ITAT Mumbai Judgments — September 2021

The Tribunal held that the corporate guarantee commission charged by the assessee at 0.5% was at an arm's length rate, following the jurisdictional High Court's decision. The Tribunal directed the AO to delete the addition made by the authorities below.

The Tribunal held that since the Pr. CIT's order under Section 263 was quashed, the consequential assessment order passed by the AO could not survive independently. Therefore, the disallowance of depreciation made by the AO was liable to be vacated.

The Tribunal held that the assessee had discharged its primary onus by providing identity, creditworthiness, and genuineness of the investors. The Revenue failed to dislodge this evidence with corroborative material, relying only on third-party statements.

The Tribunal held that advertisement expenses incurred for promoting FMCG products are inextricably linked to the business and do not create enduring benefits, thus allowable under Section 37(1). The accounting treatment in books does not determine the allowability of expenditure.

The Tribunal concurred that estimated additions were warranted as sales were accepted and purchases were necessary for sales. Following a coordinate bench's decision in a similar case, the Tribunal directed the AO to restrict the addition to 2.5% of the suspicious purchases.

The Tribunal deleted the addition for unexplained expenditure on interior work and unexplained investment in shares, finding them unsustainable. The estimation of business income for non-abated years was also deleted. The addition for foreign trips was confirmed, and the issue of unsecured loans was restored to the CIT(A) for reconsideration.

The Tribunal held that the advances were made out of commercial expediency to further the business interests of the group, and thus the interest expenditure was allowable. The Tribunal also upheld the CIT(A)'s decision regarding the Section 14A disallowance, finding the assessee's suo-moto disallowance reasonable.

The Tribunal held that interest paid on borrowed funds directly linked to the acquisition of land, and capitalized in the books, should be allowed as part of the cost of acquisition for indexation purposes. The AO was directed to allow the deduction as claimed by the assessee.

The assessee requested to withdraw the appeal to avail the benefit of the 'Viwad Se Vishwas Scheme'. The Department had no objection to this request.

The Tribunal permitted the withdrawal of the appeal. The appeal was accordingly dismissed as withdrawn.

The Tribunal held that the revisionary order passed by the Pr. CIT was barred by limitation as the period of limitation under Section 263(2) should be reckoned from the date of the original assessment order, not the reassessment order. The issue of share capital and premium was not the subject of reassessment.

The Tribunal held that certain expenses claimed as cost of improvement were indeed part of the property and eligible for deduction. However, other claimed expenses were considered personal items and not improvements to the property.

The Tribunal held that the addition was made solely on the basis of a third-party entry in a pen-drive without corroborating evidence linking the assessee. Given the assessee was a non-resident and payments were made through banking channels, the addition was not sustainable.

The Tribunal held that the Resale Price Method (RPM) was the most appropriate method for benchmarking the purchase of formulations. Regarding AMP expenses, the Tribunal ruled that they could not be considered international transactions as there was no express agreement between the assessee and its Associated Enterprises (AEs).

The Tribunal held that the assessee had substantiated its claim for deduction under Section 80-IC by providing evidence of software professionals engaged at the Baddi unit for software development. The Tribunal found no concrete material to suggest the claim was not genuine.

The Tribunal held that possession of the property is not a prerequisite for claiming deduction of interest on borrowed capital under Section 24(b). The entitlement to deduction is based on ownership and payment of interest on borrowed funds for acquisition.

The Tribunal held that the comparable uncontrolled price (CUP) method requires actual transactions, not price lists from government agencies. Therefore, the relief granted by the CIT(A) was unjustified, and the TPO's rate of Rs. 3,000 per sq meter was reinstated.

The Tribunal held that the assessee had discharged the onus by showing delivery-based transactions, payment through banking channels, and transactions on the BSE floor. The addition could not be held non-genuine solely on a third-party statement without an opportunity for cross-examination.

The Tribunal held that a view that assets acquired earlier but installed during the year are eligible for deduction under Section 32AC is legally sustainable. The CIT's order under Section 263 was considered erroneous as the AO had taken a possible view, and the CIT's disagreement did not warrant invoking Section 263 jurisdiction.

The Tribunal held that the AO's failure to strike off the irrelevant default in the show cause notice vitiated the penalty proceedings. This failure prevented the assessee from being properly notified of the specific charge against him, thus violating principles of natural justice.

The Tribunal held that education cess and secondary and higher education cess are not disallowable as deduction under Section 40(a)(ii) of the Act. The issue of disallowance under Section 14A was restored to the AO for fresh consideration.

The Tribunal dismissed the appeal as withdrawn. The assessee was granted liberty to seek restoration if the declaration under the scheme was not accepted.

The Tribunal held that the PCIT erred in revising the AO's order. Since the case was selected for limited scrutiny concerning Chapter VI-A deductions, the AO's view on Section 80P(2)(d) was a possible view, and the PCIT could not go beyond the limited scope of scrutiny.

The assessee requested to withdraw the appeals to avail the benefit of the 'Viwad Se Vishwas Scheme'. The Department had no objection to the withdrawal. The Tribunal noted that the assessee's declaration under the scheme was accepted and Form-3 was issued.

The Tribunal held that the AO failed to record proper satisfaction before applying Rule 8D for disallowance, as required by Section 14A(2). Following a previous decision in the assessee's own case, the additional disallowance was deleted.

The Tribunal held that the AO duly applied his mind to the issue and took a possible view that was not contrary to law. The revisional power under Section 263 could not be invoked as the order was neither erroneous nor prejudicial to the revenue.