ITAT Mumbai Judgments — September 2021

The Tribunal noted that once a matter is resolved under the Vivad Se Vishwas Scheme, the related appeals are required to be withdrawn. The Departmental Representative did not oppose the assessee's prayer.

The Tribunal held that the on-money received should be taxed as business income based on the assessee's regular method of accounting, which is the project completion method. The addition was directed to be made at 12% of the on-money received, in the year of project completion.

The Tribunal held that the management fees paid were managerial in nature and not fees for technical services as per the India-UK DTAA. Therefore, the assessee was not liable to deduct TDS on these payments. The disallowance made by the AO and DRP was deleted.

The Tribunal noted that once a matter is settled under the Vivad Se Vishwas Scheme, the related appeals are required to be withdrawn. The Departmental Representative did not oppose the assessee's prayer.

The Tribunal held that estimation of profit cannot be arbitrary and must be based on evidence. It directed the AO to estimate profit based on the average of the assessee's actual profit declared in previous years which were accepted by the Revenue.

The Tribunal held that the assessee was entitled to immunity from penalty under Section 271AAA(2) as they had complied with the conditions. The penalty levied by the Assessing Officer was cancelled.

The Tribunal dismissed the Revenue's appeal on the grounds of low tax effect and maintainability, following the CBDT circular. Consequently, the assessee's cross objections were also dismissed as infructuous.

The Tribunal held that the PCIT's satisfaction for reopening the assessment was recorded mechanically, lacking the required objective application of mind as mandated by Section 151 of the Act. Consequently, the reassessment proceedings were deemed bad in law.

The Tribunal held that interest income earned by the assessee had a direct nexus with its ITES business and was eligible for deduction under Section 10AA. The CIT(A)'s order was upheld, following previous consistent decisions in the assessee's own case.

The Tribunal noted that once a matter is resolved under the Vivad Se Vishwas Scheme, the related appeals are required to be withdrawn. The Departmental Representative did not oppose the assessee's prayer.

The Tribunal upheld the CIT(A)'s decision to treat the loans from M/s. Nakshatra Business Private Limited and M/s. Hema Trading Company as unexplained cash credits, finding that the assessee failed to prove the identity, creditworthiness, and genuineness of these transactions. The disallowance of ROC charges as capital expenditure was also confirmed.

The Tribunal held that since a substantial question of law regarding the addition was admitted by the Hon'ble High Court, the issue became debatable. Therefore, no penalty could be levied for furnishing inaccurate particulars of income.

The Tribunal restored the matter to the CIT(A) for fresh adjudication on merits. The assessee was granted another reasonable opportunity of hearing.

The Tribunal held that if the commission income was already offered to tax in the hands of EISPL, then taxing it again in the hands of the assessee would amount to double taxation. The Assessing Officer was directed to verify if the income was offered by EISPL.

The Tribunal held that the facts were not different from the previous assessment year and respectfully followed the co-ordinate bench's decision. The disallowance was restricted to 15% of the total purchases.

The Tribunal held that the rental and legal expenses were genuine and incurred for business purposes, directing their deletion. The commission income addition was further reduced from 2% to 1%.

The Tribunal decided that the issue of deferred payment guarantee commission was settled in favor of the assessee based on previous Tribunal orders. However, the disallowance of depreciation on securities was upheld against the assessee, following prior rulings.

The Tribunal upheld the CIT(A)'s decision, finding that the assessee had commenced business activities during the year. Therefore, routine business expenses incurred in the normal course were allowable expenditures.

The Tribunal held that while the source of goods might be doubtful, the goods themselves were available to the assessee. Therefore, the entire purchase could not be disallowed, but the profit element embedded in it could be considered for disallowance.

The Tribunal reduced the profit addition on bogus purchases from 12.5% to 6% considering the assessee's low profit margins in civil construction. The addition for commission expenses was deleted due to lack of evidence, and the reopening of assessment was upheld.

The Tribunal restored the matter to the file of the CIT(A) for fresh adjudication on merits. The assessee was granted another reasonable opportunity of hearing.

The Tribunal held that the non-issuance of a notice under Section 143(2) is a jurisdictional defect that cannot be cured by Section 292BB, even if the assessee participated in the proceedings. Therefore, the entire assessment is quashed.

The Tribunal held that the on-money received should be taxed as business income based on the assessee's regular method of accounting, which is the project completion method. The addition was directed to be made at 12% of the on-money received, in the year of project completion.

The Tribunal noted that once a matter is settled under the Vivad Se Vishwas Scheme, the related appeal is required to be withdrawn. The Tribunal decided to dismiss the appeal as withdrawn.

The Tribunal condoned the delay in filing the appeal. Regarding the addition for alleged bogus purchases, the Tribunal restricted the disallowance to 5% based on the assessee's agreement and previous year's similar issues.

The Tribunal directed the Assessing Officer to verify the leave encashment payments for all units. For interest expenditure, following a High Court precedent, the Tribunal allowed the deduction as it crystallized during the year. The claims for material consumption and repairs/maintenance were dismissed due to lack of evidence.

The Tribunal held that since the additions forming the basis of the penalty were set aside by the ITAT, the penalty under Section 271(1)(c) would not survive. The CIT(A)'s order deleting the penalty was upheld.

The Tribunal set aside the impugned order and restored the application to the CIT(E) for fresh consideration. The assessee was directed to furnish necessary documents and be given an opportunity of hearing.

The Tribunal restored the issues to the file of the AO, directing re-examination in light of a previous Tribunal order for AY 2012-13, after ascertaining parity of facts. The AO was also directed to grant a reasonable opportunity of hearing.

The Tribunal held that the Pr. CIT's revision order did not satisfy the twin conditions of being erroneous and prejudicial to the interest of revenue. The Tribunal noted that the Assessing Officer had passed the order after considering the information provided by the assessee, and that a prior ITAT decision on identical facts for AY 2012-13 favored the assessee.

The Tribunal held that the assessee should not be deprived of its legitimate claim for bad debts, especially when the claim itself was not doubted. The issue was restored to the Assessing Officer for verification.

The Tribunal restored the issue to the Assessing Officer, directing him to decide it based on the outcome of a similar substantial question of law pending before the Bombay High Court.

The Tribunal held that the assessee's activities continued to be charitable in nature even under the amended definition of Section 2(15). Therefore, the assessee is entitled to exemption under Section 11.

The Tribunal upheld the CIT(A)'s decision to restrict the disallowance to 25% of the bogus purchases, noting that the assessee had produced purchase bills and made payments by cheque, and the Assessing Officer had not doubted the sales made out of these purchases.

The Tribunal held that the disallowance under Section 40(a)(ia) could not be restricted to 30% as the amendments were not retrospective in this context. The appeal was partly allowed for statistical purposes, indicating that some issues were decided in favor of the assessee and others against.

The Tribunal agreed that adding the same income in two different assessment years would be incorrect. Since the issue was raised for the first time and not verified by lower authorities, the matter was restored to the AO for factual verification.

The Tribunal held that the disallowance under Section 40(a)(ia) could not be restricted to 30% as the amendments were not retrospective in this context. The appeal was partly allowed for statistical purposes, indicating that some issues were decided in favor of the assessee and others against.

The Tribunal set aside the CIT(A)'s order and restored the matter back to the CIT(A) for one more opportunity, subject to a cost of ₹10,000/- to the Legal Aid Authority.

The Tribunal found no infirmity in the CIT(A)'s order of restricting the addition to 12.5% of the bogus purchases, considering the purchases were made from the grey market.

The Tribunal noted that Form 10 was filed manually with the jurisdictional Assessing Officer, and this involved factual verification. Therefore, the issue was remitted back to the jurisdictional Assessing Officer to process the rectification application.

The Tribunal admitted additional grounds challenging the reopening, but dismissed the challenge as the AO had tangible material. Regarding the addition, the Tribunal found that the source of funds for the loans was not properly explained, raising doubts, but proper enquiry was lacking.

The Tribunal held that disallowance under Rule 8D should be computed considering only investments yielding exempt income. Furthermore, the disallowance cannot exceed the exempt income earned.

The Tribunal held that the 'mark to market' loss on closing stock of equity shares is a legitimate business expense and not a speculative loss. This was based on consistent past rulings of the Tribunal in the assessee's own cases.

The Tribunal held that the interest income should be treated as business income. It also vacated the disallowance of employee benefit expenses and allowed the deduction for legal and professional fees.

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

The Tribunal held that disallowance under Section 14A r.w.r. 8D cannot exceed the quantum of exempt income earned in a particular assessment year. The Tribunal also directed the AO to allow deduction of education cess from business income.

The Tribunal condoned the delay in filing the appeals. It held that late fees under Section 234E could not be levied for defaults occurring before June 1, 2015, as the amendment to Section 200A enabling such levy was prospective.

The Tribunal held that the reassessment framed without supplying the reasons recorded for reopening to the assessee is without jurisdiction. This is a violation of natural justice and renders the assessment order invalid.

The Tribunal restored the matter to the CIT(A) for fresh adjudication, providing one more opportunity to the assessee to substantiate its claim regarding loan creditors.