ITAT Jaipur Judgments — March 2017

The Tribunal held that the matter of whether interest income should be treated as business income and whether interest expenses could be set off against it required further examination. The revenue's appeal regarding unabsorbed depreciation was dismissed.

The Tribunal held that the PCIT rightly invoked Section 263 as the AO failed to conduct adequate inquiry into the genuineness of the business activity and expenses claimed by the assessee. The assessment order was deemed erroneous and prejudicial to the revenue.

The Tribunal held that the non-furnishing of the audit report electronically on the due date was a technical breach, especially since the particulars were disclosed in the return and the report was later submitted. Therefore, the penalty was not warranted.

The Tribunal held that the Commissioner of Income Tax (Exemptions) erred in rejecting the application solely on the ground that the trust was not registered with the Sub-Registrar or the Assistant Commissioner of Devsthan Vibhag. Citing a coordinate bench decision in Tsurphu Labrang vs. Director of Income Tax (Exemptions), the Tribunal noted that Rule 17A(a) of the Income Tax Rules, 1962, does not mandate registration under state law as a condition precedent. It clarifies that if a trust is created otherwise than under an instrument, the document evidencing creation is sufficient, and the rule does not specify the type of document required. The Tribunal found that the coordinate bench held that even an oral creation of a trust, if evidenced, can be eligible for registration. Therefore, the Tribunal restored the appeal to the CIT (Exemptions) for decision in accordance with the law laid down by the coordinate bench. The operative direction was to restore the appeal to the CIT (Exemptions).

The Tribunal held that the assessment was rightly done in the name of M/s Amarchand HUF. The Tribunal noted that the Assessing Officer had not disputed the death of Sh. Amarchand on 15.05.1995, nor the fact that the land was sold by Sh. Babu Lal, his three brothers, and his mother Smt. Chunni Devi. Crucially, the Tribunal relied on the finding of fact from a Coordinate Bench in the case of Sh. Sukhdev (ITA No. 747/JP/2010 dated 25.03.2011), which was not disputed by either party. This earlier decision confirmed that the agricultural land sold belonged to the HUF consisting of Sh. Sukhdev, his mother, and three brothers. The Tribunal reasoned that the land was ancestral HUF property, and after the death of Sh. Amarchand, the HUF continued to exist, represented by his elder son Sukhdev as the Karta. The other coparceners were Smt. Chunni Devi and the sons. Therefore, the assessment in the name of M/s Amarchand HUF, representing this continuing HUF, was considered proper. No partition of the HUF was found or recorded under Section 171 of the Act. The appeal filed by the assessee was dismissed.

The Tribunal held that the exemption under Section 10(5) is applicable only for travel within India. It upheld the view that LTC benefits involving foreign travel are taxable and TDS should have been deducted.

The Tribunal held that the AO had correctly given effect to the Coordinate Bench's directions by examining the set-off of undisclosed profit. The Tribunal disagreed with the CIT(A)'s findings and restored the order passed by the AO.

The Tribunal held that the surrender value as computed on the date of assignment cannot be brought to tax in the absence of actual receipt of the surrender value during the year under consideration. The taxable event is the year of actual receipt.

The Tribunal held that the deduction under Section 54F is allowable even if the property is purchased in the wife's name, provided the funds originated from the assessee. The condition of owning only one residential house was also accepted based on the assessee's affidavit.

The Tribunal dismissed the appeal in limine due to the assessee's apparent lack of seriousness in pursuing it and the failure to cure defects. The assessee can apply for recall if they can show a reasonable cause and cure the defects.

The Tribunal rejected the adjournment application due to repeated non-appearance and lack of supporting evidence. The appeal was dismissed in limine, with liberty to seek recall upon demonstrating reasonable cause.

The Tribunal found that the CIT(A) had not properly marshalled the facts before applying legal precedents. Therefore, the Tribunal set aside the CIT(A)'s order and restored the issue to the CIT(A)'s file for a fresh decision.

The Tribunal held that the notice for penalty proceedings was defective as it did not specify whether it was for concealment of income or furnishing inaccurate particulars. Furthermore, the Tribunal found that the assessee had disclosed all material facts, and the rejection of the exemption claim was a debatable issue, making the penalty unjustified.

The Tribunal held that the initiation of penalty proceedings was not specific and lacked clarity regarding the charge of concealment or furnishing inaccurate particulars. Relying on judicial precedents, the Tribunal found the penalty unsustainable.

The Tribunal held that the assessee is eligible to claim exemption under Section 11, provided the conditions are met and there is no violation of Section 13. The denial of exemption by the lower authorities was based on grounds that require further examination in light of the restored Section 12A registration.

The Tribunal upheld the CIT(A)'s decision to reject the books of accounts, finding that the AO was justified given the unverifiable purchases. The Tribunal also upheld the reduced trading addition.

The Tribunal held that the client code modifications, when done intra-day and within permissible limits, do not necessarily indicate mala fide intent. The Tribunal found that the modifications were within the allowed percentage and were accounted for.

The Tribunal upheld the CIT(A)'s decision to delete the addition made by rejecting the books of accounts, finding the AO's objections superficial. It also affirmed the deletion of the addition for disallowed interest, agreeing that the rate paid was not excessive compared to market rates for unsecured loans.

The Tribunal condoned the delay in filing the appeal, relying on the Supreme Court's judgment in Collector, Land Acquisition Vs. Mst. Katiji & Others. The appeal was restored to the CIT(A) for a decision on merits.

The Tribunal found that the CIT's rejection was based on a narrow interpretation of 'education'. Citing a coordinate bench decision, the Tribunal held that the CIT should reconsider the application after considering relevant case laws.

The Tribunal upheld the CIT(A)'s order, following the jurisdictional High Court's judgments which held that privilege fees are revenue expenditure and that employee's contribution to PF & ESI are governed by Section 43B. Both grounds of appeal by the revenue were rejected.

The Tribunal allowed the deletion of disallowance under Section 40(a)(ia) as no amount was payable at year-end. However, it confirmed the CIT(A)'s order regarding the disallowance of interest expenditure on interest-free advances to family members, finding no commercial expediency.

The Tribunal restored the issue of disallowance under Section 14A to the AO for verification of the nexus between exempt income and expenses. For partner's remuneration, the Tribunal followed a previous order and allowed the relief to the assessee.

The Tribunal held that the excess stock should be treated as business income, not income from other sources, as offered by the assessee. Regarding the interest expense, the Tribunal found that the commercial expediency for the advance was established and no nexus was shown between borrowed funds and the advance.

The Tribunal held that the right to be heard is a fundamental principle of natural justice. Since the assessee claimed non-receipt of notice and an ex-parte order was passed, the impugned order was set aside.

The Tribunal held that the reopening was not justified as the assessee had disclosed all material facts during the original assessment. Furthermore, the CBDT circular relied upon was not retrospective and the jurisdictional High Court had held that such commission payments were not taxable in India if services were rendered outside India and no permanent establishment existed.

The Tribunal held that since the Rajasthan Tax Board set aside the enhanced stamp duty valuation, the addition made by the AO under Section 50C is not sustainable. The Tribunal also upheld the rejection of the claim for cost of improvement due to discrepancies in the evidence provided.

The Tribunal dismissed the Revenue's appeal as not maintainable due to low tax effect, as per CBDT Circular No. 21/2016. Consequently, the assessee's cross-objection was rendered infructuous.

The Tribunal permitted the assessee to withdraw the appeal. Consequently, the appeal was dismissed as withdrawn.

The Tribunal held that the land became the property of the firm upon its contribution as capital. Therefore, the subsequent sale of the land by the firm, even if executed through a partner, did not result in capital gains in the hands of the assessee. The taxability, if any, would be in the hands of the firm.

The Tribunal noted that while the AO's remand report accepted the source of deposits as sale proceeds, there was no party-wise purchase evidence. Therefore, the Tribunal directed the AO to calculate the peak credit and make the addition based on that.

The Tribunal held that penalty under Section 272A(2)(c) cannot be levied in a routine manner. It emphasized that discretion to impose penalty should be exercised judiciously, considering all circumstances, and a bona fide breach due to reasonable cause does not warrant a penalty.

The Tribunal set aside the Section 14A disallowance to the AO for fresh examination, following its previous orders. It confirmed the CIT(A)'s deletion of additions related to Section 80-IA and interest expenses, relying on prior tribunal decisions.

The Tribunal held that the penalty under Section 271AAA is not leviable if the assessee admits the undisclosed income, specifies the manner of derivation, substantiates it, and pays the tax. Since the Assessing Officer did not specifically ask the assessee to specify or substantiate the manner of derivation during the statement recording, the penalty was not justified.

The Tribunal found merit in the assessee's contention that the property's valuation as commercial was incorrect, as it remained residential in official records and running a school is not necessarily a commercial activity. The issue of valuation was restored to the Assessing Officer for fresh decision.

The Tribunal held that the AO has jurisdiction to assess other income that escaped assessment and comes to his notice subsequently during reassessment proceedings, even if not included in the original reasons for reopening, as per Section 147 and Explanation 3. However, regarding the share capital addition, the Tribunal referred to its earlier decision in M/s Bright Metals Pvt. Ltd. which considered the Supreme Court's ruling in Navodaya Castle, emphasizing the assessee's onus to prove identity, creditworthiness, and genuineness of transactions.

The Tribunal affirmed the CIT(A)'s order, finding that the notice under Section 148 was indeed issued to a non-existent entity. The capital gains were also disclosed and enquired into by the AO in the partner's case, making the reopening of the firm's assessment invalid.

The Tribunal held that Section 234E provides for a fee for late filing of TDS statements, which is a privilege for the deductor. The Bombay High Court's decision was considered and found to be applicable.

The Tribunal held that exchange rate fluctuation profit is derived from export sale proceeds and qualifies for deduction under Section 10AA. It also upheld the addition for freight charges as the assessee had earned a profit on it, which cannot be included in export turnover.

The Tribunal held that the properties were jointly owned as they were purchased and sold in joint names, and sale proceeds were received in joint accounts. However, an addition related to professional fees was restored to the Assessing Officer for verification, and an addition for a cash gift was deleted based on evidence.

The Tribunal dismissed the appeal for want of prosecution, following established High Court judgments. The assessee's failure to appear indicated a lack of interest in pursuing the appeal.

The Tribunal held that if PF and ESI contributions are paid after the due date under the respective Acts but before the due date for filing the return of income under Section 139(1), they cannot be disallowed. This is based on the jurisdictional High Court's decision.

The Tribunal held that the issues were identical to previous years' cases where the Tribunal had ruled in favour of the assessee. Therefore, the CIT(A)'s order deleting the additions was upheld.

The Tribunal held that employee's contribution to PF & ESI deposited before the due date of filing the return is allowable. This is based on the jurisdictional High Court's judgments in similar cases.

The Tribunal noted that the issue was identical to a preceding year where the penalty was deleted. The assessee had offered the income for taxation before any inquiry, and the mistake was due to an error in classifying dividend income instead of short-term capital gains.

The Tribunal found that the assessee did not get a proper and effective hearing. Therefore, the case was restored back to the CIT(A) for fresh adjudication to provide an opportunity of being heard.

The Tribunal held that the disallowance under Section 14A was not applicable as the investments were made for the purpose of maintaining controlling interest in sister concerns and partnership firms. Following its own previous decisions on identical facts, the Tribunal directed the AO to delete the addition.

The Tribunal dismissed the revenue's appeal, affirming the order of the CIT(A). The addition of Rs. 69 lakh was made by the AO on the basis that the original owners of the land stated it was sold at Rs. 4.60 lacs per Bigha, leading to a computed sale consideration of Rs. 1,65,00,000/- instead of the declared Rs. 96,00,000/-. The CIT(A) had deleted the addition, relying on an identical case of Smt. Manju Kaushik, where the Tribunal had confirmed the deletion. The Tribunal noted that the land in question was adjacent to Smt. Manju Kaushik's land, a fact not disputed by the revenue. The Tribunal found no material in the form of an agreement to suggest the payment was made at Rs. 4,60,000/- per bigha. While the revenue argued that deposits in the original owners' bank accounts corroborated their statements, the Tribunal held that such deposits alone were insufficient without corresponding withdrawals from the assessee's accounts. The absence of any agreement or draft agreement indicating the higher sale price was a significant lacuna. The Tribunal agreed with the CIT(A) that the statements of the original owners were not reliable and lacked corroboration, especially given the inconsistencies noted in their statements. Therefore, the addition was unsustainable.

The Tribunal noted the assessee's consistent failure to prosecute the appeal despite multiple adjournments. Following precedents, the Tribunal dismissed the appeal for want of prosecution.

The Tribunal, following the jurisdictional High Court's decision, held that the employee's contribution to PF, if paid before the due date of filing the return, is allowable as a deduction. Therefore, the disallowance was directed to be deleted.