ITAT Hyderabad Judgments — January 2025

The Tribunal held that the appeal was filed within the extended period of limitation as per the Supreme Court's order. The CIT(A)'s order dismissing the appeal as time-barred was set aside. The matter was remanded to the Assessing Officer for fresh adjudication.

The Tribunal held that the issue regarding the characterization of services was to be decided based on subsequent years' facts. For corporate guarantee fees, the Tribunal directed the AO to restrict the charges to 0.53% of the total guarantee and the actual period. Regarding TDS disallowance, the matter was set aside for verification of additional evidence.

The Tribunal held that the assessee, dealing in an essential commodity, was justified in accepting SBNs for milk purchase, especially during the panic and confusion of demonetization. The notification allowed such transactions for milk booths, and the source of cash was considered bonafide.

The Tribunal held that for benchmarking interest paid on Indian Rupee denominated debentures, the PLR rate is appropriate, not LIBOR plus spread. The currency of borrowing and repayment is the critical factor, and Indian Rupee denominated loans should be benchmarked against domestic rates like PLR.

The Tribunal held that for INR denominated debt, the benchmarking of interest should be based on domestic lending rates (PLR) applicable to the currency concerned, not foreign currency rates like LIBOR. The currency of the loan is a critical factor in determining the appropriate benchmark.

The Tribunal upheld the Pr. CIT's order, confirming that the Assessing Officer had failed to examine the nature and allowability of the legal fees paid to ROC. It ruled that expenditure incurred for increasing authorized capital is capital in nature and not deductible under Section 37(1) of the Act. The Tribunal also rejected the assessee's argument that the assessment for AY 2019-20 was unabated and thus no additions could be made without incriminating material, as the assessment for the said year abated on the date of search.

The Tribunal noted that the assessee had settled the tax dispute under the Vivad Se Vishwas Scheme, 2024 and requested withdrawal of the appeal. The Revenue had no objection. Hence, the appeal was dismissed as withdrawn.

The Tribunal set aside the order of the Ld.CIT(A) and restored the issue to the Assessing Officer for reconsideration. The Ld.CIT(A) had dismissed the appeal ex-parte without considering the assessee's explanations.

The Tribunal held that the PCIT erred in assuming jurisdiction under Section 263. The Assessing Officer had conducted necessary inquiries and applied his mind, reaching a plausible view. The PCIT's order, which merely suggested further verification without demonstrating that the assessment order was erroneous and prejudicial to revenue, was not sustainable.

The Tribunal held that the transactions were genuine, citing SEBI's final order which exonerated the scrip and entities involved, including Sanskriti Vincom Private Limited, the original seller. The tribunal followed a coordinate bench decision on an identical issue.

The Tribunal held that the AO erred in aggregating contract receipts and advances without considering the assessee's books and treating advances as income in the same year. It also held that estimating profit on gross receipts and disallowing expenses simultaneously is contradictory. Finally, it confirmed the addition for Chapter VI-A deduction due to lack of evidence.

For A.Y. 2019-20, the Tribunal held that Rs. 37.55 lakhs, explained as business income, should be assessed at normal rates, not under Section 69A/115BBE. The addition of Rs. 3 lakhs (unexplained) was sustained but also directed to be assessed as 'income from business and profession' at normal rates. For A.Y. 2020-21, the Tribunal accepted the assessee's explanation that cash deposits originated from bona fide business sales, setting aside the additions made under Section 69A/115BBE.

The Tribunal found that SEBI, after detailed investigation, had exonerated M/s. Sanskriti Vincom Private Limited and the scrip of Kailash Auto Finance Limited, revoking earlier interim orders. Relying on a Coordinate Bench decision with identical facts, the Tribunal held that the share transactions were genuine. Consequently, the addition made by the Assessing Officer was deleted, and the penalty levied under Section 271(1)(c) was also deleted.

The Tribunal held that the CIT(A) passed the order without considering the assessee's reply and documents. Therefore, the impugned order was set aside, and the matter was remanded to the Assessing Officer for fresh adjudication.

The Tribunal set aside the disallowance of deduction for the special reserve for long-term finance and restored the issue to the Assessing Officer for re-computation. The disallowance of reversal of unrealized interest on NPAs was reversed in favor of the Revenue. Several other issues concerning bad debts, wage arrears, and penalties were either set aside for re-examination or decided in favor of the assessee, while some appeals were partly allowed.

The Tribunal held that the issue regarding the computation of eligible profits for deduction under Section 36(1)(viii) needed to be re-examined by the Assessing Officer. Regarding the reversal of unrealized interest on NPAs, the Tribunal held that it cannot be allowed as a deduction, reversing the CIT(A)'s findings.

The Tribunal held that the PCIT erred in invoking jurisdiction under Section 263. The assessment order was passed in conformity with DRP directions, and the Assessing Officer had taken plausible views. The PCIT's conclusion of error and prejudice to the revenue was not substantiated. Therefore, the PCIT's order setting aside the assessment order was quashed.

The Tribunal held that the issue of deduction under Section 36(1)(viii) regarding special reserves needs to be re-examined by the Assessing Officer due to factual discrepancies. Regarding the reversal of unrealized interest on NPAs, the Tribunal reversed the CIT(A)'s finding, holding it not deductible. Several other issues, including those related to bad debts, wage arrears, Section 14A disallowances, and RBI penalties, were decided based on earlier ITAT decisions and Supreme Court rulings, with many matters being set aside for further examination by the Assessing Officer.

The Tribunal held that the issue of deduction u/s 36(1)(viii) needs to be set aside and restored to the AO for reconsideration. The Tribunal reversed the CIT(A)'s finding on the reversal of unrealized interest on NPA accounts, holding it not deductible. The Tribunal directed the AO to delete additions related to wage arrears, finding the provision to be based on scientific methods and historical trends. The matter concerning deduction u/s 36(1)(viia) was set aside to the AO for reconsideration, noting that provisions for NPA are distinct from bad and doubtful debts. Regarding Section 14A, the issue was set aside to the AO for reconsideration in light of Supreme Court decisions. The Tribunal directed the deletion of additions made towards disallowance of provision for wage arrears. The penalty paid to RBI for deviation in KYC-AML guidelines was held to be compensatory, not penal, and thus deductible, leading to the deletion of additions.

The Tribunal held that the assessee had provided sufficient evidence, including bills and proof of payment, to substantiate the expenditure. Therefore, the disallowance of expenditure under Section 69C of the Act was not justified.

The Tribunal held that these 'other incomes' are incidental and integral to the main business activity of providing long-term finance and should be included in the eligible profit for computing the Section 36(1)(viii) deduction. It noted that prior ITAT decisions for earlier assessment years had affirmed this position. Therefore, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the additions.

The Tribunal found that the confirmation letters contained details of loans disbursed and repayments. However, a one-to-one correlation between loan disbursement and recovery needed verification. Therefore, the issue was set aside to the AO for fresh examination.

The Tribunal held that interest earned from parking surplus funds of an export-oriented unit is directly relatable to its business activities and should be considered part of its profits, thus eligible for exemption under Section 10A of the Income Tax Act.

The Tribunal found merit in the assessee's argument that the partner's arrest hindered compliance. Consequently, the Tribunal remitted the case back to the Assessing Officer for a fresh decision on merits, granting the assessee a reasonable opportunity to be heard.

The Tribunal held that the assessee's inability to access documents was due to a genuine dispute regarding premises belonging to TTD, and there was a pending appeal before the Supreme Court. The CIT(A) erroneously concluded the adjournment was sought on a false statement without proper verification.

The Tribunal held that Section 92BA is applicable irrespective of whether the assessee claims deduction under Section 80IA. The Tribunal found that the power unit is an eligible unit under Section 80IA, and transactions between eligible and non-eligible units are considered specified domestic transactions. The rejection of GSEB as a comparable and the use of internal comparables by the TPO was deemed correct.

The Tribunal found that the AO had already verified and provided relief for certain inaccuracies in the data used to calculate suppressed sales. For the first issue, the Tribunal granted marginal relief of 5% on the suppressed sales, acknowledging the revenue's mistakes. For the second issue regarding net profit estimation, the Tribunal rejected the assessee's claim based on comparable companies and the alternate claim of 5% net profit.

The Tribunal held that the failure to file the audit report within the due date was solely attributable to technical glitches and not the assessee's fault. Therefore, the assessee should not suffer adverse consequences for reasons beyond its control.

The Tribunal held that the AO erred in not considering the revised Return of Income filed before the completion of assessment. All relevant information submitted during assessment proceedings must be considered fairly. The rejection of the assessee's claim made in a revised ROI before assessment completion violates legal requirements.

The Tribunal held that the contention regarding the 'total paid' column being cumulative was partly accepted, and the gross sales suppression was reduced by 5% due to overall mistakes by the revenue. The claim for estimating net profit on suppressed sales based on comparable companies was rejected. The alternate claim for a 5% net profit was also rejected.

The Tribunal held that the CIT(A) should have considered the assessee's returns of income for earlier years (2015-16 and 2019-20) and evidence related to agricultural land holdings of the assessee's father. The matter is remitted to the Assessing Officer for fresh consideration.

The Tribunal upheld that interest income from long-term bank deposits, not directly linked to business exigencies, is 'income from other sources' and not eligible for Section 10AA deduction, referencing past assessments and Supreme Court precedents. However, issues regarding the computation of book profits under Section 115JB, Section 43B disallowances for leave encashment and bonus, and the claim of double addition of interest income were all remanded to the Assessing Officer for fresh verification and adjudication.

The Tribunal held that the assessee had provided sufficient evidence, including a cash flow statement, cash book, and confirmation letters from debtors, to explain the cash deposit of Rs. 9,60,000/-. Therefore, the addition made by the AO and confirmed by the CIT(A) was set aside.

The Tribunal held that the delay in filing the appeal was covered by the Supreme Court's decision extending limitation periods due to the pandemic. Therefore, the CIT(A) ought to have condoned the delay. The impugned order was set aside.

The assessee wished to withdraw the appeal as relief was already obtained. The Revenue had no objection to the withdrawal. Therefore, the appeal was dismissed as withdrawn.

The Tribunal dismissed the appeal as withdrawn. However, it granted the assessee liberty to approach the Tribunal to reinstate the appeal by filing a Miscellaneous Application if their case is not accepted under the Vivad Se Vishwas Scheme, 2024, by the Revenue.

The Income Tax Appellate Tribunal upheld the validity of the reassessment proceedings under Sections 147/148, stating that Section 153C was not mandatory where no satisfaction was recorded by the searched person's Assessing Officer or material was not remitted. It also confirmed the addition for unexplained investment in land, restricting it to the assessee's 1/3rd share as determined by the Commissioner of Income Tax (Appeals). However, the Tribunal deleted the enhancement made by the Commissioner of Income Tax (Appeals) for capital contribution, finding no independent material to justify it.