ITAT Cochin Judgments — June 2025

The Tribunal held that the issue of residential status and the number of days of stay in India were already examined by the AO during the original assessment proceedings. Therefore, the initiation of re-assessment under Section 148 was based on a mere 'change of opinion' without any fresh tangible material, which is not permissible as per the Supreme Court's pronouncement in CIT v. Kelvinator of India Ltd. The Tribunal quashed the re-assessment proceedings.

The Tribunal found that what constitutes a religious activity is debatable and that spending on "Bhagavata Tattva Sameeksha Satram" does not automatically qualify as a religious activity. It held the CIT(E)'s reasoning unsustainable and directed the renewal of 80G approval.

The Tribunal held that the Pr. CIT's view that entire gross agricultural receipts should be taxed as income or that expenditure to earn agricultural income should be treated as unexplained expenditure was untenable in law. Citing Supreme Court precedents, the Tribunal reiterated that revisionary powers under Section 263 cannot be exercised merely because the Commissioner holds a different plausible view, concluding that there was no error in the original assessment order passed by the AO.

The Tribunal, noting the protective nature of the Section 68 addition and the pending appeal of Shri K. Sreekumar before the CIT(A), remanded the matter back to the CIT(A). The CIT(A) is directed to redetermine the question of addition under Section 68 based on the outcome of Shri K. Sreekumar's appeal.

The Income Tax Appellate Tribunal (ITAT) held that the CIT(A) is duty-bound to dispose of appeals on merits, even ex-parte, as per Section 250(6) of the Income Tax Act and judicial precedents. Consequently, the ITAT remanded the matter back to the file of the CIT(A) for a de novo disposal on merits, after providing the assessee a reasonable opportunity of hearing.

The Tribunal, following the judgment of the Jurisdictional High Court in CIT vs. Sahyadri Co-operative Credit Society Ltd., held that interest income earned by the co-operative society from Treasury and Scheduled Banks is attributable to its main business and is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act.

The Tribunal, relying on judicial precedents, held that no disallowance under Section 14A of the Income Tax Act can be made when there is no exempt income. Therefore, the AO was not justified in making the disallowance under Section 14A.

The Tribunal held that the assessee was not entitled to the Section 80P deduction because it failed to file a valid return of income within the prescribed statutory timelines. This is a precondition for claiming deductions under Chapter VI-A, including Section 80P, as clarified by Section 80A(5) and supported by jurisdictional High Court pronouncements.

The Tribunal held that the AO erred in rejecting the Section 154 application. Since the trust's registration under Schedule IV, making its income exempt under Section 10(25)(iii), was a matter of record, the AO should have considered this fact for rectification. The issue is set aside to the AO for fresh examination and to allow the exemption claim.

The CIT(A) had dismissed the appeal ex-parte without addressing the merits of the penalty U/s. 271B, merely confirming the AO's action. The ITAT held that the CIT(A) failed to comply with Section 250(6) by not discussing facts or grounds of appeal, and remanded the matter back to the CIT(A) for fresh adjudication on merits after providing a reasonable opportunity of hearing to the assessee.

The ITAT observed that the CIT(A) erred by dismissing the appeal in limine for non-prosecution without addressing the merits, which is contrary to Section 250(6) of the Act and established legal principles requiring a CIT(A) to decide an appeal on merits even in ex-parte cases. Consequently, the tribunal remanded the case to the CIT(A) for a fresh adjudication on merits, ensuring a reasonable opportunity of hearing for the assessee.

The ITAT condoned the 34-day delay in filing the appeal, finding sufficient cause. Consequently, the tribunal remitted the quantum appeal back to the CIT(A)/NFAC for fresh adjudication on merits, ensuring the assessee is given a reasonable opportunity of being heard. The related appeal against the penalty order Under Section 270A was also remitted, while the Stay Petition was dismissed.

The Tribunal, noting that the CIT(A) erred in dismissing the appeal for non-prosecution without merits, decided the case on merits based on available records. Relying on jurisdictional High Court decisions, the Tribunal held that interest income earned by the cooperative society from District Cooperative Bank, Scheduled Banks, and Treasury qualifies for deduction under Section 80P of the Act.

The Income Tax Appellate Tribunal, following the jurisdictional High Court decision in M/s. Sahyadri Co-operative Credit Society Ltd, held that the interest income earned by the appellant from Treasury Account and Rubber market qualifies for deduction under Section 80P(2)(a)(i) of the Income Tax Act. The AO was directed to delete the addition.

The Tribunal condoned a 34-day delay in filing the appeal, finding sufficient cause. It remanded both the quantum appeal and the penalty appeal back to the CIT(A)/NFAC for fresh adjudication, providing the assessee a reasonable opportunity of being heard. The Stay Petition filed by the assessee was dismissed.

The Tribunal held that the rectification proceedings initiated by the AO under Section 154 to disallow MAT credit were barred by limitation. Since the MAT credit was not a subject matter of the CIT(A)'s earlier order, the limitation period for rectification should be calculated from the original assessment order dated 17.03.2014. As the Section 154 notice was issued on 17.01.2019, it was beyond the prescribed time limit, rendering the rectification proceedings invalid.

The Tribunal condoned the delay in filing the appeal but dismissed the appeal on merits. It held that the assessee was not entitled to a deduction under Section 80P of the Income Tax Act because no valid return of income was filed, aligning with the jurisdictional High Court's precedent that claiming such deductions requires a return filed within the prescribed due date.

The Tribunal condoned a 309-day delay in filing the appeal. Relying on jurisdictional High Court precedents, it ruled that the assessee is entitled to deduction under Section 80P for interest income received from Treasury and Scheduled Banks, as this income is attributable to its main business.

The Tribunal held that since the tax audit report, though filed late, was available to the Assessing Authority before the assessment completion, no prejudice was caused to the Revenue. Citing the Kerala High Court precedent, it ruled that penalty under Section 271B should not be imposed if there is a reasonable cause for delay and no prejudice to the Revenue, thus deleting the penalty.

The Tribunal found that the order under Section 154 was passed without issuing a prior notice of proposed disallowance and without affording the assessee an opportunity of being heard. Considering the Senior Departmental Representative's non-objection, the Tribunal set aside the order and remanded the matter back to the Assessing Officer. The AO was directed to issue a proper notice under Section 154 and pass a fresh order after granting a reasonable opportunity of being heard to the assessee.

The Tribunal held that the lower authorities should have considered the assessee's withdrawals from her Savings Bank account as available for subsequent deposits. The matter was remanded to the Assessing Officer for a fresh assessment after providing the assessee a reasonable opportunity to be heard and to consider all contentions raised.

The ITAT found that the CIT(A) erroneously dismissed the appeal ex-parte without considering the merits or the assessee's claim of bona fide belief regarding Section 44AB applicability. Citing Section 250(6), the ITAT emphasized the CIT(A)'s duty to dispose of appeals on merits. The matter was therefore remanded to the CIT(A) for a de novo disposal on merits after providing a reasonable opportunity of hearing to the assessee.

The ITAT held that the appellant's explanation for the 130-day delay in filing the appeal, citing professional pre-occupation and ignorance of legal procedures, was not bona fide. The Tribunal noted that the appellant, being a doctor and a director of a company with access to Chartered Accountants, could not claim to be a "rustic villager" and thus refused to condone the delay.

The Tribunal held that the appellant is a co-operative society, not a co-operative bank, and thus Section 80P(4) is inapplicable. Following precedents from the Supreme Court and Kerala High Court, it ruled that interest income from deposits with scheduled banks, co-operative banks, and treasury is eligible for deduction under Section 80P(2)(a)(i) and Section 80P(2)(d) respectively.

The Income Tax Appellate Tribunal found that the CIT(E)'s order was cryptic, failing to address the assessee's explanation or detail the circumstances warranting cancellation. The Tribunal held that merely citing a wrong section or clause in the application is not sufficient grounds for cancellation. The matter was remitted back to the CIT(E) to pass a fresh order after providing the appellant Trust a reasonable opportunity of being heard.

The Tribunal found that disallowing the entire labour expenditure resulted in an exorbitantly high gross profit of 46.8% and a high-pitched assessment. Though Section 44AD was not strictly applicable, the Tribunal estimated income at 12% of the gross turnover of Rs. 13.12 crores and directed deletion of the addition for labour charges.

The ITAT upheld the decision of the CIT(A), ruling that Section 12A(ba), which requires timely filing of the return of income for claiming Section 11 exemption, applies prospectively from AY 2018-19. Therefore, for assessment years prior to 2018-19, non-filing of the return within the due date prescribed under Section 139(1) is not a ground for denying exemption under Section 11 of the Act.

The Tribunal condoned a 20-day delay in filing the appeal. On merits, the Tribunal held that the CPC was justified in making the adjustment as the GST liability remained unpaid as per the Tax Audit Report and Balance Sheet, and the assessee failed to provide evidence of payment before the due date for filing the return of income, rejecting the argument against disallowance under Section 43B.

The Tribunal dismissed the Revenue's appeals regarding the deletion of disallowances under Section 14A and Section 40(a)(i), affirming that reserve funds exceeded investments and that services rendered outside India by a non-PE entity were not chargeable. It also dismissed the appeal against the restricted disallowance under Section 36(1)(iii). However, the Tribunal remanded the issue of Transfer Pricing adjustment on commission and post-support services back to the CIT(A)/AO/TPO for fresh consideration based on prior tribunal orders.

The Tribunal found that the AO did not examine whether the assessee had consistently followed its accounting method in previous years, a requirement under Section 145. Citing judicial precedents on the consistency of accounting methods, the Tribunal remanded the matter back to the AO for a fresh adjudication, ensuring a reasonable opportunity for the assessee to be heard, and keeping other contentions open.

The Tribunal dismissed the Revenue's appeals against the CIT(A)'s deletion of disallowances under Section 14A (finding sufficient reserve funds) and Section 40(a)(i) (for foreign payments as services were rendered abroad without a Permanent Establishment in India). The restricted disallowance under Section 36(1)(iii) was also upheld. However, the issue of transfer pricing adjustment for commission and post-support services was remanded to the AO/TPO for fresh consideration, taking into account a previous Tribunal order.

The Tribunal upheld the addition made by the AO, finding that the assessee offered contradictory explanations and failed to provide evidence for the source of the cash. The Tribunal also rejected the assessee's argument that the approval without a Document Identification Number (DIN) was void, citing the Kerala High Court's decision in South Coast Spices Exports (P.) Ltd.

The Tribunal concurred with the CIT(A), stating that Section 12A(ba), inserted by the Finance Act, 2017, and mandating timely return filing for Section 11 exemption, is prospective in application from AY 2018-19. Consequently, for the Assessment Years prior to 2018-19, the exemption under Section 11 cannot be denied merely due to non-filing of the return within the due date under Section 139(1).

The Tribunal admitted additional evidences presented by the appellant. It then remanded the case back to the Assessing Officer to re-examine and decide afresh the applicability of Section 2(22)(e) to the loans/advances received by the appellant, considering the new evidence.

The Tribunal held that since the underlying quantum appeal had already been restored to the Assessing Officer for fresh adjudication, the present penalty appeal under Section 270A should also be restored to the Assessing Officer. The adjudication of the penalty issue would depend on the outcome of the quantum appeal.

The Tribunal dismissed both appeals, upholding the additions made by the Assessing Authority and confirmed by the CIT(A). It was held that the assessee failed to produce any evidence to justify valuing the unsold flats at 88% of cost, thus the Assessing Authority was correct in adopting the full cost as the closing stock value. The Tribunal also found no illegality in adopting the AY 2018-19 closing stock value as the opening stock for AY 2020-21.

The Tribunal noted a further 236-day delay in filing the appeal to ITAT and found the appellant's explanation for the delay (firm out of business, unawareness of order) to be not bona fide and unsupported by evidence. Citing a Supreme Court judgment on 'delay and laches', the Tribunal dismissed the appeal.

The Tribunal condoned the minor delay in filing the appeals and upheld the addition. It ruled that the assessee failed to produce any evidence to substantiate its claim that the realisable value of unsold flats was only 88% of the actual cost. Therefore, the Assessing Authority was justified in adopting the actual cost for valuing the closing stock, and the appeals were dismissed for both assessment years.

The Tribunal dismissed the appeal on grounds of delay and latches, finding the assessee's explanation for the 310-day delay in filing the appeal not bona fide and indicative of negligence. The request for condonation of delay was rejected, citing a Supreme Court precedent.

The Tribunal observed that if the genuineness of expenditure is not in doubt and tax has been deducted at source, the AO cannot question the commercial expediency from a businessman's perspective. Consequently, it set aside the lower authorities' orders and directed the deletion of the commission disallowance.

The Tribunal ruled it has no power to condone the delay in filing the return of income. It upheld the CPC's disallowance of the Section 80P deduction, as the return was not filed within the statutory due date as required by Section 80AC.

The Tribunal held that Section 12AB of the Income Tax Act does not provide for registration with retrospective effect. Therefore, the appeal seeking retrospective application of registration under Section 12A was found to be without merit.

The Tribunal held that debiting bad debts to the Profit & Loss A/c and simultaneously reducing them from sundry debtors on the asset side constitutes an actual write-off as per the Supreme Court decision in Vijaya Bank v. CIT, thereby allowing the bad debt claim. It also ruled that the mere fact of sundry creditors being outstanding for over three years does not automatically imply cessation of liability under Section 41(1).

The Income Tax Appellate Tribunal, relying on its prior decision in the assessee's own case, ruled that the corporate guarantee commission should be computed based on the gross loan limit, not the actual loan availed. Consequently, the Tribunal set aside the lower authorities' orders and remitted the matter to the AO/TPO for re-benchmarking the international transaction according to this principle.

The Income Tax Appellate Tribunal (ITAT) held that the addition made by the AO for AY 2012-13 was unjustified. The Tribunal clarified that any discrepancy regarding WIP valuation, if it implies income suppression, should pertain to the assessment year in which it actually occurred (i.e., the preceding year) and not the current year, especially since no variation existed between the opening and closing WIP within the assessment year under consideration.

The Tribunal found the CIT(A)'s order cryptic as it did not address all the contentions raised by the appellant. Both parties agreed to remand the matter back to the CIT(A). The Tribunal directed the CIT(A) to pass a reasoned order after considering all the appellant's contentions and affording a reasonable opportunity of hearing.

The Tribunal, citing the Gujarat High Court in Mitesh Impex, held that the Goetze decision is confined to the AO's powers and does not restrict the CIT(A) or Tribunal from entertaining new grounds. Consequently, the matter was remitted back to the AO to consider the revised computation of total income and audit report.

The Tribunal, following its previous decision in the assessee's own case, held that the corporate guarantee commission should be computed on the gross loan limit, not on the basis of actual loan availed. Consequently, the orders of the lower authorities were set aside, and the matter was remitted back to the AO/TPO for re-benchmarking the international transaction on this principle.

The Tribunal held that the addition of Rs. 88,500/- for cash deposits was unwarranted as the assessee's explanation (money returned from travel advances) was not disproven by the AO. Regarding the Section 14A disallowance of Rs. 7,97,923/-, the Tribunal reiterated that no such disallowance can be made in the absence of exempt income, directing the AO to delete both additions.