ITAT Hyderabad Judgments — November 2018

The Tribunal noted that as per CBDT Circular No. 3/2018, appeals with a tax effect below Rs. 20 lakhs should not be filed before the ITAT. Therefore, the appeal was dismissed.

The ITAT dismissed the appeal based on CBDT Circular No. 3/2018, which stipulates that appeals with a tax effect below Rs. 20 lakhs should not be filed. The Revenue is permitted to file a recall application if exceptions apply.

The Tribunal held that certain comparable companies should be excluded from the list for ALP computation. It also remanded the issue of bad debts and provision for bad debts for recomputation and dismissed the ground regarding foreign exchange fluctuation.

The Tribunal directed the AO to recalculate the disallowance under Section 14A by considering only the financial expenditure related to non-agricultural activities and to consider only those investments that generated dividend income. The claim that investments were made from agricultural income was not substantiated.

The Tribunal held that the waived interest was correctly excluded for book profit calculation under Section 115JB as per clause (vii) of Explanation (1). It also held that the waived working capital term loan was a capital receipt, not revenue, and thus not taxable, distinguishing it from cases where such waivers are treated as income.

The Tribunal held that the amount received was in the nature of share premium, which is capital in nature and not taxable as income. The Tribunal followed a previous decision on similar facts.

The Tribunal upheld the CIT(A)'s decision, finding that the payments were genuine sales incentives to employees and not commission under Section 194H. It also held that delayed PF/ESIC payments made before the return filing date do not warrant disallowance.

The Tribunal noted that as per CBDT Circular No. 3/2018, appeals with a tax effect below Rs. 20 lakhs should not be filed. Therefore, the appeal was dismissed.

The Tribunal held that there is no contractor-subcontractor relationship between the JV and its constituent members. Therefore, the JV is not liable to deduct TDS under Section 194C on payments made to its partners.

The Tribunal held that the Assessing Officer wrongly initiated proceedings under Section 148 and completed the assessment under Section 143(3) r.w.s. 147. It was determined that the proceedings should have been initiated under Section 153C, as the assessment emanated from material found during a search of a third party.

The Tribunal held that the Assessing Officer wrongly initiated proceedings under Section 148 and completed the assessment under Section 143(3) r.w.s. 147. It was determined that the proceedings should have been initiated under Section 153C, as the assessment emanated from material found during a search of a third party.

The Tribunal upheld the DRP's direction to exclude certain comparable companies and allowed the revenue's appeal on this ground. However, it remanded the issue of bad debts and provision for bad debts to the AO for recomputation and dismissed the assessee's ground on foreign exchange fluctuation.

The Tribunal condoned the delay in filing the appeals before it and remitted the matter back to the CIT(A). The assessee was granted liberty to file applications for condonation of delay before the CIT(A) within two months, which were to be decided on merits.

The Tribunal condoned the delay in filing the appeals before it and remitted the matter back to the CIT(A). The assessee was granted liberty to file applications for condonation of delay before the CIT(A) within two months, which were to be decided on merits.

The Tribunal held that the CIT cannot revise an assessment order under Section 263 without demonstrating that the order is both erroneous and prejudicial to the revenue. Since the AO had applied his mind and verified the facts, the assessment order was not considered erroneous.

The Tribunal found that to meet the ends of justice, the CIT(A)'s order should be set aside. The case was restored to the CIT(A)'s file with a direction to condone the delay and adjudicate the appeal on its merits.

The Tribunal held that the deduction under Section 10A should be allowed before setting off brought forward losses, as per the Supreme Court's decision in CIT vs. Yokogawa India Ltd. The AO was directed to recompute the deduction accordingly.

The Tribunal held that Section 14A is applicable only when there is income which does not form part of the total income. Since the assessee did not earn any exempt income, the disallowance under Section 14A was not attracted.

The Tribunal held that Section 14A of the Income Tax Act, 1961, and Rule 8D are not applicable when the assessee has not earned any dividend income. Therefore, the disallowance made by the AO was not justified.

The Tribunal held that the CIT(A) was correct in directing the AO to allow deduction for salary and interest paid to partners from the estimated income, as per the proviso to Section 44AD(2) and Section 40(b) of the Act.

The Tribunal held that disallowance under Rule 8D(2)(iii) should be calculated based on average investments that actually yielded exempt income, not total investments. The AO was directed to recalculate the disallowance accordingly.

The Tribunal held that assessment under Section 153A is sustainable only if incriminating material is found during the search. Since no such material was found, the assessment made under Section 143(3) read with Section 153A was not sustainable and was set aside.

The Tribunal directed the AO to estimate the net profit at 3% of the cost of goods put to sale, following a previous decision. The addition of miscellaneous income was rejected as the assessee agreed due to the small amount.

The Tribunal held that estimation of income at 3% of the cost of goods sold is reasonable for this business, citing consistent views of coordinate benches. The AO was directed to adopt 3% of the cost of liquor sold as the assessee's income.

The Tribunal held that estimation of income at 3% of the cost of goods sold is reasonable for this business, citing consistent views of coordinate benches. The AO was directed to adopt 3% of the cost of goods sold as the assessee's income.

The Tribunal held that Section 14A is applicable only when there is income which does not form part of the total income. Since the assessee did not earn any exempt income, the disallowance under Section 14A was not attracted.

The Tribunal held that Section 14A is applicable only when there is income which does not form part of the total income. Since the assessee did not earn any exempt income, the disallowance under Section 14A was not attracted.

The Tribunal noted that the assessee failed to file grounds of appeal before the CIT(A) and the AO did not verify expenditures. Therefore, the matter was remitted back to the AO for de-novo assessment.

The Tribunal held that estimation of income at 3% of the cost of goods sold for liquor business is reasonable, aligning with coordinate bench decisions. For food items sold at the bar/restaurant, the estimation was reduced to 10% from 25%, following precedent.

The Tribunal held that in the interest of justice, the assessee should be given one more opportunity to substantiate her claim before the CIT(A). The matter was remitted back to the CIT(A) for a decision on merits.

The Tribunal held that the issue in dispute is squarely covered by the decision of a coordinate bench of the ITAT in the assessee's own case for AY 2012-13. In that decision, the Tribunal had considered the principle of mutuality concerning interest earned from a bank, which is not a member of the society. Citing the Supreme Court decision in CIT vs. Bankipur Club Ltd. and the High Court decision in CIT vs. M/s Secunderabad Club, the Tribunal noted that the principle of mutuality requires complete identity between contributors and participators, and the relationship between a club and a bank where it deposits funds is that of a creditor and debtor. The Tribunal found that the transaction with the bank, which is not a member, disqualifies the application of the principle of mutuality. Therefore, the interest earned from the bank was held to be taxable. The Tribunal upheld the orders of the AO and CIT(A) and dismissed the assessee's grounds of appeal.

The Tribunal directed the AO to estimate the net profit at 3% of the cost of goods put to sale, following previous Tribunal decisions. However, it upheld the rejection of partner remuneration and interest as deductions, as the estimated profit already accounts for such expenses.

The CIT(A) deleted the addition, relying on the jurisdictional High Court's judgment in the assessee's own case. The Tribunal upheld the CIT(A)'s order, finding no reason to interfere.

The Tribunal held that the DRP was justified in excluding Infosys BPO Ltd. and Jeevan Scientific Technology Ltd. based on high turnover, brand value, and functional differences. However, it disagreed with the DRP's exclusion of reimbursement of expenses for RPT filter, directing the exclusion of ICRA Online Ltd.

The Tribunal held that the notice issued by the AO under Section 274 read with Section 271(1)(c) was invalid as it did not specify whether it was for concealment of income or furnishing inaccurate particulars. Consequently, the penalty order was quashed.

The Tribunal held that since the assessee did not derive any exempt income during the assessment year, Section 14A of the Income Tax Act has no application. Rule 8D can only be applied when there is difficulty in finding expenditure related to exempt income, which is not the case here.

The Tribunal held that the payments were in the nature of trade advances arising from regular business transactions between the assessee and the company. Since the initial payments were made by the assessee and subsequently repaid by the company, it did not attract the provisions of Section 2(22)(e) as a loan or advance.

The Tribunal held that the activities extending beyond India are not a relevant criterion for rejecting registration under Section 12AA. The CIT(E) should have provided an opportunity to amend the Trust Deed or make necessary enquiries.

The Tribunal held that the CIT(A) cannot make additions based on independent sources of income not considered by the Assessing Officer. However, in this case, the deposits in the personal account were considered part of the same transaction of cash deposits in the bank account, not an independent source.

The Tribunal held that disallowance under Section 14A cannot exceed the exempt income earned by the assessee. Therefore, the disallowance was restricted to the extent of exempt income.

The Tribunal found that the CIT(A) had failed to dispose of the assessees' detailed objections with a speaking order. Therefore, the Tribunal set aside the CIT(A)'s orders and remanded the issues back for reconsideration and disposal.

The Tribunal allowed the appeal on grounds related to the VAT credit on furnace oil, stores, and oxygen. It noted that the VAT assessment order accepted the assessee's purchases and VAT credits, proving the ledger entries were correct.

The Tribunal held that the notice issued by the AO for penalty proceedings under Section 271(1)(c) was invalid because it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. Consequently, the penalty order was quashed.

The Tribunal found that the CIT(A) had failed to dispose of the assessees' detailed objections with a speaking order. Therefore, the Tribunal set aside the CIT(A)'s orders and remanded the issues back for reconsideration and disposal.