ITAT Mumbai Judgments — June 2025

The Tribunal held that the AO erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the assessee. The Tribunal directed the AO to accept the methodology adopted by the assessee for the computation of capital gains, allowing grounds related to the set-off of short-term capital losses. Regarding the set-off of taxable long-term capital loss against exempt (grandfathered) long-term capital gains, the Tribunal directed the AO to allow the set-off of long-term capital loss brought forward from previous years against the net long-term capital gains accrued during the year from non-grandfathered sale of shares, setting aside the impugned order on this issue. For arithmetical errors and short-grant of TDS credit, the Tribunal directed the AO to correct the income computation after considering the directions and to grant TDS credit after verification, allowing these grounds for statistical purposes. The levy of interest under Section 234C was deemed consequential. The initiation of penalty proceedings under Section 270A was held to be premature and dismissed. Consequently, the appeals were partly allowed for statistical purposes.

The Tribunal held that the AO should re-examine the QIP expense deduction claim after affording the assessee an opportunity to present details. Regarding Section 14A, the Tribunal found no merit in the addition as the AO had not recorded specific satisfaction or dissatisfaction with the assessee's suo motu disallowance.

The Tribunal held that the AO should re-examine the QIP expense deduction claim after affording the assessee an opportunity to present details. Regarding Section 14A, the Tribunal found no merit in the addition as the AO had not recorded specific satisfaction or dissatisfaction with the assessee's suo motu disallowance.

The Tribunal allowed the appeals in part for statistical purposes. Regarding the set-off of short-term capital losses (Issue 1), the Tribunal directed the AO to accept the assessee's methodology for computing capital gains, thereby allowing grounds 2 to 6. Concerning the set-off of brought forward long-term capital loss against exempt long-term capital gains (Issue 2), the Tribunal directed the AO to allow exemption of grandfathered long-term capital gains under Article 13(4) of the India-Mauritius DTAA and to allow set-off of brought forward long-term capital loss against net long-term capital gains from non-grandfathered sales, setting aside the impugned order on this issue and allowing grounds 7-10. For arithmetical errors in the computation sheet (Issue 3), the Tribunal directed the AO to correctly compute the income in accordance with law after considering the Tribunal's directions, allowing grounds 11-14 for statistical purposes, noting that rectification applications were pending. Regarding short grant of TDS credit (Issue 4), the issue was restored to the AO with directions to grant credit after verification, allowing ground 15 for statistical purposes, also noting a pending rectification application. The levy of interest under Section 234C (Issue 5) was considered consequential and not requiring separate adjudication. The initiation of penalty proceedings under Section 270A (Issue 6) was dismissed as premature. The Tribunal consolidated all appeals and decided them as partly allowed for statistical purposes.

The Tribunal condoned the delay, subject to a deposit of Rs. 2200/-. It held that the reopening of the assessment appeared to be a review of earlier proceedings or a change of opinion, which is not permissible. The Tribunal noted that the loan amounts and interest were returned, and the addition was not sustainable.

The Tribunal decided on the issues as follows: Regarding the set-off of short-term capital losses (Issue 1), the Tribunal directed the AO to accept the methodology adopted by the assessee for the computation of capital gains. Grounds related to this issue were allowed. Concerning the applicability of the IM Treaty and set-off of long-term capital losses against exempt gains (Issue 2), the Tribunal directed the AO to allow the exemption of entire long-term capital gains from transactions covered under Article 13(4) of the India-Mauritius DTAA. The AO was also directed to allow the set-off of long-term capital loss brought forward against net long-term capital gains from non-grandfathered sales. The impugned order on this issue was set aside, and the grounds were allowed. For arithmetical errors and short-grant of TDS credit (Issue 3), the Tribunal noted that rectification applications were pending. The AO was directed to correctly compute the income in accordance with the Tribunal's directions and to grant the TDS credit after necessary verification. These grounds were allowed for statistical purposes. Regarding the initiation of penalty proceedings under Section 270A (Issue 4), the Tribunal held that it was premature and dismissed this ground. The operative directions included setting aside the impugned order on specific issues and remitting them to the AO for recalculation as per the directions. The Tribunal expressly left undecided the grounds related to the initiation of penalty proceedings, which were dismissed as premature.

The Tribunal held that the AO should accept the methodology adopted by the assessee for the computation of capital gains regarding the set-off of short-term capital losses. Consequently, grounds related to this issue were allowed. Regarding the set-off of taxable brought forward long-term capital loss against exempt (grandfathered) long-term capital gains, the Tribunal directed the AO to allow the exemption under the India-Mauritius DTAA and to permit the set-off of long-term capital loss brought forward against net long-term capital gains from non-grandfathered sales. The impugned order on this issue was set aside, and the related grounds were allowed. For arithmetical errors in computation sheets and short grant of TDS credit, the Tribunal directed the AO to correct the computations and grant credit after verification, allowing these grounds for statistical purposes. The issue of interest under Section 234C was deemed consequential and not requiring separate adjudication. The initiation of penalty proceedings under Section 270A was dismissed as premature. The overall result was that the appeals were partly allowed for statistical purposes.

The Tribunal allowed the appeals in part for statistical purposes. Regarding the set-off of short-term capital losses (Issue 1), the Tribunal directed the AO to accept the assessee's methodology for computing capital gains, thereby allowing grounds 2 to 6. Concerning the set-off of brought forward long-term capital loss against exempt long-term capital gains (Issue 2), the Tribunal directed the AO to allow exemption of grandfathered long-term capital gains under Article 13(4) of the India-Mauritius DTAA and to allow set-off of brought forward long-term capital loss against net long-term capital gains from non-grandfathered sales, setting aside the impugned order on this issue and allowing grounds 7-10. For arithmetical errors in the computation sheet (Issue 3), the Tribunal directed the AO to correctly compute the income in accordance with law after considering the Tribunal's directions, allowing grounds 11-14 for statistical purposes, noting that rectification applications were pending. Regarding short grant of TDS credit (Issue 4), the issue was restored to the AO with directions to grant credit after verification, allowing ground 15 for statistical purposes, also noting a pending rectification application. The levy of interest under Section 234C (Issue 5) was considered consequential and not requiring separate adjudication. The initiation of penalty proceedings under Section 270A (Issue 6) was dismissed as premature. The Tribunal consolidated all appeals and decided them as partly allowed for statistical purposes.

The Tribunal allowed the appeals in part for statistical purposes. Regarding the set-off of short-term capital losses (Issue 1), the Tribunal directed the AO to accept the assessee's methodology for computing capital gains, thereby allowing grounds 2 to 6. Concerning the set-off of brought forward long-term capital loss against exempt long-term capital gains (Issue 2), the Tribunal directed the AO to allow exemption of grandfathered long-term capital gains under Article 13(4) of the India-Mauritius DTAA and to allow set-off of brought forward long-term capital loss against net long-term capital gains from non-grandfathered sales, setting aside the impugned order on this issue and allowing grounds 7-10. For arithmetical errors in the computation sheet (Issue 3), the Tribunal directed the AO to correctly compute the income in accordance with law after considering the Tribunal's directions, allowing grounds 11-14 for statistical purposes, noting that rectification applications were pending. Regarding short grant of TDS credit (Issue 4), the issue was restored to the AO with directions to grant credit after verification, allowing ground 15 for statistical purposes, also noting a pending rectification application. The levy of interest under Section 234C (Issue 5) was considered consequential and not requiring separate adjudication. The initiation of penalty proceedings under Section 270A (Issue 6) was dismissed as premature. The Tribunal consolidated all appeals and decided them as partly allowed for statistical purposes.

The Tribunal condoned the delay in filing the appeal by the assessee, following the principle of substantial justice over technicalities. The Tribunal restored the matter back to the file of the CIT(A) to provide the assessee with another opportunity to represent their case, imposing a cost of Rs. 2,000/-.

The Tribunal directed the Assessing Officer (AO) to correctly compute the income in accordance with law after considering the Tribunal's directions, particularly concerning arithmetical errors in the computation sheet and the set-off of brought forward losses. Grounds related to these arithmetical errors were allowed for statistical purposes. Regarding the short-grant of TDS credit, the issue was restored to the AO with directions to grant credit after verification, and the related ground was also allowed for statistical purposes. The ground pertaining to the initiation of penalty proceedings under Section 270A was dismissed as premature. The Tribunal did not explicitly decide on the core legal arguments regarding the hierarchy of set-off or the treatment of treaty-exempt gains, instead remanding the computation aspects back to the AO.

The Tribunal held that the notice under Section 148 was issued without valid prior approval as required by Section 151, making the subsequent action void ab initio. Consequently, the adjudication on the merits of the case became academic.

The tribunal condoned the delay in filing the appeal. Regarding the interest income addition, the tribunal allowed the assessee's claim, subject to verification by the AO. For the disallowance of expenses, the tribunal reduced the addition from 10% to 5% in the interest of substantial justice.

The Tribunal allowed the deduction for interest expenses under Section 36(1)(iii) as a business expense, but directed a disallowance under Section 14A for interest attributable to exempt dividend income. The AO's earlier disallowance was set aside.

On the issue of disallowance under Section 14A read with Rule 8D, the Tribunal, respectfully following the decision of a coordinate bench in the assessee's own case for AY 2016-17, held that no disallowance is warranted when exempt income is earned on shares/stocks held as 'stock-in-trade'. The Tribunal directed the Assessing Officer (AO) to delete the disallowance. This led to the allowance of Ground No. 1 in the assessee's appeal and dismissal of the corresponding ground in the revenue's appeal. Regarding the taxability of recovery of bad debts, the Tribunal, by respectfully following a coordinate bench decision in the assessee's own case for AY 2013-14, declined to interfere with the deletion of the disallowance by the CIT(A). Thus, Ground No. 2 was dismissed. Concerning the disallowance of amortisation of premium paid on securities in the HTM category, the Tribunal, respectfully following a coordinate bench decision in the assessee's own case in ITA No. 1819/Mum/2023, declined to interfere with the CIT(A)'s decision. Ground No. 4 was dismissed. For the issue of deletion of disallowance under Section 14A r.w. Rule 8D in computing book profit, the Tribunal noted that since it had held that the provisions of Section 115JB did not apply, this grievance became infructuous. For AY 2020-21, the appeal of the revenue was dismissed. For AY 2021-22, the appeal of the assessee was partly allowed, and the appeal of the revenue was dismissed.

The Tribunal held that for AY 2020-21 and AY 2021-22, no disallowance under Section 14A read with Rule 8D is warranted where the assessee earned exempt income on shares/stocks held as 'stock-in-trade'. This decision was based on respectfully following the coordinate bench's ruling in the assessee's own case, which relied on the Supreme Court's decision in Maxopp Investment Pvt. Ltd. and other precedents. Consequently, the disallowance made by the AO was directed to be deleted. Regarding the taxability of recovery of bad debts, the Tribunal respectfully followed the coordinate bench's decision, which in turn relied on the jurisdictional High Court's ruling in HDFC Bank Ltd. and the Supreme Court's decision in CIT vs. Citi Bank, holding that the AO was incorrect in making the disallowance towards broken period interest. Therefore, the deletion of this disallowance by the CIT(A) was upheld. For the disallowance of amortisation of premium paid on securities in the HTM category, the Tribunal, by respectfully following the coordinate bench's decision which relied on the Bombay High Court's ruling in HDFC Bank Ltd., declined to interfere with the CIT(A)'s decision. For AY 2020-21, the ground relating to the deletion of disallowance under Section 14A read with Rule 8D in computing book profit was rendered infructuous as the Tribunal had held that Section 115JB did not apply. The appeals of the revenue were dismissed, and the appeals of the assessee were partly allowed.

The Tribunal noted the assessee's claim that the credit card was used by someone else and that relevant documents were not filed. However, for proper verification and substantial justice, the Tribunal found it appropriate to remand the case back to the AO.

The Tribunal allowed grounds related to the set-off of short-term capital losses, directing the Assessing Officer (AO) to accept the assessee's methodology for computing capital gains, thereby allowing grounds 2-6. For the set-off of long-term capital losses against exempt long-term capital gains under the India-Mauritius DTAA, the Tribunal directed the AO to allow exemption for gains covered under Article 13(4) of the DTAA and to permit the set-off of brought-forward long-term capital loss against net long-term capital gains from non-grandfathered sales, setting aside the impugned order on this issue and allowing grounds 7-10. Regarding arithmetical errors and short-grant of TDS credit (grounds 11-14 and 15), the Tribunal directed the AO to correct the computation after considering the directions and to verify and grant the correct TDS credit, allowing these grounds for statistical purposes, noting pending rectification applications. The levy of interest under Section 234C (ground 16) was considered consequential and not requiring separate adjudication. The initiation of penalty proceedings under Section 270A (ground 17) was deemed premature and dismissed. Consequently, the appeals were partly allowed for statistical purposes.

The Tribunal held that the notice issued under Section 153C of the Income Tax Act, 1961, and the consequential assessment order were liable to be quashed and set aside. The primary reasoning was that the notice under Section 153C was issued in gross violation of its mandatory requirements. The Tribunal found that the prerequisite conditions for issuing the notice had not been complied with, specifically in the absence of any 'incriminating material' against the assessee. The Tribunal noted that the assessment order was based solely on statements recorded during the search without any corroborative material, and a mere statement cannot be treated as 'incriminating material' empowering additions under Section 153A (in the context of Section 153C proceedings). Furthermore, the Tribunal observed that the statement of Nabilal Shaikh did not link the alleged cash to the assessee and that the assessment order lacked cogent findings connecting the addition to the assessee, suggesting it was based on presumptions. The Tribunal relied on various judicial precedents, including *Olive Overseas Private Limited vs. DCIT*, *Commissioner of Income-tax-7 vs. RRJ Securities Ltd.*, *Principal Commissioner of Income-tax, Central-1 vs. Specialty Paper Ltd.*, *Principal Commissioner of Income-tax, Bengaluru vs. Smt. Lakshmi Singh*, and *Pepsi Foods (P.) Ltd. vs. Assistant Commissioner of Income-tax*, which emphasize the necessity of incriminating material for invoking Section 153C and making additions in unabated assessments. The operative direction was to quash and set aside the impugned notices and the assessment order.

The Tribunal upheld the Commissioner's decision to dismiss the appeal due to the delay, citing the Assessee's failure to provide sufficient cause and their admission of not updating their contact information, which demonstrated negligence.

The Tribunal held that the Ld. Commissioner erred by not considering the application filed u/r 46A of the Rules and not admitting the evidence filed, nor providing an opportunity for a personal hearing, thereby violating the principle of natural justice.

The Tribunal, considering the facts and a High Court judgment, found that the Assessee had identified beneficiaries for accommodation entries, a point considered by the CIT(A) who restricted the addition to 1%. However, the Tribunal enhanced this addition to 5% to cut short litigation and for substantial justice.

The Tribunal held that the documentary evidence could not be rejected without bringing on record substantial evidence. The Tribunal referred to a plethora of decisions from the Hon'ble Bombay High Court, including CIT vs. Shyam R. Pawar, Pr. CIT vs. Smt. Krishna Devi, and Pr. CIT vs. Ziauddin A. Siddique, which consistently held that transactions of purchase and sale of shares cannot be considered bogus when the documentary evidence furnished by the assessee establishes the genuineness of the claim. The Tribunal found that the jurisdictional High Court decisions and coordinate bench decisions on identical facts have binding precedence. The Tribunal concluded that the appellate order was passed in a preconceived manner, merely endorsing the assessment order rather than applying independent mind. Therefore, the Tribunal set aside the appellate order and directed the deletion of the addition made under Section 68 of the Act. The issue challenging the reopening of the assessment under Section 148 was left open as the addition was deleted. The appeal of the assessee was allowed.

The Tribunal held that the explanation provided by the assessee for the delay in filing Form 10B is reasonable and satisfactorily justified. The Tribunal noted that the delay in filing Form 10B is merely procedural, and the assessee has otherwise fulfilled the substantive conditions for claiming exemption under Section 11 of the Act. The Tribunal respectfully followed the decision of the Co-ordinate Bench of the ITAT, Mumbai, in similar cases. Accordingly, the Tribunal directed the AO to condone the delay of 31 days and accept Form 10B after necessary verification. The assessee is entitled to the benefit under Section 11 upon due satisfaction of the conditions. The addition made by the AO stands deleted. The appeal is allowed.

The Tribunal condoned the delay of 417 days, considering the cause of substantial justice. On merits, the Tribunal found that the rejection was due to a lack of compliance, but given the peculiar facts and the principle of natural justice, the matter was restored to the CIT(E) for fresh consideration, with directions for fair opportunity.

The Tribunal held that the AO relied on a generalized investigation report without establishing a direct nexus between the assessee's transactions and the alleged manipulation. The assessee provided documentary evidence like bank statements and contract notes to substantiate the transactions.

The Tribunal upheld the CIT(A)'s order, finding that bank deposits represented business receipts and not undisclosed income. However, due to infirmities in the books and lack of audit, estimating net profit at 8% was deemed reasonable.

The Tribunal, considering the facts and a High Court judgment, found that the Assessee had identified beneficiaries for accommodation entries, a point considered by the CIT(A) who restricted the addition to 1%. However, the Tribunal enhanced this addition to 5% to cut short litigation and for substantial justice.

The Tribunal upheld the CIT(A)'s order, finding that the bank deposits represented business receipts and not undisclosed income. However, due to infirmities in the books and lack of audit, estimating profit at 8% was deemed reasonable.

The Tribunal held that the addition made by the Assessing Officer was unsustainable as it was not based on any substantive material or corroborative evidence. The order passed by the Ld.AO was considered bad in law and reflected a non-application of mind.

The Tribunal held that interest income earned from cooperative banks is deductible under Section 80P(2)(d) based on various coordinate bench decisions, and interest income from nationalized banks up to Rs. 50,000 is deductible under Section 80P(2)(c)(ii).

The Tribunal held that since the assessment order, which formed the basis for the penalty, was set aside, the penalty order under Section 271(1)(c) would not survive. Therefore, the grounds of appeal raised by the assessee were allowed.

The Tribunal held that the reopening was done after four years from the relevant assessment year, making the first proviso to Section 147 applicable. The AO reopened the assessment for issues already considered during the original proceedings without new material evidence, indicating that the assessee had disclosed all material facts.

The Tribunal held that since the original assessment was completed u/s. 143(3) and the reopening was initiated after four years from the end of the assessment year, approval from the PCIT/CIT was required as per the proviso to section 151(1) of the Act. As no such approval was obtained, the reopening of assessment is invalid.

The Tribunal held that the CIT(A) erred in not condoning the significant delay in filing the appeal and consequently not deciding the grounds on merits. The matter was remanded back to the CIT(A) for fresh adjudication.

The CIT(A) observed that the assessee challenged the notice u/s 148 and admitted to not maintaining regular books of account, requesting peak credit instead of the entire deposit. The CIT(A) set aside the assessment order and restored it to the AO for de novo assessment, providing the assessee an opportunity to furnish details. The Tribunal found no infirmity in the CIT(A)'s order.

The Tribunal held that the assessee was entitled to the exemption under Section 54. Regarding the ownership of the original flats, the Tribunal noted that the sale of these flats was executed by the assessee in her individual capacity, the consideration was received in her bank account, and the capital gains were brought to tax in her hands by the AO. The Tribunal also noted that the purchase of the new flat from her husband was also executed via a registered agreement to sell, and the title was transferred in her name. The Tribunal found that the AO had merely looked at transactions on a single day (12.03.2021) when alleging fund rotation, without considering prior transactions where the assessee parked funds in fixed deposits or with Altan Engineering Pvt. Ltd. before making the payment to her husband. The Tribunal observed that the purchase of the new flat was made within the stipulated time frame of two years after the transfer of the original asset, as prescribed under Section 54. Therefore, the claim of exemption under Section 54 could not be denied. The AO was directed to allow the exemption claimed by the assessee under Section 54 of the Act.

The Tribunal held that the assessee is entitled to the deduction claimed under Section 80G of the Act towards CSR expenditure incurred. The Tribunal reasoned that the mandatory nature of CSR expenditure does not justify its disallowance under Section 80G if the other conditions of Section 80G are fulfilled. Citing the Delhi Tribunal's decision in Interglobe Technology Quotient (P.) Ltd., the Tribunal noted that while CSR expenditure is not allowed as a business deduction under Section 37(1) due to Explanation 2, this does not preclude its eligibility for deduction under Section 80G. Section 80G falls under Chapter VI-A, which applies after the total income is computed. The Tribunal further clarified that the voluntary nature of a donation is not dependent on the absence of reciprocal promises, and CSR expenditures, being philanthropic in nature, are similar in this regard. The Tribunal found that the PCIT's revision was based on a change of opinion and disagreed with the AO's view, which is not a valid ground for Section 263 proceedings when the AO has adopted a possible view. Therefore, the Tribunal quashed the revision order. The AO was directed to allow the claim subject to other requirements of Section 80G being satisfied. Ground No. 2 of the assessee's appeal was allowed.

The Tribunal held that the payments for internet, broadband, and bandwidth charges were not royalty attracting TDS provisions, as supported by High Court judgments. Similarly, the CSR donations, when claimed under Section 80G and meeting the conditions thereof, were allowable deductions. Therefore, the CIT(A)'s deletion of the disallowances was upheld.

The Tribunal held that the payments for internet, broadband, and bandwidth charges were not royalty attracting TDS provisions, as supported by High Court judgments. Similarly, the CSR donations, when claimed under Section 80G and meeting the conditions thereof, were allowable deductions. Therefore, the CIT(A)'s deletion of the disallowances was upheld.

The Tribunal held that the issue raised by the PCIT regarding the deduction claimed for CSR expenditure was highly debatable. They noted that coordinate benches had consistently held that CSR expenditure can be claimed as a donation under Section 80G.

The Tribunal held that the revised return filed within the due date substitutes the original return, and the conditions for claiming the alternate tax regime are fulfilled. The assessee is therefore entitled to the benefit of the low tax regime u/s 115BAC.

The Tribunal noted that the assessee had provided GST registration and import-export code certificates showing proprietorship of "Blue Lion Entertainment Company". Relying on a coordinate bench's decision that late filing of Form 67 is not mandatory, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh consideration.

The Tribunal noted that the assessee had provided GST registration and import-export code certificates showing proprietorship of "Blue Lion Entertainment Company". Relying on a coordinate bench's decision that late filing of Form 67 is not mandatory, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh consideration.

The CIT(A) deleted the addition, noting that the AO had not made any adverse findings regarding the original loan given by the assessee in FY 2011-12. The Tribunal upheld the CIT(A)'s decision, stating that the AO failed to conduct further inquiry into the documentary evidence provided by the assessee for the prior loan and its repayment, thereby failing to discharge the shifted onus.

The Tribunal allowed the appeal concerning ICDS adjustment for tangible fixed assets, finding a double disallowance. It also allowed the appeal regarding inadmissible interest under the MSMED Act, as the assessee had already made the disallowance. The TDS credit claim was allowed for statistical purposes.

The Tribunal noted that the AO had not thoroughly examined the nature of payments received by the assessee and had relied solely on responses from third parties. The CIT(A) also passed an ex-parte order. Therefore, the issue was remitted back to the AO for proper factual examination.

The Tribunal held that the notice issued under Section 148 for AY 2015-16 was barred by limitation as the period of six years from the end of the assessment year had expired before the notice was issued. Consequently, the assessment order was quashed.

The Tribunal held that the assessee's methodology for computing capital gains by setting off short-term capital losses incurred on shares subjected to STT against short-term capital gains on shares not subjected to STT was acceptable. The Tribunal directed the AO to accept this methodology, thereby allowing grounds related to the set-off of capital losses. Regarding arithmetical errors in the computation sheet and the grant of TDS credit, the Tribunal restored these issues to the AO for correct computation and verification, allowing these grounds for statistical purposes. The levy of interest under Sections 234B, 234C, and 234D was considered consequential and did not require separate adjudication. The ground pertaining to the initiation of penalty proceedings under Section 270A was dismissed as premature. Consequently, the appeal was partly allowed for statistical purposes.

The Tribunal held that if the disallowance under Section 14A is reduced below the suo-moto disallowance made by the assessee due to legal interpretations, the assessee should be allowed the benefit. The revenue's appeals were dismissed, and the assessee's cross objections were allowed for statistical purposes.