ITAT Bangalore Judgments — June 2025

The Tribunal held that the guarantee fees received by the assessee, a resident of South Korea, are not taxable in India. The Tribunal reasoned that the income in question does not fall under Articles 6 (immovable property), 7 (business profits), or 11 (interest) of the India-Korea DTAA. As these specific articles were not applicable, the residual clause of Article 22 ('Other Income') squarely applied. Since the assessee is a resident of South Korea, the income is taxable only in Korea as per Article 22 of the treaty. The Tribunal distinguished the reliance placed by the revenue on the Johnson Matthey Public Ltd. case, noting that the India-UK DTAA had a differently worded Article 23, whereas the India-Korea DTAA's Article 22 provides for exclusive taxation in the state of residence unless otherwise covered. Consequently, the addition made by the AO was deleted, and the appeal of the assessee was allowed. The stay petition was dismissed as infructuous.

The Tribunal held that the CPC's adjustment under Section 143(1)(a) was invalid because it failed to issue a prior intimation to the assessee in writing or electronic mode as mandated by the proviso to Section 143(1)(a). Consequently, the intimation and the CIT(A)'s order were set aside.

The Tribunal held that the assessee's failure to claim the Section 87A rebate in the original return constituted an error or omission, justifying the filing of a revised return. The Tribunal relied on the decision of the Bombay High Court in Chamber of Tax Consultant v. DGIT.

The Tribunal admitted additional evidence, directed the TPO to grant working capital adjustment, apply turnover filters, and re-examine the classification of operating and non-operating items. Certain comparable companies were also directed to be excluded.

The tribunal held that grounds related to transfer pricing adjustments were infructuous due to the MAP resolution. For the section 80G issue, the tribunal noted that receipts appeared to have necessary details, and set aside the issue to the AO for fresh adjudication, allowing the grounds for statistical purposes.

The Tribunal noted that the assessee failed to represent its case before the lower authorities and the Tribunal. However, a written submission indicated the assessee did not receive notices and only filed a reply after checking the portal. The CIT(E) order did not consider this reply.

The Tribunal allowed the appeal in favour of the assessee. It held that the income from maintenance and support services is not taxable as royalty or fees for technical services (FTS) in India. The Tribunal relied on the binding decision of the coordinate bench in the assessee's own case, which in turn followed the Supreme Court's judgment in Engineering Analysis Centre of Excellence (P) Ltd. The reasoning was that the end-user only gets the right to use computer software under a non-exclusive license, retaining the owner's copyright ownership. Payments for software licensed on a physical medium cannot be classified as royalty. For support services, the Tribunal agreed with the assessee that the sums in question cannot be taxed as FTS, as the 'make available' clause in the treaty was not satisfied. The Tribunal directed the revenue not to tax the amount offered to tax by the assessee, which was found to be not taxable, citing the principle that tax can only be levied by the authority of law. The addition made by the AO was deleted. Consequently, the stay application was dismissed as infructuous.

The Tribunal held that interest income earned by a co-operative society from investments in co-operative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act. It relied on the jurisdictional High Court's decision in 392 ITR 74, stating that a co-ordinate bench must follow an earlier decision of a co-ordinate bench of the same jurisdiction.

The Tribunal held that the estimation of profit by the lower authorities was not scientific, ignoring the assessee's past declared profit rates. The Tribunal decided to estimate the income at 8% of the gross turnover, considering it reasonable and sufficient, and reversed the CIT(A)'s estimation of 20%.

The Tribunal held that interest earned on surplus funds, not immediately required for business or statutorily mandated, is not attributable to the business of the assessee. Therefore, it cannot be deducted under Section 80P(2)(a)(i) or 80P(2)(d).

The Tribunal found that the assessee had submitted documents, but they may not have been properly considered. It granted another opportunity to the assessee to present their case to the CIT(A) with necessary documents.

The Tribunal admitted additional evidence and found that the assessee had sufficiently explained the source of the cash deposits as prior withdrawals made by himself and his sisters. The Tribunal noted the assessee's age and the lack of other income sources, differentiating the case from contrary precedents.

The Tribunal held that interest income from statutory deposits made by the assessee is eligible for deduction under Section 80P(2)(a)(i), affirming the CIT(A)'s direction to quantify it. However, interest income from other surplus deposits was not considered business income and was assessed under Section 56, with proportionate deductions allowed under Section 57.

The Tribunal held that the CIT(A) erred by dismissing the appeal for non-prosecution without adjudicating the grounds. Additionally, the reopening of assessment was based on a mere reappraisal of existing material without any tangible new evidence, which is not permissible.

The Tribunal noted that the AO made additions without verifying the return filed by the assessee, and the assessee's failure to appear was due to medical reasons. Consequently, the Tribunal decided to grant one more opportunity.

The Tribunal held that the estimation of profit by the lower authorities was not scientific, ignoring the assessee's past declared profit rates. The Tribunal decided to estimate the income at 8% of the gross turnover, considering it reasonable and sufficient, and reversed the CIT(A)'s estimation of 20%.

The Tribunal held that while filing Form 10DA on time is mandatory, its late filing, if the form was ready and available before the processing of the return, should not lead to the denial of the deduction. The issue of quantification of the deduction was remitted back to the AO.

The Tribunal observed that the assessee had not received the intimation order. Therefore, the matter was remitted to the jurisdictional assessing officer to supply the copy of the intimation and decide the issue afresh.

The Tribunal noted the assessee's submission that the issue was settled under MAP and the subsequent filing of a withdrawal application. The Revenue's counsel had no objection to the withdrawal.

The Tribunal held that the scope of inquiry for 80G approval extends to the genuineness of activities and fulfillment of conditions, not necessarily the actual receipt of donations. The Tribunal found that the CIT(Exemptions)'s observations were sweeping statements without corroborative evidence. The Tribunal noted that the assessee had received substantial amounts from tuition fees and donations and had applied substantial funds towards its educational objects.

The Tribunal noted that the dispute had been resolved under the Mutual Agreement Procedure (MAP). The assessee had filed an application to withdraw the appeal. The Tribunal accepted the withdrawal application.

The Tribunal upheld the decision of the lower authorities, confirming the addition of Rs.36 lakhs and Rs.1,97,600 as undisclosed income taxable at 60% under Section 115BBE. It found that the cash was not recorded in the books, not disclosed in the original return, and no evidence supported the claim that it originated from tyre sales. The Tribunal also held that CBDT Instruction No.1916 was not applicable to the gold coins as it pertains to jewellery and ornaments.

The Tribunal held that the addition made under Section 69A was bad in law, especially since the assessment order was passed on a deceased assessee. Considering the explanation of income sources by the legal heir and the fact that the assessee was no more, the Tribunal found it appropriate to allow the appeal.

The Tribunal found that the Assessing Officer failed to grant the statutory minimum of 7 days to the assessee for responding to the notice under Section 148A(b). Relying on jurisdictional High Court judgments, which established that a minimum 7-day period is mandatory, the Tribunal held that the proceedings initiated were vitiated due to insufficient notice period. Consequently, the appeal filed by the revenue was dismissed.

The Tribunal considered the submissions made by the assessee and the letter dated 13/05/2025 seeking to withdraw the appeal. The Tribunal acknowledged that the appeal was filed before the wrong bench due to a procedural mistake. Consequently, the Tribunal dismissed the appeal as withdrawn. However, the dismissal was granted with the liberty to the assessee to refile the appeal before the Hon'ble Panaji Bench of the Tribunal. The operative direction was to dismiss the appeal as withdrawn, allowing the assessee to pursue the matter in the correct forum. No specific issue regarding the merits of the assessment order was decided as the appeal was withdrawn on procedural grounds.

The Tribunal held that the genuineness of the activity, not the quantum of expenditure, is relevant for registration. It noted that the assessee had commenced activities and had genuine charitable objects, including proposed activities for future application of funds.

The Tribunal held that valid registration under Section 12AA/12AB of the Act is a mandatory precondition for claiming exemption under Section 11. Therefore, the assessee's claim for exemption on betterment and rejuvenation fees was not admissible.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal perused the records and noted the assessee's letter dated 31/01/2025 requesting withdrawal of the appeal due to settlement under the Direct Tax Vivad se Vishwas Scheme, 2024. The Tribunal took the letter on record and permitted the assessee to withdraw the appeal. The Tribunal granted liberty to the assessee to approach the Tribunal again if any adverse order is passed by the authorities under the said scheme. The Tribunal's decision to allow withdrawal is based on the assessee's settlement of the dispute under the Vivad se Vishwas Scheme. The ratio decidendi is that an appeal can be withdrawn if the underlying dispute has been settled under a tax settlement scheme, with liberty to re-approach the Tribunal if necessary.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal condoned the delay, finding that the service defect prevented the assessee from being heard. The ex-parte order of the CIT(A) was set aside due to violations of natural justice.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal held that the CIT(E) rejected the applications without providing a proper opportunity to the assessee and without clear, substantiated reasons. The Tribunal found that the assessee had submitted all required details and cooperated fully.

The Tribunal held that the actual amount paid by the assessee, even if it differs from the registered document, should be considered for computing capital gains, provided it is supported by verifiable documents. The Revenue did not dispute the genuineness of the payments.

The Tribunal held that the assessee could not represent its case before the CIT(Exemptions) due to a trustee's injury and advised bed rest. Given this, and in the interest of justice, the case was remitted back to the CIT(Exemptions) for fresh decision.

The Tribunal condoned both delays, holding that procedural technicalities should not impede substantial justice. The CIT(A)'s order was set aside, and the matter was restored for re-adjudication on merits.

The Tribunal held that the assessee had complied with the conditions under Section 270AA by paying the demand and filing the application for immunity within the stipulated period. The AO's failure to pass an order on the immunity application was not the assessee's fault.

The Tribunal held that the exclusion of seven comparable companies based on an upper turnover filter of Rs. 200 crore is justified. Following the decisions of coordinate benches in BORQS Software Solutions Pvt. Ltd. v. ITO and ANSR Global Corporation Pvt. Ltd. v. ACIT, the Tribunal directed the AO/TPO to apply the appropriate upper turnover filter and exclude companies with turnovers exceeding Rs. 200 crore. The Tribunal also directed the exclusion of Infobeans Technologies Ltd. and Inteq Software Pvt. Ltd. from the list of comparables, respectfully following the decision in M/s. AMD Software India Pvt. Ltd. v. ACIT and Global Logic India Pvt. Ltd. v. DCIT. Regarding the notional interest on trade receivables, the Tribunal accepted the assessee's argument. It noted that the assessee's trade payables to AEs were higher than trade receivables from AEs, and there was no dispute on the figures. Respectfully following the judgment in M/s Satyam Venture Engg. Services (P) Ltd., the Tribunal held that the charging of notional interest on delayed receivables does not arise in such circumstances and decided this issue in favour of the assessee. The appeal of the Revenue was dismissed, and the grounds raised by the assessee in the Cross Objection were allowed.

The Tribunal held that when income is offered under Section 44AD, the assessee is not obliged to maintain books of account or explain individual purchase entries, especially when the turnover does not exceed the prescribed limit and the gross receipts are undisputed. The AO's addition based on third-party information without independent verification was not sustainable.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal condoned the delay in filing the appeal, finding that the assessee, being a driver, may not have been well-versed with the Act's provisions. The case was remitted to the CIT(A) for fresh adjudication on merits.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal held that the CIT(E) rejected the applications without providing a proper opportunity to the assessee and without clear, substantiated reasons. The Tribunal found that the assessee had submitted all required details and cooperated fully.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal held that the delay in filing the appeal before the CIT(A) was for sufficient cause, citing the COVID-19 lockdown and the CA's preoccupation. The CIT(A)'s order was reversed, the delay was condoned, and the case was restored to the CIT(A) for examination on merits.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal held that penalty proceedings are separate from assessment proceedings and cannot be automatically levied merely because quantum additions were confirmed. The lower authorities failed to record specific findings of concealment or consider reasonable cause for non-compliance.

The Tribunal held that income from locker rent is eligible for deduction under section 80P(2)(a)(i). The issue of interest income from deposits was restored to the AO for verification as to whether deposits were statutory or operational.