ITAT Bangalore Judgments — July 2016

The Tribunal found that the CIT(Appeals) did not provide a specific finding on notice service and disposed of the appeal ex parte. Therefore, the order of the CIT(Appeals) was set aside.

The Tribunal held that until the High Court stays the Tribunal's order, it remains valid. Therefore, the assessment order passed consequent to the Section 263 order rightly deserved to be annulled.

For AY 2007-08, the Tribunal held that if there's no TDS liability, interest under section 201(1A) cannot be charged. For AY 2009-10, since registration under section 12A was granted, a fresh assessment was required for exemption claims.

The Tribunal examined the CIT(Appeals) order and found no defects. Since the assessee did not appear, the Tribunal proceeded ex parte.

The Tribunal held that while there was a shortfall in TDS deduction, the assessee's claim that recipients had already paid taxes needed verification. The matter was restored to the Assessing Officer to examine this claim, but interest under Section 201(1A) was held to be payable for the delay.

The Tribunal found that the Assessing Officer had not considered all bank statements, specifically deposits in ICICI Bank. Therefore, the matter was restored to the Assessing Officer for fresh adjudication.

The Tribunal found that the CIT(Appeals) order was ex parte and proper notice of hearing was not established. The assessee's detailed explanations were not examined by the lower authorities.

The Tribunal condoned the delay in filing the appeals before it but dismissed the quantum appeal due to the assessee's failure to explain the substantial delay before the CIT(A) and lack of supporting evidence. However, the penalty appeal was allowed as the penalty notice under Section 274 was found to be defective.

The Tribunal held that the notices issued for penalty proceedings were defective as they did not specify the limb under which the penalty was being levied. Following the jurisdictional High Court's judgment, the Tribunal found the penalty unsustainable.

The Tribunal held that the provisions of Section 80AC are mandatory and not directory. Therefore, failure to file the return of income by the due date specified under Section 139(1) bars the assessee from claiming deduction under Section 80IB.

The Tribunal held that the AO's decision not to refer the matter to the TPO was a possible view, especially considering subsequent judicial pronouncements that limited the binding nature of CBDT Instruction No. 3/2003 after amendments to Section 92CA. Therefore, the assessment order was not erroneous.

The Tribunal held that losses from non-STPI units cannot be set off against profits of an STPI unit for Section 10A deduction. Data link charges and foreign travel expenses cannot be included in export turnover, but should be reduced from total turnover as well. TP issues were rendered infructuous due to MAP resolution.

The Tribunal held that the rental and service charges from a single jointly owned property should be treated as 'income from house property', not 'income from other sources'. It also directed the Assessing Officer to examine the contribution ratio of the husband and wife for determining their respective shares in the property.

The Tribunal held that the assessee was not given sufficient time to collect information from previous licensees regarding tax payments. Therefore, the matter was set aside for reconsideration.

The Tribunal held that the notices issued for penalty proceedings were defective as they did not specify the limb under which the penalty was being levied. Following the jurisdictional High Court's judgment, the Tribunal found the penalty unsustainable.

The Tribunal held that the CIT(A) erred in allowing the Section 80P deduction without a clear finding on the applicability of Section 80P(4). For the TDS issue, the Tribunal found the agreement was for purchase of land with facilities, not a works contract, and thus no TDS was deductible.

For AY 2007-08, the Tribunal held that if there's no TDS liability, interest under section 201(1A) cannot be charged. For AY 2009-10, since registration under section 12A was granted, a fresh assessment was required for exemption claims.

The Tribunal allowed the appeal regarding transportation expenses and helicopter expenses, deleting the disallowance. For the sale consideration of land, the matter was remanded to the AO for fresh decision after allowing deduction for cost of acquisition.

The Tribunal held that the Assessing Officer's order giving effect to the Tribunal's directions was not properly done initially. However, the subsequent order passed u/s. 143(3) r.w.s. 254 was valid as the AO examined the set-aside issues.

The Tribunal held that the addition of Rs. 1 lakh for cash credit required further verification by the AO. For the penalty under Section 271(1)(c), the Tribunal deleted it due to a defective notice under Section 274, following jurisdictional High Court rulings.

The Tribunal held that the delay in obtaining the audit report and filing the return was due to the death of a partner, which constituted a reasonable cause. Therefore, the penalty imposed under Section 271B was deleted.

The Tribunal noted that the assessee failed to appear despite proper service of notice and did not rectify defects in the appeal, specifically not filing the impugned order. Therefore, the appeal was deemed not maintainable.

The Tribunal held that the CIT(Appeals) was justified in allowing the set-off of unabsorbed expenses and current year's deficit. This decision was based on various judicial precedents, including High Court rulings, which permit such adjustments for charitable trusts.

The Tribunal held that the RPT filter should be applied at 15% instead of the 0% applied by the DRP. Consequently, the matter was restored to the Assessing Officer/Transfer Pricing Officer for a fresh decision, considering the revised RPT filter and re-examining all comparables.

The Tribunal, considering the principle of natural justice and the circumstances of the assessees, set aside the CIT(A)'s order. The matter was restored to the file of the AO for a fresh decision after providing adequate opportunity for the assessees to be heard.

The tribunal held that Section 153D does not mandate an opportunity of hearing for the assessee before the Joint Commissioner approves an assessment order under Section 153A. It also directed verification of deposit dates for family members' accounts.

The Tribunal held that the assessee failed to substantiate its claim of treating certain share transactions as investments. The frequency and volume of transactions, coupled with the prior classification as trading activity, indicated the assessee was a trader, and profits should be assessed as business income.

The Tribunal held that the AO is duty-bound to supply the reasons for reopening the assessment. Since the reasons were not provided, the assessee was deprived of raising objections, making the reassessment invalid. The matter was set aside to the AO to provide reasons and dispose of objections.

The Tribunal held that expenditure on renovation of leased premises was revenue in nature, not capital, and allowed the deduction. It also upheld the CIT(A)'s decision to allow deduction under Section 80IA, stating that prior losses should not be reckoned for computing eligible profits.

The Tribunal held that the condition to prove that technical services were actually rendered by the associated enterprise is a prerequisite for allowing the royalty payment. Since the assessee had not produced sufficient evidence to establish this, the matter was remitted back to the TPO/AO for de novo determination.

The Tribunal held that the AO is duty-bound to supply the reasons for reopening the assessment. Since the reasons were not provided, the assessee was deprived of raising objections, making the reassessment invalid. The matter was set aside to the AO to provide reasons and dispose of objections.

The Tribunal held that since the Revenue could not point out any difference in facts compared to the cited precedents, it had no reason to take a contrary view. The appeals were decided based on earlier judgments where similar issues were ruled in favor of the assessees.

The Tribunal held that the assessee failed to substantiate its claim of treating certain share transactions as investments. The frequency and volume of transactions, coupled with the prior classification as trading activity, indicated the assessee was a trader, and profits should be assessed as business income.

The Tribunal upheld the validity of reassessment proceedings, restored the issue of interest on opening balances to the AO for recalculation, and dismissed the ground related to Section 40A(ia) disallowance following the jurisdictional High Court's decision. The ground regarding capitalization of interest on advances for business purpose was dismissed as it did not arise from the CIT(A)'s order.

The Tribunal held that the expenditure on the temporary structure resulted in the creation of an asset, hence it is capital in nature and only eligible for depreciation. However, shamiyana expenditure was held to be revenue in nature and allowable.

The Tribunal held that expenditure on renovation of leased premises was revenue in nature, not capital, and allowed the deduction. It also upheld the CIT(A)'s decision to allow deduction under Section 80IA, stating that prior losses should not be reckoned for computing eligible profits.

The Tribunal followed its previous order in a similar case involving the same assessee. It held that business losses determined prior to the initial year of business should not be set off against business profits determined for the year under consideration for the purpose of deduction under Section 80IA(5).

The Tribunal held that the AO is mandated to first decide the objections raised by the assessee against the notice under Section 148, communicate the decision, and then allow reasonable time for the assessee to challenge it before passing the assessment order. Failing to do so renders the assessment order illegal and without jurisdiction.

The Tribunal noted that the authorities below did not consider cash on hand and that the assessee provided explanations for the difference, including loans and gifts. The Tribunal also found that the assessee was not given sufficient opportunity to present details. The issue of short tax credit was directed to be verified by the Assessing Officer.

The Tribunal held that the TPO's determination of ALP at Nil for management fees was not justified, especially since the fees were paid under an agreement and the department had previously accepted management fees as part of a composite transaction in an Advance Pricing Agreement. The matter was set aside for reconsideration.

The Tribunal held that certain comparable companies should be excluded from the transfer pricing analysis due to functional dissimilarity and high related party transactions. It also ruled that insurance, telecommunication, and travelling expenses should be excluded from export turnover but deducted from total turnover for Section 10A calculations.

The Tribunal directed the exclusion of several comparable companies from the transfer pricing analysis. It also ordered that if the recomputed average PLI of the remaining comparables falls within +/- 5% of the assessee's profit, no transfer pricing adjustment should be made.

The Tribunal held that the undivided share of land attributable to a flat should be calculated proportionally based on the total land area and total constructed area of the project. The Assessing Officer was directed to recompute the capital gains accordingly.

The Tribunal held that the penalty order was not sustainable because the Assessing Officer failed to specify the charge in the notice issued under Section 274 read with Section 271(1)(c). Reliance was placed on the Karnataka High Court's judgment in CIT vs. Manjunatha Cotton & Ginning Factory.

The Tribunal upheld the CIT(A)'s decision to exclude reimbursement of expenses from both export and total turnover for Section 10A deduction, following a High Court judgment. The Tribunal also upheld the CIT(A)'s findings on the exclusion/inclusion of comparable companies, relying on previous Tribunal orders.

The Tribunal held that depreciation on 'Held to Maturity' securities and mark-to-market losses on derivatives should be allowed as revenue losses, following established principles for valuing stock-in-trade. Sundry assets written off were also allowed as the amounts were offered to tax upon recovery.

The Tribunal held that the sale agreement was not reliable as it had no nexus with the actual sale deed, which was executed much later for a significantly lower amount. The Tribunal also noted that the buyer and a signatory to the agreement were not parties to the sale deed.

The Tribunal held that depreciation on 'Held to Maturity' securities and mark-to-market losses on derivatives should be allowed as revenue losses, following established principles for valuing stock-in-trade. Sundry assets written off were also allowed as the amounts were offered to tax upon recovery.

The Tribunal dismissed the appeal, upholding the CIT(A)'s order. The Tribunal found that the assessee failed to establish the creditworthiness of loan creditors, and the sale deed's consideration was considered the definitive purchase price for the property, not a higher amount claimed by the seller's confirmation.

The Tribunal directed the TPO to re-examine the comparability of US and non-US transactions to determine if the price adopted under the Mutual Agreement Procedure (MAP) for US transactions could be applied to non-US transactions. It also directed the reduction of telecommunication expenses from both export and total turnover for Section 10A deduction.