ITAT Bangalore Judgments — October 2024

The Tribunal held that the additions made by the Assessing Officer were based on uncorroborated submissions made under pressure during the search and were not supported by any material evidence. The Tribunal noted that the assessee's initial surrender was not fully reflected in the returns filed, and the 'route expenses' were explained as payments to drivers for small, inevitable expenses during long journeys.

The Tribunal held that goodwill is an 'asset' under Explanation 3(b) to Section 32(1) of the Income Tax Act. Following previous decisions by the coordinate bench, High Court, and Supreme Court, the Tribunal ruled that depreciation is leviable on goodwill acquired through a slump sale.

The Tribunal held that a statement made under pressure during a search cannot be the sole basis for additions, especially when no corroborating material is found. The Tribunal noted that the assessee did not admit the expenses were bogus and had provided explanations for them. The disallowance sustained by the CIT(A) was deleted.

The Tribunal held that the assessee's statement during the search, which was made under pressure and coercion, cannot be the sole basis for additions. The Tribunal observed that no corroborative material was found during the search to support the alleged surrender or to prove that the expenses were bogus. The additions made by the AO and sustained by the CIT(A) were deleted.

The Tribunal found that the CIT(A) erred in rejecting the explanation of Rs. 19,25,000 from vehicle sales due to defects in delivery notes, and also erred in not giving credit for agricultural income and cash withdrawals. The Tribunal restored the issue of Rs. 19,25,000 from vehicle sales to the AO for fresh adjudication.

The Tribunal held that the AO erred in taxing the impugned amount in the assessment year under consideration. Provisions of section 68 are applicable to current year's credits, not amounts advanced in previous years, and correct income must be taxed in the correct year.

The Tribunal condoned the 6-year delay in filing the appeal, acknowledging the assessee's bonafide belief that the CIT(A) had granted full relief and the significant delay by the AO in passing the order giving effect. The Tribunal found that the cash deposit addition was adequately explained and remitted the other issues to the CIT(A) for adjudication.

The Tribunal condoned the one-day delay in filing the appeal. The Tribunal noted that the CIT(A) had dismissed the appeal ex-parte without considering the merits. Given that the assessee claimed non-receipt of physical notices and unawareness of e-filing portal uploads, the Tribunal restored the issue to the CIT(A) for a fresh adjudication.

The Tribunal held that the assessment order passed in the name of a deceased/non-existent person is bad in law and unsustainable. Issuing notice to a deceased person is not merely a procedural requirement but a condition precedent for valid proceedings. The AO's actions violated the principles of natural justice by not issuing proper notices to the legal heir.

The Tribunal noted that the assessee sought to withdraw the appeal in light of opting for the Vivad Se Vishwas Scheme. The appeal was dismissed as withdrawn with liberty to reinstate if the scheme application is not accepted by the Revenue.

The CIT(A) dismissed the appeal ex-parte due to non-prosecution, without considering the merits. The Tribunal noted that the assessee had responded to some notices and sought adjournments to file documents. Given the facts and interest of justice, the Tribunal decided to give the assessee another opportunity.

The Tribunal held that there was sufficient cause for the delay in filing the appeal, considering the reasons provided by the assessee and relying on judicial precedents. The delay was condoned, and the CIT(Appeals) was directed to decide the appeal on its merits.

The Tribunal condoned the delay of 1350 days in filing the appeal, noting that the revenue did not file a counter-affidavit and relying on various judicial pronouncements emphasizing substantial justice. The issue was remitted to the Assessing Officer for fresh consideration.

The Tribunal held that the AO wrongly disallowed the expenses under Section 14A without recording his dissatisfaction with the assessee's claim and without conducting proper verification. The Tribunal noted that the assessee had sufficient self-owned funds and no exempt income was earned, which supports the claim that no disallowance under Section 14A should be made.

The ITAT noted that the Hon'ble High Court of Karnataka had decided the issue in favour of the assessee, remitting the matter for re-examination. Considering the High Court's observations, the ITAT set aside the CIT(A)'s finding and directed the AO to delete the addition.

The Tribunal held that interest earned from investments in cooperative banks, which do not function as banks under the Banking Regulation Act, is eligible for deduction under Section 80P(2)(d). For interest earned from commercial banks, the corresponding expenditure incurred should be allowed as a deduction under 'Income from Other Sources' as per Section 57.

The Tribunal held that the assessee's centre of vital interest remained in India due to property, investments, and the employer deducting TDS in India. Therefore, the benefit of the tie-breaker test was not available, and the US income was includable in India. However, credit for taxes paid abroad was directed to be granted.

The Tribunal referred to the judgment of the Hon'ble Karnataka High Court in M/s Swabhimani Souharda Credit Co-operative Ltd. vs. ITO, which held that entities registered under the Souharda Act are to be considered as cooperative societies for the purpose of the Income Tax Act. Therefore, the assessee is eligible for the deduction under Section 80P.

The Tribunal noted that the assessee was not given sufficient opportunity to submit details and that the CIT(A) did not adjudicate the main grounds of appeal on merits. Consequently, the Tribunal decided to provide another opportunity to the assessee.

The Tribunal noted that the assessee was involved in litigation with the State Bank of India, which prevented them from responding to the CIT(A)'s notices. In the interest of natural justice, the Tribunal decided to give the assessee another opportunity to present their case.

The Tribunal held that the AO's satisfaction is a mandatory requirement before invoking Section 14A and Rule 8D. The Tribunal found that the AO had not recorded the necessary satisfaction and had mechanically applied Rule 8D. Therefore, the disallowance made by the AO was vacated. The Tribunal also addressed an appeal by the revenue regarding the disallowance of back office charges, which was dismissed by following previous decisions.

The Tribunal noted that the assessee has now paid the admitted tax. Relying on the jurisdictional High Court's decision in M/s. SSS Projects Ltd. vs. DCIT, the Tribunal held that since the admitted tax has been paid, the matter should be remitted back to the CIT(A) for adjudication on merits.

The Tribunal noted that the assessee was not given sufficient opportunity by the AO to submit details, and the CIT(A) did not adjudicate the main grounds on merits. The Tribunal found that the assessee's contentions regarding the validity of additions and the opportunity to be heard were valid.

While deprecating the assessee's non-compliance, the Tribunal restored the issues to the AO in the interest of justice and equity, granting one more opportunity for the assessee to present its case.

The CIT(A) partly allowed the appeal, reducing the addition by 50% based on the totality of the situation and the need for cash for medical expenses. The Tribunal, after hearing submissions, found that the CIT(A)'s sustenance of 50% addition was not justified and in the interest of justice and equity, sustained an addition of Rs. 2 lakhs, deleting the balance.

The Tribunal acknowledged the significant delay and the dismissal by the CIT(A) without condonation. However, considering the assessee's claim of dependency on their tax consultant and the missed notices, the Tribunal, in the interest of natural justice and fair play, decided to grant one final opportunity. The assessee is directed to file a condonation petition with the CIT(A), who will consider it and decide the appeal's admission. The CIT(A) is also directed to adjudicate the appeal on merits subsequently.

The Tribunal held that if the investments made by the assessee with co-operative banks are out of compulsion as per the Karnataka Co-operative Societies Act and its rules, then the interest income earned from such investments would qualify as business income and be eligible for deduction under Section 80P(2)(a)(i) of the Act. For claims under Section 80P(2)(d), the matter was restored to the AO to differentiate between income from co-operative societies and co-operative banks, considering the Apex Court's ruling.

The Tribunal held that the disallowance of truck hire charges for the assessee's own trucks was justified as it was not a genuine expenditure. However, the disallowance for payments made in cash/self-cheque exceeding Rs. 35,000 in a day was not justified as the amendment to Section 40A(3) was curative and retrospective, and also due to business expediency. The disallowance for non-deduction of TDS under Section 40(a)(ia) was also not sustained as the agreements were for hiring of trucks and not for transportation of goods.

The Tribunal noted that the assessee claimed the cash deposits belonged to a partnership firm, not the appellant personally, and that they had not submitted adequate proof of ownership of the bank account to the lower authorities. Given that the matter was decided ex-parte by the FAA, the Tribunal decided to remit the issue back to the AO for fresh consideration.

The Tribunal noted that the assessee had exercised the option under Section 115BAA and filed the return within the due date. Subsequently, CBDT Circular No. 19/2023 condoned the delay in filing Form 10-IC for AY 2021-22, extending the due date. As the assessee filed Form 10-IC within the extended due date, it was considered eligible for the benefit of Section 115BAA.

The Tribunal held that the reassessment proceedings were invalid. The reasons provided by the AO for reopening the assessment, especially after more than four years, did not clearly indicate a failure on the part of the assessee to disclose material facts. Furthermore, the reasons provided to the assessee differed from those presented to the Tribunal, violating principles of natural justice and transparency.

The Tribunal held that no separate benchmarking of royalty payment is required when the TNMM approach has been adopted at the entity level, as this includes royalty. Relying on previous decisions in the assessee's own case, the Tribunal directed the AO/TPO to delete the adjustment proposed for royalty as a separate international transaction.

The Tribunal noted that the FAA had merely reproduced the AO's order and had not considered the assessee's objections or submissions. The Tribunal further observed that the AO also failed to consider the assessee's submissions regarding the filing of belated Form 10.

The Tribunal held that the requirement of filing Form 67 within the due date is directory, not mandatory. It also noted that the provisions of the Double Taxation Avoidance Agreement (DTAA) override the provisions of the Act, and the DTAA does not prescribe disallowance of FTC for non-compliance with procedural provisions.

The Tribunal noted that the CIT(Appeals) had not considered the documents submitted by the assessee and had confirmed the AO's order without proper verification. The Tribunal decided to remit the issue back to the CIT(Appeals) for fresh consideration of the submitted documents.

The Tribunal, considering the circumstances and the principles of natural justice, decided to give the assessee one more opportunity. The issue has been restored to the Assessing Officer for fresh adjudication after providing a reasonable opportunity to the assessee.

The Tribunal held that Rule 128(9) of the Income-tax Rules does not mandate disallowance of FTC for delayed filing of Form 67, making it a directory rather than a mandatory requirement. It was also held that Double Taxation Avoidance Agreements (DTAA) override the Act, and procedural laws should not impede justice.