ITAT Mumbai Judgments — August 2017

The Tribunal upheld the validity of the reassessment proceedings. However, it found that the AO was not justified in invoking the third proviso to Section 80HHC retrospectively. The issue of deduction under Section 80HHC was set aside and restored to the AO for fresh examination.

The Tribunal held that the entrance fees were a price for admission to the privileges of the institution under a contract, not a voluntary contribution. Therefore, they were capital receipts and not taxable income.

The Tribunal upheld the action of the CIT(A) as the assessee failed to appear and produce any evidence. The CIT(A) had previously estimated profit at 50% of the aggregate deposits and initial investment due to undisclosed business activity.

The Tribunal upheld the CIT(A)'s decision to allow the assessee's claims. It found that the written-off advances were business losses, miscellaneous expenses were adequately supported, foreign travel was necessary for business promotion, and business promotion expenses were reasonable and properly audited.

The Tribunal upheld the CIT(A)'s estimation of GP at 13.13% as a reasonable measure, dismissing the revenue's grounds on this issue. The Tribunal also allowed the assessee's appeal on the Section 40(a)(ia) disallowance, holding that it was a case of shortfall in TDS deduction, not non-deduction, and thus Section 40(a)(ia) was not applicable.

The Tribunal deleted the disallowance under Rule 8D(2)(ii) based on the assessee having sufficient own funds for investment. It confirmed the disallowance under Rule 8D(2)(iii) and deleted the deemed dividend addition, as the assessee was not a shareholder of the lending company.

The Tribunal found that the assessee had actually purchased goods, and the supplier's failure to pay VAT did not make the purchases bogus. Therefore, the disallowance was restricted to 5% of the total purchases.

The Tribunal upheld the CIT(A)'s estimation of GP at 13.13% as a reasonable measure, dismissing the revenue's grounds on this issue. The Tribunal also allowed the assessee's appeal on the Section 40(a)(ia) disallowance, holding that it was a case of shortfall in TDS deduction, not non-deduction, and thus Section 40(a)(ia) was not applicable.

The Tribunal upheld the penalty imposed by the Assessing Officer and confirmed by the CIT(A). It found that the assessee's financial position, despite claims of liquidity crunch, did not prevent them from paying the self-assessment tax.

The Tribunal followed its previous decisions in the assessee's own cases for other assessment years and restricted the addition to 12.5% of the alleged bogus purchases.