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126 orders · Page 1 of 3
The Tribunal found it an undisputed fact that the assessee could not represent its case before the CIT(A)/NFAC. The assessee's AR undertook to submit all necessary documents and requested a remand. In the interest of justice, the Tribunal decided to remit the entire issue back to the CIT(A)/NFAC for fresh adjudication.
The assessee filed an appeal before the CIT(A) with a considerable delay, which was not condoned, leading to the dismissal of the appeal on the grounds of limitation. The assessee argued that the delay was due to a mistake in furnishing the reasons in the grounds of appeal instead of the designated column in Form 35.
The Tribunal held that the notice issued u/s 148A(b) was illegal because the AO failed to provide the statutory minimum period of 7 days for the assessee to respond. Consequently, all subsequent proceedings, including the order u/s 148A(d) and the assessment order, were also rendered invalid.
The Tribunal held that the PCIT was justified in invoking Section 263 because the allowability of deduction for delayed deposit of employee contributions to PF & ESI changed based on a Supreme Court decision post-assessment order, making the AO's order erroneous at the time of PCIT's examination. The Tribunal also upheld the PCIT's direction regarding interest on delayed filing of excise returns.
The Tribunal held that combining TIC and ITeS services for benchmarking was not justified, as the TP Order did not explain why these services, which do not share the same FAR, were grouped together. The DRP supported the TPO's approach of treating TIC services as ITeS, but did not confirm if their FARs were similar. Regarding the ITeS segment, the Tribunal found that the TPO's selection of comparables with significantly higher turnover than the assessee's Rs. 4.53 crores was inappropriate, as economies of scale and bargaining power differ. The TPO's reasoning that turnover is irrelevant in a cost-plus markup model was rejected. Accordingly, the Tribunal directed the TPO to exclude 11 comparable companies with large turnovers. On the issue of restricting adjustments to international transactions, the Tribunal directed the AO to restrict the adjustment to only international transactions, citing decisions of the Co-ordinate Bench and the Bombay High Court. For the disallowance under section 40(a)(i) amounting to Rs. 9,34,58,073/-, the Tribunal restored the issue back to the file of the AO with similar directions as in the assessee's own case for AY 2012-13, where the matter was restored back to the AO. No other grounds were pressed.
The Tribunal held that the disallowance under Section 14A was not sustainable as the Assessing Officer (AO) failed to record the necessary satisfaction regarding the assessee's claim of not incurring expenditure for earning exempt income, and the subsequent addition made by the AO on account of slump sale consideration was also deleted as it was based on the stamp duty value and not the actual consideration received.
The Tribunal condoned the delay in filing the appeal, stating that the assessee's ignorance of the changed provisions and the tax advisory, coupled with their prompt action upon receiving correct advice, constituted sufficient cause for the delay. The Tribunal also noted that the order passed by the CIT(E) violated the principles of natural justice as the assessee was not afforded a proper opportunity of being heard.
The Tribunal held that the CIT(A) confirmed the addition primarily on the reasoning that no documentary evidence was furnished other than an affidavit and that it was not produced before the AO. However, the records showed that supporting documents like balance sheets, loan documents, and sale deeds were furnished. The Tribunal found that the CIT(A)'s order did not reflect a discussion or analysis of these documents.
The Tribunal held that the disallowance under Section 14A was not sustainable as the Assessing Officer (AO) failed to record the necessary satisfaction regarding the assessee's claim of not incurring expenditure for earning exempt income, and the subsequent addition made by the AO on account of slump sale consideration was also deleted as it was based on the stamp duty value and not the actual consideration received.
The Tribunal held that the construction cost could not be denied entirely as the fact of construction was established by the sale deeds. The valuation report, although not supported by primary documents like bills, should be considered. The matter was remitted to the AO for fresh consideration.
The Tribunal held that the transfer pricing adjustment should be restricted only to AE transactions with Non-US Countries, as US AE transactions were settled in MAP. The TPO was directed to restrict the adjustment to international transactions with associated enterprises in non-US countries. This resolved Ground No. 2 in favor of the assessee. Regarding TDS credit (Ground No. 3), the AO was directed to verify the credit and allow it in accordance with the law, calling for information from the assessee before disallowing any part. Similarly, for advance tax credit (Ground No. 4), the AO was directed to verify and allow the credit, seeking information from the assessee if any part was not allowable. For interest under section 234B (Ground No. 5), the AO was directed to recompute the interest, if any chargeable. For interest under section 220(2) (Ground No. 6), the AO was directed to compute the interest in accordance with law, considering the assessee's claim that no interest is chargeable beyond October 2022, and to grant an opportunity of hearing if the AO believed such interest was chargeable. Grounds 1 and 7 were dismissed as general. The ratio for Ground 2 is that transfer pricing adjustments are limited to AE transactions, especially when other transactions with AEs are settled via MAP, and adjustments cannot be made at the entity level to include non-AE transactions.
The Tribunal condoned the delay of 41 days in filing the appeal, finding the assessee's reason to be bonafide. The Tribunal restored the appeal to the Assessing Officer (AO) directing the assessee to substantiate the identity, creditworthiness, and genuineness of three companies from whom Rs.3.56 Crores were received. The AO was instructed to examine the source of funds and pass a fresh order, allowing the assessee an opportunity of hearing.
The Tribunal noted that the assessee's application for immunity was filed belatedly by 8 days due to technical glitches and that the AO did not provide an opportunity for a hearing before rejecting the immunity claim. It was also observed that the penalty was levied without following principles of natural justice.
The Tribunal held that the CIT(E) erred in denying the 80G approval solely based on fee receipts from educational activities, especially since the assessee had separate accounting for fees and donations. The Tribunal noted that the assessee already had 12A registration, indicating its charitable nature, and there was no allegation of misuse of funds. The denial of approval was considered not well-reasoned.
The Tribunal held that a notice issued under Section 148 to a deceased person is invalid and jurisdictional. Therefore, the subsequent reassessment order passed under Section 147 is null and void. The Tribunal relied on various High Court and Supreme Court judgments stating that such an error is not curable.
The Tribunal held that the CIT(TP) was justified in invoking Section 263 of the Act. The Tribunal found that the TPO had not conducted a proper enquiry into the SBLC arrangements. While the assessee had provided some details and reported SBLCs as international transactions, the TPO merely reproduced tabular information without examining underlying agreements, nature of risk, basis of commission, recovery from AE, or whether an independent party would charge for such non-fund-based facilities. This omission amounted to an absence of enquiry on a material international transaction. The assessee's contention that SBLC charges were allowable under Section 37(1) was rejected as Section 92 operates in a different field. The Tribunal relied on Explanation 2 to Section 263, stating that an order is erroneous if passed without necessary enquiries. The Tribunal also noted that the assessee's own conduct in subsequent proceedings, acknowledging the need for adjustment based on prior Tribunal orders, supported the CIT(TP)'s view. The Tribunal upheld the CIT(TP)'s limited remand to the TPO for fresh enquiry and determination of arm's length price, finding it well within the scope of Section 263. The objection regarding jurisdiction was dismissed, citing Explanation 1 to Section 263 (inserted w.e.f. 1-4-2022), which clarifies that orders of TPO are amenable to revision. The revisionary order was passed after this amendment came into force.
The Tribunal held that short-term capital loss can be set off against long-term capital gains irrespective of the difference in tax rates, as per Section 70. It further held that TDS credit must be granted to the person in whose hands the income is assessable, and procedural discrepancies like Form 26AS mismatch should not deny this substantive right.
The Tribunal held that short-term capital loss from STT-paid transactions can be set off against long-term capital gains, irrespective of different tax rates, as per Section 70. It also held that TDS credit must be granted to the beneficiary when the income from a revocable trust is taxed in their hands, even if there are procedural discrepancies in PAN reporting.
The Tribunal held that the non-compliance was not wilful and that the AO had accepted the return of income, indicating no income escapement. Considering the discretionary nature of the penalty provision and the genuine reasons provided by the assessee, the Tribunal deleted the penalty.
The Tribunal held that the assessee has been consistently treated as a public charitable trust for over 50 years, running educational institutions, and its application clearly stated it was an educational trust. The CIT(E) did not provide any material or reasoning to classify it as a religious trust and reject the 80G approval.
The Competent Authorities of India and USA arrived at a resolution regarding the assessment of the appellant's income. As per the MAP resolution, the appellant was required to withdraw the pending appeal before the ITAT.
The Tribunal noted that the assessee was running a school for educational purposes and its income was indeed exempt. The assessee acted under a bonafide impression of not needing to file the return. The AO accepted the return filed later and determined NIL income. The word 'may' in Section 271F indicates discretionary power, and considering the circumstances, a lenient view is warranted.
The Tribunal addressed several grounds. Regarding the inclusion/exclusion of comparables (Grounds 2-15 and 17), the judgment indicates that the Tribunal considered the arguments but the specific findings on each comparable like Datamatics Business Solutions Limited, Micro Land Limited, and R Systems International Limited are not fully detailed in the provided excerpt. However, the Tribunal did decide on the interest levies. For Ground No. 22 concerning Section 234A interest, the Tribunal held that the assessee filed its return within the extended due date of 15.03.2022, and since no self-assessment tax was payable, the levy of interest under Section 234A was contrary to CBDT Circular No. 01/2022. Therefore, the Assessing Officer was directed to delete the interest of Rs. 9,84,716. For Ground No. 22 concerning Section 234C interest, the Tribunal followed the decisions of its co-ordinate bench in United Spirits Ltd. and SAP India (P.) Ltd., holding that interest under Section 234C should be computed with reference to the returned income, not the assessed income. The Assessing Officer was directed to recompute the interest accordingly. The appeal was partly allowed.
The Tribunal held that the Revenue's ground regarding the exclusion of comparables based on turnover differences is dismissed, as an identical issue was decided in favour of the assessee in another appeal (IT(TP)A No. 2512/Bangalore 2024). The Tribunal noted that the assessee was not pressing the issue concerning Kals Information System Ltd., CG-VAK Software Exports Ltd., Rheal Software Pvt. Ltd., Infobeans Technologies Ltd., Aspire Systems (India) Pvt. Ltd., and Inteq Software Pvt. Ltd. Regarding the inclusion of I2T2 India Limited and Cigniti Technologies Limited, the Tribunal found that the CIT(A) relied on previous decisions without independently examining the factual matrix, contemporaneous financials, and functional profile for the relevant assessment year. Therefore, the issue of inclusion of these two comparables is restored to the Assessing Officer/TPO for fresh examination. The Revenue's appeal is partly allowed for statistical purposes. The assessee's cross-objections for AY 2013-14 and AY 2015-16 were dismissed as not pressed.
The Tribunal held that the assessee has been consistently treated as a public charitable trust for over 50 years, running educational institutions, and its application clearly stated it was an educational trust. The CIT(E) did not provide any material or reasoning to classify it as a religious trust and reject the 80G approval.
The Tribunal held that the assessee had failed to demonstrate a sufficient cause for the inordinate delay of 840 days in filing the appeal. The explanation provided, attributing the delay to the Chartered Accountant, was considered a plea to shift blame and not a genuine reason. The Tribunal emphasized the principle that litigants have a duty to be vigilant of their rights.
The Tribunal found that the addition was based on an estimation of unaccounted sales derived from a statement recorded during survey proceedings, without corroborative evidence. The Tribunal noted that the assessee's books of account and purchases were not doubted by the Assessing Officer.
The Tribunal held that the Assessing Officer (AO) should have passed a Draft Assessment Order under Section 144C(1) of the Income Tax Act, 1961, before issuing the final assessment order on 29.09.2014. The AO's action of passing a final assessment order directly, even when giving effect to the ITAT's directions and a revised TPO adjustment, was found to be contrary to law. The Tribunal relied on the decisions of the Hon'ble Karnataka High Court in CIT vs. Cisco Systems Services B.V., the Hon'ble Delhi High Court in Principal Commissioner of Income-tax vs. Sumitomo Corporation India (P.) Ltd., and the Hon'ble Bombay High Court in Deputy Commissioner of Income-tax vs. Dimension Data Asia Pacific PTE Ltd. These judgments categorically held that passing a draft assessment order is mandatory, even in set-aside proceedings or partial remand proceedings from the Tribunal, as it upholds the assessee's right to object. Consequently, the assessment order passed by the AO on 29.09.2014 was quashed. The assessee's appeal was allowed on this ground, rendering all other issues infructuous.
The Tribunal held that the Assessing Officer (AO) should have passed a Draft Assessment Order under Section 144C(1) of the Income Tax Act, 1961, before issuing the final assessment order on 29.09.2014. The AO's action of passing a final assessment order directly, even when giving effect to the ITAT's directions and a revised TPO adjustment, was found to be contrary to law. The Tribunal relied on the decisions of the Hon'ble Karnataka High Court in CIT vs. Cisco Systems Services B.V., the Hon'ble Delhi High Court in Principal Commissioner of Income-tax vs. Sumitomo Corporation India (P.) Ltd., and the Hon'ble Bombay High Court in Deputy Commissioner of Income-tax vs. Dimension Data Asia Pacific PTE Ltd. These judgments categorically held that passing a draft assessment order is mandatory, even in set-aside proceedings or partial remand proceedings from the Tribunal, as it upholds the assessee's right to object. Consequently, the assessment order passed by the AO on 29.09.2014 was quashed. The assessee's appeal was allowed on this ground, rendering all other issues infructuous.
The Tribunal held that the addition on account of unexplained investment in shops and cash deposits was not justified due to lack of satisfactory evidence. Regarding the addition from survey, the Tribunal directed the AO to recompute the income based on gross profit earned on unaccounted sales, taxed at normal rates, not under Section 115BBE.
The Tribunal held that the Revenue's ground regarding the exclusion of comparables based on turnover differences is dismissed, as an identical issue was decided in favour of the assessee in another appeal (IT(TP)A No. 2512/Bangalore 2024). The Tribunal noted that the assessee was not pressing the issue concerning Kals Information System Ltd., CG-VAK Software Exports Ltd., Rheal Software Pvt. Ltd., Infobeans Technologies Ltd., Aspire Systems (India) Pvt. Ltd., and Inteq Software Pvt. Ltd. Regarding the inclusion of I2T2 India Limited and Cigniti Technologies Limited, the Tribunal found that the CIT(A) relied on previous decisions without independently examining the factual matrix, contemporaneous financials, and functional profile for the relevant assessment year. Therefore, the issue of inclusion of these two comparables is restored to the Assessing Officer/TPO for fresh examination. The Revenue's appeal is partly allowed for statistical purposes. The assessee's cross-objections for AY 2013-14 and AY 2015-16 were dismissed as not pressed.
The Tribunal held that turnover is a relevant criterion for determining comparability in transfer pricing, as economies of scale impact profitability. Companies with substantially higher turnover enjoy cost efficiencies not available to smaller entities, necessitating an upper turnover filter for fair comparison.
The Tribunal condoned the delay of 30 days, noting it was marginal and without mala fides, and admitted the appeal. The Tribunal found that the CIT(A) order was passed in haste without adequately appreciating the assessee's submissions and evidence.
The Tribunal held that the addition on account of unexplained investment in shops and cash deposits was not justified. For the unaccounted sales, the addition should be computed based on gross profit and taxed under normal rates, not under Section 115BBE.
The Tribunal noted the substantial delays and the assessee's lack of proper explanation for not filing delay condonation applications. However, considering that the appeals were not decided on merits by the CIT(A), the Tribunal decided to grant one more opportunity to the assessee.
The Tribunal held that the Assessing Officer (AO) failed to provide the assessee an opportunity of hearing before rejecting the immunity application, which is a violation of natural justice principles and Section 270AA(4) of the Act. The AO also did not properly address the assessee's rectification application.
The Tribunal held that additions for unsecured loans were not sustainable as they were mostly opening balances and not fresh credits. The disallowance of interest on MSME/gold loans was incorrect as the loans were for business purposes. The disallowance of salary expenditure was also not justified given the supporting documentation provided.
The Tribunal held that TDS is required to be deducted on year-end provisions that are ascertained liabilities, even if credited to a 'Provision' account instead of the party's account. However, the demand raised under section 201(1) is liable to be cancelled if TDS is deducted at the time of accounting or payment in the succeeding year, though interest under section 201(1A) is payable for the delay.
The Tribunal directed the AO/TPO to re-determine the Arm's Length Price (ALP) for ECB interest, considering the Hon'ble High Court's judgment on RBI's ceiling and the assessee's corroborative benchmarking analysis. The penalty proceedings and interest levies were dismissed as premature and consequential.
The Tribunal, referencing prior decisions, found that Larsen & Toubro Infotech Limited cannot be considered a comparable company for a captive software development service provider due to functional dissimilarities and the presence of intangibles and brand.
The Tribunal noted the substantial delays and the assessee's lack of proper explanation for not filing delay condonation applications. However, considering that the appeals were not decided on merits by the CIT(A), the Tribunal decided to grant one more opportunity to the assessee.
The Tribunal held that the assessee's initial statement under Section 132(4), corroborated by seized material, was not effectively retracted or rebutted with credible evidence. The subsequent explanation was found inconsistent with the account ledger, which showed no outstanding balance from Mr. Vasudev at the time of the search.
The Tribunal condoned the delay in filing the appeal after considering the assessee's medical issues and the non-communication from the previous consultant. The Tribunal set aside the order of the Ld.CIT(A) and remitted the issue back for fresh adjudication on merits, considering all documents.
The Tribunal held that the appellant had genuine grievances and technical difficulties in filing the correction statement on time. Considering the discretionary nature of the penalty and the appellant's situation, the penalty was deemed unwarranted.
The Tribunal condoned the delay in filing the appeal before the CIT(A), set aside the order of the CIT(A) and the AO, and remitted the issue back to the AO for a fresh assessment after considering the documents filed by the assessee.
The Tribunal held that the dividend income received by the assessee from mutual funds and shares was fully exempt under Sections 10(34) and 10(35) of the Income Tax Act. Therefore, the addition made by the AO and confirmed by the CIT(A) was incorrect, and the deduction under Section 115BBDA was not applicable as the dividend income was not chargeable to tax.
The Tribunal condoned the delay in filing the appeals and the reasons for non-appearance. Considering the assessees are old charitable organizations registered since 1985, the Tribunal decided to grant them one more opportunity to appear before the CIT(E) and produce necessary documents.
The Tribunal noted that the assessee was staying abroad and was dependent on her father for tax matters, which led to her not receiving or responding to notices. Therefore, there was a reasonable cause for not responding and remaining unrepresented.
The Tribunal noted that the AO had not allowed the excess interest paid as it was not correlated with earning income. While acknowledging the ex-parte order of the CIT(A), the Tribunal decided to remit the issue to the AO for fresh adjudication.
The Tribunal noted that notices were sent to an incorrect email ID belonging to the auditor, which the assessee was unaware of, leading to ex-parte proceedings at both the AO and CIT(A) levels. The CIT(A) erred in dismissing the appeal without verifying if notices were reaching the assessee.