This annual digest analyzes all the ITAT stories published in 2023 at taxscan.in
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the payments from the SET Satellite (Singapore) Pte Ltd are not taxable as royalty under Article 12(2) of the India-Singapore Treaty.
The Bench of Kavitha Rajagopal (Judicial) and Om Prakash Kant (Accountant)observed that the assessee was eligible to claim the benefit of the India-Singapore treaty the payment from SET Satellite (Singapore) Pte. Ltd. is not taxable as ‘royalty’ under Article 12(2) of the India-Singapore treaty and the payments from the Broadcasting Corporation of India and Prasar Bharati All India Radio are to be treated as ‘royalties’ and 50% of the payment received from LG, Hero Honda, and Hutchison for the use of trademarks, trade names, and copy rights are to be taxable as ‘royalties’ under Article 12 and clause (3)(a) of the India-Singapore treaty
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the levy of penalty under section 271(1) (c ) of the Income Tax Act,1961 on the grounds of absence of proper opportunity of hearing.
The bench of Kavitha Rajagopal (Judicial) and Om Prakash Kant (Accountant) observed that in the case of Mohd. Farhan A. Shaikh, the court held that the nonstriking on the irrelevant limb would vitiate the penalty proceedings in toto.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the expenditure of consultancy fees can be treated as revenue expenditure and is eligible for the deduction under section 37 (1) of the Income Tax Act,1961.
The bench of Kavitha Rajagopal (Judicial) and Prashant Maharishi (Accountant) the expenditure of consultancy fee had been treated as revenue expenditure which is eligible for deduction under section 37(1) of the Income Tax Act and the impugned expenditure will not come under the purview of section 35D of the Income Tax Act and rather would be a revenue expenditure allowable as deduction under section 37(1) of the Income Tax Act.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) quashed the addition made by the Assessing Officer (AO) on account of capital gain on the ground of wrongful initiation of proceedings under section 148 of the Income Tax Act,1961.
The Bench ofMadhumita Roy (Judicial) and Chandra Poojari (Accountant) observed that the wrong initiation of proceeding by issuing notice under Section 148 of the Income Tax Act culminating into the order of addition under Section 147 of the Income Tax Act was, therefore, found to be without any jurisdiction
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, directed readjudication in respect of stamp duty valuation upon the sale of inherited property to the brother.
The tribunal observed that the assessing officer did not refer to the DVO and remitted the issue back for reconsideration. After reviewing facts and records, the two-member bench directed re adjudication of stamp duty valuation
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, deleted the addition made on account of the notional Annual Letting Value (ALV) on unsold flats held as stock-in-trade. The bench observed that the unsold flats were its stock-in-trade, and income arising on their sale is liable to be taxed as business income.
The two-member bench of Rajesh Kumar (Accountant Member) and Saktijit Dey (Judicial Member)observed that unsold flats, considered stock-in-trade, are assessable under the head ‘income from business’ when sold. Therefore, the assessing officer was incorrect in taxing the notional annual letting value under the head ‘income from house property.’
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that compensation paid for the closure of agreements entered with private companies in the real estate development business is allowable expenditure. two-member bench of Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) of tribunal observed that the assessee and the company to whom compensation was paid are not related parties either under the Companies Act or under the Income Tax Act, as they have not disclosed each other in the related party disclosures in their annual accounts and tax audit report.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted a final opportunity to the assessee for non-compliance even after the appellate stage due to an addition under Section 69 of the Income Tax Act, 1961 made due to unavailability of transaction information.
The Two-member bench comprising of Aby T Varkey (Judicial member) and Padmavathy S. (Accountant member) held that the additions made by the Assessing Officer are based on information from the Intelligent Transport System (ITS) data and due to lack of details the assessing officer has treated the entire income from sale of property as unexplained.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the deduction under Section 115JB of the Income Tax Act, 1961 shall be allowed when the farmer and trade advances are actually written off in the books of accounts.
The Two-member bench comprising of Saktijit Dey (Vice-President) and B.R.R. Kumar (Accountant member) directed the Assessing Officer to factually verify the assessee’s claim in case it was found that the assessee had actually written off the farmer advances, trade advances, and doubtful debts in the books, they have to be allowed as deduction while computing book profit under Section 115JB of the Income Tax Act.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the employee’s contribution to Provident Fund (PF) and Employee State Insurance Corporation (ESIC) shall not be allowed deduction when deposited belatedly after the due date and before filling of the Income Tax Return (ITR).
The Two-member bench comprising of Prashant Maharishi (Accountant member) and Kavitha Rajagopal (Judicial member) held that the employee’s contribution to PF & ESIC having been deposited belatedly after the due date prescribed under the relevant acts, nevertheless before the filing of the return of income was not an allowable deduction as per the recent decision of the Supreme Court in the case of Checkmate Services P. Ltd.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the books of account cannot be held incorrect merely due to an inadvertent mistake in the Tax Audit Report (TAR) which is also supported by an affidavit of the auditor
The Two-member bench comprising of Aby T. Varkey (Judicial member) and Amarjit Singh (Accountant member) held that the action of the Assessing Officer to reject the books cannot be accepted and the CIT(A) has rightly reversed his action on this issue and accepted the books of account of the assessee. Thus, the order of the CIT(A) was upheld and the appeal of the revenue was dismissed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the depositary charges should not be disallowed under section 14A read with rule 8D(2)(i) of the Income Tax Act,1961.
The two-member bench comprising Amit Shukla (Judicial) and Padmavathy (Accountant) held that the investments that are yielding exempt income only should be considered for disallowance and remanded the matter back to the assessing officer for re-computation of disallowance.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the addition made by the Assessing Officer (AO) towards the business loss on the grounds of the absence of speculation of loss of share capital income.
The two-member bench comprising Amit Shukla (Judicial) and Padmavathy (Accountant) observed that the assessee was not deriving any income out of share trading that was speculative and, therefore, the finding given by the lower authority stating that the assessee was involved in speculation was factually incorrect.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the computation of fee under section 234E of the Income Tax Act,1961 cannot be done for delayed filing of return of Tax Deducted at Source (TDS) before the period of 01.06.2015.
The Benc two-member bench comprising Beena Pillai (Judicial) and Laxmi Prasad Sahu (Accountant) in the case of Fatehraj Singhvi v. UOI, Karnataka High Court held that amendment made under section 200A of the Income Tax Act providing that fee under section 234E of the Income Tax Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee under section 234E of the Income Tax Act for delayed filing of return of TDS while processing a return of TDS could have been made for tax deducted at source for the assessment years before 1.6.2015.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the determination of Arms Length Price (ALP) of professional fee should not be carried out by the Assessing Officer (AO) in a case where the reference made to the Transfer Pricing Officer (TPO).
The Bench observed that the Central Board of Direct Taxes, vide instruction no.3/2016 dated 10th March 2016 had issued Guidelines for Implementation of Transfer Pricing Provisions and the assessing officer does not have the jurisdiction to propose any transfer pricing adjustment in case where he had not made any reference to the TPO. Therefore the additional made by the assessing officer to the tune of Rs.2,87,62,981 towards transfer pricing adjustment was not legally sustainable.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, held that provisions of Section 115BBE would not be applied to surrendered income, which could not be treated as unexplained money under Section 69A 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 provisions of Section 115BBE would not be applied to surrendered income not treated as unexplained money under Section 69A. Therefore, the bench dismissed the appeal of the revenue.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the finance cost should be allowed as a deduction under section 36(1)(iii) of the Income TDAM Capital Advisors Limited vs DCIT
The two-member bench comprising Amit Shukla (Judicial) and Padmavathy (Accountant)observed that the claim of finance charges was made against the business income of the assessee from the broking business and, therefore, there was no question of triggering disallowance and finance cost should be allowed as a deduction under section 36(1)(iii) of Income Tax Act.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, while deleting the addition made by the Assessing Officer (AO), held that the AO failed to conduct an independent inquiry in respect of the deposit in the bank account of the assessee for the issuance of a demand draft in favor of Indian Oil Corporation.
Two-member bench of Waseem Ahmed (Accountant Member) and Ms. Madhumita Roy (Judicial Member) deleted the addition made by the assessing officer in respect of the cash deposit due to the failure to make an independent inquiry.
The Income Tax Appellate Tribunal (ITAT), Bangalore bench, deleted the assessment order passed under Section 153A of the Income Tax Act, 1961, against a non-existent partnership firm.
The two-member bench, consisting of Chandra Poojari (Accountant Member) and Madhumita Roy (Judicial Member),observed that assessment orders are framed by the AO against the non-existing entity despite having knowledge of the fact that the partnership firm is fully taken over by M/s. Trishul Buildtech Infrastructure Pvt. Ltd. Therefore complete failure by the AO to bring on record the successor in interest, so as to pass assessment orders in the name of new entity i.e. Trishul Buildtech Infrastructure Pvt. Ltd.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the delay of filing an appeal can be condoned when there was any sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation.
The two-member bench comprising Beena Pillai (Judicial) and Laxmi Prasad Sahu (Accountant) held that if the application of the assessee for condoning the delay is rejected, it would amount to legalizing injustice on technical grounds, when the Tribunal was capable of removing injustice and to do justice. Therefore, the delay of 438 days deserved to be condoned.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed the Assessing Officer (AO) for re-adjudication of additions made under section 69 of the Income Tax Act,1961 towards the purchase and sale of shares without sufficient evidence.
The two-member bench comprising Abt T Varkey (Judicial) and Padmavathy (Accountant) remanded the matter back to the Commissioner for considering the facts of the case and in the interest of justice and fair play and for giving one final opportunity to the assessee.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) upheld the deletion of adjustments in favor of Britannia Industries and held that the weighted average cost of capital (WACC) method cannot be applied for computing Arms Length Price (ALP) of royalty income.
Sonjoy Sarma (Judicial) and Manish Borad (Accountant) observed that the Weighted Average Cost of Capital (WACC) method should not be applied for computing ALP of royalty income and the brand value needs consistent research and development and regular investment because a mistake at any point in time could reduce the value of a brand drastically.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) granted relief to Britannia Industries by allowing the claim of deduction for lease premium on the ground of the absence of capital expenditure.
The tribunal of Sonjay Sarma (Judicial) and Manish Borad (Accountant) held that the assessee was eligible for the claim and directed the Assessing Officer to allow the claim of deduction for lease premium of Rs. 33,00,000/- for Assessment Year 2014-15.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that rates for power made available through the Indian Energy Exchange are not applicable to consumers; instead, they are rates for DISCOM. Consequently, the bench deleted the Transfer Pricing (TP) adjustment made against Tata Steel.
The tribunal of two-member bench of Ms. Padmavathy S (Accountant Member) and Amit Shukla (Judicial Member) deleted the transfer pricing adjustment, stating that rates for power made available through the Indian Energy Exchange are not applicable to consumers but are rates for DISCOM. Consequently, the bench allowed the appeal of the assessee.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) granted relief to Air India Airport Services and held that deduction under Section 80IA of the Income Tax Act, 1961 shall be allowed as air cargo handling services fall within the scope of infrastructure facility.
The Two-member bench comprising of M. Balaganesh (Accountant member) and Anubhav Sharma (Judicial member) held that ground handling and cargo handling services provided by the assessee are covered within the meaning of the Explanation referred to Section 80-IA of the Income Tax Act and the assessee was entitled to claim the benefit of same. Thus, the appeal of the assessee was allowed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the Centralized Processing Centre (CPC) cannot make an addition under Section 50C of the Income Tax Act, 1961 without giving a proper opportunity to the assessee.
The Two-member bench comprising of Kuldip Singh (Judicial member) and S. Rifaur Rahman (Accountant member) held that the proposed addition under Section 50C of the Income Tax Axt was beyond the mandate under Section 143(1) and the same can be processed only under Section 143(3) of the Income Tax Act.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that addition shall not be sustained on the basis of Annual Information Return (AIR) information and when the receipt declared by the assessee far exceeds the amount mentioned in the information.
The Two-member bench comprising of Aby T Varkey (Judicial member) and Amarjit Singh (Accountant member) held that “the additions were made solely on the basis of AIR information, especially in the absence of full details of parties and when the receipts declared by the assessee far exceeds the amount mentioned in the AIR information, was not sustainable in the eyes of law”.
The Income Tax Appellate Tribunal (ITAT),Delhi Bench while granting relief to BBC World (India) held that pass-through cost directly relatable to advertisement & publicity, business promotion and participation in trade events are excluded from the cost base.
The two-member bench of Shamim Yahya (Accountant Member) and Astha Chandra, (Judicial Member) held that pass-through cost directly relatable to advertisement & publicity, business promotion and participation in trade events are excluded from the cost base.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, while quashing the revision order, held that unsold flats categorized as stock in trade should be assessed as business income, not income from house property.
The two-member bench of S Rafiur Rahman (Accountant Member) and Kuldip Singh (Judicial Member) held that unsold flats, which are in stock in trade, should be assessed under the head “business income.” Therefore, the bench allowed the appeal of the assessee.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that anonymous donations received by trusts carrying on religious and charitable activities, approved under Section 10(23C)(v) of the Income Tax Act, are eligible for the benefit of exclusion in Section 115BBC(2)(b) of the Income Tax Act, 1961.
The bench concluded that trusts with dual purposes, having religious expenditure below 5% of total expenses, could be eligible for Section 80G certification and exempt from tax on anonymous donations under Section 115BBC(2)(b) of the Income Tax Act.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, while directing to restrict the addition to the extent of 0.05% of gross total, observed that cash deposited in the name of various proprietorship concerns involved in bogus business activities.
The two-member bench of Amarjit Singh (Accountant Member) and Kuldip Singh (Judicial Member) restricted the addition to the extent of 0.05% of the gross total of Rs. 76,55,523/- because actually, the business was run and controlled by the employer of the assessee, and the assessee had already shown the commission income received from the employer in the return filed.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench held that no disallowance should be made under Section 14A of the Income Tax Act, 1961, when assessees have their own funds exceeding investments earning exempt income. The bench granted relief to Macrotech Developers.
The two-member bench, consisting of Ms. Padmavathy S (Accountant Member) and Kuldip Singh (Judicial Member), concluded that no disallowance should be made under Section 14A of the Income Tax Act, 1961. The bench dismissed the revenue’s appeal.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, while deleting the Income Tax Addition, held that no investment has been made by the assessee outside the books of account.
The two-member bench of M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member) deleted the Income Tax addition because no investment has been made by the assessee outside the books of account
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled that an exemption under Section 54EC of the Income Tax Act would not be granted if the investment was not made within the specified timeframe. The case involved an original assessment under Section 143(3), where the total income was assessed at Rs. 2,44,769. Subsequently, the assessment was reopened under Section 147, and the Assessing Officer found that the assessee claimed exemption under Section 54EC for investing Rs. 73.50 lakhs in NABARD Bonds. The AO argued that the investment was made beyond the 6-month period from the date of transfer, which occurred on 2.4.2004. The tribunal, led by H.L. Karwa and N.K. Billaiya, agreed with the Revenue’s stance, stating that the investment exceeded the permissible timeframe. Consequently, the assessee’s appeal was dismissed as the investment was not made within the specified limitation period outlined in Section 54EC of the Income Tax Act, upholding the decision of the CIT(A).
The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) offered relief to Oriental Bank by overturning an ex-parte order due to the non-appearance of the assessee. The government bank, engaged in banking activities, faced a demand of Rs. 4,92,684 for non/short deduction of Tax Deducted at Source (TDS) under Section 194A of the Income Tax Act. Despite the case being fixed for a hearing, the assessee failed to provide information, leading to the imposition of a penalty of Rs. 2,67,763 by the Joint Commissioner of Income Tax (TDS) Jaipur. The Commissioner of Income Tax (Appeal) upheld the penalty in an ex-parte order, confirming the levy under Section 271C of the Income Tax Act. The ITAT, comprising Sandeep Gosain and Rathod Kamlesh Jayantbhai, set aside the ex-parte order, remanding the matter to the Assessing Officer (AO) for a fresh adjudication. The AO was instructed to provide the assessee with a reasonable opportunity to present their case, requiring the submission of necessary documents and evidence. The ITAT granted the assessee another chance to be heard, emphasizing the importance of a fair hearing in the interest of justice.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted another opportunity to the assessee as he was unaware of the notices that were being issued in the Income Tax Portal. The counsel appearing for the assessee submitted that the learned Commissioner of Income Tax (Appeal) [CIT(A)] has dismissed the appeal in limine, without deciding the issues urged before him on merits on the reasoning that the assessee did not respond to the notices issued by him. The Authorized Representative submitted that the assessee is an aged man and no physical notice was issued to him. All the notices were posted in the income tax portal and the assessee was not aware of those notices. Accordingly, he prayed that, in the interest of natural justice, all the issues may be restored to the file of the CIT(A) for adjudicating them on merits. Therefore, in the interest of natural justice, the bench provided one more opportunity to the assessee to present his case properly before the CIT(A). Thus, the order of the CIT(A) was set aside and the appeal of the assessee was allowed.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) ruled on a case involving a delay of 1161 days in filing an appeal, asserting that the reasons presented by the assessee did not constitute a reasonable cause for condonation. The counsel for the assessee explained the delay, stating that it was beyond the assessee’s control due to her relocation from Pune to Chennai after residing with her son. The Departmental Representative contested this, arguing that the reasons given were vague and unreasonable, pointing out that the assessee had filed an e-return and participated in proceedings before the Assessing Officer and the Commissioner of Income Tax (Appeal) [CIT(A)] during the said period. The tribunal, consisting of Mahavir Singh (Vice-president) and Manjunatha. G (Accountant member), held that the assessee displayed a casual approach in pursuing her case despite being aware of the need to file the appeal within the statutory limitation period. Consequently, the bench rejected the petition for condonation of the significant delay and dismissed the appeal as unadmitted.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has ordered a reevaluation in the case of Hasaniya Healthcare Sarvajanik Trust, a charitable trust seeking registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5) of the Income Tax Act. The tribunal noted that the trust’s chartered accountant had misinterpreted the medical store at the hospital, classifying it as a business in the Form 10B submission. The trust, focused on providing non-discriminatory medical relief through Fatema Hospital in Himatnagar, faced rejection of its application by the CIT (Exemptions) without an opportunity to address discrepancies.During the appeal, the trust’s representative explained that the portrayal of the charitable hospital engaging in trade was an error by the Chartered Accountant’s office. The tribunal acknowledged contradictions in the forms and responses but attributed them to inadvertent mistakes. It emphasized the lack of a fair opportunity for the trust to clarify these discrepancies, directing a fresh adjudication. The ITAT’s decision underscores the importance of procedural fairness in tax matters and acknowledges unintentional errors by the trust’s representatives.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled in favor of Tata Steel Ltd., deleting the Transfer Pricing (TP) Adjustment.
The ITAT, however, disagreed, emphasizing that transactions under Section 80IA(8) are not necessarily governed by ALP principles. The decision underscores the need for a context-specific approach in determining the Arm’s Length Price for eligible businesses under Section 80IA(8).
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled in favor of Hind Aluminium Industries Pvt. Ltd., holding that the reference to the Transfer Pricing Officer (TPO) for transfer pricing adjustment concerning Specified Domestic Transactions (SDT) under Section 92BA(i) of the Income Tax Act, 1961, has been omitted as per the Finance Act, 2017. The case originated when the assessee, after filing the income tax return, had its case selected for scrutiny and was subsequently referred to the TPO under Section 92CA(1) to determine the arm’s length price of transactions with its associate enterprises under Section 92BA(i).
The TPO observed that the assessee had purchased aluminum wire rod from its associate enterprises, benchmarking the transactions using the Comparable Uncontrolled Price method. Disagreeing with the TPO’s order, the assessee filed an appeal before the CIT(A), who deemed the preference given by the Assessing Officer to the TPO invalid and bad in law. The revenue appealed to the tribunal, arguing that the omission was brought about by the Finance Act, 2017. However, the tribunal, relying on legal precedent and interpreting the Finance Act, 2017, held that the omission of Section 92BA(i) implies any reference to the TPO for SDT is invalid, ultimately dismissing the revenue’s appeal.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled in favor of an assessee, allowing the setoff of unabsorbed depreciation carried forward from earlier years against income from capital gains. The Assessing Officer (AO) had disallowed the setoff, assessing the total income without considering the unabsorbed depreciation adjustment. The Commissioner of Income Tax (Appeal) [CIT(A)] upheld the AO’s decision, leading to the appeal.
The Authorized Representative argued that the CIT(A) erred in denying the setoff claim, emphasizing that it is permitted under the provisions of the Income Tax Act. The ITAT, represented by Pavan Kumar Gadale, a Judicial member, held that unabsorbed depreciation carried forward from earlier years could be set off against short-term capital gains. Consequently, the order of the CIT(A) was set aside, and the AO was instructed to allow the claim for setoff of unabsorbed depreciation against income from short-term capital gains. The AO was further directed to compute interest under relevant sections of the Income Tax Act. This decision affirms the assessee’s entitlement to set off unabsorbed depreciation, providing clarity on the application of provisions related to income from capital gains.
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