ITAT Mumbai Judgments — July 2022

The Tribunal held that the assessee primarily functions as a distributor and that the expenses incurred were for increasing its valuation as a startup, not for adding value to the core transaction. Therefore, RPM was confirmed as the most appropriate method.

The Tribunal held that the assessee should be provided an opportunity to file an appeal against the original rectification order with a condonation application before the CIT(A). The order of the CIT(A) was set aside, and the issues were restored to the file of the CIT(A) for fresh adjudication on merits.

The Tribunal held that the issue of 80HHC deduction concerning DEPB credits was decided by the Supreme Court in favor of the assessee. Therefore, the assessee's claim is allowed, and the matter is remitted to the Assessing Officer for recomputation.

The Tribunal held that the disallowance made under Section 143(1) was not permissible as the payments were made before the due date of filing the return of income. The amendments made by the Finance Act, 2021, were held to be prospective and not applicable to the assessment year in question.

The Tribunal held that the assessee was not given an adequate opportunity of being heard as notices were not properly served. Therefore, the case was remitted back to the AO for fresh adjudication after providing a proper opportunity to the assessee.

The Tribunal noted that in subsequent assessment years, both the AO and CIT(A) accepted the ALV of an Indian property instead of the London property. Therefore, the Tribunal directed the AO to compute the ALV based on the Indian property.

The Tribunal condoned the delay in filing the appeals before the CIT(A), citing substantial justice. It also held that the levy of late fees under Section 234E for periods prior to June 1, 2015, is not sustainable, following High Court decisions.

The Tribunal held that the notice issued under Section 274 read with Section 271(1)(c) was bad in law because it did not specify the limb of the section and irrelevant portions were not struck off. Consequently, the penalty was deleted.

The Tribunal upheld the deletion of penalties, agreeing that since the quantum additions were deleted or the tax was paid prior to the assessment notice, no penalty was leviable. The assessee's cross-objections were dismissed as infructuous.

The Tribunal held that MPS Ltd. was correctly excluded as a comparable as it is a product company providing high-end services, unlike the assessee's routine ITES. The direction to the TPO to recalculate the margin of Jindal Intellicom Ltd. after providing an opportunity to the assessee was also upheld.

The Tribunal held that provision for leave encashment is disallowable under Section 43B(f) as per the Supreme Court's decision in Exide Industries. The Tribunal also dismissed the assessee's claim for additional depreciation as not pressed. The Tribunal allowed the Revenue's appeal regarding sales tax incentive, confirming the AO's order.

The Tribunal condoned the delay, finding sufficient cause due to the medical emergencies faced by the assessee's family. The CIT(A) was directed to decide the appeal on its merits after providing an opportunity of hearing.

The Tribunal upheld the CIT(A)'s decision to tax only the profit element embedded in the bogus purchases at 12.5%. It found no infirmity in the CIT(A)'s reasoned order, which relied on judicial pronouncements supporting this approach.

The Tribunal noted that the assessee company's insolvency plea was admitted by the NCLT. As the further outcome (liquidation or not) was not available, and the Assessing Officer was directed to bring the Official Liquidator or new management on record if liquidation was ordered, the appeals were dismissed.

The Tribunal noted that the assessee company's insolvency plea was admitted by the NCLT. As the further outcome (liquidation or not) was unavailable, the Tribunal dismissed the appeals.

The Tribunal held that the assessee primarily functions as a distributor and that the expenses incurred were for increasing its valuation as a startup, not for adding value to the core transaction. Therefore, RPM was confirmed as the most appropriate method.

The Tribunal held that the lease rent income should be taxed as income from house property, upholding the CIT(A)'s decision. Regarding Section 14A, the disallowance made under Rule 8D was deleted as the rule was not applicable for the A.Y. 2005-06, but a disallowance of Rs. 1 lakh was upheld based on previous years' orders. The addition to book profit under Section 115JB for Section 14A disallowance was deleted.

The Tribunal held that the issue of 80HHC deduction concerning DEPB credits was decided by the Supreme Court in favor of the assessee. Therefore, the assessee's claim is allowed, and the matter is remitted to the Assessing Officer for recomputation.

The Tribunal held that since the assessee had sufficient interest-free funds available, which were more than the investment made, it could be presumed that own funds were used for the investments. Therefore, no disallowance of interest was warranted.

The Tribunal held that the AO had applied his mind and taken a possible view, and the assessee had provided sufficient documentary evidence. The AO's order did not satisfy the twin conditions of being erroneous and prejudicial to the revenue.

The Tribunal upheld the deletion of penalties, agreeing that since the quantum additions were deleted or the tax was paid prior to the assessment notice, no penalty was leviable. The assessee's cross-objections were dismissed as infructuous.

The Tribunal admitted additional grounds of appeal and restored the disputed issues to the CIT(A) for fresh adjudication. The assessee was granted an opportunity to substantiate their case with evidence.

The Tribunal upheld the deletion of penalties, agreeing that since the quantum additions were deleted or the tax was paid prior to the assessment notice, no penalty was leviable. The assessee's cross-objections were dismissed as infructuous.

The Tribunal held that contributions paid before the due date of filing the return under Section 139(1) are allowable, following jurisdictional High Court and Apex Court precedents. The amendments by the Finance Act, 2021 were held to be prospective.

The Tribunal held that the deficit in expenditure for charitable purposes can be carried forward and set off against future income, following the Bombay High Court's decision in CIT vs. Institute of Banking Personnel Services. The CIT(A)'s direction to verify the quantification was found to be without infirmity.

The tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) was defective as it did not specify the exact charge against the assessee. Relying on judicial precedents, the tribunal directed the deletion of the penalty.

The Tribunal recalled its previous order to adjudicate the omitted ground of appeal. However, the assessee's representative did not press this ground during the hearing.

The Tribunal held that provision for leave encashment is disallowable under Section 43B(f) as per the Supreme Court's decision in Exide Industries. The Tribunal also dismissed the assessee's claim for additional depreciation as not pressed. The Tribunal allowed the Revenue's appeal regarding sales tax incentive, confirming the AO's order.

The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee's business activity was not stopped. Only one unit was temporarily shut due to labor issues, while another unit continued operations, and the expenses were considered business-related.

The CIT(A) rightly restricted the disallowance under Section 14A to Rs. 1,08,586, as it cannot exceed the exempt income earned. The Tribunal found no illegality or perversity in the CIT(A)'s order.

The Tribunal held that the show cause notice issued by the Assessing Officer was vague and defective as it did not specify whether the penalty was for furnishing inaccurate particulars or concealment of income. Following judicial precedents, the Tribunal found the penalty bad in law.

The Tribunal noted that the dispute was settled under the Vivad Se Vishwas Scheme. Therefore, the assessment order passed subsequently became infructuous. The appeal was allowed for statistical purposes, and the matter was remitted back to the AO.

The Tribunal condoned the delay in filing the appeals before the CIT(A), citing substantial justice. It also held that the levy of late fees under Section 234E for periods prior to June 1, 2015, is not sustainable, following High Court decisions.

The Tribunal upheld the CIT(A)'s decision, stating that the addition of the loan waiver as income does not automatically amount to concealment or furnishing of inaccurate particulars. The assessee had disclosed the facts, and the issue was debatable.

The Tribunal followed its own prior decision for AY 2013-14, allowing the assessee's claim regarding technical know-how fees and the mark-up on expense recovery. The grounds related to these issues were allowed.

The Tribunal held that the lease rent income should be taxed as income from house property, upholding the CIT(A)'s decision. Regarding Section 14A, the disallowance made under Rule 8D was deleted as the rule was not applicable for the A.Y. 2005-06, but a disallowance of Rs. 1 lakh was upheld based on previous years' orders. The addition to book profit under Section 115JB for Section 14A disallowance was deleted.

The Tribunal, relying on a co-ordinate bench's decision on identical facts, denied the claim for depreciation on intangibles. The denial was based on the finding that these assets did not exist in the predecessor firm's books before succession, indicating an artificial creation to claim depreciation.

The Tribunal found that the CIT(A) did not properly consider the verification of the party involved in the transaction. Unverified sundry creditors cannot be allowed for deletion under Section 68. Therefore, the addition was set aside to the CIT(A) for further adjudication.

The Tribunal held that rental income should be treated as income from house property, allowing statutory deduction, and deleted an ad-hoc disallowance of expenses as it lacked merit. The Tribunal allowed the assessee's appeal.

The Tribunal held that the Assessing Officer's deficiencies were not sustainable as the assessee had filed confirmations, reconciled discrepancies, and the books of accounts were not rejected. The additions on account of cash receipts and payments were also directed to be deleted.

The Tribunal set aside the issue of ALP determination for administrative support services to the TPO for fresh consideration, stating that the primary question of whether services were rendered was not properly demonstrated or analyzed. The Tribunal also restored the issue of benchmarking the mark-up to the TPO due to a change in the assessee's benchmarking methodology.

The Tribunal held that only the license amount actually utilized during the year is taxable, following a previous decision in the assessee's own case and Supreme Court judgments. The benefit of the license is considered hypothetical income until utilized for imports.

The Tribunal held that the AO was justified in initiating rectification proceedings under Section 154 to give effect to the CIT(A)'s directions regarding valuation and legal expenses. However, it found that the CIT(A)'s confirmation of the reference made by the AO under Section 55A was bad in law.

The Tribunal held that the unearned revenue disclosed by the assessee was in line with accounting standards and had been consistently followed. It also ruled that payments made for Red Hat Subscriptions for reselling support services were not 'royalty' under Section 9(1)(vi) or Article 12(3) of the India-Singapore DTAA.

The Tribunal found that the PCIT had not granted reasonable time to the assessee to produce evidence related to old transactions. Therefore, the Tribunal set aside the PCIT's order and restored the matter back for fresh adjudication.

The Tribunal held that the penalty notice was bad in law because it failed to specify the fault or charge against the assessee. Consequently, the penalty levied was vitiated.

The Tribunal held that the Assessing Officer's additions regarding sundry creditors were not sustainable as the assessee had provided confirmations, reconciled discrepancies, and the books of accounts were not rejected. The Tribunal also directed the deletion of additions on account of cash receipts and payments as they were not claimed as expenses.

The Tribunal found that the assessee was given only one opportunity with a short deadline to submit details. Considering the time constraints and the prevailing circumstances, the Tribunal set aside the PCIT's order and restored it to the PCIT's file for a fresh decision after providing a proper opportunity to the assessee.