ITAT Annual Digest 2023 [Part-9]

Top Stories ITAT Annual Digest 2023 [Part-9] By Amal Michael – On January 7, 2024 1:31 pm – 13 mins read This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in                M/s. UMW Sher (L) Ltd. vs Assessing Officer CITATION: 2023 TAXSCAN (ITAT) 469 The Delhi bench of the Income Tax Appellate Authority (ITAT) has recently held that receipts from leasing/hiring of Rigs are taxable as business profits under section 44BB of the Income Tax Act, 1961. The ITAT Bench observed that, section 44B of the Income Tax

Act 1961 is a special provision for computing profits and gains in connection with the business of exploration, extraction etc. of minerals oils. Therefore, the amounts received by the assessee are fully covered under the provisions of section 44BB and taxable on a gross basis at the rate of 10%. Mr. Lakshminarayana Gupta 64 vs The CIT(A)-12 CITATION: 2023 TAXSCAN (ITAT) 470 The Bangalore bench of Income Tax Appellate Authority (ITAT) has recently while confirming the addition made by the assessing officer observed that the assessee did not produce any proof of payment of brokerage on sale of property. After considering the submission made by the revenue division bench of the ITAT comprising George George K (Judicial member) and Padmavathy S (Accountant Member) dismiss the appeal filed by the assessee and

observed that the assessee has not produced any proof/evidences to substantiate that he had paid brokerage on the sale of property Shailendra vs ITO CITATION: 2023 TAXSCAN (ITAT) 471 The Delhi bench of Income Tax Appellate Authority (ITAT) has recently held that the Income tax penalty could not be attracted for application of section 50C of Income Tax Act 1961. Before the bench assessee representative submit that “since the capital gain has been calculated on the basis of section 50C which is a legal fiction penalty is not leviable” Further

assessee submit that sale of the agriculture land was not taxable therefore, it is not a part of capital gain as define under section 2(14) of Income Tax Act, 1961. DCIT vs Cairn Energy Hydrocarbon Ltd CITATION: 2023 TAXSCAN (ITAT) 472 The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently provided partial relief to Cairn Energy Hydrocarbon Ltd. The division bench of ITAT comprising B. R. R. Kumar (Accountant) and Saktijit Dey (Judicial Member) observed that “Interest earned out of temporary investments made out of borrowed funds not immediately required for utilization in business is treated as business income as the commercial production has started from

29.08.2009. Ergo, the assessee gets relief of an amount of Rs. 5,16,06,907 Chandrakant Tatoba Patil vs Pr. Commissioner of Income Tax-1 CITATION: 2023 TAXSCAN (ITAT) 473 The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that the standard operating procedure (SOP) issued by the Central Board of Direct Tax (CBDT) should be followed while making additions in respect of cash deposits found during the demonetization period. The Pune Bench of Inturi Rama Rao (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member) dismissed the appeal by the assessee and observed that there was no reference or whatsoever in respect of cash deposits and the

CBDT instructions and no verification by AO. Sebastian Joseph vs ACIT CITATION: 2023 TAXSCAN (ITAT) 474 The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the penalty imposed under Section 271B of the Income Tax Act 1961, holding that the delay in submission of the audit report was a mere technical breach of law. The Division Bench of S. S. Godara (Judicial Member) and Inturi Rama Rao (Accountant Member) allowed the appeal deleting the penalty imposed and observed the, fact that the returned income was accepted by the Assessing Officer showed that no prejudice was caused to the Assessing Officer on account of delay in submission of tax audit report. Punjab State Warehousing Corporation vs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 475 The Income Tax Appellate Tribunal

(ITAT), Amritsar Bench, has recently, in an appeal filed before it, held that delay in seeking permission from head office is “reasonable cause” for delay in filing appeal. The Amritsar ITAT therefore held: “In the above view, we hold that the order of the CIT(A) is perverse to the facts on record as the explanation of the appellant is held to be reasonable and justified for the delay from 1st May, 2014 to 17 July 2014. Accordingly, the disputed period of delay in filing the appeal is condoned and the Ld. CIT (A) is directed to hear and adjudicate the matter on merits afresh after granting adequate opportunity of being heard to the assesse and considering the material evidence on record by passing a

speaking order. The appellant shall cooperate in fresh proceedings before the CIT(A). In the result, the appeals filed are allowed for statistical purpose.” Marriott International Licensing Company vs DCIT CITATION: 2023 TAXSCAN (ITAT) 476 The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has quashed the proceedings against the Marriott International holding that the issue of demand notice along with draft order was bad in law. The Division Bench of M. Balaganesh (Accountant Member) And Ms. Kavitha Rajagopal (Judicial Member) allowed the appeal and declared the assessment order as null and void and the assessment order passed subsequent to the issue of draft

assessment order along with the demand notice had been held to be bad in law and not just mere procedural defect. Shri Sanjay Vasant Jumde vs I.T.O CITATION: 2023 TAXSCAN (ITAT) 477 The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that the date of possession of flat would be the date of actual purchase for the purpose of claiming capital gain exemption under Section 54 of the Income Tax Act 1961. The Division Bench of R.S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial Member) allowed the appeal. The bench referred to the judgment of the Bombay High court in the case of CIT vs. Smt. Beena K. Jain in which it was observed that, it was right in

allowing the exemption under the said provision considering the date of possession of the new residential premises instead of date of sale of agreement and the date of registration. Dhirendra Narbheram Sheth vs ITO CITATION: 2023 TAXSCAN (ITAT) 478 The Rajkot Bench of Income Tax Appellate Tribunal (ITAT) has no interest under Section 234A and234B of the Income Tax Act 1961 shall be imposed beyond the date of self-assessed tax. The Division Bench of Waseem Ahmed (Accountant Member) and Madhumita Roy (Judicial Member) allowed the appeal referring to the decision in CIT v. Prannoy Roy and observed that, “That the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the

income-tax return for the relevant assessment year. The impugned provisions are only compensatory in nature and no part thereof is penal in character.” Smiths Detection Asia Pacific Pte Ltd vs The Dy. C.I.T CITATION: 2023 TAXSCAN (ITAT) 479 The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that misplacing fixed deposits was not a ground for deleting addition of interest therefore the bench upheld the addition made by the Assessing Officer. After considering the facts and materials the division bench of the ITAT comprising N.K. Billaiya (Accountant) and Anubhav Sharma (Judicial Member) disallowed the above ground raised by the assessee and confirmed the

addition. Further the bench observed that “The Canara Bank in Form No. 26AS has acknowledged the Fixed Deposits with it and has credited interest by deducting tax at source. Even if the Fixed Deposits are misplaced, the assessee can approach the Canara Bank and ask for duplicate Fixed Deposits.” M/s. Jet Airways (India) Limited vs Dy. CIT CITATION: 2023 TAXSCAN (ITAT) 480 The Mumbai Bench of Income tax appellate tribunal (ITAT) has recently ordered Jet Airways (India) Limited to pay a cost of Rupees 25,000 to the Prime Minister Relief Fund due to failing to comply with the notice issued by the Income Tax Department several times. After considering the facts and

materials the division bench of the ITAT comprising Prashant Maharishi (Accountant) and Kavitha Rajagopal (Judicial Member) allowed the appeal filed by the assessee and the further directed to the assessee to pay cost of Rs.25,000/- each in both these appeals for being delinquent before the lower authorities and the same is to be paid towards Prime Minister’s Relief Fund within 30 days from the date of this order. The assessee was also directed to appeal and fully cooperate with the assessing officer to present its case without any further delay. Income Tax Officer vs Aruna Gullapalli CITATION: 2023 TAXSCAN (ITAT) 481 The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT), noted that there is no violation of Rule 46A of Income Tax Rules and observed that rules framed by the Board are statutory in nature.

The Bench comprising R.K. Panda, Accountant Member and Laliet Kumar, Judicial Member observed that “As the rules were duly framed by the Board and are statutory in nature, in our view, the power given to CIT (A) is required to be exercised in accordance with the rules framed under the Income Tax Act.” Dolli Chandrashekhar Shankar (HUF) vs ACIT CITATION: 2023 TAXSCAN (ITAT) 482 The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently while allowing the benefit of extending date as per explanation 2(a)(ii) to section 139(1) Income Tax Act 1961 held that Hindu Undivided Family is Person therefore they are liable for getting its accounts audited. Ramnath P.

Murkunde, Counsel for the revenue contented that “assessee to be disentitled to the benefits on the ground that the extension did not apply to the assessee-HUF. Clause (a)(ii) of Explanation 2 to section 139(1) deals with `due date’ as concerning a person other than a company whose accounts are required to be audited under the Act or under any law for the time being in force” Jayaram Basani vs Asst. Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 483 The Hyderabad Income Tax Appellate Tribunal (ITAT) set aside the order of the Commissioner of Income Tax (Appeals)[(CIT)(A)]/NFAC and directed the Assessing Officer (AO) to cancel the penalty imposed under 271D

for violation of section 269SS of Income Tax Act, 1961. The bench of Rama Kanda Panda (Accountant Member) and Laliet Kumar (Judicial Member) stated that it was clear that the assessee had breached the section 269SS provision in the current case during the assessment year 2016–17 and not the assessment year 2017–18. As a result, there is no justification for or authority over the Revenue’s imposition of a penalty during the relevant year. Mrs. Usha Narayan Chaware vs ITO CITATION: 2023 TAXSCAN (ITAT) 484 The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition of cash deposits during demonetization on proper explanation as to utilization of the cash deposit. The Tribunal of RS Syal, Vice President noted that “Once the availability of cash in hands was established and it was not shown by the AO that such cash was spent elsewhere, I am of the considered opinion that the explanation of the assessee as to its utilization has to be

accepted.” M/s Google LLC vs JCIT CITATION: 2023 TAXSCAN (ITAT) 485 The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the amounts paid by Google India to Google US in relation to seconded employees do not come under the purview of fees for technical services (FTS) or fees for included services (FIS) as per the Income Tax Act or the India-US Tax Treaty. The tribunal bench ruled that the AO’s draft assessment order assumed that a service agreement existed between the company and Google India for the provision of services by the company to Google India from the observation that there is nothing on record to suggest that this assumption is correct. Income Tax Officer vs M/s. Sri Lakshmi Brick Industries CITATION: 2023 TAXSCAN (ITAT) 486 The Chennai Bench of Income Tax

Appellate Tribunal ( ITAT ) has held that the firm shall be eligible to deduct profit from the sale of flats which are declared as stock-in-trade to partners under Section 80IB (10) of the Income Tax Act 1961. The Division Bench of V. Durga Rao (Judicial Member) And G. Manjunatha (Accountant Member) dismissed the appeal and observed that, “even if you compute profit from the transfer of 20 flats to partners in the hands of the firm, but because the assessee is enjoying the benefit of deduction u/s. 80IB (10) of the Act for 100% profit derived from housing projects, the assessee could very well claim the deduction u/s. 80IB (10) of the Act towards profit, if any, derived from the transfer of 20 flats to its partners by way of MOU dated 08.10.2009.” M/s. Lupin Limited vs DCIT CITATION: 2023 TAXSCAN (ITAT) 487 The Mumbai

bench of the Income Tax Appellate Tribunal (ITAT) has held that the amount of provision for bad and doubtful debts reduced from Sundry Debtors Balance won’t be hit by Clause (i) of explanation to Section 115JB of the Income Tax Act, 1961. A Coram comprising of Shri B.R. Baskaran (AM) & Smt. Kavitha Rajagopal (JM) held that the amount of “Provision for bad and doubtful debts” if reduced from the amount of “Sundry debtors balance” in the assets side of the Balance Sheet, the same would not be hit by clause (i) of Explanation 1 to sec.115JB of the Act. M/s. Mulki Sundar Ram Shetty vs ITO CITATION: 2023 TAXSCAN (ITAT) 488 The Bangalore Income Tax Appellate Tribunal (ITAT)

has recently while allowing the deduction claim of assessee held that condonation of application was not required when the delay was condoned by Central Board Direct Tax circular. After considering the contentions of the both parties the division bench of ITAT comprising N.V. Vasudevan, Vice President And Padmavathy S (Accountant member) allowed the appeal filed by the assessee and observed that the delay is condoned by the circular and that there is no requirement to file condonation application therefore, assessee’s case is covered under para 4(i) of the CBDT Circular (supra) whereby the delay in filing Form 10B is condoned. Sri Thimme Gowda Shekar vs Income tax Officer CITATION: 2023 TAXSCAN (ITAT) 489 The Bangalore Income Tax Appellate Tribunal (ITAT) has recently held that capital gain exemption under section 54B of Income Tax Act 1961 could be claimed without filing of Income Tax Return. After considering the contentions of the both parties the single bench of Laxmi Prasad Sahu, (Accountant member) allowed the appeal filed by the assessee and observed on the in section 139(1) of sixth Proviso, section 54, section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or

section 54GB were inserted by the Finance Act, 2019 which is effective from 01.04.2020, but the impugned case on hand is related to the assessment year 2006-07. It indicates that the exemption under section 54B Income Tax Act, 1961 can be claimed without filing of return of income. ZF Steering Gear Ltd vs DCIT CITATION: 2023 TAXSCAN (ITAT) 490 The Pune Income Tax Appellate Tribunal (ITAT) has recently held that lease rent paid for acquiring mining rights is capital in nature and no deduction would be allowable. M. G. Jasnani counsel for the revenue submits that amortization of lease premium could not be allowed as “revenue expenditure”, as it is of enduring nature. After considering the contentions of the both parties the division bench of ITAT comprising Partha Sarathi Chaudhury (Judicial Member) And Inturi Rama Rao (Accountant Member) dismiss the appeal filed by the assessee and observed in the light of the judgment of the Supreme Court in the case of Aditya Minerals Pvt. Ltd. the impugned amortization of lease premium cannot be allowed as “revenue expenditure” M/s.Shital Builders vs ITO CITATION: 2023 TAXSCAN (ITAT) 491 The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, and held that higher rate of depreciation at 50% is allowable on commercial vehicles only. The Ahmedabad ITAT Bench composed of Siddhartha Nautiyal, the Judicial Member, along with Annapurna Gupta, the Accountant Member,

noted: “On going through the above, we find that the Ld. CIT(A) had confirmed the disallowance of depreciation on cars of Rs.4,67,633/- finding that the assessee was unable to establish with evidence that the motor vehicle was wholly and exclusively used for the purpose of the business of the assessee and also for the reason that the assessee had claimed depreciation at a higher rate of 50% on Toyota car, for which the rate of depreciation is allowable only on commercial vehicles and the assessee was unable to establish that the said vehicle was a commercial vehicle. The ld. AR was unable to contradict the factual finding of the ld. CIT(A).” Asstt. Commissioner of Income Tax vs M/s HN Agri Serve P. Ltd. CITATION: 2023 TAXSCAN (ITAT) 492 The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, has recently, in an appeal filed before it, held that addition of sundry debtors/advance to growers cannot be made under section 68 of Income Tax Act The ITAT Panel comprising of Dr. M. L. Meena, the Accountant Member, along with Anikesh Banerjee, the Judicial Member, added: “We relied on the order of ITAT Delhi bench that Sundry Debtor cannot be added back U/s 68 as it is not a creditor. The assessing authority has doubts on the transaction of assessee with the party. The Apex court, hasin its observation held that assessment cannot be done on suspicion. The ld. CIT-DR was not able to submit any contrary judgment against the submission of assessee. In the submission of CIT-DR reiterated by demurring on the mode of transaction of assessee with parties to whom the advance was given. This cannot be negated only on basis of suspicion.” Siddarthini Nanda vs ACIT CITATION: 2023 TAXSCAN (ITAT) 493 The Cuttack bench of Income Tax Appellate Tribunal (ITAT) recently deleted the penalty imposed under section 271 (1) (b) of Income Tax Act 1961 and held that the show cause notice issued by the assessing

officer was vague. The division bench of ITAT comprising Arun Khodpia (Accountant Member) and George Mathan (Judicial Member) allowed the appeal filed by the assessee The bench further observed that, show cause notice issued under section 142(1) of the income tax act 1961 did not mention in respect of which non-compliance the penalty has been initiated. Due to this show cause notice and the satisfaction recorded by the Assessing officer in all the cases under consideration is vague. SRK Infracon (India) Private Limited vs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 494 The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) recently held that a huge delay of 998 days in filing an appeal could not be condoned for vague reasons. After considering the contentions of the both parties the division bench of ITAT comprising Rama Kanta Panda (Accountant Member) and Laliet Kumar (Judicial Member) dismiss the appeal filed by the assessee and observed that reasons given by the assessee, in the petition for condonation of delay of 988 days, seems to be not bona fide. Pramod

Pareek vs The ITO Ward 6(3) 2023 CITATION: TAXSCAN (ITAT) 495 The Jaipur bench of Income Tax Appellate Tribunal (ITAT) recently held that if income is offered on presumptive basis under section 44AD of Income Tax Act 1961 there was no need to maintain books of accounts therefore the bench deleted the addition against the vegetable vendor. The single bench of ITAT Sandeep Gosain (Judicial Member) allowed the appeal filed by the assessee and observed that during the course of hearing the assessee had supplied all the details before the lower authorities like books of accounts, details of financial statement and bank account but it was ignored. Shri Sandeep Sethi vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 496 The Jaipur bench of Income Tax Appellate Tribunal (ITAT) recently held that penal provisions of section 271AAB and section 115 BBE could not be attracted if once search addition and amount has been accepted by the assessee and declared under section 132(4) Income Tax Act 1961. The division bench of ITAT comprising Rama Rathod Kamlesh Jayantbhai (Accountant Member) and Sandeep Gosain (Judicial Member) allowed the appeal filed by the assessee and observed, “Once the AO has already decided based on the fact that this is the case of search addition and amount declared under section 132(4) Income Tax Act 1961 accepted by the assessee and offered the same in the return of income filed the same will be in accordance with the penal

provision of section 271AAB and invoking to provision of section 115BBE in this case is not in accordance with the law and is also against principles of nature justice.” Shri Kista Goud Idgi Medak vs Income Tax Office CITATION: 2023 TAXSCAN (ITAT) 497 The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) while observing non-compliance of statutory notices due to unavoidable circumstances imposed cost of Rupees 10,000 on assessee for callous and non-cooperation attitude . The division bench of ITAT comprising R.K. Panda (Accountant Member) and Laliet Kumar (Judicial Member) allowed the appeal filed by the assessee and direct the assessee to pay cost of Rs.10, 000/-for callous and non-cooperation attitude and the same should be paid to the PM’s Relief Fund. Further, the bench restored the issue to the file of the CIT(A) with a direction to grant one last opportunity to the assessee to substantiate his case and decide the issue as per fact and law. Mr.Mahendra Kumar Damani vs The Asst. Director of Income Tax CITATION: 2023 TAXSCAN (ITAT) 498 The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the Income Tax deduction under Section 10AA of the Income Tax Act 1961 could not

be availed without filing a tax audit report. The Division Bench of V. Durga Rao (Judicial Member) And G. Manjunatha (Accountant Member) dismissed the appeal referring to the decision of Supreme Court in CIT v. Wipro Ltd., which was rendered with reference to sec.10B (8) of the Act, squarely applicable to the facts and circumstances of the case. The plain language used in sec.10A (5) of the Act, is also clear and unambiguous that the condition of filing an Audit Report in Form No.56F along with the return of income is mandatory for allowing any deduction. Harbauer (India) Pvt. Ltd vs ADIT CITATION: 2023 TAXSCAN (ITAT) 499 The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, held that income tax deduction claim u/s 80IA cannot be denied for vague and ambiguous reasons. The ITAT Panel comprising of Dr Manish Borad, the Accountant Member, along with Sanjay Garg, the Judicial Member, held: “In view of this, the action of the lower authorities in denying the deduction u/s 80IA of the Act to the assessee cannot be held to be justified. The impugned order of the CIT (A) is set aside and the Assessing Officer is directed to allow the deduction claimed by the assessee u/s 80IA of the Act. In the result, the appeal of the assessee stands allowed.”

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