ITAT Mumbai Judgments — October 2015

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that the disallowance of interest expenditure was not justified as the assessee had sufficient interest-free funds to cover the interest-free advances. For Section 14A, it was held that disallowance is not applicable to shares held as stock-in-trade.

The Tribunal held that interest disallowance was not justified as the assessee had sufficient interest-free funds to cover interest-free advances. For Section 14A, it was held that disallowance is not applicable to shares held as stock-in-trade, following various High Court and Tribunal decisions.

The Tribunal held that the disallowance of interest expenditure was not justified as the assessee had sufficient interest-free funds to cover the interest-free advances. For Section 14A, the Tribunal ruled that disallowance is not applicable to shares held as stock-in-trade.

The Tribunal upheld the CIT(A)'s order, finding that the assessee did conduct manufacturing activities in the SEZ and that the profit margins declared were supported by audited accounts. The Revenue failed to provide evidence to disprove the manufacturing or justify restricting profits.

The Tribunal confirmed the order of the CIT(A), holding that the compensation paid was a normal business practice and not a diversion of profit. The flats were sold at market rates, and the related parties had offered the compensation income in their returns.

The ITAT found that the CIT(A) accepted the assessee's explanation without proper examination of the school's books. Therefore, the matter was set aside and restored to the Assessing Officer for fresh examination.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that the business was 'set up' upon recruitment of employees and incurring of related expenses, distinguishing it from 'commencement of business'. Therefore, the expenditure was allowable.

The Tribunal held that transfer pricing adjustments should be restricted to international transactions with Associated Enterprises (AEs) and not at the entity level. It also found that additional evidence could be admitted before the Dispute Resolution Panel (DRP).

The CIT(A) restricted the Short Term Capital Gain (STCG) to Rs. 40,69,030/- from Rs. 53,66,599/- by assigning proportionate sale value based on the WDV of land and building. The Revenue appealed this decision.

The Tribunal held that the cost of acquisition of the land was ascertainable and that Section 50C was applicable. It also found that the investment in the new property was not made within the prescribed time for Section 54F exemption.

The CIT(A) deleted the disallowance, holding that expenses can only be disallowed under Section 14A if they have been incurred and claimed for earning exempt income. The Tribunal agreed that the assessee had not claimed any expenditure attributable to earning the exempt income.

The Tribunal held that the assessee had satisfied the conditions for claiming depreciation, including ownership and the existence of a new asset. The AO's disallowance based on the identification number and land cost was not substantiated.

The Tribunal upheld the Director's decision, finding no material evidence presented by the assessee to demonstrate that it carried out activities in furtherance of its objects. Therefore, the rejection of the registration application was deemed justified.

The Tribunal held that interest on IT refund, interest from others, interest on FDR, and tender fees are eligible for deduction under Section 80IA as they are derived from the eligible business. The Tribunal also directed that for ineligible items, deduction should be denied only on net receipts.

The Tribunal restored the issue to the AO, directing the assessee to demonstrate the availability of surplus investible funds on the date of investment. The AO is to decide the issue afresh based on these details.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that the AO was justified in denying exemption. The consultancy services were considered a commercial activity, not merely incidental to the institute's charitable objects, especially given the magnitude and organized nature of the operations.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that since the assessee had sold the goods and offered sales for taxation, the entire purchases could not be disallowed. However, an addition to the extent of the difference in Gross Profit (GP) between the books of account on undisputed purchases and the GP on sales relating to the disputed purchases was upheld.

The Tribunal held that the intention of the assessee is the deciding factor and must be gathered from surrounding facts. Factors like magnitude of transactions, frequency, holding period, intra-day sales, repetitive transactions, and utilization of borrowed funds indicated a trading activity, not investment.

The Tribunal held that the assessee has consistently treated share transactions as investments and not stock-in-trade. The volume and nature of transactions, along with the holding period, indicated an investor status, not a trader.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that the AO had conducted sufficient inquiry and verification regarding the share premium and closing stock, supported by the assessee's submissions and documentation. Therefore, the PCIT's order under Section 263 was not justified as the AO's order was neither erroneous nor prejudicial to the revenue.

The Tribunal held that for assessment years 2007-08, 2008-09, and 2009-10, a 10% disallowance of foreign travel expenses was justified, dismissing the Revenue's appeals. For assessment year 2006-07, the Tribunal directed a 20% disallowance of foreign travel expenses, partly allowing the assessee's appeal.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal upheld the CIT(A)'s decision, stating that the Assessing Officer could have at best adopted the Municipal Ratable Value. The income from house property is the higher of rent received, Municipal Ratable Value, or standard rent.

The Tribunal upheld the CIT(A)'s decision, following a previous ITAT ruling on a co-owner of the same property. It was held that the lease income should be assessed under 'Income from House Property' as the conditions of Section 22 of the Act were fulfilled.

The Tribunal upheld the CIT(A)'s direction to disallow 5% of exempt income under Section 14A, finding it justified as some expenditure is always attributable to earning exempt income. However, it directed that depreciation on the 'TIL Stacker' machine should be allowed from the date it was put to use (July 2006) rather than the date of registration (November 2006).

The Tribunal held that transfer pricing adjustments should be restricted to international transactions with Associated Enterprises (AEs) and not at the entity level. It also found that additional evidence could be admitted before the Dispute Resolution Panel (DRP).

The Tribunal held that since the assessee had sold the goods and offered sales for taxation, the entire purchases could not be disallowed. However, an addition to the extent of the difference in Gross Profit (GP) between the books of account on undisputed purchases and the GP on sales relating to the disputed purchases was upheld.

The Tribunal held that for assessment years 2007-08, 2008-09, and 2009-10, a 10% disallowance of foreign travel expenses was justified, dismissing the Revenue's appeals. For assessment year 2006-07, the Tribunal directed a 20% disallowance of foreign travel expenses, partly allowing the assessee's appeal.

The Tribunal noted that Section 94(7) was introduced on 01/04/2002, and the sale of units occurred after the stipulated period under the relevant sub-clauses. Consequently, the disallowance made under Section 94(7) was not sustained.

The Tribunal found that while the AO relied on statements of certain individuals, the assessee had provided documentary evidence. Due to gaps and contradictions, the matter was remanded back to the AO for further inquiry and verification of evidence.

The CIT(A) deleted the addition, holding that since sales to these parties were accepted, purchases could not be treated as bogus. The Tribunal upheld this decision, noting that the assessee provided documentary evidence for other liabilities and bank payments were made to creditors.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal noted that Section 94(7) was introduced on 01/04/2002, and the sale of units occurred after the stipulated period under the relevant sub-clauses. Consequently, the disallowance made under Section 94(7) was not sustained.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that the assessment order passed under section 143(3) read with section 147 is invalid for non-issuance of notice under section 143(2) after the filing of the return. The provisions of section 292BB do not help the department as the assessee had raised an objection.

The Tribunal held that the CIT(A) was justified in deleting the addition made under Section 68. The assessee had explained the nature of the credit, the identity of the broker was established, and the genuineness of the transaction was supported by evidence like contract notes and demat statements.

The Tribunal held that the assessee had sufficient material to prepare financial statements and get them audited, even if for banking purposes. Therefore, there was no justification for not submitting the audit report as required by law.

The Tribunal upheld the CIT(A)'s decision to delete the additions. It found that the commission was a trade discount and an accrued liability under the mercantile system of accounting. Regarding ceased liabilities, the Tribunal noted that the assessee had acknowledged them and provided confirmations, thus section 41(1) was not applicable.

The Tribunal held that for assessment years 2007-08, 2008-09, and 2009-10, a 10% disallowance of foreign travel expenses was justified, dismissing the Revenue's appeals. For assessment year 2006-07, the Tribunal directed a 20% disallowance of foreign travel expenses, partly allowing the assessee's appeal.

The Tribunal found the assessee's conduct questionable, especially the timing of the offer post-search, and confirmed the levy of penalty. However, it deemed the penalty rate of over 200% excessive.

The Tribunal held that the assessee had a plausible view for treating share trading as business income, especially given a prior assessment year where this was accepted. Therefore, it did not constitute furnishing inaccurate particulars.

The Tribunal held that while the purchases from the three parties were not genuine, the entire amount could not be disallowed as the assessee had sold the goods. The addition was restricted to the difference in Gross Profit (GP) between the disputed purchases and undisputed purchases.

The Tribunal held that the reopening of assessment is bad in law because the AO failed to record reasons and provide a copy to the assessee. This failure is a jurisdictional defect, rendering the reassessment order illegal.