ITAT Mumbai Judgments — March 2017

The Tribunal held that while the provisions of sections 234A, 234B, and 234C are applicable to notified entities, the calculation of interest should consider the TDS amount. Therefore, the issue of recomputing the interest was restored to the Assessing Officer.

The Tribunal held that the Assessing Officer erred in invoking Section 40A(2) without establishing that the payments were excessive or unreasonable compared to market rates. The Tribunal also held that the assessee was eligible for deduction under Section 80IA as it was engaged in developing an approved infrastructure facility.

The Tribunal held that the pending liability of Rs. 5,00,000/- shown in the books of account is allowable as an expense. It also held that the interest paid on loans is not required to be disallowed merely because interest-free loans were given to a sister concern.

The Tribunal held that the addition of entire purchases is not sustainable and directed the AO to restrict the disallowance to the Gross Profit (GP) rates of the assessee, not the entire purchase amount. The disallowance was calculated to be Rs. 1,37,921/-.

The Tribunal held that the assessee had satisfied the conditions for claiming deduction under Section 35(2AB) by providing necessary documentation. Regarding the ALP adjustment for trademarks, the Tribunal agreed with the CIT(A) that the purchase price was at arm's length.

The Tribunal held that the Assessing Officer erred in invoking Section 40A(2) without establishing that the payments were excessive or unreasonable compared to market rates. The Tribunal also held that the assessee was eligible for deduction under Section 80IA as it was engaged in developing an approved infrastructure facility.

The Tribunal held that the disallowance under Section 14A cannot exceed the amount of exempt income. Therefore, the disallowance was restricted to the exempt dividend income.

The Tribunal held that club expenses were not allowable as they were hit by the explanation to Section 37(1) and could be considered prohibited by law. However, regarding the penalty, the Tribunal found that the issue of portfolio management fees was debatable and that the penalty was not sustainable when the quantum addition was deleted.

The Tribunal found that the assessee's objections to the reopening of assessment were not disposed of. Grounds related to this violation of natural justice were allowed.

The Tribunal found that the CIT(A) had deleted a significant portion of the addition on grounds not challenged by the Revenue. Therefore, the tax effect of the remaining disputed amount was indeed below the prescribed limit.

The Tribunal held that the disallowance of interest expenditure was untenable as the AO did not record satisfaction and the assessee had sufficient own funds for investments. However, the disallowance of overhead expenses was upheld.

The Tribunal held that bad debts were allowable as they were covered by High Court decisions. Depreciation on VSAT was allowed at 60% based on previous orders. Mark-to-market losses were treated as business losses, and depreciation on customer rights was allowed. The disallowance under Section 14A was deleted in excess of Rs. 11.84 lakhs, and the indexed cost of acquisition on BSE shares was allowed.

The Tribunal held that the Assessing Officer erred in invoking Section 40A(2) without establishing that the payments were excessive or unreasonable compared to market rates. The Tribunal also held that the assessee was eligible for deduction under Section 80IA as it was engaged in developing an approved infrastructure facility.

The Tribunal upheld the CIT(A)'s deletion of disallowance for late PF/ESIC contributions, finding it was deposited before the return filing due date. It also upheld the deletion of interest disallowance on advances to subsidiary companies, as it was covered by earlier favorable orders.

The Tribunal held that the AO's action of allowing interest on the loans while disallowing the principal amount as non-genuine was contradictory. It also noted violations of natural justice as the assessee was not confronted with the investigation reports.

The Tribunal held that the AO had no jurisdiction to levy the late filing fee under Section 234E for the period prior to June 1, 2015, following the Karnataka High Court's decision. Therefore, the fee was directed to be deleted.

The Tribunal held that the reassessment proceedings were bad in law due to violations of Section 151 (approval for reopening after 4 years) and the principles of natural justice regarding the time given to the assessee after objection rejection. Consequently, the reassessment order was quashed.

The Tribunal held that the second proviso to Section 40(a)(ia) is applicable even for the assessment year in question, following the Delhi High Court's decision in CIT vs. Ansal Landmark Township(P) Ltd. The matter was remanded to the Assessing Officer for fresh adjudication after admitting additional evidence.

The Tribunal held that the assessee's bonafide belief that only the net of sales and purchases should be considered for Section 44AB limit could be a ground to mitigate the penalty. The lower authorities had not doubted the bonafides of the assessee's claim.

The Tribunal held that the assessee, being a cooperative credit society and not a 'cooperative bank' as defined for the purposes of Section 80P(4), was eligible for the deduction. The order of the CIT(A) allowing the deduction was upheld.

The Tribunal held that the land in question was agricultural land, not a capital asset as defined under Section 2(14) of the Income Tax Act. This decision was based on previous ITAT rulings concerning co-owners of the same land.

The Tribunal held that the exemption under Section 54 is based on the investment of capital gains and not on the completion of construction or possession. The assessee had made substantial payments towards the new property within the prescribed time.

The Tribunal, following a previous decision of a co-ordinate bench, held that the assessee is entitled to a part of the interest expense deduction. Legitimate expenditure incurred for earning income is allowable under Section 57(iii) of the Income Tax Act.

The Tribunal upheld the deletion of interest expenditure disallowance, agreeing that the assessee had sufficient interest-free funds. The appeal was dismissed.

The Tribunal held that the disallowance of 25% of labor, workers, and salary expenses was ad-hoc and deleted it. However, it sustained the disallowance of cash payments to the director and sales promotion expenses due to non-substantiation. The issue of work-in-progress difference was remanded to the AO.

The Tribunal held that the sale proceeds from scrap were directly related to the assessee's business and could not be taxed as income from other sources. The Tribunal also reversed the FAA's direction to consider the sale of scrap separately in the profit and loss account.

The Tribunal noted that a similar dispute for prior assessment years was restored to the Assessing Officer (AO). In one such case (AY 2007-08), the AO allowed the deduction after remand proceedings. Therefore, the Tribunal restored the matter to the AO to apply the same precedent.

The Tribunal held that the failure to add back disallowed expenses was a bona fide and inadvertent error, not a deliberate concealment or furnishing of inaccurate particulars. The penalty was not justified in these circumstances.

The Tribunal upheld the CIT(A)'s decision, stating that no disallowance under Section 14A is warranted if no exempt income is received. Regarding Section 36(1)(iii), it was held that interest expenditure on funds borrowed for business purposes is allowable even if the business transaction did not materialize and resulted in compensation.

The Tribunal held that penalty is not sustainable if the addition is based on estimations, as there was no clear basis for the 30% estimation by the CIT(A). Therefore, the penalty was not legally valid.

The Tribunal upheld the penalty levied by the Assessing Officer, agreeing that filing returns after a search and seizure operation, without challenging the quantum of additions, indicated concealment of income.

The Tribunal held that the AO had no authority to compute or determine the fee under Section 234E for assessment periods prior to June 1, 2015. Therefore, the late filing fee was wrongly levied.

The Tribunal held that Section 40(a)(ia) is applicable only for non-deduction of tax at source, not for short-deduction. Therefore, the disallowance made by the lower authorities was unsustainable.

The Tribunal held that interest earned from deposits with a Co-operative bank is eligible for deduction under Section 80P(2)(d) of the Act. It distinguished this from interest earned from a commercial bank and found the assessee's claim to be valid based on precedent.

The Tribunal held that the disallowance of interest was not justified as the assessee had sufficient own funds and interest-free advances to cover the advances made to associate concerns. However, the direction by the CIT(A) to examine the deemed dividend issue was considered premature and dismissed.

The Tribunal directed the Assessing Officer to allow depreciation on computer software at 60% based on a previous precedent. The disallowance under Section 14A at 2% of exempt income was upheld as reasonable. The unadjudicated grounds were restored to the CIT(A) for fresh adjudication.

The Tribunal upheld the penalty levied by the Assessing Officer, agreeing that filing returns after a search and seizure operation, without challenging the quantum of additions, indicated concealment of income.

The Tribunal held that club expenses were not allowable as they were hit by the explanation to Section 37(1) and could be considered prohibited by law. However, regarding the penalty, the Tribunal found that the issue of portfolio management fees was debatable and that the penalty was not sustainable when the quantum addition was deleted.

The Tribunal held that an order passed by the CIT under section 264 of the Income Tax Act is not appealable before the Tribunal. Therefore, the appeal filed by the assessee is not maintainable.

The Tribunal held that the penalty proceedings were unsustainable due to the AO's ambiguity in specifying whether the penalty was for concealment of income or furnishing inaccurate particulars. The notice issued did not clearly indicate the specific limb of Section 271(1)(c) invoked.

The Tribunal held that merely being listed on the Sales Tax Department's website as issuing bills without delivery is not sufficient proof of bogus purchases. The AO failed to discredit the evidence provided by the assessee, such as bank payments and accepted GP/NP, making the addition untenable.

The Tribunal held that the assessee is eligible for deduction under Section 80-IA as a developer of infrastructure facilities. The fact that tax was deducted at source under Section 194-C does not disqualify the assessee from claiming the deduction.

The Tribunal, considering the concession of the assessee's counsel, directed the AO to apply a flat rate of 12.50% on the bogus purchases. This decision modified the relief granted by the CIT(A).

The Tribunal held that the investment was made by the company in the assessee's name under compulsion from the bank and the assessee did not derive any benefit. Therefore, it was a case of difference of opinion and not suitable for penalty imposition.

The Tribunal held that the consideration received for software licenses/sub-licenses was for the transfer of copyrighted articles and not royalty. Consequently, the penalty levied under Section 271(1)(c) was also deleted as the assessee acted on a bonafide belief.

The Tribunal upheld the disallowance of transportation and professional charges, finding that they were not reimbursement expenses and that tax deduction was required under Section 194C. The assessee failed to provide sufficient details for hamali charges.

The Tribunal restored the matter to the Assessing Officer (AO) for fresh adjudication. This was because the AO and First Appellate Authority (FAA) did not have access to all the material and case laws that were presented before the Tribunal.

The Tribunal held that the Assessing Officer erred in invoking Section 40A(2) without establishing that the payments were excessive or unreasonable compared to market rates. The Tribunal also held that the assessee was eligible for deduction under Section 80IA as it was engaged in developing an approved infrastructure facility.