ITAT Bangalore Judgments — December 2025

The Tribunal held that the assessee, being a landowner, was not obligated to adopt the percentage completion method just because the developer did. The project completion method, consistently followed by the assessee, was deemed appropriate for recognizing income from JDAs.

The Tribunal held that the assessee, being a landowner, was not obligated to adopt the percentage completion method just because the developer did. The project completion method, consistently followed by the assessee, was deemed appropriate for recognizing income from JDAs.

The Tribunal held that the assessee, being a landowner, was not obligated to adopt the percentage completion method just because the developer did. The project completion method, consistently followed by the assessee, was deemed appropriate for recognizing income from JDAs.

The Tribunal held that the assessee, being a landowner, was not obligated to adopt the percentage completion method just because the developer did. The project completion method, consistently followed by the assessee, was deemed appropriate for recognizing income from JDAs.

The Tribunal held that the assessee, being a landowner, was not obligated to adopt the percentage completion method just because the developer did. The project completion method, consistently followed by the assessee, was deemed appropriate for recognizing income from JDAs.

The Tribunal held that the disallowance of professional charges paid to a related entity was partly confirmed, but the exemption under Section 11 should be allowed to the extent admissible. The disallowed amount not falling under application of income was to be taxed at the maximum marginal rate.

The Tribunal held that the disallowance of professional charges paid to a related entity was partly confirmed, but the exemption under Section 11 should be allowed to the extent admissible. The disallowed amount not falling under application of income was to be taxed at the maximum marginal rate.

The Tribunal held that the disallowance of professional charges paid to a related entity was partly confirmed, but the exemption under Section 11 should be allowed to the extent admissible. The disallowed amount not falling under application of income was to be taxed at the maximum marginal rate.

The Tribunal held that the addition of Rs. 1.20 crore under Section 69A was not sustainable as the assessee had explained the source of the cash as business receipts, and the books of account were not rejected. Taxing the same income twice was not permissible.

The Tribunal held that the CIT(A) erred in estimating the profit margin at 10% when previous years' profits at 6-6.4% were accepted by the department. The Tribunal found no reason to deviate from the profit margin declared by the assessee, especially in the absence of contrary evidence.

The Tribunal held that the non-filing of a return for F.Y. 2024-25 was not a defect, as the assessment year had not been completed. It found that the Ld. CIT(E) had issued a cryptic order without granting the mandatory personal hearing as per Section 12AB(1)(b)(ii)(B), violating principles of natural justice. Consequently, the Tribunal set aside the rejection orders and remitted the matters back to the Ld. CIT(E) for de novo consideration after affording the assessee a reasonable opportunity of being heard.

The Tribunal held that the Pr. CIT's order was correct in pointing out the lack of proper inquiry by the AO regarding the source of cash deposits, especially when the deposits exceeded the sale consideration of the property and were primarily supported by an affidavit without documentary evidence.

The Tribunal held that the disallowance of professional charges paid to a related entity was partly confirmed, but the exemption under Section 11 should be allowed to the extent admissible. The disallowed amount not falling under application of income was to be taxed at the maximum marginal rate.

The Tribunal held that the addition of Rs. 1.20 crore under Section 69A was not sustainable as the assessee had explained the source of the cash as business receipts, and the books of account were not rejected. Taxing the same income twice was not permissible.

The Tribunal held that the assessee, being a landowner, was not obligated to adopt the percentage completion method just because the developer did. The project completion method, consistently followed by the assessee, was deemed appropriate for recognizing income from JDAs.

The Tribunal held that for better comparability, large turnover companies should not be compared with small companies. It acknowledged that determining 'large' and 'small' is subjective and no rigid formula applies. The Tribunal directed the exclusion of Larsen & Toubro Info tech Limited, Mindtree Limited, Wipro Limited, Infosys Limited, TCS Limited, Tata Elxsi Ltd, Cybage Software Ltd, and Nihilent Limited from the comparable set due to their significantly higher turnovers compared to the assessee. Regarding Aptus Software Labs Private Limited, the Tribunal found it functionally not comparable due to its diversified activities (infrastructure management, cloud computing, etc.) compared to the assessee's software development services, and directed its exclusion. On the issue of interest on overdue receivables, the Tribunal directed the computation of interest at LIBOR + 200 basis points, noting the lack of specific reasoning by the TPO for the 450 basis points addition and the limited risk involved with the holding company. The Tribunal allowed grounds 18 to 21 of the appeal concerning this issue. The Tribunal did not expressly leave any issue undecided.

The Tribunal held that the payment was not a business expenditure under Section 37(1) as it was charitable in nature and not wholly and exclusively for business purposes. The CIT(A) was justified in upholding the disallowance.

The ITAT dismissed the revenue's appeal, upholding the CIT(A)'s order. The Tribunal specifically noted that the revenue failed to challenge the CIT(A)'s legal finding that the assessment was invalid due to the AO's breach of CBDT Instruction No. 20/2015, which mandates a prior show-cause notice before making additions. Since CBDT instructions are binding on the AO, the assessment framed in contravention was liable to be quashed, rendering the revenue's appeal infructuous.

The Tribunal held that the CIT(A) mechanically excluded comparables without proper justification of functional dissimilarity. The Tribunal directed the TPO to exclude high turnover companies as comparables and restored one case to the CIT(A) for further investigation.

The Tribunal held that the project completion method adopted by the assessee, a landowner, was appropriate. The revenue's contention to apply the percentage completion method was rejected as it is not applicable to landowners in such arrangements.

The Tribunal held that the provision for expenses was allowable as it represented an ascertained liability that had crystallised during the relevant previous year, even if invoices were received later. The disallowance made by the AO and confirmed by the CIT(A) was set aside.

The Tribunal condoned the delay in filing the appeal, noting the assessee's age, health issues, and lack of technical knowledge. The Tribunal set aside the CIT(A)'s order and restored the issue to the CIT(A) for a decision on merits after granting the assessee an opportunity of being heard.

On the issue of business loss for AY 2016-17, the Tribunal noted that the assessee acquired an ongoing business and that it charged Flipkart significantly lower rates than it paid to third-party vendors. The AO concluded that the losses were a result of deliberate decisions to benefit the group. However, the judgment excerpt provided does not contain the Tribunal's decision on this specific issue. Regarding the disallowance of manpower expenses (Rs. 19.90 crores), the Tribunal held that the absence of a vendor at its address during a later inquiry does not invalidate contemporaneous evidence. The assessee provided agreements, invoices, payroll registers, PF/ESI challans, and bank payment advices, demonstrating services were rendered and payments were made through banking channels with TDS deduction. The Tribunal cited the Calcutta High Court ruling in Diagnostic vs. CIT, stating that subsequent non-traceability of a supplier cannot invalidate genuine purchases. The Tribunal also noted that similar expenses from other vendors were accepted and that the assessee was incurring significant business losses, making the booking of bogus expenses unlikely. Therefore, the disallowance was deemed unjustified, and the AO was directed to delete the addition. On the issue of ESOP expenditure for AY 2017-18 and 2018-19, the Tribunal noted that the issue was identical to a previously decided appeal (ITA No. 530/Bang/2025) where the revenue's appeal was dismissed. Therefore, the revenue's appeal for these assessment years was also dismissed.

The Tribunal held that the expenditure of Rs. 1,25,00,000/- claimed by the assessee as preliminary expenses was indeed eligible for deduction under Section 35D of the Income Tax Act, 1961. The Tribunal analyzed the nature of preliminary expenses and distinguished them from capital expenditure. It noted that Section 35D specifically provides for the amortisation of preliminary expenses incurred by a company in connection with the setting up of its business. The Tribunal found that the assessee had fulfilled the conditions laid down in Section 35D, as the expenses were incurred for the purpose of its business and were of a preliminary nature. Therefore, the disallowance made by the Assessing Officer and upheld by the CIT(A) was set aside. The Tribunal directed the Assessing Officer to allow the deduction as per the provisions of Section 35D.

The Tribunal held that the issue of excluding companies with turnover exceeding ₹200 crores was not decided as the assessee did not press the ground related to the rejection of comparables by the TPO and DRP. Similarly, the issue of functionally dissimilar companies was also not pressed. The Tribunal did not record any arguments from the revenue on these specific grounds. Regarding Sagarsoft (India) Ltd., the judgment does not explicitly record a decision on its exclusion. However, the Tribunal allowed the assessee's ground concerning the employee-cost adjustment. It found that the assessee, a captive service provider, bore the risk of higher employee costs and lower utilization due to the pandemic. The Tribunal noted that the employee headcount and average CTC increased significantly, and billed hours did not rise proportionally, leading to higher per-hour costs. It concluded that the employee cost increase was not artificial but a result of market conditions and commercial prudence. The Tribunal directed the AO/TPO to grant an employee-cost adjustment of ₹1,51,77,750 and recompute the PLI, allowing the ground of the assessee.

The Tribunal held that the authorities below used the word 'seized' incorrectly, as the mining activities were only suspended and there was no seizure of stock. The ownership of the stock remained with the assessee as of 31.03.2011, and it should have been valued in the books of accounts.

The Tribunal held that since the assessee's premises were covered in the search, proceedings should have been initiated under section 153A of the Act, not section 153C. The assessment framed under section 153C was quashed.

The Tribunal held that the provision for expenses was allowable as it represented an ascertained liability that had crystallised during the relevant previous year, even if invoices were received later. The disallowance made by the AO and confirmed by the CIT(A) was set aside.

The Tribunal held that the assessee cannot be denied exemption merely on the bar of limitation for furnishing the audit report in Form 10B, considering the extended due dates granted by the Hon'ble Apex Court and relied on High Court judgments. The issue was remitted back to the AO for examination of the expenditure.

On the issue of business loss for AY 2016-17, the Tribunal noted that the assessee acquired an ongoing business and that it charged Flipkart significantly lower rates than it paid to third-party vendors. The AO concluded that the losses were a result of deliberate decisions to benefit the group. However, the judgment excerpt provided does not contain the Tribunal's decision on this specific issue. Regarding the disallowance of manpower expenses (Rs. 19.90 crores), the Tribunal held that the absence of a vendor at its address during a later inquiry does not invalidate contemporaneous evidence. The assessee provided agreements, invoices, payroll registers, PF/ESI challans, and bank payment advices, demonstrating services were rendered and payments were made through banking channels with TDS deduction. The Tribunal cited the Calcutta High Court ruling in Diagnostic vs. CIT, stating that subsequent non-traceability of a supplier cannot invalidate genuine purchases. The Tribunal also noted that similar expenses from other vendors were accepted and that the assessee was incurring significant business losses, making the booking of bogus expenses unlikely. Therefore, the disallowance was deemed unjustified, and the AO was directed to delete the addition. On the issue of ESOP expenditure for AY 2017-18 and 2018-19, the Tribunal noted that the issue was identical to a previously decided appeal (ITA No. 530/Bang/2025) where the revenue's appeal was dismissed. Therefore, the revenue's appeal for these assessment years was also dismissed.

On the issue of business loss for AY 2016-17, the Tribunal noted that the assessee acquired an ongoing business and that it charged Flipkart significantly lower rates than it paid to third-party vendors. The AO concluded that the losses were a result of deliberate decisions to benefit the group. However, the judgment excerpt provided does not contain the Tribunal's decision on this specific issue. Regarding the disallowance of manpower expenses (Rs. 19.90 crores), the Tribunal held that the absence of a vendor at its address during a later inquiry does not invalidate contemporaneous evidence. The assessee provided agreements, invoices, payroll registers, PF/ESI challans, and bank payment advices, demonstrating services were rendered and payments were made through banking channels with TDS deduction. The Tribunal cited the Calcutta High Court ruling in Diagnostic vs. CIT, stating that subsequent non-traceability of a supplier cannot invalidate genuine purchases. The Tribunal also noted that similar expenses from other vendors were accepted and that the assessee was incurring significant business losses, making the booking of bogus expenses unlikely. Therefore, the disallowance was deemed unjustified, and the AO was directed to delete the addition. On the issue of ESOP expenditure for AY 2017-18 and 2018-19, the Tribunal noted that the issue was identical to a previously decided appeal (ITA No. 530/Bang/2025) where the revenue's appeal was dismissed. Therefore, the revenue's appeal for these assessment years was also dismissed.

On the issue of business loss for AY 2016-17, the Tribunal noted that the assessee acquired an ongoing business and that it charged Flipkart significantly lower rates than it paid to third-party vendors. The AO concluded that the losses were a result of deliberate decisions to benefit the group. However, the judgment excerpt provided does not contain the Tribunal's decision on this specific issue. Regarding the disallowance of manpower expenses (Rs. 19.90 crores), the Tribunal held that the absence of a vendor at its address during a later inquiry does not invalidate contemporaneous evidence. The assessee provided agreements, invoices, payroll registers, PF/ESI challans, and bank payment advices, demonstrating services were rendered and payments were made through banking channels with TDS deduction. The Tribunal cited the Calcutta High Court ruling in Diagnostic vs. CIT, stating that subsequent non-traceability of a supplier cannot invalidate genuine purchases. The Tribunal also noted that similar expenses from other vendors were accepted and that the assessee was incurring significant business losses, making the booking of bogus expenses unlikely. Therefore, the disallowance was deemed unjustified, and the AO was directed to delete the addition. On the issue of ESOP expenditure for AY 2017-18 and 2018-19, the Tribunal noted that the issue was identical to a previously decided appeal (ITA No. 530/Bang/2025) where the revenue's appeal was dismissed. Therefore, the revenue's appeal for these assessment years was also dismissed.

The Tribunal noted that the lower authorities had not examined the facts related to the loans given to related parties. While the assessee relied on a Supreme Court judgment, the Tribunal found it not applicable due to differing circumstances regarding OD accounts.

The Tribunal held that the AO rightly applied Section 50C as there was a difference between the sale consideration and the guidance value. The Tribunal also noted that the cancellation deed was executed much later and required a court order for validity in such cases.

The Tribunal noted that the case involved ex-parte orders due to the assessee's non-prosecution. Following a precedent from a co-ordinate bench, the Tribunal remitted the issue back to the JAO for fresh consideration after providing the assessee with an opportunity to be heard.

The Tribunal held that the AO wrongly invoked Section 69C as the source of expenditure for acquiring a school was explained and accounted for. The CIT(A) had rightly deleted the addition based on the evidence provided.

The Tribunal held that the condition of manufacturing activity is not required for claiming deduction under Section 80JJAA after the amendment by the Finance Act 2016. The Tribunal also found that the assessee had provided sufficient documentation, including Aadhaar and UAN numbers, to substantiate the genuineness of the new employees and their employment.

The Tribunal found that the assessee had prima facie discharged her onus by filing affidavits from relatives. The AO failed to make proper enquiries regarding the creditworthiness of the donors. Therefore, the Tribunal deemed it appropriate to remit the issue to the AO for a detailed inquiry.

The Tribunal directed the exclusion of certain comparables while upholding the inclusion of others. It also allowed working capital adjustment and credit under Section 90, subject to verification.

The Tribunal directed the exclusion of certain comparables while upholding the inclusion of others. It also allowed working capital adjustment and credit under Section 90, subject to verification.

The tribunal held that the disallowance of manpower expenses was unjustified, as the assessee provided sufficient contemporaneous evidence of services rendered and payments made. The tribunal also dismissed the revenue's appeal regarding ESOP expenditure.

The Tribunal noted that the ownership of land was not solely in the assessee's name but also included family members. Considering the interest of justice and to allow proper substantiation, the matter was remitted back to the AO for a denovo assessment, focusing only on lands in the assessee's ownership.

The Tribunal held that the disallowance of depreciation under Section 143(1) was incorrect as it required detailed verification of facts and was a debatable issue. Such claims cannot be adjusted as prima facie incorrect claims apparent from the return.

The Tribunal held that the disallowance of depreciation on new assets (Ground No. 17) was not sustainable. The Assessee had generated significant revenue and received share application money from its holding company. The investments in fixed assets were recorded in the books of accounts and purchases were made through banking channels. Since the actual cost, user, and ownership of the assets were not in doubt, the disallowance of depreciation of Rs. 2,14,45,821/- was directed to be deleted. The observation regarding the carry forward of WDV was also deemed incorrect. Regarding the provision for warranty (Ground No. 18), the Tribunal noted that the closing balance of Rs. 4,51,07,257/- for AY 2016-17 became the opening balance for AY 2017-18, and further provisions were made. The Assessee's claim that warranty expenditure is not contingent and should be allowed was accepted, referencing the Supreme Court decision in 314 ITR 62. The disallowance of Rs. 27.86 crores related to buyback and repair expenses (Ground No. 4) was deleted entirely, as the Assessee had provided complete details and invoices, and the disallowance was ad-hoc. For depreciation on plant and machinery (Ground No. 5), the Tribunal restored the issue to the Assessing Officer to verify the date of actual use and income offered, directing that depreciation should be allowed if lease rent was earned for a particular period, without questioning the genuineness of the claim.

The Tribunal noted that the appeal was filed with a delay of 24 days and that the assessee had provided an affidavit explaining the reasons for the delay. The Tribunal also referred to a previous order dated July 26, 2023, where it had allowed the disallowance of depreciation and remanded the matter to the CIT(A) to reconsider other issues. The current appeal arises from the CIT(A)'s ex-parte assessment order dated March 7, 2025, where the appeal was dismissed for not providing cogent evidence regarding the corpus received as building fund. The Tribunal observed that the grounds of appeal raised by the assessee include not being provided sufficient opportunity and erroneous disallowances of building fund, loss on sale of asset, and refund money. The Tribunal did not explicitly decide on each of the grounds of appeal in the provided excerpt, but the context suggests it is examining the procedural fairness and the merits of the disallowances. The operative direction is not explicitly stated in this portion of the judgment, but the appeal is being heard.

The Tribunal held that the assessee failed to provide sufficient cause for the delay in filing both appeals. Despite multiple opportunities granted for hearing, the assessee did not appear nor provided proper justification for the delay, leading to the dismissal of both appeals as not admitted.

The Tribunal allowed depreciation on new assets as the purchase was through banking channels and recorded in audited books. It also directed the AO to re-examine the warranty provision and rental income claims. The Tribunal restored the depreciation claim on buses to the AO for verification of usage dates and income offered.

The Tribunal held that the gift deed for 1500 grams of jewelry was not valid as it lacked acceptance from the donee and was executed on plain paper. The Tribunal also found that the cash seized was unexplained, reversing the CIT(A)'s decision on this point.

The Tribunal restored the issue of director remuneration to the CIT(A) for re-examination, considering shareholding patterns and relevant case laws. The disallowance related to payments to transporters was deleted as the assessee had complied with Section 194C(6).

The Tribunal held that the assessee failed to provide sufficient cause for the delay in filing both appeals. Despite multiple opportunities granted for hearing, the assessee did not appear nor provided proper justification for the delay, leading to the dismissal of both appeals as not admitted.