ITAT Mumbai Judgments — February 2025

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 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 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 held that the assessee had correctly filed the application for renewal under clause (ii) of the first proviso to Section 80G(5), as it was already an approved trust. The provisional approval was not a sole basis for rejection.

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 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 noted that the appeals were filed ex-parte and the DR had no objection. Both appeals were remanded back to the CIT(A) for a fresh decision, with a direction to provide due opportunity of hearing to the assessee and for the assessee to comply with the notices.

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 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 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 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 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 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 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 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 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 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 considered various grounds of appeal, primarily concerning the exclusion/inclusion of comparables in transfer pricing analysis, working capital adjustments, and other transfer pricing adjustments. The Tribunal provided directions for re-verification of comparables, allowed working capital adjustments, and partly allowed other grounds for statistical purposes.

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 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 the reassessment proceedings were not exercised in a fair manner. The reasons for reopening were recorded by an officer different from the one who initiated the reassessment, and the reasons were recorded after the issuance of the notice under section 148 and were beyond the limitation period. Therefore, the reassessment notice and the consequential assessment order were quashed.

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 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 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 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 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 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 interest income earned on deposits made in compliance with statutory requirements for reserve funds and SLR, and for carrying on the business of providing credit facilities, is attributable to the business activity and eligible for deduction. However, interest received from commercial banks was remitted back to the AO for verification regarding the nature of the payer bank.

The Tribunal held that the assessee's application was rejected by the CIT(E) without affording due opportunity. Citing previous decisions with similar circumstances, the Tribunal restored the issue to the CIT(E) for fresh consideration.

The Tribunal held that disallowance under Rule 8D(2)(iii) must consider only investments yielding exempt income. For commission and club expenses, the Tribunal followed its own earlier decisions in favor of the assessee, finding identical facts and legal positions. The amendment to Form 3CL was held not applicable to the assessment years in dispute.

The Tribunal condoned the delay of 72 days, citing bonafide reasons and relying on Supreme Court judgment. The Tribunal set aside the CIT(A)'s order and restored the penalty appeal for de novo adjudication, directing the CIT(A) to consider the outcome of the quantum appeal.

The Tribunal held that the error in selecting the clause was inadvertent and clerical. It noted that the assessee had met the timeline requirements for filing the application under the correct clause. The impugned order was set aside, and the matter was restored to the CIT(E).

The Tribunal, in the interest of justice, remitted the issue back to the AO to verify the assessee's details and consider the claim for deduction under Section 10AA in accordance with the law.

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.

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 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 assessee opted to settle the dispute under the DTVSV Scheme, 2024 and requested permission to withdraw the appeals. The Revenue did not object to this request. Consequently, the appeals were allowed to be withdrawn and dismissed as withdrawn.

The Tribunal held that the rental proceeds from the property should be treated as 'Income from House Property' and not business income. The addition for unexplained investment was deleted as the source of investment was explained. The notional rent computation based on property tax was deemed unsustainable.

The Tribunal held that the assessee had not duly received various notices issued by the AO, except for the notice dated 04.01.2023. The return filed in response to this notice was considered valid and within time, allowing the benefit of Section 44AD.