This annual digest analyzes all the ITAT stories published in 2023 at taxscan.in
The Gauhati Bench of Income Tax Appellate Tribunal (ITAT) held that Principal Commissioner of Income Tax [PCIT] in his order has no where recorded about any investigation report or reports of other regulators in respect of the scrip dealt by the assessee therefore quashed the revisionary order under Section 263 of the Income Tax Act, 1961.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that simultaneous issue of the DIN number is insignificant and superfluous exercise, in the absence of mentioning the DIN number on the body of the communication, thus set aside the order of Transfer Pricing Officer (TPO) and Dispute Resolution Panel (DRP).
The Bench comprising of Shamim Yahya, Accountant Member and Anubhav Sharma, Judicial Member observed that in the impugned transfer pricing order, there is no DIN Number in its body, the Bench further relied on the decision of Co-ordinate Bench of the Tribunal in the case of Abhimanyu Chaturvedi vs DCIT. The Tribunal held that simultaneous issue of the DIN number is insignificant and superfluous exercise, in the absence of mentioning the DIN number on the body of the communication. Hence, the appeal was allowed. The TPOâs order and the DRP order was set-aside being null and void. As a consequence, the assessment order also becomes null and void.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held the compensation/damages paid by the assessee to its allottees cannot be tagged as interest under Section 2(28A) of the Income Tax Act,1961 and therefore, TDS (Tax Deducted at Source) provision of Section 194A of the Income Tax Act was not applicable.
The Bench comprising of Chandra Mohan Garg, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that the impugned payment is nothing but compensation/damages paid by the assessee to its allottees which cannot be tagged as interest under Section 2(28A) of the Income Tax Act. Therefore, TDS provision of Section 194A of the Income Tax Act is not applicable towards such payment. Therefore the assessee cannot be treated as assessee in default for noncompliance of TDS provisions on account of such payments. Hence the impugned order was set aside and so the appeal was allowed.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) held that the documentary evidences have not been held as false either by the AO during the assessment proceeding or during penalty proceeding.
The Bench comprising of Rajpal Yadav, Vice-President and Girish Agrawal, Accountant Member observed that AO has nowhere demonstrated as to how the loss claimed by the assessee is bogus. He only issued a show-cause notice and the Assessee withdrew its claim just in order to avoid litigation with Department. The Bench held that the documentary evidences have not been held as false either by the AO during the assessment proceeding or during penalty proceeding. Therefore, the assessee does not deserve to be visited with penalty.
The Kolkata Bench held that the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee, thus set aside the order of Commissioner of Income Tax (Appeals) [CIT(A)] by directing the AO to delete the addition.
The Bench comprising of Rajesh Kumar, Accountant Member and Sonjoy Sarma, Judicial Member observed that the AO, instead examining and enquiring into the material further, has straightaway jumped to the conclusion that these are unexplained cash credit within the meaning of Section 68 of the Income Tax Act. Similarly the CIT(A) has affirmed the findings of AO.
Further the Tribunal held that the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity, creditworthiness of investors and genuineness of the transactions. Therefore the Tribunal set aside the order of CIT(A) by directing the AO to delete the addition, and so the appeal of the assessee was allowed.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) held that the deduction under Section 80IB(10) of the Income Tax Act,1961 can be claimed by the joint venture and not by the assessee who is merely a partner in the partnership firm.
The Bench comprising of R.K. Panda, Vice-President and Laliet Kumar, Judicial Member observed that the deduction under Section 80IB(10) of the Income Tax Act is applicable to an undertaking developing and building housing projects with certain conditions. However, in the instant case, the assessee is not an undertaking developing and building housing projects but is merely a partner in a joint venture/partnership firm. It was held that the assessee is not entitled to deduction under Section 80IB(10) of the Income Tax Act since the assessee is merely a partner in SMR Sai Teja Estates and deduction, if any, can only be claimed by the said firm upon fulfilling the requisite conditions.
The Delhi Bench of Income tax Appellate Tribunal (ITAT) held that the addition made towards cash deposit in bank account were made recuperation of any incriminating material found during the course of search.
The Bench comprising of M. Balaganesh, Accountant Member and Anubhav Sharma, Judicial Member observed that the AO in the search assessment under Section 143(1) of the Income Tax Act for the aforesaid years had merely examined the bank account maintained by the assessee with UBI and had resorted to make addition towards cash deposit made in the said bank account.
The Bench referred to the decision of the Supreme Court in the case of PCIT Vs. Abhisar Buildwell P. Ltd, where it had been categorically held that in respect completed assessment/unabated assessments no addition can be made by AO in absence of any incriminating material found during the course of search under Section 132 or Section 132A of the Income Tax Act. Hence, the appeals of the assessee were allowed.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) held that the amount paid to the retiring partner in terms of settlement arrived at between two partners for giving up his interest in the partnership firm is a capital expenditure.
The Bench comprising of Inturi Rama Rao, Accountant Member and S. S. Viswanethra Ravi, Judicial Member held that the amount of Rs.4,99,90,000/- was paid to the retiring partner in terms of settlement arrived at between two partners for giving up his interest in the partnership firm, there cannot be any dispute that the amount paid to a retiring partner for giving up his interest in the partnership firm is a capital expenditure. It was further noted that the CIT(A) without appreciating proper facts of the case went on to hold that the payment of money to the retiring partner is revenue expenditure. Therefore, the decision of the CIT(A) was reversed and so the grounds of appeal filed by the Revenue was allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) ordered the assessee to submit the challan proving the payment of sales tax and the relevant order of the VAT assessment along with the demand notice before the Jurisdictional Assessing Officer (JAO) within 6 months from the date of this order.
The Bench comprising of C. M. Garg, Judicial Member Dr. B. R. R. Kumar, Accountant Member granted liberty to the assessee to submit the challan proving the payment of sales tax and the relevant order of the VAT assessment along with the demand notice before the JAO within 6 months from the date of this order, failing which the revenue would at liberty to initiate the recovery proceedings as the provisions of the Income Tax Act. The Tribunal followed the order of Supreme Court in the case Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I . Hence the appeal of the assessee was partly allowed for statistical purpose.
The Delhi Bench of Income tax Appellate Tribunal (ITAT) held that assessee has sufficient cause in not responding to the notices issued by the Commissioner of Income Tax (Exemption) [CIT(E)], thus restored the matter to the files of CIT(E) for fresh adjudication.
The Bench comprising of M. Balaganesh, Accountant Member and Anubhav Sharma, Judicial Member observed that main grievance of the assessee is that the notice calling for certain details issued by the CIT(E) were uploaded only in the income tax e filing portal and the same were not sent to the assessee by email which is mandate of Section 282 of the Income Tax Act. The Tribunal held that assessee has sufficient cause in not responding to the notices issued by the CIT(E) and accordingly feel that assessee should be given one more effective opportunity to furnish the requisite details that were called for by the CIT(E). Accordingly, the case was restored to the file of the CIT(E) for de novo adjudication in accordance with the law. Hence the appeal of the assessee was allowed for statistical purposes.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance holding that the provisions of Section 40(a)(ai) of the Income Tax Act 1961 was not applicable for non-deduction of Tax Deducted at Source (TDS) in salary prior to annual year 2015-2016.
The two-member Bench of M. Balaganesh, (Accountant Member) And Anubhav Sharma, (Judicial Member) observed that the AO had proceeded to disallow the salary expenditure for making payment without deduction of tax at source under Section 40(a)(ia) of the Income Tax Act which was evident from the assessment order.
In this regard, the Bench held that the provisions of Section 40(a)(ia) of the Income Tax Act could not be applied at all for non-deduction of tax at source in respect of salary as the same was introduced in the statute in Section 40(a)(ia) of the Income Tax Act only w.e.f 01.04.2015 and hence, could not be applied for years prior to AY 2015-16. Accordingly, the disallowances made by the AO under Section 40(a)(ia) of the Income Tax Act were to be deleted and this ground raised by the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the transactional net margin method (TNMM) is the most appropriate method in the absence of details of independent contracts/ functions/ services rendered to different Associated enterprises (AEs) and unrelated parties.
The Two-member bench comprising of Kul Bharat (Judicial member) and B.R.R. Kumar (Accountant member) held that the DRP has already allowed the CUP as MAM and the TPO sought to undertake the comparison âinvoice by invoiceâ with the third party located in the same âgeographical locationâ while rejecting the CUP undertaken by the assessee however, these facts are of no relevance as long as the amount/rate charges for hours incurred by an individual for a project is uniform and the services were provided to its AE as well as to third party by same employee located in India. Since, the appeal of the assessee was decided in favour of the assessee, the Stay Application of the assessee was fructuous and hence dismissed.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench while granting relief to Maharashtra state electricity board deleted the disallowance of net prior period expenditure debited under the head of âPrior Period Expenseâ.
After reviewing the facts and records, the two-member bench of B R Baskaran (Accountant member ) and Kavitha Rajagopal (Judicial Member) granted relief to assessee company and deleted the disallowance disallowance of net prior period expenditure debited under the head of âPrior Period Expenseâ. Therefore the bench allowed the Appeal .
The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has quashed the consequent assessment order passed under Section 143(3) of the Income Tax Act 1961 for want of vald assumption of jurisdiction as the notice under Section 143(2) of Income Tax Act was issued by a non-jurisdictional officer.
A Single Bench of Ravish Sood, (Judicial Member) relying upon the claim of the assessee that as the A.O i.e., ITO-1(2), Raipur having jurisdiction over the case of the assessee, had framed the assessment vide his order passed under Section 143(3) of the Income Tax Act dated 28.11.2017 without issuing notice under Section 143(2) of the Income Tax Act; held that , the same could not be sustained and was liable to be quashed at the very threshold for want of valid assumption of jurisdiction for framing the said impugned assessment.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the licensing of the software products of Microsoft in India by HP Services is not taxable in India as royalty under Section 9(1)(vi) of the Income Tax Act, 1961 and Article 12 of Indo US DTAA.
The Two-member bench comprising of Saktijit Dey (Vice-President) and N.K. Billaiya (Accountant Member) referring to the above mentioned case and the assesseeâs own case held that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software.
Therefore, the Assessing Officer was directed to consider revenue from these two companies as royalty and tax as per the relevant provisions of the Income Tax Act.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that advance payment made for the purchase of land stand establish as the same was through a banking channels and the bank certificate of deposit in the capital bank account is duly established.
The Bench comprising of M. Balaganesh, Accountant Member and Anubhav Sharma, Judicial Member observed that the CIT(A) has also taken into consideration the fact that even there were rectification proceedings under Section 154 of the Income Tax Act, initiated by the AO in which too the information provided by the assessee was duly taken into consideration and no mistake was found in the order.
The Tribunal was of considered opinion that the Annotated Report of DCIT, was not a mere internal document but formed the basis for the reopening, which the CIT(A) has rightly held to be a case of change of opinion. Therefore the appeal of Revenue was dismissed and consequently the C.O stand allowed.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that that the PCIT has merely remitted the issue back to the file of the AO to redo the assessment without giving a finding that the profit declared by the assessee is erroneous in so far as it is prejudicial to the interest of the Revenue.
The Bench comprising of Kuldip Singh, Judicial Member and S.Rifaur Rahman, Accountant Member observed that while examining the assessment records PCIT has observed that the profit declared by the assessee in its standalone financial statements is âš.68,53,323/- whereas the profit declared in the consolidated financial statements is âš.1,80,91,596/-, since he is not convinced with the submissions of the assessee and the profit adopted by the AO for the purpose of Section 115JB of the Income Tax is not proper.
The Tribunal held that the PCIT has merely remitted the issue back to the file of the AO to redo the assessment without giving a finding that the profit declared by the assessee is erroneous in so far as it is prejudicial to the interest of the Revenue. Accordingly, order passed under Section 263 of the Income Tax Act was set-aside and the grounds raised by the assessee was accordingly allowed.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has held that the Employees Stock Ownership Plan (ESOP) expenditure incurred towards raising of share capital was allowable as revenue expenditure.
The two-member Bench of B.R. Baskaran (Accountant Member) and Narender Kumar Choudhry (Judicial Member) noted that the view taken by the Assessing Officer in order to disallow the ESOP expenditure was contrary to the view expressed by the Special Bench in the case of Biocon Ltd, wherein it had been held that ESOP expenditure was allowable as Revenue expenditure.
The two-member Bench of B.R. Baskaran (Accountant Member) and Narender Kumar Choudhry (Judicial Member) noted that the view taken by the Assessing Officer in order to disallow the ESOP expenditure was contrary to the view expressed by the Special Bench in the case of Biocon Ltd, wherein it had been held that ESOP expenditure was allowable as Revenue expenditure.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition under Section 69A of the Income Tax Act 1961, holding that the books of account and vouchers were not required in return filed under Section 44AD of the Income Tax Act.
The two-member Bench of Shamim Yahya, (Accountant Member) and Astha Chandra, (Judicial Member) observed that as regards, the amount belonging to Narender Kumar Gupta and Sons HUF was concerned, it was noted that 44AD return had been submitted which had been accepted. The income, therefore, therein had been accepted. In such circumstances, there was no reason why the cash due of the income disclosed under Section 44AD of the Income Tax Act should not be accepted.
The bench set aside the impugned order holding that it was a settled law that books of account & vouchers were not required in 44AD return. Hence, adverse inference could not be taken that cash book & vouchers had not been maintained. The same income could not be taxed twice once in the hands of HUF and once again in the hands of the assessee.
The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has held that non responding and non-complaining before Principal Commissioner of Income Tax (PCIT) when issue was restored to the Assessing Officer (AO) for proper enquiries could not make revision illegal and not maintainable.
The two-member Bench of Ravish Sood, (Judicial Member) and Arun Khodpia, (Accountant Member) observed that since, the additional evidence were filed before us for the first time which were neither produced before the A.O nor before the PCIT, therefore, the same needed examination/verification in order to establish their authenticity and correctness.
The PCIT had made certain observations, however, without giving any findings on the facts had restored the issue back to the file of the A.O for making proper enquiries and to re-adjudicate the issue in view of the Explanation 2 of Section 263 of the Income Tax Act. Such order of the PCIT wherein further opportunity was granted to the assessee, to appear before the AO to submit necessary explanations/information for substantial justice, whereas the assessee had not responded and remain non-compliant in explaining his case before the PCIT, could not be termed as perverse or illegal or not maintainable. The Bench dismissed the appeal filed by the assessee.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that the amendment to section 36(1)(va) of the Income Tax Act, 1961, would not be applicable to assessment year 2017-2018. Therefore, the bench allowed a deduction in respect of employeesâ contribution to the Provident Fund (PF).
After considering the rival submissions and overall facts and circumstances, the two-member bench of S. Rifaur Rahman (Accountant Member) and Vikas Awasthy (Judicial Member) held that the amendment to section 36(1)(va) of the Act would not be applicable to Assessment Year 2017-18. Therefore, the bench allowed the appeal.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the addition of Long-Term Capital Gain (LTCG) under Section 50C of the Income Tax Act based on the unregistered deed merely entered in judicial stamp papers.
The two-member Bench of Om Prakash Kant, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) observed that the deed of the reconstitution relied upon by the assessee was merely an unregistered document, which does not instil confidence. It was pertinent to point out that the assessee had failed to provide any such communication to the Registrar of Firms related to the reconstitution of the firm. The assessee had also failed to furnish the original partnership deed or the registered reconstitution deeds.
In this case, there had been a subsequent rectification deed registered which substantiates the assesseeâs claim, but in the present case the assessee had failed to prove his claim by way of any documentary evidence which can be relied upon. The Bench dismissed the appeal filed by the assessee.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance holding that the comparison with fair market value of loan interest was not made while making disallowance under Section 40A(2)(a) of the Income Tax Act 1961.
The two-member Bench of Prashant Maharishi, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) observed that as per Section 40A(2)(a) of the Income Tax Act, if in the opinion of the AO, the payment made by the assessee to any related person was excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payments was made, so much of the expenditure as was considered excessive or unreasonable by the AO should not be allowed as deduction
Therefore, the Bench was of the considered view that the AO while partly disallowing the interest paid by the assessee had not followed the provisions of Section 40A(2)(a) of the Income Tax Act, which required comparison with the fair market value of the goods, services or facilities, which in the present case was the loan taken by the assessee. Accordingly, the appeal filed by the assessee was allowed and disallowance was directed to be deleted.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the payment of interest under Section 234B of the Income Tax Act 1961 was not necessary when certain income qualified for deduction.
The two-member Bench of R.S.Syal, (Accountant Member) and V.Durga Rao, (Judicial Member) noted that no Special Bench had been constituted so far on the issue as had been decided by the Tribunal in assesseeâs own case. Further no Miscellaneous application had been filed against the afore-said order. Once the Tribunal had decided a particular issue in assesseeâs own case in an earlier year and there was no change in facts or law in the subsequent year, then there was no scope for deviating from the view originally taken by the Tribunal. In view of these facts it was conveyed that the adjournment was not possible.
The only other effective ground was against not charging interest under Section 234B of the Income Tax Act. Both sides were in agreement that there were several orders passed by the Tribunal holding that when a particular income was such on which tax was deductible, then there was no obligation for paying interest under Section 234B of the Income Tax Act. The tribunal, in assesseeâs own case in for assessment years 2002-2003 and 2003-2004, had ordered for the deletion of levy of interest under Section 234B of the Income Tax Act. Following the precedent, the Bench dismissed this ground of appeal and partly allowed the appeal filed by the revenue.
The Income Tax Appellate Tribunal (ITAT), Delhi bench held that the Fee for Technical Service (FTS) and interest income earned from the joint venture Indian company should be taxed as per the order passed by the Tax Deduction at Source Officer under Section 195 of the Income Tax Act, 1961.
the two-member bench of Dr. B.R.R. Kumar (Accountant member) and Saktijit Dey (Vice-President) held that, in fact, the TDS Officer has issued an order under section 195 of the Income Tax Act instructing the payer to deduct tax at the rates of 10% and 15%, respectively, in recognition of this factual condition. Therefore, the bench dismissed the appeal of revenue. Ananya Kapoor, Counsel appeared for the assessee, and Vizay B. Vasanta, counsel appeared for revenue.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 due to the non-awareness of tax payment by the assessee.
The Single-member bench comprising of Suchitra R. Kamble (Judicial member) held that the assessee has not filed return of income and it appears that the assessee being not aware about the tax on sale consideration of the land is genuine. The decision of the Gujarat High Court in the case of Sun on Peak Hotel (P.) Ltd. was applicable in the present case as the assessee herein has a genuine case of not being aware of tax payment. Thus, the penalty imposed under Section 271(1)(c) of the Income Tax Act was not justifiable. Thus, the appeal of the assessee was allowed.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) allowed the disallowance under Section 37(1) of the Income Tax Act, 1961, and held that the expenses on account of interest on margin facility and late payment to brokers shall not be in nature of penalty.
The Two-member bench comprising of Annapurna Gupta (Accountant member) and T.R. Senthil Kumar (Judicial member) held that the books of accounts admittedly were all produced before the Assessing Officer, and the ledger account of these expenses also did not reveal any such fact so as to arrive at a finding that these expenses were disallowable being penalty in nature.
The assessee being in the nature of trading in shares and securities, the expenses incurred on account of interest on margin facility and late payment to brokers were undoubtedly incurred in the course of business. There was no requirement for the assessee to prove they were not in the nature of penalty, disallowable under Section 37(1) of the Income Tax Act. Thus, the appeal of the assessee was allowed.
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