Top Stories Income Tax Annual Digest 2024: ITAT Cases [Part 11] A Round-Up of all the ITAT Rulings in 2024 By Manu Sharma – On January 9, 2025 3:44 pm – 25 mins read This annual round-up analytically summarizes all the Income Tax related Orders of the Income Tax Appellate Tribunal (ITAT) Benches of India reported at Taxscan.in during 2024. Discrepancy in Excess Stock accumulated during Normal Business Assessable as “Business Income”, S. 69B r.w.s S. 115BBE Not Applicable: ITAT Revathi Modern Rice Mill vs ACIT CITATION:   2024 TAXSCAN (ITAT) 761 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the discrepancy in the excess stock accumulated during normal business shall be assessable as business income and section 69B r.w.s section 115BBE of the Income Tax Act shall not be applicable in such cases. Noting the fact that the transactions including sales and purchase have taken place through bank transfer, the bench comprising Shri Manoj Kumar Aggarwal, Accountant Member and  Shri Manu Kumar Giri, Judicial Member observed that “Unless, discrepancy is pointed out in the physical quantities, no case of unexplained investment, in our considered opinion, could be made out against the assessee. Further, it is undisputed fact that the assessee is assessed to tax for past several years and its only source of income is ‘Business income’ only. In such a case, whatever discrepancies are noted, the same would be part and parcel of business operations and could be considered to be Business income only and not from any other sources.

It could very well be said that entire stock was accumulated out of income from business and the undisclosed business income, if any, was ploughed back into business to acquire further stock.” Date of Allotment of Under-Construction Property cannot be Treated as “Date of Purchase”:  ITAT allows Capital Gains Exemption u/s 54 Sunil Amritlal Shah VS The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 762 In a recent ruling, a Two-Member bench of the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the date of allotment in respect of an under-construction property cannot be considered as date of purchase for the purpose of allowing capital gain deduction under section 54 of the Income Tax Act, 1961 as the provision mandates “purchase” of property. Holding in favor of the assessee, the Tribunal held that “assessee is entitled to deduction u/s 54 of the act on purchase of new property considering the date of possession , when it is completed, as the date of purchase of property as agreement to purchase the property was for under construction property.” Disallowance under Income Tax Act cannot be based on Presumptions of Earning Dividend Income in future: ITAT Zodiac Ventures Ltd vsIncome Tax Officer Ward 11(3)(4) CITATION:   2024 TAXSCAN (ITAT) 763 The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that disallowance under Income Tax Act, 1961 cannot be based on presumptions of earning dividend income in future. It was found that the Assessing Officer ( AO ) has proceeded for disallowance made based on presumptions that the investment was made from borrowed funds bearing interest expenditure, which may earn dividend income in the future.

The two-member bench of Raj Kumar Chauhan (Judicial Member) and Padmavathy S (Accountant Member) has observed that the AO has proceeded for disallowance made based on presumptions that the investment was made from borrowed funds bearing interest expenditure, which may earn dividend income in the future, and the disallowances and additions are permissible under Section 14A read with Rule 8D of the Income Tax Rules, 1962. ITAT deletes Addition of ‘On Money’ due to Lack of Information about Receipt of Money Yash Synthetics Private Limited vs Assistant Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 764 The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the income tax addition of ‘On Money’ due to lack of information about receipt of money. The  two member bench of Anikesh Banerjee (Judicial Member) and B.R. Baskaran (Accountant Member) has observed that the entries made in the document fall short of certain material facts, viz., date and mode of receipt of “on money,” who had paid the money, to whom the money was paid, date of agreement, etc. Addition on Payment of Rent and Salary by Charitable Trust: ITAT Upholds  Allowance of Exemptions under Section 11 Income Tax Act Dy. Commissioner of Income Tax vs Catholic Education Society CITATION:   2024 TAXSCAN (ITAT) 765 The Income Tax Appellate Tribunal ( ITAT ), Mumbai upheld the exemptions under Section 11 of Income Tax Act and questioned the validity of the Assessing Officer’s findings in a recent appeal filed by Revenue on grounds of excessive payments made to specific persons under the charitable trust on account of salary and rent. The Revenue was represented by Shri H. M. Bhatt.

The Two Member Bench constituted by Prashant Maharishi ( Accountant Member ) and Sandeep Singh Karhail ( Judicial Member )  observed the AO’s findings to be erroneous and baseless, and discovered the payments paid by assessee on salary and rent was not excessive of what may be reasonably paid to specified persons under Section 13(3) of the Income Tax Act. Revisionary Jurisdiction under Income Tax Act cannot be invoked on allegation of Improper Inquiry by AO: ITAT Dharam Singh vs Pr. CIT CITATION:   2024 TAXSCAN (ITAT) 766 The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that revisionary jurisdiction under the Income Tax Act, 1961 cannot be invoked on allegation of improper inquiry by Assessing Officer ( AO ). The Tribunal viewed that the assessment order was held to be erroneous and prejudicial to the interest of revenue merely on the allegation that the Assessing Officer has not made an inquiry and verification regarding cash deposits and scrap sales. The two-member bench of Saktijit Dey (Vice President) and Naveen Chandra (Accountant Member) has observed that allegation of lack of inquiry by the Assessing Officer has to be substantiated based on record. The tribunal held that exercise of jurisdiction under Section 263 is invalid and, hence, unsustainable, as the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue.

Section 50C can be applied only to Capital Assets not to Leasehold Rights: ITAT Shivdeep Tyagi vs ITO CITATION:   2024 TAXSCAN (ITAT) 767 The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Section 50C of the Income Tax Act, 1961 can be applied only to capital asset not to leasehold rights. A two member bench of Kul Bharat (Judicial Member) and Avdhesh Kumar Mishra (Accountant Member) has observed that only if a capital asset, be it land, a building, or both, is transferred and the consideration received or accruing as a result of such transfer is less than the value adopted, assessed, or assessable by the stamp valuation authority, the deeming fiction under Section 50C (1) shall be activated to substitute the adopted, assessed, or assessable value as the full value of the consideration received or accruing as a result of the transfer. Delay in Filing Income Tax Appeal as Orders sent to Email was in Spam Folder: ITAT Condones Delay of 145 Days Tirupati Prasad Sahu vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 768 The Cuttack Bench of Income Tax Appellate Tribunal ( ITAT ) has condoned the delay of 145 days in filing an Income Tax appeal as the assessee failed to receive the orders sent through email, as many of these orders are going to spam folders. The two-member bench of George Mathan ( Judicial Member ) and Manish Agarwal ( Accountant Member ) has observed that the assessee mistakenly did not receive the orders sent through email, as many of these orders are going to spam folders. Further viewed that the explanation given by the assessee was satisfiable for condoning the delay of 145 days in filing the appeal before the CIT (A). ITAT Quashes Order Rejecting Approval u/s 80G of Income Tax Act as CBDT Extended Due Date for Filing Form 10AB Carers World Wide vs The Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 769 The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) has quashed the order rejecting the approval under Section 80G of the Income Tax Act as the Central Board of Direct Taxes ( CBDT ) has extended the due date for filing Form 10A/10AB via press release dated April 25, 2024, to June 30, 2022.

The two-member bench of Beena Pillai (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) has observed that the CBDT extended the due date of filing Form 10A/Form 10AB up to June 30, 2024, in respect of certain provisions of Section 10(23C), Section 12A, Section 80G, and Section 35 of the Income Tax Act. Income Tax Deduction cannot be denied due to wrong classification in ITR: ITAT National Contracting Company vs The Deputy Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 770 The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that deduction under the Income Tax Act cannot be denied due to wrong classification in Income Tax return ( ITR ). The two-member bench of Manu Kumar Giri ( Judicial Member ) and Manoj Kumar Aggarwal ( Accountant Member ) has observed that inadvertent non-reporting in tax audit report by the auditor is bonafide when all details are available in ITR on records although such deduction was find mentioned in wrong classification in ITR as the discussed supra. Deductions based on the genuine claim of the assessee cannot be denied especially in the circumstances as narrated above. As such the assessee has claimed deduction under section 43B of the Act and the same should have been allowed by the authorities below. While allowing the appeal, the Tribunal held that inadvertent non-reporting in a tax audit report by the auditor is bona fide when all details are available in the ITR on records, although such a deduction was found to be in the wrong classification in the ITR.

The deductions based on the genuine claim of the assessee cannot be denied. Deduction u/s 80P(2)(d) of Income Tax Allowable to Cooperative Banks Doing Banking Business: ITATGrand Paradi Co-op Housing vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 771 The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has allowed the deduction under Section 80P(2)(d) of the Income Tax Act, 1961 to the Grand Paradi Co-op Housing Society and held that cooperative banks are cooperative societies that are doing banking business. The single member bench of Prashant Maharishi (Accountant Member) has observed that, as per Section 2(10) of the Maharashtra Cooperative Societies Act, “co-operative bank” means a cooperative society that is doing the business of banking as defined in Section 5(1)(b) of the Banking Companies Act, 1949, and includes any society that is functioning or is to function as an agricultural and rural development bank. While allowing the appeal, the Tribunal held that the assessee is entitled to the deduction under Section 80P(2)(d) of the Income Tax Act with respect to the amount of interest income earned from cooperative banks.

Payment by Indian Entity to its AE Abroad not ‘FTS’ in absence of availability of Technical Skill: ITAT rules in favour Herbalife International India M/s.Herbalife International India Pvt. Ltd vs DCIT CITATION:   2024 TAXSCAN (ITAT) 772 The Bangalore Income Tax Appellate Tribunal ( ITAT ) held that payment made by Assessee ( Indian entity ) to its foreign AE ( Parent entity ) for obtaining administrative services would not be taxable as Fees for Technical/ Included Services  ( FTS/FIS )in India in terms of Indo USA DTAA, in the absence of ‘make available’ clause in the agreement between both the parties. The two-member Bench of Chandra Poojari (Accountant Member) and Prakash Chandra Yadav (Judicial Member) observed that “if there is any conflict among the provisions of DTAA and Income Tax Act 1961, then provisions of treaty would override the domestic law provisions”. The Bench also referred to the CBDT Circular No.333 dated 02.04.1982 reported in 137 ITR 1, to state that the provisions of DTAA will override the domestic law provisions. Benefit of Sec 36(1)(Va) of Income Tax Act is not Claimable on Failure to Deposit Employees’ Contribution to PF Within Due Date: ITAT Supreme & Co. Pvt. Ltd vs DCIT CITATION:   2024 TAXSCAN (ITAT) 773 The Kolkata Income Tax Appellate Tribunal ( ITAT ) has held that delayed deposit of amount collected towards employees’ contribution to Provident Fund ( PF ) renders claim of deduction under section 36(1)(va) of the Income Tax Act, 1961 ineligible.

The two member Bench of Sanjay Garg ( Judicial Member ) and Sanjay Awasthi ( Accountant Member ) reiterated that deduction under section 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF cannot be claimed even though deposited within the due date of filing of return even when read with Section 43B. The Bench held that deduction under section 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF cannot be claimed even though deposited within the due date of filing of return even when read with Section 43B of the Income Tax Act. Failure to serve Hearing Notice under Income Tax Act invalidates Ex-Parte Order: ITAT Littlestar Projects Pvt. Ltd vs ITO CITATION:   2024 TAXSCAN (ITAT) 774 In a significant case, the Kolkata Income Tax Appellate Tribunal ( ITAT ) held that failure to serve hearing  notice under Income Tax Act, 1961 invalidates ex-parte order. The ITAT directed the assessee to furnish its correct address before the competent authority. The two member Bench of Sanjay Garg (Judicial Member) and Sanjay Awasthi (Accountant Member) observed that “the assessee has further changed its address and the assessee is required to duly brought to the knowledge of the Assessing Officer/CIT(A) regarding the change in address”. The Bench found from a perusal of the Form No.36 that the assessee has changed its address later on, and this is why the hearing notices could not be served upon the assessee during the appellate proceedings. Because of the change of address of the assessee, the notices issued by the AO during the course of assessment proceedings were returned with mark ‘not found’. ITAT allows Income Tax Sec.80P Deduction to Co-operative Society on Interest Earned from Co-operative Bank The Janta Adarsh Co-operative vs ITO CITATION:   2024 TAXSCAN (ITAT) 775 In a matter related to Income Tax deduction, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the deduction under Section 80P(2)(d) of the Income Tax Act,  is allowable to the co-operative society on interest earned from co-operative banks. The two member bench of Kul Bharat ( Judicial Member ) has held that Co-operative Bank is primarily a Co-operative Society.

Therefore, for section 80P(2)(d) of the Income Tax Act, the assessee would be entitled for deduction under section 80P(2)(d) of the Income Tax legislation. While allowing the appeal, the tribunal held that the assessee would be eligible for income tax deduction under Section 80P(2)(d) ITAT Allows Depreciation Claim by Purchaser under Income Tax on Excess Amount Paid Over & Above Net Asset Value of Seller’s Business DN Solutions (India) Private Limited vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 776 The Bangalore Income Tax Appellate Tribunal ( ITAT ) held that once the department has accepted the capital gain offered by the seller upon transfer of its business, then said transaction cannot be doubted in the hands of the purchaser. The Bench disregarded the opinion of the Income Tax Assessing Officer that there was no intangible asset transferred to the assessee by the seller company, since the excess amount offered by the recipient company as short-term capital gain was accepted by the Revenue itself.

The Appellate Tribunal of Income Tax allowed assessee’s appeal and concluded that Income Tax Authorities are not correct in disallowing the claim of assessee on depreciation Taxpayer provides proper explanation and Documentary Evidence for Agricultural Income: ITAT deletes addition of Rs.16.4 Lakhs Dhoom Singh Sharma 9/1060 HIG vs ITO CITATION:   2024 TAXSCAN (ITAT) 777 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of Rs.16.4 lakhs after the taxpayer provided a proper explanation and documentary evidence for their agricultural income The two member bench of the tribunal comprising S. Rifafur Rahman (Accountant member) and Yogesh Kumar U.S (Judicial member) found merit in the Grounds of appeal of the assessee, accordingly, the additions made by the A.O. which was confirmed by the CIT (A) was hereby deleted and the Grounds of Appeal of the assessee were allowed. Taxpayer Avails Assessment u/s 44 AD without maintaining Regular Day Books of Account: ITAT dismisses appeal Amit Kumar Bhati vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 778 The two member bench of the Income Tax Appellate Tribunal ( ITAT ) Delhi, dismissed the taxpayer’s appeal after they claimed assessment under section 44AD without maintaining day-to-day regular books of account. The bench observed that no substantial evidence was produced to justify the transactions.

The manner in which CIT (A) has discussed the receipt and payment by assessee and lack of certainty to whom the payments were actually returned. The non-corroboration of claim of working as land aggregator with specific transactions taken up or abandoned on behalf of said builder M/s Krrish Buildtech, only justifies the conclusion of CIT (A) and same cannot be said to be based on mere suspicion Section 56 (2)(vii) not Applicable to Non-Resident: ITAT deletes Income Tax Addition of Rs. 9.31 Cr APL Logistics Vascor Automotive vs AO CITATION:   2024 TAXSCAN (ITAT) 779 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of Rs. 9.31 crore citing the non-applicability of Section 56(2)(vii) to non-residents. The CIT(A) failed  to consider  the assessee’s  pleas regarding the Rs.2.15 crores and Rs.9.31 crores additions, therefore, the coram of G.S Pannu ( Vice President) and Anubhav Sharma ( Judicial member)  remanding this  ground back to the CIT(A) for reconsideration in light of the appellant’s arguments, and granting the appellant a fresh opportunity for a hearing. The appeal of assessee was accordingly allowed Cash Deposit Made in Bank Account Stands Thoroughly and Properly Explained: ITAT Deletes Addition of Rs. 7.43 Crore DCIT Vs Sushil Kumar Sharma CITATION:   2024 TAXSCAN (ITAT) 780 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that the cash deposit made in the bank account was thoroughly and properly explained, resulting in the deletion of an addition of Rs. 7.43 crore.” The two-member bench of the tribunal, comprising Amit Shukla (Judicial member) and M. Balaganesh (Accountant member), observed that the assessee had duly explained that the phone numbers provided were complete.

The first two digits were given in the previous column, and the remaining eight digits in the next column, thereby ensuring completeness of both mobile and landline numbers. Additionally, the assessee had conducted enquiries on a few borrowers on a test-check basis and found them to be genuine, having also verified their PANs. These details were placed on record before the lower authorities. Therefore, the observations made by the learned AO in the assessment order in this regard are completely devoid of merit. ITAT deletes Penalty u/s  271D of Income Tax Act on Availability of Reasonable Cause to Prove Bonafide Act of Assessee Laxmilal Badolla vs The NFAC CITATION:   2024 TAXSCAN (ITAT) 782 The Bangalore of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under section 271 D of the Income Tax Act, 1961 as it proved reasonable cause to treat the assessee as bonafide. The words ‘reasonable cause’ would mean a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fides, from doing the act of which he, called on to act reasonably, knows or ought to know. The two-member Bench of Chandra Poojari (Accountant Member) and Prakash Chandra Yadav (Judicial Member) observed that “there was reasonable cause and explanation of the assessee would be treated as bonafide, hence in this case, no penalty is leviable as section 273B. Section 273B categorically excludes the operations of section 271D”. (Part 10) The Bench found that the assessee filed his return on Aug 07, 2017.

The Department after a month processed and issued a penalty notice after almost four years of the processing return. The Bench opined that the penalty was not initiated by the Revenue in a reasonable time as the Departmental Representative had failed to point out anything contrary to the facts of the case. . Licence Fees Received Towards Live Transmissions of Cricket Matches Held in Australia Not Taxable in India: ITAT Cricket Australia vs ACIT (International Taxation) CITATION:   2024 TAXSCAN (ITAT) 783 The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the licence fees received by the assessee towards live transmissions of cricket matches held in Australia are not taxable in India as royalty. The two-member bench of G.S. Pannu (Vice President) and Anubhav Sharma (Judicial Member) have observed the rights were merely for advertising, communications, and sales and marketing campaigns showcasing the Sponsor’s association with the Big Bash League (BBL). The use of intellectual property rights like the logo of the assessee or BBL, was incidental to the objective of the promotion of BBL and the products of the sponsor. CIT(E) Rejects S.12AB Application under Income Tax Act without providing sufficient opportunity to furnish Documents: ITAT directs Re adjudication Institute of Driving and Traffic Research vs The Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 784 The Raipur Bench of the Income Tax Appellate Tribunal ( ITAT ) observed that as the assessee institute had remained divested of sufficient opportunity to put forth its case and furnish the requisite details in the course of the proceedings before the CIT( Exemption ), the matter need re-adjudication. A two member bench of Shri Ravish Sood, Judicial Member and Shri Arun Khodpia, Accountant Member observed that as the assessee institute had remained divested of sufficient opportunity to put forth its case and furnish the requisite details in the course of the proceedings before the CIT( Exemption ), the matter need re adjudication.

Mere Suspicion cannot be a Ground for Issuance of Notice u/s 148 of the Income Tax Act: ITAT Keshav Shroff vs ITO, Ward-50(1), Kolkata CITATION:   2024 TAXSCAN (ITAT) 785 In a recent case, the Kolkata Bench of The Income Tax Appellate Tribunal ( ITAT ) has held that mere suspicion cannot be a ground for issuance of notice under section 148 of the Income Tax Act, 1961.It was viewed  that when the assessee has fulfilled all the three ingredients i.e., identity and creditworthiness of the loan creditors and the genuineness of the transaction by producing documentary evidence then the unsecured loan stands explained. A two-member bench of Dr Manish Borad, Accountant Member & Pradip Kumar Choubey, Judicial Member viewed that mere suspicion cannot be a ground for issuance of notice.  Further ,observed that there is nothing in the record brought by the AO to establish any connection of the assessee with Mukesh Banka, there is no transaction made by and with Mukesh Banka as the statement of bank account details reveals. The ITAT allowed the appeal of the assessee. Old Loans Converted into Share Allotment Cannot be Unexplained Money: ITAT deletes Addition under Income Tax Act Sachdev Steel Pvt. Ltd vs ITO CITATION:   2024 TAXSCAN (ITAT) 786 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Unexplained money under the Income Tax Act, 1961 as the amount was the old loan converted into share allotment. A two-member bench of Shri Sanjay Garg, Judicial Member and Dr Manish Borad, Accountant Member observed that the documents referred by the Counsel for the assessee are enough to prove on record that no fresh share application money was received by the assessee during the year under consideration. ITAT sets aside Income Tax Reassessment completed without Providing a Copy of the Reasons Rajesh Kumar Tiwari vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 787 The Raipur Bench of the Income Tax Appellate Tribunal ( ITAT ) sets aside income tax reassessment completed without providing copy of the reasons. The Tribunal found that the Commissioner of Income Tax (Appeals)[ CIT(A) ] had not considered the adjournment request of the assessee neither additional submission nor legal grounds / additional grounds assailed by the assessee. Rajesh Kumar Tiwari, the appellant assessee filed an original return of income declaring a total income of Rs. 1,57,520/- and notice under section 148 was issued by Income Tax Assessing Officer ( AO ) against which the appellant filed a return declaring the same income as declared in the original return.

The AO passed an order under Section 147 of Income Tax Act assessing the income at Rs. 1,44,48,972/- making certain additions/disallowances. The AO observed that while computing the capital gain, the appellant has shown sale consideration of Rs. 22,50,000/- instead of Rs. 1,54,19,500/- i.e. value adopted by Stamp Valuation Authority. During the assessment proceedings, the appellant specifically requested before AO to refer the matter to DVO for valuation of property but AO did not accept the submission of the appellant. Ignoring the request of the appellant, the AO concluded that, considering the location of property, the value adopted Stamp Valuation Authority is reasonable and not disputable. He made an addition of Rs. 1,31,69,500/- and recomputed the capital gain disclosed by the appellant. A two member bench of Shri Ravish Sood, JM & Shri Arun Khodpia, AM set aside the order of CIT(A) to his file for fresh adjudication and partly allowed the appeal. ITAT allows Liquor, Buffet Dinner and Govt Taxes to DLF Resort expenses as Business Promotion Expenses u/s 37(1) Rhine Energy LLP vs Assessment Unit CITATION:   2024 TAXSCAN (ITAT) 788 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed expenses for liquor, buffet dinner, and government taxes paid to DLF Resort as business promotion expenses under Section 37(1) of the Income Tax Act. The two member bench of the tribunal comprising S. Rifafur Rahman (Accountant member) and Vimal Kumar (Judicial member)  found that assessee had arranged a party at Taj Mahal Hotel and paid hotel bill of Rs. 20, 00,557/- consisting of cot of Buffet dinner, liquor and Government taxes etc.

The appellant claimed expenditure as revenue exclusively for purpose of business liable under Section 37(1) of the Income Tax Act. Issuance of Notice in name of Non-existing entity is Non-curable defect u/s 292B of Income Tax Act: ITAT quashes Reassessment u/s 148 Dragon Builders & Developers LLP vs ITO CITATION:   2024 TAXSCAN (ITAT) 789 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) quashed the reassessment, stating that the issuance of a notice in the name of a non-existing entity is a non-curable defect under Section 292B of the Income Tax Act, 1961. The  two members of the tribunal comprising Amit Shukla (Judicial member) and M. Balaganesh (Accountant member)  held that when a private limited company has been converted into an LLP and this fact is duly conveyed to the AO during the reassessment proceedings vide the objections filed to reasons recorded, then the notice issued under Section 148 in the name of non-existing company leads to quashing of the reassessment proceedings as this jurisdictional defect is not curable under Section 292B of the Income Tax Act, 1961. Reliance has been placed on the Supreme Court Judgement in the case of Maruti Suzuki India Ltd. Identity of Parties, Share Applicant, Vendor, Promoters and Genuineness of Transaction of Land is duly established: ITAT deletes addition of ₹3 Cr Neo Structo Construction Pvt. Ltd. vs The ACIT CITATION:   2024 TAXSCAN (ITAT) 790 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of 3 crore Rupees, finding that the identity of the parties, share applicants, vendors, and promoters, as well as the genuineness of the land transaction, was duly established. The two member bench of the tribunal comprising Madumitha Roy ( Judicial member ) and Waseem Ahemed ( Accountant member ) lifted the corporate veil and held that, ultimately, they were still the owners of the land transferred to the assessee.

Charging Capital Gains Tax twice on Same Land from Sale Deed Execution is Impermissible: ITAT quashes Reassessment u/s 148 Dabur India Ltd vs ACIT CITATION:   2024 TAXSCAN (ITAT) 791 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that charging capital gains tax twice on the same land from the execution of the sale deed was impermissible, and consequently quashed the reassessment under Section 148 of the Income Tax Act, 1961. The two member bench of the tribunal comprising Amit Shukla ( Judicial member) and M. Balaganesh ( Accountant member)  held that the assumption of the jurisdiction by the AO under Section 147 of the Income Tax Act was  illegal and in any case, there cannot be any assessment of capital gains on merits and on law for AY 2011-12. Accordingly, the grounds raised by the assessee are allowed, the appeal of the assessee was allowed. ITAT deletes Income Tax Addition made on Cash Deposits during Demonetization Period DURGA FIRE WORK vs ITO CITATION:   2024 TAXSCAN (ITAT) 792 The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition under section 68 of the Income Tax Act, 1961 made on cash deposits during the demonetization period. The two-member bench of Challa Nagendra Prasad ( Judicial Member ) and Avdhesh Kumar Mishra ( Accountant Member ) has observed that there cannot be any addition under Section 69A of the Income Tax Act in respect of cash deposits made by the assessee into its bank account as unexplained income in the case of the assessee. Allegation of Bogus Donation: ITAT Allows Income Tax Deduction u/s 35 (1)(ii) in Absence of Material Evidence Chemstar International vs DCIT-24 CITATION:   2024 TAXSCAN (ITAT) 793 In a recent case related to the allegation of bogus donation, the Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) allowed Income Tax deduction under section 35 (1) (ii) of the Income Tax Act, 1961 as there was no material to prove that the check paid for the donation had been ploughed back by way of cash. The two-member bench of Sunil Kumar Singh (Judicial Member) and B.R. Baskaran (Accountant Member) has observed that the AO has not brought any material to disprove the evidence furnished by the assessee concerning the donations it has made to the institutions.

There is also no proof to show that the check paid by the assessee has been ploughed back by way of cash to the assessee. It is a settled proposition that the subsequent withdrawal of recognition granted under Section 35(1)(ii) will not be a bar for granting deductions for the donations paid earlier. Excise Duty Exemption for Tobacco Refuse allowable, By-Product in Cigarette Manufacturing: CESTAT Commissioner of Central Excise vs M/s. NTC Industries Limited CITATION:   2024 TAXSCAN (ITAT) 794 In a major ruling, the Kolkata bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) ruled that excise duty exemption for tobacco refuse, by-product in cigarette manufacturing The  two member bench of the tribunal comprising Ashok Jindal ( Judicial member) and Rajeev Tandon ( Technical member) highlighted that input namely cut tobacco used in the manufacture of dutiable cigarettes and tobacco refuse is a by-product which emerges during manufacturing, the tobacco refuse is not liable to duty.

Income Tax Reassessment after Expiry of 4 years due to Non-Filing of GST by Supplier is Invalid: ITAT Karrm Infrastructure Private Limited vs Commissioner of Income Tax (Appeals) NFAC CITATION:   2024 TAXSCAN (ITAT) 795 The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that no reopening can be done after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for the reasons of the failure on the part of the assessee to disclose truly and wholly all material facts necessary for the assessment. The two-member bench of Amit Shukla ( Judicial Member ) and Gagan Goyal ( Accountant Member ) has observed that the assessment was already completed under Section 143(3) by the order dated March 20, 2016. The case has been reopened on some Income Tax Business Application ( ITBA ) databases where the parties from whom the assessee made purchases were found to be non-filers of GST, and simply based on this information, the assessment has been reopened under Section 148 to make the addition on account of purchases that already stood examined earlier as they are part of the trading amount. While allowing the appeal, the Tribunal held that the time limit for reopening and the assessment as was applicable at the time of issuance of the Income tax reassessment notice is three years from the end of the relevant assessment year.

Penalties u/s 269SS and 269T cannot be Levied on Company for Receipt/ Repayment of Cash Loans from Directors out of Business Exigency: ITAT Pearl Beach Promoters P. Limited VS The Assessing Officer CITATION:   2024 TAXSCAN (ITAT) 796 The Chennai ‘A’ Bench of Income Tax Appellate Tribunal ( ITAT ) held that penalties under Sections 269SS and 269T of the Income Tax Act, 1961, cannot be levied on a company for the receipt and repayment of cash loans from directors due to business exigency. The two-member bench of Mahavir Singh, Vice President, and Manoj Kumar Aggarwal, Accountant Member, rejected the argument that receipt and repayment of cash loans from directors were not covered under Sections 269SS and 269T, noting that no such exceptions are provided in these statutory provisions. The ITAT concluded that the penalties under Sections 271D and 271E were not justified in this case. It allowed the appeals of the assessee, deleting both penalties. Interest Paid on Borrowings to Acquire Property deductible from Sale Consideration: ITAT directs to Re-Compute Capital Gain Ms.DiyyaKrishnasayee vs DCIT CITATION:   2024 TAXSCAN (ITAT) 797 The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) has directed that interest paid on borrowings to acquire property should be deductible from the sale consideration, ordering the re-computation of capital gains. A two-member bench of Manoj Kumar Aggarwal (Accountant Member) and Manu Kumar Giri (Judicial Member) concluded that the interest expenditure was allowable in the computations of capital gains. The AO was directed to re-compute the income of the assessee, allowing the impugned interest expenditure. The ITAT allowed the appeal, providing significant relief to the legal heir of the deceased assessee by directing the re-computation of LTCG, inclusive of the interest component as a cost of acquisition.

Huge Amount cannot be given to anybody for “Free”: ITAT upholds Addition of Gift Indira Ramaiah vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 798 The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the addition of a gift, stating that a huge amount cannot be given to anybody for free. The two member bench of the ITAT comprising George George K ( Vice President ) and Laxmi Prasad Sahu ( Accountant member )  rejected the argument of the  AR that loan was  still outstanding and it was liability of the assessee, since it was not substantiated with cogent evidence. Accordingly ITAT dismissed the grounds of assessee. Form 10IE Directory, not Mandatory: ITAT directs CPC to allow Benefit of New Income Tax Regime Akshay Devendra Birari vs DCIT CITATION:   2024 TAXSCAN (ITAT) 799 The Pune Bench of the Income Tax Appellate Tribunal has directed the Centralised Processing Centre (CPC) to allow the benefit of filing Income Tax Return (ITR) under the New Income Tax Regime, despite Form 10IE being filed, but after the due date. The Income Tax Appellate Tribunal ruled that filing Form No. 10IE is directory rather than mandatory. Since the form was available to the CPC on the processing date, the CPC should have considered it and allowed the benefits of the New Tax Regime. Consequently, the Tribunal directed the CPC to amend the intimation by considering Form No. 10IE, thus granting the assessee the benefits of the New Tax Regime. Family Business of Money Lending for 20 Years: ITAT upholds Addition of Excess Income as ‘Business Income’ Shri Rameshlal Kailash vs ITO CITATION:   2024 TAXSCAN (ITAT) 800 The Chennai Bench of the Income Tax Appellate Tribunal (I TAT ) upheld the addition of excess income as ‘business income’ for a family engaged in the money lending business for 20 years. The two-member bench of Manu Kumar Giri (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) found that the assessee family had been engaged in money lending for over 20 years, with promissory notes as current assets. The bench noted that sundry debtors would change continuously due to advances given and received back. The differential was offered as undisclosed income by the assessee, arising from the money lending business.

The ITAT concluded that the excess debtors were from the business and taxable as ‘business income.’ The ITAT’s decision was supported by similar cases, including the Chennai Tribunal in M/s Mookambika Impex vs. DCIT and M/s Overseas Leathers vs. DCIT. The Tribunal upheld the assessee’s treatment of additional income as ‘Business Income,’ directing the AO to re-compute the income and demand payable and directed the CIT(A) to adjudicate the issue on merits. Both appeals were allowed. Bonus of Equity Shareholders not Covered under S.2(22)(b) of Income Tax Act, not Taxable as “Other Income” u/s 56(2): ITAT DCIT vs M/s. Tangi Facility Solutions Pvt. Ltd CITATION:   2024 TAXSCAN (ITAT) 801 Concerning the latest case, the Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal made by the assessee as the tribunal agreed to the findings made by the Commissioner of Income Tax (Appeals). The Tribunal held that bonuses of equity shareholders are not covered under section 2(22)(b) of the Income Tax Act,1961 and are not taxable as “other income” under Section 56(2) of the Act. The two-member bench of Mahavir Singh(Vice President) and Manoj Kumar Aggarwal ( Accountant Member ) found that there is no reason to reverse the CIT(A)’s decision in this case based on the legal precedents and rulings. Beneficial provision of S.54 F should be given a Liberal Construction to the Maximum Extent Possible: ITAT upholds Full Deduction for Purchase of Property in Wife’s name out of Bank Loan Shri Velayutham Surya Narayanan vs ITO CITATION:   2024 TAXSCAN (ITAT) 802 In the recent case, the Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Income-tax Assessing Officer ( AO ) to allow the claim of the assessee under Section 54F of the Income Tax Act,1961 as the assessee has fulfilled the necessary conditions required under the aforementioned section.

The Tribunal upheld full deduction made for purchase of property in wife’s name out of bank loan. The two-member bench of Manu Kumar Giri (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) found that the assessee has taken into consideration the necessary conditions that are required to claim the deduction under Section 54F other than the fact that the new investment was made under the name of the assessee’s wife. The Tribunal allowed the claim made by the assessee under section 54F of the Act and ordered the AO to allow the Income tax deduction claimed by the assessee under section 54F of the Act. N. Arjun Raj appeared for the appellant and AR V Sreenivasan appeared for the respondent. Section 254(2) of Income Tax cannot be used for Recall and Review Order by Tribunal: ITAT ITO vs Neetaben Snehalkumar Patel CITATION:   2024 TAXSCAN (ITAT) 803 The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the provision of Section 254(2) of the Income Tax Act, 1961 cannot be used for a recall and review order by the tribunal. It was viewed that the above-said provision intended to only rectify the mistake apparent from the records.

The two-member bench of Raghunath Kamble ( Judicial Member ) and Narendra Prasad Sinha ( Accountant Member ) has observed that the order passed by the ITAT recalling its earlier order, which was passed in the exercise of powers under Section 254(2) of the Act, is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254(2) of the Income Tax Act. While dismissing the application, the Tribunal noted that the finding as given by the tribunal was not only based on the portion of the order to which the assessee objected. The finding as recorded by the Tribunal is not disputed as incorrect, and no mistake in the findings has been pointed out. The tribunal held that the ITAT is not required to revisit its order and dwell on its merits, as the power under Section 254(2A) is limited to correcting or rectifying mistakes apparent on record. Scrip can’t be Penny Stock: ITAT deletes Addition u/s 68 of Income Tax Act M/s. Elara India Opportunities Fund Limited vs Dy. CIT (International Taxation)- 2(2)(1) CITATION:   2024 TAXSCAN (ITAT) 804 While deleting the addition under section 68 of the Income Tax Act, 1961, the Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) held that scrip cannot be called penny stock when shares are retained for more than 10 years The two-member bench of Kavitha Rajagopal ( Judicial Member ) and Amarjit Singh ( Accountant Member ) has observed that the assessee, being a SEBI-registered FPI, is engaged in investment in various companies out of which the assessee earns income and is also the only source of income for the assessee.

The AO has failed to substantiate how the assessee is involved with Naresh Jain, alleged to be an accommodation entry provider who has even otherwise not specifically mentioned the assessee as the beneficiary of accommodation entry and the scrip of International Conveyors Ltd. (ICL) as a penny stock. While allowing the appeal, the ITAT directed the A.O. to delete the addition made under Section 68 of the Income Tax Act. Consultancy Charges paid to Resident Director not ‘Excessive or Unreasonable’: ITAT allows Company’s Deduction Claim M/s Egberts India Private Limited vs ITO CITATION:   2024 TAXSCAN (ITAT) 805 The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) determined that the consultancy charges paid to a resident director by M/s Egberts India Private Limited were not “excessive or unreasonable.” Consequently, the tribunal allowed the company’s deduction claim for the payment made. The two-member bench of Manoj Kumar Aggarwal ( Accountant Member ) and Manu Kumar Giri ( Judicial Member ) found that the AO had not provided any material evidence to demonstrate that the payment was excessive or unreasonable. The bench emphasised that the reasonableness of expenditure should be judged from the perspective of a businessman, not the Revenue. The tribunal referred to the ruling of Madras High Court in the case of Computer Graphics Pvt. Ltd, which held that disallowance under Section 40A(2) requires proof of excessive or unreasonable payment. It was also noted that the revenue of the company from operations significantly increased in the year under consideration, justifying the higher remuneration to the resident director.

The payment was also found to be in conformity with the provisions of the Companies Act, and the director had duly offered the income to tax in his return. The tribunal deleted the disallowance of Rs.73.78 Lacs and directed the AO to re-compute the income of the assessee. Accordingly, the appeal was allowed. Bonus paid as CTC to Employees cannot be Disallowed u/s 43B of Income Tax Act: ITAT grants Relief to Renault M/s Renault Nissan Automotive India Private Limited vs DCIT CITATION:   2024 TAXSCAN (ITAT) 806 In a ruling that grants relief to Renault Nisan Automotive, the Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that bonuses paid as CTC of employees cannot be disallowed under section 43B of the Income Tax Act,1961. The Tribunal contested four different issues and ordered partial allowance of appeal based on the contention made by disallowed expenses and depreciation.

The Tribunal agreed that the business setup date was 01-10-2009, depreciation needed to be allowed based on the assets put to use and the additional depreciation issue back to the AO for reconsideration. The Tax Auditor had reported that a bonus of Rs.277.83 Lakhs was unpaid as of 31-03-2010. The assessee had claimed that this was variable pay and part of the CTC of employees. The AO disallowed it under Section 43B of the Act. While partly allowing the appeal the two-member bench of Mahavir Singh ( Vice- President ) and Manoj Kumar Aggarwal ( Accountant Member ) agreed to the contention made by the assessee and stated that the bonus is payable to employees who have rendered services to the assessee and the same form part of CTC of employees, therefore the disallowance is not valid and is deleted.