ITAT Mumbai Judgments — February 2020

The Tribunal held that since the coordinate bench had already decided both the disallowances in favor of the assessee in the quantum appeal, the penalty order based on those disallowances did not survive. Therefore, the penalty was deleted.

The Tribunal found that the CIT(A) had not considered all the evidence and submissions provided by the assessee, including cash withdrawals, agricultural income details, and cash in hand reflected in balance sheets. Therefore, the sustained additions were not based on evidence.

The Tribunal followed the Bombay High Court's decision in Pr.CIT v. M/s. Mohommad Haji Adam & Co., directing the Assessing Officer to restrict the disallowance to the extent of bringing the Gross Profit rate on alleged bogus purchases to the same rate as genuine purchases.

The Tribunal held that the issue of non-media billing at cost needs to be verified by the AO regarding the reconciliation of the cost of services. If the cost of services related to non-media billing is excluded from the profit and loss statement, the addition to turnover may be deleted.

The Tribunal held that the expression 'sufficient cause' for condoning delay should receive a liberal construction to advance substantial justice. Technical considerations should not be preferred over substantial justice, especially when the delay is bona fide and not due to malafide or dilatory tactics.

The Tribunal held that Section 92A(1) cannot be applied on a standalone basis and must be considered in conjunction with Section 92A(2). Since the conditions in Section 92A(2) were not satisfied, the assessee and KE-S were not considered associated enterprises.

The ITAT noted that the tax effect was below the revised monetary limit for filing appeals before the ITAT as per CBDT Circular No. 17 of 2019. The Departmental Representative conceded that the appeal was covered by the circular.

The Tribunal set aside the ex-parte order of the CIT(A) and restored the matter back for fresh adjudication. The assessee was granted one more opportunity to present their case.

The Tribunal found no reason to interfere with the CIT(A)'s order, which restricted the addition to 12.5% of the purchases to serve the purpose of justice and address potential revenue leakage.

The Tribunal held that the AO had made necessary verifications and accepted the assessee's claim based on a plausible view supported by judicial precedents. Therefore, the Pr. CIT's order under Section 263 was set aside.

The Tribunal upheld the CIT(A)'s decision, agreeing that since corresponding sales were not disputed, the purchases were likely from the open market. The addition was rightly restricted to the estimated profit element.

The Tribunal upheld the CIT(A)'s order, stating that since the Section 263 order was quashed, the consequential assessment could not survive. The pendency of an appeal before the High Court against the ITAT's order was not considered a ground to disturb the CIT(A)'s decision in the absence of a stay.

The Tribunal held that Kaybee Exim Pte Ltd was not an associated enterprise of the assessee, as the conditions under Section 92A(1) of the Income Tax Act were not met when read in conjunction with Section 92A(2). Consequently, the penalties imposed were deleted.

The Tribunal found no reason to disturb the CIT(A)'s order, confirming the disallowance at 12.5% of the non-genuine purchases. The revenue's grounds of appeal were dismissed.

The Tribunal held that Kaybee Exim Pte Ltd was not an associated enterprise of the assessee, as the conditions under Section 92A(1) of the Income Tax Act were not met when read in conjunction with Section 92A(2). Consequently, the penalties imposed were deleted.

The Tribunal held that the amendment to Section 32(2) by the Finance Act, 2001, removed the 8-year restriction on carry forward and set off of unabsorbed depreciation. Therefore, the unabsorbed depreciation pertaining to AY 1998-99 to 2000-01 was allowable.

The Tribunal held that appeals against rectification orders, which only correct clerical mistakes and do not introduce new findings, are not maintainable. The Revenue had already appealed against the original orders.

The Tribunal held that the AO's reasons for reopening the assessment lacked the 'reason to believe' that income had escaped assessment, as per the Bombay High Court's ruling in a similar CCM case. Therefore, the reassessment proceedings were deemed bad in law.

The Tribunal held that the computation of capital gains is distinct from the rate of tax applicable. Therefore, STCLs on which STT was paid can be set off against STCGs on which STT was not paid, following a coordinate bench decision.

The Tribunal held that a claim for deduction not raised in the original return of income cannot be entertained by the AO, except through a revised return. Therefore, the AO was justified in rejecting the claim for the investment made on June 20, 2011.

The Tribunal held that the AO wrongly rejected the books of account as no specific defects were pointed out and the books were audited. The Tribunal also found the net profit declared by the assessee to be reasonable considering previous years' profits.

The Tribunal held that appeals against rectification orders, which only correct clerical mistakes and do not introduce new findings, are not maintainable. The Revenue had already appealed against the original orders.

The Tribunal held that Section 92A(1) cannot be applied on a standalone basis and must be considered in conjunction with Section 92A(2). Since the conditions in Section 92A(2) were not met, the assessee and KE-S could not be treated as associated enterprises.

The Tribunal held that the PCIT erred in revising the assessment order under Section 263 without satisfying the prescribed conditions. The reassessment was based on suppressed turnover, but the AO accepted the assessee's explanation for the original turnover. The revisionary proceedings were initiated for issues (expenses and unsecured loans) that were not the subject matter of the reopening notice.

The CIT(A) restricted the addition to 12.5% of the alleged bogus purchases, considering it as the profit element. The Tribunal upheld this decision, noting that the corresponding sales were not denied and a full disallowance was not warranted.

The Tribunal held that the mutuality concept is not applicable when the assessee provides services to both members and non-members. It also noted that the assessee was granted 12A registration recognizing its charitable objectives.

The Tribunal held that penalty under Section 271(1)(c) cannot be levied when additions are made on an estimated basis. Relying on various High Court and Tribunal decisions, it was concluded that estimated additions do not constitute concealment or furnishing of inaccurate particulars.

The Tribunal found that the CIT(A) had not properly verified the additional evidence submitted by the assessee. Therefore, the Tribunal set aside the CIT(A)'s findings and remanded the issues back to the Assessing Officer for fresh adjudication after verifying the evidence and providing an opportunity of being heard to the assessee.

The Tribunal held that the AO must record satisfaction before invoking Rule 8D. However, it also ruled that only investments yielding exempt income should be considered for calculating the disallowance under Rule 8D(2)(iii). Furthermore, the disallowance under Section 14A should not be added for computing book profit under Section 115JB.

The Tribunal held that the compensation received was for an option agreement, not for actual letting out or deemed letting out of the property. Therefore, it could not be assessed under the head 'Income from house property'.

The Tribunal, following the Bombay High Court's decision in Pr.CIT v. M/s. Mohommad Haji Adam & Co., directed the Assessing Officer to restrict the disallowance to the extent of bringing the Gross Profit rate on alleged bogus purchases to the same rate as genuine purchases.

The Tribunal noted that the assessee could not substantiate the authenticity of the purchases. Following its own previous order in similar cases, the Tribunal restricted the addition to 2% of the impugned purchases.

The CIT(A) restricted the disallowance to 12.5% of the non-genuine purchases, considering that the sales were not doubted and following various judicial precedents. The Tribunal found no infirmity in the CIT(A)'s order.

The Tribunal agreed that a profit element should be estimated from non-genuine purchases, but found the 12.5% rate to be too high. They directed the Assessing Officer to estimate the profit element at 4% of the non-genuine purchases.

The Tribunal held that the expenses were crystallized during the year and the assessee had made full disclosures. Mere disallowance of a claim does not equate to furnishing inaccurate particulars or concealment of income.

The Tribunal found that the assessee was not given a proper opportunity to be heard due to notices being sent to the wrong address. Therefore, the appeal was restored to the CIT(A) for a fresh adjudication.

The Tribunal held that ATM machines are computer equipment and eligible for depreciation at 60%, following the jurisdictional Bombay High Court decision. The disallowance of excess depreciation was vacated.

The Tribunal found that the expenses were mere reimbursement of costs incurred by the non-resident for displaying products and participating in a promotion festival. There was no element of supervision or control indicative of managerial services.

The Tribunal held that 'Apitco Ltd.' is not a comparable because it is a government undertaking engaged in high-end technical consultancy, functionally different from the assessee's business support services. Similarly, 'TSR Darshaw Limited' was deemed not comparable due to its engagement in BPO/KPO activities like payroll services.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance of management fees, noting it was paid as per an agreement and allowed in prior/subsequent years. The Tribunal also upheld the deletion of the addition related to GP ratio, finding the assessee's explanation for the fall in GP ratio satisfactory.

The Tribunal found that the CIT(A) had dismissed the appeal on the ground that the assessee was not eligible for exemption under Section 54F. However, the assessee had claimed exemption under Section 54. Therefore, the Tribunal set aside the CIT(A)'s order.

The Tribunal held that 'Apitco Ltd.' is not a comparable because it is a government undertaking engaged in high-end technical consultancy, functionally different from the assessee's business support services. Similarly, 'TSR Darshaw Limited' was deemed not comparable due to its engagement in BPO/KPO activities like payroll services.

The Tribunal held that the transaction with Hero Honda Motors Ltd. was indeed with the holding company, L&T Ltd., and the addition in the assessee's hands was not warranted, leading to potential double taxation. The reimbursement of ESOP costs was also allowed, considering past precedents and the nature of the expense as a reimbursement of personnel costs.

The Tribunal, following its own prior decision in the assessee's own case, held that 100% disallowance for bogus purchases is not justified when sales are not doubted. It directed the disallowance to be restricted to 12.5% of the alleged bogus purchases.

The Tribunal held that the transaction with Hero Honda Motors Ltd. was indeed with the holding company, L&T Ltd., and the addition in the assessee's hands was not warranted, leading to potential double taxation. The reimbursement of ESOP costs was also allowed, considering past precedents and the nature of the expense as a reimbursement of personnel costs.

The Tribunal held that the Commissioner (Appeals) was correct in deleting the transfer pricing adjustment, finding that internal TNMM was appropriate and the assessee's margin was higher than non-AE sales. Regarding the sundry creditor, the Tribunal directed deletion of the addition subject to verification of payment and offering to tax. The provision for sales return was disallowed as it was an anticipated loss, but consequential relief was to be granted if the loss crystallized later.

The assessee requested to withdraw the appeal as the grounds no longer survived due to the relief granted by the Assessing Officer. The Tribunal permitted the withdrawal of the appeal.

The Tribunal found that the assessee was not afforded a reasonable opportunity of being heard and that the CIT(A) had not recorded independent findings. Therefore, the matter was set aside to the AO for fresh assessment.

The Tribunal followed the Bombay High Court's decision in a similar case, directing the AO to restrict the addition to the extent of bringing the Gross Profit (GP) rate on disputed purchases to the same rate as other genuine purchases. The disallowance of the full amount was set aside.

The Tribunal held that the entire purchase price should not be added as income, but only the profit element embedded in the purchases. The ad-hoc disallowance of expenses was deleted due to the absence of a clear basis and lack of specific details called for by the AO.