ITAT Bangalore Judgments — October 2021

The Tribunal restored the issue of ALP determination for AMP expenses to the AO/TPO for fresh examination. It allowed depreciation on intangible assets, following its own prior decisions. The Tribunal also allowed the deduction of education cess, relying on High Court judgments.

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

The Tribunal found that the tax audit report and relevant records were not adequately considered by the lower authorities. Therefore, the matter was remitted back to the Assessing Officer for fresh consideration.

The Tribunal held that companies with significantly higher turnovers than the assessee should be excluded from the list of comparables, following established precedents. It also directed the Assessing Officer to recompute the deduction under Section 10AA by including the disallowed communication and travel expenses in the total turnover, in line with the Supreme Court's ruling.

The CIT(A) partly allowed the appeal regarding the expenditure disallowance, restricting it to Rs. 39,31,596. However, the additions for securities premium and share application money were dismissed due to the assessee's failure to prove the creditworthiness of the investors.

The Tribunal held that the expenditure was incurred towards expansion of the existing business and was a commercial decision to shelve a non-viable project. Therefore, it was revenue in nature and allowable as a deduction.

The Tribunal held that the expenditure on re-modification of TV towers was revenue in nature. However, the construction of temporary stables was treated as capital expenditure, while repairs to existing stables were allowed as revenue. The upgradation of UPS systems was treated as capital expenditure eligible for depreciation.

The Tribunal held that the scope of Section 80-IA(5) is limited to determining the quantum of deduction by treating the eligible business as the sole source of income. It cannot be used to restrict deductions to only 'business income'. The issue of Section 80-IB(10) deduction was remanded to the AO for recomputation based on Supreme Court rulings.

The Tribunal held that the assessment order was dispatched within the prescribed limitation period, rejecting the assessee's plea of limitation. However, in the interest of justice, the issue on merits regarding the addition under Section 68 was restored to the Assessing Officer for further verification.

The Tribunal held that the assessee was the owner of multiple residential units as per the JDA at the time of purchasing the new asset. Therefore, the assessee did not fulfill the conditions for claiming exemption under Section 54F.

The Tribunal held that the assessee had commenced its business as it had acquired land in 2010-11 and incurred construction expenses. However, the allocation of expenses to the project account by the CIT(A) required fresh examination considering accounting standards.

The Tribunal restored the issue of Rs. 1,50,000 loan from Ms. Shamala to the AO for fresh consideration with admitted additional evidence. It confirmed the addition of Rs. 1,25,000 from Mr. Ramrathana due to lack of evidence. For loans from Mr. Manu K.P. and Smt. Roopa Manu, the Tribunal directed the AO to delete the addition if the assessee proves repayment, noting the CIT(A)'s enhancement was made without notice.

The Tribunal held that the assessee was not granted a proper opportunity of being heard. Therefore, in the interest of justice, the issue was remanded back to the Principal CIT for a detailed order after granting the assessee a proper hearing.

The Tribunal held that the KHB is a projection of the State Government and its activities are driven by public welfare, not profit. The net profit rate was found to be significantly lower than what was alleged by the revenue.

The Tribunal held that the Assessing Officer failed to discharge the burden of proving that the assessee was the beneficial owner of the bank account. The addition was based on suspicion and conjecture without sufficient legal evidence, and the corporate veil was lifted without proper investigation.

The Tribunal found that the CIT(A)'s approach of disallowing expenses on an ad-hoc basis was not justified. The Tribunal remanded the issue of consultancy payments and speculative loss to the TPO/AO for fresh consideration and proper verification of evidence.

The Tribunal found that the CIT(A)'s approach of disallowing expenses on an ad-hoc basis was not justified. The Tribunal remanded the issue of consultancy payments and speculative loss to the TPO/AO for fresh consideration and proper verification of evidence.

The Tribunal found that the CIT(A)'s approach of disallowing expenses on an ad-hoc basis was not justified. The Tribunal remanded the issue of consultancy payments and speculative loss to the TPO/AO for fresh consideration and proper verification of evidence.

The Tribunal found that the CIT(A)'s approach of disallowing expenses on an ad-hoc basis was not justified. The Tribunal remanded the issue of consultancy payments and speculative loss to the TPO/AO for fresh consideration and proper verification of evidence.

The Tribunal held that payments to the Polish law firm were not taxable in India under the DTAA as the conditions for professional services under Article 15 were not met. For payments to the US vendor, the Tribunal found that the CIT(A)'s reliance on an overruled High Court decision required a remand for fresh examination.

The Tribunal held that the expenditure on re-modification of TV towers was revenue in nature. However, the construction of temporary stables was treated as capital expenditure, while repairs to existing stables were allowed as revenue. The upgradation of UPS systems was treated as capital expenditure eligible for depreciation.

The Tribunal held that the assessee had commenced its business as it had acquired land in 2010-11 and incurred construction expenses. However, the allocation of expenses to the project account by the CIT(A) required fresh examination considering accounting standards.

The Tribunal held that since the transactions, including the advances to the director and bank withdrawals/deposits, were routed through the company's books of account, they could not be considered undisclosed income. The CIT(A)'s deletion of the additions was upheld.

The Tribunal held that the KHB is a projection of the State Government and its activities are driven by public welfare, not profit. The net profit rate was found to be significantly lower than what was alleged by the revenue.

The Tribunal directed the exclusion of six comparable companies due to their high turnover exceeding the assessee's turnover category. The Tribunal also restored three other comparable companies to the AO/TPO for further verification of factual aspects.

The Tribunal found that the CIT(A)'s approach of disallowing expenses on an ad-hoc basis was not justified. The Tribunal remanded the issue of consultancy payments and speculative loss to the TPO/AO for fresh consideration and proper verification of evidence.

The Tribunal held that the execution of a registered Joint Development Agreement (JDA) and General Power of Attorney (GPA) constituted a transfer of property for capital gains purposes, even if physical possession was handed over later. Interest under sections 234A, 234B, and 234C was deemed mandatory and consequential.

The Tribunal held that payments to the Polish law firm were not taxable in India under the DTAA as the conditions for professional services under Article 15 were not met. For payments to the US vendor, the Tribunal found that the CIT(A)'s reliance on an overruled High Court decision required a remand for fresh examination.

The Tribunal noted that the lower authorities had not considered the Supreme Court's decision in ICDS Ltd. The issue revolved around whether the transaction was a finance lease. Therefore, the Tribunal remanded the issue back to the Assessing Officer for verification based on the principles laid down by the Supreme Court.

The Tribunal held that the loss on investment for shares was a capital loss, not a business loss. However, the issue of certain deposits claimed as bad debts was remitted to the Assessing Officer for fresh consideration.

The Tribunal held that the sale proceeds from software licenses, based on the Supreme Court's decision in Engineering Analysis Centre of Excellence Pvt. Ltd., do not constitute royalty income under the India-Singapore DTAA. Therefore, the addition made by the AO is to be deleted.

The Tribunal held that the Assessing Officer failed to discharge the burden of proving that the assessee was the beneficial owner of the bank account. The addition was based on suspicion and conjecture without sufficient legal evidence, and the corporate veil was lifted without proper investigation.

The Tribunal held that since the transactions, including the advances to the director and bank withdrawals/deposits, were routed through the company's books of account, they could not be considered undisclosed income. The CIT(A)'s deletion of the additions was upheld.

The Tribunal noted that the authorities below failed to distinguish between Section 28 (compulsory acquisition) and Section 46 (private negotiations) of the RFCTLARR Act. It also observed that the CBDT Circular No. 36/2016 provides exemption for compensation received under Section 28.

The Tribunal condoned the delay, citing the Hon'ble Supreme Court's liberal approach to substantial justice. The CIT(A) was directed to admit the appeal and decide the issues on merits after granting the assessee an opportunity of being heard.

The Tribunal restored the issue of deduction under Section 80P(2)(a)(i) to the Assessing Officer for de novo consideration, following a Supreme Court judgment on the definition of 'members'. It also directed the AO to examine the claim for deduction under Section 80P(2)(d) and Section 57 afresh.

The Tribunal held that the delay was due to negligence and inaction on the part of the assessee and their representative, and not a sufficient cause. The explanation regarding the COVID-19 pandemic was also rejected as the CIT(A)'s order predated the pandemic.

The Tribunal held that the disallowance was incorrect as the PF contribution was made within the due date for filing the return of income under section 139(1), even if it was beyond the due date prescribed by the PF Act. The amendments made by the Finance Act 2021 were not applicable retrospectively.

The Tribunal held that the amendments to Section 36(1)(va) and 43B of the IT Act by the Finance Act, 2021, were not retrospective and did not apply to the assessment year in question. The assessee is entitled to deduction if the payment was made before the due date of filing the return of income.

The Tribunal noted the discrepancy between the application and the granted registration. It remanded the issue back to the Commissioner to examine the trust's objects and consider the claim for charitable activities.

The Tribunal held that income earned outside India by a non-resident is not taxable in India, and erroneously offered income in the return constitutes a mistake apparent from record. The rejection of rectification applications was set aside.

The Tribunal held that income earned outside India by a non-resident is not taxable in India, and erroneously offered income in the return constitutes a mistake apparent from record. The rejection of rectification applications was set aside.

The Tribunal agreed that disallowance under Rule 8D(2)(ii) requires proof of interest-free funds for investments, directing the AO to verify this. For Rule 8D(2)(iii), the disallowance should be restricted to investments yielding dividend income.

The Tribunal restored the claims for deduction under Section 35(1)(i) and 35(1)(iv) to the AO for examination. It allowed the provision for commission expenses, holding that it accrued when sales orders were secured. The Tribunal confirmed the deletion of disallowance under Section 35(2AB) by following the jurisdictional High Court's decision and deleted the disallowance under Section 14A, finding that the assessee's own funds exceeded its investments.

The Tribunal restored the claims for deduction under Section 35(1)(i) and 35(1)(iv) to the AO for examination. It allowed the provision for commission expenses, holding that it accrued when sales orders were secured. The Tribunal confirmed the deletion of disallowance under Section 35(2AB) by following the jurisdictional High Court's decision and deleted the disallowance under Section 14A, finding that the assessee's own funds exceeded its investments.

The Tribunal held that the legal contentions regarding the applicability of the RFCTLARR Act were not raised before the Pr. CIT. Therefore, the matter requires reconsideration by the Pr. CIT.

The Tribunal condoned the delay in filing the appeal, citing the assessee's own case for a prior assessment year and the principle of substantial justice. The issue of long-term capital gains on penny stocks was restored to the Assessing Officer for de novo assessment.

The Tribunal held that interest income earned from investments in co-operative societies is eligible for deduction under Section 80P(2)(d) and remanded the issue to the AO for verification. The issue regarding deduction for credit facilities to associate/nominal members was also remanded for de novo examination in light of a Supreme Court judgment.

The Tribunal noted the assessee's decision to resolve the dispute under the Vivad Se Vishwas Act. Consequently, the appeals were treated as withdrawn by the assessee.

The Tribunal held that location savings, while a factor in cross-border trade, cannot solely be the basis for determining Arm's Length Price (ALP) and making adjustments if comparable uncontrolled prices are available. The Tribunal also found that an addendum to the agreement, treating investigator payments as pass-through costs without a mark-up, was a self-serving document intended to evade taxes and was not genuine.