difference in dates of agreement fixing for consideration and registration of property, directed to take the date of agreement adopted by Stamp Duty Valuation for compute full value consideration.
The bench observed that when the date of agreement fixing the amount of consideration and date of registration of property is different, the value adopted by stamp valuation authority on the date of agreement was to be taken for purposes of computing the full value of consideration of such transfer
The Income Tax Appellate Tribunal (ITAT), Delhi bench, has ruled that professional fees paid to an advocate for drafting a share purchase agreement to facilitate the acquisition of shares are considered revenue expenditure.
The two-member bench of M. Balaganesh (Accountant Member) and Kul Bhara (Judicial Member) held that professional fees paid to an advocate for drafting a share purchase agreement to facilitate the acquisition of shares are indeed revenue expenditure. To Read the full text of the Order CLICK HERE
The Income Tax Appellate Tribunal (ITAT), Pune bench, has allowed the carry forward of unabsorbed depreciation from assessment years 1997-98 to 2000-01 for set-off without any time limit.
The two-member bench of G.D. Padmashali (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member) dismissed the grounds raised by the revenue. Kishor B. Phadke, Counsel for the assessee, and Ajay Kumar Kesari, appearing for Revenue, presented their arguments during the proceedings.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has deleted an addition against Volkswagen on account of government grants.
The two-member Bench of R.S. Syal, (Vice President) and S.S. Viswanethtra Ravi, (Judicial Member) observed that the Commissioner may call for and examine the record of any proceedings under this Act and thereafter if he considers that any order passed therein by the AO was erroneous, he may initiate the revision proceedings. Both the conditions, namely, the CIT calling for and examining the record and then considering the assessment order passed by the AO to be erroneous and prejudicial to the interest of the Revenue were to be cumulatively satisfied by the CIT alone.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has upheld the deletion of addition under Section 69A of the Income Tax Act 1961 upon cash found during search after demonetisation in fiduciary status as director.
The two-member Bench of M. Balaganesh, (Accountant Member) and Anubhav Sharma, (Judicial Member) dismissed this ground of appeal filed by the revenue observing that, “We find that the company had come forward give details of various cash withdrawals made by them and details of cash expenses incurred by them from 08.11.2016 to 20.03.2017 which was evident from the details furnished in pages 31 to 41 of the Paper Book.”
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