ITAT Bangalore Judgments — December 2021

The Tribunal held that the AO's failure to conduct a fresh examination and pass a fresh assessment order, instead granting relief in an 'Order Giving Effect', rendered the order erroneous and prejudicial to revenue. Therefore, the revision order by the PCIT was upheld.

The Tribunal held that the AO had made a conscious decision to estimate profit from unaccounted sales based on a plausible view, and the seized materials did not contain details of unaccounted purchases as presumed by the PCIT. Therefore, the assessment orders were not erroneous or prejudicial to the revenue.

The Tribunal held that the employees' contribution paid before the due date of filing the return under Section 139(1) is an allowable deduction. The amendments to Sections 36(1)(va) and 43B by the Finance Act, 2021, were held to be not applicable retrospectively for the assessment year in question.

The Tribunal held that the 15% of sale proceeds retained by the monitoring committee, though not an 'overriding title' diversion, constituted an allowable business expenditure under Section 37 of the Income Tax Act. It also clarified that as a partnership firm, the assessee was not subject to Corporate Social Responsibility (CSR) provisions applicable to companies.

The Tribunal held that the AO had made a conscious decision to estimate profit from unaccounted sales based on a plausible view, and the seized materials did not contain details of unaccounted purchases as presumed by the PCIT. Therefore, the assessment orders were not erroneous or prejudicial to the revenue.

The Tribunal held that the AO had made a conscious decision to estimate profit from unaccounted sales based on a plausible view, and the seized materials did not contain details of unaccounted purchases as presumed by the PCIT. Therefore, the assessment orders were not erroneous or prejudicial to the revenue.

The Tribunal held that payments made as compensation for R&R plans are allowable as revenue expenditure, not hit by Section 37(1) Explanation 1. However, due to lack of detailed break-up, the issue of compensation payment was restored to the AO for factual examination.

The Tribunal held that the CIT(A) should have decided the appeal on merits ex-parte, rather than dismissing it for non-prosecution. The case was remitted back to the CIT(A) for a decision on merits after providing adequate opportunity of hearing to the assessee.

The Tribunal held that the business profile of the assessee cannot be changed from year to year, especially when international transactions are based on the same agreement. The reclassification solely based on the lack of employee bifurcation was deemed insufficient.