ITAT Bangalore Judgments — September 2016

The Tribunal found no infirmity in the DRP's rationale for upholding the TNMM method and rejecting the CPM and CUP methods. The assessee failed to establish a case in its favor.

The Tribunal held that reimbursement of salary costs for seconded employees, when borne by the subsidiary and reimbursed on a cost-to-cost basis, is not taxable as FTS. However, miscellaneous receipts were confirmed as taxable due to lack of supporting evidence.

The Tribunal followed the Karnataka High Court's decision in Tata Elxsi Ltd., holding that expenses excluded from export turnover must also be excluded from total turnover for Section 10A deduction to avoid anomalies. The revenue's appeal was dismissed.

The Tribunal held that once the source of income (hospital operation) is accepted, the deduction under Section 80 IB(11C) cannot be denied solely because it was not recorded in the books at the time of survey. However, the eligibility conditions of Section 80 IB(11C) were not examined by the lower authorities.

The Tribunal found that the assessee had sufficient cause for not appearing before the CIT(A) due to being in judicial custody. Therefore, the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal held that while the assessee's claim of employer's involvement was plausible, the AO had not verified the peak credit. Therefore, the AO was directed to recalculate the peak credit and assess accordingly.

The Tribunal restored the issue of opening capital for AY 2005-06 to the AO for fresh consideration, allowing the assessee an opportunity to provide evidence of property acquisition dates. Other grounds for AY 2005-06 and all grounds for AY 2007-08 were rejected.

The Tribunal found that the CIT(A) had not provided sufficient reasoning for allowing a reduction in interest disallowance based on interest-free funds. Therefore, the matter was remanded to the CIT(A) for a fresh, reasoned decision.

The Tribunal held that while the matching principle is applicable, the expenditure must have a direct nexus with the income declared. In this case, the assessee failed to provide evidence to establish this nexus, as even the work order was issued after the financial year-end.

The CIT(A) did not address the issue of the mandatory notice u/s 143(2). Therefore, the matter is restored back to the CIT(A) to decide this issue after providing an opportunity to the assessee.

The Tribunal restored the issue of opening capital for AY 2005-06 to the AO for fresh consideration, allowing the assessee an opportunity to provide evidence of property acquisition dates. Other grounds for AY 2005-06 and all grounds for AY 2007-08 were rejected.

The Tribunal noted that there was no fresh investment during the assessment year. The issue of disallowance under Section 14A on account of interest expenditure was dependent on the finding for the prior assessment year, which was remitted to the Assessing Officer.

The Tribunal directed the TPO to re-evaluate the transfer pricing adjustments. Specifically, it ordered the inclusion of foreign exchange gains/losses as operating items, proper computation of working capital adjustments, and the grant of risk adjustments for both software development and marketing support services.

The Tribunal held that telecommunication expenses incurred in foreign currency should be excluded from both export turnover and total turnover for the purpose of calculating deduction under Section 10B. This ensures uniformity in the numerator and denominator of the formula.

The Tribunal held that Section 14A is not applicable if no exempt income is earned, and dismissed the Revenue's ground regarding it. The Tribunal also held that Section 40(a)(ia) does not apply to depreciation allowance, allowing the assessee's cross-objection on this point.

The Tribunal found that the issue of depreciation claim on revalued assets and its relation to Section 43 of the Act was not adequately examined. Therefore, the matter was remitted back to the Assessing Officer for a fresh examination.

The Tribunal admitted additional grounds of appeal concerning the rejection of a comparable company and set aside the issue to the TPO for fresh adjudication. It also directed the TPO to re-examine the inclusion/rejection of several other comparables based on specific criteria and case law.

The Tribunal held that 12 comparables sought to be excluded by the assessee were not good comparables, relying on a previous Tribunal order. The Tribunal also allowed the assessee's claim regarding excess provision written back in the P&L account.

The Tribunal held that foreign exchange gains on external commercial borrowings utilized for capital purposes are not taxable. It also held that the lower of unabsorbed depreciation or business loss should be considered on a cumulative basis for set-off against book profits under Section 115JB.

The Tribunal restored the matter back to the CIT(A) for a fresh decision. This was done in the interest of justice to allow both sides a reasonable opportunity of being heard.

The Tribunal held that as long as the stated purposes for accumulation are for achieving the objects of the trust and are charitable in nature, the exemption under Section 11(2) cannot be denied merely due to the plurality of purposes or the absence of detailed expenditure plans.

The Tribunal restored the matter to the CIT(A) for a fresh decision, directing that the assessee be given an opportunity to provide details and evidence of finishing expenses.

The Tribunal found that the Assessing Officer's order lacked reasoning for rejecting the rectification application. Therefore, the matter was restored to the Assessing Officer to pass a reasoned and speaking order.

The Tribunal held that the reopening of assessment under Section 148 was invalid as it was based on a change of opinion without any tangible material. Consequently, the reassessments were quashed.

The Tribunal held that the profit from the sale of securities is not income from banking business and therefore not eligible for deduction under Section 80P. It found that the reopening was valid as the AO had provided reasons based on material, and the assessee's reliance on various judgments was misplaced given the facts.

The Tribunal decided the appeal ex-parte as the assessee did not appear. The appeal was found to be defective due to non-service of notice and was accordingly dismissed as unadmitted.

The Tribunal set aside the issue to the Assessing Officer to examine the genuineness of the JDA and the nature of the property. If the JDA is found to be genuine and possession was handed over, the transfer would be deemed complete on the JDA date, following jurisdictional High Court precedent.

The Tribunal admitted an additional ground raised by the assessee regarding an adjustment for depreciation. The issue of depreciation adjustment was remitted to the Assessing Officer/TPO for examination and consideration.

The Tribunal held that for the purpose of computing income under Section 44 of the Income Tax Act, both the policyholders' and shareholders' accounts should be consolidated as the assessee is engaged solely in the life insurance business. Consequently, the appeal of the assessee was allowed.

The Tribunal found that the Assessing Officer and CIT(A) did not properly ascertain if the assessee had incurred administrative expenses to the extent disallowed. The matter was restored to the Assessing Officer for a fresh decision.

The Tribunal set aside the issue of disallowance of interest expenditure and administrative expenses related to investments and advances to the Assessing Officer for fresh examination, considering the availability of own funds and the year of investment. The disallowance of syndicate fees was restored to the Assessing Officer's order due to lack of supporting evidence.

The Tribunal held that the appeal of the revenue was not maintainable as the tax effect was below the threshold stipulated by the CBDT Circular. Therefore, the appeal was dismissed on this technical ground.

The Tribunal held that foreign exchange gains on external commercial borrowings utilized for capital purposes are not taxable. It also held that the lower of unabsorbed depreciation or business loss should be considered on a cumulative basis for set-off against book profits under Section 115JB.

The Tribunal held that if the trust deed or by-laws stipulate that donations received shall form part of the corpus, separate confirmation letters from donors are not necessary. Following this principle, the departmental appeal was dismissed.

The Tribunal directed the inclusion of Fine Line Circuits as a comparable and the exclusion of Rangsons Electronics Pvt. Ltd. and Spell Semiconductor Ltd. from the manufacturing segment comparables. For the GSSC segment, Vishal Information Technologies Ltd. was excluded from the comparables.

The Tribunal found that the assessee failed to provide a satisfactory explanation for claiming unabsorbed depreciation that had already been utilized in a prior year. No submissions were made to support the claim of a clerical error.

The Tribunal held that while credit for advance tax cannot be allowed on a TDS challan, the AO must pass an appropriate order on the assessee's rectification request. The matter was restored to the AO for this purpose.

The Tribunal held that the AO wrongly invoked the provisos to Section 24, which are applicable only to self-occupied properties. Since the property in question was let out, these provisos could not be applied, and the full claimed loss should be allowed.

The Tribunal upheld the CIT(A)'s finding that the cash payments were made to an agent for agricultural produce, and therefore, the exception under Rule 6DD(k) applied, making Section 40A(3) inapplicable.

The Tribunal confirmed the disallowance of brokerage as the assessee failed to provide adequate proof of payment and its source. However, the issue of capital gains computation was restored to the Assessing Officer for fresh adjudication.

The Tribunal held that the assessments made under Section 153C were invalid because the Assessing Officer of the searched person had not recorded the requisite satisfaction. This defect was considered fatal to the assessment, following a jurisdictional High Court judgment.

The Tribunal held that the CIT(A) should have verified the claim of the cash flow statement submission and considered it. The matter was restored to the CIT(A) for a fresh decision after examining the cash flow statement and supporting evidence.

The Tribunal held that the non-allocation of common corporate expenses, being a debatable issue, cannot be the basis for levying penalty under Section 271(1)(c). Similarly, penalty for non-deduction of tax on fees paid to non-residents for services rendered abroad was deleted due to the prevailing legal position at that time.

The Tribunal dismissed the assessee's appeals. It held that the assessee failed to provide evidence for its contentions regarding the calculation of Section 80-HHC deduction and the valuation of closing stock. The assessment order under Section 153A was deemed valid despite a potential section misstatement, due to Section 292B.

The Tribunal dismissed the assessee's appeals. It held that the assessee failed to provide evidence for its contentions regarding the calculation of Section 80-HHC deduction and the valuation of closing stock. The assessment order under Section 153A was deemed valid despite a potential section misstatement, due to Section 292B.

The Tribunal granted the assessee's request to withdraw the appeal. Consequently, the appeal was dismissed as withdrawn.

The Tribunal dismissed the assessee's appeals. It held that the assessee failed to provide evidence for its contentions regarding the calculation of Section 80-HHC deduction and the valuation of closing stock. The assessment order under Section 153A was deemed valid despite a potential section misstatement, due to Section 292B.

The Tribunal restored the matter to the AO for a fresh decision, directing the AO to consider if the interest credited was a notional provision that was reversed. If proven, no TDS liability would be imposed.

The Tribunal held that the AO should re-examine the applicability of Section 44AF by considering returned jewellery and verify the pigmy deposit adjustment with the bank certificate.

For AY 2004-05, the Tribunal upheld the reopening of assessment and dismissed the assessee's grounds regarding the validity of reopening and the additions made. For AY 2006-07, the Tribunal set aside the assessment order and remanded the matter to the Assessing Officer for fresh assessment, allowing the assessee another opportunity to present their case.