ITAT Mumbai Judgments — May 2020

The Tribunal held that Ground-3 regarding amortization of terminal rights was covered by a previous decision in the assessee's own case. The judgment also discussed the interpretation of Section 80IA and the 'derived from' clause, referencing Supreme Court and High Court decisions. The pronouncement of the order was delayed due to the COVID-19 lockdown, which the Tribunal decided to exclude from the 90-day period for pronouncement.

The Tribunal dismissed the appeals for AY 2013-14, finding that the assessee was not entitled to MAT exemption beyond the period when its net worth turned positive. The appeals for AY 2014-15 were allowed for statistical purposes.

The Tribunal dismissed the appeals for AY 2013-14, finding that the assessee was not entitled to MAT exemption beyond the period when its net worth turned positive. The appeals for AY 2014-15 were allowed for statistical purposes.

The Tribunal dismissed the appeals for AY 2013-14, finding that the assessee was not entitled to MAT exemption beyond the period when its net worth turned positive. The appeals for AY 2014-15 were allowed for statistical purposes.

The Tribunal dismissed the appeals for AY 2013-14, finding that the assessee was not entitled to MAT exemption beyond the period when its net worth turned positive. The appeals for AY 2014-15 were allowed for statistical purposes.

The Tribunal held that the rejection of the Cost Plus Method (CPM) by the TPO and DRP was appropriate given the differences in functions, assets, and risks between AE and non-AE transactions. The Tribunal also addressed the delay in pronouncement of the order due to the COVID-19 lockdown.

The Tribunal held that the assessee had provided sufficient evidence for the purchases, including bills, ledger copies, and payment details. The disallowance was reduced by the CIT(A) to 5% of the alleged bogus purchases, which the Tribunal found to be reasonable given the evidence presented.

The Tribunal held that income from offshore supply of products and repair work is not taxable in India as these activities are separate, divisible, and independent. The Tribunal followed its own previous decision in the assessee's own case for earlier assessment years.

The Tribunal upheld the CIT(A)'s order, finding it well-reasoned. The Tribunal agreed that a reasonable profit margin on bogus purchases should be brought to tax, as per the Gujarat High Court's decision in CIT vs. Simit P. Sheth.

The Tribunal held that the Assessing Officer need not record satisfaction if the assessee makes no disallowance. However, the factual verification of interest-free funds and the computation of administrative expenses disallowance under Rule 8D(2)(iii) were directed to be re-examined.

The Tribunal held that the assessee had made a full disclosure of the arbitration award in its return and provided a legal opinion for not offering the income to tax, thus neither concealment nor inaccurate particulars could be alleged. The penalty was therefore not leviable.

The Tribunal held that the e-connectivity charges are revenue expenditure, consistent with its previous decisions in the assessee's own cases. The Assessing Officer was directed to allow the deduction as revenue expenditure.

The Tribunal allowed the deduction for software expenses as revenue expenditure, following its own prior decisions. It restored the issue of Section 35(2AB) deduction to the Assessing Officer for the assessee to furnish Form 3CM. The department's appeal regarding trademark purchase expenses was dismissed based on consistent rulings in favour of the assessee.

The Tribunal held that the CIT(A)'s dismissal was unsustainable as the assessee had filed both manual and e-appeals. The Tribunal considered the non-filing of the e-appeal as a technical mistake and that substantial justice should prevail over technicalities.

The Tribunal held that a cooperative bank is a cooperative society and therefore, interest earned by a cooperative society from its investments with a cooperative bank is eligible for deduction under Section 80P(2)(d). The orders of the lower authorities were set aside.

The Tribunal allowed the ground related to the inclusion of CENVAT credit in closing stock valuation, following previous decisions. It also allowed the ground concerning disallowance of interest on advances to subsidiaries, as similar disallowances were deleted in earlier years. The ground regarding set-off of MTM losses was dismissed as infructuous.

The Tribunal held that the e-connectivity charges are revenue expenditure, consistent with its previous decisions in the assessee's own cases. The Assessing Officer was directed to allow these expenses as revenue deduction.

The Tribunal held that the assessee's activities of manufacturing odoriferous substances, involving complex chemical processes, reactions, and lab testing, qualified as manufacturing for the purpose of Section 80IC. The Tribunal also addressed the delay in pronouncement of the order due to the COVID-19 lockdown.

The Tribunal held that the assessee's activities, involving complex mixing, chemical reactions, and lab testing of over 1500 raw materials to produce over 500 distinct odoriferous substances and perfumes, qualified as manufacturing for Section 80IC. The Tribunal also addressed the delay in pronouncement due to the COVID-19 lockdown.

The Tribunal held that the assessee's activities of mixing various chemicals with precise formulations, controlled temperatures, and laboratory testing to produce odoriferous substances and industrial perfumes constituted manufacturing. The CIT(A) was justified in allowing the deduction under Section 80IC.

The Tribunal held that once an agent is paid arm's length remuneration and the income embedded in such remuneration is taxed in India, no further profits can be attributed to the DAPE. The existence of a DAPE is tax neutral in such cases.

The Tribunal found that the AO erred in rejecting the assessee's suo motu disallowance solely because a higher disallowance could be made under Rule 8D. The AO must be satisfied independently of Rule 8D before invoking it. The Tribunal also noted that the pronouncement of the order was delayed due to the COVID-19 lockdown, which is a force majeure event and should be excluded from the 90-day time limit.

The Tribunal found that the AO erred in rejecting the assessee's suo motu disallowance solely because a higher disallowance could be made under Rule 8D. The AO must be satisfied independently of Rule 8D before invoking it. The Tribunal also noted that the pronouncement of the order was delayed due to the COVID-19 lockdown, which is a force majeure event and should be excluded from the 90-day time limit.

The Tribunal held that the CIT(A) was correct in deleting the addition. The amount received was an advance and not taxable as income until the conditions for its accrual were met, which had not happened.

The tribunal held that the DRP violated principles of natural justice by enhancing adjustments without a show cause notice. It also considered the impact of the COVID-19 lockdown on the time limit for pronouncements, allowing for exclusion of the lockdown period.

The Tribunal followed a coordinate bench decision and held that the issue requires further examination. The matter was remitted to the Assessing Officer to determine if the trust was properly assessed as a representative assessee.

The tribunal held that the DRP violated principles of natural justice by enhancing adjustments without a show cause notice. It also considered the impact of the COVID-19 lockdown on the time limit for pronouncements, allowing for exclusion of the lockdown period.

The Tribunal held that the assessee is a 'state' under Article 289 of the Constitution of India. Consequently, it is entitled to immunity from taxation under the Income Tax Act, 1961.

The Tribunal restored the alternative claim for business loss to the Assessing Officer for fresh adjudication, noting that the CIT(A) had summarily rejected it without considering evidence. The Tribunal also restored a related ground concerning other debit write-offs.

The Tribunal held that there is no compartmentalization in the Income Tax Act for setting off short-term capital gains and losses based on whether Securities Transaction Tax (STT) was paid. Following numerous judicial precedents, the Tribunal upheld the CIT(A)'s decision.

The Tribunal held that the reassessment proceedings were invalid because the reasons recorded did not demonstrate the assessee's failure to disclose material facts, and the reopening was initiated beyond four years without fulfilling the conditions of the proviso to Section 147.

The Tribunal held that interconnection usage charges are not in the nature of fees for technical services and are outside the purview of TDS under Section 194J. This decision was based on previous judgments, including one from the Karnataka High Court, which found that such services operate automatically without human intervention.

The Tribunal held that the reopening of assessment was invalid due to the AO's lack of independent application of mind to the information received, constituting a 'borrowed satisfaction'. Consequently, the reassessment proceedings were quashed.

The Tribunal found that the AO erred in rejecting the assessee's suo motu disallowance solely because a higher disallowance could be made under Rule 8D. The AO must be satisfied independently of Rule 8D before invoking it. The Tribunal also noted that the pronouncement of the order was delayed due to the COVID-19 lockdown, which is a force majeure event and should be excluded from the 90-day time limit.

The Tribunal found that the AO erred in rejecting the assessee's suo motu disallowance solely because a higher disallowance could be made under Rule 8D. The AO must be satisfied independently of Rule 8D before invoking it. The Tribunal also noted that the pronouncement of the order was delayed due to the COVID-19 lockdown, which is a force majeure event and should be excluded from the 90-day time limit.

The Tribunal held that the reassessment proceedings were invalid as the Shah Commission's report was merely an opinion and not a definitive pronouncement. The Tribunal relied on the jurisdictional High Court's judgment in Sesa Sterlite Limited Vs ACIT, which stated that facts and conclusions of a commission of inquiry are not judicial pronouncements.

The Tribunal held that an assessment order passed against a non-existent entity is void ab initio. The assessment proceedings were initiated against a company that had ceased to exist due to amalgamation.

The Tribunal held that only the profit element embedded in the unaccounted sales could be added to the income, not the entire sale amount. The profit was estimated at 10%.

The Tribunal held that the penalty was not sustainable as penalty proceedings were not specifically initiated by the CIT(A) in respect of the addition made by him. Therefore, the penalty was deleted.

The Tribunal allowed the appeal for statistical purposes. The judgment primarily addresses the procedural aspect of the pronouncement of the order, noting that the 90-day period for pronouncement under Rule 34(5) of the Appellate Tribunal Rules, 1962, should exclude the period of lockdown due to the COVID-19 pandemic. The Tribunal relied on pronouncements from the Hon'ble Bombay High Court and the Government of India's notification classifying COVID-19 as a natural calamity. The Tribunal held that the period during which the lockdown was in force should be excluded when computing the limitation for pronouncement. While the core dispute regarding the disallowance of interest under Section 36(1)(iii) is mentioned, the detailed reasoning and decision on the substantive issue are not provided in the excerpt. The operative direction is to allow the appeal for statistical purposes, implying a procedural allowance rather than a decision on the merits of the interest disallowance.

The Tribunal decided to exclude the lockdown period when computing the 90-day limit for pronouncement of orders, considering it an extraordinary situation. The appeal was decided based on this interpretation.

The Tribunal held that the rejection of the claimed stock loss due to flood was erroneous, as sufficient evidence was provided. The issue of interest disallowance was remanded to the AO for verification. The taxability of profit on sale of fixed assets was also remanded to the AO to determine if the assets were depreciable.

The Tribunal found that the assessee failed to provide cogent evidence or persuasive submissions to counter the additions made by the revenue authorities. Consequently, the Tribunal upheld the decision of the Commissioner (Appeals).

The Tribunal allowed the disallowance of prepaid expenses, training expenses, and depreciation on employee residence equipment. It upheld the disallowance of gifts but reversed the disallowance of capital expenditure. The disallowance of travelling expenses was reduced to 10% across various assessment years.

The Tribunal decided to remit the matter back to the TPO/AO to consider the assessee's plea for working capital adjustment. The assessee was directed to provide and substantiate its workings for this adjustment.

The Tribunal allowed the disallowance of prepaid expenses, training expenses, and depreciation on employee residence equipment. It upheld the disallowance of gifts but reversed the disallowance of capital expenditure. The disallowance of travelling expenses was reduced to 10% across various assessment years.

The Tribunal found merit in the assessee's submissions regarding the comparability of M/s Advanced Micronic Devices Ltd. and the need to examine fresh comparable searches. The matter was remitted back to the TPO/AO for further examination.

The Tribunal allowed the disallowance of prepaid expenses, training expenses, and depreciation on employee residence equipment. It upheld the disallowance of gifts but reversed the disallowance of capital expenditure. The disallowance of travelling expenses was reduced to 10% across various assessment years.

The Tribunal held that as per Section 43CA(3) and (4), when the date of agreement and registration differ, and consideration is received other than cash before the agreement date, the stamp duty value on the agreement date should be considered. Since the agreements were in 2010 and advances were received, the ready reckoner rate as of 2010 should be applied.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. It also set aside the CIT(A)'s order, remanding the matter back for a fresh decision after providing the assessee with an opportunity to be heard.