ITAT Mumbai Judgments — November 2016

The Tribunal held that the assessee's explanation regarding job work charges paid to weavers, with Kewal Textiles being the loom owner, was not found to be false. The payments to the seven creditors were substantiated by bank statements in subsequent years. Therefore, there was no conscious concealment of income.

The Tribunal held that income earned from bank deposits and other sources like restaurant compensation and gymkhana function income, when applied for charitable purposes, is exempt. It ruled that these activities do not constitute trade, commerce, or business under the proviso to Section 2(15).

The Tribunal held that the payment for diamond grading and certification services rendered outside India was not subject to TDS as it did not constitute 'fees for technical services' taxable in India. It further held that diamond cutting and polishing amounts to manufacture, allowing the claim for additional depreciation.

The Tribunal held that the CIT's order under Section 263 was erroneous as the AO had made necessary inquiries and the land qualified as rural. For the other assessment year, the disallowance under Section 14A was upheld, but the interest expense disallowance was deleted based on consistency with the prior year's order.

The Tribunal restored both the issue of disallowance of deduction under Section 80IA on interest income and the disallowance under Section 14A back to the Assessing Officer for fresh adjudication. This was based on previous decisions of the Tribunal on identical issues.

The Tribunal held that the turnover filter was not consistently applied by the Revenue and, following the Delhi High Court's precedent, rejected the Revenue's appeal. The Tribunal also directed the AO to give effect to the DRP's direction regarding exchange differences.

The Tribunal followed its earlier decision for AY 2007-08, holding that expenses on perimeter road strengthening were revenue in nature. It also allowed depreciation at the rate applicable to plant and machinery for taxiways, aprons, and runways.

The Tribunal restored the appeal to the file of the CIT(A) in the interest of justice. The assessee was permitted to file a condonation petition for the delay, and the CIT(A) was directed to decide the appeal after considering it.

The Tribunal held that the delay in filing TDS returns due to non-receipt of PAN details from deductees constitutes a reasonable cause. Therefore, the penalty levied for this delay was considered unjustified.

The Tribunal held that the CIT(A) erred in admitting additional evidence without confronting the AO, violating natural justice, and remanded the issue. For the assessee's appeal, the Tribunal held that filing the return within the time prescribed by Section 139(1) is mandatory for claiming deduction under Section 80IB(10), as per High Court judgments.

The Tribunal dismissed the grounds related to the disallowance of Section 10B deduction for AY 2007-08 and 2011-12. However, it partly allowed the claim for Section 10A for statistical purposes for AY 2010-11 and 2011-12.

The Tribunal upheld the CIT(A)'s decision regarding interest on bank deposits, following its own prior ruling. For the issue of interest on investment in Srinagar Cinemas Pvt. Ltd., the Tribunal remanded the matter to the Assessing Officer for fresh adjudication based on specific guidelines.

The Tribunal dismissed the grounds related to the disallowance of Section 10B deduction for AY 2007-08 and 2011-12. However, it partly allowed the claim for Section 10A for statistical purposes for AY 2010-11 and 2011-12.

The Tribunal upheld the order of the CIT(A) and dismissed the assessee's appeal. The assessee's explanation for the cash deposits was not controverted, and no evidence was furnished.

The Tribunal found that the Assessing Officer erred in applying the 8% GP rate meant for manufacturing to a scrap trading business. However, the assessee's declared GP rate was also unreliable.

The Tribunal found that the Assessing Officer erred in applying the 8% GP rate meant for manufacturing to a scrap trading business. However, the assessee's declared GP rate was also unreliable.

The Tribunal restored the appeal to the file of the CIT(A) in the interest of justice. The assessee was permitted to file a condonation petition for the delay, and the CIT(A) was directed to decide the appeal after considering it.

The Tribunal admitted the assessee's alternative argument that grants received with specific directions do not form voluntary contributions and are thus exempt. The Tribunal set aside the CIT(A)'s order and remitted the case to the AO for fresh assessment.

The Tribunal upheld the CIT(A)'s decision to tax only the profit element of the alleged bogus purchases, finding it justifiable and in accordance with established legal precedents.

The Tribunal held that the services rendered by the assessee did not fall within the ambit of fees for technical services as defined in the India-Israel DTAA, as no technical knowledge or skills were made available to the Indian subsidiary. Reimbursement of expenses was also not considered taxable revenue. Interest under Section 234B was not leviable on a non-resident.

The Tribunal held that the CIT(E) erred in rejecting the application solely based on the nationality of the directors. The focus should be on the charitable activities conducted in India.

The Tribunal held that income earned from bank deposits and other sources like restaurant compensation and gymkhana function income, when applied for charitable purposes, is exempt. It ruled that these activities do not constitute trade, commerce, or business under the proviso to Section 2(15).

The Tribunal held that advancing the ICD was part of the assessee's business, linked to a consultancy agreement for the revival of the other company. It also found that the debt satisfied the conditions of Section 36(2)(i) as interest and consultancy fees related to the ICD had been offered to tax.

The Tribunal held that since the Commissioner did not respond to the application within the stipulated six months, the registration is deemed to have been granted. The subsequent rejection order by the Commissioner is irrelevant.

The Tribunal found merit in the assessee's submissions regarding the exclusion of certain investments from Section 14A disallowance and restored the issue to the AO for fresh examination. The Tribunal also upheld the CIT(A)'s principle of excluding long-term capital gains from book profit computation but restored the quantum to the AO.

The Tribunal held that the commission payments were for services rendered by the agent and not proven to be illicit payments to the Iraqi government. Relying on High Court and coordinate bench decisions, the Tribunal found no illegality in the commission payments.

The Tribunal found no infirmity in the CIT(A)'s order due to the assessee's consistent non-appearance and failure to provide documentary evidence to substantiate their grounds of appeal.

The Tribunal found that the disallowance made by the Assessing Officer and CIT(A) was without reasonable basis and without discrediting the assessee's account books. The expenses assessed could not exceed the exempt income.

The Tribunal upheld the CIT's order under section 263, finding that the Assessing Officer had not conducted adequate inquiries. The assessment order was set aside for a fresh adjudication.

The Tribunal condoned the delay in filing the appeal upon payment of costs. Regarding expenses, the addition was restricted to Rs. 1 lakh. The addition of Rs. 3 lakhs as advance income was deleted as the advance was returned.

The Tribunal held that the lower authorities misappreciated the facts and failed to provide evidence to deny the Section 10B exemption. The transfer of employees was found to be within the permissible limits as per CBDT circulars, and the purchase of computers was substantiated.

The Tribunal, noting that the assessee's appeal before the Commissioner (Appeals) was decided ex-parte, decided to grant the assessee one more opportunity to prove the claimed expenditures by producing corroborating evidence.

The Tribunal held that the reassessment order was legally unsustainable due to the non-issuance of the mandatory notice under Section 143(2). This failure is not curable under Section 292BB of the Act.

The Tribunal partly allowed the assessee's appeal for AY 2009-10, allowing appeals for AY 2010-11 and 2011-12 on transfer pricing issues. The revenue's appeal was dismissed.

The Tribunal held that the reassessment order was legally unsustainable due to the non-issuance of the mandatory notice under Section 143(2). This failure is not curable under Section 292BB of the Act.

The Tribunal held that the CIT(A) had judiciously and correctly allowed the claim of the assessee. The Assessing Officer failed to discredit the assessee's explanation regarding scrap generation as a by-product of industrial operations, despite directions from the ITAT.

The Tribunal held that losses from prior years should not be reduced before allowing the claim under Section 80IA, as this would defeat the purpose of the provision. The deduction should be allowed on a stand-alone basis for the eligible business.

The Tribunal followed its earlier decision for AY 2007-08, holding that expenses on perimeter road strengthening were revenue in nature. It also allowed depreciation at the rate applicable to plant and machinery for taxiways, aprons, and runways.

The Tribunal dismissed the grounds related to the disallowance of Section 10B deduction for AY 2007-08 and 2011-12. However, it partly allowed the claim for Section 10A for statistical purposes for AY 2010-11 and 2011-12.

The Tribunal held that the lower authorities misappreciated the facts and failed to provide evidence to deny the Section 10B exemption. The transfer of employees was found to be within the permissible limits as per CBDT circulars, and the purchase of computers was substantiated.

The Tribunal held that income earned from bank deposits and other sources like restaurant compensation and gymkhana function income, when applied for charitable purposes, is exempt. It ruled that these activities do not constitute trade, commerce, or business under the proviso to Section 2(15).

The Tribunal held that the rental income from the immoveable property should be treated as 'income from house property' and not 'business income'. Consequently, the capital gain on the sale of the property should not be recomputed as short-term capital gain under Section 50.

The Tribunal partly allowed the assessee's appeal for AY 2009-10, allowing appeals for AY 2010-11 and 2011-12 on transfer pricing issues. The revenue's appeal was dismissed.

The Tribunal held that the AO's addition was not sustainable as the assessee had provided sufficient evidence of payments through banking channels. Invoking Section 69C was also found to be on a wrong footing as the source of expenditure was explained.

The Tribunal admitted documentary evidence filed by the assessee before it, which was not considered by the CIT(A). The case was restored to the CIT(A) for re-consideration of this evidence, with a direction to provide a proper opportunity of being heard.

The Tribunal held that the CIT(A)'s approach in doubting the genuineness of the transaction based solely on the use of funds and lack of profit sharing was myopic. The genuineness of a transaction should be evaluated at the time it was carried out, and business imponderables should not be the sole basis to defeat it.

The Tribunal held that as per CBDT Circular No. 21/2015, appeals with a tax effect of Rs. 10 lacs or less should not be filed or pressed. This circular is applicable retrospectively to pending appeals.

The Tribunal condoned the delay in filing the appeal, finding the reasons to be bonafide. Regarding the addition, the Tribunal held that the assessee needs to provide clinching evidence to prove the joint nature of the bank account and that the co-account holder had owned up the deposits.

The Tribunal held that the CIT(A)'s approach in doubting the genuineness of the transaction based solely on the use of funds and lack of profit sharing was myopic. The genuineness of a transaction should be evaluated at the time it was carried out, and business imponderables should not be the sole basis to defeat it.

The Tribunal held that the CIT's directions were clear and unambiguous, leaving no discretion to the AO. The CIT(A)'s decision to dismiss the appeal as not maintainable was upheld, as the issue of taxing the interest income had already been decided by the CIT.