This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during the previous week 5th October 2024 to 12th October 2024.
In a recent ruling, the Cochin Bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer ( AO ) to delete the addition due to disallowance which was made without recording satisfaction regarding the assessee’s books of account.
The ITAT bench comparing Soundararajan K (Judicial Member) and Waseem Ahmed (Accountant Member) allowed the appeal filed by the assessee.
The Cuttack Bench of Income Tax Appellate Tribunal(ITAT) upheld the Commissioner of Income Tax(Appeals)[CIT(A)]’s decision to delete the Rs.3,08,11,278 penalty levied under section 271(1)(c) for the Assessment Year(AY) 2014-15, as the underlying quantum addition no longer existed.
The two member bench comprising George Mathan(Judicial Member) and Manish Agarwal (Accountant Member) dismissed the appeal filed by the revenue.
In a significant relief to Tata Teleservices Limited, the Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, has ruled that the interest payment made by the company to China Development Bank ( CDB ) is exempt from taxation under the amended Article 11(3) of the India-China Double Taxation Avoidance Agreement ( DTAA ). The ruling comes in relation to the assessment year 2014-15, with the tribunal dismissing an appeal filed by the Income Tax Department challenging the order passed by the Commissioner of Income Tax (Appeals)-43.
The tribunal concluded that the issue was squarely covered by the previous decision in Tata Teleservices’ own case and, therefore, found no merit in the Revenue’s appeal. As a result, the ITAT upheld the CIT(A)’s decision and dismissed the Revenue’s appeal, providing substantial relief to Tata Teleservices.
In a recent decision, the Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, remanded a case involving the assessee, Virtual Global Education Ltd. back to the Assessing Officer ( AO ), after finding that the income tax addition made by the department was based on guesswork and lacked sufficient justification. The case, related to the assessment year 2015-16, involves the disallowance of INR 3.74 crore by the AO, who made an ad hoc addition of 30% of the total expenses claimed by the assessee without substantial evidence.
In its order, the ITAT stressed that ad hoc additions based on guesswork and surmises could not be sustained, especially when the assessee is willing to furnish supporting evidence. The tribunal observed the need to uphold the principles of natural justice and stated that the assessee-company should be given a fair chance to provide the necessary documents to prove its case. As a result, the ITAT set aside the orders of the lower authorities and remanded the case back to the AO for fresh assessment.
Recently, the Income Tax Appellate Tribunal ( ITAT ) of Delhi has directed the Assessing Officer (AO) to reappraise evidence in a case involving Ducati India Private Limited. The assessee-company had appealed against a tax demand resulting from an addition of Rs. 2.63 crore made by the tax authorities, which exceeded the amount indicated in the show cause notice ( SCN ). The ITAT found that the addition was made without due process, as the SCN pertained to a lower amount of Rs. 1.89 crore.
To prevent any miscarriage of justice, the ITAT remitted the case back to the CIT(A) for fresh consideration, instructing the authority to examine all evidence, including that which had been previously overlooked. The tribunal also directed that the assessee be given a chance to present further evidence, if necessary, and warned that if the company fails to cooperate, the CIT(A) is free to proceed in accordance with the law.
In a relief to Jindal Saw Ltd, the Income Tax Appellate Tribunal ( ITAT ) of Delhi ruled that the excise duty refund received by the company is not chargeable to tax, classifying it as a capital receipt rather than a revenue receipt. This judgment arises from appeals filed by both the Revenue and the assessee, Jindal Saw Ltd, concerning the tax treatment of excise duty refunds claimed under a government incentive scheme aimed at promoting industrial growth in Gujarat’s Kutch District following the 2001 earthquake.
Further bolstering the tribunal’s decision was a reference to a Gujarat High Court ruling in the SAL Steel Ltd vs Union of India case, which highlighted the purpose behind such excise duty incentives. The court stressed that these incentives were introduced to promote long-term economic and industrial recovery in the Kutch region after the devastating earthquake, thus reinforcing the capital nature of the refunds.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) ordered income estimation at 12.5% of gross receipts instead of disallowing entire entries as bogus due to potential expense inflation.
The Tribunal emphasized that the assessee’s books had irregularities, and completely dismissing all bulk entries as suggested by the AO would result in an unrealistically high-profit margin. The tribunal supported the approach of estimating profits reasonably rather than disallowing all expenses. Therefore, the tribunal upheld the CIT(A)’s decision to estimate the income based on a 12.5% net profit margin. The tribunal directed the AO to reassess the assessee’s income based on the revised profit margin. The appeal of the revenue was dismissed.
Recently, the Income Tax Appellate Tribunal ( ITAT ) in Delhi dismissed the appeal filed by the assessee, Shivam Leasing Pvt. Ltd., upholding a substantial income tax addition of ₹1.05 crore for the assessment year 2008-09. The case involved the assessee-company’s alleged concealment of income and failure to maintain proper financial records.
In addition to the income addition, the Assessing Officer had initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act for the concealment of income. The Tribunal upheld these penalty proceedings, reinforcing the severity of the assessee’s non-compliance with tax regulations.
Recently in a decision, the Income Tax Appellate Tribunal ( ITAT ) of Bangalore, quashed an addition made under Section 69A of the Income Tax Act 1961 ( ITA ) holding that treating cash deposits from “business income” as “unexplained” can lead to double taxation.
In result the tribunal found the assessment of unexplained income under Section 69A to be incorrect and ruled in favor of the assesseee.It also negated the application of Section 115BBE of ITA, which applies only to unexplained income. The appeal was allowed, and the assessee’s declared income under the head of profits and gains from his jewelry business was accepted.
Recently in a decision, the Income Tax Appellate Tribunal ( ITAT ) of Bangalore upheld a bank’s claim for the write-off of non-rural bad debts, overturning the Assessing Officer’s ( AO ) disallowance under Section 36 of the Income Tax Act 1961 ( ITA ). The case, which concerned the 2015-16 assessment year, revolved around whether the assessee/appellant bank, Karnataka Bank Ltd, could claim deductions for bad debts written off from non-rural branches without adjusting them against provisions made under Section 36(1)(viia) of ITA, which is primarily meant for rural branches.
In its judgment, the ITAT observed that the legislative intent of Section 36(1)(viia) of ITA was to support rural banking, and the two sections were meant to operate independently. By disallowing the deduction for non-rural bad debts, the AO had incorrectly applied the law, which the Tribunal corrected by allowing the full deduction for the bank’s non-rural bad debts.
In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) of Delhi held that rectification is not permissible for debatable issues related to income tax matters. The case in question involved the assessee, Beacon Higher Education Services Pvt. Ltd., who had claimed depreciation on a non-compete fee under the Income-tax Act, 1961 ( ITA ). The depreciation claim arose from agreements made in 2011, one for service continuation and another for non-compete purposes, amounting to ₹1,20,93,750.
The Bench of Mr Kul Bharat and Mr Brajesh Kumar Singh, after reviewing the case, sided with the assessee. It ruled that since the issue was indeed debatable and pending final resolution in higher courts, it did not qualify as a “mistake apparent on record” under Section 154 of tax statute. The tribunal further noted that when there is room for multiple interpretations of a tax provision, the interpretation favoring the taxpayer should be preferred. As a result, the ITAT set aside the CIT(A)’s rectification order, allowing the assessee’s appeal for statistical purposes.
In a recent judgment, the Income Tax Appellate Tribunal ( ITAT ) Delhi Bench “B” ruled in favor of an assessee and directed the matter regarding ad hoc income tax disallowances to be re-examined by the Assessing Officer ( AO ). The case, which pertains to the Assessment Year 2015-16, involved two primary disputes: the disallowance of business expenses and an enhancement of income based on reimbursements from the company’s Oman branch. The ITAT found that the Commissioner of Income Tax (Appeals) [CIT(A)] had failed to give due weight to additional evidence submitted by the company and therefore sent the matter back to the AO for reconsideration.
Accordingly, the tribunal set aside the disallowance and remanded the matter to the AO for fresh adjudication, giving the assessee the opportunity to present further evidence in its defense.
The Income Tax Appellate Tribunal (ITAT) in Delhi upheld the deletion of an addition made by the Assessing Officer (AO) concerning alleged undisclosed income linked to post-dated cheques (PDCs) recovered during a search. The AO had failed to establish a clear nexus between the cheques and any unaccounted income of the assessee, leading to the dismissal of the Revenue’s appeal.
ITAT dismissed the Revenue’s appeal, affirming that the addition made by the AO was based on mere conjecture and lacked legal merit.
Recently in a decision, the Income Tax Appellate Tribunal (ITAT) of Delhi quashed a reassessment notice issued under Section 148 of the Income Tax Act, 1961 (ITA) to the assessee/ appellant, Natraj Products Pvt. Ltd. for the Assessment Year 2010-11, citing mechanical approval granted by the Principal Commissioner of Income Tax (PCIT). The reassessment was based on alleged accommodation entries amounting to ₹60 lakh, but the ITAT found that the approval granted for reopening the case lacked application of mind and was issued without satisfying the strict requirements of the law.
Additionally, the ITAT observed that the AO had not acted on the information for nearly four years, initiating proceedings only on the verge of the limitation period, indicating a lack of urgency or independent inquiry. The tribunal criticized both the AO and the PCIT for failing to properly evaluate the case before initiating reassessment. It stressed that approval under Section 151 of ITA should be granted only after careful consideration and not as a mere formality. Ultimately, the ITAT ruled that the reassessment proceedings were invalid due to improper jurisdiction under Section 147 of the tax statute and quashed the reassessment order
The Cuttack Bench of Income Tax Appellate Tribunal(ITAT) deleted the addition of Rs. 16,80,000 made for cash deposits in Specified Bank Notes (SBN) from liquor sales, citing exceptional circumstances.
A single member bench of George Mathan(Judicial Member) allowed the appeal filed by the assessee.
The Cuttack Bench of the Income Tax Appellate Tribunal ( ITAT ) found Rs. 3.4 crore addition related to a sale discrepancy excessive and remanded the case to the Principal Commissioner of Income Tax ( PCIT ) for re-examination.
Therefore, the tribunal upheld the PCIT’s invocation of Section 263 but modified the order to allow the appellant another opportunity to explain the discrepancy. The appeal of the assessee was partly allowed.
The Cuttack Bench of the Income Tax Appellate Tribunal (ITAT) rejected the assessing officer (AO)’s appeal challenging the Commissioner of Income Tax (Appeals) [CIT(A)] deletion of Rs. 3.4 Crore addition. This decision was made due to a lack of contradictory evidence from the revenue.
The tribunal noted that the revenue failed to demonstrate any error or falsehood in the CIT(A)’s findings. Therefore, the appeal filed by the revenue was dismissed and the tribunal upheld CIT(A)’s decision to delete the addition of Rs. 3,40,35,866 under the head unexplained money.
The Cuttack Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed exemption under Section 10 (38) of the Income Tax Act, 1961, which the Assessing Officer had denied because the share transaction was bogus. The Tribunal emphasized that Securities Transaction Tax ( STT ) had been paid on each transaction, thereby validating the authenticity of the share dealings.
The Tribunal found no evidence showing that the transactions were bogus and the revenue failed to prove that the documents submitted by the assessee were false or fabricated. Therefore, the tribunal directed AO to allow the benefit of exemption claimed under Section 10(38) of the Income Tax Act, 1961.
In a recent case, the Income Tax Appellate Tribunal (ITAT) of Delhi upheld the depreciation claim made by the assessee/ appellant , Delhi Airport Metro Express Private Limited on self-funded assets. The ruling arose from the between the assessee and the tax authorities concerning the eligibility for depreciation on assets developed under the Build-Operate-Transfer (BOT) scheme.
Furthermore, the Tribunal dismissed the argument presented by the Revenue, which was heavily reliant on the CBDT circular. The ITAT clarified that the circular was not applicable in this case, as it pertain specifically to infrastructure projects like roads and highways and did not extend to metro projects. It reaffirmed that depreciation could be claimed on assets as long as they were owned by the company during the period of use, even if they were to be transferred back to the DMRC at the end of the concession period.
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) restored the additional depreciation claim for statistical reassessment following a legal amendment in Section 32(1)(iia) of the Income Tax Act,1961.
The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Annapurna Gupta(Accountant Member) allowed the appeal for statistical purposes, enabling the reassessment of the depreciation claim in light of the new legal framework.
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer (AO) to consider bank withdrawals while reassessing the unexplained cash deposits totaling Rs. 3.13 crore.
The two member bench comprising Siddhartha Nautiyal (Judicial Member) and Makarand V.Mahadeokar(Accountant Member) partly allowed the appeal of the assessee.
The Raipur Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the appeal, stating that belated returns filed under Section 139(4) satisfy the “1st proviso” to Section 201(1) of the Income Tax Act,1961.
The bench held that since the “1st proviso” to Section 201(1) of the Act requires the payee to have filed their return under Section 139, the belated returns filed under Section 139(4) by the payees in this case satisfied the condition. Therefore, the tribunal disagreed with the CIT(Appeals), who had denied the concession and rejected the firm’s claim for not being treated as an “assessee in default.”
A single member bench of Ravish Sood(Judicial Member) allowed the appeal filed by the assessee.
The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) vitiated the claim of depreciation by an Assessee on a Toll Road constructed by them under Build,Operate and Transfer ( BOT ) basis, claiming the inability to consider such toll Roads as Intangible Assets for the purpose of claiming depreciation
The Bench concluded that CIT(A) rightly denied the claim of depreciation purported by the Assessee while permitting the benefit of amortisation in light of the Concession Agreement between the Appellant and NHAI. In light of the findings made, ITAT disposed of both appeals affirming that the instant decision shall apply mutatis mutandis to both matters.
The Cuttack Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the Rs. 58 Lakh capital investment addition made by the assessing officer (AO) due to a discrepancy in the taxpayer’s name in records.
The Tribunal found no substantial evidence to prove the assessee’s capital contribution to Jai Bhavani Enterprises. Therefore, the tribunal deleted the addition of Rs. 58,00,000 made by the assessing officer, and the appeal of the assessee was allowed.
The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)ruled that the severance compensation of Rs. 15.5 lakhs received by the appellant-assessee was a capital receipt, not taxable under Section 17(3) of the Income Tax Act,1961,and deleted the addition made by the Assessing Officer (AO),emphasizing that the compensation was due to redundancy and unrelated to past services.
The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Makarand V.Mahadeokar(Accountant Member) ruled that the severance compensation of Rs. 15,50,905 was a capital receipt, not taxable under Section 17(3), and set aside the CIT(A)’s order, deleting the AO’s addition.
The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) set aside the Commissioner of Income Tax(Exemption)[CIT(E)]’s order, emphasizing that the applicability of Section 13 should only be examined during the income tax assessment phase and not at the registration stage under Section 12A of the Income Tax Act,1961.
The two member bench comprising Suchitra Kamble (Judicial Member) and Makarand V.Mahadeokar(Accountant Member) set aside the CIT(E)’s order and directed a fresh evaluation of the registration application, focusing solely on the charitable nature of the assessee’s objects without invoking Sections 13(1)(c) or 13(3) and ensuring the assessee had a reasonable opportunity to be heard.
The Cuttack Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that assessment under Section 147 of the Income Tax Act,1961 cannot be made without a substantive assessment.
The two member bench comprising George Mathan (Judicial Member) and Manish Agarwal (Accountant Member) consequently, dismissed the appeal of the revenue, and the protective additions made against the assessee were deleted.
The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the reassessment of the assessee, ruling that an assessment under section 147 of the Income Tax Act,1961 cannot be reopened based on mere change of opinion.
The two member bench comprising Madhumita Roy(Judicial Member) and Shamim Yahya(Accountant Member) allowed the appeal filed by the assessee.
In a significant ruling, the Income Tax Appellate Tribunal ( ITAT ) quashed the revision proceedings under Section 263 of the Income Tax Act initiated against the assessee at Vadodara, for Assessment Years 2010-11 and 2011-12, by placing reliance on a Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) decision.
This decision underscores the principle that if the very foundation of a revision is set aside by a higher authority, any connected proceedings, such as under Section 263 of the Income Tax Act, lose their validity.
The Income Tax Appellate Tribunal ( ITAT ) has ruled that the interest income from bank deposits is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961.
The ITAT set aside the order of the CIT(A) and ruled in favour of the appellant, allowing the claim for deduction under Section 80P.
The Income Tax Appellate Tribunal ( ITAT ) has quashed income tax additions based solely on third-party statements, as seen in the recent ruling in Olive Overseas Pvt. Ltd. vs. DCIT.
Tribunal quashed the income tax additions made for the assessment years in question.
In a recent ruling, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) remanded the matter with Rs. 5000 due to non-compliance with the notices by the assessee.
The ITAT bench, comprised of Keshav Dubey (Judicial Member) and Laxmi Prasad Sahu (Accountant Member), remanded the matter back to the AO for reconsideration, subject to the payment of Rs. 5,000 in costs. The bench directed the assessee to update its communication details and cooperate fully with the proceedings.
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) allowed Sun Pharma Laboratories Ltd. to claim an immediate revenue deduction of ₹89.39 lakh for expenses related to an Apple iPad care protection plan.
The two member bench comprising T.R.Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) dismissed the revenue’s appeal, upholding the CIT(A)’s decision to allow the deduction for the care protection plan.
The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam in a recent matter directed the Assessing Officer (AO) to delete additions made under Section 69A read with Section 115BBE of the Income Tax Act, 1961 in light of discovery that cash deposits in the Assessee’s bank accounts have been obtained through sale proceeds.
In light of the findings made, ITAT directed the AO to delete additions made under Section 69A read with Section 115BBE of the Income Tax Act, 1961 while observing that the Revenue Authorities had accepted the total turnover claimed by the Assessee, but failed to take cognizance of the turnover during the demonetization period, which has been reflected by means of the disputed cash deposits.
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the taxation of global income by confirming the assessee’s tax residency status as being in India.
The two member bench comprising Anikesh Banerjee(Judicial Member) and Prashant Maharishi(Accountant Member) upheld the lower authorities’ decision on taxing his dividend and capital gains income and dismissed the appeal.
In a recent decision, the Income Tax Appellate Tribunal (ITAT) condoned a 395-day delay in the filing of an appeal by the assessee/appellant, M/s Khoday Ehshwarsa and Sons. The case involved a Joint Development Agreement and the income declared for the assessment year 2020-21.
In result, the ITAT allowed the appeal for statistical purposes, condoned the delay, and directed the CIT(A) to adjudicate the matter afresh on its merits.
Recently in a ruling the Income Tax Appellate Tribunal (ITAT) Bangalore quashed an ₹84 lakh penalty imposed on a company for under-reporting income under the Income Tax Act 1961 (ITA), specifically related to delayed Provident Fund (PF) contributions and disallowed cess deductions. The Tribunal held that there was no misreporting of income and that the claims were made in good faith based on existing judicial precedents.
In its final ruling, the ITAT concluded that the penalty under Section 270A of the tax statute was not justified, as the company’s explanation for the PF and cess claims was bona fide. The Tribunal also noted that the company had voluntarily withdrawn the cess deduction before the assessment was completed, further demonstrating its good faith.
As a result, the ITAT quashed the ₹84 lakh penalty, offering significant relief to the company.
The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) deleted Rs. 15 Lakh addition alleged accommodation entries in the form of loans based on third-party information citing that the transaction was genuine.
The tribunal found that the AO failed to give proper consideration to the evidence provided by the assessee and did not investigate further. The tribunal noted that the loan was repaid before the search action and the loan’s legitimacy was further corroborated by the interest received and the deduction of TDS.
Therefore, the tribunal deleted the addition made by the AO, finding the transaction was genuine and allowing the assessee’s appeal.
The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the matter alleged cash deposit during the demonetization period back to the assessing officer ( AO ) to verify the agriculturalist claim, deposited before the demonetization period.
The tribunal criticized the assessee for failing to comply with notices but acknowledged the need for one more opportunity to present evidence supporting the source of the cash deposits. Therefore, the tribunal set aside the orders of both the AO and the CIT(A) and restored the matter to the AO.
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