ITAT Mumbai Judgments — December 2024

The Tribunal noted that the error in the opening WDV was a typographical mistake, which was subsequently rectified in a revised return. The Tribunal also observed that the Assessing Officer (AO) had taken the income from the revised return as the basis for assessment without disallowing depreciation. The CIT(A) had directed the AO to examine the facts and grant the correct depreciation.

The Tribunal deleted the disallowance of INR 5.31 Cr, ruling that the CPC failed to issue proper notice under Section 143(1)(a) before making the adjustment. It also deleted the INR 9.57 Cr addition for the defined benefit plan, accepting the assessee's argument that the amount was already offered for tax, and the CPC's addition led to double taxation. The Assessing Officer was directed to re-compute tax liability, and the interest under Section 234B was deemed consequential.

The Tribunal noted that the tax effect in certain appeals was below the prescribed threshold, leading to their dismissal. For the remaining appeals, the Tribunal followed a coordinate bench's decision in the assessee's own case, holding that administrative support services and reimbursement of expenses do not qualify as FTS under the India-UK DTAA. The services provided were found to be group support services and not FTS as they did not make technical knowledge available to the recipient.

The CIT(A) dismissed the assessee's appeal for not filing advance tax as per Section 249(4)(b) of the Act. The Tribunal observed that for prior and subsequent years, the AO accepted the assessee's contention that the parent trust consolidated the income and filed the return, and no addition was made.

The Tribunal noted that the factual position regarding whether the disputed incomes from AYs 2013-14 and 2014-15 were voluntarily offered in AY 2015-16, or if they were admitted under the VSV scheme, was not clearly established. Due to these unaddressed vital facts, the matter was remitted back to the Assessing Officer for fresh adjudication.

The Tribunal held that the reopening of assessment was valid as the AO provided specific reasons and information from the Investigation Wing. Furthermore, the Tribunal found that the assessee discharged its duty by identifying the payer, and the fact that Mr. Ravi Prakash's source of funds was unexplained did not concern the assessee, especially since the income was offered as business income.

The Tribunal noted that the AO initiated penalty proceedings under Section 270A but did not levy the penalty and failed to issue a show-cause notice after the assessment order. The CIT(A)'s order upholding the initiation of penalty was considered premature as the AO has discretion to levy the penalty, and the CIT(A) had no locus standi to adjudicate this issue without a statutory notice. Therefore, the Tribunal allowed the ground related to the initiation of penalty proceedings as infructuous.

The Tribunal held that the assessee is entitled to interest on refund arising out of excess self-assessment tax from the date of payment till the date of grant of refund, as this is covered under Section 244A(1)(b). Regarding the delay in granting the refund, the assessee is entitled to interest from 01.06.2016 till the date of refund, as per Section 244A(1A).

The CIT(A) followed the Bombay High Court's ruling in PCIT vs. Mohammad Haji Adam & Co. and found that the GP rate on purchases from non-genuine parties (1.10%) was comparable to that from genuine purchases (1.11% for AY 2016-17 and 1.38% vs 0.50% for AY 2018-19). The Tribunal noted that the assessee provided quantitative details of purchases and sales, along with payment proofs, and that the statement of one individual handling the bogus bill-providing entities did not implicate the assessee. Therefore, the additions were deleted.

The Tribunal held that the administrative support services provided by the assessee to its Indian subsidiary did not qualify as Fees for Technical Services (FTS) under the India-UK DTAA. Similarly, the reimbursement of expenses incurred by the assessee on behalf of the subsidiary, being on a cost-to-cost basis without any mark-up, was also not taxable as FTS.

The Tribunal held that the issue is no longer res integra, and the authorities below have concurrently found that Section 80P(2)(d) allows deductions for income derived by a co-operative society from investments with another co-operative society. The intention of the legislature was to exclude co-operative banks or commercial banks, but the definition of 'co-operative society' under Section 2(19) includes entities registered under state co-operative societies acts, which can include cooperative banks.

The Tribunal held that the matter should be restored to the AO for proper substantiation of sales. The assessee needs to provide sale bills, bank statements, and ledger account confirmations for the sales made to wine companies. If the sales are found to be genuine, no addition should be made.

The Tribunal found that the assessee had inadvertently selected the wrong sub-clause in Form 10AB due to a typographical error. Since the assessee's provisional registration was for three years, they did not qualify for renewal under the sub-clause selected. The Tribunal granted liberty to the assessee to file a fresh application.

The Tribunal held that there was a reasonable cause for the delay in filing the appeal before the CIT(A) as the assessee was attempting to resolve the issue with the CPC. The Tribunal condoned the delay of 52 days in filing the present appeal before it.

The Tribunal held that the income generated from operating and managing industrial parks, including rent from lease of space and facility management charges, is to be considered 'business income' and eligible for deduction under Section 80IA(4)(iii). The Tribunal also noted that previous decisions by coordinate benches had consistently allowed such deductions for the assessee.

The Tribunal noted that the AO did not find fault with the assessee's books or documents, and suppliers confirmed the transactions. The Tribunal found the disallowance of the entire purchase amount unjustified, referencing decisions that limit additions to the extent of bringing the GP rate on alleged bogus purchases to the rate of other genuine purchases. In this case, the GP rate on alleged bogus purchases was higher than the genuine ones.

The Tribunal held that the assessee could not establish the genuineness of the transactions. However, considering various judicial precedents, especially those involving similar facts and cases of family members, the Tribunal found that the additions were not based on sound footing and were not proved with cogent evidence. The Revenue failed to discharge its onus. Therefore, the additions made by the AO were deleted.

The CIT(A) deleted the addition, finding that the assessee had made an advance payment and there was no actual credit received. The Tribunal upheld the CIT(A)'s decision, agreeing that Section 68 is applicable only to cash credits and that the transaction was an advance made in a prior assessment year, not a credit in the current year.

The Tribunal held that the income from operating and managing industrial parks, including rent from space, furniture, and maintenance charges, is classifiable as business income eligible for deduction under Section 80IA(4)(iii). Previous orders from coordinate benches and the Tribunal itself have consistently allowed this deduction in similar cases, provided the project was approved and conditions were met.

The CIT(A) initially deleted the addition for AY 2016-17, following the Bombay High Court's ruling in PCIT vs. Mohammad Haji Adam & Co., wherein it was held that if the gross profit on sales made from non-genuine purchases is comparable to that from genuine purchases, the addition should be deleted. For AY 2018-19, the CIT(A) sustained the addition by applying a GP rate of 0.88%. The Tribunal noted that the assessee had provided all necessary documentation and that the gross profit margins were comparable.

The Tribunal held that the assessee was permitted to share the premises with group entities as per the Leave and License agreement. Therefore, the rent reimbursement received effectively reduces the assessee's rent expenses and should be considered as such. The appeal of the assessee on this issue was allowed.

The Tribunal held that interest income derived by a co-operative society from its investment with any other co-operative society is eligible for deduction under Section 80P(2)(d) of the Income Tax Act. The Tribunal noted that co-operative banks, registered under the Co-operative Societies Act, fall within the definition of "co-operative society" for the purpose of this deduction.

The Tribunal held that there was no delay in filing the appeal before the CIT(A) as the intimation was served on 02/02/2020 and the appeal was filed on 14/02/2020. Furthermore, the Tribunal noted that prior to AY 2021-22, adjustments u/s 143(1) for deduction u/s 80P were not permissible, and the assessee's return was filed within the due date.

The Tribunal noted that the assessee provided confirmations from suppliers, evidence of payments via account payee cheques, proper record-keeping, and matched export sales with purchases. The Tribunal found that the AO relied heavily on a generalized investigation report without conducting an independent inquiry and that the suppliers confirmed the transactions.

The Tribunal held that the AO failed to record proper satisfaction for invoking Section 14A, which vitiated the proceedings. Regarding the disallowance computation, the Tribunal noted that amended provisions of the Finance Act, 2022, apply prospectively, not retrospectively. The Tribunal also ruled that a notional disallowance under Section 14A cannot be added back to book profit under Section 115JB.

The Tribunal observed that the total tax effect of the appeal fell under the monetary limits prescribed by the CBDT, making the revenue barred from preferring this appeal. Therefore, the appeal was deemed not maintainable.

The Tribunal noted that the difference between the stamp duty value and the actual sale consideration was less than 5%. It referred to the third proviso of section 50C(1) and CBDT circulars, which provide a tolerance band for such variations due to bonafide reasons. Therefore, the addition made under section 56(2)(vii)(b) was not sustainable.

The tribunal acknowledged the insufficient time provided to the assessee. With the agreement of both the assessee and the ld. DR, the applications for registration under sections 12AB and 80G were remitted back to the CIT(E). The CIT(E) is directed to reconsider the matters afresh, ensuring the assessee is given due opportunity to submit all necessary materials and receive a proper hearing.

The Income Tax Appellate Tribunal (ITAT) found that the assessee had furnished sufficient documentary evidence (contract notes, bank statements, D-mat statements, STT payment) proving the genuineness of the share purchases and sales. The Tribunal emphasized that additions cannot be made solely based on general investigation reports, suspicion, or uncross-examined third-party statements, especially when the AO failed to provide specific material linking the assessee to price rigging. Citing numerous High Court and ITAT precedents, including cases of the assessee's family members with similar facts, the Tribunal held the LTCG to be genuine and eligible for exemption, also deleting the estimated commission addition under section 69C.

The Tribunal upheld the CIT(A)'s decision that the assessee was not liable to deduct TDS under Section 194A for interest paid to AGE Patel JV, as the JV effectively ceased to be an AOP. It confirmed the assessee's eligibility for Section 80IA deduction, recognizing it as a 'developer,' and affirmed the 20% tax rate for long-term capital gains on depreciable assets under Section 112. Adjustments to Book Profits under Section 115JB were deleted, and claims for prior period expenses and write-off of advances/bad debts were allowed as business losses. Compensation to promoters for debt restructuring was allowed as a revenue expenditure under Section 37(1). However, the Revenue's appeal regarding the allowability of interest on delayed payment of TDS was allowed, stating it is not an allowable business expenditure.

The Tribunal confirmed that AGE Patel JV ceased to exist as an AOP post-amended agreements, thus no TDS was required on interest paid to it. It upheld the assessee's eligibility for Section 80IA deduction as a 'developer', allowed the 20% tax rate on depreciable long-term capital gains, and deleted additions to book profit under Section 115JB. The Tribunal also allowed the assessee's claims for prior period expenses, write-offs of advances/bad debts to subsidiaries, and compensation to promoters as revenue expenditure. However, the Revenue's appeal regarding interest on delayed TDS payments was allowed.

The Tribunal held that the AO failed to record proper satisfaction regarding the assessee's suo-moto disallowance under section 14A before invoking Rule 8D, as mandated by the Act and judicial precedents. It directed that the disallowance under section 14A be restricted to the assessee's own computation of Rs. 9,04,943/-. Regarding section 115JB, the Tribunal ruled that disallowance under section 14A read with Rule 8D cannot be made while computing book profits, and the adjustment should be limited to the actual expenditure incurred. Furthermore, the levy of interest under section 234C on assessed income instead of returned income was also directed to be deleted.

The ITAT acknowledged the validity of the reassessment proceedings but noted that the assessee submitted a Paper Book containing crucial evidence like audited financials, invoices, and bank statements showing TDS for manpower services for the first time before the ITAT. Consequently, the ITAT remitted the case back to the Assessing Officer for fresh consideration, instructing the AO to review the new documents and provide the assessee with an effective opportunity to be heard.

The Tribunal held that the CIT(A)'s order upholding the initiation of penalty proceedings under Section 270A was premature, as no show-cause notice was issued by the AO. Regarding the double disallowance, the Tribunal dismissed the ground, stating that a separate appeal against the Section 143(1) intimation should have been filed. The interest under Section 234A was remanded to the AO for verification. Regarding penalty proceedings under Section 270A, the finding in ITA No. 927/Mum/2024 was applied mutatis mutandis.

The Tribunal held that no TDS was required on interest to the JV as the JV had ceased to exist as an AOP, with the assessee taking full responsibility for the contract and offering income to tax. The assessee was found eligible for Section 80IA(4) deduction as a developer. Capital gains on depreciable long-term assets were to be taxed at 20% under Section 112, and AO's adjustments to book profits under Section 115JB were restricted to Explanation 1. Prior period expenses and most AIR reconciliation differences were allowed, while interest on delayed TDS was disallowed. Bad debts written off on loans to subsidiaries were allowed as business losses, as was the compensation paid to promoters for debt restructuring, as it was incurred for business expediency.

The Tribunal held that M/s Nivya Infrastructure Ltd. is not a penny stock and there is no SEBI/BSE order confirming price manipulations. The assessee is a regular investor, and the transactions were conducted through a reputed broker and reflected in bank accounts. The price fluctuations occurred in earlier years, and the assessee already has significant carried forward losses, rendering the alleged transaction insignificant for tax purposes. The CIT(A)'s order was also noted to have directed action only if short-term capital gains were adjusted against profits.

The Tribunal held that the assessee was not liable to deduct TDS on interest to AGE Patel JV as the JV effectively ceased to be an AOP. It confirmed the assessee's eligibility for Section 80IA(4) deduction as a developer, not merely a contractor, and allowed the 20% capital gains tax rate under Section 112. The Tribunal ruled against AO's adjustments to book profits beyond statutory provisions, allowed prior period expenses, and deleted additions based on minor AIR reconciliation differences. The write-off of bad debts/advances was allowed as business losses, and compensation to promoters for debt restructuring was treated as revenue expenditure under Section 37(1) due to commercial expediency.

The Tribunal held that the assessee had provided sufficient documentary evidence to prove the genuineness of the transactions. The reliance on investigation reports without concrete evidence connecting the assessee to price rigging was deemed insufficient. Therefore, the addition made by the AO was deleted. However, the Revenue's appeal regarding the deletion of estimated commission expenses was dismissed.

The Tribunal held that the disallowance under Section 14A cannot exceed the amount of exempt income earned. The amendments to Section 14A by the Finance Act 2022 were considered to be prospective and not retrospective. The CIT(A) had correctly deleted the disallowance based on existing jurisprudence.

The Tribunal held that the notice issued under section 148 for AY 2015-16 was barred by limitation. The provisions of TOLA (Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020) and subsequent judicial pronouncements were considered, leading to the conclusion that the reassessment action could not be sustained.

The Tribunal upheld the CIT(A)'s decision that the assessee was not liable to deduct TDS on interest paid to AGE Patel JV, as the JV effectively ceased to be an AOP. It confirmed the assessee's eligibility for Section 80IA deduction as a developer and ruled that capital gains on depreciable assets should be taxed at 20% under Section 112. Adjustments to book profits beyond Explanation 1 of Section 115JB were disallowed. The Tribunal allowed the assessee's appeals for prior period expenses and directed deletion of additions based on unreconciled AIR entries. However, it ruled that interest on delayed TDS is not an allowable business expenditure. All write-offs of loans and advances to subsidiaries (PERL, DEPL, BEDL) and an individual were allowed as either bad debts or business losses. Compensation paid to promoters during debt restructuring was held to be revenue expenditure under Section 37(1).

The Tribunal remanded the case back to the CIT(A) for fresh adjudication in the interest of justice. It directed the CIT(A) to provide an adequate opportunity of being heard to the assessee, who is also instructed to make all requisite compliances.

The Tribunal held that the rent reimbursement was permissible as per the lease agreement and effectively reduced the assessee's rent expenses. Therefore, it should be considered as business income and not 'income from other sources'. The claim for setting off brought forward losses was also directed to be considered.

The Tribunal noted that the opportunity of hearing provided to the assessee was not adequate and that the principles of natural justice were violated. The Revenue did not oppose the restoration of the matter for a de novo consideration by the CIT(A).

The Tribunal held that the administrative support services provided by the assessee to its Indian subsidiary were group support services and did not fall under the ambit of FTS or FIS as they did not involve making available technical knowledge or skills. Similarly, reimbursement of expenses incurred by the assessee on behalf of its subsidiary, on a cost-to-cost basis, was not taxable as FTS. The Tribunal relied on the decision of a coordinate bench in the assessee's own case.

The Tribunal noted that while the AO rejected the claim of cash availability from sales, the AO did not reject the assessee's books of accounts and did not conduct proper inquiries. The Tribunal also observed that the assessee failed to furnish details of physical stock before the AO, which is crucial for substantiating cash sales. Consequently, the Tribunal admitted the stock summary as additional evidence and set aside the CIT(A)'s order.

The Tribunal held that the assessee is eligible to claim deduction u/s. 80IA(4)(iii) as the income is derived from the operation and management of industrial parks, which is classified as 'business income'. Previous rulings by coordinate benches also supported this position.

The Tribunal noted that while the assessee had complied with earlier notices, the failure to respond to the last notice within the short timeframe led to the rejection by the CIT(E). The Tribunal decided to restore the matter to the CIT(E) for fresh adjudication, directing the assessee to provide the necessary compliance.

The Tribunal held that the assessee is entitled to interest on refund arising out of excess self-assessment tax under Section 244A(1)(b) for the period prior to the amendment w.e.f. 01.06.2016, relying on High Court decisions. Regarding the claim for additional interest due to the delay in giving effect to the CIT(A)'s order, the Tribunal held that the assessee is entitled to interest from 01.06.2016 till the date of refund.

The Tribunal held that the JV had ceased to exist as a separate entity from March 31, 2016, due to amended agreements where the assessee took sole responsibility for the project execution. Consequently, the assessee was not liable to deduct TDS on interest paid to the JV.