ITAT Bangalore Judgments — September 2021

The Tribunal held that the sale proceeds of software licenses, based on the terms of the agreements and the Supreme Court's decision in Engineering Analysis Centre of Excellence Pvt. Ltd., do not constitute royalty income. Consequently, the addition made by the AO was set aside.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal held that disallowance of technical fees paid to M/s Kotawala was justified due to lack of evidence of services rendered. Disallowance under Section 14A was deleted as the assessee had sufficient own funds. Other grounds were either dismissed as not pressed, infructuous, or allowed based on previous tribunal decisions.

The Tribunal held that the CIT(A) should have issued a notice to the assessee before treating the income as business income. The issue was remitted back to the CIT(A) for fresh consideration.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal held that the notice issued under Section 148 with the approval of the Commissioner, when the statute mandates approval from the Joint Commissioner, is unsustainable. Consequently, the assessment order is vitiated.

The Tribunal followed previous decisions of coordinate benches and held that payments for cloud hosting and server storage do not constitute royalty. The AO was directed to re-examine the agreements based on established judicial precedents.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal held that the assessee substantially fulfilled the conditions for Section 54F exemption, allowing for a liberal interpretation. However, expenses on interior decoration were disallowed as they were not for making the house habitable.

The Tribunal held that the provisions of Section 50C were not applicable. It reasoned that the sale consideration of Rs. 7 crores was arrived at through a court-approved settlement after prolonged litigation stemming from an agreement to sell in 2004. The revenue had not provided any objective evidence to prove undervaluation or that the assessee received more than the agreed consideration. The Tribunal noted that the AO did not refer the matter to the District Valuation Officer (DVO) as per Section 50C(2) and that the higher value for stamp duty was a compulsion of the Stamp Act. Therefore, the AO's adoption of the stamp duty value was unjustified. The Tribunal directed the AO to work out capital gains on the basis of the proportionate consideration shown by the assessee. Regarding the Section 54 deduction, the Tribunal noted that the assessee claimed expenditures on refurbishing the house, with evidence filed in the paper book. Since these documents were not verified by the lower authorities, the issue was remanded back to the AO for verification and consideration in accordance with law, granting the assessee an opportunity of being heard. The grounds related to Section 50C and Section 54 were allowed.

The Tribunal held that entities registered under the Karnataka Souharda Sahakari Act, 1997, fit the definition of 'co-operative society' under Section 2(19) of the Income Tax Act. Therefore, the CIT(A)'s order was set aside for fresh adjudication on merits.

The Tribunal held that the CIT(A) was not justified in dismissing the appeal as not maintainable. The revised form correctly identified the assessee, and the CIT(A) should have considered it.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal held that the assessment order was unsustainable because the notice under Section 143(2) was issued by an officer without jurisdiction. Therefore, the entire assessment proceedings were void ab initio.

The Tribunal confirmed the CIT(A)'s decision to allow the inventory write-off as a deduction. It was held that the treatment in accounts was revenue neutral and followed accounting principles, and that the loss was effectively adjusted against opening stock.

The Tribunal held that the revenue's appeal was not maintainable as the tax effect was below Rs. 10 lakhs as per CBDT circular. Consequently, the assessee's cross-objection became infructuous. The Tribunal also directed the AO/TPO not to make any negative working capital adjustment.

The Tribunal held that the reopening of assessment under Section 147/148 was valid, as the AO had sufficient material to form a belief of escapement of income. However, the Tribunal also found that the assessment could not be reopened under Section 153C as no assets or documents belonging to the assessee were seized during the search.

The Tribunal held that head office expenses need to be allocated to determine eligible profits for deduction under Section 80IA. It also ruled that excise duty and sales tax should not be included in turnover for calculating deductions under Sections 80HHC and 80HHE.

The Tribunal held that the revenue's appeal was not maintainable as the tax effect was below Rs. 10 lakhs as per CBDT circular. Consequently, the assessee's cross-objection became infructuous. The Tribunal also directed the AO/TPO not to make any negative working capital adjustment.

The Tribunal held that certain comparable companies (Universal Print, TCS e-serve, and Infosys BPO) should be excluded from the list of comparables and remanded the case of BNR Udyog for fresh consideration. It also held that a negative working capital adjustment should not be made for a captive service provider.

The Tribunal found that the assessee acted on the advice of their authorized representative and that the assessee should not be put at a disadvantage due to the representative's fault. The Supreme Court's principle of condoning delay for substantial justice was considered.

The Tribunal upheld the validity of reopening assessments based on the statement given under Section 132(4). It confirmed the CIT(A)'s decision to restrict the addition for suppressed sales to the gross profit margin, as both sales and purchases were suppressed. The Tribunal remanded the issue of sundry creditors back to the AO for fresh examination.

The Tribunal upheld the validity of reopening assessments based on the statement given under Section 132(4). It confirmed the CIT(A)'s decision to restrict the addition for suppressed sales to the gross profit margin, as both sales and purchases were suppressed. The Tribunal remanded the issue of sundry creditors back to the AO for fresh examination.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal upheld the validity of reopening assessments based on the statement given under Section 132(4). It confirmed the CIT(A)'s decision to restrict the addition for suppressed sales to the gross profit margin, as both sales and purchases were suppressed. The Tribunal remanded the issue of sundry creditors back to the AO for fresh examination.

The Tribunal, following previous decisions of coordinate benches, directed the exclusion of certain comparable companies (Infosys Ltd., Persistent Systems Ltd., Thirdware Solutions Ltd., Larsen & Toubro Infotech Ltd.) due to functional dissimilarity and issues with intangible assets and revenue segmentation. It also directed the AO/TPO to consider correct margins for other retained comparables.

The Tribunal held that the AO's failure to examine the applicability of Section 115JB Explanation 1(f) renders the assessment order erroneous and prejudicial to revenue. However, the Principal CIT's direction to use the Section 14A disallowance for Section 115JB computation was found contrary to a Special Bench decision.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal found that the assessee did not maintain separate books for different activities and that income from trading with non-members might not be eligible for deduction. Therefore, the issue was remitted back to the AO for proper quantification of the deduction under Section 80P(2)(a)(iii) after verifying the books of account.

The Tribunal found that the assessee did not maintain separate books for different activities and that income from trading with non-members might not be eligible for deduction. Therefore, the issue was remitted back to the AO for proper quantification of the deduction under Section 80P(2)(a)(iii) after verifying the books of account.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal found that the assessee did not maintain separate books for different activities and that income from trading with non-members might not be eligible for deduction. Therefore, the issue was remitted back to the AO for proper quantification of the deduction under Section 80P(2)(a)(iii) after verifying the books of account.

The Tribunal held that the assessee was not given a proper opportunity of hearing regarding the rejection of additional evidence. Therefore, the orders of the lower authorities were set aside.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal upheld the validity of reopening assessments based on the statement given under Section 132(4). It confirmed the CIT(A)'s decision to restrict the addition for suppressed sales to the gross profit margin, as both sales and purchases were suppressed. The Tribunal remanded the issue of sundry creditors back to the AO for fresh examination.

The Tribunal found that the assessee did not maintain separate books for different activities and that income from trading with non-members might not be eligible for deduction. Therefore, the issue was remitted back to the AO for proper quantification of the deduction under Section 80P(2)(a)(iii) after verifying the books of account.

The Tribunal upheld the validity of reopening assessments based on the statement given under Section 132(4). It confirmed the CIT(A)'s decision to restrict the addition for suppressed sales to the gross profit margin, as both sales and purchases were suppressed. The Tribunal remanded the issue of sundry creditors back to the AO for fresh examination.

The Tribunal upheld the validity of reopening assessments based on the statement given under Section 132(4). It confirmed the CIT(A)'s decision to restrict the addition for suppressed sales to the gross profit margin, as both sales and purchases were suppressed. The Tribunal remanded the issue of sundry creditors back to the AO for fresh examination.

The Tribunal held that the assessee's dominant and prime objective was not profit-making but providing public transportation, aligning with its statutory duties. Therefore, the proviso to Section 2(15) was not applicable, and the assessee was entitled to the benefits of Section 11.

The Tribunal set aside the issue of comparability of one company (I2T2 India Ltd.) back to the AO/TPO for verification of its functions, activities, and results (FAR). It also directed the AO/TPO to grant working capital adjustment to the assessee in accordance with the law.

The Tribunal held that the assessee was merely reshuffling its loan portfolio by changing lenders. Since the asset side of the balance sheet contained only business assets, it was not a case of diverting interest-bearing funds to related concerns. Therefore, the interest expenditure was allowable.

The tribunal held that education cess is an allowable expenditure for deduction, following the judgments of the Bombay and Rajasthan High Courts. The tribunal noted that the term 'cess' is absent in Section 40(a)(ii) of the Income Tax Act, which disallows certain taxes.

The Tribunal held that the issue of interest on capital work-in-progress should be remitted to the AO for fresh examination, requiring the assessee to demonstrate sufficient interest-free funds. For employee contributions to PF and ESI, the issue was remitted to the AO to verify if payments were made before the return filing due date. The disallowance of interest paid to NBFC was confirmed due to lack of evidence.

The Tribunal held that the assessee had a reasonable cause for not attending the hearings before the CIT(Appeals) due to the COVID-19 pandemic. Therefore, the assessee should be provided with one more opportunity to present her case.