ITAT Mumbai Judgments — July 2020

The Tribunal held that prior to June 1, 2015, the Assessing Officer was not empowered to levy fees under Section 234E while processing TDS statements under Section 200A. The amendment enabling this was prospective. Therefore, the demand raised for late fees was invalid.

The Tribunal held that since the quantum additions/disallowances were restored for fresh assessment, the penalties levied on such additions would not survive. Therefore, the penalty orders were set aside and remitted to the Assessing Officer.

The Tribunal upheld the CIT(A)'s decision to include three companies as comparables, finding they were not persistent loss-making entities. For the subsequent assessment year, the Revenue's appeal was dismissed due to low tax effect.

The Tribunal held that prior to June 1, 2015, the Assessing Officer was not empowered to levy fees under Section 234E while processing TDS statements under Section 200A. The amendment enabling this was prospective. Therefore, the demand raised for late fees was invalid.

The Tribunal upheld the CIT(A)'s order, finding no infirmity. The assessee failed to provide sufficient evidence, such as bills, vouchers, or a logbook, to substantiate the business nature of the expenses or to bifurcate personal use.

The Tribunal deleted the disallowance under Rule 8D(2)(ii) as investments were made from the appellant's own surplus funds, following the Bombay High Court's decision. However, the disallowance under Rule 8D(2)(iii) for administrative expenses was upheld as the assessee did not maintain separate accounts for exempt income.

The Tribunal deleted the addition of Rs. 5,68,942/- sustained by the CIT(A) on account of unexplained jewellery. This decision was based on the reasoning that no incriminating material was recovered during the search, consistent with the Tribunal's prior decision on bogus gifts.

The Tribunal held that the PCIT's order under Section 263 was bad in law due to breach of principles of natural justice and non-application of mind. The Tribunal also found that the assessment order was not erroneous and not prejudicial to the interest of the revenue.

The Tribunal restored the transfer pricing adjustment issues related to license fees and cost allocations to the AO/TPO to decide as per the department's stand in subsequent years. The disallowance of foreign travel expenses was confirmed, subject to verification of fringe benefit tax payment.

The Tribunal held that penalty cannot be levied when additions are made on an ad-hoc estimation basis. Since the disallowance was an estimation of profit on purchases, it does not amount to concealment or furnishing inaccurate particulars.

The Tribunal held that since the quantum additions/disallowances were restored for fresh assessment, the penalties levied on such additions would not survive. Therefore, the penalty orders were set aside and remitted to the Assessing Officer.

The Tribunal, following its own previous orders in similar cases for the assessee and other insurance companies, decided that the provisions of Section 234B were not applicable in the assessee's case. The Tribunal allowed the grounds raised by the assessee concerning the levy of interest.

The Tribunal held that since the quantum additions/disallowances were restored for fresh assessment, the penalties levied on such additions would not survive. Therefore, the penalty orders were set aside and remitted to the Assessing Officer.

The Tribunal accepted the assessee's request to withdraw the appeal. The appeal was accordingly dismissed as withdrawn.

The Tribunal admitted additional evidence regarding the reimbursement of employee costs, noting that similar claims were accepted in a prior assessment year. The issue was restored to the Assessing Officer for fresh examination and verification of the provided documents.

The Tribunal held that the corporate guarantee fee should be accepted at the assessee's internal CUP rate of 1.68%. For interest on loans to AEs, the internal CUP rate of LIBOR + 2.68% was to be applied. The issue of share application money was remanded for the Assessing Officer to verify genuineness and decide on interest levy.

The Tribunal held that 100% disallowance for bogus purchases is not justified when sales are not doubted, and directed the disallowance to be restricted to 10% of bogus purchases. The issue of contract receipts was remitted to the AO for verification.

The Tribunal found that the CIT(A) had not made any finding on whether the provision was made on a scientific basis. Therefore, in the interest of justice, the matter was remanded to the AO for fresh adjudication.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 12.5% of the bogus purchases, following the Gujarat High Court's ruling that only the profit element embedded in such purchases should be disallowed.

The Tribunal held that the penalty order was illegal and bad in law because the Assessing Officer failed to arrive at a clear satisfaction regarding the specific limb of Section 271(1)(c) under which penalty was being initiated and levied. The notice issued was also found to be defective.

The Tribunal held that the reopening of assessment was valid as it was based on tangible material. It further held that the expenditure incurred for business counseling was non-genuine as the recipient companies were shell entities and not traceable, rendering the payments bogus.

The Tribunal held that the procedural defect of filing a scanned signature was curable and that the DRP's rejection of the objections in limine was unsustainable, especially considering the Revenue's acceptance of e-filing.

The Tribunal found that the AO considered the entire investment for calculating disallowance under Rule 8D(2)(iii) instead of only those investments yielding exempt income. Therefore, the issue was restored to the AO for re-computation.

The Tribunal held that the AO had no jurisdiction to insist on a particular valuation method when Section 56(2)(viib) read with Rule 11UA allows the assessee to choose from available methods. The Tribunal followed precedents stating that the AO cannot change the valuation method adopted by the assessee based on subsequent actual results.

The Tribunal restored the issue of management and accounting services to the Assessing Officer for de novo adjudication as neither party followed prescribed methods. It allowed depreciation on goodwill, following its own prior decisions, and directed verification for set-off of losses and credit for advance tax/TDS.

The Tribunal dismissed the Revenue's appeal as not maintainable. This decision was made in accordance with the binding CBDT circular regarding the monetary limit for filing appeals.

The Tribunal held that the Assessing Officer erred in disallowing the cost of the fixed asset without verifying the existence of the machine at the assessee's premises. The Tribunal also found no merit in the assessee's cross-objections regarding the reopening of assessment.

The Tribunal held that the reopening of assessment was invalid as there was no failure on the part of the assessee to make a full and true disclosure of material facts in the original assessment. The original AO had already examined the unsecured loans.

The Tribunal upheld the order of the CIT(A), following its own previous decision in the assessee's own case for a prior assessment year. The Tribunal agreed that a 100% disallowance of bogus purchases is not appropriate when sales are not doubted.

The Tribunal held that the addition was made by the AO merely on suspicion and presumption without cogent evidence. The CIT(A) had rightly deleted the addition, finding no specific evidence that the assessee indulged in CCM with mala fide intention.

The Tribunal held that the AO's scope of reassessment was limited to the issue for which the notice was issued. Since no addition was made on that specific issue, the AO could not travel to other issues. Therefore, the PCIT erred in invoking revisional jurisdiction.

The Tribunal held that the assessee should have appealed the CIT's Section 263 order. Since no appeal was filed against the revision order, the AO was bound to follow the CIT's directions, and the assessee cannot challenge the subsequent disallowance made by the AO.

The Tribunal held that companies incurring losses in a single year, but profitable in other years, should not be excluded as comparables in transfer pricing analysis. It directed the inclusion of three specific companies as comparables and recomputation of the arm's length margin.

The Tribunal decided to remit several grounds of appeal back to the Assessing Officer (AO) for fresh consideration, particularly concerning AMP expenses, depreciation on goodwill, and double taxation of income from other sources. Some grounds were allowed for statistical purposes.

The Tribunal held that assessment orders passed against non-existing entities are void ab initio and invalid. Following Supreme Court and its own precedents, the Tribunal quashed the assessment orders.

The Tribunal deleted the disallowance of global support service fees, citing a consistent approach from previous years and the 'make available' clause in the tax treaty. However, the transfer pricing adjustments were not fully resolved in this excerpt, leading to a partial allowance.

The Tribunal held that the TDRs were acquired for the purpose of construction on the land which was subsequently sold. Therefore, the cost of TDRs should be considered as part of the cost of acquisition of the land and not as a separate deductible expense. The assessee's claim for deduction was accordingly disallowed.

The Tribunal condoned the delay in filing the appeal. Regarding the substantive issue, the Tribunal allowed the assessee's appeal, directing the deletion of the ALP adjustment made by the AO and sustained by the DRP.

The Tribunal held that the TNMM methodology adopted by the assessee was to be accepted, following the principle of consistency and a previous order in the assessee's own case. The impugned transfer pricing adjustment was deleted. For AY 2010-11, an addition of interest income was confirmed as relief was already granted in a subsequent year.

The Tribunal held that AMP expenditure incurred by the assessee was for its own business and not an international transaction, and that the Bright Line Test was not applicable. For import of finished goods, the issue was restored to the Dispute Resolution Panel (DRP) for fresh examination.

The Tribunal found that the CIT(A) had not adjudicated the appeal on merits. Considering the assessee's plea of technical glitches in the first year of mandatory e-filing and the fact that the appeal has now been filed electronically, the Tribunal decided to remit the issue back to the CIT(A).

The Tribunal held that penalty under Section 271(1)(c) is applicable only for concealment or furnishing of inaccurate particulars of income, not for additions made on an estimation basis without concrete evidence. The CIT(A)'s deletion of penalty was upheld.

The Tribunal held that the TNMM method adopted by the assessee was appropriate, especially given its acceptance by the revenue in prior and subsequent years and by the Tribunal in similar cases. Consequently, the transfer pricing adjustments were deleted. For AY 2010-11, an addition related to interest income was confirmed due to timing differences and relief already granted in a subsequent year.

The Tribunal dismissed the Revenue's appeal, following a coordinate bench's decision. The appeal was dismissed based on the low tax effect circular, making it unnecessary to delve into the merits of the case.

The Tribunal held that the TPO should reconsider the inclusion of certain comparable companies and also compute risk and working capital adjustments. The revenue's appeal was dismissed following a Supreme Court decision.

The Tribunal held that the amount received was for relinquishing rights in the property, and following precedents on tenancy/sub-tenancy rights, the receipt is taxable as capital gains. However, the Tribunal set aside the CIT(A)'s order.

The Tribunal directed the AO to set off available brought forward business loss and unabsorbed depreciation against the total income. The Tribunal also acknowledged the disruption caused by the COVID-19 pandemic, which impacted the timely pronouncement of the order.

The Tribunal upheld the CIT(A)'s decision, agreeing that while purchases from suspect parties might not be genuine, the purchases themselves could not be doubted as the assessee's sales were not questioned. Therefore, the revenue's grounds of appeal were dismissed.

The Tribunal held that the sale of immovable property is complete only upon registration of the transfer deed, as mandated under Section 54 of the Transfer of Property Act. While Section 47 of the Registration Act allows a document to operate from the date of execution once registered, it does not deem the sale complete on the execution date. The Bombay High Court in Amarchand J. Aggarwal vs. UOI was cited, stating that title passes only when the document is registered. Therefore, the date of transfer for the purpose of Section 54EC is the date of registration, which was January 16, 2013. Since the assessee invested Rs. 25,00,000 on May 31, 2013, and Rs. 25,00,000 on July 31, 2013, these investments were within six months of the transfer. Consequently, the assessee is eligible for the exemption under Section 54EC. The Assessing Officer was directed to allow the exemption.