ITAT Mumbai Judgments — March 2018

The Tribunal upheld the CIT(A)'s decision to delete the addition for payments to deceased partners and allow payments to retired partners, following its own prior orders. However, it also upheld the CIT(A)'s confirmation of the disallowance of depreciation on tenancy rights, again based on prior ITAT rulings.

The Tribunal held that the services provided by the subsidiary were not FTS as they were rendered outside India and did not meet the 'make available' test under the tax treaty. Consequently, the payments were not taxable in India, and there was no liability to withhold taxes.

The Tribunal held that orders passed against a non-existent entity are null and void, constituting a jurisdictional defect. Furthermore, the retrospective application of the Explanation to Section 9(1) of the Act for disallowing expenditure was not permissible for the assessment year in question.

The Tribunal upheld the reopening of the assessment. However, it restricted the disallowance of bogus purchases to 12.5% of the total amount, deviating from the 100% disallowance initially made.

The Tribunal upheld the CIT(A)'s decision, stating that disallowance under Section 40(a)(ia) is not warranted when the expenditure is not claimed in the Profit & Loss account. The issue regarding provisions for expected claims was also decided in favor of the assessee.