ITAT Mumbai Judgments — February 2019

The Tribunal held that no fresh term loans were taken during the relevant financial year to finance CWIP, and the addition made by the AO was based on presumption. Therefore, the addition was deleted.

The Tribunal held that the Pr. CIT's order was not based on material evidence and was in the nature of a roving inquiry. Since the assessee had provided details of WIP to the AO, who had examined them, the Pr. CIT's revisionary order was not sustainable.

The Tribunal held that the AO had recorded reasons for the disallowance and that investments in subsidiaries for business promotion should not be considered for disallowance under Section 14A. It also allowed the deletion of disallowance for late filing fees for service tax returns.

The Tribunal held that receipts from the sale of software products are not taxable as royalty. This decision was based on previous judgments in the assessee's own case and the principle of interpreting tax laws in favour of the assessee.

The Tribunal held that since all material facts regarding the loss were disclosed and the assessee was under a bona fide belief about its allowability, the penalty under Section 271(1)(c) was not leviable. The Tribunal followed the decision of the Allahabad High Court in Paswara Petrochem Ltd. v. CIT.

The Tribunal held that the research and development expenditure was operational in nature and intended for the furtherance of the enterprise. Citing Supreme Court judgments, it was determined that such expenses are revenue in nature.

The Tribunal held that the AO's order was bad in law due to the violation of natural justice by not allowing the assessee to cross-examine the person whose statement was relied upon. The matter was restored to the AO for de novo assessment.

The Tribunal held that the penalty proceedings were initiated by the Joint Commissioner, and the penalty order was passed within the prescribed time limit. However, the matter was restored to the Joint Commissioner to verify if the recipients of the payments had already paid taxes.

The Tribunal held that the penalty proceedings were initiated by the Joint Commissioner, and the penalty order was passed within the prescribed time limit. However, the matter was restored to the Joint Commissioner to verify if the recipients of the payments had already paid taxes.

The Tribunal held that the AO had recorded reasons for the disallowance and that investments in subsidiaries for business promotion should not be considered for disallowance under Section 14A. It also allowed the deletion of disallowance for late filing fees for service tax returns.

The Tribunal partly allowed the assessee's appeal. It confirmed the disallowance of donations and rent expenses due to lack of supporting evidence, but allowed other minor business expenses based on self-made vouchers and their insignificance relative to total expenses.

The Tribunal held that the AO rejected the books of account based on surmises and conjectures without finding any specific defects. The AO also failed to reject the assessee's explanation for the variations in expenses and consumption.

The Tribunal held that while the sales were not doubted, a 100% disallowance for bogus purchases was not justified. However, a 12.5% disallowance was deemed appropriate given the purchases were made from the grey market. The disallowance was further restricted by the gross profit rate already declared by the assessee on these transactions.

The Tribunal upheld the deletion of penalty by the CIT(A). The CIT(A) reasoned that the change in head of income was based on a possible view supported by tribunal decisions, and the depreciation disallowance was a cascading effect of earlier adjustments, also covered by prior tribunal rulings.

The Tribunal held that the unspent surplus of the assessee was below the taxable limit of ₹2.50 lakhs. It directed the CIT(A) to consider the provisions of Section 164(2) of the Act, which states that such income should be taxed at the rate applicable to an Association of Persons (AOP).

The Tribunal found the CIT(A)'s estimation of 12.5% profit on bogus purchases to be on the higher side. It directed the AO to recompute the income by applying a profit rate of 5%.

The Tribunal found the 12.5% profit rate to be on the higher side, considering the nature of the business and the fact that VAT was paid on these purchases. Therefore, it directed the AO to recompute the income by applying a profit rate of 5%.

The Tribunal found the 12.5% profit rate to be on the higher side, considering the nature of the business and the fact that VAT was paid on these purchases. Therefore, it directed the AO to recompute the income by applying a profit rate of 5%.

The assessee's counsel moved an application to withdraw the appeal. The Departmental Representative had no objection to the withdrawal.

The ITAT admitted the additional evidences filed by the assessee. The matter was restored back to the CIT(A) for reconsideration and decision after considering all the evidences.

The Tribunal held that the interest rate charged by the assessee (LIBOR + 400 bps) was at arm's length, considering its own past rulings and the AE's borrowing rates. The Tribunal also directed the AO to consider the issues of Dividend Distribution Tax credit and TDS credit as per law, subject to factual verification.

The Tribunal found the CIT(A)'s order to be bizarre, especially the adverse inference drawn without the AO's response. The issue was remitted back to the AO for fresh consideration.

The Tribunal partly allowed the appeal, confirming the disallowance of donations and rent expenses due to lack of supporting evidence. However, it allowed other minor business expenses, considering their small proportion to total expenses and the presence of self-made vouchers.

The Tribunal upheld the penalty levied under Section 271D, agreeing with the CIT(A) that the assessee failed to demonstrate any reasonable cause or business exigency for accepting the cash loan in violation of Section 269SS.

The Tribunal upheld the CIT(A)'s order, following a series of its own previous decisions and a High Court judgment. It was held that the income derived from operating and running malls, which involves complex commercial activities and provision of various services, constitutes business income and not income from house property.

The Tribunal upheld the CIT(A)'s decision on both issues. For the annual letting value, it followed the Bombay High Court and a coordinate bench's ruling. For Section 14A, it agreed that no disallowance was warranted as no expenditure related to investments was debited to the profit and loss account.

The Tribunal held that the disallowance under Section 14A read with Rule 8D cannot exceed the amount of exempt income earned by the assessee. This decision was based on a prior ruling in the assessee's own case.

The Tribunal noted that the assessee submitted evidence and arguments supporting the claim that the club expenses were for business purposes. The AO and CIT(A) had confirmed the disallowance without fully considering this evidence.

The Tribunal held that the reopening of assessment was invalid as it was based on a change of opinion and not on fresh material. The Tribunal also found that the CIT(A) had erred in not properly adjudicating the validity of reopening.

The Tribunal held that Rule 8D, which prescribes the method for disallowance under Section 14A, was not applicable retrospectively to assessment years prior to 2008-09. Therefore, the disallowance made by applying Rule 8D for AY 2006-07 was not sustainable.

The Tribunal held that the revised computation of book profits should not be rejected solely because it was not filed with the original return. It referred to the Apex Court's decision in Goetze (India) Ltd. v. CIT, which allows ITAT to admit grounds not originally filed.

The Tribunal condoned the delay in filing the appeal and admitted additional evidence. It directed the Assessing Officer to reconsider the claim for exemption under Section 54F and the issue of notional rental income, granting the assessee an adequate opportunity to be heard.

The Tribunal upheld the orders of the lower authorities, including the CIT(A), as the assessee failed to appear before the Tribunal and provide any explanation or new address for service of notice. The grounds of appeal raised by the assessee were dismissed.

The Tribunal dismissed the appeal, citing CBDT Circular No. 03/2018 which mandates that appeals with a tax effect below Rs. 20 Lakhs should not be filed. The issues raised were left open for future examination.

The Tribunal noted that GP rates tend to decrease with increased turnover. Considering the turnover in the current year was lower than in AY 2011-12, a higher GP rate was deemed appropriate.

The Tribunal held that rental income from letting out a building terrace for cell phone towers should be assessed under the head 'Income from House Property', allowing for statutory deductions under Section 24(a). This decision followed a consistent view of the Tribunal on similar facts.

The Tribunal held that while the purchases were not proved to be genuine, only the profit element embedded in such purchases should be taxed, not the entire amount. The AO was directed to estimate profit at 12.5% on the alleged bogus purchases.

For AYs 2003-04, 2004-05, and 2006-07, the matters were restored to the CIT(A) for a fresh decision on the enhancement of income issue. For AY 2005-06, the matter was restored to the CIT(A) to decide the issue of expenses for commission income. For AYs 2007-08 and 2008-09, the appeals were dismissed as the grounds were general and the penalty issue was premature.

The Tribunal upheld the CIT(A)'s deletion of the Section 41(1) addition, finding no cogent reason for it. Regarding Section 14A, the Tribunal acknowledged the assessee's arguments but the final decision on this ground is not fully detailed in the provided excerpt. The Tribunal also upheld the CIT(A)'s deletion of interest expenditure allocation to the Baddi unit for Section 80IC deduction.

The Tribunal decided to correct the typographical error in its previous order. The words "entry level" on pages 9 and 10 of the order dated 16.01.2019 are to be replaced with "entity level".

The Tribunal held that rental income from letting out a building terrace for cell phone towers should be assessed under the head 'Income from House Property', allowing for statutory deductions under Section 24(a). This decision followed a consistent view of the Tribunal on similar facts.

The Tribunal noted that the assessee failed to produce crucial evidence before the lower authorities due to staff issues. Considering the additional evidence filed, the Tribunal set aside the issue of foreign exchange loss on loan conversion to the AO for fresh consideration.

The Tribunal found that some additions were made without sufficient verification and directed the Assessing Officer to re-examine these issues in light of the evidence provided by the assessee. However, some additions were upheld where the assessee failed to provide adequate explanations.

The Tribunal held that export commission paid to non-residents without a permanent establishment in India is not taxable in India. Therefore, Section 195 and the consequent disallowance under Section 40(a)(i) are not applicable.

The Tribunal held that when a capital asset is acquired by inheritance, the cost of acquisition for indexation purposes should be taken from the year the previous owner first held the asset. Therefore, the assessee was entitled to indexation from 1981.

The Tribunal held that the AO erred in making the addition without providing the assessee an opportunity to cross-examine the individuals whose statements were recorded behind the assessee's back. The Tribunal found that the assessee had provided sufficient evidence regarding the identity, creditworthiness, and genuineness of the loan transaction.

The Tribunal held that a mere change in the head of income, even if it results in an enhancement of income, does not automatically constitute furnishing inaccurate particulars of income. Following a co-ordinate bench decision, the Tribunal directed the deletion of the penalty.

For AYs 2003-04, 2004-05, and 2006-07, the matters were restored to the CIT(A) for a fresh decision on the enhancement of income issue. For AY 2005-06, the matter was restored to the CIT(A) to decide the issue of expenses for commission income. For AYs 2007-08 and 2008-09, the appeals were dismissed as the grounds were general and the penalty issue was premature.

For AYs 2003-04, 2004-05, and 2006-07, the matters were restored to the CIT(A) for a fresh decision on the enhancement of income issue. For AY 2005-06, the matter was restored to the CIT(A) to decide the issue of expenses for commission income. For AYs 2007-08 and 2008-09, the appeals were dismissed as the grounds were general and the penalty issue was premature.

For AYs 2003-04, 2004-05, and 2006-07, the matters were restored to the CIT(A) for a fresh decision on the enhancement of income issue. For AY 2005-06, the matter was restored to the CIT(A) to decide the issue of expenses for commission income. For AYs 2007-08 and 2008-09, the appeals were dismissed as the grounds were general and the penalty issue was premature.