ITAT Mumbai Judgments — December 2025

The Tribunal found that the assessee did not adhere to the procedure for filing the return of income in time nor raised objections against the reopening. The assessee's ground regarding the non-issuance of a notice under Section 143(2) was dismissed as the return was filed on the same day as the assessment order. The assessee's contention that the reassessment order was passed without jurisdiction and proper opportunity was also not found to have merit.

The Tribunal held that the assessee is eligible for carry forward of business loss pertaining to assessment years 2016-17, 2017-18 and 2018-19. The issue was remitted to the Jurisdictional Assessing Officer (JAO) to consider the claim and pass necessary orders in accordance with law. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the addition for unsecured loan was not sustainable as the assessee had discharged its primary onus by providing loan details and demonstrating repayment, and the revenue had not disputed the repayment. The Tribunal also noted that the CIT(A) had correctly deleted the addition for cash deposit and Section 40A(3) disallowance, finding that the AO's additions were based on assumptions rather than documentary evidence. Therefore, the assessee's appeal was allowed and the revenue's appeal was dismissed.

The Tribunal upheld the exclusion of Excel Infoways Ltd. as a comparable, citing its different business model and low employee cost ratio. It also directed the inclusion of Jindal Intellicom Ltd. as a comparable, noting its prior acceptance in the Assessee's own case for a previous assessment year. Working capital adjustment was allowed.

The Tribunal held that the AO's addition was based on suspicion and a general investigation report, not specific evidence. The assessee provided documentary evidence showing the share transactions were genuine and conducted through a registered broker on the stock exchange, with SEBI also clearing the scrips. Therefore, the addition made by the AO was deleted.

The CIT(A) deleted the addition for cash deposit and Section 40A(3) disallowance but upheld the addition for unsecured loan. The Tribunal, while hearing appeals from both the assessee and revenue, found that the cash deposit and Section 40A(3) disallowance were correctly deleted by the CIT(A). However, they directed deletion of the unsecured loan addition, holding that the assessee had discharged its primary onus and the loan was repaid.

The Tribunal held that the Advanced Pricing Agreement (APA) entered into between the assessee and CBDT is binding and nullifies any disallowance under Section 37(1) for the impugned transactions. The claim for deduction under Section 80JJAA was allowed as the assessee furnished the required report and documents. The credit for DDT was also directed to be granted.

The Tribunal held that the PCIT validly exercised his revisionary jurisdiction. The retrospective amendment of Section 40(a)(ii) disallows the claim for Higher Education Cess as a business expense. The assessee's arguments regarding the Assessment Unit not being an Assessing Officer and the pending appeal before CIT(A) were rejected.

The Tribunal held that the assessee was a regular investor and provided sufficient documentary evidence to prove the genuineness of the share transactions. The AO's additions were based on suspicion and a general investigation report, not specific evidence against the assessee.

The Tribunal held that the assessee, being an instrumentality or agent of the State, is not taxable on interest income earned on fixed deposits as per Article 289(1) of the Constitution of India. Similarly, the grant-in-aid received from the State Government for its statutory functions is also not taxable.

The Tribunal held that the purchases alleged to be bogus were not substantiated by cogent evidence and the assessee had provided documentary evidence to support the transactions. The ad-hoc disallowance of expenses was also deleted due to lack of proper justification.

The Tribunal held that dividend income earned from mutual funds falls within the provisions of Section 10(35) and is therefore exempt in its entirety, not restricted to Rs. 10 lacs as per Section 115BBDA. The addition made by the AO was deleted. The second ground regarding disallowance of capital loss was allowed for statistical purposes as per the CIT(A)'s direction.

The Tribunal held that the exclusion of Eclerx Services Ltd. and Infosys BPO Ltd. as comparables was justified due to functional dissimilarity and high brand value, respectively. The Tribunal also allowed deductions under Section 10A for units acquired through slump sale, following earlier precedents and CBDT circulars, and remitted the issue of Titanium STPI Unit's deduction to the AO for fresh examination.

The Tribunal allowed several grounds for the assessee, including issues related to depreciation on let-out property, set-off of interest paid and received, and ESOP expenditure. Some grounds for the revenue were dismissed, such as the taxability of foreign dividends. Certain issues were remitted back to the AO for fresh examination.

The Tribunal noted that the assessee is a regular income tax filer with sufficient declared income. Considering the deposited amount was not abnormal and a lenient view was taken, the addition made by the Assessing Officer was deleted.

The Tribunal noted that the CIT(A) had deleted the addition on a protective basis because the substantive addition in the hands of the alleged beneficiary, M/s First Winner Industries Ltd., had already been confirmed by the CIT(A). The Tribunal found discrepancies in the companies and amounts considered by the AO and the CIT(A).

The Tribunal condoned the 656-day delay in filing the appeal, applying a lenient view for substantial justice. It remitted the matter back to the CIT (Exemption) for fresh consideration, directing the CIT (Exemption) to provide a reasonable opportunity of hearing to the Assessee, and the Assessee to ensure timely compliance.

The Tribunal concurred with the Ld. CIT(A)'s view that the reassessment notice dated July 31, 2022, was barred by limitation. Since the root cause of the assessment (the notice) was held to be beyond the period of limitation, the entire assessment proceedings were quashed as bad in law.

The Tribunal held that the reassessment proceedings were initiated without valid approval as mandated by Section 151 of the Income Tax Act, as the approval was granted by an authority not competent for notices issued beyond three years. This jurisdictional defect is incurable.

The Tribunal noted that the AO relied on third-party statements without cross-examination, violating natural justice. The Tribunal found that the SEBI report did not establish wrongdoing and AO's findings were based on conjecture. The assessment order under Section 143(3) was held invalid due to denial of cross-examination and reliance on unsubstantiated statements.

The CIT(A) deleted the addition, finding no evidence that the assessee incurred the alleged cash expenditure. The ITAT upheld the CIT(A)'s decision, confirming that no corroborative evidence was brought on record to link the assessee to the seized documents or prove the actual incurrence of cash expenditure. The Tribunal emphasized that the incurring of expenditure must be established before invoking Section 69C.

The tribunal condoned the delay in filing appeals for AYs 2013-14 and 2014-15. For AYs 2013-14 and 2014-15, the assessments were quashed as being time-barred and without jurisdiction, as they fell outside the statutory six-year block under Section 153C, and the escaped income was below the threshold for the extended 10-year period. For AY 2019-20, the assessment made under Section 143(3) was quashed as being without jurisdiction, as it should have been under Section 153C/153A. For AYs 2015-16 to 2018-19, the tribunal directed the Assessing Officer to adopt a net profit rate of 0.18% or the declared GP, whichever is higher, for statistical purposes, after factual verification.

The Tribunal held that the assessment order was passed beyond the period of limitation prescribed by the Income Tax Act, 1961, primarily due to the invalid extension of time for the special audit. Consequently, the assessment order was quashed.

The Tribunal held that the CIT(A) had erred in restricting the addition to 3% as against 100%. Citing various High Court and Supreme Court decisions, the Tribunal stated that where sales are accepted, and there's no discrepancy between purchases and sales, the addition should be limited to bringing the Gross Profit (GP) rate on alleged bogus purchases to the same rate as other genuine purchases. Since the assessee's GP rate on alleged bogus purchases was higher than the overall GP rate, no addition was warranted.

The Tribunal held that disallowances of professional fees were not warranted as the services were rendered outside India and not taxable in India, and in some cases, the payments were diverted by overriding title. Payments to retired partners were also allowed as a deduction, following established judicial precedents. Additions based solely on AIR information without evidence were deleted.

The Tribunal condoned the delay in filing the appeal, noting the assessee's medical condition and bonafide reasons for the delay. The Tribunal held that the date of the allotment letter should be considered the date of acquisition for determining long-term capital gain/loss, not the date of sale agreement.

The Tribunal condoned the delay in filing the appeals, finding substance in the assessee's explanation. The Tribunal then proceeded to adjudicate the appeals, holding that the assessment orders for AY 2013-14 and 2014-15 were bad in law due to lack of valid assumption of jurisdiction as they fell outside the six-year block period. For AY 2019-20, the assessment under section 143(3) was also held to be invalid, as it should have been framed under section 153C. For AYs 2015-16 to 2018-19, the appeals were partly allowed.

The Tribunal condoned the delay in filing the appeal. However, upon hearing the appeal ex-parte due to the assessee's non-appearance, the Tribunal found that the assessee failed to establish the prima facie case under Section 10(38) and discharge the onus under Section 68.

The Tribunal held that the date of allotment, supported by substantial part payment, should be considered for stamp duty valuation, not the later registration date. The addition made by the AO and confirmed by the CIT(A) was therefore deleted.

The Tribunal observed that identical additions in similar cases had been deleted by Coordinate Benches. It found no concrete evidence, specific mention of the assessee's name in seized documents, or proof of cash payment by the assessee. Relying on previous judgments, including a Gujarat High Court ruling, the Tribunal concluded that the addition made by the AO and sustained by the CIT(A) lacked corroborative evidence and was thus deleted.

The Tribunal condoned the delay, acknowledging the assessee's bona fide reasons. For AYs 2013-14 and 2014-15, the assessments under Section 153C were quashed as being time-barred and without jurisdiction, as the escaped income did not meet the threshold for the extended limitation period. For AY 2019-20, the assessment made under Section 143(3) was quashed because it fell within the block period for search assessments and should have been framed under Section 153C. For AYs 2015-16 to 2018-19, the Ld. AO was directed to re-estimate the profit based on an average Gross Profit rate of 0.18% or the declared GP, whichever is higher, after factual verifications.

The Tribunal noted that the assessee had filed a rectification application under Section 154 of the Act. The CPC, vide its order dated 23.06.2025, had rectified the mistake and determined the income from property at Rs. 6,44,299, effectively accepting the assessee's contention.

The Tribunal allowed the grounds related to disallowance of professional fees, stating that the payments were not taxable in India and thus Section 40(a)(i) was not applicable. The additions for payments to retired partners were deleted based on the partnership deed and judicial precedents, holding it as a diversion of income by overriding title. Additions based on unreconciled transactions in AIR and Form 26AS were deleted due to lack of evidence beyond mismatch. Claims for TDS credit, foreign tax credit, and interest were directed for verification and grant as per applicable rules and precedents.

The Tribunal primarily upheld the Ld. CIT(A)'s decisions by relying on its own previous orders and judicial precedents for most recurring issues. It confirmed that Tata Sons Ltd. is the legal owner of the 'TATA' brand, not TCS, and dismissed Revenue's grounds on brand royalty adjustments. It also allowed foreign tax credit for income not taxable in India under Section 10AA, deductions for overseas state taxes, and year-end provisions, as well as gratuity expenses debited to OCI. Transfer pricing adjustments for services and guarantees were also largely decided in line with prior years' rulings, dismissing Revenue's grounds.