ITAT Annual Digest [Part-41]

This analyzes all the ITAT stories published in the year 2023 at taxscan. in The Income Tax Appellate Tribunal (ITAT) Kolkata Bench directed readjudication on reason of auditor inadvertently shown wrong disallowance sum under Section 43B of Income Tax Act, 1961 in audit report uploaded on Income Tax Portal. The tribunal while considering the appeal admitted the submission of the assessee and restored the issue of disallowance made under Section 43B of the Income Tax Act to the file of the jurisdictional Assessing Officer .

Further, directed that the assessee should file details of proof of payment showing that the said liability has been paid off before the due date of furnishing of return of income under Section 139(1) of the Income Tax Act and also produce the certificate from the auditor who made the inadvertent mistake in the audit report uploaded on the income tax portal. Therefore, a single member bench of Manish Borad (Accountant Member) allowed the appeal filed by the assessee. The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the non-resident Indian assessee was eligible for a beneficial rate of tax at 15% on interest income during the calculation of tax amount under the India-USA Tax Treaty.

The two-member bench comprising Anil Chaturvedi (Accountant) and Siddhartha Nautiyal (Judicial) restored the file to the Commissioner of Income Tax (Appeals) to allow the assessee to provide supporting documents to validate that the assessee was a tax resident of the USA for the beneficial rate of tax calculation under India-USA treaty while allowing the appeal filed by the assessee. The Surat Bench of Income Tax Appellate Tribunal (ITAT) in the absence of deliberate or intentional or gross negligence and hence condoned the delay of 85 days and allowed the plea for deduction of professional and salary expenses under proviso to Section 201 of the Income Tax Act,1961. The Single member Bench of Pawan Singh, Judicial Member observed that there was only delay of about 85 days in filing appeal before CIT (A) and is not deliberate or intentional or gross negligence on part of assessee, therefore, considering the principle that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred, therefore, delay in filing appeal before the CIT (A) is condoned.

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the addition made without giving the sufficient opportunity of hearing to the assessee. The two-member panel comprising Sanjay Garg (Judicial) and Girish Agrawal (Accountant) directed the assessing officer to re-adjudicate the matter by giving the sufficient opportunity of hearing to the assessee while allowing the appeal filed by the assessee. The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the disallowed Tax Deducted at Source (TDS) credit cannot be added twice to the income of the assessee as it amounts to double the addition of income.

The two-member bench comprising Saktijit Dey (Judicial) and M. Balaganesh (Accountant) held that once a certain amount claimed as TDS credit was disallowed, the assessee’s claim of pre-paid taxes to that extent gets reduced. Therefore, there was no need for making any further addition of the corresponding amount to the income of the assessee as it amounts to the addition of the same amount twice while dismissing the appeal filed by the revenue.

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal filed by the revenue on the ground of the tax effect involved was less than the prescribed monetary limit by the Central Board of Direct Tax (CBDT) for filing the appeal. The two-member bench comprising Sanjay Garg (Judicial) and Girish Agrawal (Accountant) held that since the tax effect involved was less than the prescribed limit, the present appeal was not maintainable under section 268A of the Income Tax Act, 1961 while dismissing the appeal filed by the revenue. The Income Tax Appellate Tribunal (ITAT) Delhi Bench upheld the addition made under Section 36 of Income Tax Act for delayed deposit of Employees’ Provident Fund (EPF) and Employee State Insurance Corporation (ESIC) A two member bench of B.

R. R. Kumar(Accountant Member) and Yogesh Kumar U.

S. (Judicial Member) confirmed the addition under Section 36 of the Income Tax Act for delayed deposit of EPF & ESIC. The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the receipts from international traffic pertaining to voyages should not be chartered as royalty.

The two-member bench comprising Dr. B. R.

R. Kumar (Accountant Member) Yogesh Kumar Us (Judicial Member) held that revenue erred in treating the receipts from international traffic pertaining to voyage chartered as ‘Royalty’ . Ajay Vohra appeared for the assessee and Anshuman Pattnaik for the revenue.

The Delhi bench of Income Tax Appellate Tribunal (ITAT) has held that addition made on account of estimated rate of profit applied to turnover did not amount to concealment. Therefore, the bench deleted the penalty imposed by the Assessing Officer (AO). The two member bench comprising Kul Bharat (Judicial Member) and Dr.

B. R. R.

Kumar (Accountant Member ) allowed the appeal filed by the assessee and deleted the penalty. Neeraj Jain, counsel appeared for the assessee and Sanjay Kumar, counsel appeared for the revenue. The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled that it was not permissible for the assessing officer to conduct a second assessment on the identical matter within the same assessment year.

The two-member bench comprising Chandra Mohan Garg (Judicial Member) and Pradip Kumar Kedia (Accountant Member) quashed the second assessment order on the same issue on the same Assessment Year and allowed the appeal of the assessee. The Delhi Bench of Income Tax Appellate Tribunal (ITAT) while condoning the delay of the appeal, it was held that period during covid-19 pandemic not included in the limitation period for filing appeal. The two-member bench comprising Chandra Mohan Garg (Judicial Member) and Pradip Kumar Kedia (Accountant Member) directed the CIT(A) to consider the extended time limit and treat the appeals as has been filed within prescribed time limit.

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) upheld the deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 on the ground of the genuine disclose of all the material facts relating to the payment of a non-compete fee. The two-member bench comprising Saktijit Dey (Judicial) and M. Balaganesh (Accountant) upheld the decision of the Commissioner of Income Tax (Appeals) for deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act while dismissing the appeal filed by the revenue.

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) quashed the assessment order passed by the assessing officer without proper examination of documents and declared it as invalid as per the law. The two-member bench comprising B. R.

R. Kumar ( Accountant) and Yogesh Kumar US (Judicial) held that the assessment completed cannot be held to be legally valid and is liable to be quashed while allowing the appeal filed by the assessee. The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the utilisation of traveling expenses which was used for business purposes and not for personal use can be treated as deductible expenditure.

The two-member bench comprising B. R. R.

Kumar (Accountant ) and Yogesh Kumar US, (Judicial) directed the assessing officer to re-adjudicate for allowing the claim of the assessee while allowing the appeal filed by the assessee. The Pune bench of the Income Tax Appellate Tribunal (ITAT) held that the compulsory acquisition of agricultural land will not attract the capital gains which was chargeable to tax calculation. The two-member bench comprising R.

S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial) directed the assessing officer to re-adjudicate the matter while allowing the appeal filed by the assessee. The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) held that mere non-furnishing of a copy of the registration of charitable Trust under Section 12A of the Income Tax Act cannot be a reason to deny exemption under Section 11 of the Income Tax Act and hence set-asides the order of Commissioner of Income Tax (Appeals) [CIT(A)].

The Bench comprising of A. D. Jain, Vice President and Vikram Singh Yadav, Accountant Member held that mere non-furnishing of a copy of registration under Section 12A of the Income Tax Act cannot be held as a valid and justifiable reason for denial of exemption under Section 11 of Income Tax Act of the Act where such registration continues to exist and the assessee trust duly stand registered under Section 12A of Income Tax Act for the year under consideration.

The Tribunal further noted that the assessee trust’s current registration under Section 12A of the Income Tax Act continues to be valid and that the new registration rules have no impact on the assessee trust’s registration for the challenged assessment year 2020–21. The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT), observed that the revenue received on account of provision of facilities and services of seismic data acquisition and mining services are not Fees for Technical Services (FTS) taxable under Section 44B of the Income Tax Act, 1961. Reliance was placed on behalf of the assessee on the decision of Supreme Court in the case of ONGC Limited vs.

CIT, wherein it was held that similar services provided by the assessee were specifically covered under the provision of Section 44BB of the Income Tax Act and, therefore, general provision of Section 44DA of the Income Tax Act could not be applied. The Third Member observed that “The said services or facilities provided by the assessee actually are inextricably connected with prospecting for, or extraction or production of, mineral oils as held by the Supreme Court in the case of ONGC, under the similar facts and circumstances and the revenue received for the same accordingly is taxable under Section 44BB of the Income Tax Act. ” The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the revenue earned by a non-resident assessee on the sale of a copyrighted article is not like royalty.

“The amount paid by resident Indian end users/distributors to non-resident computer software manufactures/suppliers as consideration for the re-sale/use of the computer software through end user license agreement/distribution agreement is not like royalty for the use of copyright in the computer software, hence, cannot be treated as royalty,” the two-member Shri G S Pannu, President and Shri Saktijit Dey, Judicial Member observed. The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT), ruled that the amount received as reimbursement of service tax not includible in gross turnover for purpose of computing taxable income under Section 44BB of the Income Tax Act, 1961. The Third Member observed that “the amount received by the assessee as reimbursement of service tax is not includible in gross turnover for the purpose of computing taxable income under Section 44BB of the Income Tax Act.

” The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) deleted disallowance in the matter of expenses incurred by the Permanent Establishment (PE) to be set off in legal expenses against the interest income. A Two-Member Bench of the Tribunal comprising GS Pannu, President and Saktijit Dey, Judicial Member observed that “As regards assessee’s claim of disallowance of brought forward loss and set off of current year loss against the current years income, issues have become consequential in view of our decision qua the issue of existence of PE and taxability of interest income. Hence, the Assessing Officer has to give effect in accordance with the relevant statutory provisions.

” The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), allowed capital gain exemption on assessee who is not exclusive owner of multiple residential properties occupied by other family members. A two-Member Bench of the Tribunal comprising Kavitha Rajagopal, Judicial Member and Om Prakash Kant Accountant Member, observed that “The claim of deduction under Section 54 of the Income Tax Act need to be allowed, as there is no material to show that assessee is exclusively owner of the other five residential properties/flats which are occupied by the other family members. ” The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), allowed Corporate Social Responsibility (CSR) Expenditure on community development, and environment, health and safety expenses.

A two-Member Bench of the Tribunal comprising Amarjit Singh, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that “Therefore, in view of the above, once the expenditure has been accepted to be for the community development, and environment health & safety expenses, the same cannot be held to be not incurred wholly and exclusively for the purpose of business in the year under consideration. ” “Further, it cannot be disputed that the expenditure incurred on environment health and safety, as stated above, are relevant considering the business in which the assessee is engaged, i. e.

development and implementation of coal-based thermal power project” the Bench held. The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that no penalty should be levied on the grounds of non-auditing of accounts if bonafidely claims exemption under Section 11 of Income Tax Act, 1961. The single -member bench comprising Sandeep Gosain, (Judicial Member) deleted the penalty imposed under Section 271B of Income Tax Act.

The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer (AO) has wrongly invoked Section 50C (1) of the Income Tax Act, 1961. The two-bench member consisting of Sudhanshu Srivastava (Judicial member) and Vikram Singh Yadav (Accountant member) held to restore the appeal to the file of the Assessing Officer with the direction to re-adjudicate the issue after giving proper opportunity to the assessee to present his case. The assessee was directed to properly avail the opportunity being granted to him at juncture and to fully cooperate during the set aside the assessment proceedings.

If the assessee fails then the Assessing Officer shall have the liberty to decide the issue at hand ex-parte qua the assessee on merits and in accordance with law. Therefore, the appeal of the assessee stands allowed for statistical purposes. The Chennai Bench of Income Tax Appellate Tribunal (ITAT) while condone delay in filing appeal observed that ex parte order of Commissioner of Income Tax (Appeals)[CIT(A)] sent to the email address of former chartered accountant of assessee and direct readjudication.

The two-member bench comprising V. Durga Rao, (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) held that condone the delay in both the appeals and restore the appeals to the file of first appellate authority for denovo adjudication. K.

Meenakshisundaram, counsel appeared for the assessee and P. Sajit Kumar, counsel appeared for the revenue. The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the additions made on the cash out of income leaving aside the amount of huge cash withdrawals from State Bank of India to United Commercial Bank.

A bench consisting of a single member, C. M. Garg (Judicial Member), carefully reviewed the arguments presented by both parties.

The ITAT bench concluded that the AO made an incorrect decision by solely focusing on the cash derived from income while disregarding the substantial cash withdrawals from the assessee’s State Bank of India account. The amount of these cash withdrawals surpassed the impugned cash deposit made to the UCO Bank account of the assessee. Thus , the bench deleted the addition made by the assessing officer The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the cash deposits from earlier withdrawals cannot be totally disbelieved, thus, the bench allowed deduction on the cash deposits.

The Single-bench member consisting of George George K (Judicial member) stated that since the receipt of Rs. 5,50,00/- has not been doubted by the Assessing Officer, the amount would be available with the assessee for making the impugned cash deposits. Further, the assessee has placed the record on the return of income and statement of income wherein the assessee had offered to tax a sum of Rs.

2,50,000/- being sundry receipts and gifts. The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the assessee Hindu Undivided Family (HUF) be allowed with Tax Deducted at Source (TDS) credits upon filing an affidavit by the individual that the income does not belong to him and that he has not claimed credit of TDS. The Two-Member Bench comprising of Prashant Maharishi, Accountant Member and MS.

Kavitha Rajagopal, Judicial Member observed that the assessee has shown Long term capital gain of Rs. 13,57,61,063 from the sale of immovable property and is said to have invested Rs. 6,35,04,000 in the capital gain account and Rs.

50 lacs in bond for which the assessee is said to have claimed deduction under Section 54 and 54EC of the Income Tax Act. The Chennai bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the addition made by treating the loss of income as the speculation loss under section 73 of the Income Tax Act,1961. The two-member bench comprising V Durga Rao (judicial) and Manoj Kumar (Accountant) held that the explanation to section 73 of the Income Tax Act would not apply to the case of the assessee because of specific exclusions of the arbitrage/jobbing transactions from the purview of speculative transactions under section 43(5) of the Income Tax Act.

Additionally, the bench directed the assessing officer to re-compute the income of the assessee while allowing the appeal filed by the assessee. The Chennai bench of the Income Tax Appellate Tribunal (ITAT) directed the Commissioner of Income Tax (Appeals) to re-adjudicate the matter by condoning the delay of filing an appeal by the assessee. The two-member bench comprising V.

Durga Rao (Judicial) and Manoj Kumar Aggarwal (Accountant) directed the Commissioner of Income Tax (Appeals) to condone the delay of filing the appeal and re-adjudicate the case on merit while allowing the appeal filed by the assessee. The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) upheld the deletion of disallowance made by the assessing officer on the ground of incurred expenses as the revenue expenditure of the business of the assessee. The two-member bench comprising Chandra Mohan Garg (Judicial) and M.

Balaganesh, (Accountant) held that the decision made by the Commissioner of Income Tax (Appeals) by deleting the disallowance made by the assessing officer was as per the law while dismissing the appeal filed by the revenue. The New Delhi bench of the Income Tax Appellate Tribunal (ITAT quashed the order passed by the Commissioner of Income Tax (Appeals) framed under section 263 of the Income Tax Act,1961 in the name of the non-existing entity. The two-member bench comprising N.

K. Billaiya (Accountant) and Anubhav Sharma (Judicial) held that revision jurisdiction framed under section 263 of the Income Tax Act was not as per the law and liable to be quashed while allowing the appeal filed by the assessee. The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently quashed the reassessment proceedings initiated by the Assessing officer without having tangible materials.

The bench consisting of two members, M. Balaganesh, (Accountant Member) Kul Bharat, (JudicialMember) held that AO had invalidly assumed the jurisdiction under Section 147 of the Income Tax Act. The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that no addition could be made on assessee, if ownership of jewellery belongs to family members.

The bench consisting of two members, Dr. B. R.

R. Kumar, (Accountant Member) Yogesh Kumar US, (JudicialMember reviewed the arguments presented by both parties. The bench concluded that the jewellery found during the search operation was not in the ownership of assessee and also which was in the ownership of assess’s relatives.

Thus, the bench deleted the addition made by the assessing officer. The Pune bench of the Income Tax Appellate Tribunal (ITAT) held that the compensation paid by the builder for delay in handing over the possession of the flat is a part of a work-in-progress, thus, the bench allowed the deduction. A Single bench member consisting of R.

S. Syal (Vice president) is of the opinion that it would be just and fair if the impugned order is set aside and the matter is remitted to the Assessing Officer for verifying the relevant clauses of the agreement. If the payment is found to be compensation to the owner of the flats for the delay in handing over the possession, such an amount should be treated as a part of work-in-progress.

The Assessing Officer will decide the nature of payment as per law after affording a reasonable opportunity of hearing to the assessee. The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently ruled that the expenses incurred for business promotion and tour & travel of firms for discharging professional duties as partners should not be disallowed. The tribunal after considering the submissions observed that the income earned from the assessee is part of his total professional income whether as partner’s salary, interest on capital balance in the firm, share in profit or amount remitted as professional remuneration.

Further, it was observed that the amount of remuneration received by the assessee from KCO is in the course of his discharge o f his professional duties as a partner of Khaitan &Co . LLP and is not arising out of any independent agreement or employment between him and the said entity. The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the reopening of assessment under section 147 of the Income Tax Act,1961 after the expiry of four years from the end of the relevant year of assessment was invalid.

The two-member bench comprising N. K. Billaiya (Accountant) and Anubhav Sharma (Judicial) held that merely adding a line in the reasons recorded by the assessing officer was not sufficient to re-open the assessment proceeding under section 147 of the Income Tax Act while allowing the appeal filed by the assessee.

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