1. Boundary Wall & Land-Filling Costs allowed as Genuine Devt. Expenses: ITAT Partly allows LTCG Claim

Kiran Yadav vs The ITO CITATION: 2025 TAXSCAN (ITAT) 2121

The Jaipur Bench of the Income Tax Appellate Tribunal ( ITAT ) confirmed that the development costs related to the construction of a boundary wall and Mitti Bharai (land filling) were allowable as they were not disputed by the revenue authorities and partly allowed long term capital gain (LTCG).

The two-member bench, comprising Dr. S. Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) noted that the assessee had submitted 31 supporting vouchers and confirmations for the expenses related to the boundary wall and Mitti Bharai.

The tribunal observed that these documents were not disputed by the revenue authorities. The bench held that constructing a boundary wall and Mitti Bharai was a reasonable cause to cover and improve a piece of land, and the expenditure incurred, supported by evidence, could not be denied.

2. ITAT Affirms CIT(A)'s Deletion of Bad Debts of ₹1.26 Cr, Management Fee and Depreciation Citing Submission and Verification of Evidence

The two-member bench, comprising S. Rifaur Rahman (Accountant Member) and Anubhav Sharma (Judicial Member) observed that the AO had disallowed the management fee due to a lack of supporting documents (like bills/invoices/advices) and was not satisfied with the nexus between the earnings and the fees paid to the parent company.

The Tribunal found the Revenue's assertion to be without substance since the Revenue could not establish that the assessee was called upon to file specific evidence which were not filed before the AO. The appeal of the Revenue was dismissed.

3. LTCG Derived Exclusive from Equity Shares and Equity-Oriented Mutual Funds only Exempted u/s 10(38): ITAT Remits Matter

Assistant Commissioner ofIncome Tax vs Vireet Investments Pvt. Ltd. CITATION: 2025 TAXSCAN (ITAT) 2124

The Delhi Bench of the Income Tax AppellateTribunal (ITAT) held that Long-Term Capital Gains (LTCG) derived exclusively from Equity Shares and Equity-Oriented Mutual Funds can only be exempted under section 10(38) of the Income Tax Act.

The two-member bench comprising Yogesh Kumar U.S. (Judicial Member) and Avdhesh Kumar Mishra (Accountant Member), noted that the CIT(A)'s finding was based on two core facts which was STT was paid on all transactions, and samples of contract notes showed the shares and units were equity shares and units of equity-oriented mutual funds.

4. ITAT Directs TPO to Re-calculate Adjustment after Exclusion of Erroneous Comparable and Re-application of Filters

FIL India Business &Research Services Pvt. Ltd vs Assessment Unit Income Tax Department CITATION: 2025 TAXSCAN (ITAT) 2125

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) directed the Transfer Pricing Officer (TPO) to re-evaluate the arm's length price (ALP) of an assessee’s international transactions after excluding a company that failed the prescribed turnover filter.

The two-member bench, comprising Satbeer Singh Godara (Judicial Member) and Manish Agarwal (Accountant Member), examined the TPO’s order and the financial statements of the disputed company.

The tribunal held that the inclusion of this company was erroneous and directed the TPO/Assessing Officer (AO) to re-consider the comparables. The Tribunal instructed the TPO/AO to exclude SPT Investment Advisory Services Ltd. and then re-work the resulting adjustment, if any, after properly applying the filters.

5. Relief for Dabur India: ITAT Rules PCIT Erred in Setting Aside Assessment for Inadequate Enquiry Without Stating AO's View Unsustainable in Law

M/s. Dabur India Limited vsPr.CIT, Delhi CITATION: 2025 TAXSCAN (ITAT) 2126

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the PCIT erred in setting aside the assessment merely for alleged inadequate enquiries without establishing that the Assessing Officer's (AO) view was unsustainable in law or that the order was prejudicial to the interest of the Revenue.

The two-member bench, comprising S. RifaurRahman (Accountant Member) and Vimal Kumar (Judicial Member), noted that the AO had taken a possible view based on the various documents submitted by the assessee, such as audited financial statements and auditor reports.

The Tribunal found that the PCIT's directions for making fresh enquiries and verification were erroneous since the directions provided no clear findings on how the AO's order was erroneous and prejudicial to the interest of the Revenue.

6. S. 69A cannot be Invoked to Tax Commission on Seized Documents: ITAT Directs AO to Treat 20% of Gross Commission as Income

Sanjay Wahi vs AssistantCommissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2127

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled that Section 69A of the cannot be invoked to tax commission details found on seized documents, as the provision applies only to unexplained money, bullion, jewelry, or other valuable articles and directed to treat 20% of the gross commission as the income of the assessee.

The two-member bench of S. Rifaur Rahman (Accountant Member) and Vimal Kumar (Judicial Member) observed that the Revenue authorities invoked Section 69A of the Income Tax Act.

The Tribunal highlighted the conditions for invoking Section 69A, which requires the assessee to be the owner of any money, bullion, jewelry, or other valuable article that was not recorded in the books of account, with an unsatisfactory explanation of its source and acquisition.

7. Large Addition of ₹1.11 Cr Unsustainable as Investment Duly Recorded in Books and Paid Through Banking Channel: ITAT

The two-member bench comprising S. Rifaur Rahman (Accountant Member) and Anubhav Sharma (Judicial Member), observed that the assessee had recorded the transaction in its books of account and submitted all relevant information before the CIT(A).

The tribunal observed that the investment was recorded in the books and the payments were through a proper banking channel which was acknowledged by the First Appellate Authority. and the AO’s failure to submit a remand report which formed the basis of deletion of addition.

8. Taxability Determined by Employment Status: ITAT Holds Employee Transferred from PSEB to PSPCL Eligible for Exemption Only for Service Period Under PSEB

Chander Shekher Saini, vs The ITO CITATION: 2025 TAXSCAN (ITAT) 2129

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee was not entitled to full tax exemption on his entire leave encashment received upon retirement from Punjab State Power Corporation Limited (PSPCL) but only eligible for the exemption for the portion of service rendered under the erstwhile Punjab State Electricity Board (PSEB).

The Single-member bench comprising Laliet Kumar (Judicial Member) confirmed that, based on prior Coordinate Bench decisions, PSPCL could not be treated as the 'State Government' for the purposes of Section 10(10AA) of the Act. The tribunal observed that the service period from April 16, 2010, to the date of retirement under PSPCL did not qualify for the full exemption. The Tribunal noted that PSEB squarely qualified under the provisions of Section 10(10AA) as a State undertaking.

The two-member bench comprising Madhumita Roy (Judicial Member) and Brajesh Kumar Singh (Accountant Member), noted that the DRP, in its directions which had merely observed that bank charges were related to the business transactions of the assessee and therefore should be treated as operating.

The tribunal observed that this approach rendered the DRP's order "non-speaking and incomplete."

10. AO Erred by Recording Consolidated Satisfaction Note for Multiple AY's: ITAT Quashes S.153C Assessment

The Bench comprising Narender Kumar Choudhry, Judicial Member and Prabhash Shankar, Accountant Member, observed that the WhatsApp screenshot was an unauthenticated rough working that did not bear any signature or verification from any authority.

The Tribunal held that the WhatsApp chat was merely a private exchange between the purchaser’s son and his accountant and did not mention the assessee or the specific shop sold. No corroborative evidence of any cash payment was found during the search on the assessee.

12. Taxpayer to Prove Fund Flow of Loans through Partner's Repayments to HUFs: ITAT Remands Unsecured Loan Addition Matter

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter ₹35,00,000 to the Commissioner of Income Tax (Appeals) [CIT(A)] to allow the assessee to prove the complete fund flow trail of unsecured loans received from three Hindu Undivided Families (HUFs) by linking them to repayment transactions made by one of its partners.

The Single-member bench comprising LalietKumar (Judicial Member) observed that while the lower authorities were correct in confirming the addition based on the material available at that time as the assessee had failed to produce documentary evidence of the entire fund flow.

The tribunal observed that the new evidence now placed before the Tribunal could not be ignored.

13. Proper Course of Action for Assessment Based on Information from Search must be u/s 153C: ITAT Rules S. 147 Invocation Invalid

Somnath Ramdas Jadhav,Mundhekarwadi vs ITO CITATION: 2025 TAXSCAN (ITAT) 2134

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) quashed the entire reassessment proceedings and ruled that proper course action must be under section 153C for reopening based on search but not section 147 of the Income Tax Act.

The two-member bench comprising Manish Borad (Accountant Member) and Vinay Bhamore (Judicial Member) relied on a binding precedent set by a coordinate bench in the case of Vijaykumar Mangilal Chordiya vs. NFAC.

The tribunal held that the initiation of proceedings under Section 147 was not in accordance with law and liable to be quashed.

14. Reduction in Shareholding Due to Fresh Allotment is Not a 'Transfer or Relinquishment of Right': ITAT Deletes ₹2.53 Cr Capital Gain Addition

Income Tax Officer vs Ms. Sunita Sanjeev Aeren, Aerens Bimaldeep Complex CITATION: 2025 TAXSCAN (ITAT) 2135

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) granted substantial relief by confirming the deletion of a Short-term Capital Gain addition of ₹2,53,20,000/- for the Assessment Year (AY) 2011-12 and held that reduction in shareholding due to fresh allotment was not a transfer or relinquishment of right.

The two-member bench comprising Mahavir Singh (Vice President) and Krinwant Sahay, (Accountant Member), relied on the binding precedent set by the Delhi High Court in the related case of Snerea Properties Pvt.Ltd. Vs. ACIT.

The High Court had previously confirmed that where no part of the title or interest in the property was transferred by the assessee, the income incidence, if any, would fall only on the transacting parties (the transferor and transferee of the shares), and not on the company or the non-transacting shareholder.

15. Sale Proceeds Recorded in Books Cannot be Recharacterized as Unexplained Cash Credit: ITAT Deletes Addition

Krishna Prabhas Agro Oils Private Limited vs Assistant Commissioner CITATION: 2025 TAXSCAN (ITAT) 2137

The Visakhapatnam Bench of the Income Tax Appellate Tribunal (ITAT) has held that once the books of accounts and the resultant trading results are accepted by the Assessing Officer (AO), a portion of the recorded sale proceeds cannot be recharacterized and taxed again as an unexplained cash credit under Section 68 of the Income Tax Act, 1961.

The two-member bench comprising Manjunatha G. (Accountant Member) and Ravish Sood (Judicial Member) observed that the AO, while framing the assessment, had accepted the audited books of accounts and computed the income based on the returned income, which included the sales proceeds in question.

The tribunal relied on precedents, including the ITAT Raipur Bench's decision in Rahul Cold Storage v. ITO which held that receipts forming part of the business turnover and accepted by the AO cannot be taxed again under Section 68 of the Income Tax Act.

16. Interest Income Earned by Credit Co-operative Society from Co-operative Bank is Eligible for Deduction u/s 80P(2)(d): ITAT

ITO vs The Ammunitionfactory co-op. credit society limited CITATION: 2025 TAXSCAN (ITAT) 2138

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) confirmed that interest and dividend income earned by a primary credit co-operative society from investments made with a co-operative bank is eligible for deduction under Section $80P(2)(d)$ of the Income Tax Act, 1961.

The two-member bench comprising Manish Borad (Accountant Member) and Vinay Bhamore (Judicial Member) noted that the assessee was a primary credit co-operative society whose core business was providing credit facilities to its members.

The Tribunal relied on the principle that a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act. It followed binding precedents from the Jurisdictional Mumbai Bench of the ITAT and the Hon'ble Bombay High Court in the case of Annasaheb Patil Mathadi Kamgar Sahkari Pathpedhi Ltd.

17. Bank Holidays Do Not Justify Cash Payments Exceeding Statutory Limit: ITAT Rejects Assessee’s Claim u/r 6DD of Income Tax Rules

M/s. Texo The Builders vsACIT CITATION: 2025 TAXSCAN (ITAT) 2139

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) ruled that the payments was not made on banking holidays and held that the assessee failed to establish the conditions required for claiming exemption under Rule 6DD(j) thus confirming the disallowance under Section 40A(3) of the Income Tax Act for the Assessment Years 2013-14 and 2014-15.

The two-member bench, comprising Laxmi Prasad Sahu (Accountant Member) and Soundararajan K (Judicial Member), critically examined the detailed submission of dates and payments provided by the assessee for the disputed cash expenses.

The Tribunal held that the actual days of payment for transactions like 'Engineer work charges' (₹21,250) and 'Mahaganapathi Steel' (₹2,00,000) were Friday, Tuesday, Wednesday, and Thursday - all regular bank working days.

Accordingly, The Tribunal ruled that the assessee’s submissions that the cash payments were made on banking holidays was incorrect. Therefore, the tribunal observed that the payments did not come under the explanation provided under Rule 6DD(j) of the Act.

18. ITAT Estimates Agricultural Expenditure at ₹22.37 Lakhs on Onion Sale, Rejects 35% of CIT(A)'s Estimation

Shital Nilesh Parakh vs ITO CITATION: 2025 TAXSCAN (ITAT) 2141

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) partly allowed the appeal of a by estimating agricultural expenditure towards onion cultivation at ₹22,37,554 out of gross sales of ₹89,50,214 and set aside the Commissioner of Income Tax (Appeals) [CIT(A)] estimation of 35%.

The two-member bench comprising Manish Borad(Accountant Member) and Vinay Bhamore (Judicial Member) considered the totality of the facts and arguments. The Tribunal decided to adopt a middle ground to estimate the expenses towards agricultural operations.

The Tribunal observed that it was appropriate to estimate the expenses at ₹22,37,554 approximately of the gross receipts for the period under consideration. This estimation was significantly higher than the assessee's claimed 21% but lower than the CIT(A)'s 35%.

19. Sale Proceeds Recorded in Books Cannot be Recharacterized as Unexplained Cash Credit: ITAT Deletes Addition

Krishna Prabhas Agro OilsPrivate Limited vs Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2142

The Visakhapatnam Bench of the Income Tax Appellate Tribunal (ITAT) has held that once the books of accounts and the resultant trading results are accepted by the Assessing Officer (AO), a portion of the recorded sale proceeds cannot be recharacterized and taxed again as an unexplained cash credit under Section 68 of the Income Tax Act, 1961.

The two-member bench comprising Manjunatha G. (Accountant Member) and Ravish Sood (Judicial Member) observed that the AO, while framing the assessment, had accepted the audited books of accounts and computed the income based on the returned income, which included the sales proceeds in question.

The tribunal relied on precedents, including the ITAT Raipur Bench's decision in Rahul Cold Storage v. ITO which held that receipts forming part of the business turnover and accepted by the AO cannot be taxed again under Section 68 of the Income Tax Act.

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