ITAT Bangalore Judgments — June 2015

The Tribunal held that expenditure deducted from export turnover must also be deducted from total turnover for Section 10A computation, following the jurisdictional High Court. It also allowed set-off of unabsorbed depreciation. For transfer pricing, certain comparable companies were excluded based on functional comparability and previous year's treatment.

The Tribunal held that income forming part of the business of an eligible undertaking is eligible for deduction under Section 10A/10B without further exclusion. The issue of depreciation was remanded to the CIT(A) for consequential effect.

The Tribunal held that income forming part of the business of an eligible undertaking is eligible for deduction under Section 10A/10B without further exclusion. The issue of depreciation was remanded to the CIT(A) for consequential effect.

The Tribunal held that certain companies used by the TPO as comparables were not appropriate due to reasons like high turnover, functional dissimilarity, and related party transactions exceeding a certain threshold. It also directed the exclusion of certain expenses from both export and total turnover for Section 10A computation.

The Tribunal upheld the deletion of the gift addition of Rs. 19,15,000/- due to banking transactions and confirmation letters. However, the addition of Rs. 10,14,500/- for capital investment was set aside and remitted back to the AO for fresh consideration due to contradictory findings.

The Tribunal held that the unserved notices do not automatically prove non-existence of parties, and the CIT(A) had considered VAT papers and cheque payments. The Tribunal also noted that confirmation letters received by the AO after assessment completion were relied upon by the CIT(A) for deleting other disallowances.

The Tribunal held that if the advances were genuinely received in earlier assessment years and represented an opening balance for the relevant year, disallowance in the current year would be incorrect. The AO was directed to verify if the creditors in earlier years were the same as the closing balance in the relevant year.

The Tribunal noted that the CIT(A) had followed his own previous order which was remitted back to the AO by the Tribunal. Considering the change in investment values during the year, the Tribunal decided to remit the issue back to the AO for fresh examination.

The Tribunal held that a co-operative society not registered with the RBI and not exclusively carrying on banking business is eligible for deduction under Section 80P(2)(a)(i). The Explanation to Section 80P(4) does not apply to such societies.

The Tribunal held that the assessee society was not a cooperative bank carrying on exclusively banking business and did not possess a banking license. Therefore, Section 80P(4) was not applicable, and the assessee was entitled to the deduction under Section 80P(2)(a)(i).

The Tribunal held that the assessee, being a co-operative society not registered with the RBI and not exclusively carrying on banking business, is eligible for deduction under Section 80P(2)(a)(i). The Explanation to Section 80P(4) does not apply to such societies.

The Tribunal held that the assessee, being a co-operative society not registered with the RBI and not exclusively carrying on banking business, is eligible for the deduction under Section 80P(2)(a)(i). The Explanation to Section 80P(4) does not apply in this case.

The Tribunal held that the provision for bad and doubtful debts cannot be added back to book profits under Section 115J, following Supreme Court and jurisdictional High Court decisions. It also upheld the CIT(A)'s directions regarding interest under Section 244A and Section 234D.

The Tribunal held that income forming part of the business of an eligible undertaking is eligible for deduction under Section 10A/10B without further exclusion. The issue of depreciation was remanded to the CIT(A) for consequential effect.

The Tribunal held that the adjustment made by the AO under Section 200A by applying a 20% TDS rate without considering the beneficial provisions of the Double Taxation Avoidance Agreement (DTAA) was beyond the scope of Section 200A. Such an issue requires detailed reasoning and is not an arithmetical error or an incorrect claim apparent from the statement.

The Tribunal held that the arm's length price (ALP) for international loans should be determined based on internationally recognized rates like LIBOR, not domestic corporate bonds. The interest charged by the assessee was found to be higher than the applicable LIBOR rates.

The Tribunal held that the CIT(A) had made a clear finding that the unexplained investment was spread over three years, justifying the invocation of Section 150(1) for re-assessment. The additions made on merits were also upheld due to lack of contrary evidence from the assessee.

The Tribunal held that the notice issued under Section 274 was bad in law as it failed to specify whether the penalty proceedings were for concealment of income or furnishing inaccurate particulars. Consequently, the penalty orders were quashed.

The Tribunal held that the assessee's claim for rectification under Section 154 was not maintainable as the issues raised were debatable and not a mistake apparent from the record. The remedy for the assessee was to appeal against the orders.

The Tribunal held that interest earned on surplus funds deposited in banks is attributable to the business of providing credit facilities and is eligible for deduction under Section 80P(2)(a)(i). The judgment in Totagars Co-operative Sale Society Ltd. was distinguished.

The Tribunal upheld the DRP's decision, agreeing that turnover is a material factor in determining comparability. Companies with turnovers significantly higher than the assessee's should be excluded to ensure accurate transfer pricing adjustments.

The Tribunal held that Section 194A(3)(v) exempts co-operative societies from deducting TDS on interest paid to their members, regardless of the deposit type. This exemption applies even to co-operative banks.

The CIT(Appeals) cancelled the penalty, finding reasonable cause for the belated return and that the disallowances were technical or ad-hoc without concealment. The Tribunal upheld this decision, agreeing that claiming a disallowed deduction does not automatically imply concealment.

The Tribunal held that the assessee's method of valuing old stock at a lower rate was based on a consistent and bonafide practice, especially considering it was accepted in previous assessment years. Therefore, the addition made by the AO did not automatically imply concealment or furnishing of inaccurate particulars.

The Tribunal held that Section 80P(4) applies only to cooperative banks, not credit co-operative societies. Therefore, the assessee was eligible for the deduction under Section 80P(2)(a)(i). The issue of disallowance under Section 40(a)(ia) was not addressed in the provided text.

The Tribunal held that Section 40(a)(i) cannot be invoked to disallow depreciation on capitalized expenditure, even if TDS was not deducted. The remedy for non-deduction of TDS lies under Sections 201 and 201A of the Act.

The Tribunal noted the consistent non-appearance of the assessee despite repeated opportunities. Considering the assessee's lack of interest in pursuing the appeals, the Tribunal decided to dismiss them.

The Tribunal upheld the CIT(A)'s decision to allow bata expenses and loss on consignment, and also the disallowance of higher depreciation on motor lorries. The Tribunal held that replacement of tyres and pallets are revenue expenditure.

The Tribunal held that if the interest income of Rs. 19,06,609/- on standard assets represents loans given to members, it is eligible for deduction under Section 80P as income from providing credit facilities. The society is not a co-operative bank and thus not excluded from the benefit of Section 80P.

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 the deduction under Section 80P(2)(a)(i).

The Tribunal held that size and turnover are relevant criteria for selecting comparables and dismissed the Revenue's grounds related to these filters. It also directed the TPO to consider including two specific companies as comparables, if found correct, based on export revenue filters.

The Tribunal found that the assessee was not granted sufficient opportunity to substantiate its claims, as the assessment order was passed on the same day the details were submitted. The Tribunal also noted that the AO took a technical view during the DRP proceedings, refusing to consider the evidence.

The Tribunal held that depreciation is allowable on capital assets for charitable institutions to compute income and preserve the corpus, distinguishing it from double deduction. It followed the jurisdictional High Court's view over contrary decisions.

The Tribunal held that size and turnover are relevant criteria for selecting comparables and dismissed the Revenue's grounds related to these filters. It also directed the TPO to consider including two specific companies as comparables, if found correct, based on export revenue filters.

The Tribunal held that the issue of whether interest expenditure could be allowed under Section 57(iii) for earning interest income requires verification of the purpose for which the loans were borrowed. The appeal by the Revenue regarding the set-off of losses was dismissed.

The Tribunal held that the notice issued under Section 274 read with Section 271(1)(c) was invalid because it did not clearly specify the default of the assessee. Following the jurisdictional High Court's decision, the Tribunal found that a vague notice offends principles of natural justice and renders the subsequent penalty order unsustainable.

The Tribunal held that depreciation is allowable on capital assets even if their cost was treated as application of income, as it is necessary for computing income in a normal commercial manner and does not amount to double deduction. The Tribunal followed the jurisdictional High Court's decision, distinguishing contrary rulings.

The Tribunal upheld the CIT(A)'s decision to delete interest under Section 234B. It followed its own prior ruling for the assessment year 2010-11, which considered various High Court decisions and the principle of interpreting tax laws in favour of the assessee.

The Tribunal set aside the determination of annual letting value for the Hyderabad property to the AO for re-computation, considering the property tax records. The claim for vacancy allowance was rejected as the property was never let out. The issue of cost of improvement was also set aside to the AO for examination, allowing the assessee's ground for statistical purposes.

The Tribunal held that the notice issued under Section 274 read with Section 271(1)(c) was invalid due to vagueness. Following the jurisdictional High Court's decision, it was found that the AO did not specify the limb for which the penalty was levied, rendering the notice and subsequent penalty order unsustainable.

The Tribunal held that the assessee is a cooperative society and not a 'cooperative bank' as defined under the relevant acts, and therefore, it is entitled to the deduction under Section 80P(2)(a)(i). The cross-objection by the assessee was rendered infructuous.

The Tribunal directed the exclusion of certain comparable companies (Infosys Technologies Ltd., Satyam Computer Services Ltd., and Allsec Technologies Ltd.) from the transfer pricing analysis. It also allowed working capital adjustment and directed the deletion of disallowances for club expenses and employee provident fund liability.

The Tribunal upheld the CIT(Appeals)'s decision, allowing the deduction under Section 10A. It was held that netting off export and import payments was permissible, especially when supported by RBI instructions and judicial precedents, and that disallowance under Section 40(a)(ia) was not applicable for short TDS deduction.

The Tribunal held that the exchange fluctuation on FCCBs, which were issued for acquiring a new industrial undertaking, is on capital account and therefore not taxable. The Tribunal found the facts identical to a Madras High Court ruling where such gains were treated as capital receipts.

The Tribunal held that the assessee failed to establish the genuineness of the payment and the nexus of the expenses with the business. The inability to produce Suresh Babu for examination and the disproportionate amount of fees paid relative to turnover were key factors.

The Tribunal held that the reopening of assessment was invalid because it was done after more than four years and there was no failure on the part of the assessee to disclose all material facts. The AO's action was considered a change of opinion.

The Tribunal held that the CIT(A) was justified in dismissing the appeal as defective because the admitted tax due on the income returned was not paid in full. The return filed pursuant to a notice under section 148 is considered a return of income for the purpose of appeal maintainability.

The Tribunal held that the evidence produced before the CIT(A) was not fresh evidence as the AO had already verified the assessee's books of accounts and bills. Therefore, there was no violation of Rule 46A, and the CIT(A)'s order was upheld.

The Tribunal acknowledged that the assessee did employ people and paid salaries, but the quantum required verification. Therefore, the issue was remitted back to the AO for examination of the details to be provided by the assessee.

The Tribunal held that communication expenses should be reduced from both export and total turnover if deducted from export turnover for Section 10A computation. It also allowed the deduction for late receipt of export proceeds, following jurisdictional High Court precedents.