ITAT Mumbai Judgments — January 2022

The Tribunal held that the notice issued under Section 274 r.w.s. 271 of the Act was defective because the irrelevant charge was not struck off, rendering the penalty proceedings vitiated. This decision was based on the Bombay High Court's ruling in Mohd. Farhan A. Shaikh vs. DCIT.

The Tribunal held that the order passed by the AO under Section 201(1)/201(1A) was time-barred. The pre-amended Section 201(3) provided a limitation period of two years from the end of the financial year in which the TDS statement was filed. Since the order was passed after this period, it was invalid.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 12.5% of the bogus purchases. The Tribunal found the CIT(A)'s decision to be judicious and correct, considering relevant High Court and ITAT precedents.

The Tribunal restored the issues concerning depreciation, warranty expenses, and reimbursement of expenses back to the CIT(A) for fresh adjudication after admitting additional evidence. The issue of R&D expenses was also set aside and restored to the CIT(A) for fresh decision based on additional evidence, allowing the assessee's cross objections for statistical purposes.

The Tribunal upheld the deletion of the penalty, agreeing that since the underlying addition was deleted by a previous ITAT order, the penalty could not stand. The revenue's appeal was dismissed.

The Tribunal held that the source of the capital introduction was adequately explained by the advance received for development rights, which was confirmed by the lender's spouse. The AO did not raise any adverse remarks against the explanation provided.

The Tribunal restored the issue to the Assessing Officer for de novo adjudication, considering the documentary evidence filed by the assessee. The Assessing Officer was directed to grant a reasonable opportunity of hearing.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 12.5% of the bogus purchases, considering it judicious and correct. The Tribunal found no reason to interfere with the CIT(A)'s order.

The Tribunal held that if the disallowance under section 14A is reduced below the suo-moto disallowance due to legal pronouncements, the assessee is entitled to the benefit of such reduction. The appeal was allowed on this ground.

The Tribunal upheld the CIT(A)'s decision to quash the reassessment proceedings. The AO failed to record reasons indicating the assessee's failure to make a full and true disclosure of material facts, which is a mandatory requirement for reopening beyond four years.

The Tribunal held that the AO had misinterpreted its previous directions and acted in violation of judicial discipline by disregarding the appellate authority's order. The AO's assessment order and the CIT(A)'s order were quashed.

The Tribunal restored the issue of 'speed money' disallowance to the Assessing Officer for de novo consideration, noting that the assessee had already made a suo moto disallowance and the AO might have mistakenly presumed the entire administrative expenditure as 'speed money'. The ground regarding business promotion expenses was dismissed as not pressed.

The Tribunal affirmed the CIT(A)'s direction to the AO to ascertain the brought forward losses after giving effect to the ITAT's order for AY 2011-12 and then allow the claim as per law. The Tribunal found no ambiguity in the CIT(A)'s order.

The Tribunal held that the mere fact that a judicial decision is challenged before a higher forum does not diminish its binding effect. Therefore, the CIT(A) was correct in following the co-ordinate bench decision.

The Tribunal held that the Assessing Officer had applied his mind and verified the facts, even if not elaborately discussed in the assessment order. The CIT's action was not acceptable as the AO's order did not satisfy the twin conditions of being erroneous and prejudicial to the revenue.

The Tribunal held that penalty under Section 271(1)(c) is not leviable on ad-hoc or estimated additions. Since the addition was based on estimation and not on conclusive proof of concealment or furnishing inaccurate particulars, the deletion of penalty by the CIT(A) was upheld.

The Tribunal held that freight income from feeder vessels is eligible for the benefit under Article 8 of the India-Germany DTAA, following previous decisions in the assessee's own case. The Tribunal also directed the Assessing Officer to verify and grant TDS credit as per law.

The Tribunal held that the disallowance of expenses on free samples was not justified, especially when the assessee provided detailed records and the expenditure was a normal business practice. The Tribunal followed its own previous orders where similar expenses were allowed in full.

The Tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) was invalid because it did not specify the exact limb (concealment of particulars or furnishing inaccurate particulars) under which the penalty was being levied, indicating a non-application of mind by the Assessing Officer. Consequently, the penalty was deleted.

The Tribunal allowed the deduction for ESOP expenditure, following a Special Bench decision. It also directed the AO to reconsider the revised Section 10A deduction claim. The Tribunal excluded one comparable in the transfer pricing adjustment, directing a re-computation of the arm's length margin.

The Tribunal held that since Project B was unfinished and no revenue was recognized from it, the interest expenditure specifically related to Project B could not be allowed as a revenue expense. It should be capitalized to the work-in-progress of Project B.

The Tribunal upheld the CIT(A)'s decision to restrict the disallowance under Section 14A to 2% of the exempt income. It also noted that if no dividend was received on investments in group companies, no disallowance was warranted.

The Tribunal held that the CIT(A) should have decided the appeal on merits rather than dismissing it for non-prosecution. The order of the CIT(A) was set aside, and the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that depreciation on goodwill and customer contracts should be allowed, following previous decisions in the assessee's own case and Supreme Court rulings. The disallowance made by the Assessing Officer was deleted.

The Tribunal held that the AO had examined the issue of interest expenses and made a reasoned disallowance. Therefore, the PCIT's invocation of Section 263 was not justified as the assessment order was not erroneous or prejudicial to the revenue. The Tribunal set aside the PCIT's order.

The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned, upholding the CIT(A)'s decision. Furthermore, the Tribunal ruled that disallowances under Section 14A cannot be added for computing book profit under Section 115JB.

The Tribunal held that the transfer fee received by the society was not taxable as it falls within the concept of mutuality, following a Supreme Court decision. It also directed the AO to consider the actual rent received for determining the ALV of let-out properties.

The Tribunal held that the CIT(A) was justified in allowing the claim. The Tribunal followed the decision of the jurisdictional High Court and allowed the additional ground raised by the assessee, leading to the deletion of additions made by the AO.

The Tribunal held that notional interest income should not be taxed when recovery is uncertain, citing High Court precedents. Regarding TDS credit, the Tribunal directed the AO to verify and grant credit if the income is not taxable.

The Tribunal held that the AO did not discharge the onus of providing justification for rejecting the assessee's suo motu disallowance. Following previous decisions, the Tribunal directed the AO to accept the assessee's suo motu disallowance.

The Tribunal held that the penalty notice issued by the AO was invalid as it failed to specify the limb under Section 271(1)(c) under which penalty proceedings were initiated. This failure demonstrated a non-application of mind by the AO and a violation of natural justice.

The Tribunal noted that the donee institution had filed a writ petition before the Bombay High Court challenging the rejection of its recognition. Both parties agreed to remand the issue to the Assessing Officer to decide based on the final outcome of the writ petition.

The Tribunal held that the assessment order passed against a non-existent entity is a nullity. Following the Supreme Court's decision in similar cases, the Tribunal quashed the assessment order.

The Tribunal held that notional interest income should not be taxed when recovery is uncertain, citing High Court precedents. Regarding TDS credit, the Tribunal directed the AO to verify and grant credit if the income is not taxable.

The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned, upholding the CIT(A)'s decision. Furthermore, the Tribunal ruled that disallowances under Section 14A cannot be added for computing book profit under Section 115JB.

The Tribunal held that the assessee was a valid trust and not an Association of Persons (AOP). The income was taxable in the hands of the SR holders, and since their shares were known, it was not an indeterminate trust.

The Tribunal held that the Pr. CIT initiated revision proceedings based on presumption and a differing opinion, without finding any prima facie error in the assessment order. The AO had considered the relevant facts and provisions of law.

The Tribunal held that for assessment years where the tax effect was below the prescribed limit, the Revenue's appeals were not maintainable and were dismissed. For AY 2005-06, the Tribunal upheld the CIT(A)'s deletion of additions, relying on a coordinate bench's decision that the foreign bank account deposits belonged to the assessee's mother.

The Tribunal condoned the delay in filing the appeal. It observed that the CIT(A) had not adjudicated on the grounds challenging the reopening of assessment. Therefore, the issue was remitted back to the CIT(A) for adjudication.

The Tribunal held that the assessee rightly claimed depreciation on spectrum fees under Section 32 as an intangible asset. It found that the PCIT's revisionary order was unsustainable in law, as the AO's assessment order was not erroneous or prejudicial to the revenue.

The Tribunal held that the Pr. CIT initiated revision proceedings based on presumption and a differing opinion, without finding any prima facie error in the assessment order. The AO had considered the relevant facts and provisions of law.

The Tribunal condoned the delay in filing the appeal due to the pandemic. It held that the CIT(Exemptions) order was passed without affording a proper opportunity of being heard, violating principles of natural justice.

The Tribunal held that in assessments framed under section 153A, additions cannot be made without incriminating material found during the search. An evasive reply, even if considered by the lower authorities, does not constitute sufficient incriminating material for making additions in such cases.

The Tribunal dismissed the appeal as withdrawn, subject to the condition that if the Vivad se Vishwas scheme does not resolve the matter, the assessee can seek restoration of the appeal within the prescribed time.

The Tribunal held that the Pr. CIT erred in invoking Section 56(2)(vii)(b) as the property was booked and substantial payments were made in an earlier financial year when the market value was lower. The Tribunal also found that the source of funds was adequately explained to the Assessing Officer.

The tribunal decided to dispose of the appeal as withdrawn, following the assessee's decision to opt for the Vivad Se Vishwas Scheme. Liberty was granted to the assessee for restoration of the appeal if the scheme's outcome is unfavorable.

The Tribunal treated the assessee's appeal as withdrawn and dismissed it. The Tribunal also dismissed the Revenue's appeal, finding no infirmity in the CIT(A)'s decision to restrict the disallowance under Section 14A.

The Tribunal held that the assessee had discharged the initial burden of proving the identity, genuineness of transactions, and creditworthiness of the lenders by providing various documents. The AO failed to controvert this evidence, and the relied-upon Supreme Court judgments were distinguishable.

The Tribunal held that the PCIT erred in initiating revision proceedings as the AO had applied their mind and verified the transactions, accepting the assessee's explanation and supporting evidence. The assessment order did not satisfy the twin conditions of being erroneous and prejudicial to the interest of the revenue.

The Tribunal held that Section 43CA was not applicable as the agreements were entered into prior to its introduction. It also noted that the difference between the ready reckoner rates and sale consideration was marginal, less than 5%.