ITAT Mumbai Judgments — December 2024

The Tribunal held that the advances were received in earlier years and not in the relevant assessment year, thus Section 68 was wrongly invoked. It also held that the compensation paid was a business loss deductible under Section 37(1).

The tribunal considered the facts and circumstances, noting the assessee initiated the process for settlement via VSVS 2024. The adjournment sought was declined, and the appeal was dismissed as withdrawn.

The Tribunal noted that the CIT(A)'s order again dismissed the appeal on the same ground without considering the Tribunal's previous order. The impugned order was set aside with directions to decide the grounds on merits first, and then consider if the issue was covered by the DTVSVS Scheme.

The Tribunal held that the addition was not solely based on the partner's statement but was also corroborated by evidence found during the survey. However, considering a previous identical case for AY 2017-18, the Tribunal found merit in the assessee's explanation for the reduced profit and deleted the addition.

The Tribunal agreed with the assessee and the Revenue that the first two grounds of appeal regarding the Section 80IC(2) deduction were covered in favor of the assessee, stating that the company's activities constitute manufacturing. For the third ground concerning TDS credit, the issue was remitted to the Assessing Officer for necessary action.

The Tribunal held that donations made as part of CSR spending are eligible for deduction under Section 80G, as there is no specific bar in the Act. The amendment to Section 37(1) disallowing CSR as business expenditure does not affect eligibility under Section 80G. The disallowance under Section 14A was also deleted as the amendment to Section 14A was held to be prospective.

The Tribunal held that while the CIT(A) correctly recognized the principle of matching credit, the direction to credit the TDS to the spouse was unwarranted. The TDS amount should be credited to the assessee as the income was declared and taxed in his hands.

The Tribunal noted that the CIT (Exemption) had condoned the delay in filing Form 10B under Section 119(2)(b) of the Act, considering the COVID-19 pandemic and CBDT Circular No. 02/2020. Following this condonation order, the Tribunal set aside the orders of the lower authorities.

The Tribunal held that the reopening of assessment was invalid as it was based on a 'change of opinion' and not on any new material. The lease agreements were available to the AO during the original assessment, and no additions were made at that time. Furthermore, reopening after four years without assessee failure is impermissible under Section 147(3).

The Tribunal held that the Centralized Processing Centre (CPC) was not justified in disallowing the claim of deduction under Section 154/143(1) of the Act. The Tribunal noted that the assessee earned interest on FDR and savings accounts maintained with cooperative banks. It respectfully followed decisions of coordinate benches of the ITAT, Mumbai, in cases like Hilla Heights Co-operative Housing Society Limited (ITA No. 2850/MUM/2022) and Dheeraj Gaurav Heights Co-operative Housing Society Limited (ITA No. 1976/M/2024). These decisions held that the adjustment of disallowance of deduction under Section 80P(2)(d) is not a permissible adjustment under Section 143(1) of the Act. The Tribunal reiterated the principle that as long as the interest income is derived by a cooperative society from its investments made with any other cooperative society, the claim of deduction under Section 80P(2)(d) would be available. The Tribunal emphasized that while cooperative banks may not be entitled to deduction under Section 80P(4), they remain cooperative societies, making interest income derived by a cooperative society from them eligible for deduction under Section 80P(2)(d). Consequently, the order of the CIT(A) was set aside, and the deduction claimed by the assessee under Section 80P(2)(d) was allowed.

The Income Tax Appellate Tribunal held that the CIT(A) erred in treating the assessment order as void ab initio because it was passed before the approval of the resolution plan by the adjudicatory authority. The Tribunal noted that income tax authorities have jurisdiction to assess quantum of dues but not to initiate recovery during the moratorium period.

The Tribunal held that the assessee was not given a reasonable opportunity to submit the required details. Therefore, the CIT(Exemptions) was directed to reconsider the applications after allowing the assessee to submit all necessary documents.

The Tribunal found that the DRP had consistently ruled in favor of the assessee on the allowability of interest expenditure for investments in overseas subsidiaries for previous assessment years. The Tribunal also referred to High Court decisions which supported the view that interest on borrowed funds utilized for business purposes, including acquiring controlling interest in companies, is deductible under Section 36(1)(iii).

The Tribunal, following previous decisions in the assessee's own case and other co-ordinate benches, upheld the order of the CIT(A). The AO was directed to carry out the arithmetic calculation of apportioning the year-wise discount over the vesting period, considering options granted, perk value, etc., and allow it as per the provisions of the Income Tax Act.

The Tribunal held that the assessee was not given a reasonable opportunity to submit the required details. Therefore, the CIT(Exemptions) was directed to reconsider the applications after allowing the assessee to submit all necessary documents.

The Tribunal noted that no effective hearing was provided to the assessee, even though they sought adjournment due to genuine reasons. Therefore, the appeal was remanded back to the Ld.CIT(A) to consider the issues with regard to the evidence filed by the assessee and to grant a proper opportunity of being heard.

The Tribunal noted that the penalty was levied on additions made on an estimated basis. Citing various High Court decisions and its own co-ordinate bench rulings, the Tribunal held that penalty under Section 271(1)(c) is not leviable on additions made merely on estimations, as there is no definite finding on the quantum of concealment of income. Therefore, the penalty is unsustainable.

The Tribunal held that the case law cited by the revenue (Mak Data (P) Ltd.) was not applicable because, in the present case, the assessee had admitted the mistake, held the status of Resident but not Ordinarily Resident, had foreign tax credit available, and the additional income was negligible compared to the total income. Unlike Mak Data (P) Ltd. where a survey operation led to the filing of a revised return after a significant delay, here the assessee cooperated and rectified the mistake promptly.

The tribunal noted that the ground challenging the validity of the reassessment notice was not pressed and was dismissed. Regarding the addition, the assessee argued that notices were not served properly. The tribunal, considering the assessee's undertaking to cooperate, set aside the CIT(A)'s finding and restored the matter back for deciding the issue of disallowance.

The Tribunal held that merely because creditors' liability was over 3 years old does not automatically constitute cessation of liability under Section 41(1) of the Act. The assessee had not claimed any remission or cessation, and the liability was still reflected as payable in the financial statements.

The Tribunal held that unsold properties, being stock-in-trade, should be treated as business assets, and any income derived therefrom should be considered 'Income from Business' and not 'Income from House Property'. Consequently, the addition of ALV was deleted.

The Tribunal noted the assessee's consistent non-compliance and failure to provide submissions. Despite this, considering the interest of justice, the Tribunal decided to restore the matter to the CIT(A) for de novo adjudication, emphasizing the need for proper opportunity and adherence to natural justice principles.

The Tribunal noted that the assessee provided various documents to prove the identity, creditworthiness, and genuineness of the transactions, including company registration, ITRs, lease agreements, and bank statements. The Tribunal found that the AO's rejection of these documents was based on flimsy grounds and that the verification unit's report was not adequately supported. The Tribunal also emphasized that the burden of proof shifts to the AO if the assessee discharges the initial onus.

The Tribunal noted that both the AO and CIT(A) passed ex-parte orders because the assessee, or their representative, did not appear. In the interest of natural justice, the Tribunal decided to give the assessee one more opportunity.

The Tribunal held that there is no estoppel against law and any mistake in the return should not be used against the assessee. The F&O transactions, if they fall within the exception in Section 43(5) proviso, should be treated as business loss, not speculative loss.

The Tribunal considered the submissions from both parties. The Department's representative, with the concurrence of the assessee's representative, stated that the appeal had become infructuous due to the enhanced monetary limit for tax effect, which was not met by this appeal. Therefore, the appeal was dismissed as infructuous.

The Tribunal held that the issue of unexplained expenditure had been considered and accepted by the Interim Board for Settlement (IBS) in its order related to Mr. Vikas Oberoi's settlement application. The Tribunal noted that once the source of cash is taxed, it cannot be treated as unexplained expenditure again, and applying such addition would lead to double taxation.

The CIT(A) admitted the additional evidence and found that the assessee's husband had sufficient funds to provide the loan. The CIT(A) noted that the assessee had proved the identity, creditworthiness, and genuineness of the loan. The tribunal affirmed that all transactions were routed through banking channels and the assessee had discharged her onus regarding the source of investment funds.

The Tribunal quashed the assessment orders passed under Section 143(3) read with Section 153A due to invalid approval under Section 153D. Consequently, the penalties levied under various sections were also quashed.

The Tribunal quashed the assessment orders because the approval granted under Section 153D of the Act was not in accordance with the law. Consequently, the penalties levied based on these assessment orders were also quashed.

The tribunal noted that the assessee was ex-parte before the Ld. CIT(A) and AO, failing to comply with notices. However, recognizing that a bank statement needs verification and the Ld. DR had no objection, the tribunal decided to restore the matter to the AO for fresh adjudication, providing one more opportunity of hearing to both parties.

The Tribunal noted that the assessee had opted for the Direct Tax Vivad Se Vishwas Scheme. Therefore, the appeal was dismissed, with liberty granted to the assessee to seek reinstatement if the scheme application was not accepted.

The Tribunal decided the appeals as follows: Regarding Ground No. 1 (Advance Licence Benefit Receivable) and Ground No. 2 (Pass Book Benefit Receivable), the Tribunal directed the deletion of the addition made on account of Pass Book Benefit Receivable of Rs. 23,40,93,786/-. The decision on Advance Licence Benefit Receivable is not explicitly stated in the provided excerpt but the deletion of Pass Book Benefit Receivable indicates a favourable outcome for the assessee on this aspect. Ground No. 3 (Proportionate deduction in respect of Premium on Leasehold Land) was not pressed by the assessee as deduction was allowed in earlier years, hence dismissed. Ground No. 4 (Rejection of non-claiming of depreciation) was decided against the assessee, upholding the lower authorities' order, as conceded by the Ld. AR. Ground No. 5 (Interest Attributable to earning of Exempt income) was decided in favour of the assessee, and the Ld. AO was directed to delete the addition. The decision for AY 2000-01 was applied mutatis mutandis. Ground No. 6 (Claim for deduction in respect of Legal Fees Treated as Advance) was allowed in favour of the assessee, following the decision for AY 2000-01. Ground No. 7 (Claim for deduction in respect of Salary and Wages Capitalised) was dismissed as withdrawn by the assessee. Grounds No. 8 & 9 (deduction u/s 80IB and 80HHC) were restored to the Ld. AO for fresh computation, following the decision for AY 2000-01. The assessee was directed to submit a fresh computation. Ground No. 10 (Short granting of Interest u/s 244A) was allowed, directing the AO to grant interest as per applicable provisions. Additional Ground No. 1 (Computation of deduction under Section 80HHC for book profits u/s 115JA) was allowed, applying the decision for AY 2000-01. Additional Ground No. 2 (Deduction u/s 80HHC on DEPB) was allowed for statistical purposes, directing the AO to consider the claim in accordance with the settled legal position, as deduction u/s 80HHC was to be computed afresh. Additional Ground No. 3 (Proportionate deduction in respect of service charges for computer software) was dismissed as withdrawn. Additional Ground No. 4 (Proportionate deduction in respect of R&D expenses of AYs 1998-99 & 1999-2000) was decided in favour of the assessee, directing the AO to allow proportionate deduction. Additional Ground No. 5 (Proportionate deduction in respect of R&D expenses of AY 2000-01) was partly allowed in favour of the assessee, directing the AO to allow proportionate deduction. Additional Ground No. 6 (Proportionate deduction in respect of data access fees and task force expenses) was decided in favour of the assessee, directing the AO to allow proportionate deduction. The ratio for allowing proportionate deductions on R&D expenses and data access fees/task force expenses is based on the decisions of co-ordinate benches in earlier years.

The Tribunal quashed the assessment orders because the approval granted under Section 153D of the Act was found to be mechanical and not in accordance with the law. Consequently, the penalties levied were also quashed.

The Tribunal noted that the issue was squarely covered by previous decisions, including those of the ITAT and the Delhi High Court in India Trade Promotion Organization Vs. CIT. The Tribunal followed these precedents, holding that when a partial refund is made, the revenue is liable to pay interest on the balance outstanding amount, including interest on interest, until the full amount is paid.

The Tribunal quashed the assessment orders because the approval granted under Section 153D was not in accordance with the law. Consequently, the penalties levied based on these assessment orders were also quashed.

The Tribunal quashed the assessment orders passed under Section 143(3) read with Section 153A due to invalid approval under Section 153D. Consequently, the penalties levied under various sections were also quashed.

The Tribunal considered the rival submissions and material on record. In the interest of justice, the Tribunal deemed it appropriate to restore the case back to the file of the Assessing Officer (AO) for denovo assessment. This decision was made to provide the assessee with an adequate opportunity to be heard. The assessee was also directed to make the requisite compliance before the AO to enable the AO to pass a fresh order on merits. The Tribunal found that both the AO and the CIT(A) had passed ex-parte orders, and the primary grievance of the assessee was the lack of adequate opportunity of being heard. The Tribunal's reasoning was that a fair hearing is a fundamental principle of natural justice, and to ensure this, a fresh assessment was necessary. The ratio decidendi is that where assessment and appellate orders are passed ex-parte without affording a proper opportunity of being heard to the assessee, the matter should be remanded for fresh adjudication.

The Tribunal decided the appeals as follows: Regarding Ground No. 1 (Advance Licence Benefit Receivable) and Ground No. 2 (Pass Book Benefit Receivable), the Tribunal directed the deletion of the addition made on account of Pass Book Benefit Receivable of Rs. 23,40,93,786/-. The decision on Advance Licence Benefit Receivable is not explicitly stated in the provided excerpt but the deletion of Pass Book Benefit Receivable indicates a favourable outcome for the assessee on this aspect. Ground No. 3 (Proportionate deduction in respect of Premium on Leasehold Land) was not pressed by the assessee as deduction was allowed in earlier years, hence dismissed. Ground No. 4 (Rejection of non-claiming of depreciation) was decided against the assessee, upholding the lower authorities' order, as conceded by the Ld. AR. Ground No. 5 (Interest Attributable to earning of Exempt income) was decided in favour of the assessee, and the Ld. AO was directed to delete the addition. The decision for AY 2000-01 was applied mutatis mutandis. Ground No. 6 (Claim for deduction in respect of Legal Fees Treated as Advance) was allowed in favour of the assessee, following the decision for AY 2000-01. Ground No. 7 (Claim for deduction in respect of Salary and Wages Capitalised) was dismissed as withdrawn by the assessee. Grounds No. 8 & 9 (deduction u/s 80IB and 80HHC) were restored to the Ld. AO for fresh computation, following the decision for AY 2000-01. The assessee was directed to submit a fresh computation. Ground No. 10 (Short granting of Interest u/s 244A) was allowed, directing the AO to grant interest as per applicable provisions. Additional Ground No. 1 (Computation of deduction under Section 80HHC for book profits u/s 115JA) was allowed, applying the decision for AY 2000-01. Additional Ground No. 2 (Deduction u/s 80HHC on DEPB) was allowed for statistical purposes, directing the AO to consider the claim in accordance with the settled legal position, as deduction u/s 80HHC was to be computed afresh. Additional Ground No. 3 (Proportionate deduction in respect of service charges for computer software) was dismissed as withdrawn. Additional Ground No. 4 (Proportionate deduction in respect of R&D expenses of AYs 1998-99 & 1999-2000) was decided in favour of the assessee, directing the AO to allow proportionate deduction. Additional Ground No. 5 (Proportionate deduction in respect of R&D expenses of AY 2000-01) was partly allowed in favour of the assessee, directing the AO to allow proportionate deduction. Additional Ground No. 6 (Proportionate deduction in respect of data access fees and task force expenses) was decided in favour of the assessee, directing the AO to allow proportionate deduction. The ratio for allowing proportionate deductions on R&D expenses and data access fees/task force expenses is based on the decisions of co-ordinate benches in earlier years.

The assessee requested the appeals to be kept in abeyance while they pursued the 'Vivad Se Vishwas Scheme-2024'. The Tribunal noted that the appeals were pending as of the cut-off date for the scheme and that the assessee was eligible. The Revenue's DR had no objection to the appeals being dismissed as withdrawn if the assessee availed the scheme.

The Tribunal quashed the assessment orders passed under Section 143(3) read with Section 153A due to invalid approval under Section 153D. Consequently, the penalties levied under various sections were also quashed.

The Tribunal noted that the issue was covered by its own previous orders on identical facts and circumstances for AY 2008-09, where a similar penalty was deleted. The Tribunal held that penalty cannot be levied when the income was shown under one head by the assessee and assessed under another by the AO, as it was a case of difference of opinion and not furnishing inaccurate particulars.

The tribunal quashed the assessment orders passed under section 143(3) read with section 153A of the Act because the approval granted under section 153D was not in accordance with the law. Consequently, the penalties levied were also quashed.

The Tribunal observed that the appellate order was passed ex parte, and the reasons for non-compliance, due to medical emergencies, were explained by the assessee's affidavit. Considering the principles of natural justice, the assessee was denied a reasonable opportunity of being heard.

The Tribunal held that the Assessing Officer (AO) committed gross negligence in levying the penalty by considering extraneous facts and additions not pertaining to the assessment year 2006-07, specifically referencing additions made in AY 2007-08. The penalty order was also found to be issued prior to the assessment order for AY 2007-08, and the AO failed to specify which limb of Section 271(1)(c) was invoked.

The Tribunal held that the approval for issuing the notice u/s 148 was not obtained from the specified authority as required by Section 151 of the Act, given that the notice was issued beyond three years from the end of the assessment year. Consequently, the notice and the reassessment order were quashed.

The Tribunal held that the assessee's case falls under the proviso of Section 56(2)(vii)(b) of the Act, not Section 56(2)(x). The assessee fulfilled the criteria outlined in the proviso, particularly regarding the date of the agreement and payments made before it. Therefore, the difference between the stamp duty value and the agreed consideration is not taxable income.

The Tribunal held that the approval obtained for issuing the notice under Section 148 was not from the specified authority as required by Section 151 of the Act, especially since the notice was issued beyond three years from the end of the relevant assessment year. Consequently, the notice and the reassessment order were quashed.

The Tribunal allowed the claim for sundry balances written off and directed the AO to allow proportionate deduction for R&D expenses. It also allowed the ground regarding the computation of deduction under section 80HHC for book profit. Several other grounds were also decided in favour of the assessee or revenue based on preceding year's orders or specific facts.

The assessee requested the appeals to be kept in abeyance while they pursued the 'Vivad Se Vishwas Scheme-2024'. The Tribunal noted that the appeals were pending as of the cut-off date for the scheme and that the assessee was eligible. The Revenue's DR had no objection to the appeals being dismissed as withdrawn if the assessee availed the scheme.