ITAT Bangalore Judgments — April 2019

The Tribunal held that the CIT's reason for rejecting the 80G application (lack of future project details) was not mandated by law. Since the CIT had already granted 12AA registration, implying verification of the trust's objects, the matter was restored to the CIT for fresh examination.

The Tribunal dismissed the revenue's appeal due to its failure to rectify the defects pointed out by the registry. The revenue was deemed not interested in prosecuting the appeal.

The Tribunal found that the CIT(A) passed an ex-parte order without considering the assessee's adjournment request. To ensure substantial justice, the case was restored to the CIT(A) for fresh adjudication with an adequate opportunity for the assessee to be heard.

The Tribunal condoned the delay in filing the appeal. It found that the AO and CIT(A) did not properly examine the difference between the original and revised returns, particularly regarding audited financial statements. The matter was restored to the AO for fresh examination.

The Tribunal held that the CIT(A) did not dispose of the appeal on merits and that substantial justice would be served by hearing the appeal afresh. The impugned order of the CIT(A) was set aside.

The Tribunal held that merely capitalizing expenditure as an intangible asset does not make it capital in nature if it is revenue in nature. The entitlement to deduction depends on the Income Tax Act, not book entries. The expenditure on employee training and salaries was considered revenue in nature.

The Tribunal accepted the income offered by the assessee at 8% on contract receipts under Section 44AD. For the remaining Rs. 16.50 lakhs, the issue was restored to the Assessing Officer for verification of evidence regarding its ownership by Mr. Babu Prakash.

The Tribunal held that fixed expenses related to the helicopter should be allowed in full, while 40% of variable expenses should be allowed. The disallowance was reduced accordingly.

The Tribunal held that disallowance under Section 14A should not be considered for computing book profits under Section 115JB. The AO's action under Section 154 to add back a debatable issue was beyond its scope.

The Tribunal upheld the CIT(A)'s order, stating that allowing the deduction in AY 2011-12 would be of academic interest only as it would reduce the Section 10B deduction, resulting in no impact on the ultimate taxable income.

The Tribunal held that the reopening of assessment was not valid as there was no direct link between the material available with the AO and the formation of belief that income had escaped assessment. The AO's generalized inference from third-party statements without specific mention of the assessee was deemed insufficient.

The Tribunal held that the reopening of assessment was not valid as there was no direct link between the material available with the AO and the formation of belief that income had escaped assessment. The AO's generalized inference from third-party statements without specific mention of the assessee was deemed insufficient.

The Tribunal held that the reopening of assessment was not valid as there was no direct link between the material available with the AO and the formation of belief that income had escaped assessment. The AO's generalized inference from third-party statements without specific mention of the assessee was deemed insufficient.

The Tribunal held that the reopening of assessment was not valid as there was no direct link between the material available with the AO and the formation of belief that income had escaped assessment. The AO's generalized inference from third-party statements without specific mention of the assessee was deemed insufficient.

The Tribunal held that since the assessee had sufficient interest-free funds (own funds and Compulsorily Convertible Debentures) exceeding the investments in tax-free securities, the disallowance of interest expenditure under Section 14A r.w.r. 8D(2)(ii) was deleted. However, the disallowance of 0.5% of average investment under Section 14A r.w.r. 8D(2)(iii) was upheld as conceded by the assessee.

The Tribunal held that for Section 153A to be invoked for a year prior to the search, there must be pending assessment or incriminating material found. Since no assessment was pending and the CIT(A) had not determined if incriminating material was found, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal dismissed the Revenue's ground on foreign exchange fluctuation, stating it was operational in nature for the first year of business. However, it remanded the issue of working capital adjustment to the DRP for actual calculation, finding the DRP's ad-hoc approach incorrect. The Tribunal also admitted the assessee's grounds on comparable selection and remanded them for de novo examination.

The Tribunal held that for Section 153A to be invoked for a year prior to the search, there must be pending assessment or incriminating material found. Since no assessment was pending and the CIT(A) had not determined if incriminating material was found, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that CBF is a mandatory deduction and not an application of income, thus allowing the deduction. Regarding Section 35AC donations, the Tribunal found that the CIT(A) did not examine the revised return and remanded the issue for fresh adjudication.

The Tribunal held that the assessee was not entitled to risk adjustment as no scientific basis or computation was provided. It remanded issues of working capital adjustment to the TPO for recomputation. The Tribunal allowed deduction under Section 10AA by directing expenses to be reduced from both export and total turnover, following a Supreme Court judgment.

The Tribunal held that the payments were for independent personal services covered under Article 14 of the India-Uganda DTAA, not fees for technical services under Article 12. Therefore, the income was taxable only in Uganda, and no TDS was deductible in India.

The Tribunal held that expenses excluded from export turnover for Section 10AA deduction must also be excluded from total turnover, following the Karnataka High Court and Supreme Court decisions. Therefore, the CIT(A)'s order allowing the assessee's claim was upheld.

The Tribunal restored both appeals to the CIT(A) for a fresh decision. This was done in the interest of justice, considering the assessee's illness and unintentional error in sending the adjournment request.

The Tribunal found that the assessee's failure to appear was due to a genuine mistake and illness, not an intent to abandon the appeal. Therefore, the matter was restored to the CIT(A) for a fresh decision.

The Tribunal held that the bonus paid to a director for services rendered is deductible under Section 36(1)(ii) if it is not otherwise payable as profit or dividend. Since the revenue did not establish that the bonus was otherwise payable as dividend, the disallowance was deleted.

The Tribunal set aside the ex-parte order of the CIT(A) and remanded the matter back for a fresh hearing on merits. The assessee was directed to cooperate and participate in the proceedings.

The Tribunal held that for payments made before the Karnataka High Court's Samsung judgment (October 15, 2011), there was no obligation to deduct tax at source on software payments, following its own earlier decision. Therefore, the disallowance for payments made up to that date was correctly deleted.

The Tribunal held that the AO's estimation of agricultural income was arbitrary and failed to consider land holdings in the name of a joint family member. It also found that the cash deposits were sufficiently explained by the declared agricultural and business income.

The Tribunal held that the seized document, found from a third party, did not establish the cash payment was made by the assessee. The Tribunal noted that other entries on the document, which were cheque payments, were made by a company and not the assessee, and therefore, the cash payment could also be by that company.

The Tribunal held that since the assessee had sufficient interest-free funds (own funds and Compulsorily Convertible Debentures) exceeding the investments in tax-free securities, the disallowance of interest expenditure under Section 14A r.w.r. 8D(2)(ii) was deleted. However, the disallowance of 0.5% of average investment under Section 14A r.w.r. 8D(2)(iii) was upheld as conceded by the assessee.

The Tribunal held that for Section 153A to be invoked for a year prior to the search, there must be pending assessment or incriminating material found. Since no assessment was pending and the CIT(A) had not determined if incriminating material was found, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that for Section 153A to be invoked for a year prior to the search, there must be pending assessment or incriminating material found. Since no assessment was pending and the CIT(A) had not determined if incriminating material was found, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that for Section 153A to be invoked for a year prior to the search, there must be pending assessment or incriminating material found. Since no assessment was pending and the CIT(A) had not determined if incriminating material was found, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that for Section 153A to be invoked for a year prior to the search, there must be pending assessment or incriminating material found. Since no assessment was pending and the CIT(A) had not determined if incriminating material was found, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that for Section 153A to be invoked for a year prior to the search, there must be pending assessment or incriminating material found. Since no assessment was pending and the CIT(A) had not determined if incriminating material was found, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that export incentives should be included in operating profit, following a Bombay High Court judgment. Issues regarding the selection of comparables, inclusion of rental income, and risk adjustment were restored to the DRP/AO/TPO for fresh consideration. The arm's length commission for corporate guarantee was fixed at 0.5%.

The Tribunal held that the grounds raised by the Revenue were not emanating from the order of the DRP. Consequently, the appeal filed by the Revenue was not maintainable.

The Tribunal remanded the transfer pricing issues, including the exclusion of a comparable, foreign exchange gain/loss, and risk adjustment, back to the DRP for a fresh decision. This was done to allow for a detailed and reasoned examination of the entire case.

The Tribunal held that while the general disallowance of cash payments was not justified, specific instances of cash payments exceeding Rs. 20,000/- that did not fall under the exceptions of Rule 6DD were to be disallowed. Interest under sections 234B and 234C was upheld as mandatory.

The Tribunal held that the assessee's right under the agreement to construct and possess the flat, from the date of agreement (29/01/2007) until its sale (10/07/2013), constituted a capital asset held for more than 36 months. Therefore, the claim for long-term capital gain/loss was valid.

The Tribunal held that the disallowance under Section 14A of the Income Tax Act cannot exceed the exempt income earned by the assessee. Following judicial precedents, the disallowance was restricted to the actual exempt dividend income.

The Tribunal restored the entire disputed issue to the file of the CIT(A) for fresh adjudication on merits. This was subject to the assessee paying a cost of Rs. 5,000/- to the Income-tax Department, acknowledging the principles of natural justice while noting the assessee's prior non-appearance.

The Tribunal held that the non-receipt of the hearing notice constituted a reasonable cause for the assessee's absence. Therefore, the ex-parte order of the CIT(A) was set aside.

The Tribunal noted that the CIT(E) had granted registration under Section 12AA on the same day it rejected the 80G application. Following a co-ordinate bench decision, the Tribunal restored the matter to the CIT(E) for fresh adjudication.

The CIT(A) deleted the addition after verifying that payments were made through the bank and financed by documented sources like share transactions. The Tribunal upheld the CIT(A)'s order as the revenue failed to controvert the findings with cogent evidence.

The Tribunal held that the non-compete fee confers a business right similar to intangible assets, making it eligible for depreciation. They followed the binding precedent of the Karnataka High Court in CIT vs. Ingersoll Rand International India Ltd.

The Tribunal held that the AO should have provided the workings for the restricted deduction and allowed the assessee to present its case. The issue of determining the correct quantum of deduction was restored to the AO for re-examination.

The Tribunal upheld the CIT(A)'s decision to delete the addition for guarantee commission, finding it covered by a previous co-ordinate bench ruling. Similarly, the addition for interest income was deleted, following precedent that such interest earned on government funds used for public welfare is not taxable income for the nodal agency.

The Tribunal held that the unexplained liabilities of Rs. 5,00,000 for AY 2008-09 and Rs. 57,78,203 for AY 2010-11 were substantiated by the assessee and deleted the additions. The addition of Rs. 46,58,000 for AY 2009-10 on account of cash deposits was also deleted as unsustainable.

The Tribunal held that the unexplained liabilities of Rs. 5,00,000 for AY 2008-09 and Rs. 57,78,203 for AY 2010-11 were substantiated by the assessee and deleted the additions. The addition of Rs. 46,58,000 for AY 2009-10 on account of cash deposits was also deleted as unsustainable.