This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal ( ITAT ) reported at Taxscan.in during the previous week 21st July 2024 to 27th July 2024.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the difference between the average sale rate and the actual transaction value should be treated as âon-moneyâ. However, if the average sale rate is found to be higher than the actual transaction value, then the difference should be considered as âon-moneyâ paid in cash for the purchase of the flat and added to the total income of the assessee under Section 69 of the Income Tax Act, 1961.
The two member bench of the ITAT comprising Narendar Kumar Billaiya (Accountant member) and Sandeep Sigh Karhail ( Judicial member) directed that if the average sale rate for the assessment year 2014-15 of the flat is found to be lower than the actual transaction value in the case of the assessee, then no addition on account of âon moneyâ be made in the hands of the assessee.
However, if the average sale rate is found to be higher than the actual transaction value, then the difference should be considered as âon moneyâ paid in cash for the purchase of the flat and added to the total income of the assessee under Section 69 of the Income Tax Act.
Accordingly, the impugned order is set aside and the appeal by the assessee was partly allowed for statistical purposes.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), consisting of M. Balaganesh (Accountant Member) and Vimal Kumar (Judicial Member), has ruled that Built Operate and Transfer (BOT) projects are considered intangible assets, highlighting that the assessee is entitled to claim depreciation at 25% on road construction as admissible on intangible assets.
In a significant ruling, the special Bench of the Income Tax Appellate Tribunal (ITAT) in Hyderabad has set a precedent by recognizing rights under Build-Operate-Transfer (BOT) projects as intangible assets. This decision was rendered in the case of ACIT Hyderabad versus M/s. Progressive Construction Limited.
The tribunalâs judgment revolved around the interpretation of Section 32(1)(ii) of the Income Tax Act, which pertains to the depreciation of intangible assets. Drawing from the precedent set by the Supreme Court in the case of Techno Shares and Stocks Ltd., the ITAT concluded that the right to operate toll roads and collect toll charges under BOT contracts qualifies as a business or commercial right. Consequently, this right is categorized as an intangible asset under the law, making it eligible for depreciation.
In view of the above material facts and well-settled principles of law, the bench highlighted that the assessee is entitled to claim depreciation at 25% on road construction as admissible on intangible assets. Therefore, the impugned orders are not legal and deserve to be set aside. Hence, the appeal of the assessee was allowed for statistical purposes.
The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) held that the indexation benefit is allowable based on the cost of acquisition of property sold by the taxpayer. It was held that the assessee is entitled to avail of the benefit of carrying forward of long-term capital loss on the sale of residential property.
The two member bench of Saktijit Dey (Vice-President) and M. Balaganesh (Accountant Member) observed while completing the assessment, the Assessing Officer did not allow set off and carry forward of long term capital loss. As the assessee raised objections on the issue, the DRP directed the Assessing Officer to allow set off of long term capital loss as per law by passing a speaking order.
However, while passing the final assessment order, though, the Assessing Officer set off the long term capital gain computed on sale of commercial property against long term capital loss on sale of residential property, however, he did not allow carry forward of the long term capital loss remaining after set off.
The ITAT held that the assessee is entitled to avail the benefit of carry forward of long term capital loss. Accordingly, the Assessing Officer is directed to verify the issue factually and allow carry forward of long term capital loss claimed by the assessee.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) held that as per section 144 C of the Income Tax Act, 1961 the Assessing Officer ( AO ) must pass a draft assessment order to the eligible assessee if he proposes to make any variation in the income or loss returned which is prejudicial to the interest of such assessee.
The two member bench of Manu Kumar Giri (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) while expanding the scope of Sec 144C by defining eligible assessee as a non-resident not being a company, observed that AO is quite empowered to issue draft assessment order even in cases where he proposes to make any variation which is prejudicial to the interest of the assessee.
The Bench partly allowed Assesseeâs appeal and restored the matter to the AO to re-examine whether the Assessee could be considered as a beneficial owner of royalty.
In a recent case, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that the services rendered for product certification, which include evaluating technical quality and issuing certificates, do not fall under the definition of Fees for Technical Services as per Section 9(1)(vii) of the Act.
The two-member Bench of T.R. Senthil Kumar (Judicial Member) and Makarand V. Mahadeokar (Accountant Member) observed that the royalty is payable to the vendor only upon the activation of the software by the end user, which creates a time gap between the provision made by the assessee and the actual activation by the end user.
The Tribunal viewed that the provision for royalty expenses is made at the time of recording sales, but the actual payment is not immediately due to the third-party vendor as the end user has not yet activated the software.
The ITAT deleted the additions made by AO under section 40(a)(i) while concluding that the payments are not liable for withholding tax under section 195 and dismissed the appeal.
The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) held that the Assessing Officer ( AO ) cannot make income additions solely based on the retracted statement of third parties. It was viewed that once the assessee has denied payments made by him, then he cannot be expected to prove the negative.
The two member Bench of Aby T. Varkey (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) held that addition could not be made on mere presumption and suspicion. The AO has to bring cogent positive evidences to sustain addition based on third party statement / material.
The Bench found that the AO retracted the statement of R. Sabapathy within a span of three months and R. Sabapathy stated that loan of Rs.17 Crores was received from Rakesh whereas the balance of Rs.8 Crores was out of sale of excess stock. The tribunal found that AO failed to conduct any independent enquiry relating to the value of the property purchased or did not refer the same to the valuation officer and merely relied on the statement given by the seller, the same would be fatal to additions.
The Income Tax Tribunal viewed that the impugned additions are merely unsubstantiated additions which could not be sustained in law. The ITAT deleted the additions confirmed by the Commissioner of Income Tax (Appeals) and allowed the Assesseeâs appeal. Shri Rajagopal Saravanan
The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under section 69 of the Income Tax Act, 1961 as the cash sales canât take place before commencement of business.
The two member bench of Madhumita Roy (Judicial Member) and Avdhesh Kumar Mishra (Accountant Member) observed that the purchases are entirely through imports. Also found that the revenue has also failed to place any material on the record to demonstrate that the VAT returns of the relevant year have not been accepted by the VAT authority and the Custom authority has not accepted the imports/purchases.
The ITAT deleted the addition made under section 69A and dismissed the appeal filed by Revenue.
The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has set aside the appellate order and allowed the deduction of Rs. 52,51,027 in respect of traded goods written off on account of damaged, obsolete, or expired stock.
The two-member ITAT bench, consisting of Pradip Kumar Kedia, ( accountant member ), and Yogesh Kumar ( judicial member ), based on the facts and previous decisions, found merit in the ground claimed by the assessee and deleted the disallowance made by the A.O. which has been confirmed by the CIT(A) and thus the appeal was partly allowed.
Recently the Income Tax Appellate Tribunal (ITAT) Chennai dismissed an appeal made for the deletion of penalty imposed under section 271 of the Income Tax Act 1961 (ITA), as ordered by the Commissioner of Income Tax (Appeals) [CIT (A) ]
The bench comprising Mr Mahavir Singh and Mr SR Raghunatha heard the appellantâs arguments. The bench observed that the company failed to provide sufficient evidence for the delay, highlighting that the company had been compliant in filing audit reports for other years. It was also observed that the appellantâs side had no other contentions besides that they are a law abiding citizen who couldnât file the income tax return on time due to litigation and the financial struggles that followed. The tribunal didnât find any merit in the issues raised by the appellant. Consequently, the appeal was dismissed and the penalty imposed was upheld.
Recently, Income Tax Appellate Tribunal ( ITAT ) Ahmedabad ruled in favour of the appellant in an appeal filed against the order of the Assessment Officer (AO) made under Section 143(3) read with Section 143(5) of the Income Tax Act, 1961.
The bench comprising Ms. Suchitra Kamble and Mr Makarand V Mahadeokar observed that the effective borrowing cost, including the guarantee fee, was lower than the interest rate quoted by the bank and this justifies the payment of guarantee fee. It was also observed that the argument made by the AO which stated that âno real service were providedâ was considered not compelling enough, noting that the economic benefits derived from lower interest rates supported the armâs length nature of the transaction.
The tribunal further focused on emphasizing the importance of consistency in decisions, especially given that cases of similar facts and circumstances were already judicially decided before. By stressing on the aforementioned points, the tribunal ruled in favor of the appellant and deleted the adjustment made by the Assessing Officer.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
