ITAT Bangalore Judgments — December 2023

The Tribunal held that the reasons provided for the 220-day delay in filing the appeal were not sufficient or bonafide. The assessee failed to demonstrate due diligence, and ignorance of law is not an excuse.

The Tribunal found the NFAC's order to be cryptic and not addressing all issues. Therefore, the matter was remitted to the AO for fresh examination of both the Section 80P deduction and the Section 69A additions.

The Tribunal, considering the assessee's claim of being in the timber and firewood business and the lack of proper examination by the lower authorities, decided to remit the issue back to the AO. The AO is directed to re-examine the matter in light of the provided CBDT circulars and previous tribunal orders.

The Tribunal found the NFAC's order to be cryptic and not addressing all issues. Therefore, the matter was remitted to the AO for fresh examination of both the Section 80P deduction and the Section 69A additions.

The Tribunal dismissed one appeal as infructuous. For other appeals, it condoned the delay in filing by the revenue. It allowed the deduction for CSR expenditure, remitted the issue of RBI penalty for verification, and partly allowed the revenue's appeal on club expenses pending verification.

The Tribunal dismissed one appeal as infructuous. For other appeals, it condoned the delay in filing by the revenue. It allowed the deduction for CSR expenditure, remitted the issue of RBI penalty for verification, and partly allowed the revenue's appeal on club expenses pending verification.

The Tribunal held that the payments received for interconnectivity utility charges cannot be considered as Royalty or Fees for Technical Services (FTS) taxable in India. The Tribunal upheld the decision of the CIT(A) which relied on the Karnataka High Court's ruling.

The Tribunal held that the deductibility of foreign taxes paid on income arising in India needs verification by the AO. The appeals were partly allowed for statistical purposes.

The Tribunal decided the issues as follows: Regarding the revenue's grounds concerning Section 10A deduction for ET/TT (export of taxable services/technical services), the Tribunal followed the Supreme Court's decision in CIT vs. HCL Technologies and CIT vs. TATA Elxsi, directing the AO to recompute the eligible profits for deduction under Section 10A as per the Supreme Court's directions. Revenue's grounds 8-9 were dismissed. For the revenue's grounds challenging the exclusion of comparables and the treatment of the assessee as KPO under the IT segment, the Tribunal noted that the issue of benchmarking the IT segment was already remanded to the AO/TPO with directions not to consider the assessee as a KPO and to use TNMM as the MAM. Consequently, the issue of comparables also stood remanded, and revenue's grounds 10-11 were rendered infructuous and dismissed. Regarding revenue's grounds on the attribution of additional profits (grounds 12-18), the Tribunal held that since the assessee could not be considered a DAPE of Google Ireland Ltd., the income earned by Google Ireland Ltd. could not be taxed in India as business profits. Therefore, the issue of attribution did not arise, and these grounds were rendered infructuous and dismissed. Revenue's grounds 19-20 were general and did not require adjudication. On the additional grounds raised by the revenue alleging incorrect Section 10A deduction on ITeS income, the Tribunal found that the AO had not verified the necessary criteria for eligibility, specifically whether payments were received in foreign exchange. The Tribunal remanded this issue to the AO to verify invoices, service work orders, and other documents to confirm foreign currency receipt for ITeS services rendered. The additional grounds were allowed for statistical purposes. The Tribunal expressly left undecided the specific transfer pricing adjustments for software services, ITeS, and advertisement space purchases, as well as the corporate tax issues related to the rejection of books of accounts and disallowance of payments to Google Ireland Ltd., due to the remand of certain issues and the resolution of others based on precedent.

The Tribunal decided the issues as follows: Regarding the revenue's grounds concerning Section 10A deduction for ET/TT (export of taxable services/technical services), the Tribunal followed the Supreme Court's decision in CIT vs. HCL Technologies and CIT vs. TATA Elxsi, directing the AO to recompute the eligible profits for deduction under Section 10A as per the Supreme Court's directions. Revenue's grounds 8-9 were dismissed. For the revenue's grounds challenging the exclusion of comparables and the treatment of the assessee as KPO under the IT segment, the Tribunal noted that the issue of benchmarking the IT segment was already remanded to the AO/TPO with directions not to consider the assessee as a KPO and to use TNMM as the MAM. Consequently, the issue of comparables also stood remanded, and revenue's grounds 10-11 were rendered infructuous and dismissed. Regarding revenue's grounds on the attribution of additional profits (grounds 12-18), the Tribunal held that since the assessee could not be considered a DAPE of Google Ireland Ltd., the income earned by Google Ireland Ltd. could not be taxed in India as business profits. Therefore, the issue of attribution did not arise, and these grounds were rendered infructuous and dismissed. Revenue's grounds 19-20 were general and did not require adjudication. On the additional grounds raised by the revenue alleging incorrect Section 10A deduction on ITeS income, the Tribunal found that the AO had not verified the necessary criteria for eligibility, specifically whether payments were received in foreign exchange. The Tribunal remanded this issue to the AO to verify invoices, service work orders, and other documents to confirm foreign currency receipt for ITeS services rendered. The additional grounds were allowed for statistical purposes. The Tribunal expressly left undecided the specific transfer pricing adjustments for software services, ITeS, and advertisement space purchases, as well as the corporate tax issues related to the rejection of books of accounts and disallowance of payments to Google Ireland Ltd., due to the remand of certain issues and the resolution of others based on precedent.

The Tribunal dismissed one appeal as infructuous. For other appeals, it condoned the delay in filing by the revenue. It allowed the deduction for CSR expenditure, remitted the issue of RBI penalty for verification, and partly allowed the revenue's appeal on club expenses pending verification.

The Tribunal admitted additional grounds of appeal and directed the exclusion of 'Manipal Digital Systems Pvt. Ltd.' from the list of comparables, remanding the issue for fresh examination. The Tribunal also addressed the comparability of 'CES Ltd.', referencing prior decisions.

The Tribunal addressed several grounds of appeal. Regarding the validity of the assessment order (Ground No. 2), the Tribunal noted that the case was transferred to NFAC and the draft assessment order was passed by NFAC. However, the final assessment order was passed by the jurisdictional AO. The Tribunal considered communications from the revenue and a CBDT circular. While the internal ITBA order sheet was not considered sufficient to meet the requirements of Section 144B(8), the Tribunal ultimately did not decide this issue on merits, stating it was academic in nature. Regarding comparables (Ground No. 4), the Tribunal directed the exclusion of Jindal Intellicom Ltd. as it was not pressed by the assessee and was not part of the original grounds. For Ground No. 5, concerning the inclusion of comparables, the Tribunal remanded the issue to the AO/TPO for necessary verification and to grant an opportunity of being heard to the assessee. For Ground No. 7, concerning working capital adjustment, the Tribunal, following the decision in Huawei Technologies India (P.) Ltd. v. Jt. CIT, remitted the issue to the AO/TPO to determine the correct working capital adjustment. For Ground No. 8, regarding the set-off of brought forward losses, the Tribunal directed the AO/TPO to grant the set-off of brought forward losses against the final adjustment. Grounds 9-10 were considered academic and did not require adjudication. The appeal was partly allowed.

The Tribunal held that the deductibility of foreign taxes paid on income arising in India needs verification by the AO. The appeals were partly allowed for statistical purposes.

The Tribunal, while deprecating the assessee's non-response, decided to provide one more opportunity in the interest of justice and equity. The matter was remitted back to the AO for a fresh decision.

The Tribunal held that separate benchmarking of royalty payment is not required when the assessee has adopted the TNMM method at the entity level, which includes royalty as part of operating costs. This decision was based on the consistent view of the coordinate bench of the Tribunal in the assessee's own case for earlier assessment years (AYs 2012-13 and 2014-15), which found that if the net profit margin is tested at the entity level, the individual components are implicitly at arm's length. The Tribunal followed the precedent and directed the AO/TPO to delete any adjustment proposed for royalty as a separate international transaction. Consequently, the grounds relating to the Arm's Length Price (ALP) computation of royalty were rendered academic and left undecided. For the revenue's appeal concerning testing expenses (R&D), the Tribunal held that since the assessee's appeals were allowed on the issue of separate benchmarking of royalty, this issue also became purely academic and did not require separate adjudication. The Tribunal allowed the assessee's appeals partly and dismissed the revenue's appeals.

The Tribunal found the revenue's appeals to be defective due to the lack of proper signatures. Consequently, the appeals were dismissed as defective.

The Tribunal held that disallowances made under Section 40(a)(ia) should be added back to the profits, and the enhanced profits should be eligible for deduction under Section 80P(2)(a)(i), following a coordinate bench decision.

The Tribunal held that separate benchmarking of royalty payment is not required when the assessee has adopted the TNMM method at the entity level, which includes royalty as part of operating costs. This decision was based on the consistent view of the coordinate bench of the Tribunal in the assessee's own case for earlier assessment years (AYs 2012-13 and 2014-15), which found that if the net profit margin is tested at the entity level, the individual components are implicitly at arm's length. The Tribunal followed the precedent and directed the AO/TPO to delete any adjustment proposed for royalty as a separate international transaction. Consequently, the grounds relating to the Arm's Length Price (ALP) computation of royalty were rendered academic and left undecided. For the revenue's appeal concerning testing expenses (R&D), the Tribunal held that since the assessee's appeals were allowed on the issue of separate benchmarking of royalty, this issue also became purely academic and did not require separate adjudication. The Tribunal allowed the assessee's appeals partly and dismissed the revenue's appeals.

The Tribunal found the appeals filed by the revenue to be defective due to lack of proper signatures. Consequently, the appeals were dismissed as defective.

The Tribunal held that the notice issued under Section 274 for penalty proceedings was defective as it did not specify the grounds for imposing the penalty. Following the Karnataka High Court's decision, the penalty was deemed invalid.

The Tribunal noted the assessee's claim of sufficient cause for non-compliance due to COVID-19 and the loss of his mother. It was also observed that the Commissioner (Appeals) did not entertain additional evidence. Therefore, the case was remitted back to the AO for fresh consideration.

The Tribunal held that since the CIT(A)'s order was ex-parte and not decided on merit, the issue should be remitted back to the CIT(A). The CIT(A) is to adjudicate the matter on merit after giving the assessee an opportunity of being heard and considering the evidence.

The Tribunal held that disallowances made under Section 40(a)(ia) should be added back to the profits, and the enhanced profits should be eligible for deduction under Section 80P(2)(a)(i), following a coordinate bench decision.

The Tribunal held that separate benchmarking of royalty payment is not required when the assessee has adopted the TNMM method at the entity level, which includes royalty as part of operating costs. This decision was based on the consistent view of the coordinate bench of the Tribunal in the assessee's own case for earlier assessment years (AYs 2012-13 and 2014-15), which found that if the net profit margin is tested at the entity level, the individual components are implicitly at arm's length. The Tribunal followed the precedent and directed the AO/TPO to delete any adjustment proposed for royalty as a separate international transaction. Consequently, the grounds relating to the Arm's Length Price (ALP) computation of royalty were rendered academic and left undecided. For the revenue's appeal concerning testing expenses (R&D), the Tribunal held that since the assessee's appeals were allowed on the issue of separate benchmarking of royalty, this issue also became purely academic and did not require separate adjudication. The Tribunal allowed the assessee's appeals partly and dismissed the revenue's appeals.

The Tribunal found the revenue's appeals to be defective due to the lack of proper signatures. Consequently, the appeals were dismissed as defective.

The Tribunal held that the matter needed fresh examination by the AO to determine if the interest income was from providing credit facilities to members. If so, the assessee would be entitled to deduction under section 80P(2)(a)(i).

The Tribunal held that the matter needed fresh examination by the AO to determine if the interest income was from providing credit facilities to members. If so, the assessee would be entitled to deduction under section 80P(2)(a)(i).

The Tribunal held that separate benchmarking of royalty payment is not required when the assessee has adopted the TNMM method at the entity level, which includes royalty as part of operating costs. This decision was based on the consistent view of the coordinate bench of the Tribunal in the assessee's own case for earlier assessment years (AYs 2012-13 and 2014-15), which found that if the net profit margin is tested at the entity level, the individual components are implicitly at arm's length. The Tribunal followed the precedent and directed the AO/TPO to delete any adjustment proposed for royalty as a separate international transaction. Consequently, the grounds relating to the Arm's Length Price (ALP) computation of royalty were rendered academic and left undecided. For the revenue's appeal concerning testing expenses (R&D), the Tribunal held that since the assessee's appeals were allowed on the issue of separate benchmarking of royalty, this issue also became purely academic and did not require separate adjudication. The Tribunal allowed the assessee's appeals partly and dismissed the revenue's appeals.

The Tribunal, in the interest of justice and equity, granted the assessee one more opportunity to present his case. Since the assessment was completed under Section 144, the matter was remitted to the Assessing Officer.

The Tribunal restored the issues to the file of the CIT(A) to provide the assessee with one more opportunity to represent her case, considering the interest of justice and equity.

The Tribunal restored the matter to the AO, granting the assessee one more opportunity to present her case due to her age, illiteracy, and the ex-parte nature of the CIT(A)'s order. The AO is directed to provide a reasonable opportunity of being heard.

The Tribunal admitted the additional evidence filed by the assessee, finding sufficient reason for its late submission. The Tribunal decided to remit the issue to the Assessing Officer for fresh consideration in light of these documents.

The Tribunal admitted the additional ground raised by the assessee regarding the applicability of Section 56(2)(x) to stock-in-trade. The matter was remitted to the AO for fresh consideration of the documents and arguments.

The Tribunal restored the matter to the AO, granting the assessee one more opportunity to represent their case. The AO was directed to provide a reasonable opportunity of being heard.

The Tribunal held that the cash deposits were from sales and not unexplained. Since the primary addition was deleted, the penalty levied on that addition also did not survive.

The Tribunal held that the cash deposits were from sales and not unexplained. Since the primary addition was deleted, the penalty levied on that addition also did not survive.

The Tribunal directed the Assessing Officer to restrict the disallowance under Section 14A to the extent of exempt income. For the Section 80IA claim, the Tribunal found that the assessee's eligibility was not properly examined and that revised Form 10CCB was filed. The cross-objections by the revenue were dismissed.

The Tribunal held that the addition under section 68 cannot be made solely because the assessee was not authorized to collect old currency notes. The source of cash deposits needs to be examined. Therefore, the matter was remanded to the AO for this purpose.

The Tribunal held that the VAT liability, even if not routed through the P&L account, is disallowable under Section 43B if not paid within the due date. However, the addition for cessation of liability was deleted as the liability was not written off by either party, and thus, did not cease to exist as per Section 41(1).

The Tribunal held that interest income earned from cooperative banks is not eligible for deduction under Section 80P(2)(a)(i) or 80P(2)(d) of the Act, following the jurisdictional High Court's decision in PCIT Vs. Totagars Co-operative Sale Society Ltd.

The Tribunal allowed the ground relating to the disallowance of ESOP expenditure. It held that the expenditure on account of ESOP is a revenue expenditure and should be allowed as a deduction. The Tribunal relied on the decision of the Special Bench in the case of Biocon Ltd. v. Dy. CIT and a coordinate bench decision in Novo Nordisk India (P) Ltd. The reasoning was that the ESOP cost is an employee cost incurred for retaining a skilled workforce, which is a business expediency. The Tribunal noted that there was an actual outflow of cash from the assessee to the parent company for this purpose. The judgment indicates that the appeal was partly allowed for statistical purposes, suggesting that other grounds were either dismissed or not fully allowed. However, the specific findings on other grounds are not detailed in the provided extract. The operative direction for the ESOP issue was to allow the ground of the assessee.

The Tribunal upheld the CIT(Appeals)'s decision to allow proportionate deduction under Section 80P(2)(a)(i) for income earned from regular members, while disallowing income from associate/nominal members. The Tribunal followed the Supreme Court's decision in Mavilayi Service Cooperative Bank Ltd.

The Tribunal condoned the delay in filing the appeal before it, finding the assessee's explanation to be reasonable. However, the Tribunal remanded the matter back to the CIT(A) to reconsider the delay and pass a speaking order.

The Tribunal held that interest income earned by a co-operative society on its investments with co-operative banks is eligible for deduction under Section 80P(2)(d). Interest earned from commercial banks should be treated as income from other sources and relief granted under Section 57.

The Tribunal found that the CIT(A) had dismissed the appeals without adjudicating on merits, solely on the ground of delay. The Tribunal noted that penalties are consequential to quantum assessments, which were still pending before the CIT(A) after a remand from the ITAT.

The Tribunal found that the CIT(A) had dismissed the appeals without adjudicating on merits, solely on the ground of delay. The Tribunal noted that penalties are consequential to quantum assessments, which were still pending before the CIT(A) after a remand from the ITAT.

The Tribunal found that the Assessing Officer (AO) had not correctly calculated the interest under Section 244A. Therefore, the issue was remitted back to the AO for recalculation in accordance with the law.

The Tribunal held that the failure to provide an opportunity of hearing violated the principles of natural justice. Therefore, the appeals were remitted back to the NFAC for fresh consideration after providing an opportunity of hearing.

The Tribunal held that the principle of mutuality was not applicable as the assessee failed to demonstrate that the purchaser participated in common funds and was entitled to surplus. However, it agreed that only net capital gains, not the entire sale consideration, should be taxed.