ITAT Mumbai Judgments — January 2026

The Tribunal held that denial of a personal hearing, especially when statutorily recognized and expressly sought through video conferencing, cannot be considered a mere procedural lapse, as it violates the principle of audi alteram partem. The appeals were restored to the CIT(A) for fresh adjudication.

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 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 noted the assessee's consistent non-compliance and failure to substantiate investments and explain cash deposits. Both the AO and CIT(A) upheld the penalty. The Tribunal found no infirmity in the CIT(A)'s findings and decided to dismiss the grounds of appeal.

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 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 condoned the delay of 210 days, noting that the assessee company had ceased business operations and had no functioning directors. The Tribunal observed that the assessee failed to substantiate the addition before the AO and CIT(A). Therefore, in the interest of justice, the matter was restored to the AO for fresh adjudication.

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 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 observed that the assessee failed to substantiate the nature and source of investments and was non-compliant during assessment, penalty, and appellate proceedings. Despite opportunities, no cogent evidence or explanation was provided. The Tribunal found no infirmity in the CIT(A)'s order.

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 observed that the assessee had made a specific request for personal hearing via video conferencing and had submitted extensive documentation. Denial of such a hearing, especially when statutorily recognized, cannot be considered a mere procedural lapse.

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 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 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 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 due to the company being defunct with no functioning directors and authorized signatories. Although the assessee failed to substantiate its claims before the lower authorities, the matter was deemed to require fresh adjudication.

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 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 allowed relief to the assessee on grounds related to disallowance of discounts on gift cards and vouchers, and deduction of interest charged on income tax. The revenue's appeal was dismissed, and the assessee's appeal was partly allowed.

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 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 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 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 condoned the delay of 210 days, noting that the assessee company had remained defunct since 2015 and could not provide requisite evidence. While the assessee failed to substantiate its claims before the lower authorities, the matter was restored to the AO for fresh adjudication.

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 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 noted the inordinate delay in filing the appeal and the failure to provide sufficient cause. However, considering the principles of natural justice and the potential for the parties to suffer due to counsel's negligence, the Tribunal decided to give the assessee one more opportunity to present their case before the Assessing Officer.

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 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 reopening of assessment under Section 147 was bad in law as the AO had already examined the issue during the original assessment under Section 143(3) and there was no new tangible material. The Tribunal relied on judicial precedents, stating that the AO's jurisdiction to reopen was not supported by new material, and thus the reassessment order was quashed.

The Tribunal held that the notice issued under section 148 for reopening the assessment was barred by limitation as the case did not fall under the exception provided in section 149(1)(b). The Tribunal also noted that the Assessing Officer had not properly considered the documentary evidence submitted by the assessee regarding the source of funds for the property purchase.

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 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 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 Assessing Officer (AO) failed to provide the assessee with the material relied upon to initiate reassessment proceedings, thus violating principles of natural justice. The notices issued under Section 148A(b) and subsequently under Section 148 were found to be invalid due to procedural defects, including the issuance by the Jurisdictional Assessing Officer instead of the faceless National Faceless Appeal Centre as mandated by CBDT notifications.

The Tribunal held that the notice u/s 148A(b) and subsequent notice u/s 148 were invalid. This was primarily due to the AO not providing the material relied upon for issuing the notice, violating principles of natural justice, and the notice being issued by the Jurisdictional Assessing Officer instead of the National Faceless Appeal Centre as mandated by subsequent notifications. The Tribunal also noted that the reassessment was initiated based on an incorrect assumption of escaped income exceeding the threshold for extended limitation.

The Tribunal held that the notice under Section 148 was issued beyond the permissible time limit as per the Supreme Court's decision in Rajeev Bansal (supra). Therefore, the Assessing Officer did not validly assume jurisdiction, and the assessment order is liable to be quashed.

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 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, 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 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 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 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 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 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 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 while the stock brought by the partner was undisputedly introduced, the explanation for it should have been sought from the partner. The AO erred in making the addition in the hands of the firm. However, considering the gross profit rate, the addition was restricted.

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.