ITAT Mumbai Judgments — April 2019

The Tribunal decided to give the assessee one more opportunity to explain the source of capital introductions. The issue was restored to the file of the AO for fresh adjudication.

The CIT(A) sustained 10% of the addition and deleted 90%, considering the assessee's profit margins and the details provided. The Tribunal upheld the CIT(A)'s decision, finding no error in reducing the disallowance.

The Tribunal, following its own earlier decision for the assessment year 2007-08, held that the expenses incurred for capacity expansion of an existing unit should be treated as revenue expenditure. Consequently, the disallowance made by the lower authorities was set aside.

The Tribunal noted that a co-ordinate bench had directed the Assessing Officer to assess the profit margin on bogus purchases at 3%. Therefore, the Revenue's appeal was rendered infructuous.

The Tribunal held that the penalty notice was bad in law because the AO failed to strike off the inappropriate/redundant words, thus not specifying the exact charge. This deprived the assessee of a reasonable opportunity to respond.

The Tribunal upheld the CIT(A)'s deletion of the addition for deferred sales tax, stating it is not covered by Section 115JB. It also upheld the allowance of set off of unabsorbed depreciation, following High Court judgments that removed the 8-year carry forward restriction.

The Tribunal acknowledged that the assessee failed to substantiate the genuineness of the purchases. However, it found the 25% disallowance to be exorbitant and restricted it to 5% of the purchase value.

The Tribunal held that the disallowance under Section 40(a)(ia) is not sustainable as the TDS amount was paid before the due date of filing the return of income, and the amendment to the section applies retrospectively. The disallowance was directed to be deleted.

The Tribunal agreed that the purchases were not genuine from the stated party but were from the open market. However, it found the AO's estimation of profit at 12.5% to be unjustified for the diamond trade, reducing it to 3%.

The Tribunal held that while the assessee failed to prove the genuineness of purchases, the sales were not doubted. Considering the low profit margins in the business, the addition should be restricted to 2% of the non-genuine purchases.

The Tribunal upheld the Commissioner (Appeals)'s decision, allowing depreciation on the non-compete fee by treating it as an intangible asset. This was based on consistent previous rulings by the Tribunal and High Court decisions.

The Tribunal held that Section 271AAA is not applicable as the search was initiated after July 1, 2012, making Section 271AAB the relevant provision. Since the CIT(A) confirmed the penalty under an inapplicable section, the order was set aside.

The Tribunal held that unsold flats treated as stock-in-trade by a builder and developer cannot be taxed as income from house property. Income derived from such stock should be treated as business income.

The Tribunal held that a return filed under Section 153A is treated as the original return for all purposes, including penalty proceedings. Therefore, concealment must be examined vis-à-vis the Section 153A return, not the original Section 139 return.

The Tribunal upheld the deletion of disallowances related to depreciation on leased assets and expenditure on club facilities, following previous rulings. The issue of lease equalization reserve was restored to the AO for re-computation.

The Tribunal held that only the profit element embedded in the bogus purchases should be taxed, not the entire amount. Following High Court decisions, the disallowance was restricted to 12.5% of the non-genuine purchases.

The Tribunal held that insurance claims for damaged assets cannot be considered profits derived from export for the purpose of Section 10AA deduction. However, it admitted an additional ground for allowing expenditure related to this income if treated as 'other sources'.

The Tribunal held that Section 41(1) is applicable only when the assessee obtains a benefit by way of remission or cessation of liability. Since the assessee did not obtain any such benefit and the liability remained outstanding, the addition was not justified.

The Tribunal held that when sales are not doubted, a 100% disallowance for bogus purchases cannot be made. The disallowance was modified to 12.5% of the bogus purchases, reduced by the gross profit rate already declared by the assessee.

The Tribunal held that 'Apitco Ltd.' cannot be considered a comparable in transfer pricing as it is a government company and has been excluded in previous judicial pronouncements. It also held that channel placement fees are not in the nature of royalty, thus disallowance under Section 40(a)(ia) was incorrect.

The Tribunal upheld the Pr.CIT's order, finding that the AO had not applied his mind to the issue of disallowance under Section 14A and had failed to conduct proper inquiry regarding the exclusion of investments in partnership firms. This non-application of mind rendered the assessment order erroneous and prejudicial to the revenue.

The Tribunal admitted the additional grounds, finding that notices under Section 143(2) were sent to the assessee's old address, which was no longer valid and known to the AO. Consequently, the assessment was held to be void due to non-service of mandatory notices.

The Tribunal held that interest income derived by a co-operative society from its investments with any other co-operative society is eligible for deduction under Section 80P(2)(d). The fact that the investment was with a co-operative bank, which is itself a co-operative society, does not disqualify the deduction.

The Tribunal held that only the profit element embedded in the bogus purchases should be taxed, not the entire amount. Following High Court decisions, the disallowance was restricted to 12.5% of the non-genuine purchases.

The Tribunal held that the appeal filed by the Revenue had a tax effect below the monetary limit prescribed by the CBDT. Therefore, the appeal was dismissed as withdrawn.

The Tribunal held that the payments made to foreign residents were plain commission and brokerage, not fees for technical services. Following its own previous decisions and the Bombay High Court's ruling, the Tribunal found no requirement for withholding tax under section 195.

The Tribunal held that the assessee had sufficiently discharged its onus to prove that the WIP was carried forward to subsequent years and the income was offered for taxation in AY 2003-04. The revenue failed to provide cogent material to disprove the assessee's contentions.

The Tribunal deleted the disallowance under rule 8D(2)(ii) as interest-free funds were sufficient. For disallowance under rule 8D(2)(iii), the AO was directed to re-compute by considering only income-yielding investments.

The Tribunal upheld the penalty imposed under section 271(1)(b) as the assessee showed contempt for statutory notices and provided no reasonable cause for non-compliance.

The Tribunal held that the assessee did not file the revised return voluntarily but only after being confronted by the Assessing Officer regarding the incorrect claim of loss on sale of fixed assets. Therefore, the penalty was upheld.

The Tribunal held that re-characterizing preferential shares as an interest-free loan is invalid, following previous High Court and Tribunal decisions. It also held that disallowance of interest expenditure on loans advanced to related parties and the foreign subsidiary was not justified.

The Tribunal held that the penalty orders were barred by limitation as prescribed under Section 275 of the Income Tax Act. The revenue failed to provide evidence that the penalty proceedings were initiated within the prescribed time frame.

The Tribunal held that only the profit element embedded in the bogus purchases should be taxed, not the entire amount. Following High Court decisions, the disallowance was restricted to 12.5% of the non-genuine purchases.

The Tribunal affirmed the order of the CIT(A) who deleted the addition. The CIT(A) found that the assessee and CDDPL were taxed at marginal rates, and CDDPL was not a paper concern providing accommodation entries.

The Tribunal held that expenses incurred after setting up a business but before its commencement are allowable. Following a coordinate bench's decision on identical facts for a previous assessment year, the Tribunal upheld the CIT(A)'s order.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 5% of the bogus purchases, following its own precedent in the assessee's own case for a prior assessment year. The Tribunal also deleted the addition made by the AO on account of commission.

The Tribunal held that the CIT's revisionary order under Section 263 was without jurisdiction. This was because the issue regarding the determination of ALV was already a subject matter of appeal before the CIT(A) and had been decided in the assessee's own case for earlier years, barring the CIT's jurisdiction.

The Tribunal held that merely because a claim made by the assessee was not accepted by the revenue, it does not automatically attract penalty under Section 271(1)(c). The penalty was deleted as the assessee had not furnished inaccurate particulars and the claim was not lacking in good faith or due diligence.

The Tribunal held that the reassessment proceedings were invalid as the Assessing Officer reopened the assessment based on a mere change of opinion, as all relevant material was available during the original assessment. Therefore, the additional ground of appeal regarding the invalidity of reassessment was allowed.

The Tribunal held that managerial services are not covered under the definition of FTS in the India-Netherland Tax Treaty. Furthermore, even if services had technical elements, the assessee did not 'make available' technical knowledge to the subsidiary for independent use.

The Tribunal upheld the CIT(A)'s order, accepting the revised return. It was held that the error was a genuine punching mistake, and substantial justice should be done by taxing the correct income.

The Tribunal held that the amount received by the assessee was on account of the transfer of possessory rights in the property, which was rightly offered for tax under the head 'Capital Gains'. The CIT(A)'s order was upheld.

The Tribunal held that the assessee had furnished complete details and provided a satisfactory explanation for the claims, which were withdrawn during the assessment proceedings. Therefore, no penalty was leviable.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 12.5% of the bogus purchases. It distinguished the case from precedents where full disallowance was made, noting that the assessee's books were not rejected and sales were not doubted.

The Tribunal held that a return filed under Section 153A is treated as the original return for all purposes, including penalty proceedings. Therefore, concealment must be examined vis-à-vis the Section 153A return, not the original Section 139 return.

The Tribunal found defects in the DVO's valuation report, noting that comparable instances were from different localities and years. The Tribunal set aside the CIT(A)'s order and remanded the issue back to the AO for fresh determination of capital gains.

The Tribunal acknowledged the assessee's failure to prove the purchases but considered the high turnover and the fact that purchase bills were available. Therefore, a reasonable disallowance of 30% of the purchases was deemed appropriate.

The Tribunal held that since the additions forming the basis of the penalty were already deleted by a previous ITAT order in the assessee's own case, the penalty had no survival basis and was liable to be cancelled.

The Tribunal set aside the ex-parte order of the CIT(A) and restored the matter back for decision on merits. The assessee was directed to appear before the CIT(A) within 30 days.

The Tribunal held that the addition on account of bogus purchases should be restricted to 12.5% less the Gross Profit (GP) of the current year. The cross-objection by the assessee challenging the reopening of assessment was dismissed.