ITAT Mumbai Judgments — October 2016

The Tribunal held that the penalty under Section 271(1)(c) was not imposable as the assessee had fully disclosed all particulars of the loss and the claim was made under a bonafide belief, even if it was found to be wrong due to deeming provisions.

The Tribunal held that since the quantum additions were set aside for fresh adjudication, the penalty proceedings arising from those additions cannot be sustained. Therefore, the penalty was directed to be deleted.

The Tribunal decided on various grounds related to depreciation on courseware, disallowance of expenses, and additions under Section 68. For some appeals, the Tribunal followed its earlier decisions, leading to mixed outcomes for the parties.

The Tribunal deleted the penalty under Section 271(1)(c) as the additions were made on an estimated basis and there was no evidence of concealment or furnishing inaccurate particulars. For other assessment years, the Tribunal upheld the deletion of disallowances made by the CIT(A) concerning allocation of expenses, interest, and legal/professional charges, while dismissing the assessee's claim for expenses incurred for increase in share capital.

The Tribunal held that since the assessee did not claim any expenditure while computing total income, and certain expenses like PMS charges were not claimed as deductions, no further disallowance under Section 14A was warranted.

The Tribunal deleted the penalty under Section 271(1)(c) as the additions were made on an estimated basis and there was no evidence of concealment or furnishing inaccurate particulars. For other assessment years, the Tribunal upheld the deletion of disallowances made by the CIT(A) concerning allocation of expenses, interest, and legal/professional charges, while dismissing the assessee's claim for expenses incurred for increase in share capital.

The Tribunal noted that the assessee wished to withdraw the appeal and the Departmental Representative had no objection. Consequently, the appeal was dismissed as withdrawn.

The Tribunal partly allowed the appeal. It upheld the disallowance of certain expenses but reduced the disallowance on car repair charges. The issue of income from house property was remanded back to the AO for de novo assessment.

The Tribunal held that Section 50C can only be invoked when a transfer of property has taken place. Since the deceased assessee had not transferred the flat, the addition of Short Term Capital Gains was unjustified.

The Tribunal decided on various grounds related to depreciation on courseware, disallowance of expenses, and additions under Section 68. For some appeals, the Tribunal followed its earlier decisions, leading to mixed outcomes for the parties.

The Tribunal decided on various grounds related to depreciation on courseware, disallowance of expenses, and additions under Section 68. For some appeals, the Tribunal followed its earlier decisions, leading to mixed outcomes for the parties.

The Tribunal held that the principal component of the loan written off as bad debts is allowable as a deduction since the assessee is a finance company. However, the issue of writing off the interest component was set aside to the Assessing Officer for verification of whether it was offered as income in earlier years.

The Tribunal agreed with the CIT(A) that the diary entries were merely cost estimations for sales inquiries and not actual unaccounted sales, as there was no corroborative evidence to support the AO's assumption.

The Tribunal held that the term loan was taken for the purpose of the assessee's profession, and the interest claimed was rightly debited to the income and expenditure account. The classification as 'Home Loan Product' in the sanction letter was not determinative of the loan's actual purpose.

The Tribunal deleted the penalty under Section 271(1)(c) as the additions were made on an estimated basis and there was no evidence of concealment or furnishing inaccurate particulars. For other assessment years, the Tribunal upheld the deletion of disallowances made by the CIT(A) concerning allocation of expenses, interest, and legal/professional charges, while dismissing the assessee's claim for expenses incurred for increase in share capital.

The Tribunal deleted the penalty under Section 271(1)(c) as the additions were made on an estimated basis and there was no evidence of concealment or furnishing inaccurate particulars. For other assessment years, the Tribunal upheld the deletion of disallowances made by the CIT(A) concerning allocation of expenses, interest, and legal/professional charges, while dismissing the assessee's claim for expenses incurred for increase in share capital.

The Tribunal found that the assessee could not furnish certain vital information to the AO and was now presenting additional evidence and new contentions. Therefore, the issue required a fresh examination.

The Tribunal decided on various grounds related to depreciation on courseware, disallowance of expenses, and additions under Section 68. For some appeals, the Tribunal followed its earlier decisions, leading to mixed outcomes for the parties.

The Tribunal held that the issue was debatable, as evidenced by the admission of a substantial question of law by the jurisdictional High Court in an identical case for a prior assessment year. Therefore, the penalty could not be levied.

The Tribunal deleted the penalty under Section 271(1)(c) as the additions were made on an estimated basis and there was no evidence of concealment or furnishing inaccurate particulars. For other assessment years, the Tribunal upheld the deletion of disallowances made by the CIT(A) concerning allocation of expenses, interest, and legal/professional charges, while dismissing the assessee's claim for expenses incurred for increase in share capital.

The Tribunal deleted the penalty under Section 271(1)(c) as the additions were made on an estimated basis and there was no evidence of concealment or furnishing inaccurate particulars. For other assessment years, the Tribunal upheld the deletion of disallowances made by the CIT(A) concerning allocation of expenses, interest, and legal/professional charges, while dismissing the assessee's claim for expenses incurred for increase in share capital.

The Tribunal reduced the ad-hoc disallowance of expenses to Rs. 2 lakh, considering it a reasonable amount. The Tribunal also allowed the disallowance of Provident Fund payment of Rs. 82,554 as it was paid before the due date of filing the return of income.

The Tribunal upheld the CIT(A)'s deletion of the penalty, finding that the assessee had specified and substantiated the manner of earning the undisclosed income during the search proceedings. The AO had also failed to identify specific violations of Section 271AAA.

The Tribunal held that the assessee was aware of the nature of the loss as speculative and the legal distinction between speculative and non-speculative income. The claim for set off was considered fatuous and not made under a bona fide belief, especially after filing a revised return which further compounded the erroneous claim.

The Tribunal held that the Assessing Officer did not have the power to make the addition in the absence of any incriminating material found during the search. Therefore, the addition was beyond the scope of section 153A, and the CIT(A) order was upheld.

The Tribunal held that the interest income was rightly assessed under Section 56 as it had no nexus with the business. Regarding the setting up of business, the matter was factually indeterminate.

The Tribunal held that the ratio of the Gujarat High Court judgment in the case of Simit P. Sheth is relevant, which suggests adding only the profit element embedded in such purchases. The AO was directed to consider the weighted average GP of the assessee (10.91%) on the suspicious purchases instead of the normal GP.

The Tribunal held that the donor had sufficient capital and the gift was made through cheque, reflected in bank accounts. The genuineness of the donor and the transaction were established, and no new material was found to suggest otherwise.

The Tribunal held that Explanation 5A to section 271(1)(c) was not applicable as the AO himself noted the assessee had no income in that year, and the joint ownership supported the claim of gift/inheritance. Therefore, the penalty was deleted.

The Tribunal held that Explanation 5A to section 271(1)(c) was not applicable as the AO himself noted the assessee had no income in that year, and the joint ownership supported the claim of gift/inheritance. Therefore, the penalty was deleted.

The Tribunal held that income tax paid on behalf of expatriates as per employment agreement is allowable as expenditure, and club membership fees are business expenditure. However, the Tribunal found the AO justified in excluding consistently loss-making companies from the transfer pricing comparables.

The Tribunal held that since the assessee's sales were treated as genuine, the corresponding purchases could not be entirely disallowed. However, a partial disallowance was sustained to account for potential inflation in purchases.

The Tribunal restored the issue to the file of the AO for fresh consideration. The AO was directed to determine if any expenditure was actually incurred for earning exempt income, considering the balance sheet figures and the assessee's claim of using own funds.

The Tribunal held that transaction charges paid to stock exchanges are for facilities provided and do not constitute 'technical services' requiring TDS deduction under Section 194J. Consequently, no interest under Section 201(1A) was liable.

The Tribunal held that ad-hoc disallowances without any basis are not permissible, especially when accounts are audited. It also held that employee PF and ESIC contributions deposited before the due date of filing the return of income are allowable as per the Bombay High Court judgment.

The Tribunal held that the disallowance of consultancy fees was justified as the assessee failed to provide sufficient evidence, and the claim under Section 80HHE was not allowable due to lack of cogent evidence of actual export of computer software.

The Tribunal found the assessee's plea regarding excessive assessed income to be plausible. It directed the Assessing Officer to recompute the business income by estimating the net profit at 10% of the gross receipts, without making individual additions to expenditure items.

The Tribunal held that long-term capital gains should be accepted as capital gains, following CBDT circulars. However, for short-term capital gains, it upheld the Assessing Officer's view that the assessee was a trader, based on a previous decision in the assessee's own case.

The Tribunal held that transaction charges paid to the stock exchange are for providing facilities and not fees for technical services. Therefore, no tax deduction at source was required under Section 194J.

The Tribunal held that the CIT had rightly invoked Section 263 as the Assessing Officer had not applied his mind to the issue of whether the assets were put to use before the year-end. The CIT's order was found to be judicious and correct.

The Tribunal, following a co-ordinate bench's decision for a prior assessment year, restricted the commission to 0.20% instead of the 0.50% estimated by the Assessing Officer.

The Tribunal held that the AO failed to provide conclusive evidence to prove the purchases were bogus. The assessee had submitted documentary evidence like purchase bills, bank statements, and stock registers, and the AO had not doubted the assessee's sales.

The Tribunal dismissed the Revenue's appeal as not maintainable due to low tax effect. For the assessee's appeal, the Tribunal found that the CIT(A) had not properly appreciated the evidence regarding the cash deposits, particularly those originating from the deceased husband's assets.

The Tribunal held that the purchases could not be treated as non-genuine solely because the suppliers could not be produced, especially when payments were made by cheque and the assessee's GP ratio was consistent. The CIT(A)'s estimation of 25% disallowance was also found unsustainable.

The Tribunal held that payments made to banks for credit card facilities are in the nature of bank charges, not commission, and therefore, TDS under Section 194H is not attracted. The assessee-bank relationship in this context does not constitute an agency relationship.

The Tribunal held that since the assessee's sales were treated as genuine, the corresponding purchases could not be entirely disallowed. However, a partial disallowance was sustained to account for potential inflation in purchases.

The Tribunal upheld the CIT(A)'s decision to dismiss the appeal. The assessee failed to provide evidence of paying the tax due on the returned income, which is a prerequisite for admitting the appeal.

The Tribunal held that the appeal was not pressed in terms of the CBDT circular as the tax effect was below the prescribed monetary limit and no exceptions applied. The appeal was dismissed without going into the merits of the case.

The ITAT restored the issue of disallowance under Section 14A to the AO for re-verification, following a previous year's order. The ITAT allowed the appeal regarding disallowance under Section 40(a)(ia), relying on the Supreme Court's decision in Kotak Securities Ltd.

The Tribunal found that the tax authorities relied solely on the statement of a third party without proper verification of the assessee's documents or confronting the assessee with the statement. The Tribunal held that the AO failed to establish that the assessee's specific transactions were bogus.