ITAT Bangalore Judgments — May 2016

The Tribunal held that the CIT(A) erred by setting aside the transfer pricing issue to the AO/TPO instead of deciding it himself. The matter was restored to the CIT(A) for a fresh decision with specific directions. The revenue's grounds regarding the exclusion of internet charges from total turnover for Section 10A deduction were rejected, following the Karnataka High Court's decision.

The Tribunal held that a notice under Section 143(2) is a mandatory requirement for completing scrutiny assessments, even in reassessment proceedings under Section 147. Consequently, the reassessment completed without such a notice was deemed invalid.

The Tribunal held that the export incentive income was taxable on mercantile basis once the export obligation was discharged, reversing the CIT(A)'s decision to set aside the issue. However, the claim for bad debts was not allowed as it did not represent a 'debt' in the first place.

The Tribunal held that the assessee is eligible for exemption under Section 10(21) of the Act due to the subsequent CBDT notification. Consequently, the Revenue's appeal was dismissed.

The Tribunal held that the CIT(A) erred in allowing leave encashment deduction as Section 43B(f) was applicable and the payment was not made in the year. However, regarding amortization of premium on government securities, the Tribunal followed its own previous decisions and allowed the deduction.

The Tribunal held that the principle of mutuality does not apply to a company running chit funds as its main business. The dividend earned by the company was considered business income, not exempt on the grounds of mutuality, as the company was operating with a commercial motive.