ITAT Mumbai Judgments — May 2025

The Tribunal held that the addition made by the AO and partly sustained by the CIT(A) on account of commission on circular trading was to be deleted. The Tribunal noted that in the case of KGR Enterprises Pvt. Ltd., the AO had estimated expenses at 3% of total sales and purchases, but there was no finding that KGR had paid any commission to the assessee, nor was any addition made in that regard. Therefore, no commission income could be presumed or estimated in the hands of the assessee. Regarding the ad hoc addition on account of salary and wages, the Tribunal found no specific finding that the expenses debited were not verifiable or not for business purposes. Since the salary and commission payments were commensurate with the turnover, the ad hoc addition was deleted. The appeals of the assessee were allowed, and the appeals of the Revenue were dismissed.

The Tribunal considered the rival submissions and found that the objection regarding the alleged lack of verification of expenses was not examined by the AO. The role of the TPO is confined to determining the arm's length price, not the genuineness or allowability of expenses, which falls within the AO's domain. Since no adverse finding was recorded by the AO, this objection was rejected. Regarding the capitalization of expenditure, the Tribunal held that the applicability of transfer pricing provisions does not hinge on the assessee's accounting method. International transactions, once established, are subject to benchmarking. The Tribunal noted that in cases of project completion method, adjustments would impact work-in-progress, ultimately affecting profits in the completion year. Conversely, under the percentage completion method, adjustments apply annually. The Tribunal found that the assessee's benchmarking required reconsideration as the Cost Plus Method was applied by comparing the gross profit margin of the importer of services with providers of similar services. Due to incomplete evaluation by lower authorities, the Tribunal set aside the transfer pricing adjustment and remanded the matter to the TPO for de novo consideration. Ground No. 3 was allowed for statistical purposes, rendering findings on other grounds academic.

The Tribunal found that the assessee had not provided complete details of beneficiaries and documentary evidence. Therefore, the issue was remanded back to the Assessing Officer for de novo assessment, directing the assessee to provide full compliance and the AO to decide based on jurisdictional High Court rulings.

The Tribunal held that no commission income could be presumed or estimated in the assessee's hands as there was no finding that the other party paid commission. Ad-hoc additions for salary and wages were also deleted due to lack of specific defects.

The Tribunal found that the assessee had not provided complete details of beneficiaries and documentary evidence. Therefore, the issue was remanded back to the Assessing Officer for de novo assessment, directing the assessee to provide full compliance and the AO to decide based on jurisdictional High Court rulings.

The Tribunal held that no commission income could be presumed or estimated in the assessee's hands as there was no finding that the other party paid commission. Ad-hoc additions for salary and wages were also deleted due to lack of specific defects.

The Tribunal deleted the addition of Rs. 34,54,250/- as the assessee was not provided with the developer's statement and was denied the opportunity to cross-examine the developer, making the addition unsustainable. The addition of Rs. 6,75,000/- was also deleted as the difference was within the tolerance limit, which was held to be retrospective.

The Tribunal found that the assessee had not provided complete details of beneficiaries and documentary evidence. Therefore, the issue was remanded back to the Assessing Officer for de novo assessment, directing the assessee to provide full compliance and the AO to decide based on jurisdictional High Court rulings.

The Tribunal found that the assessee had not provided complete details of beneficiaries and documentary evidence. Therefore, the issue was remanded back to the Assessing Officer for de novo assessment, directing the assessee to provide full compliance and the AO to decide based on jurisdictional High Court rulings.

The Tribunal held that the assessee's computation of capital loss was factually correct and accepted during processing of the return. The differential amount received by the assessee was correctly treated as part of the capital loss. The addition made by the Revenue under 'Income from Other Sources' was found to be erroneous.

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 found that the assessee had not provided complete details of beneficiaries and documentary evidence. Therefore, the issue was remanded back to the Assessing Officer for de novo assessment, directing the assessee to provide full compliance and the AO to decide based on jurisdictional High Court rulings.

The Tribunal held that no commission income could be presumed or estimated in the assessee's hands as there was no finding that the other party paid commission. Ad-hoc additions for salary and wages were also deleted due to lack of specific defects.

The Tribunal held that no commission income could be presumed or estimated in the assessee's hands as there was no finding that the other party paid commission. Ad-hoc additions for salary and wages were also deleted due to lack of specific defects.

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 penalty proceedings were bad in law because the notice and the penalty order lacked clarity regarding the specific limb of the penalty provision under which proceedings were initiated and levied. This ambiguity was considered a curable defect.

The Tribunal held that penalty under section 271(1)(c) is not leviable on debatable issues and that the assessee acted bonafidely. Relief was granted to the assessee on the issues related to data access fees and salary/wages, making the penalty unsustainable.

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 found that the assessee had not provided complete details of beneficiaries and documentary evidence. Therefore, the issue was remanded back to the Assessing Officer for de novo assessment, directing the assessee to provide full compliance and the AO to decide based on jurisdictional High Court rulings.

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 found that the CIT(A) erred in dismissing the appeal without considering the merits. Therefore, the case was remanded back to the CIT(A) for a fresh opportunity to the assessee and to decide the appeal on merits.

The Tribunal held that the assessee could not be treated as an assessee in default for non-deduction of TDS on LFC payments. This was because the assessee was bound to follow the interim order of the Madras High Court, which directed that such payments would not be treated as income for TDS purposes.

The Tribunal held that the method of expense allocation for the Jammu unit, previously upheld by the PCIT, was justified. Consequently, the disallowance of Section 80-IB deduction for the Jammu unit was reversed.

The Tribunal held that the method of expense allocation for the Jammu unit, previously upheld by the PCIT, was justified. Consequently, the disallowance of Section 80-IB deduction for the Jammu unit was reversed.

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 held that no commission income could be presumed or estimated in the assessee's hands as there was no finding that the other party paid commission. Ad-hoc additions for salary and wages were also deleted due to lack of specific defects.

The Tribunal held that for AY 2002-03, the assessee's appeal (ITA No. 1787/Mum/2016) was partly allowed. Regarding the taxability of advance licence benefit and pass book benefit, the Tribunal found that these were notional benefits and not income that had accrued or arisen to the assessee during the year, hence they were not taxable. The deduction for data access fees was allowed in full as revenue expenditure. Salary and wages capitalized were also allowed as revenue expenditure. Interest attributable to earning tax-free income was disallowed. For Section 80-IB deduction, the Tribunal held that the assessee was eligible for deduction on profits derived from the industrial undertaking, and certain 'other income' items were correctly excluded. For Section 80HHC, the Tribunal found that 90% of interest and other receipts, including DEPB benefit, should be excluded from business profits. Interest under Section 234D was held to be wrongly levied for refunds prior to June 1, 2003. For AY 2003-04, the revenue's appeal (ITA No. 3534/Mum/2014) concerning penalty under Section 271(1)(c) was dismissed, as the issues were debatable. The assessee's appeal (ITA No. 3878/Mum/2014) regarding penalty was allowed, as the assessee had acted bona fide and disclosed facts, and relief was granted on merits in the quantum appeal.

The Tribunal held that investments yielding exempt income should only be considered for Section 14A disallowance, and that amendments to Section 14A are not retrospective. The Tribunal also directed the Assessing Officer to grant credit for Dividend Distribution Tax paid.

The Tribunal condoned the 49-day delay in filing the appeal, finding reasonable cause. Noting that the CIT(A) had issued notices allowing very short compliance time (less than two weeks), the Tribunal, in the interest of justice, restored the matter back to the CIT(A) for fresh consideration on merits, directing the assessee to make requisite compliance.

The Tribunal held that investments yielding exempt income should only be considered for Section 14A disallowance, and that amendments to Section 14A are not retrospective. The Tribunal also directed the Assessing Officer to grant credit for Dividend Distribution Tax paid.

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 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 held that the penalty proceedings were bad in law because the notice and the penalty order lacked clarity regarding the specific limb of the penalty provision under which proceedings were initiated and levied. This ambiguity was considered a curable defect.

The Tribunal held that the AO's view of making a 6% addition was a plausible view, and the PCIT could not revise the order under Section 263 merely because they disagreed. The revision order by the PCIT was set aside.

The Tribunal held that penalty under section 271(1)(c) is not leviable on debatable issues and that the assessee acted bonafidely. Relief was granted to the assessee on the issues related to data access fees and salary/wages, making the penalty unsustainable.

The Tribunal held that the AO was not justified in making the addition as it was based on the report of the DGIT Investigation Wing without sufficient computation, verification, and further enquiries from the brokers. The reassessment was initiated without cogent reasons to believe income had escaped assessment.

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 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 held that the assessee is entitled to exemption under Section 10(25) and is not even required to file a return for this purpose. The belated filing of the return does not invalidate the exemption claim.

The Tribunal admitted additional grounds of appeal regarding the non-issuance of notice under section 143(2) and the validity of reopening. The matter was remitted back to the CIT(A) for fresh adjudication on these legal grounds and on merits.

The Tribunal decided both issues in favour of the assessee. Regarding the Rs.10,50,41,824/- addition, the Tribunal found that the bank accounts held under the Chagganlal Family Trust were opened by non-residents, explicitly for the benefit of non-residents, and the source of funds was irrefutably traced to non-residents. The accrual and aggregation of funds were credited to non-resident accounts. Therefore, no part of these deposits or the peak balance could be taxed in the hands of the assessee in India. The addition was deleted. Concerning the Rs.57,00,000/- payment, the Tribunal noted the assessee had provided a detailed fund flow statement from his HUF's bank account, explaining the sources of funds. Given this explanation and the affidavit from the recipient, the Tribunal failed to understand how the payment could remain unexplained. The addition was deleted. As both quantum additions were deleted, the penalty levied under section 271(1)(c) was also deleted. The ground regarding the assessment being time-barred was rendered academic and dismissed as infructuous.

The Tribunal dismissed the Revenue's appeal. Regarding the 'on-money' addition (Ground 1), the Tribunal found that the AO made the addition based on extrapolation without any evidence in possession and upheld the CIT(A)'s order restricting the addition to 25%. For the additions related to CCDs and interest on debentures (Grounds 2 & 3), the Tribunal noted that the CIT(A) deleted these additions based on identical issues in the assessee's own case for AY 2012-13, where the Revenue did not appeal further. The Tribunal also observed that the TPO did not determine the ALP by following any of the methods prescribed under Section 92C(1) read with Rule 10AB. Furthermore, relying on the jurisdictional High Court's decisions in Equinox Business Park (P) Ltd. and PCIT Vs Aditya Birla Telecom Ltd., the Tribunal held that the issue of shares is on capital account and transfer pricing provisions do not apply. The interest on debentures was considered consequential. For the disallowance of business expenses (Ground 4), the Tribunal found that the CIT(A) held these expenses were incurred wholly and exclusively for business purposes and were neither capital nor personal. As no contrary facts or law were brought to its notice, the Tribunal did not find any reason to interfere with the CIT(A)'s order. The Tribunal expressly left no issue undecided.

The Tribunal found that the Assessing Officer had sufficient documentary evidence, including bank statements and ledger accounts, that corroborated the assessee's claim of returning the funds. The Tribunal noted the lack of independent inquiry by the Assessing Officer.

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 cannot be treated as an 'assessee in default' for non-deduction of tax at source on the impugned LFC payments. The reasoning was that the interim order of the Hon'ble High Court of Madras dated 16.02.2015 was in force during the period under consideration, and the assessee was bound to follow these directions. The interim order explicitly stated that any amount paid towards LTC or reimbursement of LTC would not amount to income for the purpose of deducting tax at source, and that if the writ petition was dismissed, the employees would be liable to pay tax. The Tribunal concurred that the assessee bank had no option but to not deduct TDS as per the interim order. Deducting tax at source would have been contrary to the Hon'ble High Court's order, potentially amounting to contempt of court. Therefore, the demand raised by the AO under Section 201(1)/201(1A) was considered unjustified and deleted. The appeal of the assessee was allowed.

The Tribunal held that since the addition on which the penalty was levied was deleted in the quantum appeal by a coordinate bench, the penalty is unsustainable and liable to be deleted. The appeal was allowed.

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 penalty under section 271(1)(c) is not leviable on debatable issues and that the assessee acted bonafidely. Relief was granted to the assessee on the issues related to data access fees and salary/wages, making the penalty unsustainable.

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.