ITAT Mumbai Judgments — May 2022

The Tribunal held that the amendments to Sections 36(1)(va) and 43B of the Income Tax Act by the Finance Act, 2021, are prospective and effective from Assessment Year 2021-22. Therefore, the disallowance made for the assessment year under appeal was incorrect.

The Tribunal followed a coordinate bench decision and the Bombay High Court ruling, directing the Assessing Officer to restrict the addition to the extent of bringing the Gross Profit rate on alleged bogus purchases to the same rate as other genuine purchases.

The Tribunal condoned the delay in filing the appeals. Regarding the addition under Section 2(22)(e), the Tribunal noted a similar case where additional evidence was directed to be considered. For another issue concerning payments to R D Karas and Sons, the Tribunal remanded the matter to the Assessing Officer for verification of demand drafts with R D Karas and Sons.

The Tribunal condoned the delay in filing the appeals. Regarding the addition under Section 2(22)(e), the Tribunal noted a similar case where additional evidence was directed to be considered. For another issue concerning payments to R D Karas and Sons, the Tribunal remanded the matter to the Assessing Officer for verification of demand drafts with R D Karas and Sons.

The Tribunal held that the disallowance of delayed payment of employee's contribution to PF/ESI was not justified. Following previous judgments, the Tribunal ruled that payments made before the due date for filing the return of income are eligible for deduction.

The Tribunal held that the CBDT circular regarding low tax effect for not prosecuting appeals applies to quantum proceedings, not penalty proceedings. Therefore, the Revenue's appeals were treated as withdrawn.

The Tribunal accepted the assessee's request to withdraw the appeal. The appeal was deemed infructuous as the assessee intended to challenge the fresh assessment order on merits before the appropriate appellate authority.

The Tribunal held that the CIT(A) erred in dismissing the appeal as withdrawn, as the VSV scheme was not availed for the specific appeal in question. The matter was therefore remanded for fresh adjudication on merits.

The Tribunal, following the Bombay High Court's decision in Pr.CIT v. M/s. Mohommad Haji Adam & Co., directed the Assessing Officer to restrict the addition to the extent of bringing the Gross Profit rate on alleged bogus purchases to the same rate as other genuine purchases. The assessee's GP rate was considered for this calculation.

The Tribunal held that once the substantive addition in the hands of the Bhanwarlal Jain Group was confirmed (albeit at a reduced rate), the protective addition in the assessee's hands was unsustainable. The revenue's attempt to keep the issue alive due to disagreement on the commission rate was not accepted.

The Tribunal found that the PCIT had not considered the submissions made by the assessee during the assessment proceedings and that the revision order was passed without giving an effective opportunity of being heard. Therefore, the matter was remanded back to the PCIT.

The Tribunal, following the Bombay High Court's decision in Pr.CIT v. M/s. Mohommad Haji Adam & Co., directed the Assessing Officer to restrict the addition to the extent of bringing the Gross Profit rate on alleged bogus purchases to the same rate as other genuine purchases. The assessee's GP rate was considered for this calculation.

The Tribunal, following the Bombay High Court's decision in Pr.CIT v. M/s. Mohommad Haji Adam & Co., directed the Assessing Officer to restrict the addition to the extent of bringing the Gross Profit rate on alleged bogus purchases to the same rate as other genuine purchases. The assessee's GP rate was considered for this calculation.

The Tribunal held that the disallowance of delayed PF and ESIC payments was not justified. Following previous judgments, it was decided that if the employee's contribution is paid before the due date of filing the return, the deduction is allowable.

The Tribunal held that the assessee demonstrated commercial expediency in advancing funds to sister concerns for business purposes, considering the nature of its real estate development activities. The disallowance of interest was therefore not tenable.

The Tribunal held that payments made to general practitioners for professional expertise and feedback on products are not in violation of IMC Regulations and should be allowed as business expenditure. The expenditure incurred for scientific research development activities, without creation of capital assets, was also allowed under Section 35 of the Act.

The Tribunal, following its own earlier decision on identical issues for prior assessment years, found that the addition of creditors and debtors based on a percentage estimate was not sustainable. The Tribunal noted that outstanding creditors can only be added under Section 41(1) if specific conditions are met, which was not the case here.

The Tribunal held that the disallowance of employee's contribution to PF/ESI, paid before the due date of filing the return of income, was not justified. It also restored the issue of short TDS credit to the AO for fresh adjudication.

The Tribunal, following its own earlier decision on identical issues for prior assessment years, found that the addition of creditors and debtors based on a percentage estimate was not sustainable. The Tribunal noted that outstanding creditors can only be added under Section 41(1) if specific conditions are met, which was not the case here.

The Tribunal upheld the CIT(A)'s order deleting the penalty. The penalty related to the disallowance of deduction under Section 10AA was deleted as the ITAT had ruled in favor of the assessee, even though the Revenue had appealed to the High Court. The penalty related to the option premium loss was also not sustained at this stage as the matter was remanded to the AO.

The Tribunal found no reason to interfere with the CIT(A)'s decision, which sustained the additions made by the Assessing Officer. The assessee's failure to provide verifiable details and reconcile discrepancies led to the confirmation of the additions.

The Tribunal held that the disallowance of belated payment of employee's contribution to PF/ESI was not justified. Following previous judgments, the Tribunal ruled that payments made before the due date of filing the return of income are eligible for deduction, and the amendment by the Finance Act 2021 is prospective.

The Tribunal held that once the substantive addition in the hands of the Bhanwarlal Jain Group was confirmed (albeit at a reduced rate), the protective addition in the assessee's hands was unsustainable. The revenue's attempt to keep the issue alive due to disagreement on the commission rate was not accepted.

The Tribunal, following the Bombay High Court's decision in Pr.CIT v. M/s. Mohommad Haji Adam & Co., directed the Assessing Officer to restrict the addition to the extent of bringing the Gross Profit rate on alleged bogus purchases to the same rate as other genuine purchases. The assessee's GP rate was considered for this calculation.

The Tribunal held that since the AO did not doubt the genuineness of sales or the consumption of goods, the entire purchases could not be treated as unexplained expenditure. The CIT(A)'s estimation of suppressed profit at 12.5% was considered judicious.

The Tribunal upheld the CIT(A)'s decision to restrict the addition on bogus purchases to 12.5% and to treat the non-compete fee as not taxable under Section 28(va) of the Act, relying on previous decisions and the specific facts of the case.

The Tribunal held that the disallowance was not justified. Following previous judgments, it was decided that payments made before the due date of filing the return of income are eligible for deduction, and the amendment to Section 36(1)(va) is prospective.

The Tribunal held that payments made to general practitioners for professional expertise and feedback on products are not in violation of IMC Regulations and should be allowed as business expenditure. The expenditure incurred for scientific research development activities, without creation of capital assets, was also allowed under Section 35 of the Act.

The Tribunal held that the capital introduction was sufficiently explained by cash withdrawals from the same concern. Regarding the loans, the Tribunal found that the assessee had provided substantial documentary evidence to prove the genuineness and creditworthiness of the lenders, leading to the deletion of the addition.

The Tribunal set aside the issue of ₹75 lacs advance and cash deposits of ₹33,63,900/- and ₹2 lac back to the AO for fresh adjudication. The Tribunal also directed the assessee to substantiate the nature of expenditure incurred. Grounds related to procedural issues were dismissed.

The Tribunal held that payments made to general practitioners for professional expertise and feedback on products are not in violation of IMC Regulations and should be allowed as business expenditure. The expenditure incurred for scientific research development activities, without creation of capital assets, was also allowed under Section 35 of the Act.

The Tribunal found that the lower authorities had not properly considered the documents submitted by the assessee regarding the cost of improvement and renovation. Therefore, the issue was remanded back to the Assessing Officer for fresh adjudication.

The Tribunal held that the amendment to Section 36(1)(va) and 43B by the Finance Act, 2021, is prospective and not applicable to the assessment year in question. Payments made before the due date of filing the return of income are allowable deductions.

The Tribunal held that the addition made under Section 143(1) was not justified as the issue was debatable and the amendments to Section 36(1)(va) and 43B were prospective. Furthermore, the disclosure in Form 3CD did not constitute a disallowance indicated in the audit report for the purpose of Section 143(1)(a)(iv).

The Tribunal held that the amounts received from members towards the Surety Guarantee Fund were capital receipts and not chargeable to tax, applying the principle of mutuality. The Tribunal also noted the consistent treatment of similar receipts in earlier and subsequent assessment years by the revenue.

The Tribunal held that since the AO granted the carry forward of losses and unabsorbed depreciation in subsequent years, no interference was needed on that ground. However, the Tribunal directed the AO to allow interest under Section 244A up to the date of refund issue, as per High Court precedents.

The Tribunal held that the issue is covered by a coordinate bench decision in favor of the assessee. Therefore, the disallowance made by the Assessing Officer was not justified.

The Tribunal held that the disallowance for delayed deposit of employees' contribution to EPF/ESIC, when paid before the due date of filing the return of income, is to be deleted. The amendment by the Finance Act, 2021 was prospective and not retrospective.

The Tribunal held that payments made to general practitioners for professional expertise and feedback on products are not in violation of IMC Regulations and should be allowed as business expenditure. The expenditure incurred for scientific research development activities, without creation of capital assets, was also allowed under Section 35 of the Act.

The Tribunal held that the assessee demonstrated commercial expediency in advancing funds to sister concerns for business purposes, considering the nature of its real estate development activities. The disallowance of interest was therefore not tenable.

The Tribunal held that the issue is covered by a coordinate bench decision in favor of the assessee. Therefore, the disallowance made by the Assessing Officer was not justified.

The Tribunal held that since the revisional order under Section 263 was set aside, the subsequent re-assessment order based on it was invalid. Therefore, the CIT(A) was correct in quashing the re-assessment order.

The Tribunal held that the date of allotment of the flat, based on the development agreement, should be considered the date of acquisition for computing capital gains. Therefore, the gain was long-term, and the exemption under Section 54F was allowed.

The Tribunal held that the CIT(E) erred in revising the assessment order under Section 263. It was found that the AO had sufficient information on record, and the assessee's explanation regarding the application of funds from earlier corpus donations was a plausible view that could not be disturbed by the CIT(E). The Tribunal also noted that amendments regarding corpus application were not retrospective.

The Tribunal held that the assessee's right in the property constituted a capital asset, and its extinguishment was a transfer. The compensation received was therefore capital gains. The Tribunal also found that the investment in bonds for Section 54EC exemption was made within the prescribed time limit.

The Tribunal dismissed the Assessing Officer's appeal, finding that the issues were covered by previous decisions of coordinate benches in the assessee's own case. Consequently, the assessee's cross-objection was dismissed as infructuous.

The Tribunal held that referral fees paid to doctors violate the Indian Medical Council's code of conduct, as they can compromise the doctor-patient fiduciary relationship. Therefore, such payments are not tax-deductible business expenses.

The Tribunal held that a notification by the Central Government in the Official Gazette is a mandatory precondition for claiming exemption under Section 10(47). Since this condition was not met, the Assessing Officer's order was erroneous and prejudicial to the revenue.

The Tribunal held that disallowance under Section 14A cannot exceed the exempt income earned. Regarding the speculative loss, the Tribunal found that the assessee's intraday trading without delivery constituted speculative transactions.

The Tribunal held that the assessee is entitled to vacancy allowance as the property was vacant and efforts were made to let it out. The previous year's decision in the assessee's own case for AY 2012-13 was followed.