ITAT Mumbai Judgments — June 2018

The Tribunal held that prior year losses should not be reduced from the profits for calculating deduction under Section 80IA, as per the interpretation of 'initial assessment year' and CBDT circulars. The disallowance of interest expenditure under Section 14A was also deleted as the assessee had sufficient interest-free funds.

The Tribunal held that the penalty notice was invalid because it did not specify the exact charge (concealment or inaccurate particulars) and showed a non-application of mind by the Assessing Officer. Therefore, the penalty was deleted.

The Tribunal found that the Assessing Officer had not conducted independent inquiries and had not issued notices to the suppliers. However, the assessee also failed to provide confirmations or prove the transportation of goods. Therefore, the Tribunal directed to sustain 8% of the alleged bogus purchases as income.

The Tribunal held that the lease premium paid to MMRDA was not in the nature of rent and therefore, Section 194-I was not applicable. Consequently, the levy of interest under Section 201(1A) was also not sustainable.

The Tribunal partly allowed the appeal. It restricted the Section 14A disallowance to the exempt income and remitted the issue of provisions for expenses back to the AO for re-adjudication. The addition on account of discount was deleted.

The Tribunal held that the re-insurance broking business might be an extension of the existing insurance broking business, considering common infrastructure and management. The departmental authorities had not fully examined the assessee's contentions or relevant case laws.

The Tribunal held that while statements made during survey proceedings require corroboration, the assessee must also demonstrate bona fide reasons for retraction. The additions related to furniture & fixture and remission of liability were deleted as they lacked proper working or evidence. The addition for excess stock was also deleted due to lack of working and survey team's failure to visit all locations. However, the addition for excess cash was confirmed as the assessee failed to reconcile the balance.

The Tribunal upheld the CIT(A)'s deletion of disallowances for interest on assets not put to use and provision for warranty, finding them to be revenue in nature and supported by previous rulings. The ISO Ohsas expenses were also held to be revenue in nature. The inventory valuation issue was remanded to the AO for further examination.

The Tribunal restricted the disallowance under Section 14A to the extent of exempt income earned. However, it confirmed the addition of reversed interest income, finding the reversal to be an afterthought to reduce taxable income.

The Tribunal held that since the transactions were routed through banking channels and the investor companies were regularly filing their income tax returns, the genuineness of the transactions was established. The assessee had discharged its onus, and the addition made by the AO was unjustified.

The Tribunal held that since the income returned under section 153A was accepted without variation, the assessee could not be charged with furnishing inaccurate particulars of income. Explanation 5A to section 271(1)(c) was also found inapplicable without specific findings.

The Tribunal held that income from sale of shares and mutual funds should be treated as short-term capital gains, except for intraday transactions which are to be considered business income. The issue of disallowance of interest expenditure under Section 14A was restored to the Assessing Officer for fresh adjudication.

The Tribunal held that Section 10A does not prohibit outsourcing of work. The CIT(A) had correctly allowed the deduction, relying on previous tribunal decisions, as the outsourced work was connected to the assessee's core business activities and the profits were derived from the 100% export unit.

The Tribunal set aside the issue of stock written off to the AO for fresh consideration, directing the assessee to provide evidence. The Tribunal also directed the AO to re-examine the adjustment of capital subsidy, allowing deduction from opening WDV if the subsidy pertains to earlier periods, and held that capital subsidy cannot be treated as revenue receipt.

The Tribunal remitted the issue of interest disallowance back to the Assessing Officer for fresh adjudication, following a precedent. The addition on account of closing stock valuation was allowed in favour of the assessee with directions for consequential effect on opening stock. The issues of stamp duty, scientific research expenditure, and carry forward of losses were dismissed as not pressed.

The Tribunal held that PMF and PLF were service charges for managing the portfolio and making investments, not expenses incurred wholly and exclusively in connection with the transfer of shares. Therefore, they are not allowable as a deduction under Section 48 of the Income Tax Act.

The Tribunal held that disallowance under Section 14A should be restricted to 5% of the dividend income. It further held that the donation claim under Section 35(1)(iii) was not allowable due to the bogus nature of the donation and the subsequent cancellation of the donee's approval. The addition under Section 56(2)(viia) for buyback of own shares was also deleted.

The Tribunal held that the disallowances did not constitute concealment or furnishing of inaccurate particulars of income. The disallowance of administrative expenses was not linked to exempt income, TDS provisions were not applicable to software purchase, and business promotion expenses were a matter of disallowance due to lack of vouchers, not concealment.

The Tribunal allowed the grounds related to bad debts, finding that the assessee had complied with the conditions under Section 36(2). Grounds related to Section 14A disallowances were restored to the Assessing Officer for re-computation.

The Tribunal deleted the disallowance of interest expenses, holding that the assessee had sufficient own funds to cover investments. For administrative expenses, the issue was remanded to the AO for fresh verification, and for the second assessment year, the disallowance of administrative expenses was also set aside and remanded due to lack of satisfaction recorded by the AO.

The Tribunal held that the CIT(A)'s estimation of expenses was not based on evidence or accounting principles. Since the books of accounts were not rejected, the estimation was set aside.

The Tribunal held that merely revising a return does not automatically imply concealment, especially when the assessee had indicated the possibility of revision based on audited global financial statements. The penalty was deleted as the assessee provided full information in the revised return and during assessment.

The Tribunal deleted the disallowance under Section 14A as no exempt income was earned and Rule 8D was not applicable retrospectively. The issue of capital gains was restored to the AO for fresh adjudication pending the outcome of a related appeal by Larsen & Toubro Ltd.

The Tribunal held that in a Section 153A assessment where the original assessment has not abated, additions can only be made if they are based on incriminating material found during the search. Since no such material was found, the additions were beyond the scope of Section 153A.

The Tribunal held that in a Section 153A assessment where the original assessment has not abated, additions can only be made if they are based on incriminating material found during the search. Since no such material was found, the additions were beyond the scope of Section 153A.

The Tribunal held that in unabated assessments under Section 153A, additions can only be made if they are based on incriminating material found during the search. Since no such material was found, the CIT(A)'s deletion of additions was upheld.

The Tribunal upheld the CIT(A)'s order, confirming the additions made by the AO. The assessee's consistent non-compliance and failure to provide explanations were noted as reasons for dismissing the appeal.

The Tribunal held that in a Section 153A assessment where the original assessment has not abated, additions can only be made if they are based on incriminating material found during the search. Since no such material was found, the additions were beyond the scope of Section 153A.

The Tribunal held that in a Section 153A assessment where the original assessment has not abated, additions can only be made if they are based on incriminating material found during the search. Since no such material was found, the additions were beyond the scope of Section 153A.

The Tribunal held that the provision for gratuity was an ascertained liability as it was paid before the due date of filing the return of income. Therefore, the deduction is allowable under the proviso to Section 43B.

The Tribunal held that since the quantum of assessment for the relevant assessment year had been set aside by the ITAT, the penalty could not stand. Therefore, the penalty was deleted.

The Tribunal held that the Assessing Officer initiated penalty proceedings without applying his mind, as the notice under Section 274 did not specify whether the penalty was for concealment or furnishing inaccurate particulars of income. The penalty order was therefore quashed.

The Tribunal held that royalty payments made to the Government of Maharashtra were not subject to TDS under Section 196 of the IT Act, and thus disallowance under Section 40(a)(ia) was incorrect. Regarding transportation charges, the Tribunal found that the provisions of Section 194C(6) were applicable, exempting the assessee from TDS deduction upon furnishing the contractor's PAN.

The Tribunal held that Section 40(a)(ia) is a deeming provision creating a legal fiction that cannot be extended beyond the disallowance of expenditure. Therefore, it cannot be applied for levying penalty under Section 271(1)(c).

The Tribunal found the CIT(A)'s order to be cryptic and lacking in appreciation of the assessee's submissions and relevant case law. Due to infirmities in the CIT(A)'s observations regarding both the renovation expenditure and the revised return, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the society formation expenses were a statutory liability of the assessee after selling flats, and therefore, were necessary for business. The disallowance was set aside.

The Tribunal found that the claim for set-off of F&O loss was made in the original return of income, as evidenced by the accompanying statement of total income. Therefore, the disallowance was incorrect.

The Tribunal held that reopening the assessment based on a change of opinion on the same facts already considered in the original assessment is impermissible. Therefore, the reassessment proceedings were quashed.

The Tribunal held that the reassessment was invalid as it was based on a change of opinion, not on any new material. The issue of Section 80IA deduction had been examined in previous assessment years and for the current year during the original assessment.

The Tribunal held that miscellaneous incomes derived from the export business are eligible for deduction under Section 10B, following its own precedents. Regarding the interest, the Tribunal found that it was charged for a one-day delay and directed the AO to recalculate it as per Section 115O.

The ITAT held that the CIT(A) erred by admitting additional evidence without giving the AO an opportunity to examine and rebut it, violating Rule 46A. The tribunal emphasized the assessee's onus to prove identity, capacity, and genuineness of the transaction.

The Tribunal held that the disallowance computed under Section 14A of the Act should not be adopted for computing book profit under Section 115JB. The assessee's method of allocating expenses for Section 115JB was accepted.

The Tribunal held that while interest income should be taxed under 'Income from Other Sources', the business expenses incurred to maintain the business status during a temporary lull are allowable. These expenses can be set off against the interest income as per Section 71 of the IT Act.

The Tribunal held that advancement of loan by one trust to another with similar objects can be treated as application of income. It also noted that the loan was repaid and offered as income in a subsequent year, potentially leading to double taxation.

The Tribunal held that merely making a claim that is not accepted by the Assessing Officer does not amount to furnishing inaccurate particulars or concealment of income. A difference of opinion on the treatment of income does not automatically attract penalty.

The Tribunal held that the issue of claiming exemption under Section 54F for investments made outside India was debatable and that a mere claim not sustainable in law does not amount to furnishing inaccurate particulars or concealment of income. Therefore, the penalty was not justified.

The Tribunal upheld the CIT(A)'s order, finding that the issue was covered by a previous decision in the assessee's own case. The Tribunal noted that the assessee had provided details of services, deducted TDS, and the payments were considered bona fide.

The Tribunal upheld the CIT(A)'s deletion of the disallowance under Section 40A(2)(b) as the individual rates charged and paid were identical. For Section 14A, the Tribunal modified the CIT(A)'s order, estimating a disallowance of Rs. 5,00,000, considering both portfolio management charges and a portion of administrative expenses.