ITAT Mumbai Judgments — June 2025

The Tribunal found the CIT(A)'s restriction to 4.40% to be erroneous as it did not fully consider the AO's findings on the non-linkage of purchases to sales. However, the Tribunal also determined that the AO's initial 20% disallowance was on the higher side. Consequently, the Tribunal directed the AO to restrict the addition for bogus purchases to 10% of the total value to ensure fairness and prevent revenue leakage.

The Tribunal noted that the delay in filing the appeal before the first appellate authority was due to the COVID-19 pandemic and could not be attributed to the assessee. The Tribunal decided to remit the appeal back to the lower authorities.

The Tribunal held that the surcharge should be levied based on the slab rates and not the MMR. The applicability of MMR for tax calculation does not automatically imply the highest slab rate for surcharge.

The Tribunal found that the assessee did not cooperate with the lower authorities and failed to submit necessary documentary evidence. Therefore, the case was restored to the Assessing Officer for a fresh assessment.

The Tribunal noted that the assessee filed the return within the extended period under section 139(4) and that the restriction under Chapter VIA, as per section 80AC, pertains only to Part C. Therefore, the matter was restored to the Assessing Officer to allow deductions under Part A and Part B of Chapter VIA and also to allow credit for tax already paid.

The Tribunal held that the AO failed to establish how the assessee's case fell under the specific instances of misreporting defined in Section 270A(9). The incorrect claim was withdrawn suo moto by the assessee and did not fall under any of the specified clauses for misreporting.

The Tribunal held that the CIT(A) was justified in deleting the disallowance of deduction u/s 10A, following established precedents and judicial pronouncements in the assessee's own case. For the issue of allocation of common expenses, the Tribunal directed the AO to reconsider the matter.

The Tribunal held that the Assessing Officer had made sufficient inquiries and the assessee had provided adequate documentation to support the agricultural income claim. The PCIT's finding of inadequate inquiry was found to be factually untenable.

The Tribunal held that the doctrine of merger does not apply when the subject matter of the intimation was not examined in the subsequent assessment order. The Tribunal also noted that the CIT(A) had not adjudicated on the issue of condonation of delay in filing the audit report and the scope of adjustments permissible under Section 143(1).

The Tribunal dismissed the claim under Section 80P(2)(a)(i), citing Supreme Court precedents that interest income from surplus funds deposited in banks does not qualify. However, for the Section 80P(2)(d) claim, which allows deduction for interest from investments with other co-operative societies, the matter was remanded to the AO for factual verification of whether the investing entities were indeed co-operative societies.

The Tribunal set aside the order of the CIT(A) and directed it to pass a fresh order after giving an opportunity of being heard to the IRP, allowing the appeal for statistical purposes.

The Tribunal held that since the assessee filed the return within the extended period under section 139(4), the restriction under Chapter VIA regarding deduction of Part C of Chapter VIA does not apply to Part A and Part B. The matter was restored to the AO.

The Tribunal held that since the assessee had disallowed all expenses debited to the Profit & Loss Account in its computation of income and had not earned any exempt income, the provisions of Section 14A were not attracted. Consequently, the addition made by the Assessing Officer and confirmed by the CIT(A) was deleted.

The Tribunal held that the AO's disallowances under Section 153A were unsustainable as they were not based on incriminating material found during the search, and the issues were already examined in the original assessment. It also found that the disallowance of sales promotion expenses was partly self-disallowed by the assessee and the remainder was ad-hoc. The disallowance of charter hire charges was also deleted as the assessee paid lesser charges than unrelated parties.

The Tribunal held that the assessee, being a co-operative bank, was not excluded from the requirement to deduct TDS under Section 194A(3)(v) if its gross turnover exceeded Rs. 50 crores. The matter was restored to the Assessing Officer for fresh determination.

The Tribunal clarified that Section 194A(3)(v) has two limbs: one exempting co-operative societies (other than banks) paying interest to members, and another for co-operative societies paying to other co-operative societies. It noted that the second limb, relevant to this case, does not explicitly exclude co-operative banks, but is subject to a condition where the payer's gross turnover does not exceed Rs. 50 crores. The matter was remanded to the Assessing Officer for a fresh determination to verify the assessee's gross turnover and the nature of deposits to apply the exemption correctly.

The Tribunal condoned the delay in filing the appeal. It was noted that the orders of both the AO and CIT(A) were ex-parte. Therefore, the matter was restored to the file of the AO for a denovo assessment.

The Tribunal held that Section 50C of the Income Tax Act, 1961, is applicable only to the transfer of land or building or both, and not to the transfer of leasehold rights. Therefore, the adjustment made by the CPC was not valid.

The Tribunal held that the additions/disallowances were unsustainable as they were not based on incriminating material found during the search. The charter hire charges were found to be less than market rates when compared properly, and the sales promotion expenses were disallowed on an ad-hoc basis without cogent reasoning. Victualling expenses were also found to be supported by evidence.

The Tribunal held that the assessee's explanation for the delay, while lacking procedural diligence, was bona fide and not tainted with mala fides. It condoned the delay and restored the matter to the CIT(A) for adjudication on merits.

The Tribunal held that the additions/disallowances made by the AO were unsustainable as they were not based on any incriminating material found during the search and seizure operation, especially since the assessment under Section 143(3) was already completed prior to the search. The disallowance of sales promotion expenses was also deleted as the assessee had already disallowed 50% of the expenses.

The Tribunal noted that the assessee's application for registration under Section 12AB was also rejected for identical reasons, and that matter had been restored to the CIT(E) by a coordinate bench for a fresh decision. Following this precedent, the Tribunal restored the present appeal for Section 80G approval to the CIT(E), granting the assessee liberty to file an amended MOA/objects clause for fresh consideration.

The Tribunal held that additions/disallowances made under Section 153A for an unabated assessment year (2012-13) were unsustainable as they were not based on any incriminating material found during the search. For AY 2017-18 and 2018-19, the Tribunal upheld the CIT(A)'s deletion of disallowances related to charter hire charges under Section 40A(2)(b) and victualling expenses, finding the AO's comparison methodology flawed and the assessee's expenses justified. The disallowance of sales promotion expenses for AY 2017-18 was also deleted, as the assessee had already disallowed 50% voluntarily.

The Tribunal held that for reassessment proceedings to be valid, additions must be made on the very issue that formed the basis of the reasons to believe, as per the jurisdictional High Court's decision in Jet Airways (I) Ltd. Since no addition was made on the primary issue that triggered the reassessment in both assessment years, the entire reassessment proceedings were vitiated in law.

The Tribunal held that the penalty proceedings were initiated without the Assessing Officer recording specific satisfaction regarding the limb under which penalty was to be levied (concealment or inaccurate particulars). The show cause notice was also found defective for not specifying the charge. Mere disallowance of a claim, even if unsustainable, does not automatically attract penalty.

The Tribunal allowed the assessee's appeal, finding no error in the assessee's tax planning. It held that Section 71(2) does not prescribe a specific sequence for setting off losses and grants the assessee the option to set off business losses against any head of income, including capital gains, to optimize deductions under Chapter VI-A. The Tribunal directed the Assessing Officer to grant the Chapter VI-A deduction as computed by the assessee.

The Tribunal held that the Pr. CIT erred in assuming jurisdiction under Section 263. The AO had conducted proper inquiries and was satisfied with the assessee's explanation and evidence regarding the merger and acquisition expenses. The Tribunal cited judicial precedents emphasizing that Section 263 requires an order to be both erroneous and prejudicial to revenue, and that it cannot be invoked when there are two possible views or when the AO has made a reasonable inquiry.

The Tribunal noted the assessee's non-compliance during both the assessment and appellate stages. Given the lack of response and the earlier dismissal by the CIT(A), the Tribunal concluded that the assessee was not interested in pursuing the appeal.

The Tribunal held that additions made under Section 153A were unsustainable as they were not based on any incriminating material found during the search, and the AO had merely revisited material from the original assessment. The disallowance of charter hire charges was deleted as the comparison made by the AO was unscientific. Similarly, the disallowance of sales promotion and victualling expenses was deleted.

The Tribunal noted the assessee's explanation regarding the delay and non-appearance before the lower authorities due to professional commitments and health issues. Considering the principles of natural justice, the Tribunal decided to grant one more opportunity to the assessee to present the case.

The Tribunal held that the assessee had provided sufficient documentary evidence, including a housing loan from HDFC Bank and personal savings from NRE account, to substantiate the source of funds for the property purchase. The lower authorities were incorrect in making the addition under Section 69A of the Act.

The Tribunal condoned the delay in filing the appeal, holding that there was a 'sufficient cause' for the delay. It held that the rejection order did not afford the assessee an adequate opportunity of being heard and that issues of fund application are better examined during assessment proceedings, not at the registration stage.

The Tribunal set aside the order of the CIT(A) and directed it to decide the appeal afresh on merits after giving the assessee an opportunity to be heard and to make requisite compliance.

The Tribunal found that the assessee had demonstrated sufficient cause for the delay, supported by an affidavit and medical evidence. The delay was condoned, and the case was remanded back to the CIT(A) for fresh adjudication on merits, with adequate opportunity of hearing to the assessee.

The Tribunal held that the exemption under Section 194A(3)(v) applies to interest paid by a cooperative society to another cooperative society, provided the payer's gross turnover does not exceed Rs. 50 crores. The matter was restored to the Assessing Officer for verification of this condition.

The Tribunal held that derivatives are distinct from shares and are not covered under Article 13(3A) of the India-Mauritius DTAA. Therefore, gains from the alienation of derivatives are taxable only in the contracting state of the alienator as per Article 13(4).

The Tribunal held that the addition made under Section 56(2)(vii)(b) was not applicable to the Assessment Year 2012-13 as the said provision was introduced by the Finance Act, 2013. The issue of deemed rent was remanded to the AO for recomputation. The addition related to loans was set aside to the file of the AO for fresh adjudication.

The Tribunal noted that the assessee had provided extensive documentary evidence, including purchase bills, bank statements, supplier's affidavit, and stock registers. The AO had not conducted independent inquiry to contradict this evidence and had not rejected the assessee's books of accounts. Reliance was placed on Supreme Court judgments.

The Tribunal held that while the first limb of Section 194A(3)(v) excludes cooperative banks from exemption for payments to their members, the second limb, concerning payments to other cooperative societies, does not exclude cooperative banks. Therefore, if the assessee's gross turnover did not exceed Rs. 50 crores, it would not be liable for TDS.

The Tribunal held that merely transacting in shares alleged to be penny stock does not automatically make the transaction bogus without evidence of price rigging. The assessee was a regular investor, and the AO had not recorded any adverse findings regarding the documentary evidence submitted. Therefore, the addition made by the AO was deleted, and the STCL was allowed to be set off.

The Tribunal held that the second limb of Section 194A(3)(v) provides an exemption for interest paid by a cooperative society to another cooperative society, subject to a gross turnover threshold of Rs. 50 crores for the payer. The matter was restored to the Assessing Officer to verify this turnover.

The Tribunal observed that the property was purchased in FY 2013-14, but the agreement was in FY 2016-17. The actual payment was made in FY 2015-16. The matter was set back to the AO to verify the actual payment date and apply the stamp duty value accordingly.

The Tribunal held that the AO erred in invoking Section 147 when the correct procedure should have been Section 153C, as the basis of reassessment stemmed from a third-party search. The invocation of Section 147 was deemed invalid and without legal sanction.

The Tribunal held that the second limb of Section 194A(3)(v) provides exemption for payments made by a cooperative society to another cooperative society, provided the payer's gross turnover does not exceed Rs. 50 crores. The Tribunal restored the matter to the AO to verify the assessee's turnover for the relevant financial year.

The Tribunal held that disallowance under Section 14A should be restricted to investments yielding exempt income. It further held that employee costs provision for wage revision, based on a settlement agreement, is an allowable business expenditure. The AO was directed to verify the book profit computation.

The Tribunal held that the PCIT's order passed under Section 263 was bad in law as it was made without issuing a show cause notice and without providing an opportunity of hearing to the assessee. Therefore, the order was quashed.