ITAT Bangalore Judgments — February 2019

The Tribunal held that for a deduction under Section 36(1)(viia) to be allowed, the bad debts must be actually written off in the books of account. A mere provision for bad and doubtful debts, without a corresponding reduction from the assets side of the balance sheet, does not constitute an actual write-off.

The Tribunal noted that the sole crux of the disputed issue was with reference to the grant of possession of the land to the developer. It was a fact that the development agreement was entered into on February 14, 2009, and due to non-compliance of terms and conditions, the developer terminated the JDA. The assessee's contention was that no possession was given and the developer acted as a licensee, thus not constituting a transfer under section 2(47). The Tribunal found that the CIT(A)'s order lacked specific findings or observations on the ground of possession of the property or the plea raised in appellate proceedings. Therefore, in the interest of substantial justice, the Tribunal restored the issue of granting of possession by the assessee to the developer to the file of the CIT(A) for adjudication. The CIT(A) was directed to pass a reasoned and speaking order after considering the observations of the Hon'ble Supreme Court in CIT vs. Balbir Singh Maini and the Hon'ble Punjab & Haryana High Court in C.S.Atwal vs. CIT. The assessee was directed to cooperate in submitting information for early disposal. The grounds of appeal were allowed for statistical purposes.

The Tribunal found that the CIT(A) dismissed the appeal for non-appearance despite multiple opportunities. While the assessee's reasons for non-appearance were not satisfactory, the Tribunal restored the issue to the CIT(A) for fresh adjudication on merits, subject to payment of costs.

The Tribunal found the CIT(A)'s order to be ex-parte and restored the issue to the CIT(A) for fresh adjudication. The assessee was directed to cooperate in submitting information, and the CIT(A) was asked to provide a reasonable opportunity of hearing.

The Tribunal partly allowed the appeal regarding the disallowance of business expenses, reducing the disallowance on vehicle maintenance and other expenses. For commission payments, the matter was remanded to the AO for fresh adjudication after the assessee provides details on commission rates and purchase values.

The Tribunal held that the initiation of penalty proceedings, for the purpose of Section 275(1)(c), is the date the AO recommended the penalty. As the order was passed beyond the statutory period, it was considered void.

The Tribunal permitted the assessee to withdraw the appeal as the revenue had no objection. Consequently, the appeal filed by the assessee was dismissed as withdrawn.

The Tribunal held that if the employee contributions towards PF and ESI are deposited before the due date for filing the return of income under Section 139(1), no disallowance can be made. The Tribunal followed the jurisdictional High Court's decisions on the matter.

The Tribunal restored one comparable (M/s. Microland Limited) back to the list as it was excluded suo motu by the CIT(A) and the assessee had no objection. For four other comparables, the Tribunal followed a previous order for the same assessment year, directing their exclusion.

The Tribunal found merit in the assessee's argument regarding lack of adequate opportunity. The CIT(A)'s order was set aside and the matter was restored for a fresh decision.

The Tribunal held that the AO's failure to make necessary inquiries regarding the overtime allowance liability rendered the assessment order erroneous and prejudicial to revenue. Therefore, the CIT's invocation of Section 263 was justified.

The Tribunal held that while the DTAA lacks a specific FTS article, the payments should be treated as business profits. However, the assessee failed to conclusively prove the absence of a Permanent Establishment (PE) in India.

The Tribunal held that penalty cannot be levied on additions made on an estimated basis. Following its own precedent, the Tribunal deleted the penalty.

The Tribunal held that the penalty order was invalid because the show cause notice issued under Section 274 did not specify whether the charge was for concealment of income or furnishing inaccurate particulars, and did not strike out the irrelevant portion. This violated principles of natural justice.

The Tribunal held that the penalty order was invalid because the show cause notice issued under Section 274 did not specify whether the charge was for concealment of income or furnishing inaccurate particulars, and did not strike out the irrelevant portion. This violated principles of natural justice.

The Tribunal held that the penalty order was invalid because the show cause notice issued under Section 274 did not specify whether the charge was for concealment of income or furnishing inaccurate particulars, and did not strike out the irrelevant portion. This violated principles of natural justice.

The Tribunal found that the AO's calculation of cash deposits in one of the banks was incorrect. Considering the corrected cash deposits and the excess of opening cash balance over closing cash balance, the Tribunal held that the entire cash deposit was explained and no addition was warranted.

The Tribunal found that the assessee did not receive a proper opportunity to be heard due to the delayed receipt of the show cause notice. Therefore, the order of the CIT(Exemptions) was set aside.

The Tribunal held that the penalty order was invalid because the show cause notice issued under Section 274 did not specify whether the charge was for concealment of income or furnishing inaccurate particulars, and did not strike out the irrelevant portion. This violated principles of natural justice.

The Tribunal, following the Supreme Court's decision in MST. Katiji & ors., held that substantial justice should be preferred over technical considerations. The delay in filing the appeal was condoned, and the matter was restored to the CIT(A) for a decision on merits.

The Tribunal held that the Assessing Officer's disallowance under Section 14A was made without verifying the nexus between borrowed funds and exempt income. Regarding carbon credits, the Tribunal found the addition to be unsustainable as there was no finding of receipt or accrual of income.

The Tribunal held that two comparable companies (L&T Infotech Ltd. and Persistent Systems Ltd.) should be excluded. It also directed the TPO to re-examine and grant working capital adjustment. The ground regarding the exclusion of another company (Tech Mahindra Ltd.) was dismissed.

The Tribunal upheld the AO's action in taxing the share premium under Section 56(2)(viib) as the assessee failed to substantiate the valuation method used. The Tribunal also upheld the disallowance of bad debts, finding that the written-off amounts were reimbursable advertisement expenses and not genuine bad debts.

The Tribunal held that two comparable companies (L&T Infotech Ltd. and Persistent Systems Ltd.) should be excluded. It also directed the TPO to re-examine and grant working capital adjustment. The ground regarding the exclusion of another company (Tech Mahindra Ltd.) was dismissed.

The Tribunal held that the show cause notice issued under Section 274 of the Act was defective as it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income. Following the jurisdictional High Court's decision, the Tribunal found the penalty imposition unsustainable.

The Tribunal held that while Form 10 was filed belatedly, it was filed before the processing of the return of income. Citing the Supreme Court judgment in Nagpur Hotel Owners' Association, the Tribunal dismissed the Revenue's appeal.

The Tribunal held that the TPO and DRP failed to provide the basis of the search and the key search filters used. Therefore, the order of the lower authorities was set aside.

The Tribunal found that the CIT(A) did not provide sufficient opportunity of hearing to the assessee. Therefore, the matter was restored to the CIT(A) for a fresh decision after providing adequate opportunities to both parties.

The Tribunal remanded the issue of R&D expenses for fresh examination by the AO, following a previous order in the assessee's own case. The Tribunal allowed the ground related to internet access charges, following a coordinate bench decision in the assessee's favor.

The Tribunal found that the assessee failed to establish that services were rendered by the consultant for business purposes. Therefore, the CIT(A)'s order was not sustainable.

The Tribunal directed the exclusion of one comparable company (Excel Infoways Ltd.) due to super normal profits. It restored the issue of mark-up on recovery transactions to the AO/TPO for reconsideration and directed the grant of MAT credit.

The Tribunal dismissed the Revenue's appeal in limine. This was based on the submission by the learned DR that the tax effect of the relief granted was less than 20 lakhs, making the appeal non-maintainable as per Circular No. 3/2018.

The Tribunal held that the original assessment proceedings abated as they were pending on the date of the search initiation. Consequently, the assessment orders passed were considered non-est in the eyes of law.

The Tribunal restored the appeal to the CIT(A) for fresh adjudication on merits, considering the principles of natural justice. However, this was subject to the assessee paying a cost of Rs. 10,000/- to the Income-tax Department.

The Tribunal condoned the delay in filing appeals electronically, stating that manual filing should not be a ground for rejection. For the other assessment year, the Tribunal found that the Assessing Officer and CIT(A) did not properly examine the facts and legal grounds for rejecting the deduction claim.

The Tribunal condoned the delay in filing appeals electronically, stating that manual filing should not be a ground for rejection. For the other assessment year, the Tribunal found that the Assessing Officer and CIT(A) did not properly examine the facts and legal grounds for rejecting the deduction claim.

The Tribunal condoned the delay in filing appeals electronically, stating that manual filing should not be a ground for rejection. For the other assessment year, the Tribunal found that the Assessing Officer and CIT(A) did not properly examine the facts and legal grounds for rejecting the deduction claim.

The Tribunal held that the appeal should not be rejected for being filed manually initially and condoned the delay in electronic filing. The matter was restored to the CIT(A) for fresh adjudication on merits.

The Tribunal held that the reassessment proceedings initiated against the assessees were barred by limitation. This was because the assessees were not parties to the High Court proceedings and were not given an opportunity to be heard before the order was passed, thus failing to meet the conditions of Explanation 3 to Section 153(3).

The Tribunal held that while a subsequent decision of a jurisdictional High Court can give rise to a mistake apparent from record, the Assessing Officer (AO) and CIT(A) failed to properly examine the Joint Development Agreement and relevant Supreme Court decisions. The AO's orders were considered non-speaking.

The Tribunal held that the reassessment proceedings initiated against the assessees were barred by limitation. This was because the assessees were not parties to the High Court proceedings and were not given an opportunity to be heard before the order was passed, thus failing to meet the conditions of Explanation 3 to Section 153(3).

The Tribunal held that the CIT(Appeals) erred in confirming the addition solely based on Form 26AS and AIR information without properly examining the assessee's evidence. For one client, the Tribunal found that the client's confirmation indicated no discrepancy. For another client, the Tribunal remanded the issue for fresh consideration by the AO.

The Tribunal held that while a subsequent decision of a jurisdictional High Court can give rise to a mistake apparent from record, the Assessing Officer (AO) and CIT(A) failed to properly examine the Joint Development Agreement and relevant Supreme Court decisions. The AO's orders were considered non-speaking.

The Tribunal held that while a subsequent decision of a jurisdictional High Court can give rise to a mistake apparent from record, the Assessing Officer (AO) and CIT(A) failed to properly examine the Joint Development Agreement and relevant Supreme Court decisions. The AO's orders were considered non-speaking.

The Tribunal held that the reassessment proceedings initiated against the assessees were barred by limitation. This was because the assessees were not parties to the High Court proceedings and were not given an opportunity to be heard before the order was passed, thus failing to meet the conditions of Explanation 3 to Section 153(3).

The Tribunal held that while a subsequent decision of a jurisdictional High Court can give rise to a mistake apparent from record, the Assessing Officer (AO) and CIT(A) failed to properly examine the Joint Development Agreement and relevant Supreme Court decisions. The AO's orders were considered non-speaking.

The Tribunal held that while disallowance is warranted due to defective vouchers, the CIT(A)'s sustained disallowance was excessive. The disallowance was restricted to 7.5% of the claimed labour charges.

The Tribunal held that the same income cannot be taxed twice. Therefore, the addition to the extent of Rs. 3,35,000/-, which was already offered to tax in the subsequent assessment year, should be deleted from the addition made in AY 2013-14.

The Tribunal held that the addition made by the AO was unsustainable. It reasoned that the cash deposits could be explained by the substantial receipts from the assessee's contract business, even without a detailed cash flow statement.