ITAT Mumbai Judgments — October 2017

The Tribunal held that allowing depreciation would not amount to a double deduction, relying on various High Court judgments, including the jurisdictional Bombay High Court. The Tribunal also affirmed the CIT(A)'s decision to allow the carry forward of deficit.

The Tribunal upheld the CIT(A)'s decision regarding purchases from M/s. Siddhi Enterprises, M/s Devchaya Trading Co., and M/s. D.C. Corporation, but directed the Assessing Officer to disallow 4% of these purchases to cover revenue leakage. The disallowance for purchases from M/s. Disha Transport Co. and M/s. D.K. Enterprises was upheld.

The Tribunal held that the CIT(A) was correct in allowing the carry forward of the deficit, as it followed the binding judgment of the Bombay High Court. The pendency of an SLP by the department on a similar issue was considered irrelevant.

The Tribunal held that a prerequisite for levying penalty under Section 271G is a specific requisition made under Section 92D(3) and failure to comply. Since no such notice was issued by the TPO/AO, the penalty was deleted.

The Tribunal upheld the CIT(A)'s deletion of the addition, agreeing that no incriminating material was found during the search to support the disallowance under section 14A.

The Tribunal restored the issue to the Assessing Officer to decide the average value of investment as per a Special Bench decision. The AO was directed to consider only investments yielding income during the year for calculating average investment.

The Tribunal noted that new arguments were raised by the assessee for the first time, requiring factual investigation. The Tribunal found that crucial facts regarding the probate of the will, the period of share ownership, and the control over the associated flat were not adequately investigated by the lower authorities.

The Tribunal held that the CIT(A) was correct in allowing the carry forward of the deficit. The decision followed the binding judgments of the Bombay High Court in similar cases, even though the Revenue had not accepted those decisions on merits.

The Tribunal held that the AO had not levied penalty on a specific charge, as concealment of income and furnishing inaccurate particulars are distinct. Following the jurisdictional High Court's decision, the penalty was deleted.

The Tribunal held that allowing depreciation on assets acquired from application of income does not amount to a double deduction, citing various High Court judgments. The Tribunal affirmed the CIT(A)'s decision to allow depreciation and carry forward of deficit.

The Tribunal upheld the CIT(A)'s decision regarding purchases from M/s. Siddhi Enterprises, M/s Devchaya Trading Co., and M/s. D.C. Corporation, but directed the Assessing Officer to disallow 4% of these purchases to cover revenue leakage. The disallowance for purchases from M/s. Disha Transport Co. and M/s. D.K. Enterprises was upheld.

The Tribunal held that the disallowance under Section 14A read with Rule 8D cannot exceed the exempt income earned. Therefore, the disallowance was restricted to the dividend income of ₹.1,83,000/-.

The Tribunal held that additions made under section 153A without incriminating material found during search are bad in law, following the Bombay High Court's decision in All Cargo Global Logistics Ltd. Consequently, the addition of prior period expenses was deleted, and the penalty related to the Rule 9A addition was also set aside.

The Tribunal held that allowing depreciation on assets whose cost was treated as application of income does not amount to a double deduction. It followed the consistent view of the Bombay and Delhi High Courts, which was also not stayed by the Supreme Court.

The Tribunal held that payments made for additional FSI to MMRDA do not fall within the definition of rent under Section 194-I. Consequently, the assessee was not required to deduct TDS on such payments.

The Tribunal upheld the CIT(A)'s order, finding that depreciation is considered an application of income for charitable trusts. It also held that excess application (deficit) in an earlier year can be set off against income in subsequent years.

The Tribunal held that the assessee's decision to change its accounting method from percentage completion to project completion was made prior to the revenue's detection. Therefore, the withdrawal of the deduction was not a result of being caught, and the issue was debatable.

The Tribunal held that Section 14A disallowance is not applicable if the assessee has not earned any exempt income. Therefore, the CIT's order under Section 263 was erroneous.

The Tribunal held that the Commissioner (Appeals) was not justified in dismissing the appeals solely on the ground of delay without deciding the issues on merits, especially when the delay was for bona fide reasons. The Tribunal also held that penalty under Section 271C was not leviable as the assessee had a reasonable cause for not deducting TDS on payments to overseas entities, supported by a Chartered Accountant's certificate and past departmental inaction.

The Tribunal upheld the CIT(A)'s decision, stating that since no incriminating material was found during the search, the AO could not make additions in non-abated assessments. The deletion of additions was based on the jurisdictional High Court's ruling.

The Tribunal confirmed the validity of assessments made under Section 153C. However, it restored the issue of additions under Section 68 to the CIT(A) for fresh examination regarding peak credit and telescoping benefits. The issue of corresponding relief for salary disallowance was also restored to the CIT(A).

The Tribunal held that since the original assessment had become final and no incriminating material was found during the search, the Assessing Officer lacked jurisdiction to make additions under section 153A. Consequently, all additions made by the AO were deleted.

The Tribunal, considering the principles of natural justice, decided to grant the assessee one more opportunity to present their case before the Commissioner (Appeals). This was conditional on the assessee paying a cost of Rs. 10,000 to the Prime Minister's Relief Fund.

The Tribunal held that the AO did not conduct sufficient investigation to prove the purchases were bogus, especially since the assessee provided quantitative details of stock and corresponding sales, which were not disputed. The Tribunal noted that payments were made by account payee cheques and there was no evidence of cash back.

The Tribunal found that the CIT(A) failed to decide the additional ground raised by the assessee. The Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A) for fresh adjudication, directing the CIT(A) to first decide the additional ground and then other grounds.

The Tribunal dismissed the appeal because the assessee failed to provide sufficient cause for the delay in filing the appeal. The delay was not condoned as the reasons provided were not considered unavoidable or beyond the assessee's control.

The Tribunal held that while the AO's approach of disallowing entire purchases based solely on third-party information was not justified, the assessee also failed to prove the genuineness of purchases due to unserved notices. Therefore, only the profit element embedded in such purchases should be taxed.

The Tribunal held that the disallowance under Section 14A read with Rule 8D cannot exceed the exempt income earned. Therefore, the disallowance was restricted to the dividend income of ₹.1,83,000/-.

The Tribunal observed that while the assessee had submitted numerous documents, their correlation with sales and utilization/consumption of material was not adequately proven before the lower authorities. Therefore, the matter was set aside and restored to the AO for fresh determination.

The Tribunal held that the CIT(A) was correct in allowing the carry forward of deficit, as it followed the binding judgment of the Hon'ble Bombay High Court. The pendency of an SLP by the Revenue was considered irrelevant.

The Tribunal held that additions made under section 153A without incriminating material found during search are bad in law, following the Bombay High Court's decision in All Cargo Global Logistics Ltd. Consequently, the addition of prior period expenses was deleted, and the penalty related to the Rule 9A addition was also set aside.

The Tribunal held that the reassessment was validly initiated. However, it found that the assessee was not given a proper opportunity to cross-examine the suppliers whose statements were relied upon by the AO. Therefore, the matter was restored to the AO for fresh assessment.

The Tribunal upheld the order of the CIT(A) and dismissed the assessee's appeal. The assessee failed to provide any evidence to substantiate their claims regarding purchases and expenses.

The Tribunal directed the Assessing Officer to estimate the profit element from non-genuine purchases at 2% uniformly for all assessment years. It also restricted the disallowance under Section 14A to the extent of dividend income earned.

The Tribunal confirmed the CIT(A)'s deletion of the disallowance, noting that the issue had been decided in favor of the assessee in prior assessment years and maintaining consistency.

The Tribunal held that the reassessment proceedings were valid. However, it emphasized the importance of cross-examination of parties whose evidence is material to the case. The matter was restored to the AO to provide an opportunity for cross-examination and fresh assessment.

The Tribunal held that since the assessee had fulfilled its onus of making payments by cheque and provided supplier addresses, purchases could not be presumed bogus solely because suppliers were not found. The AO failed to conduct further investigation beyond suspicion.

The Tribunal found that the disallowance made by the AO was higher than the actual interest claimed by the assessee. Therefore, the Tribunal reduced the disallowance to the amount of interest claimed.

The Tribunal held that since the assessee made payments by account payee cheques and had corresponding sales which were accepted by the AO, the purchases could not be presumed to be bogus solely because the suppliers were not found or did not appear. The Tribunal endorsed the CIT(A)'s order.

The Tribunal held that the assessee should be given an opportunity to cross-examine the concerned parties, as the AO failed to enforce their attendance. The matter was restored to the AO for fresh assessment.

The Tribunal held that the CIT(A) was correct in deleting the disallowance of interest expenditure. This was based on the principle that if interest-free funds exceed investments, no disallowance is required, following jurisdictional High Court precedents.

The Tribunal held that the CIT(A) erred in estimating profit at 25% for bogus purchases without proper evidence and that the AO failed to provide an opportunity for cross-examination. The Tribunal also upheld the CIT(A)'s deletion of the cash credit addition due to the AO's lack of specific grounds.

The Tribunal held that freight income from feeder vessels is eligible for the benefit under Article 8 of the India-Germany DTAA, similar to previous years. Consequently, issues related to service tax and PE were rendered academic or dismissed.

The Tribunal held that the AO failed to discharge the onus of proving the transaction was non-genuine. Receiving funds by the purchaser from a third party does not automatically render the transaction invalid, especially when the assessee provided evidence of sale and delivery.

The Tribunal held that the assessee should have been given an opportunity to cross-examine the parties whose statements were used against them. The matter was restored to the AO for fresh assessment after providing this opportunity.

The Tribunal held that merely treating business loss as speculative loss does not automatically warrant an inference of concealment of income, especially when full details were disclosed. The deletion of penalty by the CIT(A) was upheld.

The Tribunal held that merely treating business loss as speculative loss does not automatically warrant an inference of concealment of income, especially when full details were disclosed. The deletion of penalty by the CIT(A) was upheld.

The Tribunal held that allowing depreciation does not amount to a double deduction, citing multiple High Court judgments and the dismissal of a related SLP by the Supreme Court. The CIT(A)'s decision was upheld.

The Tribunal held that for unabated assessment years, additions under Section 153A can only be made if there is incriminating material found during search. Since no such material was found, the deletion of additions by the CIT(A) was upheld.

The Tribunal upheld the CIT(A)'s decision regarding purchases from M/s. Siddhi Enterprises, M/s Devchaya Trading Co., and M/s. D.C. Corporation, but directed the Assessing Officer to disallow 4% of these purchases to cover revenue leakage. The disallowance for purchases from M/s. Disha Transport Co. and M/s. D.K. Enterprises was upheld.