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

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. Interest and Dividend derived by one Cooperative Society From Investment with another one is eligible for Deduction u/s 80P(2)(D) of Income Tax Act: ITAT Konkan Education Society Sevak Sahakari Patpedhi Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 386 The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the interest and dividend derived by one cooperative society from investment with another one is eligible for deduction under Section 80p(2)(d) of the Income Tax Act, 1961. A Two-Member Bench comprising Partha Sarathi Choudhury, Judicial Member and GD Padmashali, Accountant Member observed that “The interest and dividend earned by the appellant society from its investment held with co-operative banks namely RDCC, being a registered co-operative society under respective state laws, qualifies for deductions under Section 80P(2)(d) of the Income Tax Act. Consequently the views adopted by the tax authorities below are not in conformity with legal position and binding judicial precedents, hence deserves to be vacated. Resultantly, we set-aside the impugned order and reverse the denial of deduction.” Disallowance u/s 14A of Income Tax Act should be limited to Exempted Income: ITAT Ms. Ambika Ghorpade vs ACIT Circle-1 Bellary CITATION: 2024 TAXSCAN (ITAT) 387 The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Bangalore held that disallowance under Section 14A of the Income Tax Act, 1961 should be limited to exempted income. According to the decision of Karnataka High Court in the case of Biocon Ltd. Vs. DCIT wherein it was held that “when there is no exempt income, there could not be any disallowance under Section 14A of the Income Tax Act. In other words, it means that disallowance under Section 14A of the Income Tax Act should be limited to the exempted income”. After reviewing the facts the ITAT bench of George George K., Vice President and Chandra Poojari ( Accountant Member ) sustained the addition to the tune of Rs.31,600/- only up to the exempt income earned by the assessee. K.R. Pradeep & Ms. Girija GA counsel appeared for the assessee and Subramanian S.counsel appeared for revenue. Transfer of FD of Deceased Husband during Demonetisation Period for purchase Agriculture plot: ITAT Remands matter to AO for verification Mrs. Shantabai Jasraj Lodha vs The ITO CITATION: 2024 TAXSCAN (ITAT) 388 The single member bench of Income Tax Appellate Tribunal ( ITAT ) of Pune while observing the transfer of fixed deposits of deceased husbands during the demonetisation period for purchase of agricultural plots remands the matter to the file of Assessing Officer (AO) for verification. After reviewing the facts the ITAT bench of Partha Sarathi Chaudhury ( Judicial Member ) remand the matter to the file of AO for complete verification of the submissions made by the assessee with respect to the FD transferred from the account of assessee husband. Source of Cash Deposit made in Corporation Bank is out of Advanced money received from Sale of Property: ITAT deletes addition Mr. Aashish Luthra vs ITO-19(2)(1) CITATION: 2024 TAXSCAN (ITAT) 389 The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Mumbai while deleting the addition made by the assessing officer the bench held that the source of cash deposit made in corporation bank is out of advance money received from the sale of property. It is observed by the tribunal that the assessee had an opening cash balance of Rs. 5,08,370.34 as per the financial for the year ended 31.03.2005. further noticed that the credits in the Corporation Bank up to 05.07.2005 ( before assessee leaving India ) total to Rs. 4,02,250/-. Therefore, there is merit in the contention that he assesses that the source for the amount deposited until the date of his leaving India is from the cash in hand which is declared in the return of income for the previous AY. Considering the facts and documentary evidence submitted by both parties the bench confirmed that the assessee has explained the source for the cash deposited during his stay in India which is fact is not disputed by the Revenue and that the affidavit of the father not being rejected by the Revenue. Therefore the Banglore bench allowed the appeal filed by the assessee. Territorial Jurisdiction of AO is determined on basis of place where assessee Resides or Carries Business or Profession: ITAT allows appeal Jeeri Keerthana Reddy vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 390 The Income Tax Appellate Tribunal (ITAT) of Pune bench while allowing the appeal filed by the assessee held that territorial jurisdiction of the AO is determined on the basis of place where the assessee resides and/or carries on his business or profession After reviewing the facts the ITAT bench of C.V. Bhadang, (President) and B.R. Baskaran, (Accountant Member) held that the assessee was residing and carrying on her profession at Bangalore, the assumption of jurisdiction by the AO at Mumbai was invalid. Therefore The change of address in the records and/or migration of PAN are not strictly relevant in the matter where the jurisdiction is governed by the statutory provisions as contained in Section 120 read with Section 124 of the Income Tax Act and the notification issued by the Board. ITAT directs readjudication with respect to Disallowance made on expense incurred u/s 37(1) of Income Tax Act Ms. Ambika Ghorpade vvs ACIT CITATION: 2024 TAXSCAN (ITAT) 391 The Two member bench of Income Tax Appellate Tribunal (ITAT) of Bangalore directed readjudication with respect to disallowance made on expenses incurred under Section 37(1) of the Income Tax Act, 1961. After reviewing the facts the ITAT bench of George George K., Vice President and Chandra Poojari,(Accountant Member) partly allowed it for statistical purposes. K.R. Pradeep & Ms. Girija GA counsel appeared for the assessee and Subramanian S.counsel appeared for revenue. Non-Grant of TDS credit: ITAT directs re adjudication Crisil Limited vs Addl. CIT CITATION: 2024 TAXSCAN (ITAT) 392 The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench directed a readjudication with respect to the denial to grant Tax Deduction at Source ( TDS ). After analyzing the submissions of both parties, the bench comprising Aby T Varkey ( Judicial Member ) and S. Rifaur Rahman ( Accountant Member ) remitted this issue back to the file of the Assessing Officer with a direction to verify the records submitted by the assessee on merit and as per law. Dhanesh Bafna, the counsel appearing for the assessee, and Vachashpati Tripathi, counsel appearing for the Department representatives, were present during the proceedings. ITAT directs to allows Expenditure towards commission payment made to Agents who relate to Business Expenses Jai Trading Company vs ITO CITATION: 2024 TAXSCAN (ITAT) 393 The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Kolkata directed to allow expenditure towards the commission payment made to agents who relate to business expenses. Accordingly the bench comprising Sonjoy Sarma, ( Judicial Member ) and Dr. Manish Borad,( Accountant Member ) directed the AO to allow the claim of assessee such expenditure towards commission payment made to the various parties. ITAT directs Re adjudication with respect to Advance received against Booking of Flats M/s Cavalcade Properties Pvt. Ltd vs Dy.CIT, Circle-4 CITATION: 2024 TAXSCAN (ITAT) 394 The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Mumbai directed readjudication with respect to parties who advanced against booking of flats. Therefore the bench comprising Sandeep Singh Karhail ( Judicial Member ) and Om Prakash Kant ( Accountant Member ) restored the matter back to the file of the Assessing Officer for examining parties from whom advance was received against booking. Madhur Agarwal appeared for assessee and H.M. Bhatt appeared for revenue. Income from housing finance for Residential Purposes for a period of less than 5 years eligible for deduction u/s 36(1)(viii) of Income Tax Act: ITAT Housing Development Finance Corporation Limited vs The Additional Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 395 The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Mumbai ruled that Income From housing finance for residential purposes for a period of less than 5 years should be eligible for deduction under Section 36(1)(viii) of Income Tax Act, 1961. Therefore the interest income earned from loans extended or construction or purchase of house for a period of less than 5 years should also be included in the profits for the purpose of deduction under section 36(1)(viii) of the Income Tax Act. Therefore the bench comprising Amit Shukla ( Judicial Member) and Padmavathy S. ( Accountant Member ) allowed the above ground raised by the assessee. Management Service Fees paid to Non Resident AEs eligible for Deduction u/s 37(1) of Income Tax Act: ITAT Iris Worldwide Integrated Marketing Pvt. Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 396 The Income Tax Appellate Tribunal ( ITAT ) of Delhi held that management service fees paid to non- resident Associate Enterprises are eligible for deduction under Section 37(1) of the Income Tax Act, 1961. Therefore the bench comprising Anubhav Sharma ( Judicial Member ) and M. Balaganesh, ( Accountant Member ) observed that the common administration costs incurred by the parent group would be recharged on all the subsidiaries spread across the globe. Hence it was held that the management service fees paid by the assessee would be squarely allowable deduction under Section 37(1) of the Income Tax Act. Failure to controvert evidence with respect to Sale against Advance amount received from Trade Creditors by ITD: ITAT deletes addition Hiral Exports vs ITO Ward CITATION: 2024 TAXSCAN (ITAT) 397 The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Mumbai while deleting the addition made by the assessing officer held that the Income Tax Department failed to controvert evidence with respect to sale against advance amount received from trade creditors. It is observed that lower authorities have failed to controvert the relevant supporting evidences furnished by the assessee that they have made sales to the Vishal Gems & Jewel against the advance amount received by them from that concern and there was no unsecured loan obtained by the assessee from that concern. Therefore the bench comprising Rahul Chadhary, ( Judicial Member ) and Amarjit Singh,( Accountant Member ) deleted the addition made under Section 68 of the Income Tax Act, 1961. Loan received through State Government does not attract S.43B(d) of Income Tax Act: ITAT Tokai Sahakari Sakhar Karkhana Ltd vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 398 The Income Tax Appellate Tribunal ( ITAT ), Pune bench ruled that loan received through the state government does not attract section 43B(d) of the Income Tax Act, 1961. After analyzing the submission of both parties the bench comprising S.S. Godara (Judicial Member ) and G.D. Padmahshali, ( Accountant Member ) observed that assessment year A.Y.2016-17 held that loans received through a state government does not attract section 43B(d) of the Income Tax Act. Therefore the bench allowed the appeal filed by the assessee. ITAT directs to Rectify Assessment Order passed u/s 143(3)of Income Tax Act regarding 80P deduction Town Vividoddesha Sahakari Bhandar Niyamitha vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 399 The Income Tax Appellate Tribunal ( ITAT ), Bangalore bench directed to rectify the assessment order passed under Section 143(3) of the Income Tax Act, 1961 regarding the 80P deduction . Therefore the bench further observed that AO while issuing show cause notice for rectification had not mentioned that the assessee had violated the principles of mutuality by dealing with nonmembers. After analyzing the submission of both parties the bench comprising George George K (Vice President) and Chandra Poojari, (Accountant Member) allowed rectification of the assessment order passed under Section 143(3) of the Income Tax Act, 1961 regarding the 80P deduction. No addition u/s 50C of IT Act when Income from Project of Redevelopment determined under PGBP: ITAT Tirupati Developers vs Additional Joint Deputy Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 400. The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench ruled that no addition shall be made under Section 50C of the Income Tax Act, 1961 when income from a project of redevelopment is determined under profit and gains of business of profession ( PGBP ). After analyzing the submission of both parties the bench comprising Narender Kumar Choudhry ( Judicial Member ) and Ms Padmavathy S, ( Accountant Member ) determined that In assessee’s case, the assessee being a Builder and Developer of property has offered the income from project of redevelopment under the head of and gains from business or profession following Project Completion Method and therefore the addition made by the assessing officer is not sustainable Income from Hotel related services provided to Indian Hotels not Royalty/FIS under Article 12 of India- USA DTAA: ITAT ACIT vs Westin Hotel Management L.P. A-109 CITATION: 2024 TAXSCAN (ITAT) 401 The Income Tax Appellate Tribunal ( ITAT ), Delhi bench ruled that income from the hotel related services provided to Indian hotels is not royalty/Fee including service ( FIS ) under Article 12 of the India USA Double Taxation Avoidance Agreements ( DTAA ). The tribunal observed that the issue in dispute is squarely covered in favor of the assessee by the decision of the Tribunal and Jurisdictional High Court. Therefore the bench comparison Astha Chandra ( Judicial Member ) and Shamim Yahya, ( Accountant Member ) held that income from the hotel related services provided to Indian hotels are not covered royalty/Fee including service ( FIS ) under Article 12 of the India USA Double Taxation Avoidance Agreements ( DTAA ). Therefore the bench dismisses the appeal filed by the revenue. Hospital Building Construction Investment from Professional Receipts shall compute under Head of Business Income: ITAT Aniljit Singh Arora vs DCIT CITATION: 2024 TAXSCAN (ITAT) 402 The Chandigarh Income Tax Appellate Tribunal ( ITAT ) held that investment in construction of hospital buildings made out from the professional receipts are computed under head business income. After analyzing the submission of both parties the bench comprising Sanjay Garg (Judicial Member) and Vikram Singh Yadav (Accountant Member) held that investment in construction of hospital buildings made out from the professional receipts are computed under head business income. Procedure of disposal of appeal with respect to Investment in Equities not in accordance with mandate given u/s 250(6) Income Tax Act: ITAT directs Re adjudication Aryavrat Vintrade Pvt. Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 403. The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) while directing the readjudication observed that procedure of disposal of appeal with respect to investment in equities is not in accordance with mandate given under Section 250(6) of the Income Tax Act, 1961 After analyzing the submission of both parties the bench comprising Rajpal Yadav (Vice-President) and Dr. Manish Borad (Accountant Member) set aside this issue to the file of CIT (Appeals) and observed that the procedure of disposal of appeal with respect to investment in equities is not in accordance with mandate given under Section 250(6) of the Income Tax Act. ITAT directs to deletes addition made in respect of Capital Gains by adopting the value of property as per DVO Report Sri Arijit Chakraborty vs ITO, Ward-46(1) CITATION: 2024 TAXSCAN (ITAT) 404 The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) directed to delete additions made in respect of capital gain by adopting the value of property as per DVO report. The tribunal observed that the assessee as a prudent seller to get rid of the long time and continuous harassment due to interruption and obstacles of miscreants in peaceful use and enjoyment of the property, has made a distress sale of the property at Rs.30,00,000/ After analyzing the submission of both parties the bench comprising Sanjay Garg ( Judicial Member ) and Girish Agrawal, ( Accountant Member ) held that addition made by the Assessing Officer in respect of capital gains by adopting the value of the property as per the DVO report is ordered to be deleted. Method of Revenue Recognition and application of Accounting Standard properly verified by AO in Assessment Order: ITAT quashes Revision Order M/s Soham Buildcon vs PCIT-3 CITATION: 2024 TAXSCAN (ITAT) 405 The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) while quashing the revision order held that the method of revenue recognition and application of accounting standard are properly verified by the assessing officer in the assessment order Therefore After analyzing the submission of both parties the bench comprising Madhumita Roy ( Judicial Member ) and Waseem Ahmed, ( Accountant Member ) observed that the method of revenue recognition and application of accounting standards are properly verified by the assessing officer in the assessment order. Therefore the bench quashed the revision order. No addition on account of Share Premium received in excess of FMV u/s 56(2)(viib) of Income Tax Act: ITAT DCIT vs Continental Corrugators Pvt. Ltd. CITATION: 2024 TAXSCAN (ITAT) 406. The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that no addition shall be made on account of share premium received in excess of Fair Market Value (FMV) under Section 56(20(viib0 of the Income Tax Act, 1961. After analyzing the submission of both parties the bench comprising Kul Bharat(Judicial Member) and Pradip Kumar Kedia, (Accountant Member) held that no addition was made on account of share premium received in excess of Fair Market Value (FMV) under Section 56(20(viib0 of the Income Tax Act.Therefore the bench reverse addition mae by the assessing officer. No Interest on delayed realization of export proceeds from AEs: ITAT strides Pharma Science Limited vs The Deputy Commissioner of Income Tax Circle – 15(3)(2) CITATION: 2024 TAXSCAN (ITAT) 407 The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that no interest shall be levied on delayed realization of export proceeds from Associate Enterprises(AE) After analyzing the submission of both parties the bench comprising Vikas Awasthy (Judicial Member) and Amarjit Singh, (Accountant Member) held that imputing of interest on delayed payment of receivables from AEs is unwarranted. Expenditure incurred on Shelved Projects are Revenue Expenditure: ITAT deletes Disallowance The Tata Power Co. Ltd vs Additional Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 408 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) recently held that expenditure incurred on sheleed projects are revenue expenditure and deleted the disallowance made by the assessing officer. Considering this fact the tribunal observed that the preceding Assessment Years the Tribunal has been consistently holding that such expenditure is on revenue account and has decided the issue in favor of the assessee. Therefore, the two member tribunal bench of Vikas Awasthy, ( Judicial Member ) and Padmavathy.S, ( Accountant Member ) held that expenditure incurred on sheleed projects are revenue expenditure. Source for cash deposit in Saving Bank Account is made out of Sale Proceeds of Flat: ITAT deletes Addition Siddharth Mehta vs ITO CITATION: 2024 TAXSCAN (ITAT) 409 The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) while deleting the addition made by the assessing officer held that source for cash deposit in savings bank account is made out of sale proceeds of flat. After analyzing the submission of both parties the single bench of M. Balaganesh, (Accountant Member) held that the source for cash deposit for Rs. 29 lakhs in the bank account is made out of sale proceeds received in cash is to be believed as there is no other source of income available to the assessee. Therefore the bench allowed the appeal filed by the assessee. ITAT directs re-adjudication with respect to LTCG of sold property which was canceled by Civil court Smt. Mangalagiri Tulasi vs ITO CITATION: 2024 TAXSCAN (ITAT) 410 The Bangalore bench of Income Tax Appellate Tribunal (ITAT) directs re-adjudication with respect to Long Term Capital Gain of sold property which was canceled by the civil court. After analyzing the submission of both parties the bench comprising George George K, (Vice President) and Chandra Poojari, (Accountant Member)directs re-adjudication with respect to Long Term Capital Gain of sold property which was canceled by the civil court. Dispute on Remittance of Employees Contribution towards Provident Fund and ESI: ITAT directs re- adjudication Gurusamy Adhinarayanan vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 411 The Chennai bench Income Tax Appellate Tribunal ( ITAT ) directs readjudication due to the dispute with respect to the remittance of employees contribution towards the provident fund and Employee State Insurance ( ESI ). After analyzing the submission of both parties the bench comprising V. Durga Rao (Judicial Member) and Manjunatha G (Accountant Member) directed readjudication due to the dispute with respect to the remittance of employees contribution towards the provident fund and Employee State Insurance. No addition u/s 41(1) of Income Tax Act on ground of Expiration of Limitation Period Alone: ITAT deletes Addition Ecokrin Hygiene Pvt. Ltd vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 412 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition as no addition under section 41(1) of the Income Tax Act shall be made solely on the grounds of the expiration of the limitation period. The two member bench comprising Narendar Kumar Choudhari ( Judicial member ) and M.S Pathmavathy ( Accountant member ) noticed in Assessee’s case that the assessee as part of the financial statements reflecting the outstanding liability it would mean that it is an acknowledged liability and that the assessee was intending to settle the liability in the future date. Section 2(22) of Income Tax Act cannot be invoked against Non-Beneficiary Shareholders in company receiving Company Loans: ITAT Deputy Commissioner of Income Tax vs Eko Diagnostic Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 413 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that Section 2 (22) of Income Tax cannot be invoked against Non-Beneficiary Shareholders in companies receiving Company Loans. The Coram of Sanjay Garg (Judicial member) and Dr. Manish Borad (Accountant member) concluded that since the assessee company was not a beneficial shareholder in M/s. Calcutta Medical Imaging Institute Ltd., the loan received was a commercial transaction. Thus, Section 2(22)(e) could not be invoked. Consequently, the revenue’s grounds were dismissed Magnitude of Profit is not Decisive factor about Genuineness of existence of an Investee Company: ITAT Brajesh Narnolia vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 414 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has observed that the magnitude of profit is not a decisive factor about the genuineness of existence of an investee company. It was reiterated that the legitimacy of the assessee’s investment could not be established based solely on the modest profit earned. Therefore, the Tribunal, led by Girish Agrwal ( Accountant member ) and Rajpal Yadav ( Vice President ), upheld the decision of the CIT(Appeals), dismissing the appeal. Interconnect usage charges paid to foreign Telecom Operators not Taxable in India under India-Sri Lanka DTAA: ITAT Dialog Axiata PLC vs Dy. CIT CITATION: 2024 TAXSCAN (ITAT) 415 In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Interconnect usage charges paid to foreign Telecom Operators Not Taxable in India under India-Sri Lanka Double Taxation Avoidance Agreement ( DTAA The bench of Om Prakash Kanth ( Accountant member ) and Kavitha Rajagopal ( Judicial member ) held that the payment made towards interconnect usage charges to foreign telecom operators does not accrue or arise in India and in the absence of any permanent establishment in India could not be brought to tax in India under Article 7 of DTAA. In the result, the appeal filed by the assessee is allowed. Loan advanced for Repayment of Business Operation Liabilities allowable as Business Expenditure u/s 37 (1): ITAT Ardom Towergen (P) Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 416 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT) observed that loan advanced for repayment of business operation liabilities allowable as business expenditure under Section 37(1) of the Income Tax Act, 1961. The two member bench comprising Pradip Kumar Kediya ( Accountant member ) and Saktijit Dey (Vice President) found, as per submissions of Departmental Representative, it was the case of the Revenue that various agreements, which are not produced at earlier stages need to be examined for arriving at a proper conclusion on assessee’s claim of business. Further, in the interest of justice, the issue arising for consideration needs to be restored back to the Assessing Officer for de novo adjudication TDS on Salary paid to all Categories of Doctors shall be covered u/s 194J of Income Tax Act, not Section 192: ITAT ACIT (TDS) vs Artemis Medicare Services Ltd CITATION: 2024 TAXSCAN (ITAT) 417 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) clarified the applicability of Tax Deducted at Source ( TDS ) provisions on salary payments to doctors, determining that such deductions fall under Section 194J of the Income Tax Act, 1961 rather than Section 192. Considering the submissions, the two-member bench comprising Anubhav Sharma (Judicial member) and M. Balaganesh (Accountant member) reaffirmed that TDS on salaries paid to doctors, across all categories, falls under Section 194J of the Income Tax Act. TDS filing Delayed due to Paucity of Funds and Interest Duly Paid: ITAT deletes Penalty u/s 272(2)(k) Ambience Developers & Infrastructure Pvt. Ltd vs JCIT CITATION: 2024 TAXSCAN (ITAT) 418 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under section 272(2)(k) of the Income Tax Act, 1961 as Tax Deduction at Source ( TDS ) filing was delayed due to paucity of funds, with interest duly paid. The bench of Anubhav Sharma ( Judicial member ) and M. Balaganesh ( Accountant member ) held that this was not a fit case for levy of penalty under Section 272A (2) (k) of the Income Tax Act. Accordingly, the grounds raised by the assessee for all the years under consideration are allowed, and the appeals of the assessee are allowed. AO solely relies on DDIT Report for 15 Crores Income Escapement: ITAT quashes Reassessment Order ITO vs Surender Dalal CITATION: 2024 TAXSCAN (ITAT) 419 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has invalidated a reassessment order as the Assessing Officer’s sole reliance on DDIT report for the alleged 15 crore income escapement was deemed insufficient. The bench of G.N Pannu ( Vice President ) and C.N.Prasad ( Judicial member ) held that the reassessment made in the section 143(3) read with section 147 of the Act is bad in law and the re- assessment order was quashed, Accordingly, the appeal of the Assessee are allowed. ITAT dismisses Reassessment as AO fails to Pass Assessment Order within 4 weeks from Rejection of Taxpayers’ Objection Champalal Omprakash vs ITO CITATION: 2024 TAXSCAN (ITAT) 420 The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) dismissed reassessment as Assessing Officer ( AO ) failed to pass assessment Order within 4 weeks from rejection of taxpayers’ objection. The bench of Manish Board (Accountant member) and Sanjay Garg (Judicial member) observed that the assessment framed by the Assessing Officer held to be bad in law and therefore, the consequential additions made by the Assessing Officer in the reopened assessment are not sustainable. ITAT decided the legal issue in favor of the assessee holding that the assessment framed in this case was bad in law, therefore, other grounds/issues taken by both the parties on merits are rendered academic in nature. Relief to Sahara India: ITAT deletes Addition of Interest Income for AO’s Failure to Appreciate Facts Properly A.C.I.T. vs M/s Sahara India Financial Corporation Ltd CITATION: 2024 TAXSCAN (ITAT) 422 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) granted relief to Sahara India Financial Corporation Limited by deleting the addition of interest income. This action was taken due to the Assessing Officer ( AO )’s failure to properly appreciate the facts of the matter Upon thorough examination of the facts, the bench of Saktijit Dey (Judicial Member) and N. K. Billaiya (Accountant member) concurred with the view that the AO had not accurately understood the situation. Consequently, the tribunal declined to intervene, and the appeal of the revenue was dismissed accordingly. ITAT directs to compute Income earned from Sale of Property u/s 45(2) of Income Tax Act Dharani Developers Private Limited vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 423 The Chennai bench Income Tax Appellate Tribunal ( ITAT ) directed to compute income earned from sale of property under Section 45(2) of the Income Tax Act, 1961. Therefore, the bench concluded that the assessee has furnish the details, such as how long the asset was treated as long term capital gain and when the assessee has converted the property into stock-in- trade and accordingly up to conversion of the property, the Assessing Officer has to treat it as capital asset and after conversion of the property, it has to be treated as business assessee. Although, neither the assessee nor the Assessing Officer properly computed the property of the assessee After analyzing the submission of both parties the bench comprising V. Durga Rao (Judicial Member) and Manjunatha G (Accountant Member) directed to compute income earned from sale of property under Section 45(2) of the Income Tax Act. Depreciation Claim allowable on Vehicle used Commercially for Business Purpose: ITAT-Deputy Commissioner of Income Tax vs Avichal Buildcon Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 445 The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) determined that a vehicle exclusively used by a business entity qualifies for depreciation claims. It was noted by the two member bench of Waseem Ahmed ( Accountant Member ) and Madhumita Roy (Judicial Member) noted that, “purchase of a car was made by the appellant company which is also reflected in the books of account of the appellant company and therefore it can be well said that the car is commercially used for the purpose of business of the company and the depreciation thereon cannot be denied; moreso, the interest on car loan and car insurance was allowed by the department.” Payments towards Marketing and Distribution Rights of Google Ad words not Royalty: ITAT- Google Ireland Ltd vs The DCIT (IT) CITATION: 2024 TAXSCAN (ITAT) 473 The Bangalore Income Tax Appellate Tribunal ( ITAT ) Bench held that the payment made by Google India to the assessee does not fall under the category of royalty or Fees for Technical Services (FTS). The tribunal bench of Accountant Member Laxmi Prasad Sahu and Vice President Geroge George K held that the payments made by Google Ireland Limited to the assessee cannot be taxed in the hands of the assessee as royalty. ICSI Income Tax Exemption Claim: ITAT orders to Carry Out Necessary Verification- The Institute of Company Secretaries of India vs DCIT CITATION: 2024 TAXSCAN (ITAT) 472 The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has directed a reassessment of the Institute of Company Secretaries of India’s ( ICSI ) income tax exemption claim. The Tribunal Bench of Astha Chandra (Judicial Member) and N.K. Billaiya (Accountant Member) has partially upheld the appellant’s appeal and remanded the case to the Assessing Officer for further examination, acknowledging the intricacies and nuances involved. ICSI Income Tax Exemption Claim: ITAT orders to Carry Out Necessary Verification- The Institute of Company Secretaries of India vs DCIT CITATION: 2024 TAXSCAN (ITAT) 472 The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has directed a reassessment of the Institute of Company Secretaries of India’s ( ICSI ) income tax exemption claim. The Tribunal Bench of Astha Chandra (Judicial Member) and N.K. Billaiya (Accountant Member) has partially upheld the appellant’s appeal and remanded the case to the Assessing Officer for further examination, acknowledging the intricacies and nuances involved. Assessee demonstrates Reasonable Cause for Cash Loan Availment u/s 273 B: ITAT deletes Penalty u/s 271D M/s. SVT Wholesale Pvt. Ltd vs JCIT CITATION: 2024 TAXSCAN (ITAT) 470 The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271D of the Income Tax Act, 1961 emphasizing a reasonable cause for cash loan availment and demonstrating compliance with Section 273B of the Income Tax Act. The two member bench of the tribunal comprising Laxmi Prasad Sahu (Accountant member) and George George K. (Vice President) observed that the matter needs fresh examination by the AO. Accordingly, the matter is restored to the file of the AO. The AO was directed to examine whether there is “reasonable cause” as mandated under section 273B of the Act, for assessee to avail cash loans from its Directors. Accordingly appeal of the assessee was allowed Genuineness of Purchase and Sale of Shares Proved by Producing Documentary Evidence: ITAT deletes addition u/s 68- Amarjit Kaur Surinder Singh Kochhar vs ITO Ward-12(1)(1) CITATION: 2024 TAXSCAN (ITAT) 469 In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT) deleted addition under Section 68 of Income Tax Act as genuineness of purchase and sale of shares is proven by producing documentary evidence. The single-member bench of the tribunal, comprising Pavan Kumar Gadale ( Judicial member ) directed AO to delete the additions and allow the grounds of appeal in favor of the assessee, resulting in the allowance of the appeal filed by the assessee. No Enquiry by AO: ITAT upholds Revision of Bad Debts allowed u/s 36(1) (vii) of Income Tax Act ICICI Bank Ltd vs The Dy. Commissioner of Income- tax CITATION: 2024 TAXSCAN (ITAT) 468 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has upheld the revision of bad debts allowed under Section 36(1)(vii) of the Income Tax Act, 1961 as there was no enquiry conducted by the Assessing Officer (AO). The two member bench of the tribunal comprising Sandeep Singh Karhail (Judicial member) Prashanth Maharishi (Accountant member) observed that “During the course of assessment proceedings neither there is any discussion not there is any detail called for by the assessing officer and therefore we do not find infirmity in the order of the learned principal Commissioner of income tax in holding that not making any enquiry by the learned assessing officer on this aspect makes the order of the learned AO erroneous so far as judicial to the interest of the revenue.” ITAT upholds CIT (A)’s Decision Deleting Sales Tax Refund Addition of Rs. 11.6L made by AO u/s 43B of Income Tax Act DCIT vs M/s. Flax Apparels Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 467 The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) upheld the Commissioner of Income Tax (Appeals) ’s decision to delete the addition of Rs. 11.6 lakhs pertaining to sales tax refund, which was made by the Assessing Officer (AO) under section 43B of the Income Tax Act, 1961. The Coram of T.R.Senthil Kumar (Judicial member) and Annapurna Gupta (Accountant member) do not see any reason to interfere with the order of the CIT(A) holding the assessee’s claim of sales tax refund waived during the year amounting to Rs. 11,68,847/- as allowable expenditure. ITAT restores Trust’s 80G (5) Registration Application back to CIT (E) despite 6-Year Delay Freepathshala vs Commissioner of Income-tax (Exemptions), Chandigarh CITATION: 2024 TAXSCAN (ITAT) 466 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) restored the trust’s 80G(5) Registration Application back to the Commissioner of Income Tax (Exemption) (CIT (E)) despite a 6-year delay. The two-member bench of the tribunal comprising Pradip Kumar Kediya (Accountant member) and Kul Bharat (Judicial member) set aside the order and restored the application before CIT(E) for decision afresh in accordance with the law. Accordingly, the assessee’s appeal stands allowed for statistical purposes. Unutilized CENVAT credit requires to be included in Closing Stock Value as u/s 145 of Income Tax Act: ITAT confirms Addition- Dr. Raveendra M. Madraki vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 464 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) confirmed the addition of unutilized Central Value added Tax (CENVAT) credit, mandating its inclusion in the closing stock value as per Section 145 of the Income Tax Act. The two member bench if the tribunal comprising Pavan Kumar Gadale ( Judicial member) and Prashanth Maharishi ( Accountant member) find any infirmity in the order of the lower authorities in including the above sum in the closing stock of the assessee and thereby increasing the total income. Accordingly, the appeal was dismissed. Taxpayer Fails to Prove CA’s Advice to Transfer Case to Advocate and his Negligence to File Timely Appeal: ITAT Denies to Condone Delay of 310 Days Dr. Raveendra M. Madraki vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 464 The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) refused to grant condonation for a 310-day delay, citing the taxpayer’s inability to substantiate the Chartered Accountant’s (CA) recommendation to transfer the case to an advocate and the advocate’s subsequent negligence in filing the appeal on time. The two member bench of the tribunal comprising Beena Pillai (Judicial member) and Chandra Poojari (Accountant member) found no merit in the application for condonation of delay. Accordingly, ITAT considered the view that the assessee has failed to make out a sufficient and reasonable cause for condonation of delay and rejected the petition for condonation of delay. Non-striking of Irrelevant Matter would Render Income Tax Penalty Notice Defective: ITAT- Jatin Enterprises vs ACIT-19(2) CITATION: 2024 TAXSCAN (ITAT) 463 The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) recently quashed a pre-drafted penalty notice that included both concealed and inaccurately furnished income particulars. The bench, comprising Vikas Awasthy (Judicial Member) and S. Rifaur Rahman (Accountant Member), noted that when the Assessing Officer indicates satisfaction for imposing penalties based on Section 271(1)(c) of the Act, failure to strike out irrelevant portions renders the notice defective. This defect would compromise the penalty proceedings No Interest Cost cannot be claimed as Business Expenditure when borrowed amount utilized for making Investment in Shares: ITAT directs to recompute STCG from Shares- JPR Investments and Trading Private Limited vs Asstt.Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 462 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) while making directions to recompute the Short Term Capital Gain( STCG ), held that interest cost can not be claimed as business expenditure when the borrowed amount was utilized for making investment in shares. After analyzing the submission of both parties, the bench comprising Narender Kumar Choudhry, ( Judicial Member ) & I Amarjit Singh, ( Accountant Member ) directs the assessing officer to treat the interest cost of Rs.122,26,476/- as cost of investment made towards purchasing the shares of M/s India Bull Real Estate Ltd. and re-compute the short term capital gain. No TDS Deduction Required on Commission Income earned by Foreign Agents Outside India: ITAT deletes Disallowance- Globe Textiles (India) P.Ltd vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 461 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ), after deleting the disallowance made by the assessing officer, held that Tax Deduction at Source ( TDS ) should not be deducted on account of commission income earned by foreign agents outside India. The two-member bench of Annapurna Gupta ( Accountant Member ) and Pavan Kumar Gadale ( Judicial Member ) held that commission income earned by the agents cannot be termed to have incurred or arisen in India, and therefore, was not taxable in India. No Disallowance on payments towards PF and ESI made before due date of filing Income Tax Return u/s 139(1) of Act: ITAT Coronation Cigar Co vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 460 The Mumbai bench Income Tax Appellate Tribunal (ITAT) held that there was no disallowance on payment towards the Provident Fund and Employee State Insurance (ESI) made before the due date of filing Income Tax Return under Section 139(1) of the Income Tax Act, 1961. After analyzing the submission of both parties, the two member bench of Vikas Awasthy (Judicial Member) and Pramod Kumar (Vice President)held that disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1) of Income Tax Act. Liability of Directors continue even though after dissolving Company u/s 248(5) of Companies Act: ITAT upholds Notice u/s 148 of Income Tax Act Chandan Realtors Pvt. Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 459 The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) while upheld the notice issued under Section 148 of the Income Tax Act,1961 observed that liability of directors continues even after dissolving the company under Section 248(5) of the Companies Act, 2013. the two-member bench of Annapurna Gupta, ( Accountant Member ) and Pavan Kumar Gadale,( Judicial Member ) held that upheld the notice issued under Section 148 of the Income Tax Act, 1961 observed that liability of directors continues even though after dissolving the company under Section 248(5) of the Companies Act, 2013. ITAT deletes deduction claimed u/s 35(1)(ii) of Income Tax Act towards Donation made to ineligible Scientific Research Trust C K Zipper Private Limited vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 458 The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) deleted the deduction claimed under Section 35(1)(ii) of the Income Tax Act, 1961 towards donation made to the ineligible scientific research trust. The two member bench of Ramit Kochar, ( Accountant Member ) and Madhumita Roy, ( Judicial Member ) deleted the deduction claimed under Section 35(1)(ii) of Income Tax Act towards Donation made to ineligible Scientific Research Trust. ITAT directs Re adjudication with respect to Source Of Money Trail related to Unsecured Loan- BMM Ispat Limited vs ACIT Circle-1(1)(2) Bangalore CITATION: 2024 TAXSCAN (ITAT) 457 The Bangalore bench Income Tax Appellate Tribunal (ITAT) directed education with respect to the source of money trail related to unsecured loan. The two member bench of Chandra Poojari, ( Accountant Member ) and George George K.( Vice President ).The tribunal observed that the onus on the assessee is not only limited to establish the identity of the person making the advance but also his capacity to make advances and it has to be proved that it had actually been received as a loan from the creditor. Bad Debts arising out of Business of Credit Card Services is part of Banking Activities: ITAT allows deduction claimed by HDFC Bank u/s 36(1)(vii) of Income Tax Act- HDFC Bank Ltd. vs The DCIT-2(3)(1) CITATION: 2024 TAXSCAN (ITAT) 456 The Mumbai bench, Income Tax Appellate Tribunal ( ITAT ) while allowing the deduction claimed by the HDFC Bank under Section 36(1)(vii) of the Income Tax Act, 1961 held that bead debts arising out of the business of credit card services is part of banking activities. the two member bench comprising Kuldip Singh, (Judicial Member) & Padmavathy S, (Accountant Member) held that bad debts arising out of the business of credit card services is part of the banking activities and the loss arising on account of unrecovered balance is arising out of the normal course of banking business. Accordingly, the same shall be allowed as a deduction under section 36(1)(vii) of the Income Tax Act. Absence of cogent material to prove Cash Transaction with respect to Purchase of Chemicals: ITAT directs readjudication Polyspin Filtration India Pvt. Ltd. vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 455 The Delhi bench Income Tax Appellate Tribunal (ITAT) directed readjudication in absence of cogent material to prove the cash transactions with respect to purchase of chemicals. The bench observed that the payments made to M/s Krishna Enterprise out of its regular banking channels In such a situation the revenue had not brought any material on record to prove that subsequent to payment by banking channels to the supplier, the supplier had in turn given back the cash to the assessee after reducing his / her commission if he / she is an accommodation entry provider. Therefore the entire addition has been made in the hands of the assessee only on suspicion. The bench comprising M. Balaganesh, (Accountant Member) directs readjudication in absence of cogent material to prove the cash transactions with respect to purchase of chemicals . Failure to establish Legal Expenses incurred from Trading Loss as Civil Expenditure: ITAT directs Readjudication M/s. AC Choksi Share Brokers Pvt Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 454 The Mumbai bench Income Tax Appellate Tribunal ( ITAT ) directed readjudication on account of failure to establish legal expenses incurred from the trading loss as civil expenditure. The tribunal observed that the assessee is a stock broker and was in the business as stock broking services and due to trading in the clients account, the client has filed the criminal case. However the assessee could not establish with the supporting evidence that the claim of the assessee is a civil expenditure allowable under the Income Tax Act. ITAT deletes disallowance made towards Staff Welfare Expenses without giving opportunity M/s.Rotex Enterprises P.Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 453 The Ahmedabad bench Income Tax Appellate Tribunal (ITAT) deletes disallowance made towards the staff welfare expenses without giving opportunity. The tribunal observed that during the course of hearing, the AO had rejected the books of accounts of the assessee and estimated the income of the assessee by applying 10% to the gross turnover of the assessee. Therefore it was observed after examining the order of CIT(A) did not find any merit in the anomaly of salary mismatch between that reflected in the bank and that claimed by the assessee in its books as noted by the AO. ITAT quashes Assessment Order passed on Violation of Principles of Natural Justice- Kanchan Vanijya Pvt. Ltd. vs ACIT CITATION: 2024 TAXSCAN (ITAT) 451 The Mumbai bench Income Tax Appellate Tribunal ( ITAT )quashed the assessment order passed on violation of principle of natural justice. The Two member bench of Girish Agrawal, ( Accountant Member ) & Sanjay Garg ( Judicial Member )observed that adherence to principles of natural justice is recognized by all civilized States and is of supreme importance when a quasi judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences is in issue. Natural Justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental.`` Section 155(14) of Income Tax Act cannot limit TDS Credit if Income disclosed in ITR: ITAT allows Full Credit as per Form 26AS- Dassault Systemes Simulia Corp vs DCIT CITATION: 2024 TAXSCAN (ITAT) 449 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that the Section 155(14) of the Income Tax Act, 1961 cannot restrict the Tax Deduction at Source ( TDS ) credit if the income is properly disclosed in the Income tax Returns ( ITR ). The bench of V. Durga Rao (Judicial member) and Manoj Kumar Agarwal (Accountant member) directed the AO to allow full TDS credit to the assessee which is otherwise available as per Form 26AS. Accordingly the appeal of the assessee was allowed. 857 days delay, including 56 Pre-Covid days Properly Explained: ITAT directs CIT(A) to Condone Delay in Appeal Filing- C. Ramasamy Gounder HUF vs Income Tax Officer Ward 1(5) CITATION: 2024 TAXSCAN (ITAT) 448 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Commissioner of Income Tax (Appeals) to condone the 857-day delay in filing the appeal a the assessee has given proper explanation provided for the delay, encompassing 56 pre-COVID days. e bench of Justice C.V. Bhadang and Manjunatha G. (Accountant member) considered the view that the CIT (A) ought to have condoned the delay in filing of appeal to advance substantial justice. ITAT directed the first appellate authority to condone the delay in filing of appeal and admit the appeal for hearing and decide the issues involved on merit, after providing reasonable opportunity of hearing to the assessee. Accordingly, an appeal filed by the assessee was allowed. Installment Payments for Immovable property Purchase via cheque on different dates: ITAT deletes Addition u/s 56(2)(x) Bijay Kumar Agarwal vs ITO CITATION: 2024 TAXSCAN (ITAT) 447 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ), deleted addition under Section 56(2)(x) of the Income Tax Act, 1961 as the orders of both the lower authorities are not sustainable because the assessee has demonstrated that it has made payment for purchase of this property through account payee cheque in installments on different dates. The two member bench consisting Girish Agrwal ( Accountant member ) and Rajpal Yadav ( Vice President ), while deleting the addition, sets aside the file back to the assessing officer for reconsideration Sale of Software Products does not Constitute Royalty Income, Not taxable under Article 12 of India- Japan DTAA: ITAT- ACIT vs Dassault Systemes BioviaK.K CITATION: 2024 TAXSCAN (ITAT) 446 In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the sale of software products does not constitute royalty income and is not taxable under Article 12 of India- Japan Double Taxation Avoidance Agreement ( DTAA ). The two member bench of the tribunal comprising Dr.B.R.R Kumar ( Accountant member ) and Anubhav Sharma ( Judicial member ) observed that the CIT (A) had fallen in error in making the deletion. It was observed that “After the judgment of Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited vs CIT (supra), the issue with regard to taxability of the income from the sale of Software licenses subscription, stands settled and the same is followed by ld. CIT(A), so there is no infirmity in the impugned orders, requiring interference.” ITAT allows Depreciation claim u/s 80IC for Building, Factory, Furniture and Plant Machinery Blocks Deputy Commissioner of Income Tax vs Avichal Buildcon Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 445 The Income Tax Appellate Tribunal ( ITAT ) of Delhi, allowed depreciation claims under Section 80IC of Income Tax Act, 1961, for building, furniture, and plant machinery blocks. The bench of Pradip Kumar Kediya (Accountant member) and Saktijit Dey (Vice president) opined that the assessee’s claim of depreciation was allowable. Even, otherwise also, the disallowance of depreciation would only enhance the profit of the assessee, which was otherwise eligible for claim of deduction under Section 80IC of the Income Tax Act. ITAT upholds the decision. Commissioner cannot invoke Revisional Jurisdiction to cancel Assessment: ITAT- Shri Subbaraya Annamalai Siva Kumar vs ITO CITATION: 2021 TAXSCAN (ITAT) 510 The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench ruled that the Commissioner cannot invoke Revisional Jurisdiction to cancel Assessment. The coram L.P.Sahu and S.S.Godara while allowing the appeal of the assessee in the light of the decision of the Apex court in the cases of Malabar Industrial Co. vs. CIT, CIT vs. Max India Ltd., and CIT vs. Kwality Steel Suppliers Complex held that an assessment or reassessment, as the case may be, could only be revised in case it satisfies the twin conditions of erroneous as well as causing prejudice to the interest of revenue; simultaneously. There is no such indication in the Pr. CIT’s above-extracted directions. Coupled with this, he has also directed the Assessing officer to cancel the assessment himself which the latter has no jurisdiction to do as per Section 263 of the Act. ITAT deletes addition made on accrual basis with respect to interest income of arbitration award MMTC Ltd 1st Core vs The Dy. C.I.T Circle – 5(1) CITATION: 2024 TAXSCAN (ITAT) 509 The Delhi bench Income Tax Appellate Tribunal ( ITAT ) deleted the addition made on the accrual basis with respect to the interest income earned from the arbitration award. The bench comprising N.K. Billaiya, ( Accountant Member ) & Astha Chandra ( Judicial Member )relied upon the decision of Supreme Court in the case of Shoorji Vallabhji and in the case of Godara Electricity Observed that the income which has to be recognized as per the system of accounting followed by the assessee in view of section 145 of the Income Tax Act if the income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income, which does not materialize. ITAT uphold upward adjustment towards guarantee fee in favor of bank with respect of transaction carried out by AE’s Intas Pharmaceuticals Ltd. vs Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 511 The Ahmedabad bench Income Tax Appellate Tribunal (ITAT) confirmed the upward adjustment made towards the guarantee fee in favor of the bank with respect to transactions carried out by Associate Enterprise. The bench comprising Annapurna Gupta (Accountant Member) & Siddhartha Nautiyal, (Judicial Member) observed that The assessee during the course of assessment proceedings has himself accepted to charge guarantee fee @ 0.8% as observed by CIT(A) in the appellate order. Accordingly, in view of the judicial precedents on the subject and the assessee’s own acceptance placed on record before the AO / TPO, we find no infirmity in the order of CIT(A) Loan from Close Relatives & Friends cannot be treated as ‘Unexplained’ to invoke S. 68: ITAT Mr.Pakkeer Tulkarnai-Gulam Alam Shah vs Asst. Commissioner of Income Tax CITATION: 2022 TAXSCAN (ITAT) 508 The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the loan taken from close relatives and friends cannot be treated as unexplained cash credit in order to attract section 68. Tribunal held that “In this case, the assessee has filed all details to prove the identity of the loan creditors, genuineness of transactions and creditworthiness of the parties. In fact, the loans are taken from close family members and friends. It is not a case of the AO that the assessee had taken loans from certain unknown people whose identity is doubtful. Therefore, we are of the considered view that the AO is completely erred in making additions towards the loan taken from above parties as unexplained credit u/s.68 of the Act.” Agricultural Expenditure Adequacy Not verified by AO u/s 143(3), Revenue interests not sustainable: ITAT quashes Assessment Order- Vijay Rajnikant Patel vs Principal Commissioner of Income Tax-3 CITATION: 2024 TAXSCAN (ITAT) 507 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the assessment order after finding that the Assessing Officer ( AO ) failed to verify the adequacy of agricultural expenditure under Section 143(3), of the Income Tax Act, 1961 stating that it is not sustainable in the interest of revenue. A two member bench of the tribunal comprising Wassem Ahemed (Accountant member) and M.s Madumita Roy (Judicial member) observed that the agricultural receipts and the issue of adequacy of agricultural expenditure were not verified by the assessing officer, the order dated 01.02.2021 passed under Section 143(3) of the Income Tax Act was erroneous insofar as prejudicial to the interest of Revenue is palpably bad, not sustainable in the eye of law and therefore quashed. Accordingly, the appeal of the assessee was allowed. Interest on Non-Recovery of Loans Falls within Purview of Business Activity only, Not Income from Other Sources: ITAT directs Re-adjudication Dakshin Gujarat Vij Co. Ltd vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 506 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) directed re-adjudication, ruling that interest on non-recovery of loans falls within the purview of business activity only and not under income from other sources. The two member bench of the tribunal comprising Waseem Ahemad ( Accountant member ) and T.R. Senthil Kumar ( Judicial member ) found it fit to remand this issue to the file of the Assessing Officer for verification of the facts with proper materials and allow the claim in accordance with law. Accordingly this ground raised by the assessee was partly allowed. Taxpayer Challenges AO’s Disallowance which is not in terms with Section 115JB of Income Tax Act: ITAT restores matter back for Factual Verification M/s. Global Vectra Helicorp Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 505 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) responded to the taxpayer’s challenge against the Assessing Officer’s disallowance, which was deemed inconsistent with Section 115JB of the Income Tax Act, 1961 by directing the restoration of the matter for factual verification. The two member bench of the tribunal comprising Dr B.R.R Kumar ( Accountant member ) and Sakti Jit Dey ( Vice President ) observed that the assessee’s claim of deduction for computing book profit under Section 115JB of the Income Tax Act required fresh verification in the light of the Chart furnished by the assessee, which has been reproduced in the order. Relief to Hindustan Times: ITAT allows Expenditure incurred on Paintings, Deeming Essential for Business Environment M/s. The Hindustan Times Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 504 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has granted relief to Hindustan Times by allowing expenditure incurred on paintings, deeming it essential for creating a conducive business environment. The bench of Sakti Jit Dey ( Vice President ) and M. Balaganesh ( Accountant member ) observed that the cost of paintings are meant for aesthetic purpose and for having better environment and accordingly to be construed as expenditure wholly and exclusively incurred for the purpose of business of the assessee herein Relief ISRO Employees Society: ITAT condones Delay Considering Affidavit, Directs NFAC to Consider Section 80P (2)(d) Claims M/s. Space Employees Cooperative Housing Society Ltd vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 503 The Income Tax Appellate Tribunal ( ITAT ) has granted relief to ISRO Employees Society by condoning the delay and directing National Faceless Assessment Centre ( NFAC ) to consider Section 80P(2)(d) deduction claims under Income Tax Act, 1961, taking into account the submitted affidavit. A two member bench of the tribunal comprising Chandra Poojari ( Accountant member) and Beena Pillai ( Judicial member) deemed it appropriate to condone the delay as the reasons for the delay mentioned in the affidavits are sufficient to explain the delay caused in filing the present appeals before this Tribunal. ITAT therefore condoned the delay caused in filing the present appeals before this Tribunal in all the appeals under consideration. Accordingly, the application for condonation of delay dated 08.12.2023 stands allowed. Education Cess cannot be allowed as Allowable Expense u/s 37 (1) of Income Tax Act: ITAT RSWM Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 502 In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the education cess cannot be allowed as allowable expense under Section 37 (1) of Income Tax Act, 1961. The two member bench of Dr. B.R.R Kumar (Accountant member) and Yogesh Kumar U.S (Judicial member) held that the education Cess can’t be allowed as an allowable expense, accordingly the particular ground raised by the assessee was dismissed. Income Tax Addition under Section 69 of Income Tax Act not Permitted without Examining and Finding Fault in Cash Book Produced by Assessee ITAT- Shri Mool Chand Aggarwal vs Asst. CIT Central Circle CITATION: 2024 TAXSCAN (ITAT) 501 The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the income tax addition under Section 69 of the Income Tax Income Tax Act, 1961 is not permitted without examining and finding fault in cash book produced by an assessee. A Two-Member Bench comprising N K Billaiya, Accountant Member and Yogesh Kumar, Judicial Member observed that “In our considered opinion, the findings given by the CIT(A) on the cash book is baseless and perverse. The assessee having been produced the cash book and explained the cash found during the search and seizure operation contending that the cash found during the search are belongs to family members and considering the fact that even the Panchnama drawn during the search proceedings containing the names of the Assessee and other family members and the A.O. who has examined the cash book has not found fault on the same on the merit of it, in our considered opinion, the authorities have committed error in making/sustaining the addition.” Receipts by Taxpayer cannot be added to Income for Non-Compliance of Summons under Section 131 of Income Tax Act: ITAT Nano Infra Promoters Pvt. Ltd vs ITO, Ward-7(1) Kolkata CITATION: 2024 TAXSCAN (ITAT) 500 The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) held that the receipts by the taxpayer cannot be added to income for non-compliance of summons under Section 131 of the Income Tax Act, 1961. A Two-Member Bench comprising Sonjoy Sharma, Judicial Member and Rajesh Kumar, Accountant Member observed that “In our opinion, once the assessee has filed the evidences as required by the AO in order to prove the share capital/share premium then the assessee has discharged his onus of filing the documents initially and the burden shifts to the Revenue. In other words, the AO has to carry out further verification/examination of these evidences and then come to a conclusion as to how the share capital/share premium is not proved and not merely on the ground that the assessee has not complied with the summons issued under Section 131 of the Income Tax Act.” Revisional Jurisdiction not Invokable on Simple Disagreement with Plausible Views of AO: ITAT Satbir Mahato vs PCIT-5 CITATION: 2024 TAXSCAN (ITAT) 499 The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the revisional jurisdiction under Section 263 of the Income Tax Act, 1961 is not invokable on simple disagreement with plausible views of the Assessing Officer (AO). A Two-Member Bench comprising Sanjay Garg, Judicial Member and Rajesh Kumar, Accountant Member observed that “We are of the view that it can be said to be plausible and possible view on the basis of evidences before the AO and the PCIT cannot invoke the jurisdiction under Section 263 of the Income Tax Act on the ground that he does not agree with the view taken by the AO and direct the AO to add the entire cash deposits in the hands of the assessee. In our opinion, the jurisdiction under Section 263 of the Income Tax Act can be invoked if twin conditions are satisfied i.e. order is erroneous and is prejudicial to the interest of the revenue as has been decided in the case of Malabar Industrial Co. Ltd.” Top Stories ITAT upholds Transfer Pricing Adjustment made on Purchase consideration paid under Scheme of Amalgamation entered with Holding Company Dimexon Diamonds Ltd vs Asstt. Commissioner of Income Tax Central Circle–1(4) CITATION: 2024 TAXSCAN (ITAT) 498 The Mumbai bench Income Tax Appellate Tribunal ( ITAT ) upheld that transfer pricing adjustment made on purchase consideration paid under the scheme of amalgamation entered with the holding company. Amarjit Singh, ( Judicial Member ) & Sandeep Singh Karhail, ( Accountant Member )entire merger transaction is a mere restatement of accounts of the subsidiary companies without the actual transfer of any asset and liability by DIHBV. Hence the lower authorities have rightly held that shares of the assessee now held by HBV represent the fair value of the aforesaid merger transaction. Rectification of Mistakenly filed ITR by tax consultant: ITAT directs Re adjudication- Uttam Narayanmal Mehta vs ITO CITATION: 2024 TAXSCAN (ITAT) 497 The Mumbai bench Income Tax Appellate Tribunal (ITAT) directs re- adjudication with respect to the rectification application filed for Mistaken in Income Tax Return by the tax consultant. the bench comprising Aby T. Varkey (Judicial Member) & S Rifaur Rahman, (Accountant Member) directs readjudication with respect to rectification application filed for Mistaken in Income Tax Return happened by the tax consultant “Not every deposit during Demonetisation Period would fall under category of Unaccounted Cash”: ITAT directs Re-adjudication with respect to genuineness of deposit Shri Aijaz Ahmed Suri vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 496 The Bangalore bench Income Tax Appellate Tribunal (ITAT), while directing re- adjudication with respect to genuineness of deposit made during the demonetisation period held that not every deposit during the demonetisation period would not fall under the category of unaccounted cash. The bench comprising Beena Pillai (Judicial Member) & Chandra Poojari, (Accountant Member) while directing re-adjudication observed that not every deposit during the demonetisation period would fall under the category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. Failure to provide proper reason with respect to Escapement of Income regarding investment in House Construction: ITAT quashes Reassessment Proceedings ITO vs Surender Dalal CITATION: 2024 TAXSCAN (ITAT) 495 The Delhi bench, Income Tax Appellate Tribunal (ITAT) while quashing the reassessment proceedings held that the Assessing officer failed to provide proper reason with respect to escapement of income regarding investment in house construction. The tribunal observed that In the reasons recorded the AO has not given any details as to how the income more than 15 crores has escaped assessment. Nothing in the reasons specified as to how the escapement of income has been arrived at more than 15 crores. There is no live link between the reasons recorded and the materials on record when the reasons were recorded. The bench comprising G.S. Pannu, (Vice President) & Challa Nagendra Prasad, (Judicial Member)quashed the reassessment proceedings and held that the Assessing officer failed to provide proper reason with respect to escapement of income regarding investment in construction house . Assessee couldn’t contact Tax Consultant due to Dislocation of Business: ITAT Remands Order Passed u/s 250 of Income Tax Act Shri. Rajesh Laxmikanth Varnerkar vs ITO CITATION: 2024 TAXSCAN (ITAT) 494 The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) viewed that the assessee couldn’t contact the Tax Consultant due to a dislocation of business and remanded the order passed under section 250 of the Income Tax Act, 1961. Since notices from the Office of the CIT(A) were sent to the email ID of his tax consultant who did not observe the mail on account of his father’s ill health, the Two member bench comprising of Shri George George K, Vice President and Shri Chandra Poojari, Accountant Member directed to be provided with one more opportunity to represent his case. ITAT upholds Genuine Nature of Sunrise Asian Share Sales, allows LTCG claims under Section 10(38) of Income Tax Act- Smt. Hema Ramesh Jain vs ITO CITATION: 2024 TAXSCAN (ITAT) 493 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) decision to uphold the genuine nature of Sunrise Asian share sales resulted in granting Long Term Capital Gain (LTCG) claims under Section 10(38) of the Income Tax Act. The bench noted that the Assessing Officer and the CITY (A), both, had moved on the incorrect premise that the Assessee was not involved in trading of shares or that the Assessee only dealt with the script of Sunrise Asian. The Assessee has been registered as a sub-broker affiliated with Mangal Keshav Securities limited since 2007. The coram of S. Rifafur Rahman (Accountant member) and Aby. T. Varkey (Judicial member) allowed the appeal of the assessee. And directed the AO to allow the LTCG claim of the assessee and delete the addition of Rs 25,12,070/ Relief to Bank of Nova scotia: ITAT allows Expenditure incurred towards earnings interest income exempt u/s 10 (15) The Bank of Nova Scotia vs Assistant Director of Income Tax CITATION: 2024 TAXSCAN (ITAT) 492 The Income Tax Appellate Tribunal (ITAT) has provided relief to the Bank of Nova Scotia by permitting the expenditure incurred towards earning interest income exempt under Section 10(15) of the Income Tax Act, 1961 The two member bench of the tribunal comprising Vikas Aswathy (Judicial member) and Amarjith Singh (Accountant member) directed the assessing officer to delete the disallowance made under Section 14A r.w.Rule 8D in the case of the assessee. Accordingly, this ground of appeal of the assessee was allowed. Taxpayer engaged in Development Work with Statutory Bodies eligible for Deduction under Section 80-IA of Income Tax Act: ITAT M/s. N.C.C. – M.S.K.E.L (J.V.) vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 491 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT) observed that the taxpayer engaged in development work with statutory bodies eligible for deduction under Section 80-IA of Income Tax Act, 1961 The coram of Waseem Ahemad ( Accountant member ) and Siddhartha Nautical ( Judicial member ) observed that CIT (A) undertook a detailed analysis of the scope of work undertaken by the assessee and the various risks and responsibilities undertaken by the assessee and then came to conclusion that assessee qualifies as a “developer” and is eligible to claim of deduction under Section 80-IA (4) of the Income Tax Act. Accordingly, ITAT found no infirmity in the order of CIT ( Appeals ) so as to call for any interference. CIT (A) Fails to Prove Records of Unsecured Loan Non -genuine: ITAT Deletes Disallowance of Rs. 116 crore J.M. Mhatre Infra Private Limited vs Assistant Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 490 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) deleted the disallowance of Rs. 116 crore as Commissioner of Income Tax (Appeals) failed to prove the non-genuineness of records pertaining to the unsecured loan. The two member bench of the tribunal comprising Narendra Kumar Chaudhary ( Judicial member) and Amarjith Singh ( Accountant member) consider that decision of CIT(A) in sustaining the disallowance of interest payment made by the assessing officer purely on presumption basis without disproving the relevant supporting evidences brought on record by the assessee is not justified. Therefore, this ground of appeal of the assessee was allowed. Accordingly, the appeal of the assessee was allowed. CIT Appeal has no power u/s 250 of Income Tax Act to dismiss Appeal on account of non prosecution without discussing Merit of Case: ITAT Babubhai Ramanbhai Patel vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 489 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that CIT Appeal has no power under section 250 of the Income Tax Act, 1961 to dismiss an appeal on account of non-prosecution without discussing the merit of the case. A two member bench comprising Smt Annapurna Gupta, Accountant Member & Shri Siddhartha Nautiyal, Judicial Member restored the matter to the file of CIT(A) for de Novo consideration. Assessing Officer nor CIT(A), the assessee is directly to promptly comply with all notices of hearing and in case of any further default on the part of the assessee to cause appearance, CIT(A) would be at liberty to pass orders based on materials available on record, under law. The appeals of the assessee are allowed for statistical purposes. Addition u/s 68 is invalid When Creditworthiness of Money was proved by Balance Sheet showing Legitimate Fund Transfer to Company: ITAT The I.T.O vs M/s Placid Buildwell Pvt Ltd CITATION: 2024 TAXSCAN (ITAT) 488 The Delhi bench of the Income Tax Appellate Tribunal( ITAT )has held that addition under section 68 is invalid when the creditworthiness of money was proved by a balance sheet showing legitimate fund transfer to the company. Considering the assessment status of all the three share applicant companies, the two-member bench comprising Shri N K Billaiya, Accountant Member and Shri Yogesh Kumar U S, Judicial Member held that the assessee has successfully discharged the initial onus cast upon it by provisions of section 68 of the Act. Chargeability of Deemed Income between Holding and Subsidiary Contradicts Intent of Section 56(2)(viib) of the Income Tax Act : ITAT M/s. Rugby RegencyP. Ltd vs Addl. CIT CITATION: 2024 TAXSCAN (ITAT) 48 The two member bench of the Income Tax Appellate Tribunal ( ITAT ) Delhi, observed that chargeability of deemed income between holding and subsidiary contradicts intent of Section 56(2)(viib) of the Income Tax Act, 1961. The Coram comprising N.K.Billaiya ( Accountant member ) and Astha Chandra ( Judicial member ) held that the objective behind the provisions of section 56(2) ( viib ) of the Income Tax Act is to prevent unlawful gain by issuing company in the garb of capital receipts. However, in the transaction between holding and its subsidiary company no income can be said to accrue to the ultimate beneficiary i.e. holding company. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

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

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

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