ITAT Mumbai Judgments — March 2019

The Tribunal found that the jurisdictional issue raised by the assessee was identical to a previously decided case for AY 2009-10. Both parties agreed that the matter should be restored to the PCIT for fresh adjudication.

The Tribunal held that while the purchases were not entirely genuine, a 100% disallowance was excessive. They directed a 20% disallowance of the purchases to be brought to tax.

The Tribunal held that the disallowance of Keyman insurance premium was incorrect. It followed a previous decision in the assessee's own case where similar deductions were allowed because the sum assured would be received by the assessee company.

The Tribunal held that the assessee was not given an adequate opportunity to cross-examine the party providing the accommodation entries. Therefore, the matter was restored to the AO for a fresh assessment after providing this opportunity.

The Tribunal dismissed the appeals as withdrawn, accepting the assessee's request in light of the MAP resolution. The MAP resolution provided a framework for taxing offshore supply, offshore service, and onshore contracts.

The Tribunal held that the assessee's activities, primarily focused on promoting housing for its members on a self-financing basis, could not be considered charitable objects under the definition of 'charitable purpose'. The Tribunal confirmed the Commissioner's order.

The Tribunal held that the subsidy should be reduced from the closing stock of the film, not just the cost debited to the profit and loss account. The balance cost should be carried forward as opening stock for the next year.

The Tribunal held that the High Court's decision in the assessee's own case, which deleted the transfer pricing adjustment on corporate guarantee commission, was applicable. The Tribunal found no material difference in facts between the current year and earlier years.

The Tribunal noted that a coordinate bench had previously restored similar issues to the AO for fresh consideration. Therefore, the Tribunal also restored the current issue to the AO for fresh adjudication.

The Tribunal found that while the loan was routed through banking channels and TDS was complied with, the non-appearance of the lender in response to summons and the lender's financial status raised suspicion. However, the AO's reliance solely on non-appearance was not sufficient to conclusively prove a sham transaction.

The Tribunal held that the written-off loan liability cannot be taxed under Section 28(iv) as it was not a benefit in kind, nor under Section 41(1) as it was not a trading liability for which a deduction was previously claimed. The waiver of the loan was considered a capital receipt.

The Tribunal held that the penalty proceedings were bad in law because the AO issued a vague notice under Section 274 read with Section 271(1)(c) without striking off the inapplicable portion, indicating a non-application of mind. Consequently, the penalty order was quashed.

The Tribunal upheld the CIT(A)'s order, stating that since the quantum addition was deleted, the penalty levied under Section 271(1)(c) would not survive, following the Supreme Court's decision in KC Builders v. ACIT.

The Tribunal held that prior to the amendment effective from April 1, 2015, Section 54 allowed deduction for investment in 'a residential house', which could include multiple units. Therefore, the assessee was entitled to the deduction for both flats.

The Tribunal held that foreign exchange loss on restatement of an existing liability for advance receipts cannot be allowed as a deduction unless the transaction is crystallized by performance or cancellation of the contract. The case laws relied upon by the assessee were found not applicable to the facts.

The Tribunal held that the assessee had disclosed all necessary facts in its audited accounts and there was no suppression or deliberate concealment of income. The provisions disallowed were due to a bonafide belief about their allowability, not an intention to evade tax.

The Tribunal condoned the delay in filing the appeals, considering the reasons provided by the assessee and the principle of advancing substantial justice. The matter was then remanded back to the CIT(A) for adjudication on merits.

The Tribunal held that the issue is covered by the Bombay High Court's decision in CIT v. Hindustan Organics Chemicals Ltd. The disallowance made for delayed payment of employee's provident fund contribution, which was paid before the due date for filing the return, was directed to be deleted.

The Tribunal noted that the tax effect was below the monetary limit for filing appeals as per CBDT Circular No. 03/2018. Therefore, the appeal was dismissed as not maintainable.

The Tribunal held that a period of inactivity in business does not automatically disallow expenses incurred in the normal course of business. The assessee had substantiated that investment deals were in the pipeline, and subsequent years showed business income, indicating the business was not abandoned.

The Tribunal upheld the reopening of assessment, stating that the Assessing Officer had reason to believe income had escaped assessment based on information received. The Tribunal also sustained the disallowance of purchases, estimating profit at 12.5% as the genuineness of purchases could not be proven.

The Tribunal followed its coordinate bench's decision in the assessee's own case, which held that disallowance under Section 14A read with Rule 8D cannot exceed the exempt income. The Tribunal found no infirmity in the CIT(A)'s order deleting the addition.

The Tribunal held that the assessee failed to comply with the mandatory requirement of Section 44AB by not obtaining the audit report within the prescribed time. Consequently, the penalty under Section 271B was rightly imposed.

The Tribunal found that the AO failed to establish a nexus between the borrowed funds and the ICD advanced. It also noted that the issue of interest-free funds being sufficient to cover investments is a question of fact requiring detailed examination.

The Tribunal held that since the addition was restricted to 25% on an estimation basis by a previous ITAT order, and in similar circumstances, penalty was deleted by the ITAT Ahmedabad Bench, the penalty in this case should also be deleted.

The Tribunal found that the assessee should have been given another opportunity to present their case. The assessee was also directed to cooperate fully in the proceedings before the CIT(A).

The Tribunal held that the agricultural income should be accepted to the extent of 75%, consistent with past practice, as there was no change in facts. Regarding the property, the Tribunal ruled that the annual value was taxable in the assessee's hands as the owner, but the arbitrary estimation of Rs. 21 lakhs by lower authorities was incorrect.

The Tribunal acknowledged that the assessee failed to substantiate the genuineness of the purchases. However, it found the CIT(A)'s estimation of profit at 12.5% to be unsubstantiated and, following its own precedents, restricted the addition to 3% of the alleged bogus purchases.

The Tribunal held that while the reopening of assessment was valid, disallowing the entire purchases was not justified. The Tribunal restricted the disallowance to 12.5% of the impugned purchases, considering the principle that only real income is taxable.

The Tribunal held that the standard deduction under Section 24(a) is not allowable for rental income of a charitable trust claiming exemption under Section 11. It also held that the revised claim for accumulation of income under Section 11(2) made after six years, to overcome the disallowance, was not permissible.

The Tribunal found that the assessee should have been given another opportunity to present their case. The assessee was also directed to cooperate fully in the proceedings before the CIT(A).

The Tribunal upheld the decision of the CIT(A) to delete the disallowance. It was held that no disallowance under Section 14A can be made if the assessee has not earned any exempt income.

The Tribunal held that the disallowance of Keyman insurance premium was incorrect. It followed a previous decision in the assessee's own case where similar deductions were allowed because the sum assured would be received by the assessee company.

The Tribunal held that the CIT(A) should have granted one more opportunity to the assessee to present their case. The assessee was also directed to cooperate with the proceedings without seeking unnecessary adjournments.

The Tribunal held that for the assessment year prior to AY 2008-09, Rule 8D was not applicable. It restricted the disallowance under Section 14A to 2% of dividend income, following its own precedent. The issues regarding interest under Sections 234C and 234D were remanded to the AO for verification and fresh adjudication.

The Tribunal upheld the CIT(A)'s decision, finding that the assessee had provided sufficient documentary evidence, including bank statements, purchase bills, and transporter details, to substantiate the genuineness of the purchases and expenses. The Tribunal also noted that the payments were made through banking channels and tax was deducted at source where applicable.

The Tribunal held that the CIT(A) should have admitted the additional evidence and should have examined it, possibly by calling for a remand report. The assessee was found to have a reasonable cause for not furnishing the evidence earlier.

The Tribunal held that the assessee had discharged its initial onus by providing sufficient evidence for the unsecured loans. The AO's addition, based solely on the unprovided and uncross-examined statement of PKJ, was found to be in violation of natural justice and thus unsustainable.

The Tribunal condoned the one-day delay in filing the appeal. It held that the issue of disallowance under Section 14A should be restored to the AO for fresh adjudication, directing the assessee to provide detailed working and investment portfolio management details.

The Tribunal found that the assessee should have been given another opportunity to present their case. The appeal was restored to the Ld.CIT(A) for denovo adjudication, with a direction for the assessee to cooperate with the proceedings.

The Tribunal upheld the reopening of assessment, stating that the Assessing Officer had reason to believe income had escaped assessment based on information received. The Tribunal also sustained the disallowance of purchases, estimating profit at 12.5% as the genuineness of purchases could not be proven.

The Tribunal found that the CIT(A) had correctly deleted the additions. The statement of Kiran Shah was found to be unreliable due to contradictory statements and lack of corroborating evidence, especially after cross-examination.

The Tribunal followed a previous ruling stating that appeals against assessment orders passed before March 1, 2016, could be filed manually, even if the electronic filing system was introduced. Therefore, the CIT(A) was directed to admit the appeal and decide on its merits.

The Tribunal held that penalty on issues remitted to the Assessing Officer by ITAT in the quantum appeal is not sustainable and remitted the matter for fresh consideration. The penalty on interest income from savings bank account was deleted as it was considered a voluntary offer.

The Tribunal held that computation under Section 115JB should not be made by resorting to Section 14A and Rule 8D. It also held that only investments yielding exempt income should be considered for disallowance. Furthermore, if own funds exceed investments, disallowance of interest is unwarranted.

The Tribunal upheld the CIT(A)'s decision, following its own prior rulings in the assessee's own case. The data processing cost was not considered royalty, and the disallowance under Section 14A was deleted as no exempt income was earned by the branch.

The Tribunal held that the AO made an ad-hoc disallowance without any satisfaction that the assessee actually incurred expenses for earning exempt income. The CIT(A)'s order was considered hypothetical and based on guesswork.

The Tribunal held that prior to April 1, 2015, there was no explicit requirement for the new residential house to be purchased within India for Section 54 deduction. It also held that for inherited property, indexation can be calculated from the year the previous owner acquired it, following jurisdictional High Court decisions.

The Tribunal held that the assessee does not have a Permanent Establishment (PE) in India. Therefore, income from the sale of spare parts and CBU cars to MBIPL and directly to customers in India is not taxable in India.