ITAT Bangalore Judgments — August 2016

The Tribunal held that since the revision order under Section 263 was already quashed by the ITAT, the consequential assessment order under Section 143(3) rws 263 could not survive. Therefore, the CIT(A)'s decision in favour of the assessee was upheld.

The Tribunal held that the assessee had discharged their onus by producing evidence showing the conversion of gold and diamond jewellery declared under VDIS into bullion and loose diamonds, which were subsequently sold. The Tribunal found no discrepancy in the quantity and items.

The Tribunal found that the Assessing Officer should have conducted further inquiry to verify the execution of the GPA, especially by examining the witnesses. The denial of exemption solely based on the owner's statement without further investigation was deemed incorrect.

The Tribunal held that the DVO's report alone is not sufficient to reopen an assessment under Section 147 of the Income Tax Act. The AO must apply their mind to collected information and form a belief of income escapement based on tangible material.

The Tribunal held that vacancy allowance is available when a property is not intentionally kept vacant and is beyond the assessee's control. It also ruled that Section 50C, concerning stamp duty valuation, is not applicable to the purchaser for determining income from unexplained sources.

The Tribunal allowed the assessee's appeal for statistical purposes, setting aside the matter to the CIT(A). The CIT(A) is to decide the appeal afresh after considering the additional evidence filed by the assessee.

The Tribunal held that reopening the assessment beyond four years was invalid as there was no failure on the part of the assessee to disclose material facts. The assessee had offered capital gains in a subsequent year, and at the time of JDA execution, it was not clear that capital gains were chargeable then.

The Tribunal found that while the AO and CIT(A) considered some of the assessee's explanations, subsequent letters providing further details about the deposits were not properly considered. Therefore, the matter was remitted back to the AO for a fresh examination.

The Tribunal found that the CIT(A) had considered the Supreme Court decision in Totagar's case and other High Court judgments. The CIT(A) had allowed the deduction based on the income being attributable to the business activities of the co-operative society.

The Tribunal held that the assessee consistently claimed the bank account belonged to an AOP, and evidence supported this claim, including the co-member's appearance before the AO. The AO failed to provide concrete evidence to prove the account belonged to the individual. Therefore, no addition could be made in the hands of the individual.

The Tribunal held that the assessee is entitled to depreciation at 30% on vehicles used for transporting municipal waste. This decision was based on a coordinate bench ruling and upheld by the jurisdictional High Court.

The ITAT set aside the CIT(A)'s order and restored the matter to the CIT(A)'s file. The CIT(A) was directed to re-adjudicate the issues on merit after providing the assessee an opportunity to be heard.

The Tribunal held that reopening the assessment based on information already available and considered during the original assessment amounts to a change of opinion, which is not permissible. Therefore, the reopening was deemed bad in law.

The Tribunal held that certain companies, like Wipro and Tata Elxsi, were not comparable for ALP determination due to functional dis-similarity and differences in business models. It directed the AO/TPO to recompute ALP excluding these companies and consider the +/-5% tolerance range.

The Tribunal held that the addition for trade creditors should be reduced as some confirmations were accepted. However, the addition for cash credits was upheld as the assessee failed to establish the genuineness and creditworthiness of the creditors.

The Tribunal restored the matter concerning the inclusion of one comparable company to the TPO for fresh consideration. However, it upheld the TPO's decision regarding two other comparable companies, deciding against the assessee on those points.

The Tribunal held that the AO was not required to reject the books of account to make an addition based on duly signed sale agreements. The assessee's inability to provide confirmations for certain buyers despite opportunities meant the addition sustained by the CIT(A) was upheld.

The Tribunal dismissed the grounds related to transfer pricing adjustments as infructuous due to the MAP resolution. For the Section 10A deduction, the Tribunal followed the jurisdictional High Court's decision in favor of the assessee, despite the revenue filing an SLP.

The Tribunal upheld the addition of Rs. 4,18,000, agreeing with the CIT(Appeals) that the assessee failed to discharge the onus of explaining the discrepancies between sale agreements and their books of account.

The Tribunal held that the aggregation of all international transactions, including royalty, for benchmarking purposes is permissible. It also directed the exclusion of one comparable company and set aside the issue of another for verification of profit margin, while establishing a turnover tolerance range for comparables.

The Tribunal held that the assessee could not dispute the receipt of Rs. 15 lakhs as commission when he himself had signed a voucher acknowledging the payment. The assessee failed to provide positive evidence to rebut the presumption arising from the signed voucher.

The Tribunal held that while the registration under Section 12AA was restored, the Assessing Officer is competent to examine the actual activities for granting exemption under Section 11. The assessee's primary activity of letting out the kalyana mantapa was found to be commercial, not charitable.

The Tribunal held that the obligation to discharge income-tax liability lies with the company itself. The expenditure was not a condition precedent for the transfer of shares and thus not incurred wholly and exclusively for the transfer. The claim was also considered untenable as the entire tax liability of the companies could not be fastened on a single shareholder.

The Tribunal held that the assessee consistently followed a cash basis for kist payments due to a bona fide belief regarding Section 43B, and this practice was revenue-neutral. Disturbing this consistent accounting policy would lead to double taxation.

The Tribunal held that the assessee was eligible for deduction under Section 10B. It noted the consistent allowance of deduction for eight years and relied on High Court decisions that supported the assessee's claim regarding STPI approval.

The Tribunal directed the exclusion of Apitco Limited, Choksi Laboratories Limited, and WAPCOS Limited (Seg.) due to functional dissimilarity. For RELQ Software Private Limited, several comparables were excluded based on a prior Tribunal order and turnover filter, leading to a recalculation of transfer pricing adjustments.

The Tribunal upheld the CIT(A)'s decision regarding the deduction u/s 10A, dismissing the revenue's grounds. However, it disagreed with the CIT(A)'s turnover filter for comparables, allowing the revenue's appeal on that ground.

The Tribunal held that the CIT(Appeals) erred by not admitting and examining additional evidence regarding the FDRs and bank statements. The matter was restored to the CIT(Appeals) for fresh adjudication after considering the bank statements. The ground regarding business income estimation was dismissed.

The Tribunal held that foreign currency expenses should be excluded from both export and total turnover for Section 10A calculation, following a jurisdictional High Court ruling. It also directed the exclusion of several companies from the comparable set due to functional dissimilarity and high turnover, and applied a 15% threshold for related party transactions.

The Tribunal held that the reassessment proceedings were validly initiated as the AO discovered information about the omission of Section 10(23G) during subsequent proceedings. The addition on account of reversed provisions was confirmed due to the assessee's failure to establish a nexus with the previously disallowed amounts.

The Tribunal confirmed the CIT(A)'s order after a careful perusal of the lower authorities' orders. No defects were pointed out in the CIT(A)'s order, leading to the dismissal of the assessee's appeal.

The Tribunal held that the genuineness of the refund from the property deal could not be ascertained without examining the other party, Shri P. Suresh. The matter was therefore remanded to the AO for fresh examination.

The Tribunal held that the lower authorities did not properly examine whether the development work was actually executed. The matter was remitted back to the AO for a fresh consideration of the short-term capital gains.

The Tribunal held that considering the social status and employment of both the assessee and her husband, the loan of Rs. 6,75,000/- from the husband ought not to have been disbelieved. Therefore, the addition made by the AO was deleted.

The Tribunal held that the payments were in the nature of remuneration to employees, not commission falling under Section 194H. The CIT(A)'s finding of an employer-employee relationship was upheld.

The Tribunal upheld the CCIT's decision, finding that the assessee's objects of providing consultancy services to banks and other institutions were not strictly for educational purposes. The cited judgments did not help the assessee's case.

The Tribunal found that the unregistered development agreement raised questions about the true nature of the transaction, especially since the developer had allegedly sold parts of the built-up area. Therefore, the matter was remanded for fresh adjudication.

The Tribunal held that the CIT(A) erred in concluding that no notice u/s 143(2) was issued. Based on judicial precedents, the issuance and dispatch of the notice by the department is deemed sufficient service, even if the acknowledgement slip is not found.

The Tribunal held that several companies, including ICRA Techno Analytics Ltd., Infosys Ltd., Kals Information Systems Ltd., Persistent Systems & Solutions Ltd., Persistent Systems Ltd., and Tata Elxsi Ltd., should be excluded from the comparables list, following a previous Tribunal order. The Tribunal also upheld the Karnataka High Court's decision regarding the computation of deduction under Section 10A.

The Tribunal partly allowed the appeals of both the revenue and the assessee. It reinstated 'M/s Sundaram Business Services Ltd.' as a comparable for the revenue's appeal and directed the exclusion of 'M/s Acentia Technologies Ltd.' for the assessee's appeal concerning ITES.

The Tribunal held that the notice issued under section 153C was valid despite a mention of the wrong section, relying on section 292B. Regarding the addition, the Tribunal confirmed it as the assessee failed to substantiate their explanation for the stock difference.

The Tribunal held that while statements recorded during a survey cannot solely form the basis for additions, the assessee failed to explain the discrepancy in stock. However, the Revenue also did not make efforts to reconcile the stock difference. Therefore, the matter was remitted back to the AO for fresh consideration.

The Tribunal held that the expenditure was incurred in connection with leasing the industrial shed to a specific company, LICEPL. Since the assessee was not carrying on any business during the year and had no business receipts, the consultancy fees could not be considered a business expenditure.

The Tribunal held that interest earned on surplus funds, which were meant for lending to members but not immediately utilized due to lack of takers, is attributable to the business of providing credit facilities. Therefore, the assessee is eligible for deduction under Section 80P(2)(a)(i).

The Tribunal held that the assessee demonstrated the loan was used for property acquisition, evidenced by bank DDs and sale deed details. Therefore, the interest paid to the intermediary was an allowable deduction under Section 24(b).

The Tribunal held that the Commissioner was not justified in cancelling the registration granted under Section 12AA of the Income Tax Act, 1961. The Tribunal reasoned that the power to cancel registration under Section 12AA(3) is exercisable only if the activities of the trust are not genuine or not carried out in accordance with its objects. The Tribunal noted that there was no dispute regarding the charitable nature of the assessee's objects at the time of registration, nor was there any change in the nature of its activities or objects. The sole ground for cancellation was the transfer of foreign contributions to another trust, which the CIT considered a violation of FCRA. However, the Tribunal found that the issue of FCRA violation does not fall under the jurisdiction of the Commissioner for the purpose of cancelling 12AA registration. The Tribunal also pointed out that the recipient trust, Malankara Catholic Diocese of Puttur, was itself registered under Section 12AA, indicating its objects were considered charitable. The Tribunal concluded that the transfer of funds to another registered trust does not, in itself, constitute a change in the assessee's activities or a deviation from its objects, and that the application of income for charitable purposes is a matter for exemption under Section 11, not for cancellation of registration under Section 12AA. Therefore, the impugned order of cancellation was set aside.

The Tribunal held that the CIT(A) erred in confirming the addition on account of interest-free loans without proper consideration of the assessee's submissions. The Tribunal also noted that the sale of shares was not completed in the relevant assessment year.

The Tribunal held that the claim of bad debts written off by the assessee is allowable. It reasoned that the character of the debts does not change due to transfer and retransfer between the assessee and its subsidiary, as long as the conditions for deductibility are met.

The Tribunal directed that expenses reduced from export turnover should also be reduced from total turnover for computing Section 10A deduction, following a jurisdictional High Court ruling. The issue of foreign currency expenditure for 'recharge of other costs' was set aside to the Assessing Officer for verification.