ITAT Mumbai Judgments — October 2017

The Tribunal confirmed the CIT(A)'s order, holding that since the sales were not doubted, a 100% disallowance of purchases was not justified. The disallowance of 15% of bogus purchases was considered to meet the ends of justice.

The Tribunal held that the AO failed to record satisfaction regarding the assessee's claim of exempt income before invoking Section 14A. However, to maintain consistency, a disallowance of 2% of exempt income was made.

The Tribunal found that the lower authorities had not examined whether the interest income earned by the assessee was from advances made out of the loans taken. Therefore, the matter was remitted back to the Assessing Officer for fresh consideration.

The ITAT found that the CIT(A) failed to properly consider the assessee's admission of bogus purchases. The Tribunal remitted the issue back to the CIT(A) for fresh consideration.

The Tribunal held that a loan obtained is a capital receipt and does not lose its capital nature even when waived. Therefore, the waived loan amount cannot be treated as taxable income under Section 41(1) of the Income Tax Act.

The Tribunal held that the sales tax benefit received by the assessee was a capital receipt not chargeable to tax. The fact that the assessee had sold its unit on a slump sale basis prior to receiving the benefit was considered irrelevant.

The ITAT held that the CIT(A) should have decided the appeal on merits rather than dismissing it for non-prosecution. The case was remitted back to the CIT(A) for fresh consideration.