ITAT Hyderabad Judgments — March 2018

M/S SERVOMAX INDIA LIMITED,HYDERABAD vs DCIT., CIRCLE-3(1), HYDERABAD, HYDERABAD

ITA 1863/HYD/2014[2010-11]Status: Disposed28 Mar 2018AY 2010-11Allowed

The Tribunal held that expenditure incurred to make leased premises suitable for business, especially for short lease periods, is revenue in nature and not capital. The assessee is entitled to claim it as revenue expenditure.

UPKAR INFRA PROJECTS PVT.LTD., HYD,HYDERABAD vs DCIT, CIRCLE-3(3), HYD, HYDERABAD

ITA 1349/HYD/2015[2006-07]Status: Disposed28 Mar 2018AY 2006-07Partly Allowed

The Tribunal held that it cannot take back the benefit granted to the assessee by the AO, following a Supreme Court decision. The Tribunal modified its earlier order to restrict the consequential assessed income to the income assessed by the AO under Section 143(3).

SUN MINERALS, HYD,HYDERABAD vs DCIT, CIRCLE-6(1), HYD, HYDERABAD

ITA 138/HYD/2016[2007-08]Status: Disposed28 Mar 2018AY 2007-08Dismissed

The Tribunal followed its previous decision in the assessee's own case for an earlier assessment year. It held that the assessee failed to discharge the onus of proving that the commission payments were incurred wholly and exclusively for business purposes due to a lack of evidence.

CORDYS SOFTWARE INDIA PVT.LTD., (NOW MERGED WITH OPEN TEXT CORPN. INDIA P. LTD),HYDERABAD vs DCIT, CIR-1(2), HYD, HYDERABAD

ITA 232/HYD/2016[2011-12]Status: Disposed28 Mar 2018AY 2011-12Partly Allowed

The Tribunal held that notional interest on outstanding receivables is not chargeable and no transfer pricing adjustment can be made. It further observed that working capital adjustments already account for interest on receivables.

SRI KODE FINVEST PVT.LTD., HYD,HYDERABAD vs ITO, WARD-3(1), HYD, HYDERABAD

ITA 237/HYD/2016[2009-10]Status: Disposed28 Mar 2018AY 2009-10Partly Allowed

The Tribunal held that the AO must record satisfaction before invoking Section 14A, but found that the AO had done so by issuing a show cause notice and considering objections. However, the Tribunal allowed the appeal on the ground that only investments yielding exempt income should be considered for calculating disallowance under Rule 8D(2)(iii).

DIVYA JYOTHI STEELS LTD., HYD,HYDERABAD vs ACIT, CIRCLE-17(1), HYDERABAD, HYDERABAD

ITA 29/HYD/2016[2009-10]Status: Disposed28 Mar 2018AY 2009-10Allowed

The Tribunal held that the CIT's order under Section 263 was erroneous and prejudicial to the interests of the revenue, as the original assessment order was passed after due verification by the AO. Consequently, the CIT's order was quashed.

ROHINI GREEN ENERGY PRIVATE LIMITED,HYDERABAD vs DCIT., CENTRAL CIRCLE-7, HYDERABAD, HYDERABAD

ITA 113/HYD/2015[2011-12]Status: Disposed28 Mar 2018AY 2011-12Allowed

The Tribunal admitted the additional ground and held that the assessment under Section 143(3) read with Section 153C was void ab initio because the AO had not recorded satisfaction for initiating proceedings under Section 153C. Consequently, the additions made were invalid.

DIVYA JYOTHI STEELS LTD., HYD,HYDERABAD vs ACIT, CIRCLE-1(2), HYD, HYDERABAD

ITA 1176/HYD/2016[2009-10]Status: Disposed28 Mar 2018AY 2009-10Allowed

The Tribunal held that the CIT's order under Section 263 was erroneous and prejudicial to the interests of the revenue, as the original assessment order was passed after due verification by the AO. Consequently, the CIT's order was quashed.

E.NAVEEN KUMAR GOUD, VIKARABAD,HYDERABAD vs ITO, WARD-1, VIKARABAD, VIKARABAD

ITA 540/HYD/2016[2011-12]Status: Disposed28 Mar 2018AY 2011-12Remanded

The ITAT held that the CIT(A) erred in dismissing the appeal for non-appearance without deciding on merits. The matter was remanded to the CIT(A) for fresh consideration on merits.

ACIT, CENTRAL CIRCLE-1(1), HYD, HYDERABAD vs KANDULA VISVESWARA RAO, HYD, HYDERABAD

ITA 55/HYD/2016[2011-12]Status: Disposed28 Mar 2018AY 2011-12Dismissed

The Tribunal held that the entire jewellery found could not be considered as explainable by the assessee alone, considering societal patterns and claims of ownership by other family members. The AO's addition was not sustained.

RAVINDRA REDDY PALLAVALLI, HYD,HYDERABAD vs ITO, WARD-8(2), HYDERABAD, HYDERABAD

ITA 763/HYD/2016[2009-10]Status: Disposed28 Mar 2018AY 2009-10Allowed

The Tribunal held that the penalty under Section 271(1)(c) is not leviable as the assessee's admission of additional income was due to inability to substantiate claims, not due to proven concealment or furnishing of inaccurate particulars. The AO did not provide evidence that the assessee's statement was false or incorrect.

PALAPARTHI SUNDARAM,HYDERABAD vs INCOME TAX OFFICER, WARD-6(4), HYDERABAD

ITA 1027/HYD/2017[2009-10]Status: Disposed28 Mar 2018AY 2009-10Partly Allowed

The Tribunal found the AO's method of using SRO rates from a different area improper. It also found the valuer's further escalation of SRO rates for FMV questionable. The Tribunal directed the AO to use the SRO value for the specific property and adjust the indexation for building valuation.

KRISHNA MOHAN SAHU.,HYDERABAD. vs INCOME TAX OFFICER, INTL. TAXATION-1., HYDERABAD

ITA 1343/HYD/2017[2010-11]Status: Disposed28 Mar 2018AY 2010-11Allowed

The Tribunal condoned the delay of 970 days in filing the appeal before the CIT(A) due to the assessee pursuing applications under Section 154 and with the Income-Tax Ombudsman. The matter was remitted back to the AO for fresh verification of the evidence filed by the assessee.

DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD vs ADAEQUARE INFO PRIVATE LIMITED, HYDERABAD

ITA 108/HYD/2018[2014-15]Status: Disposed28 Mar 2018AY 2014-15Dismissed

The Tribunal held that if employee contributions to PF are paid before the due date of filing the return of income under Section 139(1), no disallowance can be made. The CIT(A)'s deletion of the disallowance was confirmed.

THE ADARSH CO-OPERATIVE URBAN BANK LTD., HYD,HYDERABAD vs ACIT, CIRCLE-11(1), HYDERABAD, HYDERABAD

ITA 1336/HYD/2015[2012-13]Status: Disposed28 Mar 2018AY 2012-13Partly Allowed

The Tribunal held that depreciation at 60% is allowable on computer peripherals like UPS, cash dispensers, and ATM switches, following its own prior decision. It also held that interest on NPAs should be recognized only upon receipt, not on accrual basis, again following a prior ruling.

DCIT, CIRCLE-1(1), HYDERABAD, HYDERABAD vs ACP INDUSTRIES LIMITED, HYDERABAD, HYDERABAD

ITA 590/HYD/2017[2012-13]Status: Disposed26 Mar 2018AY 2012-13Dismissed

The Tribunal held that the second proviso to Section 40(a)(ia) is retrospective and clarificatory. Since the recipient had offered the income to tax, the assessee could not be treated as a defaulter, and the disallowance was not warranted.

MANTENA LABORATORIES LTD., HYD,HYDERABAD vs DCIT, CIRCLE 16(2), HYDERABAD, HYDERABAD

ITA 827/HYD/2016[2011-12]Status: Disposed23 Mar 2018AY 2011-12Remanded

The Tribunal agreed that the expenditure was capital in nature but found an error in the Assessing Officer's calculation of depreciation. The matter was remitted back to the Assessing Officer for re-computation.

FACTSET SYSTEMS INDIA PRIVATE LIMITED, HYDERABAD,HYDERABAD vs ACIT, CIRCLE-17(1), HYDERABAD, HYDERABAD

ITA 213/HYD/2015[2010-11]Status: Disposed23 Mar 2018AY 2010-11Partly Allowed

The tribunal allowed the assessee's appeal regarding the exclusion of communication and internet expenses from export and total turnover for Section 10AA deduction, following High Court precedent. The transfer pricing adjustment grounds were withdrawn by the assessee due to the APA.

DCIT, CIRCLE-3(1), HYD, HYDERABAD vs RASA AGROTECH PVT.LTD., SEC'BAD, SECUNDERABAD

ITA 730/HYD/2015[2008-09]Status: Disposed23 Mar 2018AY 2008-09Dismissed

The Tribunal upheld the CIT(A)'s decision to allow the assessee's alternate claim of slump sale under Section 50B, finding no change of opinion by the AO for reopening. Both the Revenue's appeal and the assessee's cross-objection were dismissed.

SEVEN HILLS CO-OPERATIVE URBAN BANK LTD., HYDERABAD,HYDERABAD vs ACIT, CIRCLE-7(1), HYDERABAD, HYDERABAD

ITA 1455/HYD/2016[2012-13]Status: Disposed23 Mar 2018AY 2012-13Allowed

The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned by the assessee. The disallowance is to be restricted to the extent of expenditure incurred in relation to tax-exempt income.

ANDHRA PRADESH STATE PLOCE HOUSING CORPORATION LIMITED, HYDERABAD,HYDERABAD vs DCIT, CIRCLE-1(1), HYDERABAD, HYDERABAD

ITA 1527/HYD/2016[2009-10]Status: Disposed23 Mar 2018AY 2009-10Partly Allowed

The Tribunal held that the assessee's operations were funded by the government as interest-free advances, and the interest expense was a notional entry. Therefore, Section 43B was not applicable as there was no real income or expenditure. The Tribunal also deleted an addition made under Section 40(a)(ia) for non-deduction of TDS, as no payment or credit was made to the contractor.

DY.COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD vs MARUTI SECURITIES LIMITED, SECUNDRABAD

ITA 1651/HYD/2017[2013-14]Status: Disposed23 Mar 2018AY 2013-14Allowed

The Tribunal held that notional interest on advances cannot be taxed on an accrual basis, especially when the principal itself is not collected. Income should be recognized only on actual receipt basis for such 'sticky' loans.

INCOME TAX OFFICER, EXEMPTIONS-2, HYDERABAD vs KALINGA CULTURAL TRUST, HYDERABAD

ITA 1701/HYD/2017[2014-15]Status: Disposed23 Mar 2018AY 2014-15Dismissed

The Tribunal held that the proviso to Section 2(15) applies only to the 'advancement of any other object of general public utility' and is intended to deny exemption to entities primarily engaged in commercial activities. Since the dominant object of the assessee trust is charitable, and the income-generating activities are ancillary, the exemption under Section 11 is allowable.

ADIPALA LINGA REDDY,NALGONDA vs INCOME TAX OFFICER, WARD-1, NALGONDA

ITA 1855/HYD/2017[2012-13]Status: Disposed23 Mar 2018AY 2012-13Remanded

The Tribunal found that the assessee failed to produce books of account and other crucial documents to verify the genuineness of the outstanding creditors. Consequently, the Tribunal set aside the orders of the lower authorities and remitted the assessment back to the AO for de novo assessment.

DY.COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD vs MED PLUS HEALTH SERVICES PRIVATE LIMITED, HYDERABAD

ITA 1527/HYD/2017[2013-14]Status: Disposed23 Mar 2018AY 2013-14Dismissed

The Tribunal held that Section 14A of the Income Tax Act is not applicable when the assessee has not earned any exempt income during the relevant assessment year. This decision followed precedents from the Delhi and Madras High Courts.

INCOME TAX OFFICER, EXEMPTION2, HYDERABAD vs KALINGA CULTURAL TRUST, HYDERABAD

ITA 1700/HYD/2017[2013-14]Status: Disposed23 Mar 2018AY 2013-14Dismissed

The Tribunal held that the proviso to Section 2(15) applies only to the 'advancement of any other object of general public utility' and is intended to deny exemption to entities primarily engaged in commercial activities. Since the dominant object of the assessee trust is charitable, and the income-generating activities are ancillary, the exemption under Section 11 is allowable.

DY.COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD vs MED PLUS HEALTH SERVICES PRIVATE LIMITED, HYDERABAD

ITA 1528/HYD/2017[2014-15]Status: Disposed23 Mar 2018AY 2014-15Dismissed

The Tribunal held that Section 14A of the Income Tax Act is not applicable when the assessee has not earned any exempt income during the relevant assessment year. This decision followed precedents from the Delhi and Madras High Courts.

SURYAJYOTI INFOTECH LTD., SEC'BAD,SECUNDERABAD vs ITO,WARD-3(2), HYDERABAD, HYDERABAD

ITA 1241/HYD/2015[2011-12]Status: Disposed15 Mar 2018AY 2011-12Partly Allowed

The Tribunal held that Section 14A is not applicable as the assessee did not earn any exempt dividend income. It also found that the interest-bearing loan was secured by sufficient assets, making the disallowance under Section 36(1)(iii) unwarranted. The issue of commission payment was remanded for fresh consideration.

NARASIMHA REDDY KODURU, HYD,HYDERABAD vs ITO, WARD-2(1), HYDERABAD, HYDERABAD

ITA 1311/HYD/2016[2010-11]Status: Disposed15 Mar 2018AY 2010-11Dismissed

The Tribunal dismissed the appeal for want of prosecution, citing the assessee's failure to appear and effectively pursue the appeal. The Tribunal also noted that the CIT(A)'s findings were uncontroverted due to the lack of representation.

ITO, WARD-3(4), HYD, HYDERABAD vs SURYAJYOTI INFOTECH LTD, SEC'BAD, SECUNDERABAD

ITA 1278/HYD/2015[2011-12]Status: Disposed15 Mar 2018AY 2011-12Partly Allowed

The Tribunal held that Section 14A is not applicable as the assessee did not earn any exempt dividend income. It also found that the interest-bearing loan was secured by sufficient assets, making the disallowance under Section 36(1)(iii) unwarranted. The issue of commission payment was remanded for fresh consideration.

DAVENDER KUMAR PARAKH, SECUNDERABAD,SECUNDERABAD vs DY.COMMISSIONER OF INCOME TAX, CIRCLE-10(1), HYDERABAD

ITA 1684/HYD/2017[2013-14]Status: Disposed15 Mar 2018AY 2013-14Dismissed

The Tribunal upheld the CIT(A)'s order, finding that the assessee failed to prove the commercial expediency of advances made to two individuals. The Tribunal also found the rental agreement with the assessee's wife doubtful and likely created to support the claim.

P. DIVYASRI,HYDERABAD vs INCOME TAX OFFICER, WARD-12(3), HYDERABAD

ITA 1095/HYD/2017[2010-11]Status: Disposed15 Mar 2018AY 2010-11Allowed

The Tribunal held that the Assessing Officer (AO) made the addition in haste without providing a proper opportunity to the assessee. Merely because the creditor did not respond to a summons, an adverse inference cannot be drawn regarding creditworthiness.

DY. COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD vs MYLAN LABORATORIES LIMITED (BEING THE AMALGAMATED COMPANY OF ASTRIX LABORATORIES LIMITED), HYDERABAD

ITA 1666/HYD/2017[2012-13]Status: Disposed15 Mar 2018AY 2012-13Dismissed

The Tribunal upheld the order of the CIT(A) by respectfully following the decision of a Co-ordinate Bench that had allowed similar depreciation claims in previous assessment years. The AO's disallowance was considered incorrect as it was based on the pendency of the issue.

KIRAN INDUSTRIES,KARIMNAGAR vs INCOME TAX OFFICER, WARD-1, KARIMNAGAR

ITA 1642/HYD/2017[2008-09]Status: Disposed14 Mar 2018AY 2008-09Allowed

The Tribunal held that the reopening of the assessment was not justified as there was no omission on the part of the assessee to disclose material facts. The Tribunal also noted that the Assessing Officer had the benefit of the investigation report and had examined the books of account during the original assessment.