ITAT Mumbai Judgments — June 2016

The Tribunal held that the Explanation to Section 73 of the Income Tax Act was intended to curb tax avoidance by business houses controlling groups of companies, and not to apply to companies whose principal business is trading in shares. The Tribunal also ruled that no disallowance under Section 14A is attracted if no exempt income is earned or if shares are held as stock-in-trade.

The Tribunal upheld the CIT's order, stating that the AO failed to conduct proper inquiry into the genuineness and creditworthiness of the cash loans. The assessment order was deemed erroneous due to the lack of due application of mind and absence of necessary evidence.

The Tribunal held that no TDS was deductible on commission paid to banks for credit/debit card transactions, as the banks were not acting as agents. Therefore, no disallowance under Section 40(a)(ia) was attracted.

The Tribunal held that the assessment order was passed in violation of natural justice as the reasons for re-opening were not communicated to the assessee, depriving them of the opportunity to object. The assessment order was set aside and the matter was remanded.

The Tribunal held that the CIT(A) was correct in deleting the additions as the assessee had provided sufficient evidence of the genuineness of creditors and purchases. The cross-objection filed by the assessee was dismissed due to a significant delay with an unsatisfactory explanation.

The tribunal confirmed the addition at 25% of the unexplained deposits, following its previous orders. The assessee's claim for set-off against returned business income was rejected due to lack of evidence and the fact that the bank account income was not disclosed.

The Tribunal held that the payments made by the assessee for display of advertisements were not in the nature of rent and that TDS was correctly deducted under Section 194C, as there was no subletting of hoarding rights.

The Tribunal held that the restriction on the exemption under Section 54EC to Rs. 50,00,000 when investments fall in two financial years was introduced from April 1, 2015. Therefore, for the assessment year in question, the full exemption was allowable. The Tribunal also denied a deduction for municipal taxes as it was not an expense incurred wholly and exclusively for the transfer of property.

The Tribunal upheld the CIT(A)'s decision, ruling that the assessee, being a resident of USA with permanent homes there, was not taxable in India on his foreign income as per the Indo-US Tax Treaty. The exemption for tax on perquisite was also confirmed.

The Tribunal restored the matter to the Assessing Officer for fresh examination of issues, including the classification of capital gains and disallowance of expenses, considering the fresh evidence now available with the assessee.

The Tribunal held that the amended provisions of Section 80IB(10) were applicable to projects approved before April 1, 2005. Consequently, the assessee was not entitled to deduction for buildings where OCs were received after March 31, 2008, but was eligible for those with OCs received on or before that date.

The Tribunal held that the PCIT was not justified in invoking Section 263 as the Assessing Officer had conducted necessary inquiries and verification. The Tribunal found that the Assessing Officer's orders were not erroneous or prejudicial to the revenue, and setting aside the assessment for de novo consideration was not warranted.

The Tribunal held that the PCIT was not justified in invoking Section 263 as the Assessing Officer had conducted necessary inquiries and verification. The Tribunal found that the Assessing Officer's orders were not erroneous or prejudicial to the revenue, and setting aside the assessment for de novo consideration was not warranted.

The Tribunal held that the disallowance of remuneration to partner Smt. Kiran R. Puri was not justified as the revenue failed to produce cogent material. The matter of TDS disallowance was remitted back to the AO for reconciliation. Disallowances for motor car and telephone expenses were deleted as FBT was paid on these expenses.

The Tribunal noted that while the identity of the creditor was proven, their creditworthiness and the genuineness of the transaction were not adequately established. The Tribunal decided to allow the assessee a further opportunity to prove the creditworthiness of the creditor.

The Tribunal held that the assessee failed to prove the purchase of the new property and the transaction was found to be fraudulent. Therefore, the assessee was not entitled to the exemption claimed under Section 54.

The Tribunal held that the PCIT was not justified in invoking Section 263 as the Assessing Officer had conducted necessary inquiries and verification. The Tribunal found that the Assessing Officer's orders were not erroneous or prejudicial to the revenue, and setting aside the assessment for de novo consideration was not warranted.

The Tribunal held that the rental income from the flats should be taxed under the head 'income from house property' and not as business income, as the assessee was not in the business of letting out properties.

The Tribunal upheld the CIT(A)'s decision to allow the mark-to-market loss on creditors, citing Supreme Court precedent. For the wastage/scrap issue, the Tribunal restored the matter to the AO for fresh adjudication.

The Tribunal held that the PCIT was not justified in invoking Section 263 as the Assessing Officer had conducted necessary inquiries and verification. The Tribunal found that the Assessing Officer's orders were not erroneous or prejudicial to the revenue, and setting aside the assessment for de novo consideration was not warranted.

The Tribunal held that the PCIT was not justified in invoking Section 263 as the Assessing Officer had conducted necessary inquiries and verification. The Tribunal found that the Assessing Officer's orders were not erroneous or prejudicial to the revenue, and setting aside the assessment for de novo consideration was not warranted.

The Tribunal held that the income from share transactions should be treated as capital gains, not business income, emphasizing consistency in treatment across assessment years and the nature of the assessee's overall activities. The disallowance under Section 14A was restricted to the exempt income earned.

The Tribunal held that the lower authorities should verify the facts regarding the assessee's claim for DTAA benefits on interest income and capital gains. The matter was remanded back to the AO for fresh examination on merits, with an opportunity for the assessee to submit evidence.

The Tribunal held that the CIT(A)'s decision was based on an incorrect premise as the Special Court matter was already disposed of. Therefore, the issue was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the assessee failed to discharge the onus of proving the source of cash deposits and income from cheque discounting. The explanations provided were found to be unsubstantiated and lacked documentary evidence.

The Tribunal held that the Explanation to Section 73 of the Income Tax Act was intended to curb tax avoidance by business houses controlling groups of companies, and not to apply to companies whose principal business is trading in shares. The Tribunal also ruled that no disallowance under Section 14A is attracted if no exempt income is earned or if shares are held as stock-in-trade.

The Tribunal held that the PCIT was not justified in invoking Section 263 as the Assessing Officer had conducted necessary inquiries and verification. The Tribunal found that the Assessing Officer's orders were not erroneous or prejudicial to the revenue, and setting aside the assessment for de novo consideration was not warranted.

The Tribunal held that since the commission was paid to non-residents for services rendered entirely outside India and these recipients had no permanent establishment or business connection in India, there was no obligation to deduct tax at source under Section 195. Therefore, the disallowance under Section 40(a)(ia) was incorrect.

The Tribunal held that since no incriminating material was found during the search and the assessments for the relevant years were not abated at the time of issuing the notice under section 153C, the additions made by the Assessing Officer were bad in law.

The Tribunal decided to give the assessee one more opportunity to explain the difference in professional receipts. The matter was remitted back to the AO for fresh adjudication.

The Tribunal held that the assessee is eligible for deduction under Section 80IA(4) as they are considered developers, not just works contractors. This decision was based on subsequent judicial pronouncements and the fact that the earlier Larger Bench decision was no longer considered good law.

The Tribunal held that the assessee can retract from a declaration partially or completely with cogent reasoning. Since the assessee honored the Rs. 50,00,000/- disclosure and paid tax thereon, the addition of Rs. 30,00,000/- was directed to be deleted.

The Tribunal held that the assessee correctly accounted for its commission income as a sole selling agent and that the provisions of Section 40(a)(ia) were not attracted. The addition made by the AO was considered wrong and against the law.

The Tribunal held that since the quantum addition was deleted, the penalty levied under Section 271(1)(c) cannot survive. The penalty cannot stand without the underlying addition.

The Tribunal allowed foreign tour expenses, restored certain disallowed expenses to the Assessing Officer for fresh adjudication, and upheld the deletion of disallowance of interest expenses. The Revenue's appeal was dismissed.

The Tribunal held that the assessee is eligible for deduction under Section 80IA(4) as they are considered developers, not just works contractors. This decision was based on subsequent judicial pronouncements and the fact that the earlier Larger Bench decision was no longer considered good law.

The Tribunal allowed foreign tour expenses, restored certain disallowed expenses to the Assessing Officer for fresh adjudication, and upheld the deletion of disallowance of interest expenses. The Revenue's appeal was dismissed.

The assessee filed an application stating that the AO rectified the order due to data entry errors in the TDS statement, reducing the demand. The department did not object, and the tribunal agreed that the appeal had become infructuous.

The Tribunal held that the appeal of the revenue deserved to be dismissed in limine due to low tax effect, as per CBDT Circular No. 21/2015. The circular applies retrospectively to pending appeals and is binding on tax authorities.

The Tribunal held that the appeal was filed in contravention of the CBDT circular and therefore deemed it withdrawn. The appeal was dismissed as not pressed.

The Tribunal dismissed the appeal filed by the Revenue. The appeal was held to be not maintainable due to the low tax effect.

The Tribunal noted that the tax effect was below the monetary limit and the Departmental Representative conceded this fact. Therefore, the appeal was dismissed as not maintainable.

The Tribunal held that since the quantum assessment order was set aside due to a gross violation of natural justice by the Assessing Officer, the penalty levied would not survive. The penalty order and the CIT(A)'s confirmation were therefore set aside.

The Tribunal accepted the assessee's request to withdraw the appeal. The appeal was dismissed as withdrawn by the Tribunal.

The Tribunal held that the rectification order under Section 154 was invalid because it was passed against a cancelled reassessment order, which was deemed non-existent. Furthermore, any attempt to rectify the original 143(1) order was barred by limitation.

The Tribunal held that the AO's disallowance of depreciation was not justified as the assessee had provided bills and vouchers, and the capitalisation of fixed assets from opening work-in-progress was accepted in earlier years. Similarly, the disallowance of purchases was not upheld as the AO failed to prove the transactions were bogus, especially when similar purchases were accepted in other assessment years.

The Tribunal held that since the substantive addition had attained finality in favour of the Revenue, the appeal against the protective addition had become infructuous.

The Tribunal held that while club membership is not purely for business, a portion of the expenditure can be attributed to professional activities. It directed the AO to allow 1/3rd of the membership fee as a deduction.

The Tribunal held that the Revenue's appeal was not maintainable due to the monetary limit prescribed by the Board. The appeal was dismissed as incompetent.