ITAT Cochin Judgments — September 2025

The Tribunal held that the agreement with Alpha Airport Holdings Ltd., UK, was solely for procurement of merchandise and did not involve the transfer of any technical knowledge or services that could be classified as 'fees for technical services' under the Act or the India-UK DTAA. Therefore, the payments were not taxable in India.

The Tribunal held that the agreement was solely for procurement of merchandise and did not involve any transfer of technical knowledge, experience, or know-how from Alpha Airport Holding Ltd., UK, to the assessee. Therefore, the essential conditions for treating the payments as 'fees for technical services' under Section 9(1)(vii) of the Act and Article 13 of the India-UK DTAA were not fulfilled. Consequently, the payments were not taxable in India as FTS.

The Tribunal held that the agreement with M/s. Alpha Airport Holding Ltd., UK was solely for the procurement of merchandise and did not involve the transfer of any technical knowledge or services. Therefore, the payments made were not 'fees for technical services' under Section 9(1)(vii) of the Act or the India-UK DTAA. The authorities below erred in treating the transaction as such.

The Tribunal found that the agreement between the assessee and M/s. Alpha Airport Holding Ltd., UK, was solely for procurement of merchandise and contained no clause for transferring technical knowledge. It held that to qualify as "fees for technical services" under Article 13 of the India-UK DTAA, there must be a transfer of technical knowledge enabling the assessee to use it independently, which was not demonstrated. Citing various High Court and Tribunal judgments, the Tribunal concluded that the services rendered were not technical in nature and the "make available" condition was not met.

The Tribunal held that the agreement with M/s. Alpha Airport Holding Ltd., UK was solely for procurement of merchandise and did not involve the transfer of any technical knowledge or services. Therefore, the payments made cannot be classified as 'fees for technical services' under the Act or the relevant Double Taxation Avoidance Agreement (DTAA). The conditions for attracting Article 13 of the India-UK DTAA were not met as there was no transfer of technical knowledge or expertise that the assessee could use independently.

The Tribunal noted that the CIT(A)'s finding of a lack of documents was contrary to the record, as documents were submitted to the Assessing Officer. The Tribunal found merit in the assessee's submission that the addition was made on incorrect facts by clubbing share capital and deposits. Due to conflicting submissions regarding document submission and the interest of justice, the issue was remanded to the Assessing Officer for a fresh adjudication.

The Tribunal noted that the CIT(A)'s finding of missing documents was contrary to the material on record, as the assessee had submitted financial statements and other relevant documents to the AO. The Tribunal found merit in the assessee's submission that the AO had clubbed share capital and deposits incorrectly.

The Tribunal accepted the Assessee's contention that the Assessing Officer erred in framing the assessment order under Section 144 of the Act, as the case rightly fell within the ambit of Section 153C, given that a satisfaction note for 153C proceedings was recorded on 17.10.2016. Consequently, the Assessment Order dated 05/03/2024 for AY 2015-2016 was quashed. Additional Ground No. 1.1 was allowed, while Additional Ground No. 1.2 and original Grounds 1 & 2 were dismissed as infructuous or based on mutually contradictory pleas.

The Tribunal condoned the delay in filing the appeal. It partly allowed the Section 54F claim, permitting a deduction of INR 2,10,565/- for electrical and plumbing expenses deemed essential for habitability, while disallowing other claimed expenses as renovations. For Section 80C, the Tribunal directed the Assessing Officer to grant a deduction of INR 1,50,000/- based on verified LIC premium receipts, modifying the previous restriction.

The Tribunal held that there was no misrepresentation or suppression of facts, as all material facts were disclosed and the claim was based on a bonafide belief. Furthermore, even if it were underreporting, the assessee was entitled to immunity under Section 270AA as the tax demand was paid and no appeal was filed against the assessment order.

The Tribunal held that the amendment requiring filing of the return by the due date for claiming exemption under Section 11, which took effect from 01.04.2016, was not applicable to AY 2014-2015. Therefore, the CIT(A)'s decision to dismiss the appeal on this ground was incorrect.

The Tribunal found merit in the assessee's submissions regarding the addition under Section 68. While some documents were submitted, they required verification by the Assessing Officer. Grounds A, B, and C were allowed for statistical purposes.

The Tribunal addressed several grounds, including transfer pricing adjustments for corporate IT services, salary expenses, and corporate guarantee fees. Regarding the Section 14A disallowance, the Tribunal held that it does not arise as the assessee did not receive exempt income and directed its deletion.

The Tribunal held that the NFAC failed to consider and adjudicate the Assessee's grounds of appeal, violating principles of natural justice and the Act. The impugned order was set aside.

The Tribunal found that the CIT(A) had failed to follow its previous mandatory directions to adjudicate the Section 10AA claim on merits, having again dismissed it on the technical ground of delayed Form 56F filing. The ITAT set aside the impugned order of the CIT(A) and remanded the case back to the CIT(A) with directions to decide the grounds on merits. The assessee was also directed to cooperate by furnishing all relevant documents.

The Tribunal held that the assessee should have been granted an opportunity to explain the delay in filing the appeal, especially since the appeal memorandum stated there was no delay. The Tribunal also noted that the CIT(A) had proceeded to adjudicate the merits despite dismissing the appeal for limitation, and found that the assessee had provided a reasonable explanation for the cash deposit on merits.

The Tribunal held that the NFAC had failed to consider and adjudicate all grounds raised by the assessee, violating principles of natural justice and the NFAC Scheme. Therefore, the impugned NFAC order was set aside.

The Tribunal noted that grounds of appeal 1 & 2 were general. Grounds 3 and 4, concerning TP adjustments for corporate IT services and salary expenses, were remitted back to the AO/TPO based on a previous tribunal decision. Ground 5 regarding the disallowance under Section 35(2AB) was also remitted back to the AO, following a similar issue decided by the Tribunal in the assessee's own case. Grounds 6 & 7 were dismissed as not pressed.

The Tribunal held that the TP adjustments and certain disallowances were not justified. Specifically, interest expenditure was allowed as revenue expenditure, and advertisement expenditure was also allowed as revenue expenditure. The case regarding TP adjustments was remanded for a fresh exercise. The appeals concerning the other years were decided based on the findings for AY 2011-12.

The Tribunal held that the issue of interest expenditure was covered by previous decisions in the assessee's own case, directing its allowance as revenue expenditure. Regarding advertisement expenditure, the Tribunal found merit in the appellant's submission that it was a revenue expenditure and directed its allowance. The Tribunal also remanded the transfer pricing adjustment issues for AY 2011-12 to the AO/TPO for a fresh exercise.

The Tribunal found merit in the appellant's contention that the TPO erred by applying a lower turnover filter for comparable selection without also applying an appropriate upper turnover limit filter, rendering the benchmarking exercise flawed. Consequently, the matter is remanded to the Assessing Officer (AO)/TPO for a fresh benchmarking exercise, considering an appropriate upper turnover filter. All other contentions raised by the appellant are kept open for fresh consideration.

The Tribunal held that interest earned by a co-operative society on deposits of its surplus profits is attributable to its main business of providing credit facilities and is eligible for deduction under Section 80P(2)(a)(i). The decision followed the judgment of the jurisdictional High Court in PCIT vs. Sahyadri Co-op. Credit Society Ltd.

The Tribunal partly allowed the appeal. Key decisions included allowing the claim for pre-operative expenditure as revenue expenditure, allowing R&D expenses related to reimbursement of salary and other expenses to an overseas subsidiary, confirming disallowances for R&D expenditure incurred outside India and for testing of tires outside India, partly allowing R&D expenditure at Limda (Vadodra), and directing AO/TPO to benchmark corporate guarantee at 0.5%. Some grounds were remanded back to the AO/TPO for further verification and decision.