ITAT Hyderabad Judgments — December 2021

The Tribunal held that the assessee's business was in the nature of a 'works contract' as per the Explanation to Section 80IA, making it ineligible for the deduction, even if considered a developer. The Tribunal relied on a co-ordinate bench's decision and contractual terms indicating fixed payments and mobilization advances.

The Tribunal allowed 50% of the repair and maintenance expenditure claim, holding that a 10% disallowance was just and proper. The disallowance of development expenditure was upheld due to lack of evidence. The Revenue's appeal regarding undisclosed income was remanded to the CIT(A) for fresh adjudication.

The Tribunal found that the CIT(A) did not adjudicate the issues on merits as required. Therefore, the appeals were set aside to the CIT(A) for fresh adjudication.

The tribunal condoned the delay in filing the appeal and restored the substantive grounds to the CIT(A) for fresh adjudication. The CIT(A) was directed to provide three effective opportunities of hearing to the assessee.

The Tribunal held that the unregistered sale agreement lacked evidentiary value and the sale deed value should be considered for cost of acquisition. However, it allowed the registered sale consideration and connected registration charges as the cost of acquisition after suitable indexation.

The tribunal held that the waiver of interest on the SBI loan was taxable under Section 41(1) as the assessee had claimed deduction for interest without payment and did not disallow it. For the Technology Development Board waiver, a portion was treated as income under Section 41(1). The issues of R&D expenditure and share application money were remitted to the AO for fresh verification.

The ITAT held that the CIT(A) erred in directing an 8% profit estimation on the entire cash deposit. It also clarified that the documents submitted to the CIT(A) (cash book and ledger) were not additional evidence. The matter was remitted to the AO to verify the assessee's claim that the deposits belonged to owners of fruits and to decide accordingly.

The Tribunal found that the CIT(A) had not adjudicated the issues on merits as required by Section 250(6) of the Act. Therefore, the appeals were set aside for fresh adjudication.

The tribunal held that a penalty under Section 271(1)(c) cannot stand on protective additions alone until the substantive assessment is finalized. The matter was restored to the Assessing Officer for fresh examination.

The Tribunal held that the disallowance was not sustainable because the legislative amendments to Sections 36(1)(va) and 43B, along with the CBDT's clarification, applied prospectively from April 1, 2021. The disallowance was therefore deleted.

The Tribunal held that the issue of assets being used for less than 180 days is not an apparent mistake rectifiable under Section 154, as it requires a detailed inquiry. Therefore, the disallowance of depreciation was deleted.

The tribunal held that there was a mistake apparent on record regarding the PAN of the assessee. The corrected PAN is AACCT7497H, replacing the incorrect AACC77497H.

The Tribunal held that the disallowance was not sustainable. This was based on the legislative amendments made by the Finance Act, 2021, and a CBDT clarification that these amendments apply prospectively from April 1, 2021.