ITAT Ahmedabad Judgments — June 2025

The Tribunal held that the disallowance of delayed ESIC & PF payments was justified. However, the disallowance of depreciation on goodwill was upheld. Claims related to sales tax subsidy, depreciation on intangible assets, product registration expenses, and benchmarking of loans were decided in favor of the assessee. The disallowance under Section 80IA was also allowed, and the issue of corporate guarantee commission was partly allowed.

The Tribunal referred to Section 275(1A) of the Act, which governs the passing of penalty orders based on revised assessment orders. The Tribunal directed the Assessing Officer to pass an order giving effect to the decision in the quantum appeal.

The Tribunal found merit in the assessee's contention, affirming that the deduction under Section 80P(2)(d) was, in fact, claimed in the return and acknowledgement. It concluded that the denial was incorrect as it stemmed from a technical glitch in the return's breakup details, and therefore directed the CPC to allow the deduction for both assessment years.

The Tribunal dismissed the assessee's ground regarding the AO's failure to record dissatisfaction for invoking Rule 8D, noting that sufficient explanation was sought. It found the assessee's suo motu disallowance of Rs. 11,571/- under Section 14A to be inappropriate and directed the Assessing Officer to make a disallowance of Rs. 30,000/- under Section 14A.

The Tribunal dismissed the assessee's appeals regarding delayed ESIC/PF payments. However, it allowed the assessee's appeal for depreciation on goodwill for AY 2012-13 and for the sales tax subsidy being treated as capital receipts. For the Revenue's appeals, the Tribunal dismissed all grounds except for the corporate guarantee commission, which was partly allowed by determining an Arm's Length Price of 0.50%.

The Tribunal condoned the delay of 142 days, finding the assessee's explanation satisfactory. It set aside the ex-parte orders and remanded the matter back to the CIT(E) for a fresh hearing, directing that the assessee be given one more opportunity to furnish necessary details for registration under Section 12AB and 80G(5) of the Act. A cost of Rs. 5,000/- was imposed on the assessee.

The Tribunal noted that the Revenue could not dispute the non-service of hearing notices. Therefore, in the interest of natural justice, the ex-parte order was set aside.

The Tribunal partly allowed the appeal. It accepted Rs.11 lakhs of the cash deposits as explained agricultural income, considering past assessments. However, the Rs.20 lakhs claimed as an unsecured loan was upheld as unexplained due to the assessee's failure to establish the identity, genuineness, and creditworthiness of the transaction.

The Tribunal condoned the delay in filing the appeals, finding the explanation satisfactory. It set aside the ex-parte orders and remanded the matter back to the CIT(E) for a fresh hearing, directing the CIT(E) to provide another opportunity to the assessee for registration under Section 12AB and 80G(5), subject to the assessee paying a cost of Rs. 5,000/-.

The Tribunal held that delayed payments to ESIC and PF are indeed disallowable if not paid within the due date. Depreciation on goodwill arising from amalgamation was disallowed as it was considered self-generated and not a capital asset. Sales tax subsidies were held to be capital receipts. The disallowance of product registration expenses and the benchmarking of loans were found to be in favor of the assessee. The disallowance under Section 80IA was allowed, and the corporate guarantee commission was treated as an international transaction, with the ALP determined at 0.5%.

The ITAT, acknowledging the assessee's current possession of medical records, decided to restore the matter to the CIT(A). The CIT(A) is directed to reconsider the application for condonation of delay and, if condoned, to adjudicate the appeal after providing the assessee a fresh opportunity of hearing.

The Tribunal dismissed the assessee's appeals on delayed ESIC/PF payments. The assessee's appeal on depreciation of goodwill was allowed, treating it as a depreciable asset. Sales tax subsidy and product registration expenses were held to be capital receipts and revenue expenses, respectively, leading to dismissal of Revenue's appeals on these points. Loans to Associated Enterprises were benchmarked as per ALP, dismissing Revenue's appeal. The Section 80IA deduction was upheld for the assessee. Corporate guarantee commission was deemed an international transaction requiring benchmarking, with a 0.5% ALP rate, thus partly allowing the Revenue's appeal on this issue.

The Tribunal condoned the delay in filing the appeals. It held that Section 40(a)(ia) applies only to income from 'business & profession' and cannot be invoked to disallow interest expense claimed against rental income. Consequently, the disallowance in the quantum appeal was deleted, and as the underlying addition was removed, the related penalty under Section 271(1)(c) was also deleted.

The Income Tax Appellate Tribunal (ITAT) held that the requirement of filing Form 10DA is directory and not mandatory. Relying on various judicial precedents, the Tribunal concluded that a mere delay in filing the form should not lead to the denial of the assessee's substantive right to claim the deduction under Section 80JJAA. Therefore, the appeal was allowed, and the CPC/AO was directed to allow the deduction.

The Tribunal found that the assessee had indeed claimed the deduction u/s 80P(2)(d) and the non-reflection in the breakup was due to a technical glitch, not a failure to claim. Therefore, the denial of deduction was incorrect. The CPC was directed to allow the assessee's claim for deduction u/s 80P(2)(d) for both assessment years.

The Tribunal condoned the delay in filing the appeal. Given the ex-parte nature of the CIT(A)'s order, the matter was set aside to the CIT(A) for a decision on merits. The assessee was directed to pay Rs. 5,000/- as costs for securing a proper opportunity of hearing.

The Tribunal condoned the delay in filing the appeals, finding sufficient cause. It held that the disallowance of interest expenses under Section 40(a)(ia) was unjustified as the expense was claimed against rental income, not business income, and thus directed deletion of the disallowance. Consequently, the penalty levied for concealment was also deleted.

The Tribunal condoned the delay of 81 days in filing the appeal, imposed a cost of Rs. 5,000/- on the assessee, and directed the Ld. CIT(E) to grant one more opportunity for hearing regarding registration under Section 12AB.

The Tribunal held that the assessee had exercised the option for the lower tax rate as evident from the ITR-6 and computation of income. The denial of the benefit was due to an inadvertent error in not filing Form 10-IC on time.

The Tribunal condoned the delay in filing the appeal and set aside the CIT(E)'s ex-parte order, restoring the matter for fresh adjudication. The assessee was given an opportunity to present its case, subject to payment of costs.

The Tribunal noted that no prejudice would be caused to the revenue if the Assessing Officer were allowed to examine the details and explanations. Therefore, the matter was remanded to the Assessing Officer for a de novo assessment.

The Tribunal condoned the delay in filing appeals, finding the non-compliance bona fide and not willful. It set aside the rejection orders, stating that beneficial provisions like Section 12AB and 80G cannot be denied solely on procedural lapses when genuineness is not doubted, and remanded the matters to the CIT(Exemption) for fresh adjudication with a cost of Rs. 5,000/- imposed on the assessee.

The Tribunal condoned the delay, finding sufficient cause. It set aside the CIT(Exemption)'s orders and remanded the matters for fresh adjudication. The CIT(Exemption) was directed to consider the existing valid registration, assess the maintainability of the new applications, re-examine the Section 80G(5)(iii) application, and provide a proper hearing. The assessee was ordered to pay Rs. 5,000 as costs for procedural indifference.

The Tribunal held that the assessee's explanation for the tripling of agricultural income and reduction in expenses was not reasonable or logical, agreeing with the lower authorities.

The Tribunal affirmed the CIT(A)'s decision, holding that if the Superannuation Fund is found to be approved and the payment was made before the due date of filing the return under Section 139(1), the disallowance should be deleted. The appeal was allowed for statistical purposes, remanding the matter to the AO for verification of the fund's approval.

The Tribunal upheld the CIT(A)'s approach of estimating a profit element on disputed purchases, consistent with Gujarat High Court precedents. However, it remanded the matter to the AO for a limited verification to ascertain if any cash trail exists (payments routed back from the supplier to the assessee) and to investigate an outstanding unpaid balance for the purchases. If a cash trail is established, disallowance should be made accordingly; otherwise, the 5% profit estimation will apply.

The Tribunal held that no prejudice would be caused to the revenue if the Assessing Officer is allowed to re-examine the details and explanations. Therefore, the matter was remanded to the Assessing Officer for de-novo assessment.

The Tribunal condoned the delay, finding the reasons for non-compliance to be bonafide and not wilful. It held that rejection solely on procedural lapses violates natural justice when the trust's genuineness is not doubted. The matter was restored to the CIT for fresh adjudication.

The Tribunal deleted the demand related to the property transactions, ruling that Section 194IA was not applicable as individual payments to co-owners were below the threshold, and stamp duty value was not a consideration for transactions prior to the relevant amendment dates. For audit fees, while the assessee was rightly held liable for non-deduction under Section 201(1), the interest calculation under Section 201(1A) was remanded to the AO for re-verification, contingent on the payee having already paid the tax.

The Tribunal remanded the matter to the Assessing Officer for a de-novo assessment, directing the assessee to comply with all notices and submit relevant documents without seeking adjournments. A cost of Rs. 1,000 was imposed on the assessee to be deposited into the "Prime Minister Relief Fund." The appeal was allowed for statistical purposes.

The ITAT upheld the CIT(A)'s deletion of material and plot development expenses, finding that supplementary development agreements justified the assessee's incurring of these costs and that the expenses were duly verified. However, the ITAT reversed the CIT(A)'s decision regarding commission expenses, reinstating the AO's disallowance, as the assessee had already sold the land to RNTC and was not justified in claiming commission for individual plot sales or a 'discount' which was not part of the agreement.

The Tribunal held that in the nature of the assessee's business (infrastructure construction), it is difficult to maintain a day-to-day stock register. Since the assessee furnished audited books, receipts were through banking channels, and no other defects were found by the AO in the books, sales, or expenditure, the rejection of books solely for non-maintenance of stock register was not justified. The Tribunal, relying on precedents, deleted the impugned addition.

The Income Tax Appellate Tribunal dismissed the appeal, noting that the assessee's counsel failed to adequately explain how the donations made to other trusts related to charitable purposes and did not provide any supporting documentation or a paper book. Consequently, the Tribunal found the grounds raised by the assessee to be without merit.

The CIT(A) allowed the assessee's appeal, holding that the revised Form 10, rectifying a typographical error, should be considered for accumulation under Section 11(2) and 11(5). The ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal, affirming that exemption cannot be denied due to wrong details in the original audit report if verifiable.

The CIT(A) upheld the rejection of books of account but reduced the GP rate to 5% for AY 2018-19 and 6% for AY 2020-21 and 2021-22, considering past performance and judicial precedents. The Tribunal, reviewing the orders and submissions, found the CIT(A)'s decision to be well-reasoned, upholding the reduced GP rates as fair and industry-consistent, and noting that complete disallowance of purchases is not sustainable when sales are accepted.

The Tribunal held that the AO's application of a 12.5% GP rate was unjustified and lacked business reality. The Commissioner of Income Tax (Appeals) had correctly granted partial relief by restricting the GP rate to 5% for AY 2018-19 and 6% for AY 2020-21 and 2021-22, which were found to be in line with industry practices and judicial precedents.

The Tribunal held that while the rejection of books of account under section 145(3) was justified due to the failure to conclusively prove supplier identity, a complete disallowance of purchases is not sustainable when corresponding sales are accepted. The Tribunal upheld the CIT(A)'s decision to restrict the addition based on a fair and industry-consistent GP rate (5% for AY 2018-19 and 6% for AY 2020-21 and 2021-22), finding the AO's 12.5% rate to be unjustified.

The Tribunal noted that the assessee had failed to appear before the Ld. CIT(A) and also failed to provide necessary details or explanations. However, considering the interest of justice and the quantum of additions, the matter was restored to the Ld. CIT(A) for a fresh consideration, allowing the assessee to present supporting evidence.

The Tribunal held that the denial of registration under section 80G(5) was incorrect. It reasoned that Section 13(1)(b) of the Act, which disallows exemption for trusts primarily for a particular religious community, is applicable only at the time of granting exemption (under Section 11), not at the time of granting registration (under Section 12A). The Tribunal noted that the trust's objects were largely charitable for the general public, despite having some religious undertones.

The Tribunal held that the definition of turnover under Section 145A of the Act cannot be used to determine the tax rate under the Finance Act, 2018. It set aside the CIT(A)'s order and directed the Assessing Officer to recompute tax at 25%.

The Tribunal held that the CUP method was inapplicable due to fundamental differences between the transactions that could not be reasonably adjusted. Consequently, the TNMM method was deemed more appropriate. The transfer pricing adjustment was deleted, and the matter of book profit and MAT credit was remanded.