ITAT Bangalore Judgments — February 2015

The Tribunal held that the assessee failed to discharge her obligation to explain the credits satisfactorily, especially by not providing the creditor's address or confirmation, and by not appearing in response to the AO's summons. Therefore, the addition made under Section 68 was justified.

The Tribunal held that the property was located in an area that was not notified as an 'urban area' for the purposes of Section 54G at the time of the transfer. Subsequent notifications declaring the area as urban were not retrospective.

The Tribunal held that the CIT(A)'s estimation of ALV, though favorable to the Revenue, was not challenged by the assessee and thus confirmed. Regarding interest on borrowings, the Tribunal found no material to dislodge the CIT(A)'s findings that loans were taken for property acquisition, dismissing the Revenue's ground.

The Tribunal held that the notice issued for penalty proceedings was invalid because it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. Following the Karnataka High Court's decision, the penalty proceedings were deemed invalid.

The Tribunal held that the CIT(Appeals) erred in granting relief without calling for a remand report from the Assessing Officer, violating principles of natural justice. The matter was restored to the Assessing Officer for fresh adjudication.

The Tribunal noted that the quantum additions were set aside for re-adjudication. Therefore, there was no determined amount on which tax evasion could be established for levying penalty. The Tribunal set aside the impugned order.

The Tribunal held that the delay of 515 days was inordinate and not supported by a reasonable cause beyond the assessee's control. The Tribunal found the reasons provided to be self-serving and not established, indicating negligence on the part of the assessee.

The Tribunal held that the AO was precluded from questioning the correctness of the previous Tribunal order. The AO should have verified the indexed cost of acquisition based on the fair market value as of April 1, 1981, and not the book value.

The Tribunal followed a previous decision holding that the deduction under Section 36(1)(viia) cannot exceed the amount debited to the profit and loss account as provision. However, it also considered that the provision need not be confined only to rural advances. The Tribunal further held that Section 115JB is not applicable to banking companies.

The Tribunal held that the assessee is not entitled to carry forward and set off the loss of Rs. 5,23,18,280 incurred in AY 2004-05 against the income of AY 2006-07. The reasoning is based on the strict interpretation of Section 80 of the Act, which mandates that for a loss to be carried forward and set off, the return of loss must be filed in accordance with Section 139(3), meaning within the due date prescribed under Section 139(1). The Tribunal noted that the assessee's return for AY 2004-05 was admittedly filed beyond the due date. While acknowledging the genuine cause for the delay in filing the return of loss, the Tribunal stated that relief cannot be granted based on equitable considerations as 'equity and tax laws are strangers to each other'. The Tribunal also distinguished the reliance placed by the assessee on the V. S. Venkataiah case, stating it was not rendered in the context of Section 80 of the Act. Therefore, the revenue authorities were justified in denying the claim. The appeal was dismissed.

The Tribunal held that the assessee's plea of making a bona fide estimate of employee salaries by valuing perquisites in the form of residential accommodation as if its employees were Central Government employees should be accepted. The Tribunal noted that the Revenue only brought to the assessee's notice that it was not a Central Government entity during proceedings initiated in 2013, which was after the assessment year under appeal. Citing several decisions, including CIT vs. Nicholas Piramal India Ltd. and others, the Tribunal reiterated that an employer's obligation under Section 192 is to make a bona fide estimate of the salary. In the facts and circumstances, the Tribunal found that the assessee had discharged this obligation properly. Consequently, the proceedings under Sections 201(1) and 201(1A) were quashed. The appeal of the assessee was allowed.

The Tribunal accepted the assessee's request to withdraw the appeal. The appeal was dismissed as withdrawn.

The Tribunal admitted the additional ground of appeal regarding payments made before March 31st and non-claim in subsequent years. The issue was remanded to the AO for verification of these facts.

The Tribunal held that the disallowance under Rule 8D(2)(ii) was unsustainable as the assessee's own funds were sufficient for the investments. The disallowance under Rule 8D(2)(iii) was remanded for fresh consideration by the AO.

The tribunal accepted the assessee's request to withdraw the appeal. The assessee stated that they did not wish to contest the final assessment order after an internal review.

The Tribunal followed a previous decision holding that the deduction under Section 36(1)(viia) cannot exceed the amount debited to the profit and loss account as provision. However, it also considered that the provision need not be confined only to rural advances. The Tribunal further held that Section 115JB is not applicable to banking companies.

The Tribunal observed that the assessee did not appear for the hearing even after proper service of notice. Therefore, it was concluded that the assessee was not interested in pursuing the appeal.

The Tribunal directed the TPO to adopt the TNMM method for determining the ALP, finding it inconsistent for the revenue to adopt CUP for the current year while using TNMM for earlier and subsequent years.

The Tribunal held that since the Hon'ble High Court has already decided that the capital gains are not chargeable to tax, the issue of the year of taxability has become academic and infructuous.

The Tribunal held that the addition under Section 2(22)(e) cannot be made in the hands of the assessee firm. This was based on the jurisdictional High Court's decision in the assessee's own case for subsequent years, which clarified that the loan must be advanced to a registered shareholder.

The Tribunal held that clauses (e) and (f) of Section 80-IB(10) are prospective and not applicable to agreements entered into before their insertion. However, proportionate disallowance is to be made for violations of clause (c) and for transactions after the insertion of clauses (e) and (f). The assessee is eligible for deduction on additional income received as on-money.

The Tribunal held that filing the return within the due date is mandatory for claiming deduction under Section 80-IB(10), confirming the disallowance. However, it deleted the disallowance under Section 14A as the assessee had no exempt income.

The Tribunal held that the assessee had sufficient interest-free funds to cover its investments, and therefore, no disallowance under Rule 8D(2)(ii) was warranted. It further held that the disallowance under Rule 8D(2)(iii) was also not justified as the AO had not recorded proper satisfaction for invoking it, especially when incremental investments were negligible and the dividend income was from long-held shares.

The Tribunal accepted the assessee's submission that the appeal had become infructuous. This was because subsequent orders and appeals related to the same issue had led to the matter being set aside to the AO for fresh consideration.

The Tribunal held that interest earned on deposits by a cooperative society engaged in providing credit facilities to its members is eligible for deduction under Section 80P(2)(a)(i). This is because such deposits fall under the definition of 'banking' as per the Banking Regulation Act, 1949.

The Tribunal held that while the entire deposits could not be presumed to be the assessee's income, credit should be given for payments made to textile mills from these deposits. The Tribunal directed the AO to allow Rs. 11,50,000 as business expenditure and treat the balance as undisclosed income.

The Tribunal held that depreciation is allowable for computing income of a charitable trust, even if the asset's cost was previously claimed as application of income. This is because depreciation is a deduction to preserve the corpus and compute income in a normal commercial manner.

The Tribunal held that the substratum for the addition disappeared due to a previous ITAT order for AY 2009-10, which allowed a similar claim. The Tribunal found no reason to interfere with the CIT(A)'s order.

The Tribunal upheld the CIT(A)'s decision, following jurisdictional High Court rulings. It held that reimbursements excluded from export turnover should also be excluded from total turnover, and that losses from non-10A units cannot be set off against profits of 10A units.

The Tribunal held that the AO's disallowance was unsustainable as he had not established that the expenses were not genuine or could not be verified. The CIT(A)'s deletion of the addition was confirmed.

The Tribunal dismissed grounds related to the general transfer pricing adjustment, upholding the inclusion of a specific comparable company. It directed the exclusion of certain expenses from both export and total turnover for Section 10A deduction and upheld the charging of interest under Sections 234B, 234C, and 234D.

The Tribunal held that the pendency of a High Court appeal does not prevent it from following established judicial precedents. It affirmed that excess expenditure incurred for charitable purposes in earlier years can be adjusted against the income of subsequent years, and such adjustment constitutes application of income for charitable purposes in the later year.

The Tribunal held that registration under Section 12AA can only be cancelled if the trust's activities are not genuine or not in accordance with its objects. The amendment to Section 2(15) is not a ground for cancellation, although it may affect the eligibility for exemption.

The Tribunal held that registration under Section 12AA can only be cancelled if the trust's activities are not genuine or not in accordance with its objects. The amendment to Section 2(15) is not a ground for cancellation, although it may affect the eligibility for exemption.

The Tribunal held that interest earned on deposits by a cooperative society engaged in providing credit facilities to its members is eligible for deduction under Section 80P(2)(a)(i). This is because such deposits fall under the definition of 'banking' as per the Banking Regulation Act, 1949.

The Tribunal held that clauses (e) and (f) of Section 80-IB(10) are prospective and not applicable to agreements entered into before their insertion. However, proportionate disallowance is to be made for violations of clause (c) and for transactions after the insertion of clauses (e) and (f). The assessee is eligible for deduction on additional income received as on-money.

The Tribunal noted that the assessment was completed without any additions after the CIT's directions. Therefore, the appeal filed by the assessee was rendered infructuous.

The Tribunal held that the assessee's failure to furnish complete details before the AO and the AO's inability to get full replies from shareholders made it difficult to conclude on the genuineness of the transactions. Therefore, the matter was remanded back to the AO for fresh consideration.

The Tribunal held that Section 80P(4) applies only to cooperative banks, not credit cooperative societies. Therefore, the assessee, being a cooperative society and not a cooperative bank, is eligible for deduction under Section 80P(2)(a)(i).

The Tribunal upheld the CIT(Appeals)'s decision, agreeing that the expenditure incurred for acquiring audio rights (master plates) is revenue in nature. The Tribunal viewed these rights as raw material for the assessee's business of manufacturing audio cassettes.

The Tribunal held that Section 40A(3) is not applicable as each individual payment did not exceed Rs. 20,000 and was for different trucks and drivers. Therefore, the payments could not be aggregated for the purpose of disallowance.

The Tribunal held that the claim for deduction under Section 80HHC is a legal claim that can be raised at any stage, especially when part of the income is now treated as business income due to appellate orders. Therefore, the Assessing Officer should examine the allowability of the claim.

The Tribunal held that the oral gifts (Hiba) of two properties made by the assessee to her daughters were valid under Mohammedan Law, divesting her of ownership before the sale. Therefore, the assessee did not own more than one residential house other than the new asset.

The Tribunal held that the beneficiaries' income had been offered to tax by them, and the trusts were not liable to be taxed again. The AO's view that the beneficiaries' shares were indeterminate was rejected.

The Tribunal held that the debt was effectively written off in the correct assessment year because the provision was made in an earlier year without claiming it as a deduction, and the subsequent approval for write-off related back to the balance sheet date. Therefore, the deduction for bad debts was allowable.

The Tribunal dismissed the Revenue's appeal due to low tax effect. The tax amount was below the monetary limit prescribed by the CBDT for filing appeals.

The Tribunal held that interest accrued on NPAs should not be taxed on accrual basis, following High Court and Tribunal precedents. It also upheld the CIT(A)'s decision regarding the disallowance for non-deduction of TDS.

The Tribunal held that interest accrued on NPAs should not be taxed on an accrual basis for co-operative banks, following High Court and Tribunal precedents. It also confirmed that Section 43D of the IT Act is applicable to co-operative banks.

The Tribunal held that both the Assessing Officer and CIT(A) did not examine the issue of deemed dividend on merits. The Tribunal found that the applicability of Section 2(22)(e) was not clearly established and that the additional evidence submitted by the assessee should have been admitted. Therefore, the matter was remanded.

The tribunal held that expenses excluded from export turnover should also be excluded from total turnover for Section 10A calculation, following the Karnataka High Court. It also upheld the CIT(A)'s view that broadband subscription is not a technical service requiring TDS and that repair charges were revenue in nature.