ITAT Mumbai Judgments — October 2018

The Tribunal restored the issues of royalty, technical knowhow fees, and Microsoft licensing fees to the AO/TPO for fresh examination, finding that the tax authorities' reasoning for disallowance was not fully justified and that the assessee's contentions regarding transfer pricing methods and aggregation of transactions needed consideration. The disallowance of gift articles was confirmed, while the provision for Diwali gifts was partially allowed with a direction for relief in the subsequent assessment year.

The Tribunal held that the omission to include the full salary was due to a bona fide mistake by the assessee's accountant, who relied on the bank account credit. The assessee also filed a revised computation upon realizing the error.

The Tribunal held that product registration expenses are revenue expenditure, following a coordinate bench's decision in the assessee's own case. The Tribunal found no legal or factual infirmity in the CIT(A)'s order.

The Tribunal held that the reopening of assessment was invalid as it was based on a mere change of opinion by the AO. Furthermore, the Tribunal agreed with the CIT(A) that the rental income should be treated as income from house property, as the assessee is a real estate developer and the nature of income is determined by the intention of letting out the property, not just its classification as inventory.

The Tribunal held that the penalty notice issued by the AO was invalid as it suffered from non-application of mind. The notice failed to specify which limb of Section 271(1)(c) was invoked and did not strike off the irrelevant clause, violating principles of natural justice.

The Tribunal held that the CIT(A)'s decision to allow expenses incurred under various heads was justified as the Assessing Officer did not conduct adequate inquiries. Regarding lease advances, the Tribunal followed the principle of judicial consistency and allowed 1/25th of the lease advance to be taxed annually.

The Tribunal held that while the existence of suppliers is not sufficient proof of purchase genuineness, the profit element embedded in such transactions should be taxed. It reduced the profit addition from 30% to 4% of the disputed purchases, following its own earlier decisions. The addition to closing stock was upheld as the assessee failed to prove the AO's calculation was wrong.

The Tribunal held that while the purchases might not be entirely genuine, adding the full amount was incorrect. Following the Gujarat High Court's decision, the Tribunal restricted the addition to 12.5% of the total bogus purchases, considering only the profit element.

The Tribunal held that the penalty notice issued by the AO was invalid as it did not specify the exact charge and showed non-application of mind. Therefore, the penalty was deleted.

The Tribunal held that the assessee is a primary credit society and not a cooperative bank, making Section 80P(4) inapplicable. Therefore, the assessee is eligible for the deduction claimed under Section 80P(2)(a)(i).

The Tribunal held that merely making a claim which is not sustainable in law does not automatically amount to furnishing inaccurate particulars. Following the Supreme Court decision in CIT v. Reliance Petroproducts (P.) Ltd., the penalty was deleted.

The Tribunal upheld the CIT(A)'s decision regarding foreign exchange gain on borrowed funds, finding it to be in accordance with Accounting Standard AS 11 and the Companies Act. The Tribunal found no reason to interfere with the CIT(A)'s findings.

The Tribunal followed a coordinate bench's decision in the assessee's own case, which had remanded similar issues to the Assessing Officer (AO) for fresh adjudication in light of a Supreme Court judgment. Therefore, the present appeal was also restored to the AO.

The Tribunal held that merely claiming a deduction under a wrong section, when the claim was otherwise bona fide, does not warrant a penalty under Section 271(1)(c). The assessee's mistake was not an intentional concealment or furnishing of inaccurate particulars.

The Tribunal upheld the CIT(A)'s decision, finding that the assessee had not actually claimed depreciation on the specific flat in its income computation under Section 32 of the IT Act, despite it appearing in depreciation schedules for Companies Act purposes. Therefore, Section 50 of the IT Act was not applicable.

The Tribunal upheld the disallowance of interest on overdraft, agreeing with the lower authorities that the expenditure was not incurred wholly and exclusively for the purpose of earning interest income from fixed deposits.

The Tribunal held that the ALV should be determined based on the municipal rateable value, as previously decided by a co-ordinate bench in the assessee's own case for the preceding year. The ALV was enhanced by 5% from the previous year's value.

The Tribunal held that the municipal rateable value, with a 5% annual increase, should be considered as the ALV for vacant properties, following its own previous decisions. The AO's higher estimation and the CIT(A)'s adjustment were not upheld.

The Tribunal condoned the delay in filing the appeals before the CIT(A), finding the assessee's reasons for delay to be reasonable. The Tribunal set aside the CIT(A)'s order and restored the appeals to the CIT(A)'s file for adjudication on merits.

The Tribunal directed the Assessing Officer to verify if the amount was offered as income in AY 2014-15. If confirmed, the protective addition in the impugned assessment year should be deleted, as income cannot be taxed twice.

The Tribunal upheld the reopening of assessment under Section 147, finding that the Assessing Officer had material to form a belief that income had escaped assessment. However, the addition made on account of lease premium, rent, and interest was restored to the Assessing Officer for fresh adjudication.

The Tribunal held that the assessee had sufficient own funds to cover the advance, and therefore, it should be presumed that the investment was made from interest-free funds. Consequently, the disallowance of interest was not warranted.

The Tribunal held that the matter was adjudicated in the assessee's own case for a prior assessment year, following the Bombay High Court's decision. It was decided that only the value fixed by municipal authorities can be used for computing deemed rent under Section 23(1)(a).

The Tribunal upheld the CIT(A)'s order, stating that discounts given to advertising agencies were a normal business practice and not commission. It also held that payments to Radio Jockeys were for professional services, not salary, and tax was correctly deducted under Section 194J.

The Tribunal held that the CBDT Circular No. 5/2012 is prospective and not applicable to the assessment year in question. Therefore, the disallowance made by the lower authorities was set aside.

The Tribunal held that the assessee had discharged their onus by providing loan confirmations, bank statements, PAN, and ITRs of the lenders. Therefore, the addition made under Section 68 was deleted.

The Tribunal held that the initial claim of entire interest expenditure was a bonafide mistake, not an intentional concealment of income. Therefore, the penalty levied under Section 271(1)(c) was unwarranted.

The Tribunal found that the AO and CIT(A) had not adequately examined the assessee's contentions regarding F&O transactions and the nature of business expenses. For the sundry creditors, the Tribunal noted that the AO had not properly applied Section 41(1) of the Act.

The Tribunal held that there is no bar to issuing shares at a high premium if a valuation report is obtained and the investment is through banking channels. The CIT(A) had rightly considered the evidence of identity, creditworthiness, and genuineness of the transaction.

The Tribunal held that the PCIT's exercise of jurisdiction under section 263 was invalid. The Assessing Officer had conducted due inquiry, and the Supreme Court decision cited by the PCIT was not available at the time of assessment.

The Tribunal restored the issue of interest calculation under Section 244A to the AO for fresh examination based on a High Court decision. For the auditor's travel expenses, the Tribunal set aside the CIT(A)'s order and remanded the issue to the AO for fresh adjudication.

The Tribunal restored the issue of annual letting value of unsold flats to the AO for fresh adjudication, considering the jurisdictional High Court and Supreme Court decisions, and also noting the AO's lack of basis for quantification. Grounds related to ad-hoc disallowances for repairs, travelling, and communication expenses were dismissed.

The Tribunal held that the Pr. CIT's exercise of revisionary jurisdiction under Section 263 was not valid. The assessee had fulfilled the conditions for claiming deduction under Section 80IA(4), and the ownership of the infrastructure facility was not a prerequisite for the enterprise claiming the deduction.

The Tribunal upheld the CIT(A)'s direction to the AO to verify derivative transactions based on ITAT precedents. The cross-objection regarding setting off derivative losses was set aside to the AO for fresh consideration.

The Tribunal held that the reopening of the concluded assessment was invalid as it disregarded a prior jurisdictional Tribunal order. Consequently, the reassessment proceedings were quashed.

The Tribunal noted that on identical facts for the preceding assessment year, a similar penalty was deleted by the Tribunal. Following that precedent, the Tribunal deleted the penalty imposed on the assessee for the current assessment year.

The Tribunal restored the issues of royalty, technical knowhow fees, and Microsoft licensing fees to the AO/TPO for fresh examination, considering the assessee as a 'Licensed Manufacturer'. The disallowance of ASP Management fees was also restored for fresh examination. The Revenue's appeal regarding warranty expenses was dismissed, upholding the DRP's decision.

The Tribunal held that the assessee had discharged their onus by providing loan confirmations, bank statements, PAN, and ITRs of the lenders. Therefore, the addition made under Section 68 was deleted.

The Tribunal held that while the purchases might not be entirely genuine, adding the full amount was incorrect. Following the Gujarat High Court's decision, the Tribunal restricted the addition to 12.5% of the total bogus purchases, considering only the profit element.

The Tribunal upheld the disallowance of professional fees paid to PAG, agreeing with previous decisions that the services were de facto provided by a director of the assessee company, not PAG itself. However, issues regarding business service centre expenses and telephone expenses were restored to the Assessing Officer for fresh adjudication.

The Tribunal held that the issue of allowability of provision for warranty expenses was covered by its previous orders in the assessee's own case. Following the precedent, the Tribunal upheld the CIT(A)'s order.

The Tribunal upheld the CIT(A)'s decision, following a previous ruling in the assessee's own case for AY 2007-08. It directed the AO/TPO to determine the arm's length price by applying LIBOR plus 2% on the monthly closing balance of advances.

The Tribunal found that the assessee neither produced the suppliers nor substantiated the genuineness of purchases. However, acknowledging that there cannot be sales without purchases, the addition was sustained at 12.5% of the bogus purchases.

The Tribunal held that the reassessment proceedings were valid and the addition as deemed dividend under Section 2(22)(e) was justified. The Tribunal found that the transaction was not a commercial transaction and the repayment of the amount did not alter its character as deemed dividend.

The Tribunal held that the reopening of the concluded assessment was invalid as it disregarded a prior jurisdictional Tribunal order. Consequently, the reassessment proceedings were quashed.

The Tribunal held that merely making a claim which is not sustainable in law does not amount to furnishing inaccurate particulars of income. The Tribunal noted that the details of the interest expenditure and the non-deposit of TDS were discernible from the assessee's records.

The Tribunal held that the assessee had discharged their onus by providing loan confirmations, bank statements, PAN, and ITRs of the lenders. Therefore, the addition made under Section 68 was deleted.

The Tribunal held that the Assessing Officer (AO) had not correctly applied the law regarding the taxation of income from house property, making the assessment order erroneous and prejudicial to revenue. The Principal CIT was justified in passing the revision order.

The Tribunal, considering the amendment to Section 23(5) of the Income Tax Act, 1961, which deems the ALV of stock-in-trade properties as nil for a period, set aside the CIT(A)'s order. For the issue of interest expenditure disallowance, the Tribunal admitted additional evidence and remitted the matter to the AO for de novo assessment.