ITAT Mumbai Judgments — February 2018

The Tribunal held that the reopening of assessments was invalid as it was based on a mere change of opinion by the AO. Furthermore, the Tribunal found that the AO had failed to issue mandatory notices and had relied on incorrect facts for reopening.

The Tribunal held that the revaluation of stock-in-trade and subsequent retirement of partners did not constitute a dissolution of the firm or a distribution of capital assets. Therefore, Section 45(4) was not applicable.

The Tribunal held that non-compete fee qualifies as an intangible asset under Section 32(1)(ii) of the Income Tax Act, following Supreme Court precedent. The Revenue did not challenge the CIT(A)'s decision on asset ownership, making that point moot.

The Tribunal upheld the CIT(A)'s decision to add only the profit element on alleged bogus purchases. The assessee could not produce suppliers for confirmation, and notices were returned unserved, justifying an addition to account for profit and potential VAT benefits.

The Tribunal upheld the CIT(A)'s decision to delete the additions. It found that the sinking fund was not income, the interest expenditure was allowable, and no notional interest should be added to the rental income.

The Tribunal held that the selection of the case for scrutiny was barred by limitation as per CBDT Instruction No. 9 of 2004. Following the decision in DCIT vs. Sunita Finlease Ltd., the notice under section 143(2) and the subsequent assessment were quashed.

The Tribunal confirmed the deletion of commission additions. For AY 2010-11, it modified the CIT(A)'s order by estimating additions at 5% of alleged bogus purchases. For AY 2011-12, it upheld the CIT(A)'s decision to confirm additions on bogus purchases but delete additions on VAT credit.

The Tribunal held that the assessee's claim was an inadvertent error, not a deliberate concealment or furnishing of inaccurate particulars. The differential tax was paid, and the quantum of STCG was not disputed, thus penalty under Section 271(1)(c) was not justified.

The Tribunal found that the CIT(A) did not follow established legal principles in estimating the profit element of the bogus purchases. The Tribunal set aside the CIT(A)'s order and remanded the issue back for a fresh decision.

The Tribunal restored the issue of disallowance of expenditure related to investments to the Assessing Officer for fresh examination of the assessee's primary objects. Revenue's appeals were dismissed.

The Tribunal found factual errors in the CIT(A)'s order and noted that relevant ITAT orders were not available to the lower authorities. Therefore, the matter was remitted back to the Assessing Officer for a fresh assessment.

The Tribunal held that the AO's rectification order was unjustified as it attempted to re-assess the case under the guise of rectification. The Tribunal noted that the issue of losses had been settled in previous proceedings, and there was no mistake apparent from the record to warrant rectification.

The Tribunal confirmed the CIT(A)'s deletion of the Section 35(1) deduction, subject to verification of depreciation reversal and non-claiming in subsequent years. For bogus purchases, the Tribunal partly allowed the revenue's appeal, confirming some disallowances made by the CIT(A) and deleting others.

The Tribunal confirmed the deletion of commission additions. For AY 2010-11, it modified the CIT(A)'s order by estimating additions at 5% of alleged bogus purchases. For AY 2011-12, it upheld the CIT(A)'s decision to confirm additions on bogus purchases but delete additions on VAT credit.

The Tribunal held that suspicion cannot replace evidence and that purchases made through account payee cheques, even if suppliers are later found to be bogus, cannot be disallowed without further investigation. However, to account for potential profit elements and VAT benefits, the addition was restricted to 12.5% of the bogus purchases.

The Tribunal found that the assessee failed to prove the identity and genuineness of the creditors. The CIT(A)'s observations regarding payments through banking channels were not confronted to the AO. Therefore, the matter was remitted back to the AO for fresh verification.

The Tribunal held that the assessee, being a co-operative credit society and not a co-operative bank, is eligible for deduction under Section 80P. The disallowance of expenses was also deemed infructuous as the entire profit was eligible for deduction.

The Tribunal held that the Assessing Officer (AO) must apply their mind and be clear about the specific charge (concealment or inaccurate particulars) when initiating penalty proceedings. Since the AO's actions indicated a lack of clarity and mechanical initiation, the penalty proceedings were vitiated.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance. It was held that carriage fees are not royalty and that a shortfall in TDS deduction does not warrant disallowance under Section 40(a)(ia) when tax has been deducted under a different provision.

The Tribunal held that the assessee was an investor and not a trader in shares, upholding the CIT(A)'s decision. The Tribunal followed a previous decision in the assessee's own case for AY 2010-11, which also treated similar share transaction gains as capital gains.

The Tribunal upheld the CIT(A)'s order, following its own previous decision in the assessee's own case for an earlier assessment year. The Tribunal found no infirmity in the CIT(A)'s reasoning.

The Tribunal upheld the CIT(A)'s decision, agreeing that carriage fees are not royalty and that disallowance under Section 40(a)(ia) is not applicable in cases of 'less TDS' where tax has been deducted under a different provision. The decision was supported by various High Court judgments, including the jurisdictional Bombay High Court.

The Tribunal held that the revenue authorities had not appreciated the facts that the assessee's investments did not earn dividend and that the capital gains earned were taxable. The invocation of Rule 8D was not automatic and required satisfaction from the AO, which was absent.

The Tribunal held that the assessee is eligible for deduction under Section 10B, following a coordinate bench's decision for the preceding assessment year. The revenue failed to demonstrate any factual difference from the prior year.

The Tribunal held that since the assessee carried out construction activities, actual material consumption was necessary. While acknowledging the possibility of grey market purchases and VAT evasion, the Tribunal found the 12.5% profit addition by the CIT(A) to be fair and reasonable.

The Tribunal restricted the addition on account of bogus purchases to 2.50% of the total amount. The disallowance on account of foreign currency fluctuation loss was allowed in favour of the assessee.

The Tribunal held that the income derived from the property was business income because it was not merely from letting out but involved composite services and facilities provided to the tenants. The Tribunal affirmed the CIT(A)'s decision, noting consistency with previous years and higher authorities.

The Tribunal dismissed the revenue's appeal regarding secondment expenses and bogus purchases, upholding the CIT(A)'s decision. The issue of compensation from customers was remanded back to the AO for fresh adjudication.

The Tribunal held that the issue of bad debt needs fresh examination by the AO in light of Supreme Court and Delhi High Court decisions, as the assessee could raise the plea for the first time before the Tribunal. The disallowance under Section 14A also requires fresh examination by the AO regarding the nature of expenses and their attribution to exempt income.

The Tribunal held that the penalty levied for claiming depreciation was not warranted, following a coordinate bench's decision in the assessee's own case for a different assessment year with similar facts.

The Tribunal upheld the CIT(A)'s decision to annul the assessment under Section 153C. It found that the seized papers were 'dumb documents' without sufficient corroboration to form the basis of additions.

The Tribunal dismissed the additional ground that the rental income should be treated as business income, citing the principle of consistency and factual differences from cited case law. However, the Tribunal remitted the matter back to the AO for re-appreciation of facts and evidence regarding the addition on merits.

The Tribunal held that the addition made by the Assessing Officer was not sustainable as it was based solely on the statement of a third-party agent and the disclosure of a co-developer, without independent enquiry. The Tribunal further held that the addition of Rs. 25 lakh sustained by the CIT(A) was also not justified.

The Tribunal held that while the purchases were not genuine, the assessee likely acquired goods from the open market and obtained accommodation bills. Therefore, a profit element on these purchases was estimated. For the expenses, the Tribunal found the disallowance excessive and restricted it.

The Tribunal upheld the CIT(A)'s order, stating that Section 14A cannot be invoked unless there is receipt of exempt income. The CIT(A) had correctly observed that the assessee had not received any dividend income and thus no disallowance was warranted.

The Tribunal noted that the property transfer was not complete and there was a civil dispute with the vendor. Considering these subsequent developments, the Tribunal decided to restore the matter to the Assessing Officer for a fresh assessment.

The Tribunal restricted the addition on account of bogus purchases to 2.50% of the total amount. The disallowance on account of foreign currency fluctuation loss was allowed in favour of the assessee.

The Tribunal held that the Commissioner (Appeals) had correctly deleted the additions as the assessee had provided sufficient evidence regarding the identity, genuineness, and creditworthiness of the loan creditors. The Tribunal also noted that similar issues in the assessee's own case and group concerns had been decided in favour of the assessee.

The Tribunal held that dubbing expenses should be amortized over the period of benefit, reversing the CIT(A)'s deletion and allowing the Revenue's appeal on this issue. For central support fees, the Tribunal followed its prior ruling and deleted the disallowance, allowing the assessee's appeal. The issue of ITS data reconciliation was remitted back to the Assessing Officer for fresh adjudication.

The Tribunal noted that the AO did not comment on the assessee's cash flow statement and there was no clarity on whether the Rs. 6.00 lakhs from the son's account was accepted as explained. Therefore, the matter was restored to the AO for fresh examination.

The Tribunal held that the addition made by the AO was not justified. It noted that the lender's (M/s Basant Marketing P Ltd) transactions had been accepted as genuine in its own assessment proceedings, and a subsequent adverse view taken by another AO was set aside by the CIT(A) and accepted by the revenue. The Tribunal found that the assessee had discharged its onus by proving the identity, genuineness, and creditworthiness of the lender.

The Tribunal upheld the CIT(A)'s decision to delete the addition. The CIT(A) had ruled that once the assessee discharges its initial onus regarding identity, genuineness, and creditworthiness, the AO cannot delve into the 'source of source' and should proceed against the alleged bogus shareholders individually.

The Tribunal held that credit for TDS cannot be denied for technical reasons if the tax has genuinely been deducted at source on income offered by the assessee. The issue was restored to the Assessing Officer for verification.

The Tribunal held that the production of mud logging reports and analysis, involving scientific processing of information, amounts to 'manufacture or production of article or thing'. Therefore, the assessee was entitled to claim additional depreciation.

The Tribunal held that since the assessee carried out construction activities, actual material consumption was necessary. While acknowledging the possibility of grey market purchases and VAT evasion, the Tribunal found the 12.5% profit addition by the CIT(A) to be fair and reasonable.

The Tribunal upheld the Commissioner (Appeals)'s decision, allowing a deduction of expenses from the estimated commission income. This decision was consistent with a previous ruling by a Co-ordinate Bench in the assessee's own case.

The Tribunal found merit in the assessee's argument that staff meeting expenses included conveyance allowance wrongly classified. It directed the AO to re-examine the issue in light of the reconciliation filed by the assessee.

The Tribunal held that dubbing expenses should be amortized over the period of benefit, reversing the CIT(A)'s deletion and allowing the Revenue's appeal on this issue. For central support fees, the Tribunal followed its prior ruling and deleted the disallowance, allowing the assessee's appeal. The issue of ITS data reconciliation was remitted back to the Assessing Officer for fresh adjudication.

The Tribunal held that the AO cannot levy penalty on both charges (furnishing inaccurate particulars and concealing particulars) simultaneously, as it indicates uncertainty about the specific default. Following the Bombay High Court's decision in CIT vs Samson Perinchery, the appeal was allowed.

The Tribunal upheld the decision of the CIT(A) to restrict the disallowance to 3% of alleged bogus purchases. It reasoned that while the assessee's turnover was not doubted and payments were through banking channels, the inability to produce confirming parties and unserved notices cast doubt on the transactions.