ITAT Bangalore Judgments — October 2021

The Tribunal restored the issue of deduction under Section 80P to the AO for de novo consideration, following the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. The Tribunal also directed the AO to examine the claim for deduction under Section 57 for expenses incurred in earning interest income.

The Tribunal held that additions based solely on loose sheets without corroborative evidence are not sustainable. The AO's reliance on unverified statements and misinterpretation of entries in the loose sheets led to erroneous additions.

The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned. Regarding the addition under Section 56(2)(viib), the Tribunal found significant defects in the AO's valuation method and restored the issue to the AO for fresh examination.

The Tribunal held that the Advance Pricing Agreement (APA) entered into by the assessee, which stipulated a 60-day realization period for receivables, should be applied for the assessment year under consideration, including its rollback period. This decision was based on a coordinate bench's ruling in a sister concern's case.

The Tribunal noted that the issues contested in the appeal have been settled under the Vivad Se Vishwas Act. Therefore, the appeal was dismissed as withdrawn.

The Tribunal directed the inclusion of one comparable company as per DRP's directions and the exclusion of another. Two other comparable companies were restored to the AO/TPO for fresh examination. The Tribunal also directed the inclusion of 'reversal of provision' as operating income but upheld the AO/TPO's treatment of a penalty under the PF Act as operating expense.

The Tribunal remanded the issue of ICRA Online Limited's comparability to the TPO for fresh examination. However, it directed the inclusion of E4E Healthcare Business Services Private Limited in the list of comparables.

The Tribunal accepted the assessee's prayer and restored the appeals to the file of the CIT(Appeals). The CIT(Appeals) was directed to provide another opportunity of hearing and decide the appeals afresh.

The Tribunal accepted the assessee's prayer and restored the appeals to the file of the CIT(Appeals). The CIT(Appeals) was directed to provide another opportunity of hearing and decide the appeals afresh.

The Tribunal held that disallowance under Section 36(1)(va) read with Section 43B of the Act is not justified if the employee's contribution to PF/ESI is paid before the due date of filing the return of income under Section 139(1), even if it's beyond the due date prescribed by the respective Acts.

The Tribunal held that the cash transactions between the uncle and nephew were purely personal and for the purpose of purchasing a flat. Relying on various judicial precedents, it was concluded that such transactions between near relatives for personal needs do not attract the provisions of Sections 269SS and 269T.

The Tribunal held that the assessee is not the legal owner of the sublet properties, and therefore, the net sublet income of Rs. 13,24,488 should be treated as income from other sources, not income from house property. Consequently, the standard deduction under Section 24(a) is not allowable on this sublet income.

The Tribunal held that expenses incurred for road repairs and reclamation/rehabilitation were compensatory in nature and incidental to carrying on the business, thus allowable under Section 37(1). Legal expenses incurred to defend existing mining leases were also held to be revenue expenditure.

The Tribunal accepted the assessee's prayer and dismissed the appeal as withdrawn. The assessee was granted liberty to seek recall of the order if the VSVS application was rejected.

The Tribunal held that disallowance under Section 36(1)(va) read with Section 43B of the Income Tax Act is not permissible if the employee's contribution to PF/ESI is paid within the due date for filing the return of income, even if it's beyond the due date stipulated by the respective Acts. The amendments made by the Finance Act, 2021, were held to be prospective.

The Tribunal held that expenses incurred for road repairs and reclamation/rehabilitation were compensatory in nature and incidental to carrying on the business, thus allowable under Section 37(1). Legal expenses incurred to defend existing mining leases were also held to be revenue expenditure.

The Tribunal held that a single building with multiple residential units, even if one is self-occupied and the other is let out, should be considered as 'one residential house' for the purpose of Section 54F. The physical structure of the house does not negate its character as a single residential house.

The Tribunal held that the reassessment proceedings were invalid because the reasons recorded for reopening the assessment were not supplied to the assessee, as mandated by law. Consequently, the reassessment order was quashed.

The Tribunal noted that the learned Departmental Representative did not object to the withdrawal. Consequently, the appeals filed by the assessee were dismissed as withdrawn.

The Tribunal considered the assessee's request for withdrawal and, with no objection from the Revenue, dismissed the appeals as withdrawn.

The Tribunal considered the assessee's request for withdrawal and, with no objection from the Revenue, dismissed the appeals as withdrawn.

The Tribunal held that the reassessment proceedings were invalid because the reasons recorded for reopening the assessment were not supplied to the assessee, as mandated by law. Consequently, the reassessment order was quashed.

Since the issues contested by the revenue have been settled by the assessee under the Vivad se Vishwas Act, the appeals filed by the revenue will not survive. The tribunal dismissed both appeals.

Since the issues contested by the revenue have been settled by the assessee under the Vivad se Vishwas Act, the appeals filed by the revenue will not survive. The tribunal dismissed both appeals.

The Tribunal held that granting retrospective effect to the exemption for the assessment years in question was not permissible. The assessee was rightly assessed under normal provisions of the Act for the period before the 12AA registration became effective.

The Tribunal dismissed all four appeals as the assessee had opted for settlement under the Vivad se Vishwas Act. The Tribunal also directed the assessee to ensure the AO files a recall application if the settlement process for the revenue's appeal for AY 2016-17 fails.

The Tribunal held that the transactions between CAPL and BBPL were business transactions, not loans, and therefore, the deemed dividend addition was not sustainable. The protective addition for unexplained investment was restored to the AO for deletion upon settlement of the substantive addition.

The Tribunal dismissed the petition for condonation of delay, finding the assessee's explanations contradictory and lacking in material evidence. The Tribunal held that the delay was due to negligence and inaction, and therefore the appeal could not be admitted.

The Tribunal dismissed all four appeals as the assessee had opted for settlement under the Vivad se Vishwas Act. The Tribunal also directed the assessee to ensure the AO files a recall application if the settlement process for the revenue's appeal for AY 2016-17 fails.

The Tribunal held that the TPO's approach of treating extended credit period beyond 150 days as a separate international transaction was incorrect. Adjustments for interest on delayed receivables should be made within the determination of ALP for the primary transaction.

The Tribunal held that granting retrospective effect to the exemption for the assessment years in question was not permissible. The assessee was rightly assessed under normal provisions of the Act for the period before the 12AA registration became effective.

The Tribunal held that the TPO's approach of treating the entire delay in realizing invoices beyond 150 days as a separate international transaction was incorrect. Instead, adjustments should be made to the comparables' profit to account for differences in credit periods. The matter was remitted to the TPO/AO for fresh determination.

The Tribunal held that the loans advanced were for business purposes and not 'deemed dividend' under Section 2(22)(e). It also confirmed the deletion of protective additions for undisclosed income, as the transactions were explained and routed through books of account.

The Tribunal held that allowing brought forward deficit as application of income is a justified finding based on correct interpretation of law. This was supported by decisions of the Karnataka High Court in the assessee's own case and other similar cases.

The Tribunal held that the loans advanced were for business purposes and not 'deemed dividend' under Section 2(22)(e). It also confirmed the deletion of protective additions for undisclosed income, as the transactions were explained and routed through books of account.

The Tribunal upheld the deletion of the deemed dividend addition, agreeing that the transactions were business-related and not loans. For the unexplained investment, the Tribunal restored the issue to the AO for deletion upon settlement under the Vivad se Vishwas scheme.

The Tribunal held that the loans advanced were for business purposes and not 'deemed dividend' under Section 2(22)(e). It also confirmed the deletion of protective additions for undisclosed income, as the transactions were explained and routed through books of account.

The Tribunal upheld the CIT(A)'s decision on deferred revenue income, following a coordinate bench ruling. Regarding Section 14A, the Tribunal noted the assessee's alternative plea for disallowance based on a Special Bench decision. The Tribunal directed that foreign currency expenses should not be reduced from export turnover, following a jurisdictional High Court decision.

The Tribunal held that the transfer pricing adjustment related to royalty on product registration was not justified, as the AEs were distributors and the product registration was a statutory requirement for the manufacturer. The Tribunal also noted that the assessee did not charge amounts above selling price from domestic or unrelated parties.

The Tribunal held that no addition for undisclosed income arises when all transactions are duly recorded in the books of account. Following its previous orders for identical issues in earlier years, the addition was directed to be deleted.

The Tribunal held that the employees' contribution to ESI, if paid before the due date of filing the return under Section 139(1), is allowable as a deduction. The amendments by the Finance Act, 2021, were considered prospective and not applicable to the assessment year in question.

The Tribunal condoned the delay, prioritizing substantial justice over technicalities, citing the Supreme Court's principles on condoning delays. The Tribunal also ruled that disallowance for delayed PF/ESI contributions paid before the return filing due date was not permissible under the relevant sections.

The Tribunal held that the assessee is entitled to deduction for employees' PF and ESI contributions if paid before the due date of filing the return under Section 139(1). The amendment to Section 36(1)(va) and 43B by the Finance Act, 2021, was held to be prospective and not applicable to the assessment year in question.

The Tribunal held that the assessee is entitled to carry forward excess expenditure. This decision was based on the principle that income of a trust should be computed on commercial principles, allowing adjustment of prior year expenses against subsequent year income.

The Tribunal held that the AO cannot change the method of valuation adopted by the assessee (DCF) and must scrutinize the valuation report and underlying assumptions. If the AO is not satisfied, they can determine a fresh valuation using the DCF method, potentially with an independent valuer.

The Tribunal held that the Revenue's appeal was rendered infructuous as the issue of TDS credit was subsumed by subsequent orders of the CIT(A) and the AO, which ultimately granted the TDS credit as originally claimed by the assessee.

The Tribunal held that if the assessee is not a software development company, then the transfer pricing adjustment based on such categorization is inappropriate. The matter was restored to the AO/TPO for fresh examination.

The Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A)'s file. This was done in the interest of natural justice to allow the assessee an adequate opportunity of hearing.

The Tribunal held that the assessment order was passed ex parte without proper notice to the assessee, who had shifted residence. The assessee was not granted sufficient opportunity to explain the source of deposits. Therefore, the matter was remitted to the AO for fresh consideration.

The Tribunal held that since the assessment order was based on an ITAT order that has now been set aside, the assessment order itself becomes non-est in the eyes of law. Therefore, the appeal filed by the assessee is dismissed as infructuous.