ITAT Annual Digest 2023 (Part-6)

The Ahmadabad ITAT held: “Accordingly, I am of the view that the assessee should be allowed the benefit of TDS credit in the AY 2017-18 subject to the verification. Hence, the ground of appeal of the assessee is allowed in the terms of the above direction.” Mrs. D. Vijayalakshmi vs. ITO CITATION: 2023 TAXSCAN (ITAT) 395 The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, held that the provision for capital gain exemption u/s 54F is the beneficial provision, and hence that substantial compliance would entitle an assessee to claim the full deduction. The Chennai ITAT commented: “It could be seen that the assessee has entered into a sale agreement dated 15.05.2013 for the sale of property for Rs.283 Lacks. The terms of the sale

agreement have been honored and the intended purchaser has paid sale consideration from time to time. The full sale consideration has been paid on 16.12.2013 whereas the sale deed has been executed on 23.02.2015. The possession is stated to be handed over on 15.10.2014. As against installments so received, the assessee has purchased land on 29.11.2013 which falls within one year from receipt of full sale consideration as well as handing over of the possession.” Shri Navghanbhai LaxmanRabar vs. ITO CITATION: 2023 TAXSCAN (ITAT) 396 The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, while disallowing capital gain exemption u/s 54 F, held that non- registered banakhat is not a valid document for property transfer. The Ahmedabad ITAT, finally held: “Even in the sale deed there is no mention of Banakhat. The issue of invoking the exemption under sec 54F was also held invalid by the lower authorities. The onus to prove the findings of the authorities below as not justified lies upon the assessee. However, the assessee has not brought anything contrary to the findings of the authorities below. As such, it seems that the assessee is not interested in pursuing his claims as he failed to appear despite giving so many opportunities by the Tribunal. Therefore, we are not inclined to interfere in the finding given by the Ld. CIT (

A). Hence, the ground of appeal raised by the assessee is dismissed.” Praveen Kumar Jain vs. Dy. Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 397 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has confirmed the addition in respect of the commission earned from 54 paper companies. the Division Bench of S Rifaur Rahman (Accountant Member) and Kuldip Singh (Judicial Member) confirmed the addition and dismissed the appeal observing that, “It is proved on record that assessee being into the business of providing accommodation entries for an unsecured loan, share application money, long-term capital gain, for bogus sales and purchases, for entries of turnover trading and accommodation entries for facilitating exempt income from bogus LTCG in penny stock by floating paper companies and by charging commissions, which is nothing but a fraud on the state exchequer,” Shri Amit Kumar Hasmukhbhai Shah vs. Dy. CIT, Circle-1(2) CITATION: 2023 TAXSCAN (ITAT) 398 The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that no penalty can be imposed if income is already offered to tax by a different entity. The ITAT Bench composed

of Annapurna Gupta, the Accountant Member, along with Siddhartha Nautiyal, the Judicial Member observed: “We have heard the rival contentions and perused the material on record. We observe that in the case of Patel Chemical Works v. Assessing Officer, the High Court has held that in penalty proceedings, factum of the very same income having been offered to tax by different entity and having been taxed substantially in hands of other entity becomes a relevant factor for determining whether the assessee has concealed the said income or furnished inaccurate particulars regarding the said income which has already been taxed after being shown in hands of different entity,namely, other than assessee.” DCIT vs. M/s. RATP DevTransdev India Pvt. Ltd. CITATION: 2023 TAXSCAN (ITAT) 399 The Delhi Bench of Income Tax Appellate Tribunal has held that the payment towards social security schemes outside India for Expat employees would not come under salary and no Tax Deduction at Source (TDS) shall be applicable. B. R. R. Kumar (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) dismissed the appeal filed by the revenue observing that, “In our considered opinion, the social security contributions do not constitute income from salary in the hands of expatriate employees and the employees do not have any right over such contributions. The same will not take care of the character of salary in the year of contribution. Therefore, in our opinion, the deletion of the disallowance made by the CIT(A) to the tune of Rs. 63,57,485/- made by the A.O. u/s 40(ia) of the Act on account of non-deduction of tax at source on amounts paid for the expat employees.” Microsoft Regional Sales Pte. Ltd. vs ACIT CITATION: 2023 TAXSCAN (ITAT) 400 The Division Bench of

Delhi Income Tax Appellate Tribunal (ITAT) has held that Microsoft regional sales could not be taxed instead of Mol observing that, “such flip flops could not be legally supported”. The Delhi Bench of SaktijitDey (Judicial Member) and B. R. R. Kumar (Accountant Member) deleted the addition and allowed the appeal observing that “we hereby hold that such flip flop cannot be legally supported and hence the addition made in the hands of the assessee is liable to be deleted.” Anil Ratanlal Bohoravs ACIT CITATION: 2023 TAXSCAN (ITAT) 401 The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that Tax Deduction at Source on interest on bank deposit could not be denied due to non-submission of statement by wife while clubbing the income. The Division Bench of R.S. Syal (Vice President) and S.S. Viswanethra Ravi (Judicial Member) allowed the TDS and observed that, “The total interest income received by the assessee’s wife got taxed partly in her own assessment and partly in the assessment of her husband, the assessee in question, as per the mandate of section 64. The b

enefit of TDS has also been claimed accordingly. Merely because the assessee’s wife did not furnish declaration to the bank in terms of proviso to Rule 37BA(2), the amount of tax deducted at source, which is otherwise with the Department, cannot be allowed to remain with it eternally without allowing any corresponding credit to the person who has been subjected to tax in respect of such income.” M/s. PricewaterhouseCoopers Pvt. Limited vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 402  The Kolkata bench of Income Tax Appellate Tribunal (ITAT) recently while giving relief to Price water house Coopers Pvt. Limited directs the first appellate authority to re-adjudication on income tax penalty cases.  The division bench of the ITAT compraising Shri RajpalYadav, (Vice-President) and Girish Agrawal, (Accountant Member) allowed the appeal filed by the assessee and held that the order of the CIT Appeals was not sustainable and direct the authority to re-adjudication of the matter ShyamSundar Agrawal Vs. Income Tax Officer, Janjgir-Champa CITATION: 2023 TAXSCAN (ITAT) 403 The Raipur bench of Income Tax Appellate Tribunal (ITAT) recently held that a huge delay of 1563 days for filing an appeal could not be attributed to a chartered accountant. The single bench of the ITAT Ravish Sood (Judicial Member) dismissed the appeal and obser

ved that “Delay of 1563 days cannot be simply condoned on the basis of the unsubstantiated claim of the assessee that the same had occasioned on account of failure on the part of his regular chartered accountant in properly guiding him as regards filing of the appeals before the Tribunal” Further the bench determined that the assessee had failed to come forth with any good and sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeals. A. Manoharan vs. Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 404  Bangalore bench of Income Tax Appellate Tribunal (ITAT ) partially upholds the addition in the absence of statement of affairs for justifying the closing cash balance.  The Accountant Member Shri Laxmi Prasad Sahu Observed that the AO has made the addition under Section 69 of the Act of Rs.12,75,802/- for want of proper explanation of cash deposited during demonetization period. During the course of assessment proceedings as well as during the first appellate proceedings the assessee did not file any cash flow statement or any statement of affairs for justifying the cash lying with him in the past years. Though he was not required to maintain books of accounts as per section 44AA (2) but can prepare a statement of affairs for justifying his closing cash balance at the end of year. The appeal filed by the assessee is partly allowed. Bineeta Singh, Vs ACIT Circle 5(1), New Delhi CITATION: 2023 TAXSCAN (ITAT) 405 The Delhi bench of

Income Tax Appellate Authority (ITAT) recently held that advance given to protect business interest of assessee –company did not attract provisions of deemed dividend under section 2(22)(e) Income Tax Act 1961.  After considering both contention the division bench of the ITAT compraising Chandra Mohan Garg, (Judicial Member) and Narendra Kumar Billaiya, (Accountant Member) allowed the appeal filed by the assessee and observed that “If such loan or advances are given to such shareholders as a consequence of any further consideration which is beneficial to the company received from such shareholders then in such advance or loan cannot be said to be deemed dividend within the ambit of section 2(22)(e) of the Act.” DCIT (Inta Taxa)-I vs. AdaniWilmar Ltd. CITATION: 2023 TAXSCAN (ITAT) 406  The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has granted relief to AdaniWilmar by dismissing 18 appeals filed by the income tax department. The Delhi Bench of Annapurna Gupta, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) dismissed the18 appeals fi

led by the department referring various decisions passed by the High Court, the SpecialBench of the ITAT and decision in assessee’s own case for assessment year 2016-17, in the same issue observed that, “CIT(Appeals) has not erred in facts and in law in holding that in case of payments made to nonresidents,theassessee was entitled to deduct taxes at source at the rate applicable in the respective Tax Treaties in case PAN of non-resident payee is not available. In the instant facts, it is not the allegation of the Department That taxes have not been deducted at source by taking recourse to relevant clauses of the Tax Treaty enabling the assessee not to deduct tax at source in respect of payments made to non-resident payees.” “In the instant facts, the assessee has deducted taxes at the beneficial rate of 10% as applicable in the respective Tax Treaties in respect of all payments made to non-resident payees.”  Maharaja ShivchatrapatiPratishthanvs ITO (Exemptions) CITATION: 2023 TAXSCAN (ITAT) 407 The Pune bench of the Income Tax Appellate Tribunal (ITAT) ha

s held that failure to satisfy the condition of advancement of any other object of general public utility curbs to avail the benefit of Exemption under section 11 of the Income Tax Act, 1961. A Coram comprising of Shri R S Syal, Vice President and Shri S S Viswanethra Ravi, Judicial Member observed that the assessee earned a huge margin on performance of the activity, which is like business, it ceases to fall within the domain of “charitable purpose”, as the business receipts exceed 20% of the total receipts. M/s Premier Irrigation Adritec (P) Ltd vs ACIT, Circle-11(1) CITATION: 2023 TAXSCAN (ITAT) 408 The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest paid on delayed deposit of income tax or Tax Deducted at source (TDS) would not be allowable as expenditure. The Division Bench of Girish Agrawal (Accountant Member) and Sanjay Garg (Judicial Member) dismissed the appeal observing that, “Once, the Deductee pays the due taxes, the Deductor is absolved from the said tax liability but not of the interest liability on the delayed payment. Allowing of such interest payment on delayed deposit of TDS as deduction would defeat the very purpose of the TDS provisions ensuring the deduction of taxes from the income of the recipient and the payment/deposit thereof with the central Govt. within the due time.”  Dy. Commissioner of Income Tax vsAarti Drugs Ltd CITATION: 2023 TAXSCAN (ITAT) 409  The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the education cess would not be allowable as expenditure under Section 37 of the Income Tax Act, 1961. The Division bench of S. Rifaur Rahman (Accountant Member) And Sandeep Singh Karhail (Judicial Member) allowed this ground observing that, “We find that Finance Act, 2022 with retrospective effect from 01/04/2005 inserted Explanation 3 to section 40(a)(ii), whereby it has been provided that the term ‘tax’ shall include and shall be deemed to have always included any surcharge of cess, by whatever name called, on such tax.” CVMV

Reddy’s Educational & Public Charitable Trust vs The Assistant Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 410 The Chennai Bench of Income Tax appellate Tribunal (ITAT) has deleted the penalty as quantum addition does not attain finality. The Coram comprising the Judicial Member V. Durga Rao and the Accountant Member Manoj Kumar Aggarwal observed that the quantum addition has not attained its finality, the penalty levied under section 270A of the Act stands deleted. However, the Assessing Officer has the liberty to pass the order under section 270A of the Act, if any, after concluding the assessment order afresh consequent upon the order passed by the CIT (E) under section 12AA of the Act and the appeal filed by the assessee is allowed. AkshayJanak Shah, Vs CIT (Appeal), Income Tax Department, CITATION: 2023 TAXSCAN (ITAT) 411  The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held purchase of property within a specified period of one year before sale of capital asset allowable as capital gain exemption under section 54F of the Income Tax Act 1961. The division bench of ITAT comprising M. Balaganesh, (Accountant) and Rahul Chaudhary, (Judicial Member) allowed the appeal filed by the assessee The bench further observed that “in terms of Section 2(47(v) of the Act, the transfer of Capital Asset took place on 30.09.2012, which fell within the previous year relevant to the Assessment Year 2013-14. The Appellant had purchased residential property on 17.08.2012 which fell within the specified period of one year before the sale of the Capital Asset. The Appellant was, therefore, entitled to claim exemption under Section 54F of the Income Tax Act 1961.”  Shri Manoj Kumar Goyalvs The DCIT CITATION: 2023 TAXSCAN (ITAT) 412 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) recently refused to condone the delay and remarked that “preferri

ng an Appeal does not mean mere formally filing it but also taking all the steps to effectively pursue the appeal”  The Coram comprising of the accountant member Anil Chaturvedi, and the judicial member, Narenderkumar choudhary, observed that the matter was listed for hearing on various occasions in the past but on all those dates there was neither any appearance by the assessee or his Counsel or any adjournment application was filed.  Manindra Mohan Mazumdarvs ACIT CITATION: 2023 TAXSCAN (ITAT) 413 The Income Tax Appellate Tribunal ( ITAT ), Kolkata Bench, has recently, in an appeal filed before it, held that addition of deemed rent cannot be made in respect of non- habitable residential flat. The Kolkata ITAT held: “Under these given facts and circumstances of the case since the residential flat at Ghaziabad is not habitable, therefore, ld. AO was not justified in making an addition for Deemed Rental Income in the hands of the assessee. We accordingly reverse the finding of ld. CIT (A) and delete the addition made by ld. AO at Rs. 72,000/-. Hence, all the grounds raised by the assessee are allowed.” Raghunathvs ITO CITATION: 2023 TAXSCAN (ITAT) 414 The Income Tax Appellate Tribunal (ITAT), Cuttack Bench, has recently, in an appeal filed before it, while imposing a cost of Rs 25,000 on the assessee, for restoration of ex- parte order, held that mistakes must be expected during migration from physical hearing to faceless. The ITAT Bench held: “This being so, in the interest of justice an

d to reduce the possible round of litigation, the issues on merits in these appeals are restored to the file of the ld. AO for re adjudication after granting the assessee adequate opportunity of being heard. As the assessments have been done ex-parte, the assessee shall pay a cost of Rs.25, 000/- (Rupees Twenty five Thousand only) per assessment year under consideration to the Income Tax Department and a copy of the challan may be produced before the AO. It is hereby clarified that the cost of Rs.25, 000/- per assessment year under consideration is not adjustable against any tax liabilities or dues for any of the assessment years.” Sh. Sangram Ram vs ITO CITATION: 2023 TAXSCAN (ITAT) 415 The Jodhpur Bench of Income Tax Appellate Tribunal (ITAT) has held that no penalty shall be levied under Section 271(1) (b) of the Income Tax Act 1961 for non-compliance of section 142(1) of the Income Tax Act. B. R. Baskaran (Accountant Member) and S. Seethalakshmi (Judicial Member) set aside the impugned order and allowed the appeal observing that, “The assessee was served with the notices issued by the AO and subsequently reply of notices were sent by the assessee is also on record. The reasons explained by the assessee were bona fide and reasonable before the CIT (A) where the CIT (A) has not been taken into consideration.” KishoriDwarakanath Pandey vs Income Tax Officer -32(2)(2) CITATION: 2023 TAXSCAN (ITAT) 416 The Mumbai Bench of Income Tax Appellate tribunal (ITAT) has allowed capital gain exemption under Section 54F of the Income Tax Act 1961, on finding that the purchase of flats was out of sale proceeds of gold jewelry. The

Mumbai Bench of Vikas Awasthy (Judicial Member) and Gagan Goyal (Accountant Member) allowed the appeal observing that “The proximity of the sale of gold jewelry and payments made towards purchase of flat establishes live nexus between sale of gold jewelry and purchase of flat. Therefore, we hold that the assessee is eligible for claiming deduction u/s. 54F of the Act.” SanjeevRajendraPanditvs The Assistant Director of Income Tax (CPC)CITATION: 2023 TAXSCAN (ITAT) 417 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the tax department could not swallow the tax paid by the assessee and deny the credit of tax deducted.  The Division Bench of Aby T Varkey (Judicial Member) And Om Prakash Kant (Accountant Member) allowed the appeal and set aside the impugned order and held that The Department could not swallow tax paid by the assessee and deny credit of tax deducted, which pertained to the assessee. Pacific Academy of Higher Education and Research Society vs The Principal Commissioner of Income Tax (Central) CITATION: 2023 TAXSCAN (ITAT) 418 The Jodhpur Bench of Income Tax Appellate Tribunal (ITAT) has held that the registration of charitable trust could not be canceled with retrospective effect. The Division bench of Baskaran Br, (Accountant Member) and Sandeep Gosain, (Judicial Member) quashed the impugned order observing that, “we are of the opinion that in the present case the ld. Pr.CIT (Central) has no jurisdiction to pass the impugned order. Accordingly, we quash the same. Even otherwise we are also of the view that no retrospective cancellation could

be made as neither in the Sec. 12AA (3) nor in Sec. 12AA (4) it has been provided or is seen to have been explicitly provided to have a retrospective character or intent. Therefore, without a specific mention of the amended provisions to operate retrospectively no cancellation for the past years could be ordered.” Income Tax Officer (IT) 3(2)(2) vs. M/s Macrotech Developer Ltd 2023 TAXSCAN (ITAT) 419 The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that reimbursement of expenses on cost to cost basis related to fee for technical service would not be subject to Tax Deduction at Source. The division bench of ITAT comprising Amarjit Singh (Accountant Member) and Aby T Varkey (Judicial Member) dismissed the appeal filed by the revenue and observed that, “The assessee has made remittances to foreign parties towards reimbursement of expenses incurred by them. The expenses were incurred by such parties on account of travel, meal, hotel stay etc. Reimbursement was made in respect of actual expen

diture incurred on a cost to cost basis without any markup.” The Assistant Commissioner of Income Tax vs. Haneefa Sahib Shajahan CITATION: 2023 TAXSCAN (ITAT) 420 The Chennai Bench of Income Tax Appellate Tribunal (ITAT) recently held that the income tax penalty cannot be levied if tax audit was not done for a reasonable cause but filed before completion of assessment.  Since the assessee was prevented by reasonable cause for not getting her books of accounts audited in time as required under the provisions of section 44AB of the Income Tax Act, 1961.But filed the tax audit report before completion of the assessment, the CIT (A) has held that it is not a fit case for the levy of penalty under section 271B of the Income Tax Act, 1961 and accordingly, the penalty levied was deleted. The appeal filed by the Revenue is dismissed.  TSYS Card Tech Ltd vs. DCIT 2023 TAXSCAN (ITAT)

421  The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that the training and related activities concerned with utilization and installation of software not FTS. The Coram comprising the judicial member Sh. SaktijitDey and the account member Dr. B. R. R. Kumar observed that the DRP has remanded the matter to the assessing officer to examine traveling and lodging expenses reimbursed. However, the assessing officer has wrongly taxed the same under FTS. Hence, the action of the assessing officer cannot be supported. The addition made is hereby directed to be deleted and the appeal allowed. Ganesh Ginning Factory vs. ACIT 2023 TAXSCAN (ITAT) 422 The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has recently, while deciding the appeals filed before it, held that addition cannot be made solely based on the statement of the director of a company, during a survey, without independent findings by the AO. The ITAT Panel consisting of Suchitra Kamble, the Judicial Member, along with, Waseem Ahmed, the Accountant member, thus held: “We have heard both parties and perused all the relevant material available on record. It is pertinent to note that the alleged discrepancy in the st

 

ock found on the date of survey on the basis of the statement of the director was never established by the Assessing Officer with the proper reasoning that the statement of the director was verifiable from the said stocks available at survey premises. There was no independent finding given by the Assessing Officer related to the said addition and therefore, this addition does not sustain.”  Intent Infra projects Pvt. Limited vs. Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 423  The Income Tax Appellate Tribunal ( ITAT ), Kolkata Bench, has recently, in an appeal filed before it, refused to condone the delay of 927 days in the filing of appeal, on the ground of non- compliance of notice and non-submission of details.  The Kolkata ITAT held: “The explanation available in this affidavit is totally vague and not specific. This explanation is to be appreciated in the light of the conduct of the assessee before the Revenue Authorities below, where the assessee neither complied with a single notice nor submitted any details. Therefore, we do not deem it fit to condone the delay in filing this appeal. This appeal is dismissed being time-barred.”

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