ITAT Mumbai Judgments — May 2017

The Tribunal held that since the corresponding sales were not denied by the AO and the assessee had offered a Gross Profit (GP) of 26.24% on total sales, adding the entire purchase amount was incorrect. The addition was restricted to 5% of the alleged bogus purchases.

The Tribunal held that the loan of Rs. 9,00,000/- from K.J. Somaiya & Sons Pvt. Ltd. could be deemed dividend if the assessee held 10% or more shares. The loan of Rs. 2,50,000/- from Film Media Communication Systems Pvt. Ltd. could also be deemed dividend if the assessee held 10% or more shares in that company.

The Tribunal held that the assessee's consistent use of the project completion method, accepted in prior years, should be respected. The AO's invocation of AS-7 was incorrect as the contract predated its applicability. Therefore, the income should be computed based on the completed project method.

The Tribunal held that since the additions on account of disallowances under sections 145A and 80IB were deleted in the quantum appeal, the penalty on these additions did not survive. Regarding the disallowance under section 14A, the Tribunal noted that a part of it was based on estimation, and penalty cannot be levied on estimated additions.

The Tribunal held that the reopening of assessment under Section 147 was not validly done as the AO failed to provide the requested documents, which were crucial for the assessee to establish its case. Consequently, the additions made in the reassessment order were not sustained. Regarding the FCCB proceeds, issue expenses, and interest, the Tribunal found that the CIT(A) had treated the FCCB funds as properly explained and deleted the disallowance of FCCB expenses except for a part used for non-business purposes. However, based on the finding that the reopening was invalid, the Tribunal reversed the CIT(A)'s order on the disallowance of FCCB interest and expenses, holding them not disallowable. The Tribunal also held that since the additions in the reassessment order were not sustained, the income computation reverts to the original assessment where interest under Section 234B was not levied. Therefore, the issue of Section 234B interest became academic, and the CIT(A)'s order was set aside. For Section 234D interest, the Tribunal directed the AO to verify the facts regarding refunds granted under Section 143(1) that were subsequently recovered in regular assessment and restrict the charge of interest accordingly. The Tribunal did not expressly leave any issue undecided.

The Tribunal condoned the delay in filing the appeal. While acknowledging a similar issue decided in favour of the assessee, the Tribunal restricted the addition to 10% of the bogus purchases due to cash transactions and discrepancies.

The Tribunal restored the matter back to the Assessing Officer for fresh verification. This was based on the assessee producing the bank statement for the first time during the appeal proceedings.

The Tribunal found that the purchases were indeed bogus. However, instead of disallowing the entire amount, it directed the AO to disallow a reasonable profit rate of 12.5% on these bogus purchases.

The Tribunal upheld the CIT(A)'s decision that payments for advertisement on hoardings fall under Section 194C, not Section 194I, following CBDT circulars and previous tribunal rulings.

The Tribunal, following its own prior ruling in similar cases for the assessee, held that the acquired commercial rights were intangible assets eligible for depreciation. Therefore, the disallowance was set aside.

The Tribunal noted that identical issues for prior assessment years were decided in favor of the assessee by the Tribunal itself. Therefore, following the precedent, the matter was remanded back to the AO for a fresh decision.

The Tribunal held that the DIT was not justified in rejecting the application solely on the grounds of delay and violation of a State Act. The DIT should have examined the conditions prescribed under Section 80G(5) of the Income Tax Act.

The Tribunal upheld the CIT(A)'s decision to delete the addition. It held that the cessation of a capital liability, where no deduction was claimed and it was not a trading liability, is not taxable under Section 41(1) or Section 28(iv).

The Tribunal noted that CBDT Circular No. 21/2015 directs that no appeal should be filed if the tax effect does not exceed Rs. 10 lac. This instruction applies to pending appeals as well.

The Tribunal held that the issues raised in the appeal were covered by its own previous orders in the assessee's own case for various assessment years. These prior decisions were in favor of the assessee.

The Tribunal held that the payment in question was not for a work contract but for clearing property title, thus Section 40(a)(ia) was not attracted. Following the principle that penalty cannot survive if the additions on which it was based are deleted, the CIT(A)'s order was upheld.

The Tribunal held that mere receipt of advance against which TDS was deducted does not automatically make it taxable income, especially when the assessee follows the mercantile system of accounting and offers income upon raising invoices. The matter was restored to the AO for verification of expenses.

The Tribunal held that since the addition was debatable, as evidenced by the High Court admitting a substantial question of law, penalty could not be levied. Consequently, the penalty was deleted.

The Tribunal upheld the CIT(A)'s decision, agreeing that the deficit could be carried forward and set off against subsequent income, following the precedent set by the Bombay High Court.

The Tribunal found no infirmity in disallowing the commission as the TDS was remitted belatedly. The disallowance under Section 14A was also sustained as the assessee did not controvert the findings of the lower authorities.

The Tribunal restored the matter to the AO to re-examine the disallowance under Section 14A, considering the total expenses debited in the Profit & Loss Account and ensuring the disallowance does not exceed these expenses. The CIT(A)'s order was set aside.

The Tribunal held that the penalty under section 271(1)(b) was not warranted as the assessee had submitted the required details before the date of hearing. Non-appearance on a single date, when details were provided, was not a sufficient reason for imposing the penalty.

The Tribunal restored the matter back to the Assessing Officer for fresh adjudication. This was based on a similar order for a different assessment year where the Tribunal directed the AO to ensure no double addition and provide necessary details to the assessee.

The Tribunal held that the assessee's consistent use of the project completion method, accepted in prior years, should be respected. The AO's invocation of AS-7 was incorrect as the contract predated its applicability. Therefore, the income should be computed based on the completed project method.

The Tribunal held that the title in the auctioned property vests with the auction purchaser from the date of sale, not the date of sale confirmation. Therefore, the transaction related to AY 2001-02, not AY 2002-03.

The Tribunal held that the frequent buying and selling of shares over a short period constituted a business adventure in the nature of trade. Therefore, the income should be treated as business income and not capital gains. However, Securities Transaction Tax (STT) paid was allowed as a deduction.

The Tribunal found that the assessee had submitted additional evidence for both issues, which required appreciation at the Assessing Officer's level. Therefore, both issues were restored to the Assessing Officer for fresh adjudication.

The Tribunal held that the issues regarding disallowance of expenses for non-deduction of TDS and additions to income from other sources and stock/work-in-progress should be remitted back to the Assessing Officer for fresh adjudication. This was due to the CIT(A) not properly considering the evidence and remand reports.

The Tribunal held that the reopening was not valid as the reasons recorded by the AO did not have a live link with the assessment year in question and reflected a non-application of mind. Previous appeals by the assessee for earlier years on similar grounds were also quashed.

The Tribunal held that purchases cannot be rejected solely based on information from the sales tax department if sales are accepted and books of accounts are not rejected. Payments were made through account payee cheques.

The Tribunal restored the issue of disallowance under Section 14A to the AO for reconsideration of strategic investments. For the revenue's appeal, the Tribunal dismissed the ground related to disallowance under Section 40A(2)(b) and restored the issue under Section 40(a)(ia) to the AO for re-adjudication.

The Tribunal held that the assessee failed to provide any evidence to support the claim of business expenditure before the lower authorities. The pattern of claiming business loss to set off other income was considered a 'make believe story'.

The Tribunal found that the assessee's submissions made just before the order were not considered by the DIT(E), violating natural justice. Therefore, the matter was restored to the DIT(E) for reconsideration.

The Tribunal found that if the assessee could prove no expenditure was incurred for earning the exempt income, the AO should consider it. The orders of the lower authorities were set aside, and the matter was remanded back to the AO for fresh adjudication.

The Tribunal, following the Supreme Court's decision in CIT Vs. Kotak Securities Ltd, held that transaction charges paid to the Stock Exchange are for facilities provided and not for technical services. Therefore, no TDS was deductible under Section 194J, and the disallowance under Section 40(a)(ia) was incorrect.

The Tribunal noted that while the onus was on the assessee to prove the cash credits, the matter was factual and required reconciliation. Therefore, the Tribunal restored the matter to the AO to re-appreciate additional evidence submitted by the assessee.

The Tribunal condoned the delay in filing the appeals, finding the reasons provided by the assessee to be reasonable. The Tribunal set aside the orders of the CIT(A) and restored the appeals to the CIT(A) for a decision on merits.

The Tribunal decided to admit additional evidence submitted by the assessee and restore the matter to the Assessing Officer for fresh adjudication, emphasizing the burden on the assessee to prove the genuineness of the commission payment.

The Tribunal restored the issue of disallowance under Section 14A to the AO for reconsideration of strategic investments. For the revenue's appeal, the Tribunal dismissed the ground related to disallowance under Section 40A(2)(b) and restored the issue under Section 40(a)(ia) to the AO for re-adjudication.

The Tribunal condoned the delay in filing the appeals, finding the reasons provided by the assessee to be reasonable. The Tribunal set aside the orders of the CIT(A) and restored the appeals to the CIT(A) for a decision on merits.

The Tribunal held that the reopening of assessment under Section 147 was not validly done as the AO failed to provide the requested documents, which were crucial for the assessee to establish its case. Consequently, the additions made in the reassessment order were not sustained. Regarding the FCCB proceeds, issue expenses, and interest, the Tribunal found that the CIT(A) had treated the FCCB funds as properly explained and deleted the disallowance of FCCB expenses except for a part used for non-business purposes. However, based on the finding that the reopening was invalid, the Tribunal reversed the CIT(A)'s order on the disallowance of FCCB interest and expenses, holding them not disallowable. The Tribunal also held that since the additions in the reassessment order were not sustained, the income computation reverts to the original assessment where interest under Section 234B was not levied. Therefore, the issue of Section 234B interest became academic, and the CIT(A)'s order was set aside. For Section 234D interest, the Tribunal directed the AO to verify the facts regarding refunds granted under Section 143(1) that were subsequently recovered in regular assessment and restrict the charge of interest accordingly. The Tribunal did not expressly leave any issue undecided.

The Tribunal condoned the delay in filing the appeals, finding the reasons provided by the assessee to be reasonable. The Tribunal set aside the orders of the CIT(A) and restored the appeals to the CIT(A) for a decision on merits.

The Tribunal condoned the delay in filing the appeals, finding the reasons provided by the assessee to be reasonable. The Tribunal set aside the orders of the CIT(A) and restored the appeals to the CIT(A) for a decision on merits.

The Tribunal found that if the assessee could prove no expenditure was incurred for earning the exempt income, the AO should consider it. The orders of the lower authorities were set aside, and the matter was remanded back to the AO for fresh adjudication.

The Tribunal held that while additions can be made under Section 68 for unexplained cash credits, penalty under Section 271(1)(c) requires more than just an addition. It necessitates proof of conscious concealment or furnishing of inaccurate particulars, which was not established in this case.

The Tribunal held that the assessee was justified in classifying the income as short-term capital gains, considering the maintenance of separate portfolios and delivery-based transactions. The disallowance under Section 14A was partly upheld, with a portion deleted.

The Tribunal allowed the appeal concerning corporate guarantees by accepting the assessee's voluntary addition of 1% commission, following its own prior decisions. It also deleted the adjustment related to preference shares by holding they cannot be re-characterized as loans and allowed the disallowance of interest expense, again following prior rulings.

The Tribunal decided to admit additional evidence submitted by the assessee and restore the matter to the Assessing Officer for fresh adjudication, emphasizing the burden on the assessee to prove the genuineness of the commission payment.

The Tribunal upheld the lower authorities' decisions as the assessee did not appear nor controvert the findings with evidence. The gain on sale of land was correctly treated as short-term capital gain.