ITAT Mumbai Judgments — February 2025

The Tribunal held that the notice issued under Section 148 was invalid as it was beyond the prescribed period of limitation under the new regime. Consequently, the assessment order passed pursuant to this notice was quashed.

The Tribunal held that disallowance under Rule 8D(2)(iii) should consider only investments yielding exempt income. Regarding Section 35(2AB), commission, and club expenses, the Tribunal followed its own consistent view in prior years, finding the factual position identical and upholding the deletion of disallowances made by the AO.

The Tribunal held that Section 68 of the Income Tax Act requires that sums must be found credited in the assessee's books of account. Since the assessee opted for presumptive taxation under Section 44AD and was not obligated to maintain books, the addition made under Section 68 based on bank passbook entries was not justified.

The Tribunal partially allowed the assessee's appeal by restricting the addition to 5% of the alleged bogus purchases, following the rule of consistency with previous years. The Revenue's appeal was dismissed.

The Tribunal held that disallowance under Rule 8D(2)(iii) must consider only investments that yielded exempt income in the year under consideration, directing the AO to recompute. For other issues regarding weighted deduction (Section 35(2AB)), commission expenditure, and club expenses, the Tribunal followed its prior decisions favouring the assessee, dismissing the Revenue's grounds.

The Tribunal directed the AO/TPO to adopt rates agreed under the Bilateral APA with the UK AE for transactions with the USA AE, resolving grounds related to ITeS services and transfer pricing adjustments. The ground regarding TDS credit was also directed to be provided.

The Tribunal held that the CIT(A) did not consider the evidence and submissions filed by the assessee and thus set aside the impugned orders. The appeals were restored to the CIT(A) for de novo adjudication.

The Tribunal held that the conditions for invoking the MFN clause were not met, particularly the requirement of a separate notification by the Indian government to import benefits from a third-country treaty. Relying on a Supreme Court decision in the Nestle SA case, the Tribunal concluded that the assessee's claim for the lower tax rate was invalid.

The Tribunal held that Section 68 of the Income Tax Act is not applicable in this case as the transactions were a revaluation of assets by the AOP and not an introduction of undisclosed income. The Tribunal also found that the brokerage expenses were allowable as revenue expenditure since they were paid through banking channels, TDS was deducted, and no adverse findings were made by the Assessing Officer.

The Tribunal allowed Grounds 2.1 to 2.6, partly allowing grounds 3.1 to 3.6. It directed the exclusion of certain comparables and remanded the matter regarding Mavric Systems Ltd. to the AO/TPO for verification. For outstanding receivables, the matter was remitted to the AO/TPO to decide in conformity with the judgment, with specific directions on interest rate calculation.

The Tribunal held that the requirement of filing Form 10-IC is directory, not mandatory. Technical glitches in the portal preventing timely filing do not deprive the assessee of the benefit, especially when the form was filed before the assessment order and other conditions are met. The delay in filing is condoned.

The assessee applied to withdraw the appeals after opting for the DTVSV Scheme, 2024. The Department did not object to this request.

The Tribunal held that the AO failed to specify the exact charge under Section 271(1)(c) for levying the penalty, and thus the penalty could neither be levied nor sustained. The Tribunal noted that the assessee had disclosed all particulars and explained the loan transaction.

The Tribunal found that the CIT(A) failed to consider the various details and submissions filed by the assessee. Therefore, the Tribunal set aside the impugned orders and restored the appeals to the file of the CIT(A) for de novo adjudication.

The Tribunal held that while there was a failure to respond to notices, the assessee had a reasonable cause due to the Director's severe personal hardship. Therefore, the assessee is entitled to exemption under Section 273B of the Act, and the penalty is deleted.

The Tribunal held that the assessee is entitled to claim deduction under Section 80P(2)(d) for interest income earned from deposits with cooperative banks. The Tribunal relied on coordinate bench decisions and Supreme Court pronouncements regarding Section 80P(4).

The Tribunal held that the appeals should be remitted back to the CIT(A) to pass a detailed order on merits after considering the assessee's submissions and granting a proper opportunity of being heard.

The Tribunal held that the approval for the Section 148A(d) order and the Section 148 notice was obtained from an authority not specified under Section 151(ii) of the Act for the given period, thereby affecting the Assessing Officer's jurisdiction. Consequently, the reassessment proceedings and the assessment order were quashed.

The Tribunal noted that the CIT(A) had passed the order based on a mistaken fact. The Tribunal therefore remitted the appeal back to the CIT(A) for a fresh decision on merits after verifying the facts and providing an opportunity of being heard.

The Tribunal held that netting of interest is permissible when the interest income earned is higher than the interest paid, following High Court precedents. Consequently, no disallowance under Section 14A was made. The Tribunal also allowed the claim for interest on borrowed capital invested in the partnership firm as it was for business purposes.

The Tribunal held that there was a mismatch in the limbs of Section 271(1)(c) of the Act concerning the initiation of penalty proceedings and the penalty order. The AO did not come to a clear finding on whether there was concealment of income or furnishing of inaccurate particulars.

The Tribunal held that no penalty could be levied in this case because the assessee had already disclosed the capital gain in the return of income, which was accepted by the AO without any disallowance. The penalty proceedings were initiated after the assessment was completed, and no inaccurate particulars were found.

The Tribunal held that since the allotment and part-payment for the three flats occurred prior to the insertion of Clause 'f' of Section 80IB(10), and these flats were allotted to different family members, there was no concealment or inaccurate particulars of income. Therefore, penalty could not be levied.

The Tribunal allowed grounds 2.1 to 2.6, dealing with transfer pricing adjustments for software development services. For ground 3 concerning notional interest on outstanding receivables, the matter was set aside and remitted to the AO/TPO for fresh adjudication in line with judicial precedents. The appeal in ITA No. 5086/M/2024 was dismissed as infructuous.

The Tribunal held that the notices issued under Section 148 for assessment year 2015-16 were invalid and time-barred. Consequently, the assessment orders for this year were quashed. For assessment years 2016-17 and 2017-18, the notices were also deemed invalid due to non-compliance with the approval requirements of Section 151 of the Act, leading to the quashing of the consequential assessment orders.

The Tribunal held that the CIT(A) did not consider all the details and submissions filed by the assessee. Therefore, the impugned orders were set aside and the appeals were restored to the CIT(A) for de novo adjudication.

The Tribunal held that the denial of deduction under Section 11 for the alleged violation of Section 13 was not justified. Relying on a previous decision in the assessee's own case for A.Y. 2012-2013, where a similar issue was decided in favor of the assessee, the Tribunal reversed the stand of the first appellate authority.

The Tribunal held that the assessee had sufficiently discharged the onus to establish the identity, creditworthiness, and genuineness of the lenders. As the entities are independently assessed to income tax, the addition made by the AO was not justified and directed to be deleted.

The Tribunal held that the notices issued under Section 148 for AY 2015-16 were invalid and time-barred. Consequently, the assessment order for AY 2015-16 was quashed. For AY 2016-17 and 2017-18, the notices were also held invalid due to non-compliance with approval requirements under Section 151 of the Act, leading to the quashing of assessment orders.

The Tribunal, following previous decisions of coordinate benches, held that the interest income earned from deposits with cooperative banks is eligible for deduction under Section 80P(2)(d). It was noted that Section 80P(4) is not applicable as the assessee is not a cooperative bank claiming a deduction.

The Tribunal held that the AO erred in treating the sale proceeds of old cars as unexplained cash credit. Since the sales were accepted and the vehicles' identities were established with RTO registration, the addition under Section 68 was uncalled for.

The Tribunal held that the non-recovery of a principal loan amount advanced as part of business activity should be allowed as a bad debt or business loss, distinguishing it from cases of loan waiver. The AO's reliance on the Mahindra & Mahindra judgment was found not applicable as it dealt with waiver, not non-recovery.

The Tribunal held that the notices issued under Section 148 for AY 2015-16 were invalid and time-barred as they were not issued within the prescribed time limits, considering TOLA and Supreme Court judgments. Similarly, for AY 2016-17 and 2017-18, the notices were held invalid due to non-compliance with Section 151 regarding prior approval from the appropriate authority.

The Tribunal held that no disallowance under Section 14A is required if no exempt income is earned, citing the Hon'ble Delhi High Court's decision on the prospective nature of the Finance Act, 2022 amendment. Regarding finance cost, it was held that since the assessee had sufficient own funds, the interest-free loan was presumed to be out of own funds. Finally, the addition to book profit under Section 115JB was deemed incorrect as the disallowance under Section 14A was not applicable and no exempt income was earned.

The Tribunal held that the notice issued under Section 148 of the Act on 27/07/2022 was barred by limitation, as the period of six years from the end of the Assessment Year 2015-2016 expired on 31/03/2022. Therefore, the reassessment proceedings and the consequent assessment order were quashed.

The Tribunal held that the notice issued under Section 148 of the Act (new regime) was issued beyond the surviving time limit and was therefore time-barred and bad in law. Consequently, the reassessment proceedings and the assessment order were quashed.

The Tribunal held that for the assessment year 2006-07, since Rule 8D was not yet in force, the disallowance under Section 14A should be limited to 1% of exempt income. For later years where Rule 8D was applicable, the Tribunal emphasized the need for the Assessing Officer to record specific satisfaction before invoking Rule 8D, and in its absence, to accept the assessee's suo moto disallowance. Other grounds were decided based on the facts and judicial precedents.

The Tribunal allowed the appeal to be withdrawn, noting that the assessee had complied with the VSV Scheme requirements and paid the dues.

The Tribunal held that while the AO initially made the addition based on information from sales tax authorities declaring M/s. Arihant Exports as a bogus party, the assessee provided evidence of regular business dealings. Following the rule of consistency with previous years where similar additions were restricted to 5%, the Tribunal reduced the addition to 5% of the alleged bogus purchases.

The Tribunal held that the delay in filing the appeal before the first appellate authority was due to sufficient cause. The first appellate authority should have condoned the delay and decided the appeal on merits.