ITAT Mumbai Judgments — October 2026

The Tribunal held that the procedural requirement of filing the audit report in Form 10B is directory in nature. It acknowledged that the assessee filed Form 10B on March 29, 2023, along with its return of income, albeit with a delay beyond the statutory due date. The Tribunal noted that the CIT(A) had not adjudicated the issue on merits but merely directed the assessee to pursue condonation before the PCIT(E). In the interest of substantial justice, the Tribunal set aside the order of the CIT(A) and restored the matter to the file of the Assessing Officer. The Assessing Officer was directed to re-examine the claim for exemption under Section 11 after considering the Audit Report in Form 10B and the outcome of the condonation proceedings before the PCIT(E) or the competent authority. The assessee was to be provided a reasonable opportunity of being heard. The ratio decidendi is that a delay in filing Form 10B does not automatically disentitle the assessee to Section 11 exemption if the report is available before assessment completion and the delay is condoned.

The Tribunal, while acknowledging the delay in filing the appeal, condoned it after being satisfied with the assessee's explanation. The Tribunal noted that the Assessing Officer rejected the assessee's cash book due to deficiencies such as the lack of day-to-day closing balances and the absence of the director's signature, deeming it inauthentic. The CIT(A) had dismissed the assessee's appeal ex-parte for failing to furnish complete documentary evidence. The Tribunal observed that the principles of natural justice require the assessee to be given a fair opportunity to substantiate its claims. Therefore, without expressing any opinion on the merits of the case, the Tribunal set aside the order of the CIT(A) and remitted the appeal back to the file of the CIT(A) for de novo adjudication. The assessee was directed to cooperate and file all necessary documents without seeking unnecessary adjournments. The appeal was allowed for statistical purposes.

The Tribunal dismissed the appeal of the Revenue and the cross-objection of the assessee. The Tribunal noted that on a similar set of facts for AY 2009-10, a similar penalty levied under Section 271G was deleted by the CIT(A) and this deletion was confirmed by the Tribunal. The Tribunal extracted its earlier order for AY 2009-10, which held that once the foundation of the penalty proceedings (the addition in quantum assessment) is wiped out, the penalty proceedings will not survive. Following the principle of consistency and the earlier decision, the Tribunal found no merit in the Revenue's grounds of appeal. Consequently, the appeal of the Revenue was dismissed. As the Revenue's appeal was dismissed, the adjudication on the grounds raised in the assessee's cross-objection became academic, and thus the cross-objection was also dismissed as infructuous.

The Tribunal held that the notice issued under Section 148 on 07.04.2022 for AY 2015-16 is barred by limitation. The Tribunal agreed with the assessee's contention that the first proviso to Section 149(1) is applicable. For AY 2015-16, the time limit under the erstwhile law (Section 149(1)(b)) for issuing a notice was six years from the end of the relevant assessment year, which expired on 31.03.2022. Since the notice was issued on 07.04.2022, it was beyond this time limit. The Tribunal further reasoned that the fifth proviso to Section 149(1), which deals with exclusion periods, is only applicable if the notice itself survives the test of being issued within the prescribed time limits under Section 149(1)(a) or 149(1)(b) of the new regime. As the notice in this case was found to be barred by limitation under the first proviso, the question of applying the exclusion period did not arise. Consequently, the reassessment proceedings based on the invalid notice were set aside, and the additions made by the AO were liable to be deleted. The appeal filed by the assessee was allowed.

The Tribunal decided to adjudicate the issue of limitation first, as it goes to the root of the matter and is a jurisdictional issue. The Tribunal noted that the merits of the case had not been argued by either party. The judgment does not record any findings on the merits of the case or any other grounds raised by the assessee, other than the preliminary issue of limitation. The Tribunal's decision on the limitation issue is not explicitly stated in the provided text, but the focus on this jurisdictional aspect indicates it was the primary point of contention. The operative directions are not specified as the judgment appears to be incomplete or focused solely on the preliminary issue.

The Tribunal decided on the following grounds: - Regarding the addition of Rs. 91,92,797/- on account of alleged bogus purchases (Ground 2): The Tribunal did not explicitly rule on this ground in the provided excerpt. The initial paragraphs describe the facts and the assessee's grounds of appeal, including this one, but the detailed reasoning and decision on this specific issue are omitted from the provided text. The judgment states that the appeals for both AY 2009-10 and 2010-11 are partly allowed (para 25), implying that some grounds were allowed and others dismissed or not decided. - Regarding club expenses (discussed in para 18-20): The Tribunal allowed this ground, following the Hon'ble Apex Court's decision in CIT vs United Glass Manufacturing Co., which held that club membership fees for employees incurred by the assessee are business expenses under Section 37. The ratio is that expenses incurred for the benefit of employees for business purposes are deductible. - Regarding professional fees of Rs. 14,27,500/- (discussed in para 21): The Tribunal allowed this ground, reversing the AO's action of treating the fees as capital in nature. Following the Hon'ble Karnataka High Court's decision in Onmobile Global Ltd., it was held that legal and professional expenditure incurred for conducting due diligence for a company acquisition is eligible for deduction under Section 37(1). The ratio is that expenses incurred for business expansion or acquisition are revenue in nature. - Regarding addition of unexplained credit on account of share application and share premium (discussed in para 22-24): The Tribunal admitted the additional evidence filed by the assessee, including bank statements, ITRs of investors, and confirmations. It restored this ground to the file of the Jurisdictional Assessing Officer (JAO) for reconsideration and fresh adjudication, allowing a fair opportunity to the assessee. The ratio is that crucial documentary evidence, if not filed before lower authorities, can be admitted for proper adjudication, and the matter can be remanded for fresh consideration. Operative Directions: Ground 2 (club expenses) allowed. Ground 3 (professional fees) allowed. Ground 4 (share capital/premium) allowed for statistical purposes and restored to AO. The appeals for both AY 2009-10 and 2010-11 are partly allowed.

The Tribunal decided on the following grounds: - Regarding the addition of Rs. 91,92,797/- on account of alleged bogus purchases (Ground 2): The Tribunal did not explicitly rule on this ground in the provided excerpt. The initial paragraphs describe the facts and the assessee's grounds of appeal, including this one, but the detailed reasoning and decision on this specific issue are omitted from the provided text. The judgment states that the appeals for both AY 2009-10 and 2010-11 are partly allowed (para 25), implying that some grounds were allowed and others dismissed or not decided. - Regarding club expenses (discussed in para 18-20): The Tribunal allowed this ground, following the Hon'ble Apex Court's decision in CIT vs United Glass Manufacturing Co., which held that club membership fees for employees incurred by the assessee are business expenses under Section 37. The ratio is that expenses incurred for the benefit of employees for business purposes are deductible. - Regarding professional fees of Rs. 14,27,500/- (discussed in para 21): The Tribunal allowed this ground, reversing the AO's action of treating the fees as capital in nature. Following the Hon'ble Karnataka High Court's decision in Onmobile Global Ltd., it was held that legal and professional expenditure incurred for conducting due diligence for a company acquisition is eligible for deduction under Section 37(1). The ratio is that expenses incurred for business expansion or acquisition are revenue in nature. - Regarding addition of unexplained credit on account of share application and share premium (discussed in para 22-24): The Tribunal admitted the additional evidence filed by the assessee, including bank statements, ITRs of investors, and confirmations. It restored this ground to the file of the Jurisdictional Assessing Officer (JAO) for reconsideration and fresh adjudication, allowing a fair opportunity to the assessee. The ratio is that crucial documentary evidence, if not filed before lower authorities, can be admitted for proper adjudication, and the matter can be remanded for fresh consideration. Operative Directions: Ground 2 (club expenses) allowed. Ground 3 (professional fees) allowed. Ground 4 (share capital/premium) allowed for statistical purposes and restored to AO. The appeals for both AY 2009-10 and 2010-11 are partly allowed.

The Tribunal upheld the Ld. CIT(A)'s decision to exclude the comparable companies. Regarding BNR Udyog Ltd., Firstsource Solutions Ltd., HCL Technologies Ltd., and Fortune Infotech Ltd., the Tribunal found that the Ld. CIT(A) had correctly calculated high RPT percentages (55.56%, 66.68%, and 99.87% for the latter three) which were substantially above the 25% threshold, and the Revenue failed to demonstrate any error in these computations. For Maple Esolutions Ltd., Triton Corp Ltd., Spanco Telesystems and Solutions Ltd., and Wipro Ltd., the Tribunal agreed with the Ld. CIT(A) that there were material functional differences, unreliable financials, or peculiar circumstances affecting comparability. Specifically, Spanco's low employee cost and unallocated corporate expenses indicated a different outsourcing model, and Wipro's diversified operations, product sales, and substantial brand value were material differences from the assessee's contact centre services. The Tribunal reiterated that while TNMM allows for some tolerance, it does not permit ignoring material differences in business models or intangibles. For Iservices India Pvt. Ltd., the Tribunal found that the Ld. CIT(A) had properly considered its diversified service profile, which included higher-end activities beyond the assessee's core business, and that the mere presence of some comparable activities did not make it a valid comparable without reliable segmental data. The Tribunal concluded that the Ld. CIT(A) had undertaken the exercise as directed, examined the data, and recorded valid reasons for exclusion, and the Revenue had not presented material to demonstrate perversity.

The Tribunal addressed several grounds. Regarding the addition of interest on delayed TDS payment (Assessee's Ground 1), the judgment notes that this issue was previously restored to the file of the Assessing Officer in the assessee's own case for fresh adjudication. The Tribunal, following this precedent, restored the issue to the CIT(A) for fresh adjudication after calling for a remand report from the AO and verifying underlying facts, including foreign exchange gain or loss. For the capital gains exemption (Assessee's Ground 2), the Tribunal admitted the additional ground but found that the factual basis required examination. Following a coordinate bench decision, the Tribunal restored this issue to the CIT(A) for adjudication after verification of facts and considering the decision in Cooper Corporation Pvt. Ltd. Regarding Revenue's Ground 5 (Section 14A for 115JB), the Tribunal upheld the CIT(A)'s deletion of the addition, following the binding precedent of the Special Bench in ACIT v. Vireet Investment (P.) Ltd., which held that Section 14A cannot be read into clause (f) of Explanation 1 to Section 115JB. The Tribunal found no infirmity in this view. The other grounds raised by the Revenue were not explicitly detailed in the provided excerpt but the concluding remark indicates that both appeals were partly allowed for statistical purposes.

The Tribunal decided to dismiss the appeal as withdrawn. The reasoning was based on the assessee's submission that the appeal was filed inadvertently and was a duplicate of another appeal, ITA No. 4160/Mum/2026, which had already been heard. The assessee explicitly requested the withdrawal of the present appeal. The Revenue did not raise any objection to this request. Therefore, in accordance with the assessee's request and the absence of objection from the revenue, the Tribunal found it appropriate to dismiss the appeal as withdrawn. No decision was made on the merits of the case.

The Tribunal held that the revision order passed by the PCIT under Section 263 was unsustainable and quashed it. The Tribunal found that the AO had conducted detailed inquiries regarding the assessee's claim for deduction under Section 80G, including issuing notices under Section 142(1) and receiving replies with supporting details and receipts. The AO, after examining the issue, was satisfied and allowed the deduction, taking a plausible and legally sustainable view. The Tribunal noted that there is no restriction in the Act disallowing consideration for Section 80G deduction simply because expenditure was incurred for CSR. Consistent decisions of coordinate benches of the Tribunal have held such donations allowable under Section 80G. The Tribunal emphasized that the PCIT's action was based on a change of opinion and that when the AO adopts one of two possible views, the order cannot be deemed erroneous. Therefore, the twin conditions for exercising jurisdiction under Section 263 were not met. The Tribunal directed the AO to allow the assessee's claim for deduction under Section 80G, subject to factual verification that the donee institutions are registered under Section 80G and other conditions are fulfilled. The grounds of appeal were allowed.

The Tribunal held that the CIT(E) erred in rejecting the application for renewal of registration under Section 12AB solely on the ground of FCRA registration cancellation without independently examining the merits of the case. The Tribunal noted that a mere violation of FCRA or other laws does not automatically disqualify a trust unless it directly impedes its charitable objectives. The burden is on the tax authority to prove the materiality of such violations. The Tribunal found that the CIT(E) did not record any independent satisfaction regarding the genuineness of the trust's activities or whether the alleged FCRA non-compliance constituted a violation of a law material for achieving the assessee's objects. The Tribunal also observed that the impugned order did not clarify whether the FCRA cancellation was permanent or if the assessee was allowed any leverage to make a fresh claim. Therefore, the Tribunal set aside the impugned order and restored the matter to the file of the CIT(E) for fresh adjudication. The CIT(E) is directed to specifically examine the assessee's factual submissions, including the contention that no foreign contribution was received or utilized after the FCRA cancellation, the liberty granted by the FCRA authority to submit a fresh application, and whether the alleged FCRA non-compliance is material to the assessee's charitable objects. The CIT(E) must independently record satisfaction regarding the objects and genuineness of activities after affording an opportunity of being heard. The rejection of approval under Section 80G, being consequential, was also set aside.

The Tribunal held that the rejection of the assessee's application for approval under Section 80G was fundamentally based on the rejection of its application for registration under Section 12AB. The CIT(E) had reasoned that since the Section 12AB registration was rejected, the assessee failed to fulfill the condition under Section 80G(5)(i), making the 80G application untenable. The Tribunal noted that the connected appeal concerning the Section 12AB registration (ITA No. 4790/Mum/2026) had been restored to the file of the CIT(E) for fresh adjudication after providing adequate opportunity of hearing. Therefore, the very basis for rejecting the Section 80G application was open for fresh consideration. The Tribunal concluded that the issue concerning Section 80G approval was consequential to and dependent upon the determination of eligibility for Section 12AB registration. Adjudicating the Section 80G appeal independently at this stage would be inappropriate. Consequently, the Tribunal set aside the impugned order and restored the assessee's application for approval under Section 80G to the file of the CIT(E) for fresh adjudication after the Section 12AB issue is decided. The CIT(E) was directed to provide an adequate opportunity of hearing and consider the 80G application afresh in light of the outcome of the Section 12AB proceedings and any material placed on record. No opinion was expressed on the merits of the 80G eligibility.

The Tribunal held that the assessee failed to discharge the burden of establishing its claim that the entire sale consideration represented the recovery of the cost of shares and that no capital gain arose. Despite repeated and specific opportunities granted by the Assessing Officer, the assessee did not furnish the necessary primary evidence to substantiate the cost of acquisition. The Tribunal noted that while the assessee distinguished between the genuineness of the transaction and the computation of capital gain, and that the addition was not framed under Section 68, this did not assist the assessee. The fundamental deficiency remained the failure to establish the cost of acquisition of the shares actually sold. The Tribunal referred to the Supreme Court's decisions in CIT v. Durga Prasad More and Sumati Dayal v. CIT, emphasizing that taxing authorities are not required to accept documentary recitals mechanically and can examine surrounding circumstances and human probabilities. The Tribunal found that the reconciliation and ledger extracts relied upon by the assessee before the CIT(A) explained accounting entries but did not establish the cost of acquisition without correlation with underlying acquisition documents. Since the necessary material was not placed before the Tribunal either, the appeal was dismissed. Grounds 1 to 3 were dismissed, and Ground 4 was general.

The Tribunal held that the mistake in mentioning the particular clause of section 12A(1)(ac) in the first application was a curable procedural defect. Crucially, the second application under the correct clause was filed on 28.08.2025 while the first application dated 28.02.2025 was still pending before the Commissioner (Exemptions). The first application was disposed of only on 08.09.2025. Therefore, the subsequent application and the request for condonation of delay were relevant and could not be ignored. The Tribunal found substance in the assessee's grievance, stating that the rejection of the first application without considering the pending subsequent application meant the assessee's substantive claim was not examined on merits. Regarding the second application, the Tribunal noted that the assessee had not been entirely inactive, having filed the first application. Considering the changes in the statutory scheme post-Finance Act, 2020, and the fact that the second application was filed during the pendency of the first, the Tribunal condoned the delay in filing the second application. The impugned orders were set aside, and the matter was restored to the CIT(E) for de novo adjudication, with a specific direction to consider the application dated 28.08.2025 on merits after condoning the delay. The Tribunal clarified that this did not express an opinion on the substantive eligibility for registration.

The Tribunal held that the mistake in mentioning the particular clause of section 12A(1)(ac) in the first application was a curable procedural defect. Crucially, the second application under the correct clause was filed on 28.08.2025 while the first application dated 28.02.2025 was still pending before the Commissioner (Exemptions). The first application was disposed of only on 08.09.2025. Therefore, the subsequent application and the request for condonation of delay were relevant and could not be ignored. The Tribunal found substance in the assessee's grievance, stating that the rejection of the first application without considering the pending subsequent application meant the assessee's substantive claim was not examined on merits. Regarding the second application, the Tribunal noted that the assessee had not been entirely inactive, having filed the first application. Considering the changes in the statutory scheme post-Finance Act, 2020, and the fact that the second application was filed during the pendency of the first, the Tribunal condoned the delay in filing the second application. The impugned orders were set aside, and the matter was restored to the CIT(E) for de novo adjudication, with a specific direction to consider the application dated 28.08.2025 on merits after condoning the delay. The Tribunal clarified that this did not express an opinion on the substantive eligibility for registration.

The Tribunal held as follows: On issue 1 (Section 14A), the CIT(A) was correct in deleting the additional disallowance as the AO had not recorded proper satisfaction for rejecting the assessee's suo motu disallowance, following the Tribunal's decision in the assessee's own case. On issue 2 (Doubtful Debts), the CIT(A)'s deletion was upheld, relying on the Tribunal's decision in the assessee's own case and Section 36(1)(vii). On issue 3 (Foreign Tax Relief), the CIT(A)'s direction to the AO to verify expenditure and grant relief was confirmed, following the Tribunal's order in the assessee's own case for AY 2018-19. On issue 4 (Trip Scheme Expenses), the CIT(A)'s deletion was upheld, accepting the assessee's contention that the expenditure was for sales and business promotion, following the Tribunal's decisions in the assessee's own case. On issue 5 (Section 194H on Trip Scheme), the Tribunal found no infirmity in the CIT(A)'s order, which was confirmed. On issue 6 (Colour Idea Stores), the CIT(A)'s deletion was upheld, following the Tribunal's decision in the assessee's own case. On issue 7 (Section 80G on CSR), the Tribunal dismissed the Revenue's ground, holding that Explanation 2 to Section 37(1) applies only to computing business income and does not bar deduction under Section 80G, citing a co-ordinate bench decision and the principle that CSR expenses eligible for Section 80G deduction are not restricted by Section 37(1).

The Tribunal held that the learned CIT(A) erred in dismissing the appeal as time-barred by relying on the section 143(1) intimation dated 12.10.2021. The appeal was against the section 154 order dated 16.07.2025, and the delay calculation should have been based on that order. On the merits, the Tribunal found that the adjustment of Rs. 40,00,000/- under section 37 was not sustainable. The assessee had merely disclosed a contingent liability (disputed income-tax demand for AY 2015-16) in its tax audit report. This disclosure did not amount to claiming it as an expenditure or deduction. The Tribunal followed the decision in ACIT v. Fitrite Packers, which held that reporting a contingent liability does not establish a claim for deduction. The Tribunal also held that the CPC's adjustment was a mistake apparent from the record, rectifiable under section 154, as it involved comparing the tax audit disclosure, financial statements, and the intimation. The Assessing Officer's general observation that the disallowances were not mistakes apparent from the record did not address this specific issue. The Tribunal directed the Assessing Officer to rectify the intimation under section 143(1) by deleting the adjustment of Rs. 40,00,000/-.

The Tribunal held that the learned CIT(A) was justified in deleting the addition of ₹1,57,48,000. The assessee had discharged its initial onus by producing contemporaneous and verifiable evidence, including contract notes, broker ledger, and bank statements, explaining the nature and source of the credit as profit from recorded F&O transactions. The difference between the AO's figure and the net profit in the books was reconciled with transaction charges. The Revenue's reliance on general Investigation Wing material and statements regarding a modus operandi was insufficient to treat the profit as an unexplained cash credit. The Revenue failed to bring on record any material showing the assessee's participation in the alleged manipulative arrangement, such as an identified counterparty nexus, evidence of pre-arrangement, collusion, an unaccounted money trail, or adverse regulatory findings concerning these specific transactions. Therefore, the addition could not be sustained merely on generalized investigation findings. The CIT(A)'s order was upheld.

The Tribunal held that the learned CIT(A) was not justified in sustaining the addition of Rs. 2,00,000 under section 69. The immediate and identifiable source of the investment was the payment made by the assessee's brother from his bank account directly to the builder. The Tribunal relied on the principle that an assessee is only required to explain the source of the credit, not the source of the source, citing Gaurav Triyugi Singh v. ITO (Bom.) and DCIT v. Rohini Builders (Guj.). The Tribunal noted that the wider requirement regarding explanation of the source of funds in the hands of a creditor was introduced in section 68 by the Finance Act, 2022, effective from Assessment Year 2023-24, and thus did not apply to Assessment Year 2020-21. The mere fact that cash was deposited in the brother's bank account shortly before payment to the builder would not, by itself, establish that such cash belonged to the assessee, as there was no finding or material connecting the cash deposit in the brother's account with the assessee. The Tribunal set aside the CIT(A)'s finding and directed the Assessing Officer to delete the addition of Rs. 2,00,000. Consequently, the application of section 115BBE to this amount also did not survive. Grounds relating to penalty proceedings were considered premature.

The Tribunal dismissed the appeal of the assessee. The Tribunal found that the assessee's plea of offering the disallowance to avoid litigation did not inspire confidence, especially as a corporate entity assisted by tax consultants. The Tribunal noted that the return of income was filed after the survey action, yet the impugned commission expenses were not disallowed. This, according to the Tribunal, attracted the penalty for misreporting. The Tribunal rejected the contention that the penalty notice was vague, stating that the show-cause notice clearly mentioned 'under-reporting of income in consequence of misreporting,' and similar assertions were made in the assessment order. The Tribunal held that if the assessee had filed an updated or revised return before the AO issued a notice or detected the omission, the penalty might have been restricted to simple under-reporting or excluded under Section 270A(6)(a) with a bona fide explanation. However, in this case, the return was filed after survey detection without disallowing the expenses, thus squarely attracting misreporting. All grounds of appeal were rejected.

The Tribunal held that the interest paid or credited by the assessee, a co-operative bank, to other co-operative societies for Assessment Year 2016-17 is covered by the second limb of section 194A(3)(v) of the Act. Consequently, the assessee was not required to deduct tax at source under section 194A on such payments. The Tribunal's reasoning was heavily influenced by the judgment of the Hon'ble Bombay High Court in Citizen Credit Co-operative Bank Ltd. v. Income Tax Officer, TDS Ward, Mumbai. The High Court had held that section 194A(3)(v) operates in two distinct parts, and the exclusion of 'a co-operative bank' was only in the first part. The second part, concerning payments to any other co-operative society, was not affected by this exclusion. The inherent legal character of a co-operative bank as a co-operative society continues, allowing it to fall within the second limb. The Tribunal also noted CBDT Circular No. 19/2015, which clarified that the exemption under section 194A(3)(v) for interest paid by a co-operative society to another co-operative society continues to apply to co-operative banks. Therefore, the foundation for treating the assessee as an assessee in default under section 201(1) and charging interest under section 201(1A) did not survive. The relief granted by the learned JCIT(A) was upheld.

The Tribunal held that the interest paid or credited by the assessee, a co-operative bank, to other co-operative societies for Assessment Year 2016-17 is covered by the second limb of section 194A(3)(v) of the Act. Consequently, the assessee was not required to deduct tax at source under section 194A on such payments. The Tribunal's reasoning was heavily influenced by the judgment of the Hon'ble Bombay High Court in Citizen Credit Co-operative Bank Ltd. v. Income Tax Officer, TDS Ward, Mumbai. The High Court had held that section 194A(3)(v) operates in two distinct parts, and the exclusion of 'a co-operative bank' was only in the first part. The second part, concerning payments to any other co-operative society, was not affected by this exclusion. The inherent legal character of a co-operative bank as a co-operative society continues, allowing it to fall within the second limb. The Tribunal also noted CBDT Circular No. 19/2015, which clarified that the exemption under section 194A(3)(v) for interest paid by a co-operative society to another co-operative society continues to apply to co-operative banks. Therefore, the foundation for treating the assessee as an assessee in default under section 201(1) and charging interest under section 201(1A) did not survive. The relief granted by the learned JCIT(A) was upheld.

The Tribunal held that the interest paid or credited by the assessee, a co-operative bank, to other co-operative societies for Assessment Year 2016-17 is covered by the second limb of section 194A(3)(v) of the Act. Consequently, the assessee was not required to deduct tax at source under section 194A on such payments. The Tribunal's reasoning was heavily influenced by the judgment of the Hon'ble Bombay High Court in Citizen Credit Co-operative Bank Ltd. v. Income Tax Officer, TDS Ward, Mumbai. The High Court had held that section 194A(3)(v) operates in two distinct parts, and the exclusion of 'a co-operative bank' was only in the first part. The second part, concerning payments to any other co-operative society, was not affected by this exclusion. The inherent legal character of a co-operative bank as a co-operative society continues, allowing it to fall within the second limb. The Tribunal also noted CBDT Circular No. 19/2015, which clarified that the exemption under section 194A(3)(v) for interest paid by a co-operative society to another co-operative society continues to apply to co-operative banks. Therefore, the foundation for treating the assessee as an assessee in default under section 201(1) and charging interest under section 201(1A) did not survive. The relief granted by the learned JCIT(A) was upheld.

The Tribunal held that the interest paid or credited by the assessee, a co-operative bank, to other co-operative societies for Assessment Year 2016-17 is covered by the second limb of section 194A(3)(v) of the Act. Consequently, the assessee was not required to deduct tax at source under section 194A on such payments. The Tribunal's reasoning was heavily influenced by the judgment of the Hon'ble Bombay High Court in Citizen Credit Co-operative Bank Ltd. v. Income Tax Officer, TDS Ward, Mumbai. The High Court had held that section 194A(3)(v) operates in two distinct parts, and the exclusion of 'a co-operative bank' was only in the first part. The second part, concerning payments to any other co-operative society, was not affected by this exclusion. The inherent legal character of a co-operative bank as a co-operative society continues, allowing it to fall within the second limb. The Tribunal also noted CBDT Circular No. 19/2015, which clarified that the exemption under section 194A(3)(v) for interest paid by a co-operative society to another co-operative society continues to apply to co-operative banks. Therefore, the foundation for treating the assessee as an assessee in default under section 201(1) and charging interest under section 201(1A) did not survive. The relief granted by the learned JCIT(A) was upheld.

The Tribunal upheld the CIT(A)'s decision on most grounds. Regarding interest on car loans, insurance, and depreciation (Grounds 1, 3, and 4), the Tribunal found that the CIT(A) correctly applied the doctrine of beneficial ownership. Despite the vehicles being registered in the director's name, the company bore the loan, capitalized the asset, and exercised dominion and control. The CIT(A) was directed to delete these additions. For rent expenses (Ground 5), the Tribunal agreed with the CIT(A) that providing accommodation to key management personnel can be a matter of commercial expediency and that the premises were plausibly used for official meetings. The rental expenditure was deemed incurred for business purposes, and the CIT(A)'s deletion was upheld. However, the Tribunal directed that the perquisite value of the rent-free accommodation should be taxed in the hands of the director, Mr. Jesus Lall, as it was not offered by him. For penal interest (Ground 6), the Tribunal held that penal interest for delayed payments is compensatory, not an offense or prohibited by law, and thus allowable as a business expenditure, upholding the CIT(A)'s deletion. The appeal was partly allowed.

The ITAT condoned the delay of 578 days in filing the appeal, subject to the assessee paying costs of Rs. 11,000/- to the Income-tax Department within 30 days. The Tribunal held that the cause for non-receipt of notices (old email ID) was bona fide and not due to conscious indifference, and the assessee acted with promptitude upon learning of the dismissal. However, the assessee was not absolved of all responsibility due to continued oversight in not updating its correspondence address. Regarding the ex parte order, the ITAT noted that there was no representation from the assessee before the CIT(A) and that the CIT(A) had disposed of the appeal without adjudicating the grounds on merits. To serve the interest of substantial justice, the ITAT set aside the CIT(A)'s order and restored the matter to the CIT(A)'s file for fresh adjudication of all grounds on merits after affording the assessee an adequate opportunity of being heard. The assessee was directed to comply strictly with all notices in the remand proceedings.

The Tribunal held that the interest income of ₹12,64,948 earned by the assessee from its deposits with Bharat Co-operative Bank Ltd. and The Saraswat Co-operative Bank Ltd. is eligible for deduction under section 80P(2)(d). The Tribunal reasoned that section 80P(2)(d) allows deduction for any income by way of interest or dividends derived by a co-operative society from its investments with any other co-operative society. The key requirements are that the recipient is a co-operative society and the investment is with another co-operative society. The Tribunal clarified that section 80P(4) was inserted to exclude co-operative banks from claiming deduction under section 80P in their own assessment, not to alter their character as co-operative societies for the purpose of section 80P(2)(d) when they are the investment destination for another co-operative society. The Tribunal distinguished the Supreme Court's decision in Totgars Co-operative Sale Society Ltd. v. ITO, noting it pertained to section 80P(2)(a)(i) and not section 80P(2)(d). The disallowance was deleted, and the Assessing Officer was directed to allow the deduction. The substantive ground raised by the assessee was allowed.

The ITAT held that the NFAC's order was unsustainable as it was based on a factually incorrect premise. The Tribunal noted that the NFAC dismissed the assessee's appeal for Assessment Year 2012-13 on the ground that the assessee had opted for the Vivad se Vishwas Scheme. However, the assessee produced Form No. 5 under the scheme, which the NFAC itself acknowledged related to Assessment Year 2015-16 and not the Assessment Year 2012-13 under appeal. This created a self-contradictory finding. The ITAT condoned the delay of 1,614 days in filing the appeal, citing the assessee's severe financial distress and circumstances beyond its control, supported by Supreme Court judgments on liberal construction of "sufficient cause." The Tribunal set aside the NFAC's order and restored the matter to the NFAC for fresh adjudication on merits after affording the assessee an adequate opportunity of being heard, subject to the assessee paying costs of Rs. 21,000/-.

The Tribunal held that the distribution fees received by the assessee from customers in India are not taxable as royalty. This decision was based on the principle of consistency, following the orders of the coordinate bench in the assessee's own case for earlier assessment years (AY 1998-99 to 2006-07). The Tribunal noted that the Revenue's counsel admitted that the issues were covered by these prior decisions. The Tribunal found no infirmity in the CIT(A)'s order deleting the additions and confirmed it. Regarding TDS credit, the Tribunal upheld the CIT(A)'s direction to the AO to verify and grant credit in accordance with law. Similarly, concerning interest under Section 234B, the Tribunal confirmed the CIT(A)'s direction to re-compute interest after verification and grant of TDS credit, finding the Revenue's ground to be misconceived to the extent it argued no liability for non-residents. The ground relating to penalty proceedings under Section 271(1)(c) was dismissed as premature, as held by the CIT(A). Consequently, all grounds raised by the Revenue were dismissed.

The Tribunal held that the distribution fees received by the assessee from customers in India are not taxable as royalty. This decision was based on the principle of consistency, following the orders of the coordinate bench in the assessee's own case for earlier assessment years (AY 1998-99 to 2006-07). The Tribunal noted that the Revenue's counsel admitted that the issues were covered by these prior decisions. The Tribunal found no infirmity in the CIT(A)'s order deleting the additions and confirmed it. Regarding TDS credit, the Tribunal upheld the CIT(A)'s direction to the AO to verify and grant credit in accordance with law. Similarly, concerning interest under Section 234B, the Tribunal confirmed the CIT(A)'s direction to re-compute interest after verification and grant of TDS credit, finding the Revenue's ground to be misconceived to the extent it argued no liability for non-residents. The ground relating to penalty proceedings under Section 271(1)(c) was dismissed as premature, as held by the CIT(A). Consequently, all grounds raised by the Revenue were dismissed.

The Tribunal held that the challenge to the validity of the reopening on the ground of retrospective application of the Finance Act, 2021 amendment fails. The Tribunal observed that the reasons recorded for reopening did not, in terms, refer to the amendment or its retrospective operation. Instead, the reasons were based on the provisions of section 36(1)(va), the statutory due dates, and the actual dates of payment as reflected in the material available. The subsequent reference to the amendment in the speaking order and the assessment order did not constitute the foundation of the reopening. The Tribunal also noted that the Hon'ble Supreme Court's decision in Checkmate Services Pvt. Ltd. (2022) 143 taxmann.com 178, which clarified the position on employees' contributions, did not depend on the retrospective operation of the Finance Act, 2021 amendment. Therefore, the recorded reasons disclosed a legally sustainable basis for forming the belief that income had escaped assessment. On merits, the Tribunal held that the addition of Rs.32,33,131/- is confirmed. Following the ratio of the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd., employees' contribution governed by section 36(1)(va) must be deposited within the due date prescribed under the relevant welfare legislation to qualify for deduction. The fact that payment was made before the due date for filing the return under section 139(1) does not cure the delay in respect of employees' contribution. The assessee did not dispute the dates of payment, which were beyond the statutory due dates.

The Tribunal held that the explanation provided by the assessee for the delay of 142 days was reasonable and bona fide. The assessment was completed ex parte under section 144 read with section 147, and the assessee's claim that notices were sent to a sold property's address was supported by an affidavit. The time taken to procure documents was also considered. The Tribunal applied the principle that 'sufficient cause' should be interpreted pragmatically to avoid shutting out genuine disputes due to procedural delays, especially when no deliberate negligence or mala fide conduct is evident. Therefore, the delay was condoned. Since the CIT(A) had dismissed the appeal on limitation and not on merits, and the assessment was ex parte, the Tribunal restored the issue to the Assessing Officer for fresh adjudication. The Assessing Officer was directed to examine the purchase agreement, sale agreement, and other relevant documents, and afford the assessee an opportunity to be heard. The Tribunal explicitly stated it had not expressed any opinion on the merits of the addition.

The Tribunal held that the addition of Rs. 4,23,10,839/- made on account of profit attribution to the PE in India cannot be sustained. The Tribunal noted that the controversy for the current year was materially identical to the issue adjudicated in the assessee's own case for AY 2022-23, where the Tribunal had held that no further profit was attributable to the PE in India when the Indian AE had been remunerated at arm's length, following the Supreme Court's decision in DIT v. Morgan Stanley & Co. The judgment reiterated the principle from Morgan Stanley that if an associated enterprise constituting a PE is remunerated on an arm's length basis, taking into account all risk-taking functions, then no further profit would be attributable to the PE. Since it was not disputed that the assessee had remunerated its Indian PE/AE at cost plus 15% and the arm's length nature of this remuneration was not disturbed, the ad hoc attribution of profit by the AO was not justified. Accordingly, the addition was deleted, and the relevant grounds were allowed. Ground No. 1 (general) and Ground No. 4 (consequential) were not separately adjudicated.

The Tribunal, considering the totality of the facts and circumstances, particularly the fact that the revenue raised no objection to the restoration of the matter, was of the view that the ends of justice would be met by granting the assessee one more effective opportunity to substantiate his explanation before the first appellate authority. The substantive dispute concerned the addition of Rs. 15,35,000/- under section 69A, with the assessee claiming the deposits were from earlier savings and withdrawals. The Assessing Officer and CIT(A) were not satisfied with the evidence. The Tribunal noted that the controversy was predominantly factual, requiring examination of withdrawals, utilization, cash availability, and its nexus with deposits. The assessee had sought a video conferencing hearing to explain these factual matters. Consequently, the Tribunal set aside the impugned order of the CIT(A) and restored the matter to his file for fresh adjudication. The CIT(A) was directed to consider the bank statements, cash-flow/reconciliation statement, and other documentary evidence, and afford the assessee an effective opportunity of being heard, including through video conferencing. The Tribunal explicitly stated that it had not expressed any opinion on the merits of the addition under section 69A or the consequential application of section 115BBE, leaving all factual and legal contentions open for the CIT(A)'s consideration.

The Tribunal held that there was no infirmity in the action of the lower authorities. Regarding the reopening under Section 147, the Tribunal found that the AO followed the due process laid down in Sections 148A(b) and 148A(d) of the Act, allowing the assessee an opportunity of hearing and appreciating the facts and submissions. The appellate authority had also held the reopening to be in accordance with law. On the issue of disallowance of deductions under Section 80GGC, the Tribunal noted that while payments were made through banking channels and receipts were produced, the investigation material, statements recorded, bank trail analysis, and the established modus operandi of the recipient political party constituted a complete chain of circumstances. This overwhelmingly demonstrated that the impugned donation was merely an accommodation entry and not a genuine contribution eligible for deduction. The Tribunal relied on the Supreme Court's judgments in CIT v. Durga Prasad More and Sumati Dayal v. CIT, stating that taxing authorities are not required to wear blinkers and can look beyond apparent transactions. The Tribunal concluded that the assessee failed to establish the genuineness of the donation. Consequently, the grounds raised by the assessee were dismissed. The ground relating to penalty proceedings under Section 270A was also dismissed as the penalty had only been initiated and not levied.

The Tribunal held that the notice under section 148 was issued on 01.04.2021, not 31.03.2021. This conclusion was based on the electronic delivery time to the assessee (01.04.2021 at 3:53 a.m.) and, crucially, the ITBA portal's record of the issuance date as 01.04.2021. The Tribunal found considerable force in the assessee's argument, citing the Bombay High Court's decision in Shah Nanji Nagsi Exports Pvt. Ltd., which held that an electronic notice sent on 01.04.2021 was not issued within the prescribed time frame under section 149. The Tribunal reasoned that when the departmental electronic record itself shows the issuance date as 01.04.2021, the date printed on the notice document (31.03.2021) cannot determine the actual date of issuance for limitation purposes. Consequently, the notice was found to be barred by limitation and without jurisdiction. The reassessment proceedings were held unsustainable. Ground No. 1 was allowed. Grounds 2 (principles of natural justice) and 3 (addition under section 68) were left undecided.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal noted that the assessee deposited Rs. 1,23,50,000/- in demonetized currency during the demonetization period. The assessee claimed these were regular business receipts and provided details of members and transactions in the Cash Transaction 2016 forms. The Tribunal observed that while the CIT(A) obtained remand reports from the AO, copies of these reports were not provided to the assessee to enable a rebuttal. The Tribunal found that the assessee was not given a proper and effective opportunity to explain its case on merits, as the CIT(A) proceeded to decide the appeal without obtaining a rejoinder from the assessee regarding the remand reports. Therefore, the Tribunal set aside the order of the CIT(A) and remanded the matter back to the CIT(A)'s file for fresh adjudication. The CIT(A) was directed to provide the assessee with copies of the remand reports, grant an adequate and reasonable opportunity of being heard, and allow the assessee to file further explanations. The Tribunal explicitly stated that it had not expressed any opinion on the merit of the addition, which the CIT(A) would decide independently. The grounds were allowed for statistical purposes.

The Tribunal, while admitting additional grounds of appeal, decided the substantive issues as follows: The Tribunal noted that Additional Ground Nos. 10 and 11, which pertained to the validity of DRP directions and the consequential assessment order, were requested by the assessee to be not pressed. Consequently, these grounds were dismissed as not pressed. The Tribunal also noted that Additional Ground No. 9, concerning the limitation for passing the final assessment order, was rendered academic due to findings on other grounds and was dismissed as infructuous. The operative part of the order indicates that the appeal of the assessee was allowed in the terms stated in the order, implying that the substantive grounds challenging the taxability of receipts as royalty/FTS, issues related to interest on refund, and penalty proceedings were decided in favour of the assessee, or at least the appeal was allowed based on the dismissal of the grounds that were not pressed or were infructuous. The specific findings on the taxability of the Rs. 11,34,37,872 as royalty or FTS, or as business profits, are not detailed in the provided excerpt as the appeal was allowed based on the dismissal of the grounds that were not pressed or were infructuous.

The Tribunal dismissed the appeal due to the assessee's persistent non-representation. The judgment notes that the appeal was fixed for hearing on 20 occasions, with the assessee remaining unrepresented on 11 recent occasions. Despite repeated opportunities, there was no effective representation from the assessee. Consequently, the Tribunal was constrained to proceed with the appeal in the absence of the assessee and dismiss it without deciding on the merits or legal contentions raised. The assessee was granted liberty to seek revival of the appeal by filing an appropriate application under Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, upon demonstrating sufficient cause for its non-representation. No specific findings were made on the grounds of appeal, as the appeal was dismissed procedurally.

The Tribunal condoned the delay in filing the appeal, considering the genuine medical reasons cited by the assessee and the non-opposition from the Revenue, referencing the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji And Others. The Tribunal noted that the CIT(A)'s order was passed ex-parte due to the assessee's non-compliance with notices. However, the assessee expressed willingness to produce necessary evidence before the Tribunal. In the interest of justice, the Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A) for de novo adjudication. This was subject to the assessee paying a cost of Rs. 10,000/- to the Prime Minister's National Relief Fund within 30 days. The CIT(A) was directed to decide the matter on merits after affording an adequate opportunity of being heard. The Tribunal explicitly stated that it had not expressed any opinion on the merits of the case. Other grounds were rendered academic.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.