ITAT Bangalore Judgments — November 2021

The Tribunal held that communication charges and expenses incurred in foreign exchange should be excluded from both export turnover and total turnover for Section 10A deduction. It also allowed education cess as a deductible business expenditure.

The Tribunal corrected the PAN of the assessee from ABHFS 8469H to ABMFS 5851N. It also clarified that the search referenced in the assessment order was conducted in the case of Sri Dadapeer, not K. Mahesh Kumar.

The Tribunal held that additions in unabated assessment years can only be made if based on incriminating material found during the search. It also found that the AO wrongly disallowed transportation charges paid to Shri Jagadish Devadiga without considering evidence and denying cross-examination, thus violating natural justice.

The Tribunal held that communication charges and expenses incurred in foreign exchange should be excluded from both export turnover and total turnover for Section 10A deduction. It also allowed education cess as a deductible business expenditure.

The Tribunal held that payments for software, in the context of the provided services and agreements, did not constitute royalty income taxable in India. This decision was based on the Supreme Court's ruling in the Engineering Analysis Centre of Excellence Pvt. Ltd. case.

The Tribunal held that payments for software, in the context of the provided services and agreements, did not constitute royalty income taxable in India. This decision was based on the Supreme Court's ruling in the Engineering Analysis Centre of Excellence Pvt. Ltd. case.

The Tribunal held that additions based solely on bank credits without considering debits or peak credit are unsustainable. The CIT(A)'s deletion of additions was upheld as the AO did not provide sufficient evidence to prove unexplained income from the bank accounts.

The Tribunal restored the appeals to the file of the CIT(A) for adjudication on merits, citing principles of natural justice. The Tribunal directed the assessee to cooperate for expeditious disposal.

The Tribunal held that payments for software, in the context of the provided services and agreements, did not constitute royalty income taxable in India. This decision was based on the Supreme Court's ruling in the Engineering Analysis Centre of Excellence Pvt. Ltd. case.

The Tribunal held that the assessee is entitled to deduction under Section 54F in principle, subject to production of evidence before the AO. Regarding the first issue, the Tribunal noted that the property was jointly purchased by the assessee and his wife for Rs. 1,00,00,000, while the sub-registrar valued it at Rs. 1,76,47,000. The assessee argued that the property was under dispute with tenants, affecting its market value. The Tribunal found that the assessee had invested in a single piece of property which was a residential building consisting of multiple units. It relied on the ratio in K.G. Rukminiamma (331 ITR 211) to hold that 'a residential house' does not mean a single unit but a building of residential nature, and the physical structure of multiple units does not impede the deduction. The Tribunal restored the issue of quantification of deduction under Section 54F to the AO, directing the assessee to produce relevant evidence. Regarding the second issue, the Tribunal noted the assessee's argument that for AY 2014-15, purchasing more than one residential house was permissible under Section 54F. The Tribunal also addressed the issue of a gifted property being shown in the balance sheet, considering it a bona fide mistake by the CA. The appeal was allowed.

The Tribunal held that the CIT's order under Section 263 was not valid as the alleged loss of revenue had already been brought to tax in the reassessment proceedings. Consequently, the subsequent orders based on the Section 263 order were also annulled.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal restored several issues, including provisions for estimated losses, computation of margins, leverage, and TDS credit, to the Assessing Officer/Transfer Pricing Officer for fresh examination. For Section 14A, a disallowance of 10% of exempt dividend income was directed. The deduction of education cess was also restored for examination.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal directed the TPO to reconsider the inclusion of LGS Global Ltd. and to include Akshay Software Technologies Ltd. as a comparable. It also ruled in favor of the assessee regarding depreciation on servers and networking equipment.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal held that interest earned on deposits of government grants, which were directed by the government to be treated as part of the grant and used for specific purposes, could not be treated as the assessee's income. The assessee's claim for additional expenses was also confirmed as disallowed.

The Tribunal held that the amendments to Sections 43B and 36(1)(va) by the Finance Act, 2021, were not clarificatory and did not have retrospective operation. Following the jurisdictional High Court's decision, the Tribunal ruled that employee contributions paid before the due date for filing the return of income are allowable deductions.

The Tribunal held that Infosys BPO Limited and TCS E-Serve Limited should be excluded from the list of comparables due to functional dissimilarity and brand value. It also ruled that no negative working capital adjustment should be made and allowed the deduction of educational cess.

The Tribunal decided to remand the issue of R&D expenses back to the AO for fresh examination, following a previous order in the assessee's own case. The Tribunal admitted the details filed by the assessee before the DRP for consideration.

The Tribunal directed the TPO to reconsider the inclusion of LGS Global Ltd. and to include Akshay Software Technologies Ltd. as a comparable. It also ruled in favor of the assessee regarding depreciation on servers and networking equipment.

The Tribunal held that the amendments to Sections 43B and 36(1)(va) by the Finance Act, 2021, were not clarificatory and did not have retrospective operation. Following the jurisdictional High Court's decision, the Tribunal ruled that employee contributions paid before the due date for filing the return of income are allowable deductions.

The Tribunal restored the issue of excess depreciation to the AO/TPO for verification and re-computation. It also directed the exclusion of Tata Elxsi Limited from the comparable list due to functional dissimilarity.

The Tribunal noted that a previous appeal concerning assessment orders had been remanded to the Principal Commissioner for re-examination due to subsequent ITAT orders. The Tribunal decided to allow the current appeal for statistical purposes, directing the Principal Commissioner to reconsider the registration issue in light of the previous order and the possibility of restored registration.

The Tribunal held that a strained relationship with the earlier auditor constituted a reasonable cause for the delay in filing the tax audit report. Therefore, the penalty levied under Section 271B was not sustainable.

The Tribunal held that the absence of the assessee's name in the sale agreement and the lack of direct correlation between payments are not conclusive. The matter was remanded to the AO for fresh examination of the understanding between the trusts and to allow the assessee to explain the deficiencies.

The Tribunal held that the assessee's reasons for the delay were not substantial and showed negligence. The CIT(A) was correct in dismissing the appeal without condoning the significant delay.

The Tribunal held that the AO's failure to make necessary inquiries regarding the audit adjustment, despite it being a recurring issue and a subject of addition in prior years, justified the Pr. CIT's invocation of Section 263. However, the matter was remanded for fresh consideration.

The Tribunal held that the issue regarding the deduction under Section 80P, particularly concerning interest income from investments made in compliance with the Co-operative Societies Act, requires fresh examination by the Assessing Officer (AO). The Tribunal relied on the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr.

The Tribunal held that the contribution to the co-operative education fund is a statutory liability and an overriding charge on the income of the society. Therefore, it is not an appropriation of profits but a diversion of income at source, making it deductible.

The Tribunal found that the assessee failed to adequately prove the identity, creditworthiness, and genuineness of the transactions with the lenders. Therefore, the matter was remitted back to the Assessing Officer for fresh consideration.

The Tribunal held that MTM losses on forward contracts are allowable if they relate to revenue items, both the contract and underlying receivables/payables are revalued, and gains are netted against losses. However, since one-to-one mapping was not established, the issue was restored to the AO for re-examination. The Tribunal also directed that foreign currency expenses should not be excluded from export turnover for Section 10A deduction.

The Tribunal held that the possession given under the JDA was permissive and not in part performance of a contract as required by Section 53A of the Transfer of Property Act. Therefore, there was no 'transfer' within the meaning of Section 2(47)(v) of the Income Tax Act during the relevant assessment year.

The Tribunal held that the Assessing Officer's assessment order was erroneous and prejudicial to the revenue as it was passed without proper inquiry or verification on crucial issues. The CIT was justified in invoking Section 263 to direct a fresh examination of the disputed claims.

The Tribunal held that the contributions to charitable institutions were not incurred wholly and exclusively for the purpose of business and thus not allowable under Section 37(1). The issue of provision for future expenses was remitted to the Assessing Officer for fresh consideration.

The Tribunal held that while financial hardship is not a sufficient reason to waive penalty for non-remittance of TDS, the penalty levied by the Assessing Officer was exorbitant. The Tribunal reduced the penalty rate from 5% per month to 1% per month.

The Tribunal held that the maintenance charges collected from tenants and paid to the service provider should be allowed as a deduction under Section 57(iii) for income from other sources. There was no basis to disallow a proportionate part of these charges.

The tribunal held that the redemption of debentures held by HDFC Property Fund is not a Specified Domestic Transaction (SDT) under Section 40A(2)(b) as HDFC Property Fund was a legal owner, not a beneficial owner. It also held that the premium paid on redemption of debentures is a revenue expenditure.

The Tribunal held that while financial hardship is not a sufficient reason to waive penalty for non-remittance of TDS, the penalty levied by the Assessing Officer was exorbitant. The Tribunal reduced the penalty rate from 5% per month to 1% per month.

The Tribunal found merit in the assessee's contention that the assessment was made without proper examination of facts, especially since it was a best judgment assessment. The Tribunal restored the issues to the AO for fresh examination.

The Tribunal held that the issue of whether interest income earned from investments made in compliance with the Karnataka Co-operative Societies Act is eligible for deduction under Section 80P(2)(a)(i) requires fresh examination by the AO. The Tribunal also clarified that interest income from investments with cooperative societies is eligible for deduction under Section 80P(2)(d).

The Tribunal condoned the delay in filing appeals before the CIT(A), citing the principle of substantial justice over technicalities. It restored the appeals to the CIT(A)'s file for adjudication on merits.

The Tribunal condoned the delay in filing appeals before the CIT(A), citing the principle of substantial justice over technicalities. It restored the appeals to the CIT(A)'s file for adjudication on merits.

The Tribunal condoned the delay in filing appeals before the CIT(A), citing the principle of substantial justice over technicalities. It restored the appeals to the CIT(A)'s file for adjudication on merits.

The Tribunal condoned the delay in filing appeals before the CIT(A), citing the principle of substantial justice over technicalities. It restored the appeals to the CIT(A)'s file for adjudication on merits.