Half Yearly Income Tax Digest: ITAT Rulings 2024 [Part IV]

This half-yearly round-up analytically summarizes the key direct tax decisions of the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during the first half of 2024. Income from providing Credit Facilities to nominal members of Co-Operative Society are eligible for exemption u/s 80P(2)(a)(i) Income Tax Act: ITAT Charvaka Seva Sahakari Bank Ltd vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 296 The Bangalore bench of Income Tax Appellate Tribunal ( ITAT ) ruled that income from providing credit facilities to nominal members of cooperative society are eligible for exemption under Section 80P(2)(a)(i) Income Tax Act,1961. After observing the submissions of both parties the two-member bench of Chandra Poojari, ( Accountant member ) and Beena Pillai, ( Judicial Member ) held that income from providing credit facilities to nominal members of cooperative society are eligible for exemption under Section 80P(2)(a)(i) Income Tax Act,1961. ITAT direct to Allow Exemption u/s 10(38) of Income Tax Act only after verifying status of STT Payment M/s The Oriental Insurance Co. Ltd vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 325 The two member bench of Income Tax Appellate Tribunal ( ITAT ) Delhi bench directed to allow exemption under section 10(38) of the Income Tax Act, 1961 only after verifying the status of STT payment. After Reviewing decision assessee own case for the assessment year 2016-17 and 2013-14 the two-member bench of Yogesh Kumar U.S ( Accountant member ) and Narendra Kumar Billaiya,( Accountant Member ) directed to allow exemption under section 10(38) of the Income Tax Act, 1961 only after verifying the status of STT payment. Tarandeep Singh, counsel appeared for assessee and Sanjay Gupta appeared for the revenue. Non Filing Audit Report along with ITR is Procedural Omission: ITAT restores matter to allow Exemption u/s 11 of Income Tax Act Gyandeep Charitable Trust vs A.D.I.T CITATION: 2024 TAXSCAN (ITAT) 310 The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) restored the matter to allow exemption under Section 11 of the Income Tax Act, 1961 and held that non-filing audit report along with income tax returns ( ITR ) is procedural omission. The Coram comprising Waseem Ahmed ( Accountant Member ) observed that “Non filing of Audit Report along with return of income is a procedural omission and cannot be an impediment in law in claiming the exemption, we allow this appeal condoning the delay in filing the Audit Report in Form No. 10B. However, we also upon condoning the delay, restore the matter to the file of the CIT(A) to pass order in regard to the exemption claimed by the assessee strictly in accordance with law.” ITAT upholds addition made on account of commission income earned from accommodation entries Ram Prakash Bhatia vs ACIT CITATION: 2024 TAXSCAN (ITAT) 312 The Income Tax Appellate Tribunal (ITAT) Delhi bench recently upheld the addition made on account of commission income earned from the accommodation entries. After reviewing the facts and circumstances the two-member bench Of Dr. B. R. R. Kumar, (Accountant member) and Challa Nagendra Prasad, (Judicial Member) upheld that the addition was made on account of commission income earned from the accommodation entries. Amol Sinha, counsel appeared for assessee and P.N Barnwal, counsel appeared for revenue. Cash Deposits in Bank Account from Sale Proceeds received in Cash on due explanation, is not Unexplained Credit: ITAT Siddharth Mehta vs ITO CITATION: 2024 TAXSCAN (ITAT) 305 The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that cash deposits in bank accounts from sale proceeds received in cash on due explanation, is not unexplained credit. A Single Member Bench of M Balaganesh observed that “The assessee in the return filed on 22.05.2018 in response to notice under Section 148 of the Income Tax Act had declared income of Rs. 5,27,050/- which is nothing but the salary income. Hence, it is proved beyond doubt that the assessee did not have any other source of income except salary which is only Rs. 5.27 lakhs. While this is so how the assessee could have made reinvestment in new property for Rs. 52,63,500/- would become a point to ponder. Considering this fact itself, I hold that the explanation given by the assessee that he had received Rs. 29 lakhs in cash on sale of property is to be believed and the assessee faithfully deposited the said sum in his bank account within a short span of time.” Cash Deposit on Demonetization not to be Taxed as Unexplained Income u/s 69A of Income Tax Act on Explanation of Source: ITAT Amikrupa Education vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 309 The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) held that cash deposits on demonetization should not be taxed as unexplained income under Section 69A of the Income Tax Act, 1961 on explanation of source. The Bench of Suchitra Kamble ( Judicial Member ) observed that “The evidences produced by the assessee before the Assessing Officer as well as before the CIT(A) clearly shows that the assessee has received fees from students related to the event as well as study tour including the buildthon event fund. The assessee has given the cash bills from the bank from 01-04-2016 to 08-11-2016.” Marketing Services Rendered by US Entity in India not Taxable in India as FTS: ITAT deletes Addition DCIT vs M/s. AD2PRO Media Solutions Pvt. Ltd., CITATION: 2024 TAXSCAN (ITAT) 300 The Bangalore bench of Income Tax Appellate Tribunal (ITAT) recently held that marketing service rendered by the US entity in India is not taxable in India aa Fee for Technical Service (FTS). Therefore the bench deleted the addition made by the Assessing officer. After observing the submissions of both parties the two-member bench Of Laxmi Prasad Sahu, (Accountant member) and George George K, (Vice President) confirmed the order of tribunal in assessee own case for the Assessment Years 2011-12 to 2017-18. Thus the bench observed that “the services received by the assessee company cannot be considered as ‘royalty’ or fees for included services and the assessee was not under obligation to deduct TDS on this payment and as a consequence, the demand raised by the AO Under Section 201(1) & 201(1A) of the Income Tax Act cannot survive and the same is deleted”. Assessee entitled to Claim Credit for MAT under VSV Scheme for year under consideration: ITAT United Spirits Limited vs The Joint Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 320 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the assessee was entitled to claim credit for Minimum Alternate Tax ( MAT ) under the Vivad se Vishwas ( VSV ) Scheme for the year under consideration. The coram of Vikas Aswathy ( Judicial member ) and Padmavathy S. ( Accountant member ) concluded that the lower authorities have denied the claim of the assessee for the reason that the claim was not adequately substantiated. Therefore ITAT remitted the issue back to the assessing officer with a direction to verify the claim of the assessee based on the documentary evidence and allow the claim in accordance with law. Needless to say that the assessee was given an opportunity of being heard. Treatment of Personal Expenses as Income precludes loan classification, Income cannot be taxed twice in same Assessment Year: ITAT deletes Penalty u/s 271D DCIT vs Platinum Towers Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 323 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271D of the Income Tax Act, 1961, as treating personal expenses as income precludes loan classification, and income cannot be taxed twice in the same assessment year. The two member Bench of the tribunal comprising C.N.Prasad ( Judicial member ) and Dr.B.R.R Kumar ( Accountant member ) observed that the Assessing Officer has treated the personal expenses incurred by M/s Spaze Towers Pvt. Ltd as income of the assessee, then the same amount cannot be treated as loan in violation of the provisions of Section 269SS of the Income Tax Act. It was added that the same income cannot be taxed in two hands in the same assessment year and CIT (A) has rightly deleted the additions made by the Assessing Officer. ITAT rules omission to sign assessment order by AO cannot be cured by relying on Section 292B of Income Tax Act Reuters Asia Pacific Ltd vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 298 In a major decision of Income Tax Appellate Tribunal ( ITAT ) Mumbai ruled that the omission to sign the assessment order by the Assessing Officer cannot be remedied by relying on Section 292B of the Income Tax Act.In the case of Vijay Corporation versus ITO, the Co-ordinate Bench in a case where the assessment order served on the assessee was not signed by the assessing officer, however, the two member bench of the tribunal comprising Gagan Goyal ( Accountant member ) and Vikas Aswathy ( Judicial member ) held that requirement of signature of the assessing officer was a legal requirement. The omission to sign the order of assessment cannot be cured by relying on the provisions of Section 2928 of the Income Tax Act and holding the order invalid. Discrepancies in Maintaining KYC Documentation not amounts to Incriminating Material: ITAT deletes Addition u/s 153A of Income Tax Act Shri Renukamata Multi–State Co–operative Society Ltd vs Asstt. Commissioner of Income Tax Central Circle–4(4) The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted addition under Section 153A of the Income Tax Act and held that discrepancies in maintaining KYC Documentation does not constitute incriminating material. The bench of Sandeep Singh Karhail ( Judicial Member ) and B.R. Baskaran ( Accountant Member ) observed that “For discrepancies in maintaining KYC documentation, account opening form, and violation of society bye laws, action can be taken against the assessee under the relevant statute or by the concerned authority, such as RBI, however, the same cannot lead to an addition in the hands of the assessee under the Act. Therefore, in view of the aforesaid findings, we are of the considered view that the material/documents found during the course of the search are not of such a nature which incriminates or militates against the assessee.” No Evidence of Cash Payments for Demand Drafts to 34 Parties: ITAT Upholds Deletion of Additions by CIT (A) u/s 68 of Income Tax Income Tax Officer vs M/s. Antriksh Infrastructure Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 317 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of additions made under Section 68 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals) (CIT(A)), citing no evidence of cash payments for demand drafts to 34 parties. The Tribunal consisting, Saktijih Dey ( Vice President ) and N.K.Billaiya ( Accountant member) observed that no evidence has been brought on record to show that the assessee has purchased the demand drafts by paying cash to 34 parties. The AO has also not brought any evidence to demolish the affirmations made in the affidavits of the persons who have given advances. It appeared that the AO has made the additions on suspicion, conjecture and surmises without any evidence and the CITY (A) has deleted the impugned additions on proper appreciation of facts. Thus, the ITAT does not find any reason to interfere with the findings of the CIT (A). Capital Gain deduction shall not be denied for purchase of New Property in the name of spouse: ITAT Simran Bagga vs ACIT CITATION: 2024 TAXSCAN (ITAT) 314 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that capital gain deduction should not be denied even if new property purchased in the name of spouse. The two-member bench Of Dr. B. R. R. Kumar, ( Accountant member ) and Saktijit Dey, ( Vice President ) relied upon the decision of Delhi High Court in the cases of CIT vs. Kamal Wahal observed that a new house purchased in the name of the spouse of the assessee was eligible for claiming deduction under section 54F of the Income Tax Act. Accordingly the bench allowed the appeal filed by the revenue. Discrepancy in Form 26AS and Profit & Loss Account due to Service Tax Amount Declaration: ITAT upholds Deletion of Addition ACIT vs M/s BBH Communications India Private Limited CITATION: 2024 TAXSCAN (ITAT) 324 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Appeals) (CIT (A)) to annul an addition made, citing a discrepancy between Form 26AS and the Profit & Loss Account, attributable to the declaration of service tax amounts. The tribunal, comprising Amjit Shukla (Judicial member) and S. Rifaur Rahman (Accountant member), examined the records and noted that the primary contention revolved around the disparity between the amounts declared in the Profit & Loss Account and Form 26AS. The significant difference, amounting to ₹.2,82,98,438/-, was attributed to service tax. Additionally, it was highlighted that the assessee also recorded discrepancies related to income offered in the previous year’s returns and certain income relevant to A.Y. 2013-14, which were reflected in the gross income declared in Form 26AS. Upon reviewing the detailed reconciliation statement submitted by the assessee before the CIT (A), the ITAT found no grounds to overturn the findings of the CIT (A). Consequently, the grounds raised by the Revenue were dismissed. Share Capital from Directors and Shareholders of Company duly discharged with Evidence: ITAT deletes addition u/s 68 of Income Tax Act DCIT vs M/s Nishit Capinvest Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 311 The Delhi bench of Income Tax Appellate Tribunal (ITAT) ruled that share capital received from directors and shareholders of the company was duly discharged with evidence . Therefore the bench deleted the addition made under Section 68 of the Income Tax Act 1961. Therefore the two-member bench Of Narendra Kumar Billaiya, (Accountant member) and Anubhav Sharma, (Judicial Member) observed that share capital received from directors and shareholders of the company was duly discharged with evidence . Thus the bench deleted the addition made under Section 68 of the Income Tax Act. Absence of DIN while granting Statutory Approval u/s 153D Income Tax Act: ITAT allows Assesee appeal Bawa Float Glass Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 302 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) while allowing the appeal filed by the assessee Bawa Float Glass Ltd held that absence of Document identification Number ( DIN ) while granting statutory approval under Section 153D of the Income Tax Act, 1961 would tantamount to no approval in the eyes of law and the approval under Section 153D Income Tax Act, 1961 is rendered non-est. Therefore the two-member bench Of Laxmi Prasad Sahu, ( Accountant member ) and George George K, ( Vice President ) set aside the assessment order passed under section 153A of the Income Tax Act and canceled in view of the legal infirmity of absence of DIN on the body of statutory approval granted under Section 153D of the Act by the competent authority i.e. Addl. Commissioner of Income Tax. Property Sale Consideration not grounds for inaccurate Income Particulars: ITAT deletes Penalty u/s 271 (1) (c) of Income Tax Act Vinay Khetan vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 321 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271(1)(c) of the Income Tax Act, stating that property sale consideration should not be grounds for inaccurate income particulars. Thus, the single member bench of Pradip Kumar Kediya ( Accountant member ) found force in the plea of the assessee that the action of the AO while imposing the penalty does not meet the requirement of law. Hence, the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act was quashed In the result, the appeal of the assessee was allowed. No Liability arises as Revenue failed to issue Demand Notice with respect to Interest component of FBT: ITAT grants relief to Sony India Sony India Pvt. Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 315 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) while granting relief to Sony India the bench held that liability does not arise since failure to demand notice with respect to interest component of Fringe Benefit Tax ( FBT ). Therefore the two-member bench of G.S. Pannu, ( Vice President ) and Saktijit Dey, ( Vice President ) observed that there cannot be a levy of interest under section 220(2) of the Income Tax Act for alleged non-payment of FBT liability. Furthermore, the records reveal that once the assessee came to know the fact that the demand relating to FBT liability was appearing in the portal of the Income Tax Department, it had opened a communication channel with the Assessing Officer continuously seeking information regarding service of intimation and demand notice creating such liability. Trade or Business Related Services Ineligible for charitable Purposes: ITAT denies Registration u/s 2(15) of Income Tax Act Sanghamithra Rural Financial Services vs ACIT CITATION: 2024 TAXSCAN (ITAT) 318 The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has denied eligibility for charitable purposes under Section 2(15) of the Income Tax Act, 1961, to services related to trade or business. The Coram of Madhumita Roy (Judicial Member) and Chandra Poojari (Accountant Member) noted that nothing has been spent by the assessee, which could be considered in the nature of charity and therefore, the benefit under the proviso to Section 2(15) of the Income Tax Act, was not available to the assessee. ITAT did not find any merit in the argument of the counsel for the assessee to support various grounds raised by the assessee. Accordingly, all the grounds of assessee are dismissed and appeals of the assessee are dismissed, in the result, appeals of the assessee are dismissed Gross Turnover Does not Exceed Rs. 250 Crores: ITAT allows Computed Tax Liability at 25% Concessional Rate M/s.Shriram Properties Ltd vs The Asst. Director CITATION: 2024 TAXSCAN (ITAT) 289 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) recently ruled in favor of businesses with a gross turnover not exceeding Rs. 250 Crores, allowing them to avail a concessional tax rate of 25%. The coram of Manoj Mohandas ( Judicial member) and Manjunatha G. ( Accountant member) concluded that after excluding these three specific items, the gross turnover or gross receipts of the assessee, including other income, did not surpass Rs. 250 Crores. Therefore, the bench determined that the assessee has accurately calculated their tax liability by applying the 25% concessional rate of tax. No Exclusion of comparable if Data available on Records can be reasonably Extrapolated: ITAT Syngenta Services Private Limited vs The Asst. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 297 In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) observed that no exclusion of comparable if data available on records can be Reasonably Extrapolated The two member bench of the tribunal comprising S. Rifafur Rahman ( Accountant member ) and Vikas Aswathy ( Judicial member ) observed that the company was deemed functionally comparable in both preceding and subsequent assessment years; there appears to be no justifiable reason to reject it based on functional disparities in the current assessment year. Therefore, the said company was directed to be included in the list of comparable. Receipts from sale of online videos to Indian clients is not taxable as ‘Royalty under India-USA DTAA: ITAT PluralSight LLC vs The Dy. Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 295 The Bangalore bench of Income Tax Appellate Tribunal ( ITAT ) recently held that receipts from sale of online videos to Indian clients is not taxable as royalty under India – USA DTAA. After observing the submissions of both parties the two-member bench Of Laxmi Prasad Sahu, (Accountant member ) and Beena Pillai, ( Judicial Member ) held that subscription revenue received by the assessee is not taxable as ‘Royalty’ in the hands of the assessee under Article 12 of the India-USA DTAA Failure to Comply CIT(A)’s Intimations despite Adequate Opportunity being Given: ITAT dismisses Ex- Parte Order Grounds M/s. Dulichand Kundanmal vs ACIT CITATION: 2024 TAXSCAN (ITAT) 286 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT) dismissed the ex-parte order on grounds of failure to comply with the CIT(A)’s intimations, despite being given adequate opportunity. Tribunal consisting , Manish Borad ( Accountant member) and Sonjoy Sharma ( Judicial member) observed that the appellant claimed that the impugned order was passed ex-parte without affording proper reasons or opportunities to the assessee. Deduction u/s 80P of Income Tax Act cannot be allowed without filing Return of Income: ITAT Madhu Souharda Pathina vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 293 Bangalore bench of Income Tax Appellate Tribunal ( ITAT ),held that deduction under section 80P of the Income Tax Act could not be allowed without filing return of income. After observing the submissions of both parties the two-member bench Of Laxmi Prasad Sahu, ( Accountant member ) and George George K, Vice President held that the assessee is not eligible for deduction u/s. 80P of the Act. Income from providing Credit Facilities to nominal members of Co-Operative Society are eligible for exemption u/s 80P(2)(a)(i) Income Tax Act: ITAT Charvaka Seva Sahakari Bank Ltd vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 296 The Bangalore bench of Income Tax Appellate Tribunal ( ITAT ) ruled that income from providing credit facilities to nominal members of cooperative society are eligible for exemption under Section 80P(2)(a)(i) Income Tax Act,1961. After observing the submissions of both parties the two-member bench of Chandra Poojari, ( Accountant member ) and Beena Pillai, ( Judicial Member ) held that income from providing credit facilities to nominal members of cooperative society are eligible for exemption under Section 80P(2)(a)(i) Income Tax Act,1961. Delay in filing appeal before Lower Authorities due to Mistake of Counsel: ITAT directs Re-adjudication Gundarlahally Ramesh Meera vs ITO CITATION: 2024 TAXSCAN (ITAT) 294 Bangalore bench of Income Tax Appellate Tribunal ( ITAT ), observed that the delay in filing appeal before the lower authorities happened due to the mistake of assessee counsel. Therefore the bench directed re-adjudication. After observing the submissions of both parties the two-member bench of Laxmi Prasad Sahu, (Accountant member ) and George George K, Vice President directed readjudication in respect of delay in filing appeal before the lower authorities happened due to the mistake of assessee counsel. Legal ownership of Transport Vehicle is not required for Sec 194C TDS deduction: ITAT Adhunik Khanan VA Parivahan Theka Sahakari Samiti Limited vs ITO CITATION: 2024 TAXSCAN (ITAT) 290 Jodhpur Bench of Income Tax Appellate Tribunal ( ITAT ), ruled that in a cases where a declaration under Section 194C(6) and a PAN are received from payees who possess a vehicle even though they are not registered owners, the legal owner is exempt from TDS under Section 194C. Therefore the two member bench of Dr. S. Seethalakshmi, ( Judicial Member ) and Rathod Kamlesh Jayantbhai, (Accountant Member) who observed that Anyone in possession of the goods carriage, other than the registered owner, is considered the owner for the purposes of section 44AE. Since the assessee transporter’s taxes are primarily governed by section 44AE, this becomes significant when defining the term “owns” in section 194C(6). Credit of Foreign Tax Cannot be denied for Not Filing Form 67 within Due Date of ITR u/s 139 (1) of Income Tax Act: ITAT Mahua Bagchi vs ACIT CITATION: 2024 TAXSCAN (ITAT) 288 The Income Tax Appellate Tribunal ( ITAT ),Kolkata, has clarified that the credit of foreign tax cannot be denied solely for not filing Form 67 within due date of the Income Tax Return ( ITR ) under Section 139 (1) of Income Tax Act, 1961. The two member bench, comprising Rajpal Yadav (Vice President) and Rajesh Kumar (Accountant Member), noted that foreign tax to the tune of Rs. 17,72,470 was indeed deducted in the UK under the Double Taxation Avoidance Agreement (DTAA) between India and the UK, as per Section 90(2) of the Income Tax Act. ITAT directs re-adjudication on accounts addition made under Excess Receipts from Contract Works Deputy Commissioner of Income Tax vs LEPL Projects Limited CITATION: 2024 TAXSCAN (ITAT) 291 Hyderabad Bench of Income Tax Appellate Tribunal (ITAT), directed adjudication on accounts of addition made under excess receipts from contracts works. The bench during the adjudication observed that the Revenue authorities have failed to examine the details of the work contracts awarded and the payment made by the Government which are relatable to various stages of work contract. Therefore, the two member bench of Laliet Kumar, ( Judicial Member ) and R.K. Panda, ( Vice President ) directed re-adjudication on accounts addition made under Excess Receipts from Contract Works. Penalty u/s 271(1) shall be Calculated Based on Additions Made to Income Disclosed in ITR u/s 139(1) of Income Tax Act: ITAT Kalna II CADP Farmers Service vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 285 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the penalty under Section 271(1) of the Income Tax Act, 1961, stating that penalties shall be calculated based on additions made to the income disclosed in the Income Tax Return ( ITR ) filed under Section 139(1) of the Income Tax Act. The two member bench of the tribunal comprising Rajesh Kumar ( Accountant member ) and Rajpal Yadav (Vice President) observed that the penalty has to be computed on the basis of the addition made to the income of the assessee disclosed in the ITR filed under section 139(1) of the Income Tax Act. The penalty could be either equivalent to the taxes sought to be evaded by the assessee or maximum to the extent 300 times. Failure to refer matter to Departmental Valuation Officers for Assessing Fair Market Value of Land Property: ITAT Partly allows Appeal Nirmal Santra vs ITO CITATION: 2024 TAXSCAN (ITAT) 287 The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has directed readjudication on the concerned grounds due to the lower authority’s failure to refer the matter to the Departmental Valuation Officers (DVO) for assessing the fair market value of the land property. The bench of Sanjay Garg (Judicial member ) and Manish Borad ( Accountant member ) observed that the lower authorities ought to have referred the matter to the Departmental Valuation Officer for valuing the fair market value of the land property. Consequently, the particular ground was directed for readjudication and the appeal was partly allowed. Exemption u/s 11(1) of Income Tax Act Not available for expense incurred for giving Mementos to Presidents and Secretaries of Milk Producers Association: ITAT The Asst. Commissioner of Income tax vs The MYMUL Raitha Kalyana Trust CITATION: 2024 TAXSCAN (ITAT) 292 Bangalore bench of Income Tax Appellate Tribunal (ITAT) ruled that exemption under Section 11(1) of the Income Tax Act, 1961 shall not be available for expenses incurred for giving mementos to presidents and secretaries of Milk Producers Association. After observing the submissions of both parties the two-member bench of Laxmi Prasad Sahu, (Accountant member ) and Beena Pillai, ( Judicial Member ) held that exemption under Section 11(1) of the Income Tax Act, 1961 shall not be available for expenses incurred for giving mementos to presidents and secretaries of Milk Producers Association. Relief to Toyota Financial: ITAT directs Re-Adjudication on Taxability of Interest Income from NPAs Toyota Financial Services India vs The Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 366 The Bangalore division of the Income Tax Appellate Tribunal ( ITAT ) provided Toyota Financial with relief by instructing a reevaluation of the tax implications related to the interest income derived from Non- Performing Assets ( NPAs ). The tribunal, comprising George George K (Vice President) and Laxmi Prasad Sahu (Accountant Member), remanded the matter to the CIT (Appeals) after granting a reasonable opportunity to the assessee. Additionally, the assessee was instructed to adhere to the hearing notice and refrain from seeking unnecessary adjournments to expedite the case’s resolution AO and CIT (A) ignores Cash Deposit Evidences: ITAT deletes addition u/s 69A Pravinbhai Mumabhai Bharwad vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 346 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled to overturn the addition made under section 69A under Income Tax Act, as both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) overlooked crucial evidence pertaining to cash deposits. A single-member bench, presided by Suchithra Kemble, emphasized that the taxpayer had provided details regarding the land sale and associated consideration, as well as evidence of withdrawals from the father’s account. Regrettably, both the Assessing Officer and the CITY (A) had disregarded this crucial evidence. Consequently, the taxpayer’s appeal was allowed. Taxpayer submits ITRs and Bank statements for Proving Genuineness of Unsecured Loan: ITAT deletes addition u/s 68 Income Tax Officer vs Aashna Developers Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 376 After the taxpayer presented Income Tax Returns ( ITRs ) and bank statements to demonstrate the authenticity of the unsecured loan, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) removed the addition under Section 68 of the Income Tax Act, 1961. The two-member bench, comprising Siddhartha Nautiyal (Judicial member) and Waseem Ahmed (Accountant member), upheld the findings of the CIT (A) and directed the AO to delete the addition. The ITAT condemned the Revenue’s decision to treat the interest on the alleged loans as genuine while deeming the loans themselves as bogus, ultimately dismissing the revenue’s appeal. Defective Penalty Notice: ITAT deletes penalty Imposed u/s 271AAB of Income Tax Act Landcraft Developers (Pvt.) Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 329 The Delhi bench of Income Tax Appellate Tribunal (ITAT) deleted the penalty imposed under Section 271AAB of the Income Tax Act, 1961 due to the defective penalty notice issued by the assessing officer. Therefore the two-member bench Of Challa Nagendra Prasad, (Judicial Member) and N.K. Billaiya, (Accountant Member) held that the penalty notice issued on 31/03/2015 is defective and, accordingly, entire penalty proceedings gets vitiated. Hence, the penalty levied under Section 271AAB of the Income Tax Act in the facts and circumstances of the instant case would have no legs to stand in the eyes of law. Accordingly the bench allowed the appeal filed by the assessee. Rajkumar counsel appeared for the assessee and Jeetendra Kumar Kale counsel appeared for revenue ITAT Orders Re-adjudication on Section 80P(2)(e) Deduction for Agricultural Loans Provided to Members under Income Tax Act M/s. Savanoor Primary Agricultural Cooperative Society vs ITO CITATION: 2024 TAXSCAN (ITAT) 336 The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has issued an order for re-adjudication regarding the deduction for agricultural loans provided to members under Section 80P(2)(e) of the Income Tax Act, 1961. The bench directed the AO to investigate whether the interest income was earned from investments in compliance with the relevant Karnataka Co-operative Societies Rules and Act. If the income was found to be a result of compulsory compliance, it would be entitled to deduction under section 80P(2)(a)(i) of the Income Tax Act. With these instructions, grounds 5 to 8 were remanded to the files of the AO. Failure To file Audit Report along with return of income by Auditor: ITAT directs to allow exemption u/s 11 of the Income Tax Act Karma Falya Trust vs D.C.I.T CITATION: 2024 TAXSCAN (ITAT) 343 The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) while directing to allow exemption under section 11 of the Income Tax Act, 1961 held that the auditor failed to file the audit report along with the return of income. It was observed by the tribunal that In the present case also, the assessee obtained the Audit Report dated 31.10.2018 from the Auditor but could not file the same on Income Tax Portal. Thus, the audit report was prepared well within the time. Thus, the CIT(A) should have taken cognisance of the same and the Assessing Officer should have also taken into account Audit Report for allowing the exemption under Section 11 of the Income Tax Act to the assessee. Therefore the single member bench Suchitra Kamble (Judicial Member) allowed the appeal filed by the assessee. IIT does not falls in status of Central Government for Invoking of Rule 3 and Section 17(2) of Income Tax: ITAT ACIT vs Indian Institute of Technology CITATION: 2024 TAXSCAN (ITAT) 374 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) noted that the Indian Institute of Technology (IIT) does not fall under the status of the Central Government for invoking Rule 3 and Section 17(2) of the Income Tax Act, 1961. However, the tribunal, comprising M. Balaganesh (Accountant member) and Anubhav Sharma (Judicial member), viewed that “view that though Ld. CIT(A) has fallen in error in holding that assessee falls in status of Central Government for the purpose of Section 17(2) of the Act, the impugned order of Ld. CIT(A) still deserves to be upheld as Ld. AO has fallen in error by straightaway invoking Rule 3 for computing value of the perquisite and treat assessee in default in deducting tax at source on said value, without first recording a finding as to whether there is ‘concession’ and the case is covered by Section 17 (2) (ii) of the Act.” ITAT dismisses Application for Condonation of Delay of 451 days regarding appeal for Penalty Proceedings Inderjit Singh Manchanda vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 340 The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the application filed for condoning the delay of 451 days regarding the appeal for the penalty proceedings. Therefore the two-member bench of C V Bhadang, (Vice President) and B R Baskaran, (Accountant Member) dismissed the appeal filed by the assessee and dismissed the application for condoning the delay. Failure to File Audit Report in Form 10CCB before ITR filing due date: ITAT disallows Deduction Claim u/s 80IC M/s Securico Electronics India Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 365 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) recently ruled on a case where deduction claims under Section 80IC of the Income Tax Act, 1961 were disallowed due to the failure to submit the audit report in Form 10CCB before Income Tax Return (ITR) filing. After examining the submissions and the facts of the case, the bench, consisting of Narendra Kumar Billaya (Accountant member) and Yogesh Kumar U.S (Judicial member), noted that the audit report in Form No. 10CCB was filed after the due date for ITR filing. The tribunal emphasized that compliance with the provisions of filing the Audit Report under Section 80IC within the stipulated time was crucial for claiming the deduction under this section. Additionally, the tribunal found no merit in the argument that the assessee had been claiming deductions under Section 80IC since the previous assessment year. Therefore, the ITAT concluded that the appeal filed by the assessee lacked merit and subsequently dismissed it. Interest paid on loans borrowed for real estate and finance business is allowable as deduction: ITAT deletes Disallowance Shri Gurcharan Singh Bhatia vs ACIT CITATION: 2024 TAXSCAN (ITAT) 350 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) while deleting the disallowance made by the assessing officer towards the interest expenses held that interest paid on loans borrowed for real estate and finance business is allowable as deduction After reviewing the submissions of both parties the two-member bench of Shamim Yahya, (Accountant Member) and Challa Nagendra Prasad, (Judicial Member) Deleted the disallowance made by the assessing officer and held that interest paid on loans borrowed for real estate and finance business is allowable as deduction. Gross Receipts of Charitable Trust Exceeding Threshold Mentioned u/s 2(15) of Income Tax Act Not a Ground for Registration Cancellation: ITAT Meerut Development Authority vs Commissioner Of Income Tax CITATION: 2024 TAXSCAN (ITAT) 338 In a major ruling, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) noted that surpassing the threshold of gross receipts for charitable trusts as outlined in Section 2(15) of the Income Tax Act does not constitute sufficient grounds for the cancellation of registration. The bench of Anubhav Sharma (Judicial member) and M. Bal Ganesh (Accountant member) held that the activities carried out by the assessee would be charitable activity under section 2(15) of the Act and in any case, the registration cannot be canceled under Section 12AA (3) of the Income Tax Act with retrospective effect from 01.04.2009. Even if the gross receipts of the assessee exceeds the threshold limit prescribed in the proviso under Section 2(15) of the Act, still there is no need for cancellation of the registration under Section 12AA(3) of the Income Tax Act. Rejection of Application of Exemption claimed u/s 80G of Income Tax Act on account of failure to produce Documentary Evidence: ITAT directs Readjudication Sawali Care Foundation vs CIT (Exemptions) CITATION: 2024 TAXSCAN (ITAT) 370 The Income Tax Appellate Tribunal ( ITAT ) of Pune bench while observing the rejection of the application of exemption claimed under Section 80G of the Income Tax Act, 1961 on account of failure to produce the documentary evidence directed readjudication. Accordingly the ITAT bench of Sarathi Chaudhury, ( Judicial Member ) & G.D. Padmahshali, ( Accountant Member ) after reviewing the submissions of both parties remand the matter back to his file to CIT(E) and directed to examining and verifying all documentary evidence furnished by the applicant-assessee. Non-Forwarding of draft Assessment Order specified u/s 144C(1) of Income Tax Act: ITAT quashed Assessment order DCIT vs Newbury Holding Two Ltd CITATION: 2024 TAXSCAN (ITAT) 352 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) recently quashed assessment order passed under Section 153C of the Income Tax Act, 1961 due to non-filing of draft assessment order specified under Section 144(1) of the Income Tax Act, 1961. After reviewing the submissions of both parties the two-member bench of Dr. B. R. R. Kumar, (Accountant Member) and Saktijit Dey, (Vice President) quashed assessment order passed under Section 153C of the Income Tax Act due to non-filing of draft assessment order specified under Section 144(1) of the Income Tax Act. Amit Goel, CA, Pranav Yadav, Advocate, Nippun Mittal, CA & Ms. Anjali Jain, Advocates appeared for assessee and Vizay B. Vasanta, Sanjay Kumar appeared for revenue. No addition shall be made u/s 68 of Income Tax Act, when Authenticity/Genuineness of Share Application Money received from various investors are fully explained: ITAT M/s Trinity Global Enterprises Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 358 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that addition under Section 68 of the Income Tax Act, 1961 should not be made, when authenticity/genuineness of share application money received from various investors are fully explained. After reviewing the submissions of both parties the two-member bench of Dr. B. R. R. Kumar,( Accountant Member ) and Yogesh Kumar US, ( Judicial Member ) deleted the addition made under Section 68 of the Income Tax Act and confirmed that Authenticity/Genuineness Share Application Money received from various investors are fully explained by the assessee. To Read the full text of the Order CLICK HERE No disallowance towards business loss incurred Erection and Testing Services of Hindustan Thermal: ITAT DCIT vs Hindustan Thermal EPC Company Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 371 The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) held that no disallowance should be made towards the business loss incurred on erection and testing services of Hindustan Thermal. After reviewing the submissions of both parties the two-member bench of M Balaganesh (Accountant Member) and C. N. Prasad, (Judicial Member) no disallowance should be made towards the business loss incurred on erection and testing services of Hindustan Thermal. Satyen Sethi,counsel appeared for assessee and Sandip Kumar Mishra counsel appeared for revenue. ITAT quashes reassessment proceedings initiated on basis of incorrect facts recorded by AO Shri Anuj Chaudhary vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 361 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed reassessment proceedings initiated on the basis of incorrect facts recorded by the assessing officer. After reviewing the submissions of both parties the two-member bench of Dr. B. R. R. Kumar ( Accountant Member ) and Saktijit Dey, ( Vice President ) quashed the reassessment by holding that assumption of jurisdiction under Section 147 of the Income Tax Act in the instant case is based on incorrect facts recorded thereon. Section 80P(2)(a)(i) Deduction under income Tax Act allowable on Interest Income from Mandatory Co- op Bank Investments under State Societies Act M/s. Kalika Parameshwari Co-operative Society Ltd vs ITO CITATION: 2024 TAXSCAN (ITAT) 367 In a recent decision, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) determined that under Section 80P of the Income Tax Act, 1961, interest income from investments in cooperative society banks is eligible for deduction, provided such investments are obligatory under the Karnataka State Societies Act, 1959. The ITAT emphasized that if the investments were made out of compulsion under the Act and relevant Rules, they would be part of the petitioner’s business activity, thus qualifying for the benefits of Section 80P(2)(a)(i) of the Income Tax Act. Consequently, the appeals filed by the petitioner were allowed. No Errors or Infirmities Found in Assessment Order Prejudicial to Revenue’s Interest: ITAT sets aside order passed by PCIT u/s 263 of Income Tax Act Simbhaoli Power Pvt Ltd vs Pr. C.I.T CITATION: 2024 TAXSCAN (ITAT) 334 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) recently made a significant decision, overturning an order passed by the Principal Commissioner of Income Tax ( PCIT ) under section 263 of the Income Tax Act, 1961. The ITAT found no errors or infirmities prejudicial to the revenue’s interest in the assessment order, thereby setting aside the CITY's decision. The bench comprising Yogesh Kumar U.S. (Judicial member) and N.K. Billaiya (Accountant member), did not identify any error or infirmity in the assessment order that could render it erroneous and prejudicial to the interest of the Revenue. Consequently, the ITAT set aside the PC IT's order and reinstated that of the Assessing Officer dated 22nd December 2016. Cash Deposit received from Mother as Gift during demonetization period properly Explained: ITATdeletes Addition u/s 69A Shri Rahul Udayashankar vs The Income-tax Officer CITATION: 2024 TAXSCAN (ITAT) 364 The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled in favor of the taxpayer, overturning the addition made under section 69A of Income Tax Act, 1961. The tribunal found that the cash deposit, received as a gift from the taxpayer’s mother during the demonetization period, was adequately accounted for. A single-member bench of Chandra Poojari (Accountant member), concluded that the addition made by the assessing officer could not be upheld as the assessee clearly provided the explanation of the cash deposit. The ITAT determined that the Rs. 25,00,000/- deposit into the taxpayer’s bank account had been properly explained, leading to the deletion of the contested addition. As a result, the taxpayer’s appeal was allowed. Comparable chosen for ITES and IT segment are within tolerance limit provided in proviso to Section 92CA Income Tax Act: ITAT dismiss revenue Appeal Income Tax Officer vs Exult Client Services I P Ltd CITATION: 2024 TAXSCAN (ITAT) 355 The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) while dismissing the revenue appeal held that the comparable chosen for ITES and IT segment are within the tolerance limit provided in proviso to section 92CA of the Income Tax Act, 1961 After reviewing the submissions of both parties the two-member bench of S Rifaur Rahman, (Accountant Member) and Amit Shukla, (Judicial Member) observed that comparable choices for ITES and IT segment are within the tolerance limit provided in proviso to section 92CA of the Income Tax Act. No one appeared for assessee during the proceedings and Shilpa N.C appeared for revenue. ITAT deletes addition u/s 68 of Income Tax Act on Submission of Requisite Documents Trident Towers Pvt. Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 345 In a major ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under section 68 of the Income Tax Act, 1961 upon submission of requisite documents by the taxpayer. Thus, the two-member bench of the ITAT, including Anubav Sharma ( Judicial member ) and M. Balaganesh ( Accountant member ) removed the addition related to the unsecured loan received by M/s. Powmex Sales Pvt. Ltd under Section 68 of the Income Tax Act. Accordingly, the appeal of the assessee was partly allowed. Gratuity Paid to Employee Classified as Salary, Deemed Expense allowable u/s 37(1) of Income Tax Act: ITAT Twinings Private Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 332 In a recent ruling, the Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) highlighted that the gratuity paid to an employee is classified as salary, hence deemed an allowable expense under Section 37(1) of the Income Tax Act, 1961. The ITAT bench comprising Sanjay Garg (Judicial Member) and Girish Agarwal (Accountant Member), expressed bewilderment at the prolonged delay in processing the assessee’s application for approval. Despite the delay, the assessee had been consistently making payments to LIC for the group gratuity scheme and claiming deductions accordingly. Framing of Assessment in name of non-existing entity is invalid and Void Ab-initio: ITAT quashes Assessment Order u/s 143(3) of Income Tax Act Solvent Real Estate Pvt. Ltd. vs ITO CITATION: 2024 TAXSCAN (ITAT) 347 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) invalidated the assessment order under Section 143(3) of the Income Tax Act, 1961 stating it as null and void from the beginning, citing the assessment being made in the name of a non-existent entity. The tribunal, comprising Sanjoy Sharma ( Judicial Member ) and Rajesh Kumar ( Accountant Member ) upholding the decision of the Supreme Court in the case of CIT vs. Maruti Suzuki observed that the framing of assessment in the name of non-existing entity is invalid and void ab-initio and cannot be sustained. Accordingly, the ITAT nullified the assessment order, allowing the additional ground raised by the assessee. Information from Pen drive / Laptop of Employees Not Deemed Credible Evidence alone for Tax Assessments: ITAT directs AO to Delete Additions Relating to Capitation Padmashree Dr. D.Y vs DCIT CITATION: 2024 TAXSCAN (ITAT) 335 In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has delivered a significant directive to the Assessing Officer (AO), compelling the deletion of additions related to capitation fees. The tribunal emphasized that information solely obtained from pen drives or laptops of employees cannot be deemed as credible evidence for tax assessments. The tribunal observed that “the information found in the pen drive/laptop of employees cannot be considered as credible evidence, unless they have been corroborated with any other evidence. Accordingly, no credence could be given to the abstract entries made in the pen drive/laptop. Accordingly, we are of the view that the AO could not have made additions on the basis of that information.” Application for approval u/s 80G of Income Tax Act filed within Prescribed Time limit: ITAT allows appeal Shri Kailash Math Trust vs The CIT(Exemption) CITATION: 2024 TAXSCAN (ITAT) 330 The Pune bench of Income Tax Appellate Tribunal ( ITAT ) while allowing the appeal filed by the assessee held that application for approval under section 80G of the Income Tax Act filed within the prescribed time limit. Therefore the two-member bench Of Satbeer Singh Godara, ( Judicial Member ) and Dr. Dipak P. Ripote,( Accountant Member ) held that the Assessee Trust had applied for registration within the time allowed under the Act. Accordingly the bench allowed the appeal filed by the assessee. No Denial of Capital Gains Deduction u/s 54 once Requisite Conditions are Met: ITA T Mukesh Harilal Mehta vs Income Tax Officer 16(3)(1) CITATION: 2024 TAXSCAN (ITAT) 381 In a significant decision, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) overturned the findings of the Commissioner of Income Tax (Appeals) regarding the eligibility of the assessee to claim deduction under Section 54 of the Income Tax Act, 1961. The tribunal bench, comprising Rahul Chaudhary (Judicial Member) and Om Prakash Kant (Accountant Member), noted that the appellant had received an occupation certificate for the Rustomjee Oriana project, where the purchased flat (Flat No. B-902) was located on 07/11/2015. The bench also observed that the possession of the flat was granted to the appellant on 15/03/2016. Based on these facts, the tribunal bench concluded that the appellant satisfied the conditions outlined in Section 54 and should be allowed the deduction. Interest earned on deposits kept for Business cannot be taxed as Income from other Sources: ITAT Addl. CIT vs Bokaro Power Supply Company Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 369 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that interest earned on deposits kept for the purpose of business could not be taxed under income from other sources. Respectfully following the aforesaid judicial precedents the two-member bench Of M. Balaganesh ( Accountant Member ) and C. N. Prasad, ( Judicial Member ) dismissed the appeal filed by the revenue. M. P. Rastogi, counsel appeared for the revenue and Kanv Bali, counsel appeared for revenue. No Disallowance of Interest Expenditure not claimed during Deposit of Tax in Return: ITAT directs re- adjudication WLD Investments Pvt. Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 327 The Delhi bench of Income Tax Appellate Tribunal (ITAT) while directing readjudication observed that no interest expenditure should be disallowed which has not been claimed during the deposit of tax in return. Therefore the two-member bench Of Pradip Kumar Kedia, (Accountant Member) and Saktijit Dey, (Vice President) set aside the first appellate order and remit the matter back to the AO for determining the issue afresh on the basis of relevant facts that may be placed by the assessee before the AO. ITAT directs AO to re-compute book profit u/s 115JB of Income Tax Act by giving opportunity of being heard to assessee M/s The Oriental Insurance Co. Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 328 The two member bench of Income Tax Appellate Tribunal (ITAT) Delhi bench directs assessing officers to re-compute book profit under Section 115JB of the Income Tax Act, 1961 by giving the opportunity of being heard to assess. After Reviewing the facts the two-member bench Of Yogesh Kumar U.S (Accountant member) and Narendra Kumar Billaiya,(Accountant Member) directed the AO to re-compute the book profit under Section 115JB of the Income Tax Act by giving reasons for making adjustment and giving an opportunity of being heard to the assessee. ITR Filing by Due Date u/s 139 of Income Tax Act Is mandatory for Political Party to Claim exemption u/s 13A: ITAT Refuses to Stay Recovery Against INC Indian National Congress vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 331 The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) refused to stay recovery against the Indian National Congress ( INC ) and ruled that ( ITR ) filing by due date under Section 139 of the Income Tax Act, 1961 is mandatory for political party to claim exemption under Section 13A of the Income Tax Act, 1961. A Two-Member Bench comprising observed that “On the basis of the aforesaid discussion, and having regard to the legal position and the material on record, it is reasonable to conclude that the income tax authorities have not made any error in denying the exemption claimed by the assessee under Section 13A of the Income Tax Act due to violation of clause (d) of the first Proviso as well as third Proviso to Section 13A of the Income Tax Act. Consequently, in our view, the Applicant has been unable to make out a strong prima facie case against the interpretation of Section 13A of the Income Tax Act as adopted by the Revenue to deny the exemption, so far it is relevant for the purposes of examining the merits of the present Application.” Revenue recognition Methodology accepted by Revenue must remain unchanged across years until and unless modified in Initial year: ITAT Ralsons Infrastructure Pvt. Ltd vs PCIT-3 CITATION: 2024 TAXSCAN (ITAT) 378 In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) emphasized the principle of consistency in revenue recognition methodologies across fiscal years unless modified in the initial year. Consequently, the two-member bench, comprising Madmitha Roy ( Judicial member ) and Waseem Ahemed ( Accountant member ), concluded that there was no error in the Assessing Officer’s order prejudicial to revenue interests. They ruled that the PC IT's order was unsustainable, and consequently, partially allowed the grounds of appeal presented by the assessee. Unexplained Expenditure justified as Business Promotion Expenses with Relevant Bank Statements: ITAT deletes Addition u/s 69C Mandeep Singh Anand 130 vs ACIT CITATION: 2024 TAXSCAN (ITAT) 375 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) removed the addition under Section 69C of the Income Tax Act, 1961 after justifying unexplained expenditure as business promotion expenses with relevant bank statements. The bench observed that the CIT(A) did not have the authority to introduce a new source of income and failed to provide proper notice to the assessee regarding the proposed change. Consequently, the additions made by the AO and upheld by the CIT(A) were considered to be on different grounds and were deleted. As a result, the grounds raised by the assessee were allowed. The decision was made by Yogesh Kumar U.S ( Judicial member ) and M. Balaganesh ( Accountant member ) of the ITAT. TDS interest paid on Account of Expenses on repair and maintenance of Aircrafts not allowable: ITAT India Flysafe Aviation Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 372 The Delhi bench of Income Tax Appellate Tribunal (ITAT) ruled that interest paid on account of expenses on repair and maintenance of aircrafts are not allowable expenditure. After reviewing the submissions of both parties the two-member bench Of M. Balaganesh (Accountant Member) and Anubhav Sharma, (Judicial Member) held that interest paid on account of expenses on repair and maintenance of aircrafts are not allowable expenditure. Failure to point out deficiency in books of account of Mobile distribution business: ITAT deletes 30% Disallowance made on Expenditure Zheng Yuan Mobiles Pvt. Ltd. vs DCIT CITATION: 2024 TAXSCAN (ITAT) 351 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) deleted 30% disallowance made on the expenditure incurred on mobile distribution business due to failure to point out the deficiency in books of accounts. Therefore the two-member bench Of Shamim Yahya, ( Accountant Member ) and Anubhav Sharma, ( Judicial Member ) Deleted the disallowance made by the assessing officer. Accordingly the bench allowed the appeal filed by the assessee. ITAT directs re-adjudication with respect to date of Acquisition of Property to determine stamp Duty Value Rajkumar Anandchand Jain vs Dy. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 328 The two member bench of Income Tax Appellate Tribunal (ITAT) Mumbai bench directed readjudication with respect to date of acquisition of property to determine the stamp duty value of immovable property sold by the assessee Rajkumar Anandchand Jain. Therefore the two-member bench Of Rahul Chaudhary,(Judicial Member) and Prashant Maharishi, (Accountant Member) directed readjudication with respect to date of acquisition of property to determine the stamp duty value of immovable property sold by the assessee Accordingly the bench allowed the appeal for statistical purposes. Disallowance of Income Tax Deduction u/s 10AA on Audit objection grounds lack Independent View: ITAT quashes Revision Order Pinkcity Jewel House Pvt. Ltd vs Principal Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 380 The Jaipur bench of the Income Tax Appellate Tribunal ( ITAT ) overturned the revision order issued by the Principal Commissioner of Income Tax ( PCIT ), which had disallowed Income Tax Deduction under Section 10AA of the Income Tax Act, 1961. It also lacked an independent view of the PCIT. The ITAT bench, comprising Dr. S. Seetha Lakshmi ( Judicial Member ) and Rathod Kamlesh Jayantbhai ( Accountant Member ), observed that the revisionary proceeding under Section 263 was solely based on an audit objection, lacking independent judgment from the PCIT. Moreover, considering that the claim had been accepted upon reopening the case after the survey, the tribunal quashed the PC IT's order. No addition shall made when Commission earned from Consignment Sale of Foodgrains are reflected in P&L Account: ITAT Income Tax Officer vs Kesar Devi CITATION: 2024 TAXSCAN (ITAT) 362 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) held that no addition should be made when commissions earned from consignment sale of food grains are reflected in profit and loss account. After reviewing the submissions of both parties the two-member bench of Dr. B. R. R. Kumar (Accountant Member) and Saktijit Dey (Vice President) dismissed the appeal filed by the revenue. No appeal should be filed when Moratorium u/s 14 IBC are issued by NCLT for initiating CIRP: ITAT M/s. Kaushal Silk Mills Pvt. Ltd. vs Income Tax Officer4(2)(2) CITATION: 2024 TAXSCAN (ITAT) 356 The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) ruled that no appeal should be filed when moratoriums under Section 14 of Insolvency and Bankruptcy Code ( IBC )are issued by the National Company Law Tribunal for initiation of the Corporate Insolvency Resolution Process ( CIRP ) against Corporate Debtors. Therefore since proceedings under I&B code have already been initiated/decided and moratorium has been declared by prohibiting all the proceedings against the corporate debtors including execution of any judgment, decree or order of any court of law, tribunal, arbitration panel or other authority, present appeals in the present format are not maintainable After reviewing the submissions of both parties the two-member bench Of Kuldip Singh, ( Judicial Member ) and Padmavathy S, ( Accountant Member ) dismissed the appeal filed by the assessee. Teena Jain Advocates appeared for assessee and P.D. Chougule appeared for revenue. Section 80IA claim permitted on gross basis without offsetting losses from other Industrial Units: ITAT allows Deduction Pragati Power Corporation Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 348 The bench of the Income Tax Appellate Tribunal ( ITAT ) in Delhi, has observed that the deduction claim under Section 80IA under Income Tax Act, 1961 shall be permitted on gross basis without offsetting the losses from the other industrial undertakings. The bench of C.N.Prasad (Judicial member) and Dr. B.R.R. Kumar (Accountant member) observed that the whether the loss making unit was also eligible for deduction under section 80- IA of the Income Tax Act and if so the claim of deduction under section 80-IA of the Act has to be computed for both eligible units. It was found that the CIT (A) has not adjudicated on the addition made by the AO in respect of the interest income which was not derived from the business of the eligible undertaking. TDS Credit shall not be denied when Income from Sale of Agriculture property not reflected in ITR: ITAT Dhirajlal Savailal Shah vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 341 The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) recently held that the Tax Deduction at Source ( TDS ) credit should not be denied when the income from sale of agriculture property was not reflected in Income Tax Return ( ITR ). Therefore the single member bench Suchitra Kamble ( Judicial Member ) observed that Tax Deduction at Source( TDS ) credit should not be denied when the income from sale of agriculture property was not reflected in Income Tax Return ( ITR ). Relief to Amazon India: Delivery Cost and Warranty Expenses not part of AMP Expenditure, rules ITAT Amazon Seller Services Private Limited vs The Commissioner of Income-Tax (TP) CITATION: 2024 TAXSCAN (ITAT) 382 The Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ) made a ruling regarding the treatment of various expenses, including share-based compensation ( SBC ), depreciation, and amortization, as operating expenses. The Tribunal Bench, consisting of George George K ( Vice President ) and Laxmi Prasad Sahu ( Accountant Member ), stated that these expenses should not be considered as incurred for brand development, as they are post-sales activities and form part of sales expenditure. It was also clarified that there was no lack of inquiry in this regard. After considering all facts, the Income Tax Appellate Tribunal Bench concluded that delivery costs and warranty expenses should not be classified as part of AMP expenditure. Income Tax Form No. 10BA Submission is Mandatory for Claiming Section 80GG Deduction: ITAT The Income Tax Appellate Tribunal ( ITAT ) in Bangalore has ruled that submission of Income Tax Form No. 10BA is mandatory for claiming deductions under Section 80GG of the Income Tax Act, 1961. However, the assessee failed to comply with this requirement. As a result, the ITAT directed the Assessing Officer (AO) to allow the deduction once the form is filed. The bench, consisting of George George K (Vice President) and Chandra Poojari (Accountant Member), emphasized the necessity of filing Form No. 10BA to claim the deduction under Section 80GG. Consequently, the issue was referred back to the AO to grant the deduction after considering Form No. 10BA in conjunction with Rule 11B of the Income Tax Act Rules, 1963. As a result, the appeal of the assessee was allowed. ITAT deletes addition made towards loss incurred on derivative transaction carried through proper banking channel: ITAT Kulvinder Nath Marwah vs ACIT CITATION: 2024 TAXSCAN (ITAT) 354 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) deleted additions made towards the loss incurred on the derivative transactions carried through the proper banking channel. After reviewing the submissions of both parties the two-member bench Of M. Balaganesh, ( Accountant Member ) and Anubhav Sharma, ( Judicial Member ) deleted additions made towards the loss incurred on the derivative transactions carried through the proper banking channel. Deferred Revenue expenditure incurred on account of leased Aircraft Engine Improvement: ITAT directs re adjudication India Flysafe Aviation Ltd. vs DCIT CITATION: 2024 TAXSCAN (ITAT) 360 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) directed readjudication with respect to deferred revenue expenditure incurred on account of leased aircraft engine improvement. After reviewing the submissions of both parties the two-member bench Of M. Balaganesh ( Accountant Member ) and Anubhav Sharma, ( Judicial Member ) restored the file to AO after considering the decision of coordinate Bench in the case of the assessee for AY 2012-13. Thus directed readjudication with respect to deferred revenue expenditure incurred on account of leased aircraft engine improvement. ITAT allows Deduction claimed u/s 80IA of Act on Account of Profit derived as per Agreement with DIAL Celebi Delhi Cargo Terminal Management India Pvt. Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 373 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) allowed deduction claimed under Section 80IA of the Income Tax Act, 1961 on account of profit derived as per the agreement with Delhi International Airport Limited ( DIAL ). Therefore the two-member bench Of M. Balaganesh ( Accountant Member ) and Yogesh Kumar U.S. ( Judicial Member ) allowed deduction claimed under Section 80IA of the Income Tax Act, 1961 on account of profit derived as per the agreement with Delhi International Airport Limited ( DIAL ). Authorities Fails to Realize Company’s Running Maintenance Office Expense: ITAT allows expenses u/s 24 (a) of Income Tax Act Armasol Properties Pvt. Ltd vs ITO, Ward-12(3), Kolkata CITATION: 2024 TAXSCAN (ITAT) 349 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) approved the claim for the company’s ongoing office maintenance expenses under Section 24(a) of the Income Tax Act, 1961, which the authorities had failed to realize. The tribunal of Sanjoy Sharma ( Judicial member ) and Rajesh Kumar ( Accountant member ) observe that both AO and CIT(A) have failed to appreciate and understand the fact that the assessee was a company and has to incur certain expenses to keep its office running. The assessee has rightly claimed the loss of Rs. 5, 66, 441/- which has to set off against the house property income. No Disallowance u/s 40A(2) towards Payments of Supervision and Risk Management Charges to Relative Concerns: ITAT M/s Trinity Global Enterprises Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 358 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) held that no disallowance should be made under Section 40A(2) of Income Tax Act in respect of payments of supervision and risk management charges to relative concerns. After reviewing the submissions of both parties the two-member bench Of Dr. B. R. R. Kumar,( Accountant Member ) and Yogesh Kumar US, ( Judicial Member ) held that no disallowance should be made under Section 40A(2) of Income Tax Act in respect of payments of supervision and risk management charges to relative concerns. ITAT deletes addition made on account of non-inclusion of GST on Sales in Profit and Loss Account Infinite Water Solutions Pvt. Ltd vs CPC, Bengaluru CITATION: 2024 TAXSCAN (ITAT) 342 The Mumbai bench Income Tax Appellate Tribunal ( ITAT ) deleted the addition made on the account of non -inclusion of Goods and Service Tax ( GST )on sales in profit and loss account . Therefore the two member bench of Vikas Awasthy,( Judicial Member ) and Shri Gagan Goyal, ( Accountant Member ) observed that the CIT (A) erred in upholding the action of the CPC, of making addition on account of non-inclusion of the GST on sales in profit and loss account. ITAT directs to Examine allowability of claim for Deduction of Service Tax made during Assessment Proceedings Technoforce Solutions (I) Private Limited vs DCIT, Circle-1, Nashik CITATION: 2024 TAXSCAN (ITAT) 357 The Pune bench of Income Tax Appellate Tribunal ( ITAT ) directed to examine the allowability of the claim for the deduction of service tax made during the assessment proceedings. Therefore the two-member bench Of Inturi Rama Rao, ( Accountant Member ) and Partha Sarathi Chaudhury, ( Judicial Member ) directed to examine the allowability of the claim for the deduction of service tax made during the assessment proceedings. Amounts Advanced for Business Transactions between shareholding entities not Deemed Dividend u/s 2(22)(e) of IT Act: ITAT deletes Addition ACIT vs Adish Jain CITATION: 2024 TAXSCAN (ITAT) 359 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) said the amount advanced for business transactions between shareholding entities is not deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. Therefore the bench deleted additions made by the assessing officer. After reviewing the submissions of both parties the two-member bench of M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member) relied upon the decision of CIT Vs Creative Dyeing and Printing Pvt. Ltd and observed that amount advanced for business transaction between shareholding entities are not deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. Therefore the bench dismissed the appeal filed by the revenue. Satish Aggrawal, counsel appeared for assessee and Kanv Bali, counsel appeared for revenue. Failure to establish element of Bogus Sale of Shares as Unexplained with respect to LTCG on Shares: ITAT deletes addition Bharatkumar Gangaram Patel vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 339 The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) while deleting the addition made by the assessing officer the two member bench held that the revenue authority failed Therefore the bench determined that the independent verification of the transactions was limited by the Assessing Officer to the extent of investigation report but the same has not doubted purchase of the shares off-market and, therefore, the same cannot be made bogus sale of shares at the available period when the assessee sold the shares was not involving the assessee to manipulate the price of the scrip then the entire case of the Revenue fails. However, while processing the return of income, the entire amount of Rs.8,10,00,000/- was adjusted against the income tax liability, thereby, creating liability of FBT demand of Rs.73,45,724/- along with interest charged of Rs.18,38,871/- under section 115WJ of the Income Tax Act.Therefore the two-member bench of Suchitra Kamble, ( Judicial Member ) and Waseem Ahmed, ( Accountant Member ) allowed the appeal filed by the assessee. Product Development Expenses shall be treated as Revenue Expenditure, eligible for Deduction: ITAT Himenviro Environmental vs ACIT CITATION: 2024 TAXSCAN (ITAT) 363 In a significant decision, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that product development expenses should be classified as revenue expenditure and are eligible for deduction. The two-member bench of Yogesh Kumar U.S ( Judicial member ) and M. Balaganesh ( Accountant member ) agreed with the AO that there was no concept of deferred revenue expenditure under the Income Tax Act, as explicitly stated in sections 35AB and 35ABB of the Income Tax Act. Considering the nature of the expenses incurred by the company for product development, the tribunal concluded that the entire expenditure was revenue in nature and thus eligible for deduction as revenue expenditure in the year of incurrence. Transport Services or Medical Expenses Reimbursement provided to non-employees excluded from FBT liability: ITAT deletes Addition M/s. Prakash Industries vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 344 The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled in favor of the assessee by removing the addition related to transport services or medical expenses reimbursement provided to non- employees, thereby exempting them from Fringe Benefit Tax ( FBT ) liability. Considering CBDT Circular No. 8/2005 dated 29.08.2005 and judgments of Coordinate Bench of the ITAT Bangalore in the case of Wipro Ltd. regarding medical expenses, and the order of the Coordinate Bench of the ITAT Pune in the case of Brihan Maharashtra Sugar Syndicate Ltd. concerning loans given to employees, the tribunal concluded that no further addition other than the amount of Rs. 113,86,653/- was liable for computation regarding FBT liability. ITAT allows Deduction of ESOP expenses claimed within the time limit prescribed u/s 139(5) of Income Tax Act Fortune Park Hotels Limited vs ACIT Circle-9 (2) CITATION: 2024 TAXSCAN (ITAT) 368 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) allowed deduction of Employees Stock Option Plan ( ESOP ) claimed within the time limit prescribed under Section 139(5) of the Income Tax Act, 1961. Therefore the two-member bench of M. Balaganesh ( Accountant Member ) and Yogesh Kumar U.S, ( Judicial Member ) held that claim of deduction of ESOP expenditure was made by the assessee in the revised return filed on 31/03/2019 which is well within the time limit prescribed under Section 139(5) of the Income Tax Act. JC IT's approval for Search assessment u/s 153 D of Income Tax Act deemed Mechanical without mindful consideration: ITAT nullifies Search Learned Joint Commissioner of Income Tax vs Central Range-4 Delhi CITATION: 2024 TAXSCAN (ITAT) 353 The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that approval under Section 153D of the Income Tax Act, 1961 granted by the Joint Commissioner of Income Tax (JCIT) for the search assessment was mere mechanical manner without due application of mind. Therefore the bench nullified the search proceedings. Therefore the two-member bench Of Inturi M. Balaganeshr (Accountant Member) and Yogesh Kumar Us, (Judicial Member) concluded that approval under Section 153D of the Income Tax Act has been granted by the JCIT in the instant case before is a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. Thus the bench allowed the appeal filed by the assess. Rental Income Shall be treated as Income from House Property, not Income from Other Sources: ITAT grants Relief to Piramal Enterprises M/s. Piramal Enterprises vs Dy. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 384 In a recent decision, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted Piramal Enterprises relief by ruling that rental income from RP House should be treated as income from house property, not income from other sources, contrary to the CIT(A)’s decision. The coordinated bench of the Tribunal, comprising S. Rifafur Rahman (Accountant Member) and Kuldip Singh (Judicial Member), accordingly following the order passed by the co-ordinate Bench of the Tribunal on the identical issue AO is directed to assess the rental income of let out portion of RP house as income from house property. This ground was decided in favor of the assessee Burden Shifts on AO to prove that cause Lacks Bonafide when Taxpayer shows reasonable cause for accepting Cash Loan: ITAT Mani Sundaram vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 385 The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) held that the burden shifts on the Assessing Officer ( AO ) to prove that cause lacks bonafide when taxpayer shows reasonable cause for accepting cash loan. A Two-Member Bench comprising V. Durga Rao, Judicial Member and Manjunatha, G., Accountant Member observed that “The assessee furnished copies of the confirmation letters from the lender, which were filed before the authorities below and find that assessee’s father-in-law as well as assessee’s wife, who have confirmed that the loan amount shall be treated as gift. The assessee’s mother passed away and produced a death certificate. Moreover, the assessee has shown reasonable cause for receiving money towards purchase of machineries. Thus, we are of the opinion that the explanation offered against show cause notice before the authorities below were reasonable and therefore, levy of penalty under section 271D of the Income Tax Act is untenable.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates