ITAT Mumbai Judgments — May 2024

The Tribunal upheld the order of the CIT(A). It was held that the AO lacked material evidence to prove the receipt of Rs. 5 crores by the assessee, as the investigation wing did not provide corroborating evidence and the assessee's bank accounts and books of accounts did not reflect such receipts.

The Tribunal found that the CIT(A) had indeed sent notices to a wrong email ID. Therefore, the matter was remanded back to the CIT(A) for a fresh decision after issuing proper notices and providing an opportunity for hearing.

The Tribunal, referencing a Special Bench decision in the case of All Cargo Global Logistics, held that an ICD/CFS qualifies as an inland port for the purposes of section 80IA(4). The Tribunal noted that previous co-ordinate benches had consistently allowed similar deductions for the assessee and in other similar cases.

The Tribunal, referencing a Special Bench decision in the case of All Cargo Global Logistics, held that an ICD/CFS qualifies as an inland port for the purposes of section 80IA(4). The Tribunal noted that previous co-ordinate benches had consistently allowed similar deductions for the assessee and in other similar cases.

The Tribunal held that the penalty levied under Section 271(1)(c) of the Act is unsustainable because the primary addition of Rs. 7,99,04,500/- on which the penalty was based, was deleted by the ITAT in its order dated 10.07.2023. The Tribunal reasoned that if the quantum addition itself is deleted, the penalty levied on that addition cannot stand. Regarding the second ground for penalty, which was the difference of Rs. 45,44,444/- between the income declared under Section 139(1) and Section 153A, the Tribunal found no merit. It was held that once a return is filed under Section 153A, the original return under Section 139 abates. Therefore, the assessment of concealment should be based on the Section 153A return. Since the returned income under Section 153A was accepted and no incriminating material was found in connection with the additional income, there was no concealment of income on this ground. Consequently, the penalty levied on this ground was also deleted. The Tribunal found no reason to interfere with the findings of the Ld. CIT(A).

The Tribunal allowed the assessee to withdraw the current appeal. The appeal was dismissed as withdrawn and infructuous.

The Tribunal held that the penalty notices issued under Section 271(1)(c) read with Section 274 of the Act were defective because the Assessing Officer failed to strike off the irrelevant limb of the charge, making the notice vague. Following the jurisdictional High Court's decision in Mohd. Farhan A. Shaikh, the Tribunal concluded that such a defect vitiates the penalty proceedings.

The Tribunal held that the penalty notices issued under Section 271(1)(c) read with Section 274 of the Act were defective because the Assessing Officer failed to strike off the irrelevant limb of the charge, making the notice vague. Following the jurisdictional High Court's decision in Mohd. Farhan A. Shaikh, the Tribunal concluded that such a defect vitiates the penalty proceedings.

The Tribunal held that the amendment to Section 14A by the Finance Act, 2022, is not retrospective. It also affirmed that disallowance under Section 14A cannot be made in the absence of exempt income, following jurisdictional High Court decisions.

The Tribunal held that RGA Services did not have the necessary license to act as a reinsurance agent in India and that the reinsurance agreements were signed outside India. Therefore, the provisions for a Dependent Agent PE (DAPE) were not applicable.

The Tribunal held that since the payments for purchases were from banking channels and supported by books, and the utilization of these purchases in manufacturing was accepted, the entire purchases could not be added under section 69C. The application of a 10% profit rate was considered reasonable and in line with High Court decisions. The penalty was also deleted as there was no concealment of income.

The Tribunal held that since the payments for purchases were from banking channels and supported by books, and the utilization of these purchases in manufacturing was accepted, the entire purchases could not be added under section 69C. The application of a 10% profit rate was considered reasonable and in line with High Court decisions. The penalty was also deleted as there was no concealment of income.

The Tribunal held that the penalty orders, passed based on assessment orders that were merged with the subsequent Tribunal order and no longer survived in the eyes of law, were invalid. Consequently, the penalty orders were liable to be quashed.

The Tribunal held that the penalty orders were passed based on assessment orders that were set aside and merged with subsequent Tribunal orders. Since the relevant assessment orders did not survive in the eyes of law, the penalty orders and the upholding orders by the CIT(A) also did not survive.

The Tribunal held that the penalty orders were passed based on assessment orders that were set aside and merged with subsequent Tribunal orders. Since the relevant assessment orders did not survive in the eyes of law, the penalty orders and the upholding orders by the CIT(A) also did not survive.

The Tribunal noted that the impugned orders were passed ex-parte. The addition of the entire purchases without considering sales was found to be unsustainable. Furthermore, a subsequent assessment order for the same year, based on a reassessment after a survey action, was also considered. The Tribunal found that the original assessment order lacked merit in light of subsequent events and a subsequent order.

The Tribunal noted that the impugned orders were passed ex-parte. The addition of the entire purchases without considering sales was found to be unsustainable. Furthermore, a subsequent assessment order for the same year, based on a reassessment after a survey action, was also considered. The Tribunal found that the original assessment order lacked merit in light of subsequent events and a subsequent order.

The Tribunal held that the assessee is entitled to the claim of exemption under Section 54 of the Income-tax Act, 1961. The undisputed facts established that the assessee's husband and son purchased flats 1101 and 1201, and the assessee purchased additional space in flats 1102 and 1202, along with terrace and car parkings. Together, these constituted a triplex flat with the assessee's share earmarked. The Tribunal reasoned that all purchase agreements must be read together. Since the assessee acquired a 25% share by paying the consideration, the transaction was genuine and legally documented, even if acquired from other family members. Therefore, the assessee was rightly allowed the exemption by the Ld. CIT(A), and no interference was called for. The appeal filed by the revenue was dismissed.

The Tribunal held that interest income earned by a co-operative society on investments made with a co-operative bank is eligible for deduction under Section 80P(2)(d), even after the insertion of Section 80P(4). The Tribunal followed various High Court and ITAT judgments supporting this view.

The Tribunal held that interest income earned by a co-operative society on investments made with a co-operative bank is eligible for deduction under Section 80P(2)(d), even after the insertion of Section 80P(4). The Tribunal followed various High Court and ITAT judgments supporting this view.

The Tribunal partially allowed the assessee's appeal and the Revenue's appeal. Regarding the provision for unavailed leave travel concession, the Tribunal noted the policy of the Corporation and the employee's option to encash LFA. The judgment indicates that the Tribunal considered the underlying facts and the arguments presented. The Tribunal also addressed issues concerning the allocation of interest expenditure for Section 80IB deductions, stating that forward exchange premium cannot be considered contingent or notional as it arises from a legally binding contract. The Tribunal found that commodity loss from hedging cannot be treated as speculative. The specific findings on each ground are detailed within the judgment, with some grounds being dismissed and others being allowed or disallowed. The cross-objection filed by the assessee was dismissed as otiose in light of the decision in the assessee's appeal. The operative directions involved allowing some claims and disallowing others, leading to a partly allowed status for both the assessee's and Revenue's appeals.

The Tribunal partially allowed the assessee's appeal and the Revenue's appeal. Regarding the provision for unavailed leave travel concession, the Tribunal noted the policy of the Corporation and the employee's option to encash LFA. The judgment indicates that the Tribunal considered the underlying facts and the arguments presented. The Tribunal also addressed issues concerning the allocation of interest expenditure for Section 80IB deductions, stating that forward exchange premium cannot be considered contingent or notional as it arises from a legally binding contract. The Tribunal found that commodity loss from hedging cannot be treated as speculative. The specific findings on each ground are detailed within the judgment, with some grounds being dismissed and others being allowed or disallowed. The cross-objection filed by the assessee was dismissed as otiose in light of the decision in the assessee's appeal. The operative directions involved allowing some claims and disallowing others, leading to a partly allowed status for both the assessee's and Revenue's appeals.

The Tribunal held that transaction charges paid to stock exchanges are for facilities provided, not technical services, thus no TDS under Section 194J was deductible. Consequently, the disallowance under Section 40(a)(ia) for these charges was deleted. Other grounds were also addressed, with some allowed and others dismissed.

The Tribunal noted that a Coordinate Bench had previously quashed the assessment of income declared under the IDS scheme. The bench found that the Assessing Officer (AO) lacked jurisdiction to make an assessment on income offered under the IDS provisions, as the declaration was made in accordance with the scheme's conditions and circulars. Therefore, the assessment was annulled.

The ITAT held that the entire dispute revolved around the date of receipt of the Intimation/Notice of Demand by the assessee. If the assessee indeed received the notice on March 4, 2023, then the appeals should have been decided on their merits by the Additional CIT(A). Conversely, if the revenue could demonstrate that the intimation was sent in 2014, the assessee would need to provide strong evidence to prove the absence of malafide intention for the inordinate delay. In the interest of justice and fair play, the ITAT restored the appeals to the file of the Additional CIT(A). The Additional CIT(A) was directed to verify the date of intimation. If the revenue could not prove the 2014 date, the appeals were to be decided on merits. If the 2014 date was proven, the assessee had to establish bonafide for the delay to the satisfaction of the Additional CIT(A), who was then to decide the issue afresh after providing a reasonable opportunity of being heard. The appeals were allowed for statistical purposes.

The ITAT held that the entire dispute revolved around the date of receipt of the Intimation/Notice of Demand by the assessee. If the assessee indeed received the notice on March 4, 2023, then the appeals should have been decided on their merits by the Additional CIT(A). Conversely, if the revenue could demonstrate that the intimation was sent in 2014, the assessee would need to provide strong evidence to prove the absence of malafide intention for the inordinate delay. In the interest of justice and fair play, the ITAT restored the appeals to the file of the Additional CIT(A). The Additional CIT(A) was directed to verify the date of intimation. If the revenue could not prove the 2014 date, the appeals were to be decided on merits. If the 2014 date was proven, the assessee had to establish bonafide for the delay to the satisfaction of the Additional CIT(A), who was then to decide the issue afresh after providing a reasonable opportunity of being heard. The appeals were allowed for statistical purposes.

The Tribunal held that payments made as compensation for hardship and alternate accommodation charges to tenants for vacating property for redevelopment do not fall under the definition of 'rent' as per Section 194I. Therefore, TDS was not required to be deducted on these payments.

The Tribunal held that doctor's fees are not part of the hospital's earnings but a reimbursement, and thus correctly excluded from gross billing for IPF calculation. The Tribunal also noted that only the Charity Commissioner can recommend withdrawal of exemption for scheme breaches, not the AO.

The Tribunal held that the reopening of assessment beyond four years was invalid as the AO failed to demonstrate the assessee's failure to disclose material facts. The CIT(A) also failed to provide a speaking order on the merits of the case, especially regarding the nature of the outstanding amounts.

The Tribunal noted that a coordinate bench in a similar appeal for the same assessment year had restricted the addition to 3% of gross profit. Since the assessee had declared a gross profit of 1.42%, the balance 1.58% was confirmed. Consequently, the appeal filed by the Revenue was rendered infructuous.

The Tribunal held that payments made as compensation for hardship and alternate accommodation charges to tenants for vacating property for redevelopment do not fall under the definition of 'rent' as per Section 194I. Therefore, TDS was not required to be deducted on these payments.

The Tribunal held that a defective penalty notice, even if not raised before lower authorities, does not automatically vitiate penalty proceedings if the assessee was aware of the reasons. However, penalty cannot be levied when income is determined on an estimated basis, especially when purchases were made through books and payments were via account payee cheques.

The Tribunal held that while the assessee is eligible for exemption on the amount actually utilized for purchasing the new flat, the unutilized portion of the capital gains, which was not used for purchase or construction within the prescribed period, is taxable. The addition should be restricted to the unutilized amount.

The Tribunal held that a defective penalty notice, even if not raised before lower authorities, does not automatically vitiate penalty proceedings if the assessee was aware of the reasons. However, penalty cannot be levied when income is determined on an estimated basis, especially when purchases were made through books and payments were via account payee cheques.

The Tribunal held that the reopening of assessment beyond four years was invalid as the AO failed to demonstrate the assessee's failure to disclose material facts. The CIT(A) also failed to provide a speaking order on the merits of the case, especially regarding the nature of the outstanding amounts.

The Tribunal, considering the arguments and material evidence, found that while the assessee's contention of a profit margin between 4% to 4.8% might be realistic, the transactions were not entirely genuine. The AO's estimation of 12.5% and the CIT(A)'s partial allowance were re-examined.

The Tribunal held that the CIT(A) was correct in deleting the penalty. The penalty notice was defective because it did not clearly specify whether the charge was for concealment of income or furnishing inaccurate particulars. The Tribunal relied on the Jurisdictional High Court's decision which stated that such a defect in the notice would vitiate the penalty proceedings.

The Tribunal held that the assessee trust received shares of Tata Sons Ltd. as corpus donation and did not utilize its funds for acquisition. Therefore, it did not violate section 13(1)(d). Furthermore, a trustee's position as Chairman did not constitute 'substantial interest' under section 13(3), thus section 13(2)(h) was not attracted.

The Tribunal held that Section 80G(4) does not apply to donations made to entities approved under Section 80G(2)(a)(iiif), confirming the CIT(A)'s order. It also held that the Section 80GGA deduction was sufficiently claimed in the return, albeit clubbed with Section 80G, and directed verification.

The Tribunal found the CIT(A)'s order to be passed without application of mind, devoid of merit, unsustainable, and perverse. The Tribunal directed the CIT(A) to re-adjudicate the matter on merits after providing a proper opportunity of hearing to the assessee.

The Tribunal held that payments made as compensation for hardship and alternate accommodation charges to tenants for vacating property for redevelopment do not fall under the definition of 'rent' as per Section 194I. Therefore, TDS was not required to be deducted on these payments.

The assessee requested to withdraw the appeal, citing subsequent developments including a new approval under section 80G. The Revenue did not object to the withdrawal request.

The Tribunal held that payments made as compensation for hardship and alternate accommodation charges to tenants for vacating property for redevelopment do not fall under the definition of 'rent' as per Section 194I. Therefore, TDS was not required to be deducted on these payments.

The tribunal held that the reopening of assessment was valid as the AO conducted independent investigation. The addition under section 68 was upheld as the transaction was found to be dubious, lacking plausible reason for a sudden spike in share value and not genuine. The addition under section 69 was remanded for statistical purposes as an application for rectification of arithmetic error was pending.

The Tribunal held that disallowance under Section 14A is not warranted in the absence of exempt income. It also deleted the disallowance for roaming charges and discount extended to pre-paid distributors, following its own previous decisions. The Tribunal remanded the issue of disallowance of interest on capital work-in-progress for fresh adjudication.

The ITAT held that the CIT(A) should have adjudicated the appeal on merits as per Section 250(6) of the Act, rather than dismissing it ex parte. The matter was restored to the CIT(A) for fresh adjudication after affording adequate opportunity to the assessee.

The Tribunal deleted the disallowance of roaming charges under Section 40(a)(ia) by following its own prior decisions. It also deleted the disallowance of discount extended to pre-paid distributors under Section 40(a)(ia), again relying on previous rulings.

The Tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) of the Act was an omnibus show-cause notice without striking off the inapplicable part. Relying on the Full Bench decision of the Bombay High Court in Mohd. Farhan A. Shaikh Vs. DCIT, the Tribunal found this defect vitiates the penalty proceedings.

The Tribunal held that the disallowance of depreciation on intangible assets was correctly deleted, as it was a recurring issue consistently allowed by the Tribunal and High Court. The disallowance of additional depreciation was also deleted, relying on a High Court decision that the amendment was clarificatory and retrospective. Regarding section 14A, the disallowance of interest expenditure was deleted as the assessee demonstrated sufficient interest-free funds. The cross-objection regarding limiting disallowance to dividend-yielding investments was allowed.

The Tribunal held that the Assessing Officer (AO) grossly erred in framing the penalty order in the name of a non-existing company, rendering the penalty order liable to be set aside for want of jurisdiction. The Tribunal found that the assessee had repeatedly informed the AO about the merger of Idea Mobile Commerce Services Limited (IMCSL) with Aditya Birla Idea Payments Bank Limited (ABIPBL) and that IMCSL had ceased to exist. Despite this knowledge, the AO proceeded to issue notices and pass orders in the name of IMCSL. The Tribunal relied on judicial decisions, including Spice Entertainment Ltd. v. CST and Pr. CIT v. Maruti Suzuki India Ltd., which establish that proceedings against a non-existent entity, especially after being informed of the merger, are void and not merely a procedural defect. Consequently, Cross Objection No. 1, challenging the penalty on the ground of being against a non-existent entity, was allowed. Cross Objection No. 2, concerning immunity from penalty under Section 270AA, was not pressed and thus dismissed. The Revenue's appeal was dismissed as the penalty order itself was quashed.