ITAT Bangalore Judgments — February 2023

The Tribunal held that the AO could not use documents seized from a third party to make additions under Section 153A of the Act. The AO should have invoked Section 153C after recording satisfaction, as the scope of assessments under Section 153A and 153C are different.

The Tribunal directed the AO to pass a revised assessment order incorporating the second Order Giving Effect (OGE) from the TPO, which revised the TP adjustment in the manufacturing segment and interest on delayed receivables. The issue of expatriate salary reimbursement was remitted back to the AO/TPO for verification of additional evidence.

The Tribunal held that working capital adjustment should be allowed as per actuals and remitted the issue to the AO/TPO for computation. The Tribunal also admitted an additional ground for inclusion of a comparable company and remitted that issue back to the TPO for fresh consideration.

The Tribunal held that the reopening of the assessment was invalid as the reasons recorded by the AO were based on mere suspicion and lacked concrete evidence of income escaping assessment. Consequently, the reassessment order was quashed.

The Tribunal held that if interest income arises from investments made under statutory compulsions for running the society's business, it should be considered business income eligible for deduction under Section 80P(2)(a)(i). The matter was remanded to the AO for fresh examination.

The Tribunal held that filing Form 67 is a directory requirement and not mandatory. It also noted that the Double Taxation Avoidance Agreement (DTAA) overrides the provisions of the Act and Rules, and disallowing FTC for a procedural delay is not justified.

The Tribunal held that filing Form 67 is a directory requirement and not mandatory. It also noted that the Double Taxation Avoidance Agreement (DTAA) overrides the provisions of the Act and Rules, and disallowing FTC for a procedural delay is not justified.

The Tribunal held that the notice under Section 143(2) was issued beyond the period of limitation, rendering the consequent assessment invalid. Therefore, the assessment orders for assessment years 2008-09 to 2011-12 were quashed.

The Tribunal held that the notice under Section 143(2) was issued beyond the period of limitation, rendering the consequent assessment invalid. Therefore, the assessment orders for assessment years 2008-09 to 2011-12 were quashed.

The Tribunal held that the notice under Section 143(2) was issued beyond the period of limitation, rendering the consequent assessment invalid. Therefore, the assessment orders for assessment years 2008-09 to 2011-12 were quashed.

The Tribunal held that the notice under Section 143(2) was issued beyond the period of limitation, rendering the consequent assessment invalid. Therefore, the assessment orders for assessment years 2008-09 to 2011-12 were quashed.

The Tribunal held that when income is computed on an estimated basis (Gross Profit rate) and no specific deduction for purchases was allowed, a further disallowance under Section 40A(3) is not warranted. The disallowance made by the AO was deleted.

The Tribunal held that when income is computed on an estimated basis (Gross Profit rate) and no specific deduction for purchases was allowed, a further disallowance under Section 40A(3) is not warranted. The disallowance made by the AO was deleted.

The Tribunal held that when income is computed on an estimated basis (Gross Profit rate) and no specific deduction for purchases was allowed, a further disallowance under Section 40A(3) is not warranted. The disallowance made by the AO was deleted.

The Tribunal held that the CIT(A) erred in adjudicating upon the Section 154 rectification order without a separate appeal or remand report. The Tribunal remitted the entire issue to the CIT(A) for fresh consideration.

The Tribunal held that the notice under Section 143(2) was issued beyond the period of limitation, rendering the consequent assessment invalid. Therefore, the assessment orders for assessment years 2008-09 to 2011-12 were quashed.

The Tribunal found that the CIT(A) had decided the appeal on merit without the assessee's participation. Therefore, in the interest of justice, the matter was remitted back to the Assessing Officer for fresh consideration.

The Tribunal decided to remit the issue of TP adjustment on interest on outstanding receivables back to the AO/TPO for a de novo consideration. The Tribunal noted that a coordinate bench in the case of Safran Engineering Services India Pvt Ltd, and in the assessee's own case for AY 2017-2018, had restored similar matters to the AO/TPO with specific directions to determine the ALP for interest on delayed receivables by following the prescribed rules and conducting a proper benchmarking study. The Tribunal directed the AO/TPO to follow these directions and provide a reasonable opportunity of being heard to the assessee. The grounds pertaining to the TP adjustment in the Technical Support Services segment were left open as they became academic in light of the decision on the interest on receivables. The Tribunal ordered accordingly, stating that the appeal of the assessee is partly allowed.

The Tribunal held that K7 Computing Private Limited should be excluded from the comparables list for the SDS segment. The assessee's argument that segmental details were unavailable and the company's higher margin indicated the impact of dissimilar software development services was accepted. The Tribunal noted the company's significant IP ownership and sale of proprietary products, differentiating it from the assessee. The Tribunal did not record arguments for the revenue on this issue. The Tribunal also did not record the assessee's arguments for excluding other companies or including additional comparables. Regarding depreciation on goodwill, the Tribunal held that goodwill is an intangible asset under Explanation 3(b) to Section 32(1) of the Act, following the Supreme Court decision in CIT v. Smifs Securities Ltd. and the jurisdictional High Court decision in Manipal Universal Learning. The Tribunal found that goodwill arising from a slump sale difference between sale consideration and net book value is eligible for depreciation. The disallowance made by the AO was deleted. The Tribunal directed the AO to examine the assessee's claim for short grant of TDS credit of Rs. 7,074/- and grant credit accordingly after providing an opportunity of being heard.

The Tribunal held that when income is computed on an estimated basis (Gross Profit rate) and no specific deduction for purchases was allowed, a further disallowance under Section 40A(3) is not warranted. The disallowance made by the AO was deleted.

The Tribunal admitted additional evidence and, considering the possibility that the co-owners did not claim the TDS benefit, remitted the issue to the AO for fresh consideration. The assessee is directed to prove these facts before the AO.

The Tribunal held that the assessee had not furnished the requisite data to the lower authorities, specifically regarding the technicalities involved in providing the services as specified in Article 12(4) of the Tax Treaty. The Tribunal observed that in the absence of such details, it was not possible to analyze the nature of the services rendered and to determine if the payments were FTS/FIS. The Tribunal noted that clinical trial test reports are not mere data and involve various stages, and that the assessee company made available skill, knowledge, and expertise to the Indian entity, suggesting services in the nature of FTS. However, the Tribunal found the assessee's reliance on CIT v. De Beers India Minerals Pvt. Ltd. not relatable to the extent of services provided. Consequently, in the interest of justice, the Tribunal remitted the entire issue of characterization of services and taxability to the file of the AO/TPO for fresh consideration in light of the submissions made. The Tribunal also noted that the other grounds of appeal (interest under section 234A and penalty under section 271(1)(c)) were academic at that stage and did not require adjudication.

The Tribunal held that the AO should have suo motu referred the property valuation to the DVO. For the loan creditors, the Tribunal noted that the issue of carry-forward from the previous year was not examined by the lower authorities.

The Tribunal held that the final assessment order was void ab-initio as it was passed without a draft assessment order, violating the mandatory provisions of Section 144C of the Income Tax Act. This omission prevented the assessee from filing objections before the DRP.

The Tribunal held that the income declared as agricultural income in AY 2012-13 was indeed sourced from the lease advance already taxed in AY 2011-12. Therefore, taxing it again would amount to double taxation.

The Tribunal held that the assessment proceedings were completed ex-parte due to the assessee's non-compliance. The exemption claimed under Section 54B was denied as the assessee did not furnish details of reinvestment to the AO.

The Tribunal held that the disallowance under Section 14A, even if increased by the AO, does not constitute misreporting of income as all facts were disclosed. The penalty order was quashed.

The Tribunal admitted additional evidence and, considering the possibility that the co-owners did not claim the TDS benefit, remitted the issue to the AO for fresh consideration. The assessee is directed to prove these facts before the AO.

The Tribunal admitted additional evidence and remitted the issue to the AO for fresh consideration. The assessee must prove that CV Trust & R.K. Associates did not claim the TDS benefit.

The Tribunal held that the delay in filing Form 10B for AY 2017-18 is condoned as per CBDT Circular No. 10/2019, provided the audit report was obtained before filing the return and filed before the due date for filing the return. The assessee's Form 10B was filed before the due date, hence the denial of deduction was incorrect.

The Tribunal found that while the assessee claimed to have submitted evidence, it was unclear if this evidence was placed before the lower authorities. Therefore, the matter was restored to the AO for fresh examination to determine the actual cost of construction.

The Tribunal allowed the assessee's claim for exemption on the medical disability pension. It relied on a coordinate bench decision which held that such exemption is available to personnel invalidated due to bodily disability in service.

The Tribunal admitted additional evidence and, considering the possibility that the co-owners did not claim the TDS benefit, remitted the issue to the AO for fresh consideration. The assessee is directed to prove these facts before the AO.

The Tribunal admitted additional evidence and, considering the possibility that the co-owners did not claim the TDS benefit, remitted the issue to the AO for fresh consideration. The assessee is directed to prove these facts before the AO.

The Tribunal held that the DRP's decision to tax software sale receipts as royalty merely to keep the issue alive pending a review petition was incorrect. The Tribunal emphasized that a pending review petition does not obliterate the binding ratio of a Supreme Court judgment. Until an order on review is passed, the Supreme Court's decision remains binding. Therefore, the Tribunal ruled that income earned by the assessee on the sale of software is not taxable in India and deleted the additions made. Regarding the cross charges/reimbursement issue, the Tribunal noted that the AO had not considered the merits due to the assessee's failure to furnish details within the stipulated time. However, the assessee subsequently provided documents. Consequently, the Tribunal remitted this issue back to the AO with a direction to consider the furnished details and decide the matter in accordance with the law, providing the assessee a reasonable opportunity of being heard.

The Tribunal held that the CIT(A)'s conclusion that the assessee failed to show joint ownership and a joint account was incorrect. Evidence, including a sale deed, tax receipts, and a joint bank account statement, supported the assessee's claim of joint ownership and rental income. The Tribunal found that the assessee had satisfactorily explained the source of the cash deposits.

The Tribunal noted a significant delay in filing the appeal but condoned it, citing the Supreme Court's COVID-19 related extensions and the assessee's explanation regarding a change in CEO. On merits, the Tribunal found the issue to be covered by a previous coordinate bench decision and remitted the matter to the AO for fresh consideration.

The Tribunal held that the CIT(A) does not have the power to remand a case to the AO. Therefore, the case was remanded back to the CIT(A) to decide the issues on merits without further remand to the AO.

The Tribunal held that the issue of royalty expenses being capital or revenue expenditure should be remitted back to the AO for fresh examination, considering the High Court's ruling in CIT v. Luwa India Ltd. The Tribunal also noted that other grounds became academic in light of this decision.

The Tribunal held that the excess stock found was generated from business income and not an investment from other sources. Therefore, Section 69B was not applicable, and the tax levied under Section 115BBE was liable to be rejected.

The Tribunal held that the AO had partially accepted the assessee's explanation regarding cash deposits. The addition of Rs. 4 lakhs was made as unexplained investment, considering the assessee's declared income from tuition and tailoring classes.

For AY 2016-17, the tribunal dismissed the appeal as the assessee failed to provide evidence for the source of income. For AY 2018-19, the tribunal remanded the issue to the AO to consider cash withdrawals from the bank account in the preceding year as a potential source for the deposits.

The Tribunal admitted additional evidence, including valuation reports, and noted that the CIT(A)'s finding of intentional inaction by the assessee was not supported by evidence. Following a similar case, the Tribunal remitted the issue back to the AO to consider the VO's report and recompute the capital gains.

The Tribunal held that the assessment order was barred by limitation because it was not dispatched from the AO's control within the prescribed period. Consequently, the assessment orders were annulled.

The Tribunal held that the assessee firm should be given credit for the TCS collected, as the income on which TCS was collected was accounted for and taxed in the hands of the firm. The Tribunal found that the denial of credit was not justified, especially with the partner confirming he had not claimed the TCS.

The Tribunal held that the assessee is not entitled to deduction under Section 80P(2)(a)(i) or 80P(2)(d) for interest earned from investments in banks. However, it is entitled to deduction of proportionate expenses incurred in earning such interest income.

The Tribunal held that the assessee firm should be given credit for the TCS collected, as the income on which TCS was collected was accounted for and taxed in the hands of the firm. The Tribunal found that the denial of credit was not justified, especially with the partner confirming he had not claimed the TCS.

The Tribunal held that the assessee firm should be given credit for the TCS collected, as the income on which TCS was collected was accounted for and taxed in the hands of the firm. The Tribunal found that the denial of credit was not justified, especially with the partner confirming he had not claimed the TCS.

The Tribunal held that the assessee firm should be given credit for the TCS collected, as the income on which TCS was collected was accounted for and taxed in the hands of the firm. The Tribunal found that the denial of credit was not justified, especially with the partner confirming he had not claimed the TCS.

The Tribunal held that the final assessment order was not in accordance with the DRP's directions regarding the transfer pricing adjustment and therefore quashed the TP adjustment. The issues related to corporate tax disallowances were remitted back to the AO for fresh consideration.