ITAT Mumbai Judgments — August 2021

The Tribunal acknowledged that once a matter is settled under the Vivad Se Vishwas Scheme, the related appeals must be withdrawn. Therefore, the appeals were dismissed as withdrawn.

The Tribunal held that interest paid for delayed remittance of TDS is not allowable as a deduction under Section 37(1) of the Income Tax Act. This decision was based on the ratio laid down by the Hon'ble jurisdictional High Court and the Hon'ble Madras High Court.

The Tribunal held that the issue of software sales taxability is covered by the Supreme Court's decision in Engineering Analysis Centre of Excellence. Furthermore, the existence of a DAPE is tax-neutral unless the agent's remuneration is not at arm's length, which was not established by the Assessing Officer.

The Tribunal allowed the assessee's appeal regarding the guarantee commission and Form-26AS mismatch, citing previous decisions. The Revenue's appeal was dismissed due to low tax effect and on merits, as it was covered by prior rulings.

The Tribunal noted that the assessee had opted for the Vivad Se Vishwas Scheme. Consequently, the appeal pending before the Tribunal was dismissed as withdrawn.

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 Therefore, the appeal was dismissed as withdrawn.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 assessee should not be denied a legitimate claim and granted an opportunity to substantiate it. The issue was restored to the Assessing Officer for verification and adjudication on merits.

The Tribunal upheld the CIT(A)'s order, finding that the loans were genuine. It noted that no incriminating material was found during searches on the assessee and that statements relied upon by the AO were later retracted without corroboration.

The Tribunal held that the issue of software sales taxability is covered by the Supreme Court's decision in Engineering Analysis Centre of Excellence. Furthermore, the existence of a DAPE is considered tax-neutral unless the agent's remuneration is not at arm's length, which was not established by the Assessing Officer. Consequently, the appeal was allowed.

The Tribunal allowed the claim for bad debts, stating that if debts are written off as irrecoverable in the books of accounts, the claim should be allowed as per CBDT circular and Supreme Court rulings. However, it confirmed the disallowance of Rs. 33,311/- towards car expenses, acknowledging the personal element.

The Tribunal noted that the assessee had sought withdrawal of the appeal due to settlement under the Vivad Se Vishwas Scheme. Therefore, the appeal was dismissed as withdrawn.

The Tribunal upheld the CIT(A)'s decision to delete the penalties. It found no evidence of concealment of income or furnishing of inaccurate particulars by the assessee, which are prerequisites for levying penalty under Section 271(1)(c).

The Tribunal held that penalty cannot be levied on income based on estimation. Therefore, agreeing with the CIT(A), the penalty was deleted.

The Tribunal held that the CIT(A) rightly deleted the disallowance when no incriminating material was found during the search, and confirmed the CIT(A)'s order restricting disallowance to the extent of exempt income.

The Tribunal held that the rectification of defects in a return relates back to the original filing date for the purpose of calculating the limitation period for issuing a notice under Section 143(2). Therefore, the notice issued was beyond the prescribed time limit.

The Tribunal noted that the issue of interest disallowance was decided in favor of the assessee in earlier years. For other disallowances under Rule 8D(2)(iii), the Assessing Officer was directed to recompute based only on investments yielding exempt income.

The Tribunal confirmed the CIT(A)'s order, finding no infirmity. The assessee had provided bills, vouchers, and made payments by cheque, with the only deficiency being the lack of transportation receipts and inability to produce the party.

The Tribunal found that the creditworthiness of the lender was sufficiently proved by the evidence presented, including the lender's ITR, statement of affairs, and bank statements. The genuineness of the transaction was not doubted.

The Tribunal upheld the CIT(A)'s order, finding that the disallowance under Section 14A was not warranted given the assessee's own funds and previous tribunal decisions. The transfer pricing adjustment was restricted, and the expenses were allowed as revenue expenditure.

The Tribunal held that the interest expenditure had a nexus to the interest income earned and allowed it. It also found that the assessee had proven the identity, creditworthiness, and genuineness of the unsecured loan, thus deleting the addition.

The Tribunal held that the share capital and share premium were not accommodation entries, as the assessee had furnished all relevant documents and explained the nature and source of the credits. The decision followed a co-ordinate bench ruling on identical facts.

The Tribunal held that penalty under Section 271(1)(c) cannot be levied merely because a claim is disallowed, especially when the issue is debatable and there is no evidence of conscious concealment or fraud. The penalty proceedings were quashed.

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

The Tribunal held that the disallowance of interest should be restricted to the advances not proven to be for business purposes. It also held that Section 41(1) is not applicable to outstanding creditors that are disclosed in the balance sheet and have not been written back.

The Tribunal held that the 15% deduction under Section 11(1)(a) is a statutory allowance and is not subject to the availability of surplus. It reversed the orders of the lower authorities.

The Tribunal held that since the Section 263 order was already set aside, the consequential assessment order had no basis. Therefore, the findings of the CIT(A) were accepted.

The Tribunal held that the penalty notice was invalid because it did not specify the charge for which the penalty was being initiated, following the Bombay High Court's decision in Mohd. Farhan A. Shaikh. Consequently, the penalty proceedings were quashed.

The Tribunal noted that the tax effect was below the enhanced monetary limit for appeals. As the Departmental Representative could not point to any exceptions, the appeal was dismissed as withdrawn.

The Tribunal held that the assessee cannot be saddled with interest under Section 201(1A) as the delay in remittance was not attributable to the assessee but to the RBI. The assessee had discharged its statutory obligation by depositing the TDS amount with the RBI within the due date.

The Tribunal noted that the assessee had opted for the Vivad se Vishwas Scheme and had received Form-3, indicating settlement. Following the Madras High Court's decision, the appeal was disposed of as withdrawn.

The Tribunal permitted the withdrawal of the appeals as the dispute had been settled under the Direct Tax Vivad se Vishwas Act, 2020. The Departmental Representative had no objection to the withdrawal.

The Tribunal found that the interest expenditure was legitimately claimed as a business expenditure. This was supported by audited accounts, TDS deduction on interest paid to the brother, and the property being used for business operations.

The Tribunal noted that once a matter is settled under the Vivad Se Vishwas Scheme, the related appeals are required to be withdrawn. Therefore, the appeals were dismissed as withdrawn.

The Tribunal deleted the disallowance of interest expenses as the assessee had sufficient own funds and no direct nexus was proven. The disallowance of administrative expenses was restricted to the actual expenditure claimed.

The Tribunal held that the penalty proceedings are vitiated due to the defect in the notice, following the Bombay High Court's decision in Mohd. Farhan A. Shaikh. The penalty levied was quashed.

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

The Tribunal held that the issues raised in grounds 1 and 2 were covered by its previous decisions in the assessee's own case, upholding the exclusion of pension fund income and exemption of dividend income. The Tribunal also held that Section 14A is not attracted to insurance companies, dismissing the Revenue's appeal.

The Tribunal held that Section 43CA(3) of the Income Tax Act mandates using the stamp duty value on the date of the agreement (booking) for calculating income. Therefore, the Pr. CIT's revisionary order was invalid as the AO had correctly applied the law.

The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned by the assessee. Furthermore, if the net interest earned by the assessee is positive, Rule 8D(2)(ii) cannot be applied.

The Tribunal held that the clause in the agreement did not constitute a third-party guarantee and even if it did, its arm's length price could not be ascertained under the CUP method. Therefore, the ALP adjustment was deleted.

The Tribunal held that the issues raised by the Revenue were covered by previous decisions of the Tribunal in the assessee's own case. These decisions had ruled in favour of the assessee, finding no double taxation or improper estimation of profit.

The Tribunal held that penalty cannot be levied on an estimated addition, especially when purchase vouchers were produced and payments were made through banking channels. The conduct of the assessee was not found to be contumacious.

The Tribunal noted that the tax effect was below the monetary limit of Rs. 50,00,000/- stipulated by CBDT Circular No. 17/2019 for filing appeals before the ITAT. The Revenue's counsel agreed that the tax effect was below the limit.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 3% of the alleged bogus purchases. It reasoned that when sales are not doubted and there is no defect in documentation, a lower profit margin estimation is appropriate, citing previous ITAT decisions.

The Tribunal held that the payment for software purchase was not royalty, as the assessee was a reseller, not acquiring a copyright. For employee expenses, the Tribunal directed the AO to verify the actual bifurcation from maintained books of account.

The Tribunal held that the assessee had discharged its onus by providing sufficient documentary evidence for all three share subscribers. The findings of the CIT(A) were confirmed, and no addition was warranted under Section 68.

The Tribunal upheld the CIT(A)'s order, noting that similar claims were allowed in preceding and succeeding assessment years, and the Assessing Officer had also allowed the full claim in a later year.

The Tribunal held that the assessee was justified in treating foreign AEs as tested parties, following a coordinate bench decision for the preceding assessment year. The authorities below were therefore not justified in rejecting this approach and making the adjustment.

The Tribunal permitted the assessee to withdraw its appeal and cross objections, stating it would not have precedence value for other assessment years. The revenue's appeal was dismissed as not maintainable.

The Tribunal held that Section 50C is not applicable to the transfer of leasehold rights, and thus the addition made by the AO was unsustainable. The Tribunal also allowed the deduction for interest paid to partners as it was in terms of the 'Deed of Addendum'.