ITAT Rajkot Judgments — December 2022

The Tribunal held that the tax credit allowable under section 115JAA includes surcharge and cess components, citing various judicial precedents. Therefore, the denial of credit to the extent of surcharge and cess was a mistake apparent from the record.

The Tribunal held that interest accrued on NPAs is taxable only on receipt basis, even for entities following the mercantile system of accounting, citing Supreme Court and High Court decisions. It also held that the deduction under Section 36(1)(viia) is available to cooperative banks irrespective of whether they have rural advances.

The Tribunal held that a net profit of 2% is justifiable and reasonable in this line of business, considering various judicial precedents. The disallowance made by the AO was considered excessive.

The Tribunal deleted the penalty levied under Section 270A. It was held that the penalty was not sustainable as the AO failed to establish that the assessees had misreported their income by not offering the 'on-money' for taxation.

The Tribunal held that interest accrued on NPAs is taxable only on receipt basis, even for entities following the mercantile system of accounting, citing Supreme Court and High Court decisions. It also held that the deduction under Section 36(1)(viia) is available to cooperative banks irrespective of whether they have rural advances.

The Tribunal held that the assessee sufficiently demonstrated that the cash deposits were made from past savings and withdrawals. It also found that the interest income earned was below the taxable limit for the assessee.

The Tribunal held that the expenditure on road construction, even if enduring, facilitated business operations without acquiring a capital asset or augmenting the profit-making structure. The recurring nature of such expenses further supported its revenue character.

The Tribunal held that the penalty was wrongly imposed as there was no proper service of notice and the CIT(A) had summarily dismissed the appeal without considering the grounds. The adjournment application filed on medical grounds was also not disposed of.

The Tribunal deleted the penalty levied under Section 270A. It was held that the penalty was not sustainable as the AO failed to establish that the assessees had misreported their income by not offering the 'on-money' for taxation.

The Tribunal held that the CIT(A) erred in disregarding the Gujarat High Court's observations regarding the eligibility of interest income from co-operative banks for deduction under Section 80P(2)(d). The Tribunal found that such income is eligible for deduction.

The Tribunal restored the matter to the AO for verification, noting the assessee's non-cooperative attitude throughout the proceedings. This was subject to the assessee paying a nominal cost of Rs. 5000/- to the Prime Minister Relief Fund.

The Tribunal held that the CIT(Appeals) did not fully consider the facts and the relevant CBDT circular. The matter was restored to the CIT(Appeals) to consider the impact of CBDT Circular No. 6/2020 and the fact that Form 10 was filed within the due date and the return of income was filed within the due date prescribed under Section 139(4).

The Tribunal held that the Pr.CIT erred in invoking section 263 as the AO had made sufficient inquiry during the assessment proceedings. The assessee had provided explanations regarding the interest expenses, and the Pr.CIT's view that the AO had not conducted proper inquiry was not substantiated.