ITAT Mumbai Judgments — May 2016

The Tribunal upheld the CIT(A)'s decision that the Assessing Officer (ACIT 8(3)) lacked jurisdiction to pass the assessment order as the revised return, showing nil income, was valid and fell under the jurisdiction of a different officer (ITO 8(1)-2). The Revenue's appeal was dismissed.

The Tribunal admitted additional evidence produced by the assessee which prima facie established the identity of the payee and the payment made. The Tribunal restored the issue of penalty to the Assessing Officer for fresh adjudication.

The Tribunal upheld the validity of the reopening under Section 147, finding sufficient reason to believe income had escaped assessment. On merits, it affirmed the CIT(A)'s direction to tax the peak amount in the bank account.

The Tribunal upheld the Commissioner (Appeals)'s decision, holding that mark-to-market losses on forward exchange contracts entered into in the regular course of business for hedging import/export are allowable. The reasoning was supported by judicial precedents and the fact that the contracts were not cancelled before maturity.

The Tribunal held that the CIT(A) should have decided the appeal on merits and that the interest of justice would be served by restoring the issues to the CIT(A) for a fresh determination.

The Tribunal held that penalty is not leviable when additions are made by merely changing the assessment year or when the issue is debatable. It also found that penalty cannot be levied on additions made on a protective basis or when the assessee has voluntarily disclosed information. Some penalties were deleted, while others were remanded for further examination.

The Tribunal upheld the CIT(A)'s decision that the Assessing Officer (ACIT 8(3)) lacked jurisdiction to pass the assessment order as the revised return, showing nil income, was valid and fell under the jurisdiction of a different officer (ITO 8(1)-2). The Revenue's appeal was dismissed.

The Tribunal held that penalty is not leviable when additions are made by merely changing the assessment year or when the issue is debatable. It also found that penalty cannot be levied on additions made on a protective basis or when the assessee has voluntarily disclosed information. Some penalties were deleted, while others were remanded for further examination.

The Tribunal held that the penalty under Section 271D was not leviable as the transaction was a repayment of an old loan and not a fresh loan acceptance. The assessee had a reasonable cause for accepting the repayment in cash, and the transaction did not have any tax implications or intent to evade tax.

The Tribunal held that the FMV of the land on the date of conversion into stock-in-trade should be considered as the cost for computing business income, as per Section 45(2) of the Income Tax Act. The assessee's claim for the FMV was therefore allowed.

The Tribunal held that the assessee failed to show sufficient cause for the delay. The explanation provided was vague and lacked substantiation, such as an affidavit from the tax professional. Therefore, the delay could not be condoned.

The Tribunal held that the assessee must satisfy the test of manufacturing distinct commercial products. The manner of charging for the product (labour charges or sale) was considered of little consequence as the deduction was claimed on value addition.

The Tribunal held that penalty is not leviable when additions are made by merely changing the assessment year or when the issue is debatable. It also found that penalty cannot be levied on additions made on a protective basis or when the assessee has voluntarily disclosed information. Some penalties were deleted, while others were remanded for further examination.

The Tribunal held that penalty is not leviable when additions are made by merely changing the assessment year or when the issue is debatable. It also found that penalty cannot be levied on additions made on a protective basis or when the assessee has voluntarily disclosed information. Some penalties were deleted, while others were remanded for further examination.

The Tribunal held that the CIT(A) erred in applying the main clause of Section 275(1)(a) and should have considered the proviso. The penalty order was found to be within the time limit prescribed by the proviso.

The Tribunal restored the issue of disallowance of business expenses to the AO for verification of their genuineness and commercial expediency. It also directed fresh adjudication on the issue of set-off of business loss against house property income.

The Tribunal held that penalty is not leviable when additions are made by merely changing the assessment year or when the issue is debatable. It also found that penalty cannot be levied on additions made on a protective basis or when the assessee has voluntarily disclosed information. Some penalties were deleted, while others were remanded for further examination.

The Tribunal held that the assessee acted as a content creator/producer, not merely a trader, justifying the Transfer Pricing adjustment. However, it also ruled that routers and switches used with computers are eligible for higher depreciation as computer hardware.

The Tribunal held that the execution of a fresh leave and license agreement in June 2003, along with fax messages and TDS certificates, clearly indicated a mutual agreement to revise the rent from Rs. 1.50 lakh to Rs. 1.25 lakh from June 2003. The Tribunal also noted that the co-owner's rental income was accepted at the revised rate.

The Tribunal held that the amendment to Section 40(a)(ia) by the Finance Act, 2012, including the second proviso, is clarificatory and retrospective. The matter was restored to the Assessing Officer to verify the assessee's claims under the amended provisions.

The Tribunal held that the reopening of assessment was invalid as it was based on a review of material already available during the original assessment, constituting a change of opinion. Furthermore, the payment was considered reimbursement of expenses, and TDS was correctly deducted by RPPL on payments to advertisers, thus no disallowance under Section 40(a)(ia) was warranted.

The Tribunal acknowledged the peculiar circumstances of migratory laborers and the difficulty in opening bank accounts. However, due to the failure to verify the affidavits and the non-compliance with notices, the case was restored to the AO.

The Tribunal held that since the assessee's main appeal regarding the taxability of the impugned receipt was allowed by the Tribunal, the penalty under Section 271(1)(c) would not survive. The penalty order was accordingly set aside.

The Tribunal held that loan processing charges and prepayment charges are allowable as deductions under Section 24(b) as they fall within the definition of 'interest'. However, the claim for common area maintenance charges was remanded to the Assessing Officer for fresh consideration.

The Tribunal noted that a previous order for earlier assessment years had remanded the issue of depreciation on the trademark back to the CIT(A) for fresh adjudication. Considering this, the Tribunal directed the deletion of the penalty under Section 271(1)(c).

The Tribunal agreed that the appeal was not maintainable as the tax effect was below the prescribed limit. However, it was held that if the CIT(A)'s order is reversed by the High Court, the appeal could be restored.

The Tribunal condoned the delay in filing the appeal, adopting a liberal approach and emphasizing substantial justice over technicalities, considering the delay was relatively less compared to cited precedents. On merits, the Tribunal quashed the revision order passed by the CIT under Section 263, holding that the assessment order was not erroneous or prejudicial to the revenue.

The Tribunal held that the assessee's chosen AY 2002-03 is the initial assessment year for claiming 80IA deduction. Unabsorbed depreciation and losses from earlier years, which were already set off against other income, cannot be notionally carried forward and set off against the profits of the Jojobera unit for AY 2002-03.

The Tribunal held that the lease premium paid by the assessee to CIDCO was not in the nature of rent as contemplated in Section 194-I. Therefore, the assessee was not liable to deduct tax at source and could not be treated as being in default.

The Tribunal held that the appeals were not maintainable as per CBDT Circular No. 21/2015, which mandates withdrawal or non-pressing of appeals with a tax effect below a specified limit. The appeals were dismissed as not pressed.

The Tribunal held that transfer pricing adjustments should be restricted to international transactions only, not all transactions. It also restored issues regarding product warranty and service coupon commission to the AO for fresh adjudication.

The Tribunal noted that the tax effect of the disputed amount was below the threshold stipulated by CBDT Circular No. 21/2015. Therefore, the appeal was not maintainable.

The Tribunal found that the CIT(A) erred by accepting additional evidence without confronting the Assessing Officer, which violates Rule 46A. The order was set aside and the issues were restored to the Assessing Officer for fresh examination.

The Tribunal held that the reopening of assessment under Section 147 was based on a change of opinion by the Assessing Officer, as the assessee had consistently followed the project completion method. No new material was brought on record to justify the reopening.

The Tribunal held that since the assessee proved no expenses were incurred for earning exempt income, no disallowance under Section 14A is warranted. The disallowance cannot exceed the exempt income.

The Tribunal noted that the quantum in dispute was Rs. 30,65,920/- with an effect less than Rs. 10 lakhs. In view of CBDT circular No. 21/2015, the Revenue was barred from pursuing the appeal.

The Tribunal held that the internal use of software for which consideration is paid does not amount to infringement of copyright. Therefore, such payments do not constitute royalty under the Income Tax Act.

The Tribunal held that the assessee had accurately disclosed all particulars of its income. The reduction of interest income from capital work in progress was a difference of opinion, not a concealment of income or furnishing of inaccurate particulars.

The Tribunal held that the ETP qualified as water pollution control equipment eligible for 100% depreciation, based on the Chartered Engineer's certificate and audit reports. However, the date of its first use was disputed, leading to a remand.

The Tribunal held that the internal use of software for which consideration is paid does not amount to infringement of copyright. Therefore, such payments do not constitute royalty under the Income Tax Act.

The Tribunal decided that interest income should be assessed as business income. It also held that provision for Employee Stock Option Plan (ESOP) expenses is an allowable deduction, following the precedent in Biocon Ltd. However, the disallowance of provision for obsolete stores was upheld.

The Tribunal held that the CRM expenses, including items provided to doctors, were revenue expenditure and not capital in nature. The lower authorities' disallowance was not justified.

The Tribunal held that the assessee had accurately disclosed all particulars of its income. The reduction of interest income from capital work in progress was a difference of opinion, not a concealment of income or furnishing of inaccurate particulars.

The Tribunal allowed the assessee's claim, finding no attempt to evade tax as both the assessee and the relatives paying interest were taxed at higher rates. The Tribunal followed the Bombay High Court's decision regarding payments to relatives where tax evasion is not evident.

The tribunal noted that the assessee was not pressing the ground related to asset ownership. For other grounds, particularly regarding interest expenditure and levy of interest under sections 234B and 234C, the matter was restored to the Assessing Officer for fresh adjudication.

The Tribunal held that royalty payments on technical know-how and trademark usage were at arm's length, following its previous decisions. Regarding AMP expenses, the Tribunal found a correlation between sales and expenses, but did not fully uphold the revenue's apportionment. For Section 14A, the Tribunal restricted the disallowance to 2% of exempt income.

The Tribunal held that the assessee had disclosed the entire income and committed only computational errors by mixing up income heads, not concealment or furnishing inaccurate particulars. Therefore, the penalty was deleted.

The Tribunal held that the internal use of software for which consideration is paid does not amount to infringement of copyright. Therefore, such payments do not constitute royalty under the Income Tax Act.

The Tribunal held that the assessee had discharged its onus by providing confirmations, PAN, and bank statements for purchases. For labour charges, the Tribunal found that the assessee failed to provide basic details for some parties and thus remitted the issue back to the Assessing Officer for fresh adjudication.

The Tribunal held that the internal use of software for which consideration is paid does not amount to infringement of copyright. Therefore, such payments do not constitute royalty under the Income Tax Act.