ITAT Mumbai Judgments — May 2021

The Tribunal held that the distribution rights granted by the assessee did not constitute a license to use copyrights, and therefore, distribution revenues were not taxable as royalty. It also held that advertisement sales revenue was not taxable in India as the assessee did not have a Permanent Establishment there.

The Tribunal held that the distribution rights granted by the assessee did not constitute a license to use copyrights, and therefore, distribution revenues were not taxable as royalty. It also held that advertisement sales revenue was not taxable in India as the assessee did not have a Permanent Establishment there.

The Tribunal noted that the assessee had opted for the 'Vivad se Vishwas Scheme 2020' and received the relevant form. Therefore, keeping the appeal pending would serve no purpose.

The Tribunal held that the distribution rights granted by the assessee did not constitute a license to use copyrights, and therefore, distribution revenues were not taxable as royalty. It also held that advertisement sales revenue was not taxable in India as the assessee did not have a Permanent Establishment there.

The Tribunal held that the appeals filed by the Revenue were not maintainable as the penalty amount fell below the monetary limit prescribed by CBDT Circular No. 17/2019. The exception for quantum proceedings was not applicable to penalty proceedings.

The Tribunal held that the distribution rights granted by the assessee did not constitute a license to use copyrights, and therefore, distribution revenues were not taxable as royalty. It also held that advertisement sales revenue was not taxable in India as the assessee did not have a Permanent Establishment there.

The Tribunal held that the assessee cannot be denied legitimate claims and granted an opportunity to substantiate its claims before the AO. The disputed issues were restored to the AO for verification.

The Tribunal upheld the CIT(A)'s order, finding no infirmity in it. The Tribunal noted that the CIT(A) had correctly relied on the ITAT's previous order and the Revenue could not controvert these findings. The appeal was dismissed due to low tax effect.

The Tribunal, following a similar order from the Madras High Court, decided to dispose of the appeal as withdrawn. The assessee was granted liberty to seek restoration of the appeal if the VSVS declaration was not decided in their favour.

The Tribunal held that the penalty proceedings are distinct from quantum assessment proceedings. The exception provided in CBDT Circular No. 17/2019 for quantum proceedings does not apply to penalty proceedings.

The Tribunal dismissed the appeal as withdrawn, granting liberty to the assessee to seek restoration if the declaration under the scheme is not accepted.

The Tribunal held that the penalty proceedings are distinct from quantum assessment proceedings. The exception mentioned in CBDT Circular No. 17/2019 for quantum proceedings is not applicable to penalty proceedings.

The tribunal allowed the withdrawal of the appeal as the assessee had opted for the Vivad Se Vishwas Scheme. The assessee was granted liberty to seek restoration if the declaration under the scheme was not accepted.

The Tribunal held that the expenditure incurred by the assessee in entering into the strategic alliance was in the nature of revenue expenditure. The arrangement was beneficial to the assessee in controlling marketing activities and safeguarding business interests.

The Tribunal held that the tax effect in these appeals was below the monetary limit prescribed by CBDT Circular No. 17/2019 for filing appeals before the ITAT. The Revenue's appeals were dismissed as withdrawn.

The Tribunal found that the estimation of profit on these purchases by the CIT(A) at 12.5% was justified. The Tribunal held that there could be no sale without actual purchase, and the profit element in these transactions was estimable.

The Tribunal admitted the assessee's additional ground of appeal regarding the exclusion of a comparable company. It also held that certain comparables identified by the AO were liable to be rejected due to functional differences and outsourcing of operations.

The Tribunal held that the reimbursement to the related party was justified given similar past allowances and the fact that both parties were in the highest tax bracket. The gold coin distribution was also deemed a business expense supported by documentary evidence.

The Tribunal treated the appeal as dismissed and withdrawn, granting liberty to the assessee to seek restoration if the Vivad Se Viswas declaration is later declared bad in law.

The tribunal permitted the assessee to withdraw the appeals. The appeals were dismissed as withdrawn.

The Tribunal held that the transfer of jurisdiction within the same city did not require prior notice to the assessee, dismissing the jurisdictional challenge. Regarding bogus purchases, the addition was restricted to 6% of the alleged amount, and deemed rental income additions were confirmed.

The Tribunal held that as per CBDT Circular No. 261, the date of tendering the cheque is considered the date of payment, not the date of realization. Since the cheques were tendered before the due date and not dishonoured, no interest under Section 201(1A) is chargeable.

The Tribunal held that as per CBDT Circular No. 261 and various judicial precedents, the date of tendering the cheque is considered the date of payment, provided the cheque is honored. Therefore, no interest under Section 201(1A) is leviable for the delay in realization.

The Tribunal directed the exclusion of certain companies (Infosys, Thirdware, Wipro) from the list of comparables due to functional dissimilarity and scale of operations. It also directed consideration of the assessee's claim for working capital adjustment and restored the issue of refund adjustment to the Assessing Officer.

The Tribunal held that as per CBDT Circular No. 261, the date of tendering the cheque is considered the date of payment, not the date of realization. Since the cheques were tendered before the due date and not dishonoured, no interest under Section 201(1A) is chargeable.

The Tribunal held that the receipts from SAP licenses, consultancy services, and IT support services were reimbursements and not taxable as royalty or fees for technical services, following its own previous decision for the assessment year 2015-16.

The Tribunal held that as per CBDT Circular No. 261 and various judicial precedents, the date of tendering the cheque is considered the date of payment, provided the cheque is honored. Therefore, no interest under Section 201(1A) is leviable for the delay in realization.

The Tribunal held that as per CBDT Circular No. 261 and various judicial precedents, the date of tendering the cheque is considered the date of payment, provided the cheque is honored. Therefore, no interest under Section 201(1A) is leviable for the delay in realization.

The Tribunal held that as per CBDT Circular No. 261, the date of tendering the cheque is considered the date of payment, not the date of realization. Since the cheques were tendered before the due date and not dishonoured, no interest under Section 201(1A) is chargeable.

The tribunal noted that the assessee's declaration under the 'Vivad Se Vishwas Scheme' was accepted and Form-3 was issued. Therefore, the appeal was dismissed as withdrawn.

The Tribunal held that the transfer of jurisdiction within the same city did not require prior notice to the assessee, dismissing the jurisdictional challenge. Regarding bogus purchases, the addition was restricted to 6% of the alleged amount, and deemed rental income additions were confirmed.

The Tribunal held that the rental income should be treated as 'Business Income', following the principle of consistency and previous orders of the Tribunal and CIT(A) in similar matters. The reopening of the assessment was also found to be based on a flawed premise.

The Tribunal directed the exclusion of certain companies (Infosys, Thirdware, Wipro) from the list of comparables due to functional dissimilarity and scale of operations. It also directed consideration of the assessee's claim for working capital adjustment and restored the issue of refund adjustment to the Assessing Officer.

The Tribunal held that as per CBDT Circular No. 261 and various judicial precedents, the date of tendering the cheque is considered the date of payment, provided the cheque is honored. Therefore, no interest under Section 201(1A) is leviable for the delay in realization.

The Tribunal held that the transactions between the assessee and its Indian agent were at arm's length, making the issue of PE academic. Consequently, no further income was taxable in India for the PE.

The Tribunal noted that the assessee had complied with the conditions of the VSVS scheme and received the final Form-5. The Revenue had no objection to the settlement.

The Tribunal permitted the assessee to withdraw the appeal. The appeal was accordingly dismissed as withdrawn.

The Tribunal held that the reliance on a third-party statement for an addition regarding interior work was without substance and deleted the addition. It also held that notings in seized materials were owned by Shri Haresh Mohanlal Mehta and outgoings of Smt Hema Haresh Mehta would be met from profits taxed in his hands.

The Tribunal held that only the profit embedded in bogus purchases should be taxed. It found the 12.5% estimation to be on the higher side and reduced it to 5.5% of the total bogus purchases, considering the typical gross profit margins in the business.

The Tribunal found that the grounds raised by the assessee required verification of facts. Therefore, the issue was restored to the file of the Assessing Officer for verification of documents and a fresh assessment.

The Tribunal found that the reclassification of investments into stock-in-trade was a bonafide transaction supported by a board resolution and accounting entries. The revenue's contention that it was an afterthought was rejected, and the loss was considered a business loss.

The Tribunal held that Section 14A of the Act was not applicable to dividend income eligible for deduction under Section 80M. It also ruled that interest expenditure incurred for investments made to secure controlling interest in group entities was fully deductible under Section 36(1)(iii) as it was in furtherance of the assessee's business activities.

The Tribunal upheld the CIT(A)'s order, stating that only the profit embedded in bogus purchases should be added, not the entire amount. The CIT(A) had correctly estimated this profit at 25%.

The Tribunal noted that the assessee's claim of a 9.34% gross profit ratio was not supported by an audit report. The AO was directed to examine this claim and then apply the ITAT's previous order in the assessee's own case to determine the disallowance.

The Tribunal held that the assessee had fulfilled the primary onus under Section 68 by providing sufficient documentary evidence to establish the identity, creditworthiness, and genuineness of the transactions. The revenue failed to controvert this evidence. Therefore, the additions were deleted.

The tribunal noted that the assessee had opted for the 'Vivad se Vishwas Scheme' and received the relevant form. Consequently, it was deemed purposeless to keep the appeal pending.

The Tribunal held that the assessee has the choice to claim the expenditure as revenue in one go or amortize it. Following the Supreme Court's decision in Taparia Tools, the remaining 6/7th of the expenditure was allowed as a deduction.

The Tribunal held that the disallowance under Section 14A was not justified, following its own and the High Court's decisions in the assessee's own case for prior years. It also allowed depreciation on leased assets, citing consistency and prior rulings.

The Tribunal accepted the assessee's request to withdraw the appeal. Liberty was granted to revive the appeal if the VSVS declaration was not accepted.

The Tribunal held that the appeal had become infructuous due to the assessee's settlement under the Vivad Se Vishwas Scheme. The appeal was dismissed with liberty to the revenue to seek restoration if the declaration was not accepted.