This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while granting relief to Travelport, held that the assessee not responsible to explain recipients of receipts shown in Form No.26AS.
Thus, allowing the assessee’s appeal, the Delhi ITAT held: “In our considered opinion, by putting the onus on the assessee, the Assessing Officer has grossly erred as the assessee is not responsible to explain the recipients of the receipts shown in Form No. 26AS. The Assessing Officer should have asked the payer, details of the payee to whom payments have been made by the payer on which it could deduct tax at source. Therefore, on merit also, addition cannot survive as facts are not identical to the facts of earlier Assessment Years.”
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has recently, in an appeal filed before it, held that registration to trust cannot be canceled for mere non-compliance of notice during the covid-19 period.
“The assessee is having sufficient cause for not replying to the notices issued by the Revenue. As regards the contention of the ld. DR we are not considering his prayer to restore this issue to the file by the ld. CIT(E) as the subsequently the ld. CIT(E) has already granted the registration to the assessee trust and there is no adverse observation by the ld. CIT(E). In light of these facts and circumstances of the case, we see no reason to sustain the order under appeal and in the absence of any controversial finding on record we vacate the order passed by the ld. CIT(E) dated 04.0“The assessee is having sufficient cause for not replying to the notices issued by the Revenue. As regards the contention of the ld. DR we are not considering his prayer to restore this issue to the file by the ld. CIT(E) as the subsequently the ld. CIT(E) has already granted the registration to the assessee trust and there is no adverse observation by the ld. CIT(E). In light of these facts and circumstances of the case, we see no reason to sustain the order under appeal and in the absence of any controversial finding on record we vacate the order passed by the ld. CIT(E) dated 04.03.2021.”
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) held that no income tax is to be levied on compensation from builders in lieu of a consumer court order as the same is in the nature of capital receipt.
The Coram comprising the account member Waseem Ahmed and the judicial member T.R Senthilnkumar observed that the assessment order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. The coordinate benches of the tribunal held that the compensation received by the assessee from the proposed building by way of allotment is actually the extinguishment of a right in relation to a capital asset, in view of the provisions of section 2(47)(vi) of the Income Tax Act,1961.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has granted interim relief to Amazon Web Services (AWS) by staying recovery of Rs 549 Crores towards addition of income from cloud computing services.
The Division Bench of Saktijit Dey (Judicial Member) and B.R.R Kumar (Accountant Member) stayed the recovery of the balance outstanding demand for a period of 180 days on certain conditions. The assessee was directed to pay 10% of the outstanding demand for both the assessment years under dispute on or before 31.03.2023 and the assessee had to furnish bank guarantee so as to cover further 10% of the outstanding demand. The bank guarantee must be furnished before the Assessing Officer on or before 30.04.2023.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that revisional jurisdiction could not be invoked on the ground of uncertain issue of entitlement of treaty benefit.
The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has held that the Malviya National Institute of Technology (MNIT) employee being a government employee would be eligible for full exemption of earned leave encashment at the time of retirement.
“The CIT(A) while rejecting the claim of the assessee has solely relied upon the decision of Hon’ble Delhi High Court in the case of Kamal Kumar Kalia vs Union of India (supra). However, the para materia contained in the said judgment of the facts are altogether different from the facts of the present case as in the case of Kamal Kumar Kalia vs Union of India,” the Bench further held.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently quashed the disallowance for payment done in lieu of race promotion contract expenses as the same was taxable at the hands of the payee and not the assessee.
The Bench of Judicial Member Yogesh Kumar U S and Accountant Member N K Billaiya observed that, “no part of the RPC fee paid by the assessee is liable to be disallowed under clause (i) of s. 40(a) because the second proviso clause (i) of Section 40(a) has been inserted w.e.f. 1.4.2020.” It was further observed that “The said proviso essentially provides that where the relevant income has been declared by the payee and tax thereon has been paid by him then no disallowance shall be made in the hands of the payer.“ Resultantly, the disallowance was set aside in favor of the assessee.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the Assessing Officer (AO) could not change the method which was followed by the assessee from discounted cash flow to Net Asset Value method.
AO has completely erred in arriving at a conclusion that DCF method followed by the assessee is incorrect only on the basis of one element, difference in projected financials and actual performance of the company for two financial years, because DCF method is mainly on the basis of projected financials of future years and depends upon various estimations and assumptions. Therefore The AO is free to examine the method followed by the assessee, however, he did not have power to change the method followed by the assessee from DCF method to NAV method, and to decide the issue in accordance with law.
The Allahabad bench of the Income Tax Appellate Tribunal (ITAT) has recently directed the centralized processing center (CPC) to ensure compliance with natural justice principles mandatory under faceless schemes.
“Appeal was decided under faceless scheme, but adherence to Principles of natural justice is one of the most important pillar of the effective judicial delivery system, as no person should be condemned unheard Thus, CIT(A) ought to have given an opportunity to the assessee so that the assessee may put forward his claim/contentions before CIT(A) as per the scheme/guidelines of faceless proceedings”. Hence in the instant case, there was a clear breach of principles of natural justice, as the assessee was condemned by CIT(A) without providing proper opportunity to the assessee to explain its case.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has allowed the depreciation claim holding that once a trust is assessed as Association of Persons (AOP) has been denied exemption under Section 11 of the Income Tax Act 1961, the entire receipts should be assessed as business income.
A Single Bench of Mahavir Singh (Vice President) allowed the appeal observing that it was clear that the assessee was running an educational institute which meant that the assessee was engaged in the business and it had been assessed as AOP. The Bench held that once the assessee was assessed as an AOP and no exemption had been allowed under Section 11 of the Act, the entire receipts were to be assessed as business receipt and consequently, depreciation had to be allowed.
After considering the contentions of the both parties the division bench of the ITAT comprising Saktijit Dey (Judicial Member) and Pradip Kumar Kedia (Accountant Member) allowed the appeal filed by the assessee and observed that, In the course of hearing, the Departmental Representative has made extensive arguments on the issue of treaty shopping, non-reporting of transactions with AEs in Form 3CEB report and various other issues. we are not able to take cognizance of such arguments as such issues were neither dealt with by learned CIT in the show-cause notice, nor in the revision order, hence, are extraneous for the purpose of adjudicating the validity of the order passed under section 263 of the Income Tax Act,1961.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Netafim holding that the income from Systems Applications and Products in Data Processing (SAP) and Information Technology support services were not in the nature of Fees for Technical Services (FTS) as per treaties.
Abhishek Kumar, on behalf of the revenue submitted that the Most Favored Nation (MFN) clause as per the Protocol to India – Israel DTAA for applying a more restrictive meaning to FTS as per a treaty between India and a third country could not be made applicable unless a specific notification regarding applicability of MFN clause was issued by the Government. Applying the restricted meaning of FTS as per India – Portugal and India – Canada DTAAs, the Division Bench of Saktijit Dey (Judicial Member) and B.R.R. Kumar (Accountant Member) held that the amounts received by the assessee from providing SAP and IT support services were not in the nature of FTS, hence, not taxable in India in absence of a Permanent Establishment.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has quashed the reassessment order against the Bharat Sanchar Nigam Ltd (BSNL).
The Division Bench of NK Billaiya (Accountant Member) and Anubhav Sharma (Judicial Member) observed that in the earlier case disallowance made u/s 40(a)(ia) was held to be not sustainable and quashed the reassessment order.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently upheld the addition made by the assessing officer upon the income received on arbitration settlement.
Gangadhar Panda counsel for the revenue opposed these submissions and supported the orders of the authorities below. After considering the contentions of the both parties the division bench of the ITAT comprising Kul Bharat (Judicial Member) and Narendra Kumar Billaiya (Accountant Member) allowed the appeal filed by the assessee and observed that, “the assessee had a PE in India during the period he assessee was engaged in the project only through its PE in India. In view of the complete involvement of the PE as above, the settlement amount, arising out of the MOU consequent upon project termination is also effectively connected to the PE. The said sum falls within the Scope of Article 21 (2) of the DTAA and will be taxable in India under Article 7 of the DTAA.”
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently granted partial tax relief to Adani Power Limited.
Further before the bench assessee submitted that, the” AE’s mentioned above were incorporated with the capital that the assessee company advanced sums towards its equity obligations. M/s Adani Power Pte Ltd was incorporated with the object of investing in coal mines and also carried on the business of an investment holding company while M/s Adani Shipping Pte Ltd was incorporated with the object of carrying on business of chartering and owning ships.” Mohd. Usman, confirmed the decision of the lower authorities. After considering the contentions of the both parties the division bench of the ITAT comprising Annapurna Gupta (Accountant Member) Siddhartha Nautiyal (Judicial Member) dismissed the appeal filed by the revenue and confirmed the Order of CIT(A) and provided partial relief to the assessee company.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, deleted the proceedings against Saif Partners India IV Limited, on the ground that conditions invoking revisional jurisdiction u/s 263 are not satisfied.
Thus, allowing the assessee’s appeal the Delhi ITAT held: “Considering the facts of the case in hand in light of judicial decisions discussed hereinabove, we set aside the order of the ld. CIT and restore that of the Assessing Officer dated 09.12.2019 framed u/s 143(3) of the Act.”
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has recently, in an appeal filed before it, held that income tax addition cannot be made merely based on assumption and presumption.
Thus, dismissing the Revenue’s appeal, the Jaipur ITAT held: “Even based on these facts, the ld. CIT(A) has also considered the claim of the assessee accordingly. Thus, we see no fault in the detailed finding of the ld. CIT(A), while allowing the claim of the assessee for an amount of Rs. 53,742/- as the revenue has not been placed on contrary evidence or facts expressly demonstrating why the claim is disallowable. Based on those observations we are of the considered view that the ground raised by the revenue fails and thus is dismissed.”
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the business profits of a financial year gets accrued only at the end of the year, deleting the addition under Section 2(22)(e) of the Income Tax Act, 1961.
Taking note of the reasoning in CIT Vs. M. B. Stockholding (P) Ltd., the Tribunal Bench of Judicial Member Aby T Varkey and Accountant Member Amarjit Singh observed that, “the Hon’ble High Court has upheld the action of the Tribunal directing the Assessing Officer not to include the current year profit to be part of accumulated profit while determining the amount of deemed dividend under Section 2(22)(e) of the Act after considering Explanation-2 to Section (2(22)(e) of the Act (which defines the accumulated profit). And the Hon’ble High Court specifically observed that while determining the amount of deemed dividend under Explanation 2 to Section 2(22)(e) of the Act, the current profit was not required to be included to be part of accumulated profit.”
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) overturned the order of the Commissioner of Income Tax (Appeals) CIT(A) providing relief to M/s PVR Pictures Limited.
The bench of Pradip Kumar Kedia (Accountant Member) and Yogesh Kumar US (Judicial Member) observed that the expression employed in the provision is the “unabsorbed depreciation” and not the “depreciation”. According to ITAT, the phrase “unabsorbed depreciation” rather than “depreciation” accurately captures the Legislature’s intent that any earlier year’s depreciation should be adjusted to the extent of any standalone book profit that year and that any remaining unabsorbed depreciation, if any, should only be used for Section 115JB adjustment purposes.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that no addition could not be made for deposit in Non-Resident External (NRE) account when the assessee had no source of income in India.
The income of the assessee was not subjected to tax in India and accordingly, he had not filed any return of income. This fact had not been appreciated by AO since AO had treated the assessee as resident only. The assessee was maintaining an NRE account as well as NRO account at Erode to remit foreign savings. The assessee, apparently, had no source of income in India.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that the 2% of Tax Deducted at Source (TDS) is applicable to Common Area Maintenance charges under section 194C and the provisions of section 194I of the Income Tax Act 1961, is not applicable to this payment.
The Coram comprising the account member Pradip Kumar Kedia and the judicial member C M Garg held that the assessee was right in deducting tax at 2% under section 194C of the Act on payment of common area maintenance charges and the provisions of section 194I of the Income Tax Act is not applicable to this payment. Therefore, the assessee cannot be treated as an assessee in default and the assessee is not liable to pay any amount under section 201(1) and under section 201(1A) of the Income Tax Act. The appeal filed by the assessee got allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the advance tax would not be payable by the assessee if he is above 60 years having no business income.
The Division Bench of G.S. Pannu (President) and Anubhav Sharma (Judicial Member) set aside the impugned order and restored it to the Commissioner of Income Tax Appeal (CIT(A)) to decide the question of applicability of section 249(4) of the Income Tax Act. on merits of claim of the assessee, after giving an opportunity of hearing to the Assessee observing that, “Here no advance tax was payable as the assessee was over 60 years of age and not having any income from P&G and the assessee was not given an opportunity of being heard.”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT)has quashed the re assessment holding that usurping jurisdiction could not be a mere technical defect curable under Section 292B of the Income Tax Act 1961.
“The Assessing Officer, in the instant case, has drawn belief based on the transactions carried out through brokers namely ‘S.S. Corporate Securities Ltd.’ which was later found to be totally non-existent. Such defect in the reasons cannot be ascribed as a mere technical irregularity and consequently defect cannot be cured by applying Section 292B of the Act. The instant case is the case of the jurisdictional defect which cannot be rectified by invoking the provisions of Section 292B of the Act.” the Bench further observed.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that ceremonial expenses performed as part of tradition would be allowable as business expenditure.
The Division Bench of R.S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial Member) upheld the decision of Commissioner of Income Tax Appeal (CIT (A)) and dismissed the appeal of revenue observing that, “These ceremonies are required to be performed on account of tradition and to a certain extent as compulsion since these functions are followed in every sugar factory. The expenses have to come from the account of assessee only. It cannot be expected to be collected from the employees. These expenses take the color and character of business expenses.”
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that provisions of deemed gift under section 56(2) (vii)(b) of Income Tax Act 1961 could not be applied retrospectively.
After considering these points the division bench of the ITAT comprising G.S.Pannu, President and Anubhav Sharma, Judicial Member allowed the appeal filed by the assessee and observed that “In the context of “deemed gift” on the basis of inadequate consideration, the series of documents executed between the assessee and her maternal uncle indicate that the transaction was Gift only and had completed before
01.10.2009. So the provisions of Section 56(2)(vii)(b) of the Income Tax Act 1961 which were introduced in the Act by Finance Act, 2010, with retrospective effect from 01.10.2009 are wrongly applied”.
The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT), quashed the revision order holding that there is no ‘lack of investigation by the Assessing Officer (AO). The appeal of the assessee, Hoshiarpur Traders, is directed against the order of the Pr. Commissioner of Income Tax [PCIT] for the order passed under Section 263 of the Income Tax Act 1961 for the A.Y. 2017-18. The assessee is a partnership firm and the dealer of the liquor. The assessment was completed under Section 143(3) of the Act
The Tribunal of Dr. M. L. Meena, Accountant Member and Anikesh Banerjee, Judicial Member observed that “Though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer, the record showed that the Assessing Officer had applied his mind. Once such application of mind is discernible from the record, the proceedings under Section 263 would fall into the area of the Commissioner having a different opinion.”
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently, while allowing depreciation on hired cars, held that vehicles are forming part of plant and machinery.
After considering these points the division bench of the ITAT comprising M.Balaganesh, Accountant Member and Sandeep Singh Karhail, Judicial Member allowed the appeal filed by the assessee and held that, “Income received from car rental of Rs.6,00,000/- is to be assessed as “income from business” and consequently, the assessee would be eligible for deduction of all expenses including depreciation as deduction under the head “business” Further the bench determined that the plant includes vehicles, which fact is evident from depreciation rate chart provided in the Income Tax Rules as vehicles are forming part of the block of assets of plant and machinery.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently deleted the addition made by the assessing officer against ESPN star sports.
After considering the contentions of the both parties the division bench of the ITAT comprising Narendra Kumar Billaiya, Accountant Member and Kul Bharat Judicial Member allowed the appeal filed by the assessee and directed the Assessing Officer to delete the impugned addition.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently in an appeal filed before it, held that vague notice invalidates penalty proceedings u/s 271(1)(c) of income tax act.
Hearing the opposing contentions of either side, the Bench comprising G.S. Pannu, the President, along with Anubhav Sharma, the Judicial Member, noted: “Giving a thoughtful consideration to the submission and to the matter on record it can be observed that the copy of penalty notice available at page NO. 5 of the paper book makes it apparent that the ld AO had failed to distinguish and inform the Assessee as to it the notice was issued for concealment of income or furnishing inaccurate particulars and a proforma in a mechanical manner the notice was issued. The judgment relied on by the counsel for the Assessee in the case of Ganga Iron & Steel Trading Co. Vs. CIT (supra) reiterates the settled provision of law that if notice is vague then the penalty proceedings initiated on that basis were vitiate and for that purpose Hon’ble High court relied its full bench judgment in Mohd. Farhan A Shaikh vs. CIT (2021) 424 ITR 1.”
The Income Tax Appellate Tribunal (ITAT), Cuttack Bench, has recently, in an appeal filed before it, held that penalty cannot be levied u/s 271(1)(c) of income tax act, when sustainability of addition is debatable.
Hearing the opposing contentions of either side and thereby perusing the materials available on record, the ITAT Bench consisting of Arun Khodpia, the Accountant Member, along with George Mathan, the judicial member held: “We have considered the rival submissions. As it is noticed that the appeal against the order of the Tribunal upholding the order u/s.263 representing the quantum addition has already been admitted by the Hon’ble Jurisdictional High Court of Orissa referred, respectfully following the principles laid down by the Hon’ble Karnataka High Court in the case of Harsha N Billiangady , the penalty as levied by the Pr. CIT stands quashed. In the result, appeal of the assessee stands allowed”.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) while quashing the revision order observed that Standard Operating Procedures guidelines issued by Central Board of Direct Tax (CBDT) are not applicable to unlisted scripts.
“Revision order passed by the PCIT only says that Aditi and Finance Pvt Ltd is a penny stock and that SOP guidelines issued by CBDT had not been followed by the AO while framing the reassessment. But penny stock SOP guidelines have been issued by CBDT only in respect of listed scrips. In the instant case, Aditi and Finance Pvt Ltd scrip is not listed in any stock exchange. We hold that the SOP guidelines issued by CBDT cannot be made applicable for unlisted scripts.”
The Chennai Income Tax Appellate Tribunal (ITAT) has recently held that deemed dividend would not be applicable to payment by company on behalf of shareholder for purchase property as a stop gap arrangement subsequently Re-paid.
After considering the contentions of the both parties the division bench of the ITAT comprising V. Durga Rao (Judicial Member) and G. Manjunatha (Accountant Member) allowed the appeal filed by the assessee and observed that, “At no point of time, M/s. IEIL has given any loan or advance to the assessee either by way of cash payment or through account transfer. Although, the company has given some payments to the third party on behalf of the assessee, but said payments have been subsequently re-paid by the assessee or his family members either on the same day or within a short period that is less than one month without there being any outstanding balance in the books of accounts of the company.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has recently held that interest paid on borrowing by assessee carrying out business in investing in shares allowable as business expenditure.
Moreover when the assessee has borrowed the funds for the purpose of making investment in shares and that investment is one of the business activity of the assessee company amount borrowed for such investment is for the purpose of business and the interest incurred on such borrowers to be wholly and exclusively for the purpose of business and it has been fulfilled the condition laid down in section 36(1)(iii) of the Income Tax Act 1961. Thereafter the bench held that the business of the assessee is to invest in shares and that the borrowing was for the purpose of business, the entire interest has to be allowed under s. 36(l)(iii) of the Income Tax Act 1961.
The Allahabad bench of the Income tax appellate tribunal has recently held that the assessee was not willing to remove the defect regarding the deficient appeal fee and hence the appeal of the assessee has been treated as not a valid appeal and liable to be dismissed.
After providing so much time for rectifying the defect in appeal filed by the assessee, the division bench of the ITAT comprising Vijay Pal Rao (Judicial Member) and Ramit Kochar (Accountant Member) dismissed the appeal. The bench observed that “assessee was not willing to remove the defect regarding the deficient appeal fee and consequently the appeal of the assessee was treated as not a valid appeal and liable to be dismissed in limine”
The Chennai Income Tax Appellate Tribunal (ITAT) has recently held that 60 percent depreciation would not be allowed on robotix kits.
Further the bench determined that, computer or software attached was used for operation of robotic kits. Therefore, it cannot be construed as if the Robotix kit itself is a computer. Computers are totally different which comprises processing data and not the machinery which undertakes work as per the instruction given through the computer. Therefore, the computer is a different one and robotics kits are entirely different machines.
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