ITAT Bangalore Judgments — April 2026

The Tribunal noted that the quantum appeal was remanded by a previous order and was pending before the CIT(A). Therefore, the Tribunal held that the penalty appeal could not survive until the quantum appeal was decided on merits. The penalty appeal was remitted back to the CIT(A) to be clubbed with the pending quantum appeal.

The Tribunal held that the assessee should be provided an opportunity to submit documentary evidence for claiming deductions and exemptions, particularly those available in Form 16, which were inadvertently omitted. It was noted that the revenue should not benefit from the assessee's ignorance, and taxing income not legally due is impermissible. The matter was remanded to the AO for a de novo assessment.

The Tribunal held that while the assessee has a responsibility to submit necessary documents, the CIT(Exemptions) did not consider the assessee's email seeking an adjournment, which was sent before the order was passed. Therefore, in the interest of justice, the matter should be reconsidered.

The Tribunal held that the delay in filing the correct audit report (Form 10BB) was a procedural lapse and should be condoned if substantive conditions for exemption under Section 10(23C)(vi) are met. The Tribunal also noted that the income might be exempt under Section 10(23C)(iiiad).

The Tribunal noted that the assessee could not properly represent their case before the lower authorities. In the interest of justice, the Tribunal decided to set aside the orders and remit the entire issue back to the Assessing Officer for a fresh decision.

The Tribunal condoned the delay of 54 days in filing the appeal before the CIT(A)/NFAC, finding the assessee's explanation plausible. The entire issues in dispute were remitted back to the CIT(A)/NFAC for fresh adjudication on merits after granting a reasonable opportunity of being heard.

The Tribunal held that the rejection of the application was due to a bonafide, unintentional, and clerical mistake in filing the application under the wrong clause. The Tribunal observed that procedural lapses should not override substantial justice and that the assessee should have been allowed to rectify the mistake.

The Tribunal acknowledged that the assessee could not represent his case before the CIT(A)/NFAC and accepted the grounds presented, including the affidavit and death certificate regarding his mother's passing. In the interest of justice and fair play, the Tribunal decided to remit the issue back to the CIT(A)/NFAC for a fresh decision.

The Tribunal held that the disallowance was made without proper enquiry, without identifying specific defects, and without correlating the information with the assessee's transactions. The addition was based on presumption and general allegations against the supplier, not on independent verification.

The Tribunal held that GST/sales tax/service tax refunds are not taxable if not routed through the profit and loss account, and the addition for margin on capital assets constituted double taxation as it was voluntarily offered to tax. Interest levies were directed to be recomputed.

The Tribunal held that the assessee had sufficient interest-free funds (share capital and reserves) to cover the interest-free advances made to sister concerns. Therefore, no disallowance of financial costs was warranted.

The Tribunal decided to remit the entire issue in dispute back to the file of the CIT(A) for a fresh decision in accordance with law. The reasoning was based on the interest of justice, equity, and fair play, acknowledging the assessee's request for another opportunity. The Tribunal emphasized that a reasonable opportunity of being heard must be granted to the assessee. The assessee was directed to cooperate with the proceedings before the CIT(A) and submit necessary documents. The Tribunal also cautioned that in case of further default, the assessee would not be entitled to any leniency. The ratio is that procedural lapses leading to non-representation, if genuinely demonstrated, can warrant a remand for a fresh adjudication, provided the assessee cooperates in the subsequent proceedings.

The Tribunal held that the assessee had sufficient interest-free funds (share capital and reserves) to cover the interest-free advances made to sister concerns. Therefore, no disallowance of financial costs was warranted.

The Tribunal found that the exact nature of the expenditure was unclear and the CIT(A)'s decision was based on the assessee's claim of offline submission of details. The Tribunal decided to remit the issue back to the Assessing Officer for fresh adjudication.

The Tribunal held that GST/sales tax/service tax refunds are not taxable if not routed through the profit and loss account, and the addition for margin on capital assets constituted double taxation as it was voluntarily offered to tax. Interest levies were directed to be recomputed.

The Tribunal condoned the delay in filing the appeal before the CIT(A) due to the assessee's lack of awareness of e-filing procedures and election-related work. The case was restored to the AO for fresh consideration.

The Tribunal held that the AO's failure to dispose of the assessee's objections to the reasons for reopening, as mandated by law and supported by jurisdictional High Court judgments, renders the reassessment proceedings and the assessment order invalid.

The Tribunal found that the CIT(A) order was ex-parte and against the principles of natural justice. Considering the assessee had cooperated with the AO and the order was ex-parte, the Tribunal decided to remit the issue back to the CIT(A) for fresh consideration.

The Tribunal partly allowed the assessee's appeal. Regarding the exclusion of comparable companies based on turnover, the Tribunal found that companies with turnovers of ₹ 4,595 crores (Infosys BPM Ltd.) and ₹ 7,036 crores (Tech Mahindra Ltd.) were not truly comparable due to significant differences in scale, market presence, brand value, and economies of scale. These factors impact margin comparability. The Tribunal directed the Assessing Officer (AO) to remove these two companies from the comparable set. However, for Motif India Infotech Limited (₹ 308 crores turnover) and MSP Ltd (₹ 218 crores turnover), the Tribunal found no significant difference in turnover compared to the assessee (₹ 57 crores) and directed their retention. Regarding E care India Private Limited, the Tribunal directed its exclusion due to the non-provision of annual accounts by the TPO and its functional dissimilarity (medical transcription). Vitae Accounting Ltd. was directed to be excluded as it is engaged in bookkeeping services, making it functionally different from ITeS. Brickworks India Private Limited was also directed to be excluded as it is a KPO provider, distinct from the assessee's ITeS services. Domex E Private Limited was found to be functionally comparable and directed to be retained. Concerning interest on outstanding receivables, the Tribunal upheld the TPO's view that it is a separate international transaction requiring separate benchmarking. However, it directed the AO to compute the interest on overdue receivables applying appropriate LIBOR or Euribor rates, as the bills were stated to be prepared in foreign currency, instead of SBI PLR.

The Tribunal held that the inclusion of Adam Comsof Ltd. as a comparable was defective on two grounds. Firstly, the TPO adopted financial data for the period 01.07.2002 to 30.06.2003, which did not fall within the relevant financial year 01.04.2003 to 31.03.2004. This approach contravened Rule 10B(4) of the Income Tax Rules, which mandates the use of data relating to the financial year in which the international transaction was entered into, unless exceptional circumstances justify using earlier year data as per the proviso. The Tribunal relied on the Delhi High Court's decision in Chryscapital Investment Advisors (India) (P.) Ltd. v. Deputy Commissioner of Income-tax, which held that using data not pertaining to the relevant financial year is impermissible. Secondly, the Tribunal found substance in the assessee's alternative contention that Adam Comsof Ltd. was involved in fraudulent activities and had been penalized by SEBI, as evidenced by a SEBI adjudication order imposing a penalty of Rs. 30,00,000/- for violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. The Tribunal relied on the Bombay High Court's decision in Commissioner of Income-tax, Pune v. Cummins Turbo Technologies Ltd., which upheld the exclusion of companies with unreliable financials due to extraordinary circumstances. Therefore, the Tribunal directed the AO/TPO to exclude Adam Comsof Ltd. from the final set of comparables. The ground of appeal was allowed.

The Tribunal held that transfer pricing adjustments must be restricted only to international transactions with Associated Enterprises (AEs) and not extended to transactions with independent third parties. The AO/TPO was directed to recompute the adjustment accordingly.

The Tribunal condoned the delay in filing appeals due to the assessee's medical condition and the circumstances surrounding the non-response to notices. The appeals were remitted to the Assessing Officer for fresh consideration on merits.

The Tribunal condoned the delay in filing appeals due to the assessee's medical condition and the circumstances surrounding the non-response to notices. The appeals were remitted to the Assessing Officer for fresh consideration on merits.

The Tribunal condoned the delay in filing appeals due to the assessee's medical condition and the circumstances surrounding the non-response to notices. The appeals were remitted to the Assessing Officer for fresh consideration on merits.

The Tribunal condoned the delay in filing appeals due to the assessee's medical condition and the circumstances surrounding the non-response to notices. The appeals were remitted to the Assessing Officer for fresh consideration on merits.

The Tribunal held that the Generation Based Incentive (GBI) received by the assessee is directly linked to the business activity of electricity generation and therefore partakes the character of business income derived from the eligible undertaking. The reliance on precedents like Sterling Foods and Pandian Chemicals was distinguished as the incentive in this case has a direct nexus with the core business.

The Tribunal held that once the assessee explained the cash deposits as amounts received from its members in the regular course of business, and the Revenue failed to provide contrary material, no addition under Section 68 was warranted. The mere fact that the currency was demonetised did not automatically make the amounts unexplained.

The Tribunal condoned the delay in filing appeals due to the assessee's medical condition and the circumstances surrounding the non-response to notices. The appeals were remitted to the Assessing Officer for fresh consideration on merits.

The Tribunal held that turnover is a relevant criterion for comparability due to economies of scale, and companies with substantially higher turnovers cannot be compared mechanically. Regarding interest on receivables, the Tribunal found that while it is an international transaction, the rate applied by the TPO was excessive.

The Tribunal condoned the delay in filing the appeal before the CIT(A) and the ITAT, considering the ex parte assessment and the interest of substantial justice. The matter was restored to the Assessing Officer for fresh adjudication.

The Tribunal held that the AO's estimation of agricultural income was arbitrary and lacked a reasonable basis. The Tribunal also found that the assessee had provided sufficient evidence, including reports from the village accountant and studies on arecanut cultivation, to support the claim.

The Tribunal held that the assessee's activities, including vocational training and skill development, constitute 'education' under Section 2(15) of the Act. Following the decision of the Karnataka High Court in the assessee's own case, the Tribunal allowed the exemption under Section 11.

The Tribunal held that the notice issued under Section 148 was bad in law due to lack of jurisdiction and being barred by limitation. It also found that the prescribed procedure under Section 148A was not followed.

The Tribunal held that duty drawback is taxable upon actual receipt as per Section 145B(3) and Section 2(24)(xviii) of the Income Tax Act. The AO's addition was based on unverified data and lacked proper evidence, while the assessee had accounted for the received amount correctly.

The Tribunal held that Rule 7B is specifically applicable to coffee grown, cured, roasted, and grounded by the seller. However, income from coffee purchased from other planters is not agricultural income and should be taxed accordingly. The issue was restored to the AO for detailed examination.

The Tribunal held that transfer pricing adjustments must be restricted to international transactions with Associated Enterprises (AEs), not the entire turnover. It also upheld the CIT(A)'s directions regarding capacity utilization and working capital adjustments after verification.

The Tribunal held that duty drawback is taxable upon actual receipt as per Section 145B(3) and Section 2(24)(xviii) of the Income Tax Act. The AO's addition was based on unverified data and lacked proper evidence, while the assessee had accounted for the received amount correctly.

The Tribunal held that the assessee's activities, including vocational training and skill development, constitute 'education' under Section 2(15) of the Act. Following the decision of the Karnataka High Court in the assessee's own case, the Tribunal allowed the exemption under Section 11.

The Tribunal held that the assessee's activities, including vocational training and skill development, constitute 'education' under Section 2(15) of the Act. Following the decision of the Karnataka High Court in the assessee's own case, the Tribunal allowed the exemption under Section 11.

The Tribunal held that Rule 7B is specifically applicable to coffee grown, cured, roasted, and grounded by the seller. However, income from coffee purchased from other planters is not agricultural income and should be taxed accordingly. The issue was restored to the AO for detailed examination.

The Tribunal held that the revenue authorities' determination of interest payment based on SBI PLR or LIBOR plus a markup is inappropriate for hybrid instruments like Compulsorily Convertible Debentures (CCDs). These benchmarks are relevant for straightforward loan transactions and do not account for the unique features of CCDs, such as optional or mandatory convertibility into equity, lack of a defined repayment schedule, longer tenure, obligation to convert, and different enforcement/liquidation rights. The Tribunal found that the OECD Transfer Pricing Guidelines (2022) and Rule 10B(2) of the Income Tax Rules mandate a detailed delineation of financial transactions, considering contractual terms, functions, assets, risks, economic circumstances, and market conditions. The TPO and DRP failed to consider these aspects and the Income Tax Rules and OECD Guidelines. The Tribunal also noted that the Transfer Pricing Study Report (TPSR) lacked details on the terms and conditions of the comparables used. Therefore, the issue of determining the arm's length price (ALP) of the interest paid on CCDs is restored to the Assessing Officer for reference to the TPO. The TPO is directed to consider the 'options realistically available' to both parties. Grounds 3 and 4 are allowed. Grounds 1, 2, 5, and 6 are dismissed as general, premature, or consequential.

The Tribunal allowed the appeal of the Revenue and restored the issue to the Assessing Officer (AO). The Tribunal noted that neither the assessee nor the TPO had analyzed the credit rating or financial capability of the Indian entity to repay the sum, nor had they considered the 'options realistically available' to both parties as per OECD Guidelines (para 10.18). The Tribunal found that the exact terms and conditions of the CCD agreement were not available, with the submitted document appearing to be board minutes. The Tribunal also considered the mix of debt and equity invested in the company and the shareholding structure. It observed that the CCDs had not been converted into equity and their tenure had been extended, indicating a perennial payment of interest. The Tribunal directed the AO to refer the matter back to the TPO for determination of the arm's-length price (ALP) of the interest paid, with both parties directed to consider the financial health of the Indian entity and 'options realistically available' based on OECD Guidelines. The AO was directed to pass a draft assessment order thereafter.

The Tribunal held that a dispute regarding the classification of income or denial of full exemption on capital gains due to joint reinvestment does not amount to concealment of income or furnishing inaccurate particulars. Therefore, penalty under Section 271(1)(c) is not leviable.

The Tribunal held that Rule 7B is specifically applicable to coffee grown, cured, roasted, and grounded by the seller. However, income from coffee purchased from other planters is not agricultural income and should be taxed accordingly. The issue was restored to the AO for detailed examination.

The Tribunal held that when issues are remanded by a higher appellate authority to the AO or TPO, a draft assessment order must be issued first, allowing the assessee the option to approach the DRP. The AO's failure to issue a draft assessment order before passing the final assessment order, as required by Section 144C of the Income Tax Act, renders the assessment order unsustainable.

The Tribunal held that enhanced business income arising from disallowances of expenditure is eligible for deduction under Section 80P(2)(a)(i), following a previous ITAT decision and CBDT circular.

The Tribunal held that the CIT(A) erred in dismissing the appeals ex-parte without considering the submissions and evidence filed by the assessee, violating principles of natural justice. The issues required factual verification and examination of evidence. Therefore, the appeals were set aside to the CIT(A) for fresh adjudication.

The Tribunal held that the CIT(A) erred in dismissing the appeals ex-parte without considering the submissions and evidence filed by the assessee, violating principles of natural justice. The issues required factual verification and examination of evidence. Therefore, the appeals were set aside to the CIT(A) for fresh adjudication.

The Tribunal held that the rejection of the assessee's Chartered Accountant certified segmental financial analysis by the lower authorities was not acceptable without proper examination. It restored ground no. 3.2 of the appeal to the Assessing Officer for fresh examination. Regarding interest on overdue receivables, the Tribunal directed reconsideration of working capital adjustments and allowed the ground with directions.

The Tribunal noted that the quantum appeal concerning the addition of Rs. 19,78,810 was restored to the Assessing Officer for fresh adjudication, with directions to decide in accordance with the Double Taxation Avoidance Agreement. Therefore, the present penalty appeal was deemed premature.