ITAT Mumbai Judgments — August 2025

The Tribunal held that the assessee had discharged the burden cast upon him under Section 68 of the Act. The Tribunal found that the Ld. CIT(A) had correctly appreciated the facts and law in deleting the addition after a detailed donor-wise analysis. The Tribunal's reasoning was that creditworthiness cannot be judged solely on the current year's returned income but must be considered in the wider context of the donor's overall financial position, capital base, and legitimate receipts, such as loan repayments. The Tribunal noted that the banking trail established sufficient funds in the donors' possession, and the Revenue could not dismiss the explanation based on presumptions or suspicion. The Tribunal also highlighted that the donors had responded directly to notices issued under Section 133(6) of the Act, confirming the gifts and providing supporting evidence, which completed the chain of evidence. The Tribunal agreed with the Ld. CIT(A)'s conclusion and directed the deletion of the addition of Rs. 89,00,000. No issue was expressly left undecided.

The Tribunal held that the additions made under Section 68 on account of unsecured loans and under Section 69C on account of interest on unsecured loans were unsustainable. The Tribunal noted that the Assessing Officer placed reliance on statements and investigation reports, but the assessee contended that no incriminating material was found during the search pertaining to these loans. While the Tribunal found merit in the assessee's legal grounds challenging the jurisdiction under Section 153A, it chose not to adjudicate these on merits as the additions were deleted on substantive grounds. Regarding the addition under Section 69D for Hundi loan, the Tribunal, respectfully following the ratio laid down by the Hon'ble Andhra Pradesh High Court, Hon'ble Delhi High Court, and coordinate benches, held that the transaction did not possess the essential characteristics of a Hundi. The document was in English, recorded a bilateral arrangement, and lacked customary features of a Hundi, resembling a promissory note instead. Therefore, Section 69D was not attracted. The Tribunal directed the Assessing Officer to verify and allow the carry-forward of eligible business losses for AYs 2017-18 and 2018-19. Consequently, all additions under Section 68, Section 69C, and Section 69D were deleted.

The Tribunal held that the additions made under Section 68 on account of unsecured loans and under Section 69C on account of interest on unsecured loans were unsustainable. The Tribunal noted that the Assessing Officer placed reliance on statements and investigation reports, but the assessee contended that no incriminating material was found during the search pertaining to these loans. While the Tribunal found merit in the assessee's legal grounds challenging the jurisdiction under Section 153A, it chose not to adjudicate these on merits as the additions were deleted on substantive grounds. Regarding the addition under Section 69D for Hundi loan, the Tribunal, respectfully following the ratio laid down by the Hon'ble Andhra Pradesh High Court, Hon'ble Delhi High Court, and coordinate benches, held that the transaction did not possess the essential characteristics of a Hundi. The document was in English, recorded a bilateral arrangement, and lacked customary features of a Hundi, resembling a promissory note instead. Therefore, Section 69D was not attracted. The Tribunal directed the Assessing Officer to verify and allow the carry-forward of eligible business losses for AYs 2017-18 and 2018-19. Consequently, all additions under Section 68, Section 69C, and Section 69D were deleted.

The Tribunal held that the reopening of assessment was not permissible as it was based on a change of opinion and not on any new tangible material. The Tribunal found that the AO had considered the dividend income and accumulation in the original assessment. Therefore, the reassessment order was quashed.

The Tribunal held that the reopening of assessment was not permissible as it was based on a change of opinion and not on any new tangible material. The Tribunal found that the AO had considered the dividend income and accumulation in the original assessment. Therefore, the reassessment order was quashed.

The Tribunal held that the source of investment in the MHADA property was explained by the assessee's US salary income remitted to India. Regarding the Neptune Developers property, the Tribunal found that the declared sale consideration was higher than the stamp duty value on the date of the agreement, thus the addition under Section 56(2)(vii)(b) was not sustainable.

The Tribunal held that the receipts from the supply of software licenses and related services are not taxable as 'royalty' under Article 12(3) of the India-USA DTAA. The Tribunal agreed with the CIT(A)'s finding that the End-User License Agreements (EULAs) indicated a sale of computer software simpliciter, without the transfer of copyright. The reasoning was that the licensee did not acquire any right, title, interest, copyright, trade secret, patent, or other proprietary rights through these licenses. The terms of the agreements restricted the licensee from copying, distributing, sublicensing, reverse-engineering, or decompiling the software without prior written consent, and no source code access was granted. The Tribunal found that the AO failed to demonstrate that copyright was transferred. Therefore, the ratio laid down by the Supreme Court in Engineering Analysis Centre of Excellence Private Limited squarely applied to the facts of the assessee's case. The Tribunal found no reason to interfere with the CIT(A)'s well-reasoned order and dismissed the Revenue's appeals.

The Tribunal noted that the present appeal (ITA No. 3295/Mum/2025) was a duplicate filing of an appeal already heard. The Tribunal allowed the assessee's request to withdraw the present appeal.

The Tribunal condoned the delay, acknowledging the assessee's explanation of sufficient cause arising from uncontrollable circumstances. The impugned order was set aside and restored to the CIT(A) for fresh adjudication.

The Tribunal held that the expenditure incurred for earning interest income is allowable as a deduction under Section 57. Despite the complex rotation of funds, the nexus between the borrowed loan and the interest income earned was established.

The Tribunal held that the receipts from software licenses were not taxable as royalty under the India-USA DTAA. The Tribunal agreed with the CIT(A) that the transactions were akin to the sale of software simpliciter, squarely covered by the Supreme Court's decision in Engineering Analysis Centre of Excellence Private Limited.

The Tribunal held that the additions made under Section 68 on account of unsecured loans and under Section 69C on account of interest on unsecured loans were unsustainable. The Tribunal noted that the Assessing Officer placed reliance on statements and investigation reports, but the assessee contended that no incriminating material was found during the search pertaining to these loans. While the Tribunal found merit in the assessee's legal grounds challenging the jurisdiction under Section 153A, it chose not to adjudicate these on merits as the additions were deleted on substantive grounds. Regarding the addition under Section 69D for Hundi loan, the Tribunal, respectfully following the ratio laid down by the Hon'ble Andhra Pradesh High Court, Hon'ble Delhi High Court, and coordinate benches, held that the transaction did not possess the essential characteristics of a Hundi. The document was in English, recorded a bilateral arrangement, and lacked customary features of a Hundi, resembling a promissory note instead. Therefore, Section 69D was not attracted. The Tribunal directed the Assessing Officer to verify and allow the carry-forward of eligible business losses for AYs 2017-18 and 2018-19. Consequently, all additions under Section 68, Section 69C, and Section 69D were deleted.

The Tribunal held that the reasons recorded for reopening the assessment were based on an incorrect appreciation of facts and applicable law. The Tribunal found that the AO's reasons did not demonstrate an application of mind or a nexus between the tangible material and the belief that income had escaped assessment.

The Tribunal held that the receipts from software licenses were not taxable as royalty under the India-USA DTAA, as the assessee had merely granted a license to use the software without transferring copyright. The decision of the Supreme Court in Engineering Analysis Centre of Excellence Private Limited was found to be squarely applicable.

The Tribunal held that as per Rule 37BA(2) of the Act, credit for TDS should be granted to the person in whose hands the income is assessable, even if the TDS is reflected in the PAN of another person. The Tribunal also noted a similar issue was allowed for the assessee's sister.

The Tribunal held that the reopening of assessment was invalid because the basis for reopening (management charges treated as FTS) was subsequently deleted by the CIT(A) and the Revenue did not appeal this decision. Therefore, the foundation for reopening no longer existed.

The Tribunal held that an assessment order passed in the name of a non-existent entity is invalid. Citing the Supreme Court decision in PCIT vs. Maruti Suzuki India Ltd., the Tribunal found that a jurisdictional error of this nature cannot be cured by Section 292B of the Act. The assessee had duly informed the AO about the merger on multiple occasions.

The Tribunal held that the assessee did not raise any objection under Section 124 of the Act regarding jurisdiction. Therefore, the legal ground decided by the CIT(A) in favour of the assessee was set aside. The CIT(A) was directed to adjudicate the appeal on merits.

The Tribunal condoned the delay, acknowledging the assessee's explanation of sufficient cause arising from uncontrollable circumstances. The impugned order was set aside and restored to the CIT(A) for fresh adjudication.

The Tribunal held that the addition made by the Assessing Officer was not justified and agreed with the Ld. CIT(A)'s deletion of the addition. The Tribunal found that the assessee had provided unimpeachable evidence of purchase and sale of shares through recognized channels, with payments and receipts routed through normal banking channels. The shares were duly dematerialized and recorded in the assessee's demat account. The Tribunal noted that the Revenue had not brought any specific material on record to establish the assessee's participation in or benefit from price manipulation. Reliance on generic investigation reports or third-party statements without affording cross-examination was deemed insufficient. The Tribunal also observed that the SEBI order was for a different period and did not name the assessee. Therefore, the transactions could not be brushed aside as sham. The addition of ₹4,00,69,645/- was deleted.

The Tribunal upheld the order of the CIT(A) and dismissed the appeal of the Revenue. The Tribunal noted that the AO had nowhere discussed any dissatisfaction with the assessee's computation of suo motu disallowance. The Tribunal relied on the binding decision of the Hon'ble Jurisdictional High Court of Bombay in PCIT vs. M/s. Bombay Stock Exchange Ltd. This decision held that non-satisfaction with the disallowance offered by the assessee must be arrived at on the basis of the accounts submitted by the assessee. The AO must carry out this exercise before rejecting the disallowance claimed by the assessee and applying Rule 8D. The Tribunal found that the CIT(A) had correctly concluded that the AO had not recorded non-satisfaction as required under Section 14A(2) of the Act. Therefore, the Tribunal declined to interfere with the findings of the CIT(A) and dismissed the grounds raised by the Revenue.

The Tribunal held that the addition on account of alleged Hundi loan under Section 69D was unsustainable as the transaction lacked the essential characteristics of a Hundi. The Tribunal also directed verification and allowance of carry-forward of eligible business losses.

The Tribunal held that the Assessing Officer (AO) had conducted sufficient enquiry and adopted a plausible view regarding the allowability of CSR expenditure under Section 80G, especially given divergent judicial opinions. Therefore, the PCIT's revisionary order under Section 263 was not justified.

The Tribunal held that the addition on account of alleged Hundi loan under Section 69D was unsustainable as the transaction lacked the essential characteristics of a Hundi. The Tribunal also directed verification and allowance of carry-forward of eligible business losses.

The Tribunal held that depreciation on goodwill acquired through a slump sale is allowable. It also found that the TPO's use of two different methods for benchmarking export transactions was not justifiable and directed the use of the Transactional Net Margin Method (TNMM).

The Tribunal condoned the delay, acknowledging the assessee's explanation of sufficient cause arising from uncontrollable circumstances. The impugned order was set aside and restored to the CIT(A) for fresh adjudication.

The Tribunal condoned the delay, acknowledging the assessee's explanation of sufficient cause arising from uncontrollable circumstances. The impugned order was set aside and restored to the CIT(A) for fresh adjudication.

The Tribunal condoned the delay, acknowledging the assessee's explanation of sufficient cause arising from uncontrollable circumstances. The impugned order was set aside and restored to the CIT(A) for fresh adjudication.

The Tribunal condoned the delay, acknowledging the assessee's explanation of sufficient cause arising from uncontrollable circumstances. The impugned order was set aside and restored to the CIT(A) for fresh adjudication.

The Tribunal held that the Assessee's investments were sourced from its own funds and internal accruals, and the interest cost was a normal business expenditure. Consequently, no disallowance under Section 14A was warranted.

The Tribunal held that the AO had not disputed the identity or capacity of the subscribers and that the share premium was supported by a valuation report using the DCF method. The Tribunal further relied on High Court decisions stating that share premium is a capital receipt not chargeable to tax for the assessment years in question.

The Tribunal partly allowed the appeal regarding interest on outstanding receivables, holding that the TPO's recommended rate was reasonable. The disallowance of R&D expenses was restored to the AO for fresh adjudication upon production of Form 3CL. The disallowance of Section 80G deduction was also allowed for statistical purposes, subject to verification by the AO.

The Tribunal held that the addition made by the Assessing Officer was not justified and agreed with the Ld. CIT(A)'s deletion of the addition. The Tribunal found that the assessee had provided unimpeachable evidence of purchase and sale of shares through recognized channels, with payments and receipts routed through normal banking channels. The shares were duly dematerialized and recorded in the assessee's demat account. The Tribunal noted that the Revenue had not brought any specific material on record to establish the assessee's participation in or benefit from price manipulation. Reliance on generic investigation reports or third-party statements without affording cross-examination was deemed insufficient. The Tribunal also observed that the SEBI order was for a different period and did not name the assessee. Therefore, the transactions could not be brushed aside as sham. The addition of ₹4,00,69,645/- was deleted.

The Tribunal held that as per Rule 37BA(2) of the Act, credit for TDS should be granted to the person in whose hands the income is assessable, even if the TDS is reflected in the PAN of another person. The Tribunal also noted a similar issue was allowed for the assessee's sister.

The Tribunal held that the AO could not make an addition on an issue (notional interest income) that was not the basis for initiating reassessment proceedings (sale of immovable properties). The addition was deleted as it was beyond the scope of the original reasons for reopening.

The Tribunal held that there was no live link between the statements recorded and the assessee. The Revenue failed to provide evidence of any SEBI order restricting JM Financial. The Tribunal upheld the CIT(A)'s view, stating that losses on account of exempted income cannot be disallowed if Section 94(7) is not applicable.

The Tribunal held that there was no live link between the statements recorded and the assessee. The Revenue failed to provide evidence of any SEBI order restricting JM Financial. The Tribunal upheld the CIT(A)'s view, stating that losses on account of exempted income cannot be disallowed if Section 94(7) is not applicable.

The Tribunal held that while the department had no evidence of undisclosed cash introduction, the assessee's explanation for cash withdrawals during the demonetization period was not satisfactory. The disallowance was restricted to the difference between cash deposited and the reduction in cash expenses.

The Tribunal held that the addition made by the AO on account of dividend income and the disallowance of short-term capital loss were not sustainable. Regarding the dividend income, the Tribunal noted that the AO's reasoning had no nexus with the statements recorded from key personnel of JM Financial and the assessee. The Revenue failed to provide any SEBI order holding that investors should be denied benefits, and the SEBI order produced did not restrict JM Financial in respect of the specific fund. The Tribunal found that the transaction undertaken by the assessee could not be faulted, as the provisions of Section 94(7) were not flouted. The assessee was an investor who invested based on a public notice. The Tribunal relied on the Supreme Court's decision in Walfort Share & Stock Brokers (P) Ltd. and the principles of tax planning within the four corners of the law. The Tribunal held that the loss incurred could not be considered non-genuine merely because the dividend was issued by JM Financial funds, especially since the purchase and sale were recorded and reflected in bank statements. In the absence of the applicability of Section 94(7), the short-term capital loss was allowable under the Act. The Tribunal found no infirmity in the CIT(A)'s view and upheld it. Consequently, the grounds raised by the Revenue were dismissed.

The Tribunal held that there was no live link between the statements recorded and the assessee. The Revenue failed to provide evidence of any SEBI order restricting JM Financial. The Tribunal upheld the CIT(A)'s view, stating that losses on account of exempted income cannot be disallowed if Section 94(7) is not applicable.

The Tribunal held that there was no live link between the statements recorded and the assessee. The Revenue failed to provide evidence of any SEBI order restricting JM Financial. The Tribunal upheld the CIT(A)'s view, stating that losses on account of exempted income cannot be disallowed if Section 94(7) is not applicable.

The Tribunal held that there was no live link between the statements recorded and the assessee. The Revenue failed to provide evidence of any SEBI order restricting JM Financial. The Tribunal upheld the CIT(A)'s view, stating that losses on account of exempted income cannot be disallowed if Section 94(7) is not applicable.

The Tribunal held that there was no live link between the statements recorded and the assessee. The Revenue failed to provide evidence of any SEBI order restricting JM Financial. The Tribunal upheld the CIT(A)'s view, stating that losses on account of exempted income cannot be disallowed if Section 94(7) is not applicable.

The Tribunal held that there was no live link between the statements recorded and the assessee. The Revenue failed to provide evidence of any SEBI order restricting JM Financial. The Tribunal upheld the CIT(A)'s view, stating that losses on account of exempted income cannot be disallowed if Section 94(7) is not applicable.

The tribunal noted the submission of the assessee's counsel to withdraw the appeal. Considering the circumstances, the tribunal allowed the withdrawal.

The Tribunal held that the addition was based on conjecture and lacked concrete evidence of cash transactions or cash trails. It also noted that the payer of the alleged excess consideration was not identified by the revenue.

The Tribunal held that the notice issued under section 274 of the Income-tax Act, 1961, was defective. Citing the Bombay High Court's decision in Mohd. Farhan A. Shaikh vs. Deputy Commissioner of Income Tax, the Tribunal found that the Assessing Officer (AO) had not specified the limb under which the penalty was proposed to be levied, and the notice did not clearly state the charge of concealing or furnishing inaccurate particulars of income. The Tribunal emphasized that penalty proceedings are distinct from assessment proceedings and must stand on their own, with the assessee being informed of the grounds through a statutory notice. An omnibus notice suffers from vagueness, and penal provisions must be construed strictly. Consequently, the Tribunal set aside the notice under section 274 and quashed the resultant penalty order. Furthermore, even on merits, the Tribunal noted that the penalty was levied on the assessee's claim of bad debts amounting to Rs. 7,19,96,655/-. The Tribunal referred to its own co-ordinate bench's decision in ITA No. 5552/Mum/2017 for AY 2010-11, which had upheld the CIT(A)'s order allowing the carry forward of the said loss. Since the foundation of the penalty proceedings (the defective notice) was removed, and the merits also favored the assessee, the AO was directed to delete the impugned penalty. The appeal of the assessee was allowed.

The Tribunal held that even if the assessee did not respond, the CIT(A) should have decided the appeal on merits. Therefore, the case was restored to the CIT(A) for fresh adjudication after providing a reasonable opportunity of hearing.

The Tribunal held that the enhanced tolerance limit of 10% under Section 50C(1) is retrospective, thus the addition made by the AO is unsustainable. It also held that stamp duty and registration charges borne by the assessee as per the sale agreement are allowable expenses for computing capital gains.

The Tribunal held that the addition was based on conjecture and lacked concrete evidence of cash transactions or cash trails. It also noted that the payer of the alleged excess consideration was not identified by the revenue.