ITAT Mumbai Judgments — January 2026

The Tribunal condoned the delay in filing the appeal, considering the assessee's explanation of not receiving notices and the fact that the assessee is suffering from cancer. The Tribunal restored the matter back to the CIT(A) for fresh adjudication.

The Tribunal held that the assessee had sufficiently proved the identity, creditworthiness, and genuineness of the gift from her mother for the Rs. 1.75 crore investment, thus deleting the addition under section 69. However, for the Rs. 28,40,000 credit from the sister, the assessee failed to provide supporting documents, leading to the upholding of the addition under section 69A.

The Tribunal held that for shares held as stock-in-trade, Section 14A is not attracted. Lease premium amortization was dismissed as not pressed. Exclusion of foreign branch profits was upheld. Addition for country risk was restored. Disallowance of bad debts was deleted. Section 115JB was held not applicable to banks. Disallowance of premium on HTM securities was deleted. Disallowance of interest on perpetual bonds was allowed. Addition of unrealized interest income on NPAs was deleted. Penalty for non-compliance with norms was found to be compensatory and allowed. Disallowance of loss on sale of assets to ARC was deleted.

The Tribunal held that the CIT(A) had no option but to dismiss the appeal due to the non-submission of documents and non-response to notices. However, considering the assessee's readiness to furnish the documents now, the matter was restored back to the CIT(A) for a decision on merits after providing adequate opportunity of hearing.

The Tribunal observed that the assessee failed to demonstrate compliance with Rule 37BA of the Income Tax Rules, which governs the grant of TDS credit to a person other than the deductee. However, considering the wife also offered her share and sought credit, the matter was restored to the Assessing Officer.

For the Section 14A issue, the Tribunal upheld the CIT(A)'s deletion, directing the AO to follow precedents that disallowance under Rule 8D(2) applies only to investments yielding exempt income. Regarding the Section 43B issue, new evidence concerning the cooperative bank's scheduled status was introduced. The Tribunal remitted this matter back to the AO for fresh consideration, requiring an opportunity for the assessee to present its case.

The Tribunal held that once the quantum addition, which forms the foundation for levying penalty, is deleted, the penalty itself becomes unsustainable. Citing the decision of the Karnataka High Court in CIT vs. Cisco Systems Services BV, the Tribunal found no basis for the penalty levied under section 271(1)(c) when the underlying assessment order was quashed.

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 noted that the assessment order was passed ex-parte due to the assessee's non-compliance with statutory notices, both before the AO and the CIT(A). Despite the grounds of appeal challenging the additions, the assessee was not heard. The Tribunal, in the interest of justice and following principles of natural justice, decided to grant one final opportunity.

The Tribunal held that the additions were unsustainable. The Excel file was from a third party, and the assessee had denied making any cash payments. Crucially, the Revenue failed to provide the assessee with an opportunity to cross-examine the individuals whose statements formed the basis of the addition, violating principles of natural justice. Furthermore, the electronic evidence lacked authenticity and corroboration. Reliance was placed on various High Court and Supreme Court decisions reinforcing these principles.

The Tribunal has considered various grounds. On the issue of Section 14A disallowance, following judicial precedents, the disallowance was deleted as shares were held as stock-in-trade. The disallowance of lease premium amortization was dismissed as not pressed or covered by previous decisions. The exclusion of foreign branch profits and credit for foreign taxes were handled based on prior rulings. Other grounds related to country risk, bad debts, and Section 115JB were also decided based on previous judgments or restored for further adjudication.

The Tribunal noted that the provision for power liability was different from the contingent liability. The assessee had furnished additional documents and claimed that the tax auditor erroneously reported the provision as contingent. Given that the return was processed under section 143(1) without the Assessing Officer having an opportunity to verify the facts, the issue was remitted to the Assessing Officer for verification.

The Tribunal held that the AO's approach was inconsistent and not acceptable, especially when departmental valuation reports were available. The excess of slump sale consideration over the value of tangible assets represents goodwill or commercial rights, eligible for depreciation.

The Tribunal noted that the assessee failed to comply with opportunities before the CIT(A), leading to an ex-parte order. The Tribunal set aside the issues to the CIT(A) to decide on merits and legal grounds after the assessee presents their case, directing strict compliance.

The Tribunal ruled that the eligibility of a venture capital undertaking must be assessed against SEBI Regulations, especially after the 2013 amendment to Section 10(23FB). It found that Mahip Hospital Private Limited met the criteria of a venture capital undertaking under SEBI norms and its investment structure aligned with venture capital objectives.

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 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 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 ruled that reinsurance premiums earned from the assessee's direct business are not taxable in India due to the absence of a business connection or permanent establishment. Furthermore, payments for IT costs and management expenses from the Indian branch to the head office were held not to be taxable as fees for technical services under the Act or the India-Germany DTAA. Certain other grounds were allowed, dismissed, or rendered academic.

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 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 in filing the appeal, citing the assessee's reasonable cause and the principle of substantial justice over technical considerations. The Tribunal found that the CIT(A) erred in dismissing the appeal for non-prosecution without adjudicating on merits.

The Tribunal decided to restore the issue of allocation of common expenses and common income to eligible units for computing deductions under Sections 10B and 80-IB to the Assessing Officer for fresh adjudication, following prior orders. Various other grounds, including transfer pricing adjustments, were decided based on earlier rulings and precedent, with some appeals and cross-objections being dismissed.

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 Tribunal condoned the delay, acknowledging the company's defunct status as a sufficient cause. It found that due to the assessee's inability to present its case effectively before the lower authorities, the matter should be restored to the AO for fresh adjudication.

The Tribunal allowed the grounds related to GSSMPL not being a business connection or PE, and also ruled that the India branch was not a PE for direct business income. It was further held that payments for IT and management expenses from the India branch to the head office were not taxable as Fees for Technical Services (FTS) under the Act or the India-Germany tax treaty.

The Tribunal ruled that subsequent to the amendment of Explanation 1(c) to Section 10(23FB) effective April 1, 2013, the assessment of a venture capital undertaking's eligibility must strictly adhere to the SEBI (Venture Capital Funds) Regulations, 1996. It was determined that Mahip Hospital Private Limited satisfied the regulatory definition of a venture capital undertaking and did not engage in any prohibited sectors. The Tribunal further noted that denying exemption solely because full-scale operations had not commenced would contravene the legislative purpose of Section 10(23FB) aimed at fostering venture capital investments.

The Tribunal held that reinsurance premiums earned by overseas offices are not taxable in India as they are not attributable to a Permanent Establishment. It was also held that IT and management expenses paid by the India Branch to its Head Office are not taxable as Fees for Technical Services under the Act or the India-Germany DTAA, as they represent a payment to self. Certain other grounds related to consequential adjustments, credit for taxes deducted at source, and interest calculations were also addressed.

The Tribunal held that the AO's approach of mechanically adopting the transferor's WDV was incorrect and the CIT(A) erred in sustaining the disallowance. It accepted the assessee's plea that the excess consideration over tangible assets represents goodwill, eligible for depreciation, and directed recomputation based on DVO's valuation.

The appellate authority failed to consider the DVO's report, which determined the fair market value significantly lower than the stamp duty value. The variation between the actual consideration and the DVO's valuation was within the permissible tolerance band of 10% as per section 50C, making the adjustment under section 56(2)(x) unsustainable.

The Tribunal found that the rejection was based solely on limitation without examining the assessee's explanation of technical failure. The tribunal opined that rejecting the application based on procedural lapse without considering merits and the explanation provided is not justified.

The Tribunal, following the decision in Aditya Birla Nuvo Ltd., held that the price at which the assessee purchased power from a distribution licensee is a valid comparable for determining the Arm's Length Price (ALP) of power supplied by its captive power plant. Consequently, the grounds raised by the Revenue regarding this issue were dismissed.

The Tribunal noted the significant delay in filing the appeal, which was allegedly due to the negligence of the assessee's tax consultants. Exercising principles of natural justice, the Tribunal granted the assessee one more opportunity to present its case before the Assessing Officer, imposing a cost.

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 decided on multiple grounds. It followed Supreme Court rulings regarding Section 14A, holding that shares held as stock-in-trade do not attract the provision. It also addressed issues related to foreign branch profits, country risk provisions, bad debts, and Section 115JB, with varying outcomes for the assessee and Revenue on different grounds.

The Tribunal held that the capital gains arising from the wife's share of the jointly owned property could not be assessed in the hands of the assessee. However, due to the assessee's inability to adequately explain or substantiate claims for section 54EC and Chapter VI-A deductions before the AO, the matter was restored to the AO for fresh adjudication.

The Tribunal held that the addition under section 68 was not sustainable as the ledger accounts showed the amounts were received in earlier assessment years and the entries in the current year were repayments or interest. The AO did not provide contrary material to disprove the assessee's ledger accounts.

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 remuneration received by a partner from a firm cannot be treated as 'gross receipt' for the purpose of Section 44ADA. However, such income is taxable under the head 'Profits and gains of business or profession', and expenses incurred for earning this income are deductible.

The Tribunal allowed the assessee's appeal regarding Section 14A disallowance, deleting it based on Supreme Court precedent concerning shares held as stock-in-trade. However, grounds related to lease premium amortization and exclusion of foreign branch profits were dismissed. Other grounds concerning bad debts, foreign tax credits, and Section 115JB were dealt with differently, with some allowed for statistical purposes, others restored for de novo adjudication, and some dismissed.

The Tribunal, while acknowledging the non-compliance and significant delay, decided to give the assessee one more opportunity to present its case before the AO. The Tribunal noted that parties should not suffer for the negligent acts of their counsels and that the issue on merits appeared to be covered in favor of the assessee.

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 if the primary quantum addition, which serves as the foundation for a penalty, is quashed, then the penalty itself becomes unsustainable. The deletion of the draft assessment order meant there was no valid basis for the penalty.

The Tribunal held that the notice issued under section 148 was barred by limitation as per the first proviso to section 149(1)(b) of the Income Tax Act, given that the escaped income was less than Rs. 50 lakhs and the notice was issued after the expiry of three years from the end of the assessment year. Consequently, the reassessment proceedings and order were quashed.

The Tribunal found that the assessee, Kuwait Investment Authority (KIA), is an independent public authority with juridical personality under Kuwaiti law, akin to a corporate entity. It followed consistent rulings in the assessee's own case for prior years, confirming its status as a non-resident corporate entity.

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 held that the definition of a 'venture capital undertaking' has been aligned with SEBI regulations, and the AO erred in applying pre-amended definitions or imposing conditions not in the statute. The Tribunal found that Mahip Hospital Private Limited met the regulatory definition of a venture capital undertaking and the investment structure was consistent with venture capital norms.

The Tribunal held that the notice issued under section 148 by the JAO was illegal and without jurisdiction. This was because it violated the provisions of section 151A and section 144B, read with the faceless scheme notified by the Central Government, which mandates such proceedings to be conducted through a faceless mechanism. Consequently, the notice and the resultant assessment order were quashed.

The Tribunal held that 'direct business' reinsurance premiums were not taxable in India as there was no business connection or Permanent Establishment (PE). Further, payments for IT and management expenses between the Indian branch and its head office were not taxable as Fees for Technical Services (FTS) under the Act or the India-Germany DTAA. The tribunal also directed re-computation of tax on interest income and other consequential adjustments.

The Tribunal held that the notice issued under Section 148 was beyond the limitation period as prescribed by the first proviso to Section 149(1)(b), rendering it bad in law. The Tribunal referred to various judicial pronouncements, including those from the Supreme Court and High Courts, to support its decision.