ITAT Cochin Judgments — May 2025

The Tribunal condoned the delay in filing the appeal. It held that following Rule 7B of the I.T. Rules for coffee cultivation, 25% of the gross produce (Rs. 24,00,358/-) should be treated as business income, and the remaining Rs. 72,01,076/- as agricultural income. Consequently, the addition made by the lower authorities was restricted to Rs. 24,00,358/-.

The Tribunal dismissed the ground related to the Section 35(2AB) disallowance, stating that an appeal, if any, should be against the rectification order u/s 154 and not the original assessment order u/s 143(3). However, the ITAT allowed the appeal concerning club membership fees, holding it to be a revenue expenditure for business purposes, relying on a Delhi High Court decision.

The Tribunal held that Section 40A(3) applies solely to revenue expenditure claimed as a deduction for computing business profits, not to capital expenditure that is capitalized and for which no deduction is claimed. The specific provision to disallow cash payments for capital assets (2nd proviso to Section 43) was introduced by the Finance Act, 2017, effective from AY 2018-19, and therefore did not apply to AY 2015-16. Consequently, the disallowance made under Section 40A(3) was deleted.

The Tribunal held that while Form 67 was not filed by the return due date, it was available with the CPC when the return was processed. It ruled that the time limit for filing Form 67 is directory, not mandatory, and directed the CPC to amend the intimation under Section 143(1) to consider the Form 67 filed by the appellant.

The Tribunal agreed that the investment violated Section 11(5). However, it ruled that the lower authorities were not justified in disallowing the *entire* investment amount, as it was not made in the relevant assessment year. The addition should be limited to the income generated from this investment during the assessment year 2013-14, citing a precedent.

The Tribunal upheld the decision of the lower authorities, ruling that the appellant was not entitled to a refund of TDS as no valid return of income was filed, which is a prerequisite under Section 239 of the Income Tax Act for claiming a refund.

The Tribunal condoned the delay in filing the appeal. However, on merits, it dismissed the appeal, holding that the assessee is not entitled to deduction under Section 80P as the return of income was not filed within the due date prescribed under Section 139(1), relying on the Kerala High Court judgment in *Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham*.

The Tribunal condoned the 25-day delay. Recognizing that both lower authorities' orders were ex parte and in the interest of natural justice, the Tribunal restored the appeal to the file of the Assessing Officer for fresh disposal, directing the AO to provide a reasonable opportunity of being heard to the assessee and the assessee to cooperate. The stay petition was dismissed as infructuous.

The CIT(A) confirmed additions after the Assessing Officer submitted a remand report and the assessee did not file a rejoinder, allegedly due to non-receipt of the CIT(A)'s letter. The Tribunal noted that the matter needed to be restored to the CIT(A) for a fresh decision.

The CIT(A) confirmed additions after the Assessing Officer submitted a remand report and the assessee did not file a rejoinder, allegedly due to non-receipt of the CIT(A)'s letter. The Tribunal noted that the matter needed to be restored to the CIT(A) for a fresh decision.

The CIT(A) confirmed additions after the Assessing Officer submitted a remand report and the assessee did not file a rejoinder, allegedly due to non-receipt of the CIT(A)'s letter. The Tribunal noted that the matter needed to be restored to the CIT(A) for a fresh decision.

The CIT(A) confirmed additions after the Assessing Officer submitted a remand report and the assessee did not file a rejoinder, allegedly due to non-receipt of the CIT(A)'s letter. The Tribunal noted that the matter needed to be restored to the CIT(A) for a fresh decision.

The Tribunal condoned the delay, finding sufficient cause. It noted that the CIT(A)'s order was ex parte due to non-compliance with hearing notices, which the assessee claimed were not served.

The Tribunal restored the appeal to the CIT(A) for de novo disposal. This was done as a last opportunity in the interest of justice and equity, directing the assessee to cooperate and not seek unnecessary adjournments.

The Tribunal held that guarantee commission paid to the State Government is not deductible under Section 40(a)(iib) of the Income Tax Act, following a Supreme Court decision. The issue of provision for bad and doubtful debts was remanded to the Assessing Officer for fresh adjudication.

The Tribunal, after perusing the material on record, was of the prima facie view that the Sub-Registrar Office had wrongly mentioned the immovable property value as Rs.1,36,26,000 instead of Rs.13,25,500 while furnishing AIR information. In the interest of justice and equity, the Tribunal decided that this aspect needed to be examined by the Assessing Officer (AO). Accordingly, the issue of the main addition concerning the property purchase was restored to the AO's file. The assessee was directed to furnish all necessary evidence to prove the property was purchased for Rs.13,25,500. Since the main issue was restored to the AO, the other subsidiary issues, namely the additions made on account of purchase of shares/mutual funds and credit card bills payments, were also restored to the AO for fresh adjudication. The Tribunal did not decide on the merits of the other additions but remanded them for re-examination.

The Tribunal held that while Section 44AD was not applicable, the entire gross receipts could not be treated as income. The case was restored to the AO to determine net income after considering expenses or estimating income.

The Tribunal found the AO's and CIT(A)'s estimation of turnover and profit to be erroneous due to a lack of direct nexus between the limited material found (44 days) and the extrapolation for the entire year. The matter is remanded to the CIT(A) for de novo disposal, directing an examination of books, bank statements, and other relevant materials to arrive at a true and correct turnover, with profit estimation based on historical data or comparable instances.

The Tribunal found the AO's and CIT(A)'s estimation of turnover and profit to be erroneous due to a lack of direct nexus between the limited material found (44 days) and the extrapolation for the entire year. The matter is remanded to the CIT(A) for de novo disposal, directing an examination of books, bank statements, and other relevant materials to arrive at a true and correct turnover, with profit estimation based on historical data or comparable instances.

The Income Tax Appellate Tribunal found that the CIT(A) had passed an ex-parte order because the hearing notices were sent to an incorrect email ID, thus depriving the assessee of a reasonable opportunity to present their case. Consequently, the ITAT decided to remand the matter back to the CIT(A) for fresh adjudication on merits.

The Tribunal ruled that a revised return, if filed within the time allowed under Section 139(5), substitutes the original return, and the claim made therein is valid. It also held that the audit report can be filed before the completion of assessment proceedings. However, as the AO did not examine other conditions for Section 10B deduction, the matter was remitted back to the AO for verification.

The Tribunal found the AO's and CIT(A)'s estimation of turnover and profit to be erroneous due to a lack of direct nexus between the limited material found (44 days) and the extrapolation for the entire year. The matter is remanded to the CIT(A) for de novo disposal, directing an examination of books, bank statements, and other relevant materials to arrive at a true and correct turnover, with profit estimation based on historical data or comparable instances.

The Tribunal noted that the AO did not make an addition under Section 68, implying the genuineness of the loans was not entirely disputed. Citing Supreme Court precedent (Rajendra Prasad Mody), the Tribunal held that interest expenditure incurred on borrowed money for investment is an admissible deduction under Section 57(iii), even if the investment did not yield interest.

The Tribunal noted that the AO did not make an addition under Section 68, implying the genuineness of the loans was not entirely disputed. Citing Supreme Court precedent (Rajendra Prasad Mody), the Tribunal held that interest expenditure incurred on borrowed money for investment is an admissible deduction under Section 57(iii), even if the investment did not yield interest.

The Tribunal held that guarantee commission paid to the State Government is not deductible under Section 40(a)(iib) of the Income Tax Act, following a Supreme Court decision. The issue of provision for bad and doubtful debts was remanded to the Assessing Officer for fresh adjudication.

The Tribunal held that the CIT(A) erred by confirming the denial on a different ground than the CPC's initial reason. Noting the CBDT's condonation of delay for Form 10BB filing, the Tribunal found the CIT(A)'s reasoning invalid and remanded the matter for de novo disposal by the CIT(A).

The Tribunal held that guarantee commission paid to the State Government is disallowable under Section 40(a)(iib) of the Income Tax Act, following a Supreme Court decision. The issue of provision for bad and doubtful debts was remanded to the Assessing Officer for fresh adjudication.

The Tribunal held that the assessee's micro-financing activities in rural areas qualified as a charitable activity under the first limb of Section 2(15) of the Act, based on consistent facts and binding precedents from the Tribunal and the Kerala High Court for an earlier assessment year. Consequently, the Tribunal quashed the revisionary orders passed by the PCIT under Section 263.

The Tribunal deleted the addition of Rs. 5,93,581/- for low gross profit, stating that a mere lower GP rate is insufficient without rejecting the books of account. It also deleted the disallowance of Rs. 20,952/- for repair charges, finding the AO's assumption that they related to house property incorrect. Consequently, for the penalty appeal, as the underlying quantum additions were deleted, the matter was restored to the AO to pass a fresh order in terms of the Tribunal's decision on quantum.

The Tribunal held that the non-compete right acquired by the assessee constitutes an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act. It followed the Madras High Court's view which distinguished the Delhi High Court's decision.

The Tribunal held that the CIT(A) erred in not condoning the delay as the appellant had no knowledge of the assessment order until receiving a demand notice. It also ruled that the CIT(A) should not have dealt with the merits of the case after dismissing the appeal in limine on grounds of delay. The CIT(A)'s order was set aside, and the matter was remitted back for disposal on merits.

The Tribunal upheld the disallowance, stating that the PCIT's order under Section 263 specifically directed the AO to disallow the guarantee commission, and this order had attained finality. Consequently, the issue of allowability could not be further agitated in an appellate forum.

The Tribunal condoned the 29-day delay, finding sufficient cause. It set aside the ex-parte order of the CIT(A) and restored the appeal to the file of the Assessing Officer for a fresh assessment, directing the assessee to cooperate.

The Tribunal held that the assessee's micro-financing activities in rural areas qualified as a charitable activity under the first limb of Section 2(15) of the Act, based on consistent facts and binding precedents from the Tribunal and the Kerala High Court for an earlier assessment year. Consequently, the Tribunal quashed the revisionary orders passed by the PCIT under Section 263.

The Tribunal held that the club operated on the principle of mutuality, and profits from dealings with members are not taxable. It directed the Assessing Officer to consider the income and expenditure account and tax only the net income, following the precedent from the immediately preceding assessment year (AY 2013-14) for the same assessee, despite the incorrect ITR form filing.

The Tribunal held that the non-compete right acquired by the assessee constitutes an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act. It followed the Madras High Court's view which distinguished the Delhi High Court's decision.

The Tribunal held that the non-compete right acquired by the assessee constitutes an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act. It followed the Madras High Court's view which distinguished the Delhi High Court's decision.

The Tribunal held that guarantee commission paid to the State Government is not deductible under Section 40(a)(iib) of the Income Tax Act, following a Supreme Court decision. The issue of provision for bad and doubtful debts was remanded to the Assessing Officer for fresh adjudication.

The Tribunal held that the non-compete right acquired by the assessee constitutes an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act. It followed the Madras High Court's view which distinguished the Delhi High Court's decision.

The Tribunal dismissed the appeal for AY 2008-09, declining to condone the delay as the appellant failed to show sufficient cause or bona fide pursuit of an alternative remedy. For both assessment years, the Tribunal upheld the additions, affirming that incriminating material was found and the appellant had declared additional income, which, as per the Supreme Court in Abhisar Buildwell P. Ltd., allows the AO to make further additions.

The Tribunal held that the AO's order under Section 154 was passed without giving the assessee a reasonable opportunity to object, as the consequential order was not served. Therefore, the matter was remanded to the AO for fresh disposal.

The Tribunal found the AO's and CIT(A)'s estimation of turnover and profit to be erroneous due to a lack of direct nexus between the limited material found (44 days) and the extrapolation for the entire year. The matter is remanded to the CIT(A) for de novo disposal, directing an examination of books, bank statements, and other relevant materials to arrive at a true and correct turnover, with profit estimation based on historical data or comparable instances.

The Income Tax Appellate Tribunal upheld the CIT(A)'s decision, ruling that the assessee failed to provide documentary evidence (like sales and purchase invoices) to substantiate the source of the cash deposits. The Tribunal found the explanation to be an afterthought and lacking proof, thereby confirming the addition of unexplained cash deposits.

The Tribunal deleted the addition of Rs. 5,93,581/- for low gross profit, stating that a mere lower GP rate is insufficient without rejecting the books of account. It also deleted the disallowance of Rs. 20,952/- for repair charges, finding the AO's assumption that they related to house property incorrect. Consequently, for the penalty appeal, as the underlying quantum additions were deleted, the matter was restored to the AO to pass a fresh order in terms of the Tribunal's decision on quantum.

The learned CIT-DR stated that he had no objection to the withdrawal of the appeal by the assessee. In view of the assessee's submission and the lack of objection from the revenue, the Tribunal dismissed the appeal as withdrawn.

The Tribunal observed that the AO mechanically accepted the claim for guarantee commission without any application of mind or inquiry into the provisions of Section 40(a)(iib). Citing precedents, the Tribunal confirmed that non-examination of a crucial issue renders the assessment order erroneous and prejudicial. Therefore, the Tribunal found no fault in the PCIT's exercise of jurisdiction under Section 263 and dismissed the assessee's appeal.

The Tribunal held that the reassessment proceedings initiated beyond four years were invalid as the reasons recorded by the AO did not contain any allegation that the assessee failed to disclose all material facts necessary for assessment, which is a mandatory condition under the proviso to Section 149 of the Income Tax Act.

The Tribunal condoned a 146-day delay in filing the appeal, noting that the appellant was pursuing alternate legal remedies. It found that the CIT(A)'s order was cryptic, failing to address the appellant's detailed explanations regarding sundry creditors and the non-applicability of TDS on freight charges. Consequently, the matter was remanded back to the CIT(A) for a de novo disposal with a reasonable opportunity of hearing to the appellant.

The Tribunal dismissed all grounds of appeal. It upheld the disallowance under Section 36(1)(viia) as the branches in question exceeded the 10,000 population limit for rural classification. The disallowances for core banking expenditure under Section 40(a)(ia) and interest on OTS/NPA schemes under Section 36(1)(vii) were also confirmed due to the appellant's failure to comply with TDS provisions and other prescribed conditions, respectively.

The Tribunal dismissed the appeal for AY 2008-09, declining to condone the delay as the appellant failed to show sufficient cause or bona fide pursuit of an alternative remedy. For both assessment years, the Tribunal upheld the additions, affirming that incriminating material was found and the appellant had declared additional income, which, as per the Supreme Court in Abhisar Buildwell P. Ltd., allows the AO to make further additions.