This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that External Commercial Borrowings (ECB) loans to Indian clients linked to PE in India and directed the tax levy at 10% on interest income. From the perusal of Indo Netherlands Tax Treaty,the two-member bench comprising Shri M Balaganesh, (Accountant) & Shri Sandeep Singh Karhail,(Judicial) observed that there is a separate Article provided for taxability of Interest vide Article 11 thereon.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that section S10AA deduction benefit cannot be denied merely on non-receipt of convertible foreign exchange on deemed exports. “In view of the above and after considering the facts in totality, we are of the view that there is no infirmity in the finding of the learned CIT-A. Even at the time of hearing, the learned DR has not brought anything on record contrary to the finding of the learned CIT-A. Hence, the appeal filed by the revenue is hereby dismissed”, the coram of Madhumita Roy, the Judicial Member and Waseem Ahmed, the Accountant Member, thus held.
The employer’s contribution under Section 43B of the Income Tax Act, 1961 is acceptable if the payment is made prior to the filing of returns, according to a recent decision by the Income Tax Appellate Tribunal (ITAT) Amritsar bench. The decision deleted the addition. The Tribunal bench of Dr. M.L. Meera and Anikesh Banerjee observed the CBDT circular and upheld the submissions made by the assessee. Thus the Coram deleted the addition made by the AO.
“Since the jurisdictional issue has been held in favour of the assessee, holding assessment order as not sustainable”, stated the Kolkata bench of Income Tax Appellate Tribunal (ITAT). After considering the submissions of both sides, the tribunal bench of Sonjoy Sharma (Judicial Member) and Girish Agarwal (Accountant Member) observed that there is no mention about the reasons to believe which were recorded for initiating the proceedings under Section 148 of Income Tax Act. Also, there was no mention about the supply of copies of reasons to believe as recorded by the AO, to the assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on finding about the issuance notice under Section 148 of the Income Tax Act, without approval of the higher authorities, quashed an assessment order. The ITAT held that “In the facts of the present appeal, it is evident that the Assessing Officer has failed to follow such mandatory requirement in law. That being the factual position emerging on record, the issuance of notice under Section 148 of the Income Tax Act, is wholly without jurisdiction. Therefore, the proceedings initiated in pursuance to such notice culminating in the impugned assessment order is also without jurisdiction. Therefore, I have no hesitation in declaring the assessment order null and void. Accordingly, the impugned assessment order is quashed and the order of learned Commissioner (Appeals) is set aside. In the result, the appeal is allowed.”
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that interest on fixed deposits is assessable under the head ‘income from other source’. “In this case, interest on fixed deposits is in the nature of income which is assessable under the head income from other source and this legal position is supported by the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemical and Fertilizers Ltd vs CIT”, the coram of Mahavir Singh, the Vice – president and Manjunatha.G, the Accountant Member added.
The Jaipur bench of Income Tax Appellate Tribunal (ITAT) has recently held that activities carried out by Rajasthan Para-Medical Council are not commercial hence they should be liable for registration under section 12AA of the Income Tax Act, 1961. The two member bench of Sandeep Gosain, (Judicial Member) Shri Rathod Kamlesh Jayantbhai, (Accountant Member) held that object of the appellant Council qualified as charitable purpose and covered under Section 2(15) of the Income Tax Act as applied by the appellant and given that there is no dispute on the genuineness of the activities carried on by the assessee Council in furtherance of its object.
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) held that the Section 10AA Income Tax Act, 1961 deduction could not be denied merely on the reason of the audit report in form 56F filed during the assessment proceedings. Waseem Ahmed, (Accountant Member) and Madhumita Roy, (Judicial Member) members of the tribunal observed that the assessee could not be deprived of the benefit provided under Section 10AA of the Income Tax Act, merely on the reasoning that the audit report in form 56F was filed during the assessment proceedings.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the determination of Arm’s Length Price (ALP) on reimbursement of third-party costs incurred under Comparable Uncontrolled Price (CUP) and directed the deletion of the proposed adjustment. A Coram comprising Shri M Balaganesh, AM & Shri Pavan Kumar Gadale, JM observed that when the transaction is in the reimbursement of expenses to AE, the third party cost incurred is a CUP for reimbursement. Accordingly, the CUP method chosen by the assessee considering the nature of the transaction and degree of comparability as the Most Appropriate Method is hereby upheld.
The Income Tax Appellate Tribunal (ITAT), Hyderabad bench in an appeal filed before it, held that foreign exchange fluctuation loss incurred in the business health care could not be allowed as revenue expenditure. It was observed that the additional liability on account of fluctuation in the foreign exchange rate in respect of liability incurred for the import of machinery by the assessee would not constitute revenue expenditure.
The Income Tax Appellate Tribunal (ITAT), Bengaluru, has recently, in an appeal filed before it, held that reopening of assessment is impossible beyond 4 years, once the assessment is completed under Section 143(3) of the Income Tax Act. Thus, the ITAT held that “Accordingly, we uphold that the reasons recorded by the AO for exercising jurisdiction under Section 147 are not in conformity with the provisions of Section 147 of the Act. Our decision is supported by the judgements relied on by the learned A.R. Accordingly, we uphold that the order passed by the AO is bad in law for want of fulfilling the necessary ingredients for exercising jurisdiction under Sections 147/148 of the Income Tax Act. On this basis we allow ground No. 3 raised by the assessee. Since this is a legal ground and we have decided one legal ground in favour of the assessee, we think there is no need to decide the other issues raised by the assessee which are left open. In the result, the appeal filed by the assessee is partly allowed in above terms”.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT), while dismissing the appeal filed by the revenue held that re computation of capital gains on sale of shares of subsidiary company by revising sale considerations that are genuine is invalid. The two member bench of M. Balaganesh, (Accountant Member) And Sandeep Singh Karhail, (Judicial Member) observed that “assessee with the support of the aforesaid documents has duly explained as to how the sale consideration of shares was reduced from Rs.10 crore to Rs.25 lakh.”
The Income Tax Appellate Tribunal (ITAT), Mumbai bench in an appeal filed before it, held that once addition has been made on adhoc and estimate which has been reduced by the tribunal, then no penalty should be imposed on concealment of income under Section 27(a)(c) of Income Tax Act, 1961. Further, the bench of Amit Shukla, (Judicial Member) and Prashant Maharishi (Accountant Member) held that “Once, the addition has been made on adhoc and estimate which has been reduced by the Tribunal, then it cannot be held that there is any concealment of income so as to warrant any penalty u/s 271(1)(c) Income Tax Act, 1961″.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, while setting aside an assessment order, held that the cash deposited in bank account of the assessee, is not sufficient for the formation of “belief of escapement of Income” by the AO. The ITAT finally held that “In view of the same, we hold that jurisdiction assumed by the AO to reopen the case of the assessee was not in accordance with law in the absence of formation of belief of escapement of income by the AO. The assessment order so framed is therefore not sustainable in law, and is set aside as invalid. Since we have set aside the assessment order passed under section 147 itself, adjudication of addition on merits is merely an academic exercise. Accordingly, the same are disposed off. In the result, the appeal of the assessee is allowed in above terms”.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, while upholding the deletion of additions made under Section 68, held that the A.O shall conduct independent investigation, without relying on third party statements and facts. the CIT(A) has passed a reasoned and conclusive order. The bench observed that they did not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue”, the coram of Baskaran BR, the Accountant Member and Pavan Kumar Gadale, the Judicial Member added.
Dismissing the Assessee’s appeals, the ITAT finally concluded: “Coming to the instant case, as the ld. Commissioner first should have decided the issue qua condonation of delay in filling of the appeals and on satisfying that the Assessee has failed to establish sufficient cause for not filling the appeals within the prescribed period of limitation, the appeals should have been dismissed at the very threshold only on the point of limitation, whatsoever once the appeals decided on merit, then there was no need to go into the controversy qua limitation and to decline the condonation of delay, hence we are inclined not to approve such view, however as we have already dealt with the findings on merit of the case by the ld. Commissioner and therefore decision of the ld. Commissioner on merit is upheld.”
The bench viewed that the exposition of law is correct and we agree with the same. Therefore, the DTAA does not get triggered at all when a domestic company pays DDT under Section 115O of the Act. We wish to place on record our appreciation for the assistance provided by the ld. counsels for the parties and the interveners and the ld. DR for the assistance provided to the Bench in deciding the issue referred to the Special Bench. These appeals/COs are restored to the respective Division Benches for deciding the issues raised in the respective appeals, accordingly.”
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, on the reopening of an assessment based on change of opinion, quashed the penalty against the assessee who had correctly declared the Income. “Since the quantum appeal itself is being quashed, the penalty levied as against
the reassessment order for furnishing inaccurate particulars has no legs to stand and the same is liable to be quashed”, the coram of Waseem Ahmed, the Accountant Member, and T.R Senthil Kumar, the Judicial Member added.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that AO cannot arbitrarily disallow expenses for want of supporting documentation, without pointing out the defect in the vouchers. The ITAT concluded that “Therefore, considering the aforementioned judicial precedents in the extant cases, we hold that no withholding of tax is warranted from the payments of Rs.2,18,66,000/-. The appeal of the assessee on this ground is allowed. In the result, the appeal of the assessee on all grounds is allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that no tax can be levied on payments in lieu of ‘business profits’, in the absence of a PE in India. In view of the same, the payment received by the assessee is in the nature of ‘Business Profit’, which cannot be brought to tax in India, in the absence of PE. Accordingly, the grounds of both the appeals of the assessee are allowed. In the result, the appeal of the Assessee in ITA No. 1877/Del/2022 and ITA No. 1876/Del/2022 are allowed, ruled the bench.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the sale of shops below market price amounts to fraud to tax evasion and upheld the disallowances. A two-member bench comprising Shri R S Syal, Vice President and Shri Partha Sarathi Chaudhury, (Judicial) observed that knowing fully well the intention to create loss and having exclusive knowledge the assessee never explained shows that the real intention of creating artificial loss is nothing but a fraud to evade payable taxes.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has, recently in an appeal filed before it, quashed the revisional order against Lakme. “After considering the detailed submissions of the assessee, Ld.Pr.CIT abruptly completed the order under Section. 263 of the Act by merely remitting the issue back to the file of the Assessing Officer without giving any finding on the issues raised by him in notices issued under Section. 263 of the Income Tax Act”, the coram of Kuldip Singh, the Judicial Member, and S. Rifaur Rahman, the Accountant Member added.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while quashing an addition made under section 69 and 69A, held that inter- account transfer and sale of shares for loss, are not income. The bench “In view of the explanations provided, backed by bank statement of all 3 banks along with narrations, as well as the US Returns, we hold that no part of the balance in the banks should be added under Section 69 or 69A. In the result, the appeal of the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that the force of attraction rule will not apply, unless there is even a remote link between the activities of other projects with the PE in question. “Having heard the parties, we direct the Assessing Officer to factually verify the assessee’s claim and grant credit for TDS in accordance with law”, the coram of G S Pannu, the President and Saktijit Dey, the Judicial Member ruled.
The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, has recently, in an appeal filed before it, held that no addition can be made under Section 68 of the Income Tax Act, for turnover already reflected in the books of the assessee. “We further relied on order of ITAT, Mumbai Jet Freight Logistics Ltd. v. Commissioner of Income-tax Appeal (NFAC). The addition Under Section 68 is beyond jurisdiction of the ld. AO as the turnover is already reflected in the books of the assessee. So, the addition amount of Rs 2,74,00,000/- is quashed”, the coram of Dr. M. L. Meena, the Accountant Member, and Anikesh Banerjee, the Judicial Member added.
The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that the income tax department has no power to recover Tax Deduction at Source (TDS) from vendors if vendee deducts tax at source for purchase of property. After considering the contentions the tribunal held that “Revenue cannot deny the TDS credit to the assessee and the only option left for the Revenue is to proceed against the deductor by holding him to be an assessee-in-default”.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that the penalty under Section 270A cannot be levied on estimated disallowance. The bench held that “In this case, the penalty has been levied on estimated disallowance. Hence, the penalty is not sustainable. Accordingly, the AO is directed to delete the penalty levied under section 270A of the Income Tax Act. Accordingly, grounds of appeal raised by the assessee are allowed. In the result, the appeal of the assessee is allowed.”
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, held that the loss incurred in foreign exchange for converting loan to foreign currency is allowable as business loss. Thus, upholding the decision of CIT(A), the two-member bench of ITAT consisting of Shri Rajesh Kumar (Accountant Member) and Shri Sonjoy Sarma (Judicial Member) held that the loss incurred in foreign exchange for converting loan to foreign currency is allowable as business loss and is deductible.
The Raipur Bench of the Income Tax Appellate Tribunal (ITAT), Ravish Sood, Judicial Member and Dipak P Ripote, Accountant Member allowed the stamp duty paid on sale by the builder and held that Section 43CA of the Income Tax Act, 1961 not to be triggered
The Tribunal observed that “For the reason that as the assessee had sold the properties/units at the market value determined by the Stamp Valuation Authority and had received the sale consideration as mentioned in the registered sale deed, therefore, the provisions of Section 43CA of the Income Tax Act by no means could have been invoked in its case.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) Chandra Mohan Garg (Judicial Member) and B.R.R. Kumar (Accountant Member) held that no addition can be made on unexplained credit amount appearing in the bank account of assessee.
The bench of determined that entire amount of credit entries cannot be added to the taxable income of the assessee ignoring the debit side entries and as when the assessee is receiving cash and issuing cheques then said cheque of almost same amount then the assessee could not be held beneficiary of entire amount or entire amount of credit entries treating the same as unexplained.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the activity of providing courses for women is charitable in nature therefore the tribunal allowed income tax refund to women training institutes.
The tribunal of two-member bench of tribunal G.S. Pannu, (President) and Astha Chandra, (Judicial Member) observed that, The Assessment Year 2009-10 in the assessee’s own case, the tribunal directed AO to grant exemption under section 11 along with consequential benefits.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has held that commission paid to US sales agents for selling products in the US should not be disallowed under Section 40(a)(i) of the Income Tax Act, 1961.
The tribunal of two-member bench of G.S. Pannu, (President) and Astha Chandra, (Judicial Member) relied upon the decision of the case Panolfa Autoelektrik observed that “commission paid by the assessee to its foreign agent for arranging of export sales and recovery of payment could not regarded as fees for technical services under section 9(1)(vii) of the Act”. This decision entirely applies to the facts of the assessee’s case.
The Pune Bench of Inturi Rama Rao, (Accountant Member) Income Tax Appellate Tribunal (ITAT), observed thatno Tax Deduction at Source (TDS) deduction under Section 194H of the Income Tax Act, 1961 for expenditure claimed to have been debited to profit and loss account under the head “commission”.
The Tribunal determined that “The appellant neither paid nor credited such income to the account of the payee. The Jurisdictional High Court in the case of Super Religare Laboratories Ltd, held that there is no obligation to deduct tax at source under Section 194H of the Income Tax Act for commission expenditure.
The Hyderabad Bench of R.K. Panda, Accountant Member and Laliet Kumar, Judicial Member Income Tax Appellate Tribunal (ITAT), dismissed an appeal stating lapse of more than 2 years to substitute the name of legal heirs for the deceased assessee.
The Coram noted that “Since the legal heirs of the deceased assessee in the instant case have not taken any steps to file the revised Form No.36, duly filled up giving the revised name of the party duly verified in the manner as prescribed in the rules, therefore, the present appeal cannot be proceeded with in the absence of any of the above said requisite information/form.
The Income Tax Appellate Tribunal (ITAT) Hyderabad Bench of RamaKanta Panda, Accountant Member and K Narasimha Chary, Judicial Member ordered fresh adjudication in the matter of disallowance of 30% of Employee Stock Ownership Plan (ESOP) cost and observed that reasons are the lifeblood for any judicial/quasi-judicial order without which it would be difficult for the appellate authority to sustain or overrule the findings reached by the authorities.
The Tribunal of observed that “We are of the considered opinion that the exercise, if any, done by the CIT(A) in formulating the opinion that various contentions raised by the assessee to the effect that ESOP expenditure is a revenue expenditure allowable in the hands of the employer are not acceptable is not reflected on the face of the order.”
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), Mahavir Singh, Vice President and Manjunatha G, Accountant Member observed that the purchase of Furniture, Air Conditioner to make a new house habitable is eligible for capital gain deduction.
The Tribunal observed that “The assessee has purchased a property and spent various expenditures to make the house habitable. The assessee has incurred an amount for purchase of Air conditioner. The assessee had also incurred expenditure for furnishing the house and spent amount toward purchase of light fittings. The AO and CIT(A) completely erred in classifying said items as personal effects and disallowed while computing capital gains.
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