ITAT Mumbai Judgments — August 2020

The Tribunal upheld the CIT(A)'s order, finding that the AO failed to provide sufficient material to prove the purchases were bogus. The assessee had provided documentary evidence, including stock records and payment details through banking channels, which were not dislodged by the AO.

The Tribunal dismissed the appeals filed by the Revenue. This was based on the CBDT Circular No. 17/2019, which sets a monetary limit of Rs. 50,00,000 for filing appeals before the ITAT.

The Tribunal dismissed the appeals filed by the Revenue. This was based on the CBDT Circular No. 17/2019, which sets a monetary limit of Rs. 50,00,000 for filing appeals before the ITAT.

The Tribunal held that the rejection of the assessee's books of account was not sustainable and restored the issue to the AO for fresh consideration. It also set aside the levy of interest under sections 234A, 234B, and 234C to be recomputed after reducing TDS.

The Tribunal held that the assessee's claim for adjustments related to extraordinary expenses for transfer pricing was not permissible as it deviated from actual financial figures. However, the Tribunal allowed the assessee's ground regarding the addition of transfer pricing adjustments to book profits under Section 115JB, stating that such adjustments are not mandated by the Act. The Tribunal also directed re-examination of service tax related issues.

The Tribunal held that the rejection of the assessee's books of account was not sustainable and restored the issue to the AO for fresh consideration. It also set aside the levy of interest under sections 234A, 234B, and 234C to be recomputed after reducing TDS.

The Tribunal held that the expenditure on replacement of jigs and fixtures is revenue expenditure, following the decision of the Madras High Court. It also held that dividends, income from units, interest, and profit on sale of investments are not part of the total turnover for the purpose of Section 80HHC deduction, as they are income from other sources and not linked to export activities.

The Tribunal held that the reopening of assessment was invalid as it was based on a change of opinion and lacked tangible material. The AO had already considered the relevant information during the original assessment.

The Tribunal held that the extinguishment of the assessee's right in the flat, evidenced by an allotment letter and subsequent payments, constituted a transfer of a capital asset. Therefore, the gain arising from this surrender was to be treated as long-term capital gain and exemption under Section 54 was allowable.

The Tribunal held that the AO had made adequate inquiries and taken a possible view in allowing depreciation on spectrum and bad debts. The revisionary order passed by the PCIT was therefore quashed.

The Tribunal held that the penalty was not sustainable as it was initiated on one limb of the offence (inaccurate particulars) but levied on a different limb (concealment of income) without proper satisfaction by the AO. Furthermore, on merits, since the assessee had voluntarily provided all details, there was no concealment.

The Tribunal held that interest income earned by a co-operative society on its investments with a co-operative bank is eligible for deduction under Section 80P(2)(d). They found the CIT(A)'s decision judicious and correct, affirming it.

The Tribunal held that the rejection of the registration application was based on procedural grounds rather than the substantive requirements of assessing the trust's objects and genuineness. The circumstances surrounding the death of the key person were considered as a mitigating factor for the non-compliance.

The Tribunal held that the reopening of assessment under Section 147 was bad in law as it amounted to a change of opinion by the AO. The AO was aware of the reduction in property value during the original assessment.

The Tribunal held that the assessee had provided sufficient documentary evidence to establish the identity, genuineness, and creditworthiness of the shareholders. It also noted that the shareholding structure was validated by the Supreme Court in a previous case.

The Tribunal held that the assessee had substantially complied with the requirements of Rule 10D and that the Assessing Officer had not pointed out specific documents that were not produced. Therefore, the penalty under Section 271G could not be levied.

The Tribunal held that the addition under Section 69B was not sustainable as the assessee was not required to maintain books of accounts, and the bank passbook is not considered the assessee's book. The Tribunal also noted the inconsistency in revenue authorities accepting large deposits without inquiry but disbelieving a smaller amount.

The Tribunal held that 100% disallowance of purchases is not justified when sales are not doubted. The addition should be limited to the extent of bringing the gross profit rate on such purchases to the same level as other genuine purchases.

The Tribunal held that the payment made to Mumbai Port Trust was in the nature of taxes levied by a local authority and was therefore allowable as a deduction from house property income, similar to service taxes.

The Tribunal held that 100% disallowance of purchases is not justified when sales are not doubted. The addition should be limited to the extent of bringing the gross profit rate on such purchases to the same level as other genuine purchases.

The Tribunal held that interest on outstanding receivables should be computed by applying LIBOR plus 0.5%, following its own prior ruling. It also held that interest income on margin money is assessable as business income, while interest from bank deposits and ICDs is assessable as income from other sources, again based on previous judgments.

The Tribunal held that revenue expenditure is allowable in the year it is incurred or the liability accrues, irrespective of when the corresponding revenue is recognized. The disallowance of commission expenses was deemed unjustifiable.

The Tribunal found that the assessee had discharged its primary onus regarding the genuineness, creditworthiness, and identity of the loan creditor by providing confirmations and bank statements. The repayment of the loan was also accepted. Therefore, the addition made by the AO was not justified.

The Tribunal held that the scheme of demerger was sanctioned by the High Court and the identity and creditworthiness of the transferor company were not doubted. The Tribunal found no evidence to suggest that unexplained money was introduced.

The Tribunal held that the penalty was not sustainable because the notice for levying the penalty did not specify whether it was for concealment of income or furnishing inaccurate particulars. The Tribunal also considered the impact of the COVID-19 lockdown on the time limit for pronouncement of the order.

The Tribunal held that it is not necessary to earn profit from a business for interest expenses to be allowed. Since the loan was taken for the stated business, the disallowance was not justifiable.

The Tribunal allowed the assessee's appeal for statistical purposes and dismissed the revenue's appeal. This decision was made after considering the impact of the COVID-19 lockdown on the pronouncement of orders, extending the 90-day limit.

The Tribunal held that if an assessee has sufficient interest-free funds, any investment in tax-free securities is presumed to be made from those funds, thus no disallowance under Section 14A is warranted. The Tribunal also condoned the delay in pronouncement of the order due to the COVID-19 lockdown.

The Tribunal held that if the cheque is tendered to the bank within the due date and is subsequently honoured, the payment relates back to the date of tendering. Therefore, interest under Section 201(1A) cannot be levied for the delay in clearing the cheque.

The Tribunal condoned the delay in filing the appeal, citing the principles of substantial justice over technical considerations. The appeals were restored to the CIT(A) for disposal on merits.

The Tribunal condoned the delay in filing the appeal, citing the principles of substantial justice over technical considerations. The appeals were restored to the CIT(A) for disposal on merits.

The Tribunal condoned the delay in filing the appeal, citing the principles of substantial justice over technical considerations. The appeals were restored to the CIT(A) for disposal on merits.

The Tribunal condoned the delay in filing the appeal, citing the principles of substantial justice over technical considerations. The appeals were restored to the CIT(A) for disposal on merits.

The Tribunal held that if the cheque is tendered to the bank before the due date and is subsequently honored, the payment relates back to the date of tendering. Therefore, interest under Section 201(1A) cannot be levied for delays in cheque clearing by the bank.

The Tribunal held that if the cheque is tendered to the bank within the due date and is subsequently honoured, the payment relates back to the date of tendering. Therefore, interest under Section 201(1A) cannot be levied for the delay in clearing the cheque.

The Tribunal held that if the cheque is tendered to the bank within the due date and is subsequently honoured, the payment relates back to the date of tendering. Therefore, interest under Section 201(1A) cannot be levied for the delay in clearing the cheque.

The Tribunal held that the initial assessments framed on 31.3.1999 were set aside by the first appellate authority, making them legally non-existent. The subsequent assessments framed on 07.3.2002 were valid. Furthermore, the Tribunal ruled that Section 153(2A) was not attracted as the remand by the Tribunal was of a limited scope, not a de novo assessment.

The Tribunal held that issuing a notice under Section 143(2) to a non-existent entity (amalgamated company) renders the assessment proceedings void ab initio. Participation in the proceedings by the assessee does not operate as an estoppel against law in such cases.

The Tribunal dismissed the revenue's appeals regarding software consultancy services and partly allowed the assessee's appeal on guarantees and inter-company loans. Procedural irregularities in referring to the TPO were rendered infructuous as TP-related grounds were allowed in favor of the assessee.

The Tribunal held that the appeal filed by the Revenue was not maintainable due to the low tax effect. Consequently, the appeal was dismissed without delving into the merits of the grounds raised.

The Tribunal partly allowed the assessee's appeal regarding guarantee adjustments, restoring some aspects to the AO/TPO. The appeal concerning loan interest adjustments was also partly allowed with similar directions. The revenue's appeal was dismissed due to low tax effect.

The Tribunal held that as the assessee is a registered NBFC and its business is advancing loans, the interest income should be treated as business income. The Tribunal also noted the consistency in treating such income as business income in other years.

The Tribunal partly allowed the assessee's appeal regarding guarantee adjustments, restoring some aspects to the AO/TPO. The appeal concerning loan interest adjustments was also partly allowed with similar directions. The revenue's appeal was dismissed due to low tax effect.

The Tribunal held that interest and brokerage expenses incurred for earning income are deductible under Section 57(iii) of the Income Tax Act, provided the borrowings are genuine and used for income-earning purposes. The Tribunal also directed a revised estimation of the annual value of the house property.

The Tribunal found the 8% profit addition to be excessive given the assessee's disclosed gross profit of 3.6% and the profit on disputed purchases of 2.42%. It reduced the estimated profit to 3% on the value of non-genuine purchases.

The Tribunal held that the reopening of assessment was based on a change of opinion by the Assessing Officer, which is not permissible in law. The original assessment order indicated that the AO had applied his mind to the interest expenses and allowed them.

The Tribunal held that profit on sale of investments is taxable as capital gains and exempt under Section 10(38), following previous High Court and Tribunal rulings. It also upheld the CIT(A)'s decision regarding the non-applicability of Section 115JB.

The Tribunal allowed the assessee's appeal and dismissed the Revenue's appeal. The Tribunal noted that the CIT(A) had partly allowed the assessee's appeal, and the Revenue was aggrieved by the deletions made by the CIT(A).

The Tribunal held that an assessment order passed in the name of a non-existent entity is without jurisdiction and void ab initio, following a Supreme Court decision. Therefore, the assessment order was quashed.

The Tribunal held that the disallowance under Section 14A, particularly concerning investments in group concerns, was not applicable, following previous decisions in the assessee's own case. The Tribunal also addressed the delay in pronouncement due to the COVID-19 lockdown, considering it an extraordinary circumstance.