ITAT Mumbai Judgments — September 2017

The Tribunal held that the reference to the DVO was not justified under Section 55A of the Income Tax Act for the assessment year prior to the 2012 amendment, as the assessee's adopted value was higher than the DVO's valuation. The tribunal followed its own earlier decision and the Bombay High Court ruling in Puja Prints.

The Tribunal found that the foreign travel expenses were incurred wholly and exclusively for business purposes and deleted the disallowance. However, other grounds were either dismissed or not pressed.

The Tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) was invalid because it did not specify the grounds for initiating penalty proceedings, violating the principles of natural justice. Consequently, the penalty was deleted.

The Tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) was invalid because it did not specify the grounds for initiating penalty proceedings, violating the principles of natural justice. Consequently, the penalty was deleted.

The Tribunal held that the assessee failed to substantiate the genuineness of the purchases. However, the addition should be restricted to the profit element embedded in these purchases, not the entire amount. The Tribunal modified the profit estimation rate.

The Tribunal held that the purchase of land and appointment of a project management consultant for redevelopment, along with steps taken by the consultant, indicated the commencement of business. Therefore, expenses incurred were allowable as revenue expenditure.

The Tribunal held that the AO did not conduct sufficient investigation and could not deny purchases solely because suppliers were not found or declared as hawala dealers. The Tribunal directed the AO to take 12.5% of the Gross Profit (GP) instead of disallowing 25% of purchases.

The Tribunal held that payments merely reimbursing expenses incurred by a foreign entity on behalf of the assessee do not require TDS. It also noted that even if TDS was not deducted, the payee having paid taxes on the income meant the assessee was not in default.

The Tribunal held that the assessee had discharged the onus of proving the genuineness of the loan transactions by providing income-tax credentials of lenders, confirmations, bank statements, and proof of repayment. The AO failed to rebut this evidence.

The Tribunal upheld the disallowance of the stamp duty as a revenue expenditure for AY 2012-13. It noted that while the expenditure was not allowable in the current year, the assessee could seek appropriate relief in subsequent years to avoid double taxation of the refunded amount.