ITAT Bangalore Judgments — May 2023

The Tribunal upheld the CIT(A)'s direction to the AO to verify the FTC claim and allowed the appeal for statistical purposes. The Tribunal also directed the AO to restrict the levy of interest under section 234C to the returned income.

The Tribunal admitted additional grounds of appeal raised by the assessee. It directed the TPO to verify TD Power Systems Ltd. as a comparable and excluded Inox Wind Ltd. and Suzlon Energy Ltd. from the list of comparables.

The Tribunal allowed the appeal of the assessee on the primary issue concerning the taxability of employee cost reimbursements. The Tribunal noted that a similar issue had been decided by a coordinate bench in the assessee's own case for Assessment Year 2019-20. In that decision, it was held that the seconded employees were paid salaries, and TDS was deducted. The reimbursement made by the assessee was on a cost-to-cost basis without any profit element. The Tribunal found that the terms and conditions of service and agreements were examined, and the reimbursements were part of the expatriate employees' salaries, covered by Article 12 of the India-Japan DTAA. Respectfully following this precedent, the Tribunal allowed grounds 3 to 3.9. Grounds 1 and 2 were considered general, and grounds 4 to 6 were consequential, thus requiring no separate adjudication. The appeal was allowed.

The Tribunal held that the DRP's order dated 29.06.2022 was manually passed without a DIN, and a DIN was subsequently generated on 30.06.2022. As per CBDT Circular No. 19/2019, any communication issued by an Income Tax Authority without DIN is treated as invalid and deemed to have never been issued, unless exceptional circumstances with proper reasons and prior approval are met, which were not recorded. The Tribunal relied on the Delhi High Court's decision in the revenue's appeal in the Brandix Mauritious Holdings Ltd. case, which held that circulars issued under Section 119 are binding on the revenue and that the absence of DIN renders the communication invalid, with no scope for recourse under Section 292B. Therefore, the Tribunal quashed the impugned final assessment order. As the legal issue was decided in favour of the assessee, other grounds of appeal were not adjudicated and were kept open.

The Tribunal held that interest income earned from parking surplus funds in fixed deposits by a Special Economic Zone (SEZ) unit is an integral part of its export business activity. Therefore, such interest income is eligible for deduction under Section 10AA of the Act.

The Tribunal held that the reference to the TPO for specified domestic transactions under Section 92BA(i) was invalid due to the omission of this clause. For international transactions below Rs. 1 crore, TP adjustment should not be made. Issues regarding unconfirmed creditors and brought forward losses were remitted to the AO.

The Tribunal held that the reference to the TPO for specified domestic transactions under Section 92BA(i) was invalid due to the omission of this clause. For international transactions below Rs. 1 crore, TP adjustment should not be made. Issues regarding unconfirmed creditors and brought forward losses were remitted to the AO.

The Tribunal held that the DRP's order, issued without a DIN, was invalid and deemed to have never been issued, following CBDT circulars and High Court pronouncements. Consequently, the final assessment order was quashed.

The Tribunal, considering the interest of justice, decided to remit the entire issue back to the NFAC. This is to allow the assessee a fresh opportunity to present their case and for the NFAC to decide the matter after affording a proper hearing.

The Tribunal, following the Karnataka High Court's decision in the assessee's own case, held that the provision for warranty was a deductible expense. The High Court had found the assessee's estimation of warranty provision to be reliable and robust, with a high utilization rate.

The Tribunal held that the disallowance of CSR contributions claimed under Section 80G was erroneous and remitted the issue to the AO for verification. Regarding gratuity provisions, the Tribunal remanded the issue to the AO for verification of actual payments and allowed deduction to the extent eligible.

The Tribunal held that the foreign travel expenses were incurred for obtaining donations from abroad, which were utilized for the trust's charitable objects. Relying on various judicial pronouncements, the Tribunal found that such expenditure, even if incurred outside India, is allowable if it serves charitable purposes in India.

The Tribunal held that the assessment order is considered issued only when it is digitally signed. Since the digital signature was affixed on March 1, 2022, which is beyond the prescribed limitation period, the order is indeed barred by limitation.

The Tribunal noted that the documents filed by the assessee regarding the closure of the branch office and employee transfers (pages 320-360, annexures 1-4) were not properly examined by the lower authorities. Verification of employee transfers pursuant to the alleged closure was also not carried out. The Tribunal acknowledged that the branch closure document itself had not been obtained by the assessee. However, it also noted that in preceding AYs, the assessee had offered income attributable to the branch, which was accepted by the revenue. The Tribunal held that if taxability of proportionate income arises, it must be computed under business income, and all available benefits should be granted. The Tribunal directed the AO to conduct verification to ascertain if any activities were being carried out under the branch office name and to determine the taxability attributable to such branch office, if any. Grounds 2-4 were allowed for statistical purposes. Grounds 5 and 6 were kept open. Grounds 7 and 8 were deemed consequential. The appeal for AY 2017-18 was partly allowed for statistical purposes. The appeal for AY 2018-19 was remanded to the AO with similar directions.

The Tribunal noted that the documents filed by the assessee regarding the closure of the branch office and employee transfers (pages 320-360, annexures 1-4) were not properly examined by the lower authorities. Verification of employee transfers pursuant to the alleged closure was also not carried out. The Tribunal acknowledged that the branch closure document itself had not been obtained by the assessee. However, it also noted that in preceding AYs, the assessee had offered income attributable to the branch, which was accepted by the revenue. The Tribunal held that if taxability of proportionate income arises, it must be computed under business income, and all available benefits should be granted. The Tribunal directed the AO to conduct verification to ascertain if any activities were being carried out under the branch office name and to determine the taxability attributable to such branch office, if any. Grounds 2-4 were allowed for statistical purposes. Grounds 5 and 6 were kept open. Grounds 7 and 8 were deemed consequential. The appeal for AY 2017-18 was partly allowed for statistical purposes. The appeal for AY 2018-19 was remanded to the AO with similar directions.

The Tribunal partially allowed the assessee's appeal. It directed the AO to disallow only 10% of the disputed expenses and deleted the addition for unexplained investment of Rs. 10 lakhs, considering the possibility of telescoping with income assessed in earlier years.

The Tribunal held that the benefit of jewellery declared under VDIS and regular returns by the assessee's mother and wife should be granted. Additionally, the benefit of jewellery for other family members as per CBDT instructions should be considered. The addition sustained by the CIT(A) was not fully justified.

The Tribunal held that the disallowance was not justified as the AO had not rejected the audited books of accounts and made an ad-hoc disallowance without proper inquiry. The Tribunal relied on its own previous order in the assessee's own case and a High Court judgment.

The Tribunal restored the matter to the CIT(A) for fresh adjudication. The CIT(A) was directed to decide the quantum assessment appeal before deciding the penalty appeal, with the assessee directed to cooperate and provide submissions.

The Tribunal held that the inclusion of BNR Udyog Ltd. as a comparable company is not valid. The Tribunal relied on its previous order in the case of GTS e-Services (P.) Ltd. and other co-ordinate bench decisions, which held that BNR Udyog Ltd. fails the functionality test because it is engaged in specialized services like medical transcription, medical coding, and medical billing, which are functionally dissimilar to the assessee's BPO services. Therefore, this ground of appeal is allowed, and the AO/TPO is directed to exclude BNR Udyog Ltd. as a comparable. Regarding Universal Print Systems Limited (UPS), the Tribunal noted that the previous order had remitted the issue to the TPO for fresh consideration. The judgment does not explicitly state the final decision on UPS in this particular order, but the focus shifts to BNR Udyog Ltd. The ground regarding interest under section 234A was considered consequential. The AO was directed to verify and grant credit for taxes paid under protest amounting to INR 53,79,565. The appeal was partly allowed.

The Tribunal held that the deposits were adequately explained as being from the husband's retirement benefits and subsequent withdrawals. Therefore, the additions made by the AO and NFAC were deleted, and the penalties were also deleted.

The Tribunal decided on the issues as follows: 1. Regarding the transfer pricing adjustment, the Tribunal accepted the assessee's contention that the AO erroneously believed the issue was remanded to the DRP. Since the TPO had already passed an order determining the adjustment as NIL, the Tribunal directed the AO to pass a consequential order considering the transfer pricing adjustment at Nil. This ground of the assessee was allowed. 2. Concerning the disallowance under Section 14A, the Tribunal noted that the AO retained the addition despite the Tribunal having deleted similar disallowances in the assessee's own case for AY 2014-15 due to the absence of exempt income. Following judicial precedent, the Tribunal directed the AO to delete the addition. This ground was allowed. 3. On the Section 80G deduction claim, the Tribunal acknowledged that the AO had retained the addition without considering the details furnished by the assessee, contrary to the Tribunal's earlier direction. The Tribunal directed the AO to pass a consequential order accordingly, allowing the assessee's ground of appeal. The Tribunal also noted that for subsequent assessment years, it had held that reimbursements to overseas entities for seconded employees do not constitute 'Fee for Technical Services' and that there was no violation of Section 195, thus no disallowance under Section 40(a)(ia) was warranted. The addition under Section 40(a)(ia) amounting to Rs. 48,25,91,738 was deleted.

The Tribunal held that employee contributions to ESI & PF paid after the due date specified in the respective Acts are not deductible, following the Supreme Court's decision in Checkmate Services. Employer contributions paid before the return filing due date are allowable. GST liability paid before the return filing due date is also allowable.

The Tribunal held that the AO's addition on account of waived interest was not justified, as the waiver was based on business commitments and proper documentation was provided. However, an addition for consultancy fees was remitted back to the AO for further examination.

The Tribunal held that the CIT(A) erred in dismissing the appeal without deciding on merits, especially since the CPC's own communication indicated that the intimation was covered under section 154. The Tribunal found that the perquisite value was wrongly added twice and that Form 16, issued by the employer, should be accepted regarding HRA exemption and Chapter VI A deductions.

The Tribunal held that the disallowance was not justified as the AO had not rejected the audited books of accounts and made an ad-hoc disallowance without proper inquiry. The Tribunal relied on its own previous order in the assessee's own case and a High Court judgment.

The Tribunal held that the deposits were adequately explained as being from the husband's retirement benefits and subsequent withdrawals. Therefore, the additions made by the AO and NFAC were deleted, and the penalties were also deleted.

The Tribunal held that the deposits were adequately explained as being from the husband's retirement benefits and subsequent withdrawals. Therefore, the additions made by the AO and NFAC were deleted, and the penalties were also deleted.

The Tribunal directed the exclusion of certain companies (Persistent Systems Ltd., Larsen & Toubro Infotech Ltd., Infosys Ltd., and Infobeans Technologies Ltd.) from the comparable list. It also directed the inclusion of other companies (I2T2 India Ltd. and Infomile Technologies Ltd.). The issue of working capital adjustment was remanded back to the AO/TPO for reconsideration.

The Tribunal restored the matter to the AO for de-novo assessment, noting that the CIT(A) had not decided the issue on merits and the assessee's submissions and documents were not examined. The assessee was directed to prove the transactions and their reflection in the partnership firm's accounts.

The Tribunal held that for Section 2(47)(v) to apply, possession must be taken in part performance of the contract. Clause 5.1 of the JDA indicated a license, not possession under Section 53A of the Transfer of Property Act. Therefore, no transfer occurred in AY 2011-12.

The Tribunal held that the AO's addition on account of waived interest was not justified, as the waiver was based on business commitments and proper documentation was provided. However, an addition for consultancy fees was remitted back to the AO for further examination.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal held that the assessee had a reasonable cause for not filing the AIR due to a bonafide belief that it was not required, especially considering the amendment to Rule 114E which included cooperative banks later. The penalty was set aside.

The Tribunal, in the interest of justice, allowed the assessee's plea for a hearing and remitted the entire issue back to the AO for fresh consideration. The AO is to decide the matter after providing the assessee with an opportunity to be heard.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. It held that the CIT(A) erred in dismissing the appeal in limine as the grounds raised in the appeal against the assessment order were different from those in the appeal against the rectification order.

The Tribunal held that the assessee society was not entitled to exemption under Section 11 as its activities amounted to carrying on a business. The disallowance of financial charges and remuneration to the secretary was upheld.

The Tribunal followed its own earlier decision for the same assessee and assessment years, which held that depreciation on goodwill is not allowable. Therefore, the grounds of appeal related to this issue were dismissed.

The Tribunal found that the CIT(A) had not properly adjudicated the assessee's contentions regarding the freight payments and the applicability of Section 194C. Therefore, the matter was restored to the CIT(A) for fresh consideration.

The Tribunal condoned the delay in filing the appeals, finding sufficient cause due to the assessee's imprisonment and mental agony. Since the CIT(A) orders were ex-parte, the Tribunal remitted the entire issue back to the CIT(A) for fresh adjudication after providing a hearing opportunity.

The Tribunal condoned the delay in filing the appeals, finding sufficient cause due to the assessee's imprisonment and mental agony. Since the CIT(A) orders were ex-parte, the Tribunal remitted the entire issue back to the CIT(A) for fresh adjudication after providing a hearing opportunity.

The Tribunal condoned the delay in filing the appeals, finding sufficient cause due to the assessee's imprisonment and mental agony. Since the CIT(A) orders were ex-parte, the Tribunal remitted the entire issue back to the CIT(A) for fresh adjudication after providing a hearing opportunity.

The Tribunal, while deprecating the assessee's lack of response, restored the appeal to the CIT(A) for fresh adjudication in the interest of justice. The CIT(A) was directed to issue fresh notices and consider the assessee's submissions.