ITAT Mumbai Judgments — April 2017

The Tribunal held that while Explanation 5A to Section 271(1)(c) applies to revised returns filed post-search, the penalty proceedings were vitiated. This was due to the penalty being initiated for one limb (concealment) but levied for another (inaccurate particulars) without proper specification in the show-cause notice.

The Tribunal held that no disallowance of interest expenditure under rule 8D(2)(ii) could be made as the assessee had sufficient interest-free funds. For administrative expenditure under rule 8D(2)(iii), the disallowance was restricted to 2% of the exempt income, following its own prior decisions.

The Tribunal held that disallowance under Section 14A is only warranted if expenses are claimed against taxable income. The matter was restored to the AO to verify if the disallowed expenses were debited to the assessee's personal account and not claimed against taxable income.

The Tribunal held that the AO's estimation of commission income on a best judgment basis was reasonable given the assessee's non-cooperation. The reduction by the CIT(A) lacked justification, and thus the AO's estimation was restored.

The Tribunal held that the AO's estimation of commission income on a best judgment basis was reasonable given the assessee's non-cooperation. The reduction by the CIT(A) lacked justification, and thus the AO's estimation was restored.

The Tribunal held that the assessee's actions constituted legitimate tax planning within the four corners of the law and not a colourable device to evade tax. Relying on a coordinate bench's decision and Supreme Court judgments, it was established that using provisions of the Act for tax planning is permissible.

The Tribunal held that since the sale proceeds were ultimately transferred to the estate of Late Smt. Bhagwatidevi Jhingan and the share certificate was transferred to Shri Ashok Jhingan as a nominee for all legal heirs, the capital gain should be assessed in the hands of Smt. Jhingan's estate. The addition in the hands of Shri Ashok Jhingan was directed to be deleted.

The Tribunal held that the Rs. 2,50,000/- was received on behalf of another party and was duly accounted for, thus deleting the addition. For the Rs. 20 lacs, the Tribunal found it was recorded as an unsecured loan in the balance sheet and the source was explained, therefore Section 69A was not attracted.

The Tribunal found that while there were variations in sale rates, the Assessing Officer had not examined the issue in the correct perspective and had made additions without sufficient evidence. The First Appellate Authority also failed to properly consider the factual matrix.

The tribunal upheld the CIT(A)'s direction to verify PF contributions within the grace period. For director's remuneration, it restored the issue to the CIT(A) for a reasoned order. The tribunal allowed the carryforward of unabsorbed depreciation based on Supreme Court and Gujarat High Court judgments.

The Tribunal held that Rule 8D is applicable prospectively from AY 2008-09. For the assessment year in question (2006-07), disallowances under Section 14A should be worked out on a reasonable basis after providing the assessee with an opportunity to be heard. The issue of interest on loans to subsidiaries was decided in favour of the assessee, following earlier Tribunal decisions.

The Tribunal held that Rule 8D is applicable prospectively from AY 2008-09. For the assessment year in question (2006-07), disallowances under Section 14A should be worked out on a reasonable basis after providing the assessee with an opportunity to be heard. The issue of interest on loans to subsidiaries was decided in favour of the assessee, following earlier Tribunal decisions.

The Tribunal held that the penalty notice issued under section 274 r.w.s. 271 was defective and issued without application of mind, making it invalid. Consequently, the penalty order was also deemed invalid.

The Tribunal restored the matter to the CIT(A) for a fresh hearing. The assessee was directed to appear and represent his case properly with supporting evidence.

The Tribunal held that the income from share transactions should be treated as capital gains, following its previous decisions. Regarding Section 14A, it was held that no disallowance should be made for interest expenditure, but other expenses were to be restricted as disallowed in the earlier year.

The Tribunal partly allowed the assessee's appeals and dismissed the revenue's appeals. It directed the AO to verify cash surplus for Section 14A disallowance on interest and restricted disallowance on other expenses based on amounts offered by the assessee, following previous tribunal orders.

The Tribunal held that while the purchases might be from the grey market, a reasonable profit rate should be applied instead of disallowing the entire amount. For the 80G deduction, the Tribunal confirmed the disallowance as the donation receipt was in another person's name. For other expenses, a 5% disallowance was deemed reasonable.

The Tribunal held that the reference to the DVO under Section 55A was not justified as the assessee's declared value was not less than the fair market value. The AO was directed to adopt the fair market value as per the registered valuer's report.

The Tribunal directed the Assessing Officer to reduce the capital cost of assets by the amount of bogus purchases and disallow depreciation, thereby partly allowing the Revenue's appeal on this issue. For the issue of loss carry forward, the Tribunal followed the Supreme Court's decision in CIT vs. Yokogawa India Ltd. and allowed the assessee's claim, dismissing the Revenue's appeal on this point.

The Tribunal held that the CIT was not justified in revising the order as the issues were decided in favor of the assessee by various judicial pronouncements at the time of issuing the notice. The AO's order could not be treated as erroneous or prejudicial.

The Tribunal held that the difference in rental income was due to TDS on service tax and amenities paid in earlier years, and since the income was already offered in prior years, no addition was warranted. The Tribunal also upheld the CIT(A)'s decision allowing the assessee's expenses, finding that the assessee was still carrying on trading activities and incurred necessary expenditures.

The Tribunal held that the entire purchases could not be disallowed as bogus, agreeing with the CIT(A) that only the profit element embedded in such purchases could be added. However, it reduced the profit addition rate from 10% to 7% based on the assessee's past GP rates.

The Tribunal held that the CIT(A) was not justified in rejecting the assessee's claim, as the assessee had inadvertently disclosed income that had not accrued. The Tribunal restored the issue to the CIT(A) for verification of the claim regarding brought forward losses and depreciation.

The tribunal held that the construction was legal and covered by the agreement, and the assessee's claim was a rejection of a claim, not concealment of income. Therefore, the penalty was not leviable.

The Tribunal held that Rule 8D is applicable prospectively from AY 2008-09. For the assessment year in question (2006-07), disallowances under Section 14A should be worked out on a reasonable basis after providing the assessee with an opportunity to be heard. The issue of interest on loans to subsidiaries was decided in favour of the assessee, following earlier Tribunal decisions.

The Tribunal held that Rule 8D is applicable prospectively from AY 2008-09. For the assessment year in question (2006-07), disallowances under Section 14A should be worked out on a reasonable basis after providing the assessee with an opportunity to be heard. The issue of interest on loans to subsidiaries was decided in favour of the assessee, following earlier Tribunal decisions.

The Tribunal held that the assessee's consistent declaration of the property as stock-in-trade since AY 2005-06, supported by surrounding circumstances and conduct, indicated an intention to hold it as business asset. Therefore, the profit should be assessed as business income.

The Tribunal upheld the disallowance of depreciation on assets acquired on demerger, following previous rulings. However, it allowed the expenditure on brand improvement as revenue expenditure, again following prior ITAT decisions. The disallowance under Section 14A was deleted as the AO failed to record proper satisfaction before applying Rule 8D.

The Tribunal upheld the disallowance of depreciation on assets acquired on demerger, following previous rulings. However, it allowed the expenditure on brand improvement as revenue expenditure, again following prior ITAT decisions. The disallowance under Section 14A was deleted as the AO failed to record proper satisfaction before applying Rule 8D.

The Tribunal held that the penalty notice issued by the AO was defective as it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars, and showed non-application of mind. Consequently, the penalty order was quashed.

The Tribunal held that the assessee, an elderly lady, relied on her employee for business management. Given the circumstances and lack of conclusive evidence of deliberate concealment, the penalty imposed under Section 271(1)(c) was deleted.

The Tribunal held that the entire purchases could not be disallowed as bogus, agreeing with the CIT(A) that only the profit element embedded in such purchases could be added. However, it reduced the profit addition rate from 10% to 7% based on the assessee's past GP rates.

The Tribunal held that the addition of the survey disclosure to book profit under Section 115JB through a rectification order under Section 154 was not permissible. It was considered a debatable issue beyond the scope of Section 154.

The Tribunal condoned the delay in filing the appeal in the interest of equity and justice. It held that disallowance under Section 40(a)(ia) is not attracted if the payee has offered the income for taxation, and restored the issue of interest disallowance to the AO for verification.

The Tribunal held that since the sale proceeds were ultimately transferred to the estate of Late Smt. Bhagwatidevi Jhingan and the share certificate was transferred to Shri Ashok Jhingan as a nominee for all legal heirs, the capital gain should be assessed in the hands of Smt. Jhingan's estate. The addition in the hands of Shri Ashok Jhingan was directed to be deleted.

The Tribunal held that the difference in rental income was due to TDS on service tax and amenities paid in earlier years, and since the income was already offered in prior years, no addition was warranted. The Tribunal also upheld the CIT(A)'s decision allowing the assessee's expenses, finding that the assessee was still carrying on trading activities and incurred necessary expenditures.

The Tribunal held that once the CIT(A) agreed with the assessee's claim regarding the nature of deposits being related to car broking business, the remaining balance in the bank account at year-end was not sufficient to be treated as undisclosed income.

The Tribunal upheld the penalty levied under Section 271(1)(c) as the assessee failed to provide valid explanations for the additions sustained/enhanced by the lower authorities. The assessee's appeal was dismissed for lack of merit.

The Tribunal held that the addition made by the AO was based solely on estimation and comparison of GP ratios of two uneven years, especially given the significant drop in turnover. Therefore, the penalty under Section 271(1)(c) could not be levied.

The Tribunal upheld the order of the CIT(A) as the assessee failed to provide any new material or evidence to counter the findings. The appeal was dismissed ex-parte.

The Tribunal followed its co-ordinate bench's decision in the assessee's own case for prior assessment years, which allowed the claim for commission expenses. The revenue did not present any distinguishing facts.

The Tribunal held that the ends of justice would be met by giving the assessee one more opportunity to submit additional evidence before the CIT(A). The CIT(A)'s order was set aside, and the appeals were restored to the CIT(A)'s file for a decision on merits after considering the additional evidence.

The tribunal held that penalty under Section 271(1)(c) is not attracted when the tax payable under normal provisions is less than the tax payable under Section 115JB, following a CBDT circular and a Delhi High Court judgment.

The Tribunal held that while the existence of bogus purchases is a finding of fact, the estimation of Gross Profit (GP) on these purchases should be fair and rational. The Tribunal adopted a GP ratio of 12.5% on the alleged bogus purchases, granting credit for the GP declared by the assessee on these purchases.

The Tribunal upheld the denial of exemption under Section 10B due to lack of approval. However, it directed the Assessing Officer to examine the alternative claim for exemption under Section 10A.

The Tribunal restored the issue of unexplained expenditure (Rs. 23,00,000) to the Assessing Officer (AO) for fresh adjudication, allowing the assessee an opportunity to explain the loose papers. Similarly, the issue of cash deposit (Rs. 5.93 lakhs) was remanded back to the AO for verification of the cash book and earlier year's ledger accounts.

The Tribunal held that the disallowance under Section 14A should be restricted to a proportionate amount of the actual expenditure claimed by the assessee, considering the ratio of exempt income to total income. The Tribunal also directed the Assessing Officer to dispose of the assessee's rectification petition for TDS credit.

The Tribunal held that the ends of justice would be met by giving the assessee one more opportunity to submit additional evidence before the CIT(A). The CIT(A)'s order was set aside, and the appeals were restored to the CIT(A)'s file for a decision on merits after considering the additional evidence.

The Tribunal upheld the denial of exemption under Section 10B due to lack of approval. However, it directed the Assessing Officer to examine the alternative claim for exemption under Section 10A.

The Tribunal held that the appeals were not maintainable as per CBDT Circular No. 21/2015, which sets a monetary limit of Rs. 10 lakhs for revenue appeals to the ITAT. This circular is retrospective and applies to pending appeals.