ITAT Bangalore Judgments — January 2015

The Tribunal held that penalty under Section 271(1)(c) cannot be levied on income declared in the return of income, even if the disclosure was prompted by a survey. Since the returned income was accepted by the Assessing Officer, the penalty was unjustified.

The Tribunal held that the assessment order was not erroneous and prejudicial to the revenue's interest. It relied on High Court decisions stating that Section 80P(4) does not apply to co-operative societies not exclusively carrying on banking business and that interest income from investments is attributable to the business of providing credit facilities.

The Tribunal held that the amounts diverted to Shri J.Bapuji were not taxable as the assessee's turnover, following a co-ordinate bench decision. Regarding security deposit refunds, the Tribunal found evidence that these were indeed refunds and not contract receipts for the relevant year.

The Tribunal held that the AO's disallowance of marketing service charges based on proportionate revenue increase was unsustainable. The matter was remanded to the AO for de novo consideration of the genuineness and reasonableness of the expenditure. The Tribunal upheld the CIT(A)'s decision regarding tele-communication expenses and directed the AO to grant Section 10A deduction in accordance with law.

The Tribunal admitted additional evidence in the form of actuarial valuation reports and remanded the issue of provisions for employee benefits to the Assessing Officer for de novo consideration. The Tribunal found it unclear if the AO or CIT(A) had verified these provisions as ascertained or unascertained liabilities.

The Tribunal held that the Revenue was at fault for initially refusing credit for TDS certificates that had valid exemptions or waivers. Therefore, the assessee was not responsible for the delay in obtaining credit for a significant portion of the TDS, and interest under Section 244A could not be denied for that period.

The Tribunal found that the addition of opening balances as unexplained credits was questionable and granted the assessee a second opportunity to present evidence for the sundry creditors.

The Tribunal held that a further disallowance under section 40(a)(ia) was uncalled for as the correct figure was already disallowed by the assessee. It also held that the assessee is entitled to deduction under section 10A on enhanced profits consequent to disallowances under section 40(a)(ia).

The Tribunal condoned the delay of 96 days, finding the assessee's explanation reasonable and the delay not inordinate. The appeal was restored to the CIT(A) for adjudication on merits.

The Tribunal held that the assessee's classification of income from layout formation as capital gains was a conscious decision, and they failed to rebut the presumption of concealment. However, the penalty should be levied only on the disputed income from layout formation, not the entire assessed income.

The Tribunal held that profits on sale of land are eligible for deduction under Section 80IB(10) and that the disallowance made by the AO under Section 14A, which was accepted by the assessee, should be adopted for computing book profits under Section 115JB.

The Tribunal held that the reassessment proceedings were invalid because the mandatory notice under Section 148 of the Income Tax Act was not properly served on the assessee. Therefore, the order of reassessment was annulled.

The Tribunal noted that the issue of comparable companies and turnover filter was similar to previous cases. It also considered the proviso to Section 92C(4) which disallows deductions under Section 10A on income enhanced by transfer pricing adjustments. The Tribunal directed the AO to decide the claim in light of the legal position regarding set-off of losses.

The Tribunal held that contemporaneous data can be used for transfer pricing audit even if not available to the assessee at the time of study. It also held that the assessee failed to quantify its claim for risk adjustment. The issue of reimbursement of expenses was remitted to the Assessing Officer for detailed verification.

The Tribunal found that the DIT(Exemptions) rejected the application due to non-submission of documents. As the assessee claimed to have the necessary documents now, the issue was remanded for fresh consideration.

The Tribunal held that payments made directly into the bank account of the payee, even if in cash initially, fulfill the purpose of Section 40A(3) by ensuring traceability and preventing the use of unaccounted money. The Tribunal followed its co-ordinate bench decision and the Supreme Court's ruling in Attar Singh Gurumukh Singh.

The Tribunal held that the failure of the Assessing Officer to furnish the reasons for reopening the assessment, despite the assessee's request, renders the reassessment order a nullity. Therefore, the order of the CIT(A) annulling the reassessment was upheld.

The Tribunal held that since the order under Section 263 was quashed, the subsequent proceedings based on it could not survive. Therefore, the CIT(Appeals) was correct in annulling the assessment order.

The Tribunal held that the assessee fulfilled the conditions for exemption under Section 54B and that the claim made in the return was bona fide. Therefore, the levy of penalty under Section 271(1)(c) was not sustainable.

The Tribunal held that since the additions, which formed the basis for the penalty, were deleted by a co-ordinate bench, the penalty order had no basis. Therefore, the penalty order was set aside.

The Tribunal partly allowed the appeal, directing the TPO to re-evaluate the selection of comparables and re-work the ALP. It also directed the exclusion of certain foreign travel and telecommunication expenses from the total turnover for Section 10A deduction and remanded the issue of lease rental expenditure for examination.