ITAT Mumbai Judgments — July 2025

The Tribunal held that the assessee is legally entitled to claim a deduction under section 80G of the Act out of CSR expenses, subject to factual verification. The Tribunal found that the AO's assessment order, which allowed the claim, was not erroneous. The PCIT's assumption of jurisdiction under section 263 was therefore found to be incorrect. The reasoning was that the issue of CSR expenses being eligible for deduction under section 80G was no longer res integra, having been settled by various Tribunal judgments, including the jurisdictional Tribunal. The AO had accepted the claim in consonance with these settled legal principles. The Tribunal noted that there is no restriction in the Act disallowing CSR expenses from being considered for section 80G deduction if they otherwise qualify as donations. The Tribunal relied on the decision in Goldman Sachs Services (P.) Ltd. and directed the AO to verify if the payments qualified as donations under section 80G and, if so, to allow the requisite amount. The Tribunal quashed the order of the PCIT, allowing the assessee's grounds of appeal.

The Tribunal held that the Focus Product Scheme (FPS) incentive received by the assessee is a capital receipt and not taxable under Section 2(24) of the Act. The reasoning was that the MEIS scheme was conceptualized as a policy instrument to reward exports, not as profit-linked assistance or cost-reimbursement. The tradable duty credit scrips were a fixed percentage of FOB value of eligible exports, akin to capital accretion rather than revenue inflow. The Tribunal emphasized strict construction of charging provisions and noted the absence of 'reward' in Section 2(24)(xviii), despite its use in the MEIS framework. For AY 2020-21, the addition was directed to be deleted, and any inadvertent duplication in the P&L account was to be rectified. For AY 2017-18 and 2018-19, similar claims regarding non-taxability of export incentives were allowed, treating them as capital receipts. For AY 2012-13 to 2016-17, where the claim was raised for the first time before the CIT(A), the matter was restored to the AO to examine the claim afresh on merits, as the CIT(A) had declined to entertain it due to the non-filing of a revised return. Other grounds not argued were dismissed as infructuous. The appeals for AY 2012-13 to 2018-19 were partly allowed for statistical purposes, and the appeal for 2020-21 was allowed.

The Tribunal held that the assessment order passed by the AO was invalid as it did not comply with the mandatory provisions of Section 144C. Consequently, the revisionary order passed by the PCIT under Section 263 was also considered bad in law and without jurisdiction.

The Tribunal held that the contribution to the SPV, being judicially mandated and compulsory for the continuation of business, is a legitimate business expenditure. It was compensatory in nature, aimed at mitigating environmental damage, and not a penal imposition.

The Tribunal held that interest income earned by a co-operative society from investments with other co-operative banks is eligible for deduction under Section 80P(2)(d). The reliance on Supreme Court and Karnataka High Court judgments by the CIT(A) was found to be misplaced or distinguishable.

The Tribunal held that the MEIS 'reward' received by the assessee is a capital receipt and not taxable as revenue income. For certain assessment years, the matter was restored to the AO to examine the claim on merits, while for others, the claims were allowed.

The Tribunal held that since additional evidence filed by the assessee before the CIT(A) was not considered, the appeal should be restored to the CIT(A) for a de-novo decision after considering the additional evidence.

The Tribunal held that the PCIT's revisionary order under Section 263 was invalid because the issue of capital gains on mutual fund redemption was not part of the original reopening notice under Section 147. The AO exceeded jurisdiction by considering an issue not subject to reopening.

The Tribunal observed that the assessee was given opportunities but failed to present its case effectively before the lower authorities. Considering the principles of natural justice, the Tribunal decided to remand the matter back to the CIT(A) for fresh adjudication.

The Tribunal held that the AO's failure to dispose of the assessee's objections before proceeding with the assessment and issuing notice u/s 142(1) constituted a breach of mandatory procedure, as laid down by the Supreme Court. Furthermore, the reasons for reopening were based on information pertaining to a different assessee (HUF), making the reopening invalid.

The Tribunal held that club membership and subscription fees are pure business expenses, drawing strength from a Supreme Court decision. However, restaurant charges incurred at the club were not discernible as business-related and were therefore disallowed.

The Tribunal held that the Assessee had furnished sufficient supporting documents like ledger accounts, purchase bills, bank statements, and sales bills. The Revenue failed to point out any infirmity in these documents or the CIT(A)'s order. Thus, the Tribunal found no reason to interfere with the CIT(A)'s order.

The Tribunal allowed the appeal for statistical purposes and remitted the matter back to the CIT(A) with a direction to decide the issues afresh after affording a reasonable opportunity of being heard to the assessee.

The Tribunal held that the MEIS (Merchandise Exports from India Scheme) reward received by the assessee during AY 2020-21 is a capital receipt and not taxable under Section 2(24) of the Act. The reasoning was that the MEIS scheme was a policy instrument to reward exports, not a profit-linked assistance or cost-reimbursement. The tradable duty credit scrips are calculated as a fixed percentage of FOB value and partake the nature of capital accretion. The Tribunal emphasized strict construction of charging provisions and noted the absence of "reward" in Section 2(24)(xviii), despite its use in the MEIS framework. The AO was directed to delete the addition and rectify any inadvertent duplication. For AY 2017-18 and 2018-19, similar claims regarding export incentives were allowed, treating them as capital receipts. For AY 2012-13 to 2016-17, where the claim was raised for the first time before the CIT(A), the matter was restored to the AO to examine the claim on merits, treating the receipts as capital in nature, following the Supreme Court's decision in NTPC Ltd. The Tribunal also noted that other grounds not argued were dismissed as infructuous. The appeals for AY 2012-13 to 2018-19 were partly allowed, and the appeal for AY 2020-21 was allowed.

The Tribunal found it appropriate, in the interest of justice, to remit the matter back to the CIT(A) for denovo adjudication. The assessee was directed to be diligent in attending hearings and making necessary compliance.

The Tribunal noted that the appellant did not get an opportunity to explain the sources of cash deposits and gold acquisition. Therefore, the matter was remitted back to the CIT(A) for fresh adjudication after admitting the evidence.

The Tribunal, relying on a precedent from a coordinate bench, held that while CSR expenditure is not allowable under Section 37(1) as business expenditure, it can still be eligible for deduction under Section 80G if the conditions for Section 80G are met and the donation is not specifically excluded. Since the donation was not to a fund explicitly disallowed under Section 80G, the Assessing Officer's action of allowing the deduction was not erroneous or prejudicial to revenue. Thus, the PCIT's revisionary order was quashed.

The Tribunal noted that the Assessee had now obtained further interest certificates and granted the Assessee another opportunity. The issue was restored to the Assessing Officer to decide the claim of deduction under Section 80P based on the relevant provisions.

The Tribunal found merit in the Revenue's submissions, stating the CIT(A) misdirected himself by treating the assessee as a controlled concern rather than a beneficiary of accommodation entries. The matter was restored to the Assessing Officer for fresh consideration.

The Tribunal held that the Assessing Officer had made due inquiries and considered the submissions and documents provided by the assessee. A mere difference of opinion by the PCIT does not make the assessment order erroneous or prejudicial to revenue.

The Tribunal condoned the delay of 162 days, finding sufficient and bona fide cause due to the Director's health condition. It also ruled that the CIT(A)'s ex parte dismissal of the appeal was erroneous because the assessee was denied an effective opportunity to present its case due to lack of awareness about the procedural changes. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication after allowing the assessee an adequate opportunity of hearing.

The Tribunal held that the Commissioner ought to have considered the application on merits after giving the assessee an opportunity to furnish requisite details.

The Tribunal held that the assessee failed to substantiate the source and nature of the cash deposits, and the explanation of withdrawing from the bank and re-depositing appeared to be an afterthought. The Tribunal found no justifiable reason to interfere with the findings of the Assessing Officer and CIT(A) who upheld the addition.

The Tribunal held that the surcharge applicable to the assessee should be at 15% and not 37%, as its total income did not exceed Rs. 2 crores. This decision was based on a Special Bench ruling that for private discretionary trusts taxed at the maximum marginal rate, surcharge should be computed based on slab rates.

The Tribunal held that the CIT(E) erred in invoking Section 263 as the assessee never claimed depreciation, and Section 50 was not applicable. The assessment order passed by the Assessing Officer was restored.

The Tribunal held that there was a 'sufficient cause' for the delay in filing the appeal before the first appellate authority, considering a liberal approach towards procedural defects. The case was remanded to the CIT(A) for de novo adjudication on merits after condoning the delay.

The Tribunal noted that the assessee had opted for the Direct Tax Vivad Se Vishwas Scheme and consequently sought to withdraw the appeal. Therefore, the appeal was dismissed as withdrawn.

The Tribunal noted that the assessment order u/s 143(1)(a) did not clearly specify under which sub-section the adjustment for delayed PF and ESIC payments was made. Finding a lack of clear reasoning, the Tribunal set aside the order.

The Tribunal held that the assessee failed to substantiate the source and nature of the cash deposits, and the explanation of withdrawing from the bank and re-depositing appeared to be an afterthought. The Tribunal found no justifiable reason to interfere with the findings of the Assessing Officer and CIT(A) who upheld the addition.

The Tribunal found that the lower authorities did not decide the issue on merits and that the assessee was not given a sufficient opportunity to present its case. The case was remanded to the CIT(A) for de novo adjudication.

The Tribunal held that the use of 'and' in the penalty notice and order, instead of 'or', vitiated the penalty proceedings. Following the jurisdictional High Court's decision, the Tribunal deleted the penalty.

The Tribunal found that the CIT(A) had not elaborately discussed the amended definition of income under Section 2(24)(viii) and had made observations regarding missing documents. The Tribunal accepted the assessee's prayer to remit the matter back to the CIT(A) for de novo adjudication.

The Tribunal held that the reassessment proceedings were bad in law and quashed them. The AO erroneously mentioned two properties and failed to consider that the transaction amount was below Rs. 50 lacs, making the notice u/s 148 of the Act invalid as more than 3 years had elapsed.

The Tribunal noted that the copy of the will was additional evidence and the applicability of Section 168(1)(a) was not conclusively verified by the CIT(A). Therefore, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal, in the interest of justice, restored the matter to the Assessing Officer for a fresh decision on merits. The assessee will be given due opportunity to explain the sources of its deposits and is directed to make all necessary compliances. The appeal was allowed for statistical purposes.

The Tribunal upheld the CIT(A)'s decision to restrict the Section 14A disallowance to the amount of exempt income, relying on the precedent set by PCIT v. Caraf Builders. It also confirmed the deletion of the notional rent addition under Section 23, affirming that the bungalow was self-occupied and the shop was used for business. Furthermore, the Tribunal dismissed the revenue's ground regarding Section 41(1), concluding that the liability was towards loans/advances and had not ceased.

The ITAT condoned the delay in filing the appeal and accepted the assessee's explanation for non-compliance. The tribunal found that the CIT(A) had not adjudicated the matter on merits and restored the case for fresh adjudication.

The Tribunal found that the CIT(A) did not adjudicate the matter on merits and the order suffered from procedural infirmity. Therefore, the matter was remitted back to the CIT(A) for fresh adjudication.

The Tribunal held that there was a 'sufficient cause' for the delay in filing the appeal before the first appellate authority, considering a liberal approach towards procedural defects. The case was remanded to the CIT(A) for de novo adjudication on merits after condoning the delay.

The assessee requested to withdraw the appeal, and the Departmental Representative raised no objection. The Tribunal allowed the assessee's application and dismissed the appeal as withdrawn.

The Tribunal noted that the DVO's report was neither before the Assessing Officer nor the DRP when the addition of INR 19,21,291/- was made. The Tribunal observed that the DVO's report itself contained contradictions regarding the valuation date. Specifically, Annexure II, which listed sale instances, was titled 'Sale Instances (For FMV as on 01/02/2018)', while the DVO's concluding remarks mentioned adopting a derived rate of INR 92,136/- per Sqm. as on 13/12/2017. Furthermore, Annexure I used a BUA rate as on 09/05/2017 to determine the Fair Market Value as on 13/12/2017, but no sale instance of 09/05/2017 was found. The Tribunal also noted that the DVO had accepted several contentions of the assessee regarding the property's condition and location. Considering the overall facts and the objective of putting the issue to rest, the Tribunal directed the Assessing Officer to adopt the sale rate of INR 62,227/- per Sq. Meter (from the sale instance dated 02/09/2017) for determining the Fair Market Value as on 13/12/2017 and to pass a Rectification Order under Section 155(15). Accordingly, Grounds 1 to 5 raised by the assessee were allowed for statistical purposes. Ground No. 6 concerning penalty proceedings under Section 270A was dismissed as premature.

The Tribunal held that the penalty imposed under Section 271(1)(c) was based on the addition made by the AO. Since a co-ordinate bench of the Tribunal had already deleted this addition by allowing the assessee's appeal, the foundation for the penalty no longer existed.

The Tribunal found it appropriate to remit the matter back to the CIT(A) for joint adjudication of both the present appeal and a related pending appeal concerning a reassessment. The assessee is to be given a reasonable opportunity to be heard.

The Tribunal held that Section 70(2) of the Income Tax Act does not provide any restriction on setting off short-term capital losses against any other short-term capital gains, irrespective of the tax rate. The assessee is free to choose how to claim the set-off to minimize tax liability.

The Tribunal upheld the deletion of additions made by the AO. It found that the assessee had discharged the onus under Section 68 by providing confirmations, bank statements, and other documents. The Tribunal also noted that similar loans were allowed in previous years by the ITAT and CIT(A).

The Tribunal held that penalty cannot be levied on additions made on an estimated basis, especially when the grounds for concealment or inaccurate particulars are not proven. The issue of penalty on estimated additions is no longer debatable.

The Tribunal held that the disallowance of capitalized interest was made without proper verification and directed the AO to verify the interest paid based on bank certificates. The addition for unexplained cash deposits was also directed to be verified de-novo.

The Tribunal held that the CIT(E) erred by issuing the show-cause notice on 22.12.2024 and passing the rejection order on 28.12.2024, which did not provide sufficient time for the appellant to respond. The Tribunal directed the CIT(E) to grant one more opportunity.

The Tribunal held that the delay in filing the appeal before the CIT(A) should have been condoned, considering the COVID-19 pandemic period as per the Supreme Court's directions. The matter was remitted back to the CIT(A) for adjudication on merits.

The Tribunal held that the MEIS 'reward' received by the assessee is a capital receipt and not taxable as revenue income. For certain assessment years, the matter was restored to the AO to examine the claim on merits, while for others, the claims were allowed.