ITAT Mumbai Judgments — May 2025

The tribunal set aside the impugned ex-parte order and remanded the case back to the Jurisdictional Assessing Officer for a fresh decision, allowing the assessee a reasonable opportunity of being heard. The appeal was allowed for statistical purposes.

The Tribunal largely decided in favor of the assessee based on consistent decisions in the assessee's own cases in previous assessment years and various High Court and Supreme Court rulings. It held that advance license and DEPB benefits are not taxable until actual accrual and deleted related additions. Data access fees, product registration, and R&D expenses were treated as revenue expenditure and allowed as deductions. Disallowance of interest for earning exempt income was deleted as the assessee had sufficient interest-free funds. For Section 80IB, income from debtors, sales tax refund, and exchange rate difference were included in eligible profits. For Section 80HHC, the computation was clarified, and DEPB benefits were included for deduction. Penalties under Section 271(1)(c) were quashed for debatable issues and where the underlying quantum additions were deleted or where the assessee acted bonafide. The disallowance for delayed PF/ESIC payments was restored in favor of revenue following the Supreme Court's decision in Checkmate Services. The corporate financial guarantee commission was directed to be recomputed at 0.5% instead of 0.6%.

The Tribunal condoned the delay of 19 days, noting the Assessee's willingness to settle the dispute amicably through VSVS 2024 and having already taken positive steps. The appeals were dismissed as withdrawn.

The Tribunal noted that the assessee had sought withdrawal of the appeal after being questioned about not challenging the original order. Considering the assessee's request, the appeal was dismissed as withdrawn.

The Tribunal held that the assessee is entitled to the exemption under Section 10(25) of the Act, and importantly, is not even required to file a return for this purpose. The disallowance by the AO based on the belated filing of the return was deemed to be without basis.

The Tribunal held that the reasons for reopening the assessment were not sustainable as they were based on surmise and guesswork without concrete evidence. The Tribunal noted that even in the case of a related entity, no commission was added, and thus, presuming commission income for the assessee was unjustified. The reopening and subsequent additions were quashed.

The Tribunal held that the assessee bank could not be considered an 'assessee in default' for non-deduction of TDS on LFC payments. This was due to the binding nature of the Hon'ble Madras High Court's interim order dated 16.02.2015, which was in effect during the relevant period and restrained the bank from deducting tax at source. Deducting tax under such circumstances would have amounted to contempt of court.

The Tribunal admitted the additional grounds of appeal regarding the non-issuance of notice under Section 143(2) and the validity of reopening. The appeal was remitted back to the CIT(A) for considering these grounds and also to adjudicate the merits of the additions afresh.

The Tribunal held that the expenditure on moulds and dies is revenue in nature due to their short life and frequent replacement. The capital investment subsidy was not to be reduced from the cost of assets. The excise duty refund was treated as a capital receipt. Disallowances under Section 14A were to be re-examined by the AO, and the deduction under Section 80-IB for the Jammu unit was allowed based on consistent past practice.

The Tribunal held that the initiation of penalty proceedings for concealment of income while levying penalty for furnishing inaccurate particulars of income is a fatal defect. The notice and penalty order must clearly specify the limb of the section under which the penalty is levied, and any ambiguity renders the order invalid.

The Tribunal held that the AO had not conducted requisite verification for the three issues pointed out by the CIT(E). Therefore, the CIT(E) was justified in initiating revision proceedings u/s 263. The matter was directed back to the AO for fresh verification and order.

The Tribunal noted that the issue is covered by a coordinate bench's decision, which followed the Delhi High Court's ruling that amendments to Section 14A are prospective. Since no exempt income was earned, the addition was deleted.

The Tribunal distinguished the case from cited precedent as the assessee had participated in proceedings and furnished explanations. It deleted the addition to the extent of Rs.14,09,614/- that was already offered to tax in AY 2014-15. For the remaining amount of Rs.2,90,462/-, the AO was directed to apply a 12.5% profit margin, consistent with the treatment of the assessee's spouse's case.

The Tribunal held that the assessee had discharged their onus by providing primary documents and that the transactions were carried out through proper banking channels and the shares were dematerialized. The deletion of addition by the Ld. Commissioner was affirmed.

The Tribunal held that the corporate guarantee commission adjustment proposed by the TPO was in accordance with the law and upheld it. The interest income from tax refund was correctly assessed under 'Income from Other Sources'.

The Tribunal held that the Assessing Officer should have considered the substance of the application rather than dismissing it based on a technical error in mentioning the wrong sub-clause. The rejection based on a minor mistake led to unnecessary litigation.

The Tribunal found that the Assessing Officer had conducted appropriate inquiries and taken a plausible view supported by judicial precedent by making a 6% addition. It reiterated that an order cannot be treated as erroneous or prejudicial under Section 263 merely because the PCIT holds a different view when two plausible views are possible. Therefore, the PCIT's order setting aside the assessment was set aside, and the original assessment order by the AO was reinstated.

The Tribunal held that the AO's reasons for reopening the assessment were based on conjecture and lacked concrete evidence. The statements collected did not indicate any benefit or profit from the circular trading, nor did they provide evidence of commission paid. Therefore, the reopening under Section 147 was not justified.

The Tribunal noted a delay in filing the appeal and the absence of a condonation application, making it liable for dismissal. However, the assessee's counsel sought to withdraw the appeal to challenge the original order.

The Tribunal allowed the taxability of advance license benefit, as it was established that no income had accrued until imports were made and raw materials consumed. Similarly, DEPB benefit was also allowed, following consistent High Court and Tribunal decisions. Various deductions related to data access fees, salary, wages, and expenses under sections 80-IB and 80HHC were allowed based on earlier precedents. However, the revenue's appeal regarding sales tax refund and delayed deposit of employee's contribution to PF&ESI was allowed.

The Tribunal held that the reasons recorded by the AO for reopening the assessment were not sustainable as they were based on guesswork and conjecture, lacking concrete evidence of commission income. The Tribunal also noted that in a related case (KGR Enterprises), no commission was found to be paid to the assessee, further weakening the AO's premise.

The Tribunal observed that the Assessee's claim that the transactions were commercial in nature was not properly examined due to the non-submission of relevant documents before the lower authorities. Citing CBDT Circular No. 19 of 2017, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the CIT(A) for fresh adjudication, directing that the Assessee be given a reasonable opportunity to present all supporting documents.

The Tribunal held that no addition can be made solely based on discrepancies in Form 26AS when the assessee has provided explanations and evidence of TDS deductions, indicating potential double deductions. The ad-hoc disallowance was also deleted for lack of specific findings.

The Tribunal held that the AO initiated penalty proceedings for concealment of income but levied penalty for furnishing inaccurate particulars of income, and similarly for A.Y. 2017-18, initiated for misreporting but levied for under-reporting. This discrepancy between the notice and the penalty order rendered the penalty proceedings invalid, as per settled legal proposition.

The Tribunal held that the reopening of the assessment was not justified as the reasons recorded by the AO were based on surmise and guesswork, lacking concrete evidence of commission income. The AO's premise of commission being earned was not supported by material on record, especially in light of statements from involved parties indicating no benefit from such transactions.

The tribunal condoned the delay in filing the appeals. Since the assessee had taken steps to settle the dispute amicably through VSVS, 2024, the appeals were dismissed as withdrawn.

The Tribunal held that no addition or disallowance could be made on a fresh issue when the original ground for reopening was not sustained. The addition made under Section 14A was therefore unsustainable and deleted.

The Tribunal held that the expenditure on moulds and dyes should be treated as revenue expenditure due to their short life and frequent replacement. The capital investment subsidy was not to be reduced from the cost of assets as it was for industrial development. The excise duty refund was held to be a capital receipt and not taxable.

The Tribunal held that the reopening under Section 147 was not justified as the reasons recorded were based on surmise and guesswork, lacking concrete evidence. Statements from involved parties indicated no benefit or profit from the transactions. The Tribunal also noted that no commission was added in the case of a related entity (KGR Enterprises).

The Tribunal held that the assessee is entitled to the benefit of the proviso to Section 56(2)(vii)(b) and that the stamp duty value as on the date of the agreement (03.09.2010) should be adopted for valuation, not the stamp duty rate on the date of registration.

The Tribunal held that the AO's addition based on the statement of a third party without corroborating evidence and without providing an opportunity for cross-examination was not justified. The Tribunal also distinguished the case of Kanak Impex relied upon by the Revenue, as the assessee in that case had not cooperated with the assessment proceedings.

The Tribunal upheld the CIT(A)'s decision, confirming that the interest subsidy received under the TUF scheme is a capital receipt and should be excluded from the computation of book profit under Section 115JB of the Income Tax Act. This decision was based on consistent views, previous judgments in the assessee's own case, and High Court rulings, distinguishing earlier precedents not applicable to Section 115JB.

The Tribunal held that Section 80IA deduction is to be allowed from Gross Total Income and not restricted to 'Profits & Gains of Business or Profession'. The scope of Section 80IA(5) is limited to determining the quantum of deduction. Regarding the Dividend Distribution Tax credit, the Tribunal directed the Assessing Officer to grant the credit after verification.

The Tribunal condoned the delay in filing appeals before both the CIT(A) and the Tribunal, citing principles of substantial justice and natural justice. The matter was restored to the CIT(A) for adjudication on merits.

The Tribunal, following its earlier decisions in similar cases involving the same society and builder, held that the compensation received was exempt. Consequently, the addition made by the Assessing Officer was deleted.

The Tribunal held that the Assessing Officer had not conducted independent inquiries or verifications and remained silent on issuing notices to relevant parties like ICICI Bank or Mr. Subhash Akerkar. Despite the assessee's claim of returning the amounts and having no contact with Mr. Akerkar, the AO failed to consider these submissions. The Tribunal also noted that the source of funds and source of source were disclosed but not properly investigated by the AO.

The Tribunal held that the interest income earned by the cooperative society from its investments with cooperative banks is eligible for deduction under Section 80P(2)(d). Furthermore, the income from providing credit facilities to members is also eligible for deduction under Section 80P(2)(a)(i). The addition under Section 69A was deleted as the deposits were found to be from the society's members.

The Tribunal decided on several grounds, allowing some appeals in favor of the assessee and others partly. Key decisions include allowing the taxability of advance license benefits and DEPB benefits, treating data access fees and salary/wage capitalization as revenue expenditure, and allowing deductions under Section 80IB and 80HHC with specific computations. The revenue's appeals on product registration expenses, sales tax refund, and delayed employee PF/ESI contributions were partly or fully dismissed. Penalty under Section 271(1)(c) was deleted as the issues were debatable.

The Tribunal held that the deduction under Section 80IA should be allowed from the Gross Total Income, not restricted to business income. It also held that Section 80IA(5) pertains to quantum determination and not to limiting deductions. The Tribunal directed the Assessing Officer to grant credit for the Dividend Distribution Tax.

The Tribunal noted the assessee's non-compliance but, to ensure proper adjudication, decided to remand the case back to the Ld. Commissioner for a fresh decision. This remand is conditional upon the assessee depositing Rs. 11,000/- with the revenue department within 15 days.