ITAT Mumbai Judgments — January 2026

The Tribunal considered the grounds related to disallowance under Section 14A, brand equity fees, and discounts on gift cards/vouchers. For Section 14A, the Tribunal found that the suo moto disallowance was accepted in previous years and directed acceptance. Regarding brand equity fees, the Tribunal relied on previous ITAT decisions allowing such expenditure. For gift card/voucher discounts, the Tribunal set aside the lower authorities' orders and allowed relief, considering the expenditure as crystallized and not contingent.

The Tribunal held that a jurisdictional issue regarding the validity of the approval under section 151 can be raised at any stage. Upon verification, it was confirmed that the approval for reopening lacked a digital signature, rendering it invalid in the eyes of law. Consequently, the notice under section 148 and the reassessment order were quashed.

The Tribunal held that the rate at which the assessee purchased power from the distribution licensee (SEB) can be applied as a valid comparable uncontrolled transaction (CUP) to determine the ALP of the power supplied by the CPP to the Rayon Plant. The Tribunal agreed with the view that the deduction claimed by the assessee u/s. 80IA should be allowed without any downward adjustment. The grounds raised by the revenue regarding the addition of Rs. 3.31 crores on account of capital creditors return back and disallowance under section 14A were also dismissed.

The Tribunal found that the AO had conducted a detailed inquiry during the original assessment and allowed the deduction. The reasons for reopening were not supported by any new tangible material. Relying on judicial precedents, the Tribunal held that the notice issued for reopening was bad in law.

The Tribunal held that the assessee had discharged the onus to explain the source of cash deposits, especially since the AO did not make similar additions for cash deposits outside the demonetization period. The Tribunal also noted the lack of proper inquiry by the AO and the absence of reasoning for the 50% addition. Regarding the addition on commission receipts, the Tribunal restored the issue to the AO for fresh adjudication.

The Tribunal held that the AO's approach of mechanically adopting the transferor's WDV was incorrect and that the assessee's claim for depreciation on goodwill, representing the excess consideration over tangible assets, was allowable. The CIT(A)'s decision to restrict depreciation based solely on the transferor's WDV was also set aside.

The Tribunal noted that this was the second round of litigation. The assessee's Authorized Representative (AR) restricted the appeal to ground No.2 concerning Short Term Capital Gain (STCG). To provide an opportunity, the Tribunal remanded the issue back to the AO for denovo adjudication.

The Tribunal held that while there might have been price manipulations, they occurred after the assessee had already sold the shares. The sale price of Rs. 2.50 per share, after holding for two years, was considered a possible raise and not indicative of benefiting from artificial price inflation. The fact that SEBI's investigation and subsequent public offers happened after the sale further supported the assessee's claim.

The Tribunal held that goodwill acquired during amalgamation is an intangible asset eligible for depreciation under Section 32 of the Income Tax Act. The amendment by the Finance Act, 2021, disallowing depreciation on goodwill, is applicable from AY 2021-22 and thus not applicable for AY 2020-21. The Tribunal also noted that for Section 14A, disallowance is applicable only when exempt income is claimed, which was not the case here.

The Tribunal noted that the assessee failed to furnish necessary documentary evidence to substantiate the claim for deduction u/s 54F of the Act before the lower authorities. However, to provide an opportunity to the assessee, the issue was restored to the file of the AO for a denovo assessment.

The Tribunal condoned the delay as the assessee was unable to present requisite evidence due to its defunct status. It was observed that the assessee failed to substantiate the additions made by the AO and upheld by the CIT(A) in both the assessment and appellate proceedings.

The Tribunal condoned the delay of 210 days, finding sufficient cause for the late filing. The appeals were heard together as lead case. The Tribunal noted the assessee's inability to provide requisite evidence during assessment and appellate proceedings and that the orders from the lower authorities were passed ex parte.

The ITAT condoned the 210-day delay, acknowledging the assessee's explanation of being defunct as sufficient cause. Observing that the assessee could not submit requisite evidence before the AO and CIT(A), the tribunal restored the matter to the file of the Ld. AO for fresh adjudication, granting the assessee a reasonable opportunity of being heard, provided they extend full cooperation.

The Tribunal held that the notice issued under Section 148 of the Act was void ab initio and bad in law due to non-compliance with Section 151 regarding the required approval from the specified authority. Additionally, the notice was found to be barred by limitation under Section 149(1)(b) as the escaped income was less than Rs. 50 lakh. Consequently, the entire reopening proceedings and assessment order were quashed.

The Tribunal found that the AO failed to apply mind to the documentary evidence regarding the PNB Housing Finance loan when passing the order under section 148A(d). When the Rs. 1.08 crore loan is accounted for, the alleged escaped income falls below Rs. 50 lakh. Consequently, the extended period for issuing notice under section 148, as per section 149(1)(b), which requires escaped income of Rs. 50 lakh or more, is not applicable. Therefore, the reassessment notice issued after 3 years is time-barred and invalid, and the subsequent final assessment order is quashed.

The Tribunal held that the AO's failure to dispose of the assessee's objections prior to issuing the reassessment order rendered the proceedings void and without jurisdiction. This was in line with the judgment of the Hon'ble Bombay High Court in Kesar Terminals & Infrastructure Ltd. v. DCIT.

The Commissioner of Income Tax (Appeals) partly allowed the assessee's appeal, upholding the addition for LTCG but deleting the commission addition. The Tribunal, considering the evidence of banking channels, stock exchange transactions, SEBI's findings, and earlier judgments, found that the assessee's transactions were not proven to be non-genuine or part of price rigging. The Tribunal noted that SEBI had not found adverse findings against the assessee in its manipulation probe.

The Tribunal dismissed all appeals by the Revenue. For inter-unit power transfer, it upheld the CIT(A)'s decision to delete the adjustment, affirming that the rate at which the assessee purchased power from the distribution licensee (SEB) is a valid CUP, relying on Special Bench and Supreme Court precedents. Regarding capital creditors, the Tribunal confirmed the deletion of the addition, citing a previous case of the assessee's holding company that loans for capital assets are not trading liabilities under Section 41(1). For Section 14A and 115JB, the Tribunal upheld the re-computation of disallowance at 0.5% and the non-addition to book profit, referencing a Special Bench decision.

The Tribunal confirmed the DIN was valid. It ruled that remuneration received by a partner from an LLP is not considered "gross receipts" for Section 44ADA, thus denying presumptive taxation. However, it allowed the alternative contention that such remuneration is business income under Section 28(v), enabling the deduction of actual expenses incurred for earning this income.

The Tribunal held that the initiation of proceedings under Section 153C was invalid as the seized Excel file was found from a third party and did not pertain to the appellant. The addition was unsustainable as it was based solely on third-party data without corroborative material belonging to or found from the appellant. The Tribunal also noted that the assessee was not provided with the adverse material and denied the opportunity to cross-examine the witnesses.

The Tribunal held that the case did not fall under the exception provided in paragraph 3.1(h) of CBDT Circular No. 5/2024, which pertains to organized tax evasion. The facts did not support allegations of organized tax evasion, bogus capital gains, or accommodation entries, and the matter was considered a routine CASS selection involving cash deposits.

The Tribunal held that the AO had not conducted sufficient inquiry into the genuineness of the donation and the compliance of the political party with the provisions of Section 13A of the Act. The PCIT's invocation of Section 263 was found to be justified as the assessment order was deemed erroneous and prejudicial to the interest of the revenue due to lack of proper verification.

The Tribunal held that the rejection of registration under section 12AB and consequential rejection of approval under section 80G were primarily due to delayed filing and non-compliance. However, considering the serious consequences, the Tribunal decided to give the assessee another opportunity.

The Tribunal held that the cash book provided by the assessee sufficiently explained the source of the cash deposits. The AO's adverse inference was based on conjectures and surmises, as the cash book was not rejected, and there were no discrepancies pointed out.

The Tribunal held that Mahip Hospital Private Limited qualified as a Venture Capital Undertaking under the SEBI (Venture Capital Funds) Regulations, 1996, especially considering the post-01.04.2013 amendment to Explanation 1(c) of section 10(23FB). It found the investment structure, involving SPVs for healthcare acquisition, consistent with venture capital objectives, and concluded that the lower authorities' inference of a 'pass-through' entity, based on the absence of immediate commercial operations, was unwarranted. Consequently, the disallowance of exemption under section 10(23FB) was unsustainable and allowed for all assessment years.

The Tribunal held that the assessment order was passed without considering the valuation report from the District Valuation Officer, which was statutorily required. The period for obtaining the report should have been excluded from the limitation period for completing the assessment.

The Tribunal condoned the 1355-day delay, observing that the merits of the case regarding 80P deduction for interest from co-operative banks are likely in the assessee's favor based on higher court decisions and that the assessee should not be penalized for counsel's negligence. The case was remanded to the Assessing Officer for a fresh assessment on merits, contingent on the assessee depositing Rs. 10,000/- per appeal to the Prime Minister Relief Fund.

The Tribunal held that the rejection of registration under section 12AB and approval under section 80G were based on the delayed filing of the application and non-compliance with notices. The Tribunal found that the assessee had not filed an application for condonation of delay.

The Tribunal held that the transponder service fees paid by the assessee to Intelsat UK do not constitute royalty under Article 13 of the India-UK DTAA. Therefore, the assessee was not liable to deduct tax at source under Section 195 of the Act.

The Tribunal held that there was a mistake apparent from the record as the earlier orders did not provide specific findings for denying registration for the years prior to AY 2017-18, despite the application being filed for AY 2012-13. It was inferred that since registration was granted from AY 2017-18, there were no adverse findings against the trust's nature and objects.

The tribunal, relying on previous decisions, held that no business connection or PE existed for GSSMPL in relation to the direct business, thus reinsurance premiums were not taxable in India. It further ruled that IT and management expenses paid by the India Branch to the Head Office were not taxable as FTS, clarifying that the Head Office and Branch are a single legal entity for domestic tax law, and under the India-Germany DTAA protocol, such income is not attributable to the PE. Additionally, it directed the Assessing Officer to restrict the taxability of interest income from refunds to 10% as per Article 11(2) of the DTAA, removing surcharge and cess.

The Tribunal held that the eligibility of a Venture Capital Undertaking must be determined strictly by the SEBI (Venture Capital Funds) Regulations, 1996, following the 2013 amendment to Explanation 1(c) of section 10(23FB). It found that Mahip Hospital Private Limited qualified as a VCU, and its investment structure, including the use of Special Purpose Vehicles (SPVs) for healthcare asset acquisition and operation, was compliant with the regulatory framework. Therefore, the lower authorities' disallowance of the exemption under section 10(23FB) was deemed unsustainable in law and on facts.

The Tribunal held that the reassessment notice issued under section 148 for AY 2017-18 was barred by limitation as it was issued after three years and the income escapement was below Rs. 50 lakhs, as per the new regime provisions and judicial precedents. Consequently, the reassessment proceedings and order were declared void and quashed.

The Tribunal noted the assessee's inability to furnish requisite evidence before the AO and CIT(A) due to cessation of business activities. In the interest of justice and to provide a reasonable opportunity of being heard, the matter for all appeals was restored to the file of the Ld. AO for fresh adjudication, with directions for the assessee to cooperate.

The Tribunal held that no business connection or PE existed for the assessee's "direct business" through its erstwhile subsidiary (GSSMPL) or India Branch, thus reinsurance premiums from direct business are not taxable in India. It further ruled that IT costs and management expenses paid by the India Branch to the Head Office are not taxable as Fees for Technical Services (FTS), treating the Head Office and Branch as a single legal entity. Additionally, the Tribunal directed that surcharge and cess are not leviable on interest income taxable at 10% under Article 11(2) of the India-Germany DTAA, and ordered rectification of other computational issues.

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to treat the Kuwait Investment Authority (KIA) as a non-resident corporate entity. The Tribunal based its decision on KIA's statutory constitution as an independent public authority with juridical personality, perpetual succession, and an independent governance structure. It also relied on consistent prior judgments in the assessee's own case and emphasized that a PAN's procedural description cannot override the substantive legal character established by law and precedents.

The Tribunal held that the addition under section 68 was not sustainable on merits as the assessee's ledger accounts showed no fresh credit entries from the alleged parties during AY 2020-21, but rather repayments or interest. The Tribunal noted that section 68 can only be invoked for sums credited in the books during the relevant previous year, and the AO failed to provide material to controvert the assessee's records. Additionally, a similar addition for AY 2019-20 was already made, making a fresh addition for the same amount impermissible double taxation. The legal grounds challenging the validity of reopening were left open.

The Tribunal acknowledged that the property was jointly owned and the capital gains attributable to the wife could not be assessed in the husband's hands. However, it found that the assessee failed to adequately substantiate his claims for Section 54EC deduction and other Chapter VI-A deductions before the AO. Consequently, the matter was remanded to the AO for fresh adjudication, ensuring the assessee a reasonable opportunity of being heard.

The Tribunal held that the notice under section 148, issued on 15.04.2022 for AY 2015-16, was beyond the period of limitation as per Supreme Court and High Court precedents. Therefore, the reassessment proceedings lacked jurisdiction.

The Tribunal ruled that while depreciation on tangible assets should follow precedents for slump sale acquisitions, the excess consideration paid over the fair market value of identifiable tangible assets, as determined by the Departmental Valuation Officer, constitutes goodwill. Citing Smifs Securities Ltd., the Tribunal held that this goodwill is an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act.

The Tribunal condoned the delay of 1355 days, holding that parties should not suffer due to the negligence of their counsel and that the issue on merits was likely in the assessee's favor. It remanded the matter back to the Assessing Officer for a fresh decision on merits, directing strict compliance from the assessee and imposing a cost of Rs. 10,000 per appeal to be deposited in the Prime Minister Relief Fund.

The Tribunal held that the CIT(E) erred in rejecting the application solely on the ground of limitation without examining the merits or the assessee's explanation regarding technical portal failure. The Tribunal set aside the CIT(E)'s order and restored the matter for fresh adjudication on merits after affording the assessee a reasonable opportunity of being heard.

The Tribunal held that the AO failed to record satisfaction that the assessee's computation of disallowance was incorrect, which is a mandatory precondition for invoking Section 14A read with Rule 8D. The Tribunal also noted that an identical issue in the assessee's own case for a previous year was decided in favor of the assessee.