ITAT Kolkata Judgments — February 2018

The Tribunal held that the amount received by the assessee as his share of goodwill on retirement from the firm is a capital receipt and not chargeable to tax, as there was no transfer of goodwill. The addition made by the Assessing Officer and confirmed by the CIT(Appeals) was deleted.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance on tyre purchases, finding that payments were subsequently made and the AO's disallowance was not justified. The Tribunal also upheld the higher depreciation on dumpers and tippers, agreeing that they are essential machinery for construction activities and qualify for higher depreciation.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance on tyre purchases, finding that payments were subsequently made and the AO's disallowance was not justified. The Tribunal also upheld the higher depreciation on dumpers and tippers, agreeing that they are essential machinery for construction activities and qualify for higher depreciation.

The Tribunal held that Section 33AB(7) should be interpreted liberally as a beneficial provision. Since the assessee had placed orders and made substantial advance payments before the year-end, demonstrating intent to utilize the funds for the intended purpose, the addition was deleted.

The Tribunal found that the assessee had a sufficient cause for non-appearance before the CIT(A) due to the accountant's illness. Therefore, the ex-parte order of the CIT(A) was set aside.

The Tribunal held that the CIT(Appeals) failed to provide a proper opportunity of hearing and did not decide the appeals on merit as required by Section 250(6). Therefore, the impugned order was set aside.

The Tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) was defective as it did not specify whether the charge was for concealing particulars of income or furnishing inaccurate particulars. Following the decision of the Hon'ble Karnataka High Court in CIT vs. SSA's Emerald Meadows, which was upheld by the Supreme Court, the Tribunal cancelled the penalty.

The Tribunal held that the issue of classifying rental income was debatable and the assessee's claim was bonafide, especially since the High Court had admitted an appeal on the matter. Therefore, the penalty was not sustainable.

The Tribunal held that the CIT(A) was correct in deleting the addition. The issue is covered by Supreme Court decisions which allow deduction for delayed deposits if paid before the return filing date.

The Tribunal held that the disallowance under Section 40(a)(i) was not sustainable as similar issues were decided in favour of the assessee in previous years. For the Section 14A disallowance, the AO was directed to re-compute it considering only investments that actually fetched exempt income.

The Tribunal found that the assessee had a sufficient cause for non-appearance before the CIT(A) due to the accountant's illness. Therefore, the ex-parte order of the CIT(A) was set aside.

The Tribunal upheld the CIT(Appeals)'s decision, following the jurisdictional High Court's ruling on a similar issue for a subsequent assessment year. The revenue's appeal was dismissed.

The Tribunal noted that the subsidy was received in prior years and the finality of the adjustment in those years was not established. Therefore, the matter was restored to the AO to decide afresh after considering the outcome of reassessment proceedings for the earlier years.

The Tribunal held that the AO failed to dispose of the assessee's objections against the reopening before passing the assessment order, which was a violation of the Supreme Court's directions. Therefore, the CIT(A)'s action of annulling the assessment was upheld.

The Tribunal deleted the addition for suppressed sales, finding no evidence of excess consideration received. It also deleted disallowances for commission expenses and freight inwards, citing lack of evidence and proper substantiation by the assessee.

The Tribunal held that the non-recovery of the advance is a business loss and an allowable expenditure under Section 37 of the Income Tax Act. The expenditure on river protection work was also considered revenue expenditure and allowable.

The Tribunal held that the valuation of closing stock of shares at the lower of cost or market value, as per Accounting Standard 2 and Section 145 of the Act, is an allowable business loss. The diminution in value represents an effective write-off of stock held as trading inventory.

The Tribunal noted that the tax effect of the appeal was below the prescribed monetary limit as per CBDT Circular No. 21/2015. Therefore, the appeal was dismissed on the grounds of low tax effect.

The Tribunal held that while the CIT(A) cannot set aside the matter to the AO, in the interest of justice, the matter should be remanded to the AO for de novo adjudication of the issues raised in the rectification petition.

The Tribunal held that the AO failed to dispose of the assessee's objections against the reopening before passing the assessment order, which was a violation of the Supreme Court's directions. Therefore, the CIT(A)'s action of annulling the assessment was upheld.

The Tribunal held that the AO failed to specify which books of accounts were statutorily required to be maintained and were not produced by the assessee. Since the assessee had produced audited accounts, purchase and sales registers, and bank statements, the penalty under Section 271A was not legally sustainable.

The Tribunal deleted the addition for suppressed sales, finding no evidence of excess consideration received. It also deleted disallowances for commission expenses and freight inwards, citing lack of evidence and proper substantiation by the assessee.

The Tribunal decided to remand the issue of leave encashment to the AO for a decision based on the outcome of the Supreme Court's main appeal. The Tribunal held that the entry tax exemption was a capital receipt, overturning the AO and CIT(A)'s decision.

The Tribunal set aside the CIT(A)'s order and remanded the case back. The CIT(A) was directed to issue a defect memo to the assessee for rectification of defects before disposing of the case.

The Tribunal decided to remand the issue of leave encashment to the AO for a decision based on the outcome of the Supreme Court's main appeal. The Tribunal held that the entry tax exemption was a capital receipt, overturning the AO and CIT(A)'s decision.

The Tribunal found merit in the assessee's contention that bills for some pre-survey purchases were received after the survey date. The Tribunal noted that payments for a significant portion of these purchases were made before the survey through banking channels.

The Tribunal found that the disallowance of consultancy fees was based on suspicion and remanded the issue to the Assessing Officer for cross-verification. Other grounds related to the classification of share sale profits were allowed.

The Tribunal held that assessment proceedings against a non-existent entity are void ab initio. Therefore, the orders passed under sections 201(1) and 201(1A) were annulled.

The Tribunal found that the disallowance of consultancy fees was based on suspicion and remanded the issue to the Assessing Officer for cross-verification. Other grounds related to the classification of share sale profits were allowed.

The Tribunal held that the CIT(A) rightly deleted the disallowance under Rule 8D(2)(ii) as investments were made from own funds. It upheld the disallowance under Rule 8D(2)(iii) on dividend-bearing investments. The Tribunal also allowed the remaining depreciation claim and the deduction for mark-to-market loss.

The Tribunal decided to remand the issue of leave encashment to the AO for a decision based on the outcome of the Supreme Court's main appeal. The Tribunal held that the entry tax exemption was a capital receipt, overturning the AO and CIT(A)'s decision.

The Tribunal held that the assessee is entitled to immunity from penalty under section 271AAA(2) as the conditions for immunity were fulfilled. The penalty levied was not sustainable.

The ITAT held that the penalty imposed under Section 271(1)(c) was unsustainable because the show cause notice issued by the AO did not specify the charge against the assessee. The Tribunal followed the decision of the Karnataka High Court, which held that such a defect invalidates penalty proceedings.

The Tribunal upheld the CIT(A)'s decision to estimate profit at 8% on undisclosed contractual receipts, deeming the AO's 40% estimation unachievable. It also upheld the CIT(A)'s estimation of 1.25% profit on disputed purchases, agreeing that only the profit element should be taxed.

The Tribunal held that the CIT(A) rightly deleted the disallowance under Rule 8D(2)(ii) as investments were made from own funds. It upheld the disallowance under Rule 8D(2)(iii) on dividend-bearing investments. The Tribunal also allowed the remaining depreciation claim and the deduction for mark-to-market loss.

The Tribunal held that a mistake apparent from the record includes the non-consideration of a Supreme Court decision. Rectification is mandated to remove errors and bring assessment orders in line with established legal propositions.

The Tribunal held that the AO failed to comply with the previous ITAT direction to make additions based on seized materials. The addition was made solely on the basis of a retracted statement under section 132(4) without corroborating evidence.

The Tribunal held that the cancellation of registration was not sustainable as there was no direct evidence to prove the donation was bogus or that the assessee was involved in money laundering. The statement from the third party was considered vague and not directly implicating the assessee.

The Tribunal found that the disallowance of consultancy fees was based on suspicion and remanded the issue to the Assessing Officer for cross-verification. Other grounds related to the classification of share sale profits were allowed.

The Tribunal found merit in the assessee's contention that the later filed return was invalid. Consequently, the Tribunal set aside the CIT(A)'s order and restored the case to the AO for fresh assessment based on the originally filed valid return.

The Tribunal held that the second proviso to Section 40(a)(ia) is curative in nature and addresses unintended consequences. Following precedent, the Tribunal remanded the matter to the Assessing Officer to verify the details of the recipients and whether they have paid tax on the income.

The Tribunal found that the disallowance of consultancy fees was based on suspicion and remanded the issue to the Assessing Officer for cross-verification. Other grounds related to the classification of share sale profits were allowed.

The Tribunal held that the advertisement expense was incurred to enhance the company's brand value and was a commercial expediency. It also ruled that club membership fees are allowable as they provide a platform for business meetings and networking, thus aiding in business promotion.

The Tribunal held that merely because a comparable company is making a loss at the net level does not justify its exclusion if it is functionally comparable. The TPO was directed to include the two excluded companies in the list of comparables.

The Tribunal held that the AO had made due enquiries before completing the assessment and that the CIT could not substitute his judgment for the AO's without a finding that the order was erroneous. The CIT's exercise of jurisdiction under Section 263 was found unsustainable.

The Tribunal found merit in the assessee's contention that the later filed return was invalid. Consequently, the Tribunal set aside the CIT(A)'s order and restored the case to the AO for fresh assessment based on the originally filed valid return.

The Tribunal held that the transactions between the assessee and SVPL represented current account transactions due to fluctuating balances and mutual advances. Therefore, Section 2(22)(e) was not attracted.

The Tribunal held that the CIT(A) was correct in deleting the addition for commission as sufficient evidence was provided and the recipient's income was reflected in their return. However, the Tribunal found that a loss on a fixed asset (mobile) could not be claimed as a revenue loss, but depreciation could be allowed.

The Tribunal held that the assessee had made substantial compliance by furnishing information for assessment completion. The non-compliance was considered technical or venial, and therefore, the penalties under section 271(1)(b) were not sustainable.

The Tribunal held that the penalty was unsustainable because the show cause notice issued under Section 274 did not specify whether the charge was for concealment of income or furnishing inaccurate particulars of income. Following the Karnataka High Court's decision, the Tribunal preferred the view favorable to the assessee.