ITAT Annual Digest [Part 57]

Deduction u/s 80G of Income Tax Act can be claimed when Assessee satisfies all the Conditions: ITAT Optum Global Solutions (India) Private Limited CITATION: 2023 TAXSCAN (ITAT) 2137

The Hyderabad bench of the Income Ta Appellate Tribunal (ITAT) held that the deduction under Section 80G of the Income Tax Act, 1961 can be claimed when the assessee satisfies all the conditions.

The Two-member bench comprising of Rama Kanta Panda (Vice-President) and K. Narasimha Chary (Judicial member) held that the assessee satisfied the conditions of Section 80G of the Income Tax Act, the assessee is entitled to claim deduction under Section 80G of the Income Tax Act in respect of such donations which formed part of the spend towards CSR. Thus, the appeal of the assessee was allowed.

Guarantee Fees paid to Govt of Gujarat in consideration of Guarantee issued by it for Repayment of Unsecured loan is Revenue Expenditure: ITAT Gujarat State Electricity Corporation Limited CITATION: 2023 TAXSCAN (ITAT) 2138

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench held that guarantee fees paid to the government of Gujarat in consideration of guarantee issued by it for the repayment of unsecured loan is revenue expenditure.

After considering the facts submitted by both parties, the two member bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) held that guarantee fees paid to the government of Gujarat in consideration of guarantee issued by it for the repayment of unsecured loans are revenue expenditure.

Therefore the bench dismissed the appeal filed by the revenue and partly allowed the appeal filed by the assessee.

Nature and Source of Unrecorded Transactions and Nexus with Business Proved: ITAT Quashes Revision Order Shri Jasjot Singh Garcha vs The Pr. CIT CITATION: 2023 TAXSCAN (ITAT) 2140

The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) held that no reasons were recorded by the PCIT (Principal Commissioner of Income Tax) for holding assessment order by AO (Assessing Officer) to be erroneous and for application of Section 115 BBE of the Income Tax Act 1961, thus the Bench set aside revisionary order passed under Section 263 of Income Tax Act.

The Two Member Bench comprising of Aakash Deep Jain, Vice President and Vikram Singh Yadav, Accountant Member observed that there is no findings recorded by the PCIT as to how the deeming provisions are applicable in the instant case and the order so passed by the AO is erroneous, and it was held that merely stating that there was survey operation at the business premises of the assessee and provisions of Section 115BBE Income Tax Act are attracted, the same can be a basis for exercise of jurisdiction under section 263 of the Income Tax Act.

Gain/Loss arising out of Foreign Exchange Fluctuation is Recognised as Profit or Loss Accrued During Relevant Previous Year: ITAT reinstates Income Tax Addition Deputy Director of Income Tax vs Standard Chartered Bank CITATION: 2023 TAXSCAN (ITAT) 2139

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that the gain arising on account of revaluation of the outstanding forward contract as on the last of the previous year as per the provisions of Accounting Standard 11 would have to be recognized as profits of the relevant previous year.

The Bench comprising of Prashant Maharishi, Accountant Member and Rahul Chaudhary, Judicial Member relied on the decision of Supreme Court Commissioner of Income Tax, Delhi Vs. Woodward Governor India Pvt. Ltd. where it was held that the loss/gain arising on account of foreign exchange fluctuation is to be recognized in the Profit & Loss Account for the relevant previous year.

Mere Delivery Contract provided for Delivery of Securities to the Broker is not Sufficient to Claim Loss in Stock Exchange: ITAT Allows Appeal Deputy Director of Income Tax vs Standard Chartered Bank CITATION: 2023 TAXSCAN (ITAT) 2139

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that mere fact that the delivery contract provides for delivery of the securities to the broker is not sufficient and does not meet the requirements of Section 15 of the Securities Contract (Regulation) Act, 1956 (SCRA).

The Bench comprising of Prashant Maharishi, Accountant Member and Rahul Chaudhary, Judicial Member stated that Section 15 of SCRA deals with a contract between a member of a recognized stock exchange and a non-member. Therefore, the conclusion drawn by the CIT(A) that the provisions of Section 15 of SCRA shall not apply to transaction between the Assessee and broker is not correct.

Treatment of interest income/miscellaneous receipts earned from employees of Gujarat State Electricity Corporation through advancing loan and facilities: ITAT directs Re-adjudication Gujarat State Electricity Corporation Limited vs DCIT CITATION: 2023 TAXSCAN (ITAT) 2142

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench directed re-adjudication in respect of treatment of interest income /miscellaneous receipts earned from employees of Gujarat Electricity Cor[oration through advancing loan and facilities.

After considering the facts submitted by both parties, the two member bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) remanded the matter to the file of the CIT(A) for reconsideration.

Guarantee fee paid to holding company for loan advanced by assessee company to third party is business expediency: ITAT allows deduction u/s 37 of Income Tax Act DCIT vs M/s. Rabo India Finance Ltd CITATION: 2023 TAXSCAN (ITAT) 2143

The Income Tax Appellate Tribunal (ITAT) Mumbai bench held that guarantee fees paid to the holding company for loan advanced by assessee company to third party is business expediency. Therefore the bench allowed the deduction claimed under Section 37 of the Income Tax Act .

After considering the facts submitted by both parties, the two member bench of S. Rifaur Rahman,(Accountant Member ) and Rahul Chaudhary, (Judicial Member) held that guarantee fees paid to the holding company for loan advanced by assessee company to third party is business expediency thusIt should be allowable as deduction under Section 37 of the Income Tax Act.

Receipts that constitute business receipts cannot be held as unaccounted money of the assessee: ITAT directs re-computation Smt.Saraniyaa Karthick vs ITO CITATION: 2023 TAXSCAN (ITAT) 2144

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that receipts constitute business receipts and nothing else and therefore, the same could not be held to be unaccounted money of the assessee.

The two member bench consisting of V. Durga Rao (Judicial member) and Manoj Kumar Aggarwal (Accountant member) held that In most cases, the clients opted for travelling at later dates. Thus, such receipts constitute business receipts and nothing else and therefore, the same could not be held to be unaccounted money of the assessee. Under such circumstances, making full addition thereof could not be held to be justified.

Incurring expenditure for the purpose of expansion of business is allowable u/s 271(C) of Income Tax Act: ITAT Tourism Finance Corporation of India Ltd vs Addl. CIT CITATION: 2023 TAXSCAN (ITAT) 2145

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that NBFC being financial company tried to enter in to banking business and for this purpose the assessee incurred expenditure on preparation of a report on transformation of company from financial institution to banking company, which was not beyond the scope of working.

The two bench member consisting of Pradip Kumar Kedia (Accountant member) and Chandra Mohan Garg (Judicial member) held that the assessee had incurred expenditure for the purpose of expansion of its business from financial activities to banking activities and thus the same was for the purpose of business of assessee and thus allowable.

ITAT sets aside revision order in the absence of finding error in the order of AO in allowing assessee’s claim earned from sale of land as being in the nature of capital gains u/s 54EC Shri Laxmanbhai Balchanddas Patel vs Pr. Commissioner of Income-tax CITATION: 2023 TAXSCAN (ITAT) 2146

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that there is no basis with the PCIT to hold that the facts relating to the transaction in sale of land were indicative of the same being in the nature of adventure in the nature of trade.

The two member bench consisting of Madhumita Roy (Judicial member) and Annapurna Gupta (Accountant member) held that, in the absence of any finding of error in the order of the Assessing Officer allowing the assessee’s claim of gains earned from sale of land as being in the nature of capital gains, the order passed by the PCIT under Section 263 of the Income Tax Act is liable to be set aside.

No Penalty u/s 271(1)(c) Income Tax Act shall levied if Bonafide Assessee revised and added Interest Income: ITAT Pramila Tarneja vs The DCIT Circle CITATION: 2023 TAXSCAN (ITAT) 2147

The Income Tax Appellate Tribunal (ITAT) Delhi bench held that the penalty under Section 271(1)(c) of the Income Tax Act should not be levied if the assessee bonafide revised and added the interest income.

After considering the facts submitted by both parties, the two member bench of Pradip Kumar Kedia (Accountant Member) and Chandra Mohan Garg (Judicial Member) directed AO to deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act and held that the interest income declared in revised return does not amount to concealment of income. Therefore the bench allowed the appeal filed by the assessee.

 Transfer Pricing Adjustment shall not be made on account of Intra-Group Services available from AE for Manufacturing & Trading Services, if proven with Documentary Evidences: ITAT Lord India Private Limited vs Assistant Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 2148

The Income Tax Appellate Tribunal (ITAT) Mumbai bench held that transfer pricing adjustment should not be made on account of Intra -Group Services available from Associate Enterprise (AE) for manufacturing and trading services, if the assessee proved the same with documentary evidence.

After considering the facts submitted by both parties, the two member bench of Amarjit Singh (Accountant Member) and Amit Shukla (Judicial Member) observed that the assessee has properly demonstrated objective analysis of each of the Intragroup services rendered with document evidence. Hence, transfer pricing adjustment should not be made on account of Intra-Group Services available from Associate Enterprises(AE) for manufacturing and trading service , if the assessee proves the same with documentary evidence.

Disallowance of Interest on Delayed TDS Deposit and Service Tax without Bifurcation: ITAT directs Re-Adjudication Apeejay Pvt. Ltd. vs D.C.I.T CITATION: 2023 TAXSCAN (ITAT) 2150

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication as the disallowance of interest on delayed Tax Deducted at Source (TDS) deposit and service tax was without bifurcation

The two-member Bench of Manish Borad, (Accountant Member) Sonjoy Sarma, (Judicial Member) observed that the tribunal while considering the appeal had already deleted the addition made under Section 2(22)(e) of the Income Tax Act and also deleted the disallowance made under Section 14A read with Rule 8D of Income Tax Rules, for Assessment Year 2017-18.

Delayed remittance of employees’ contribution due to mis-utilization of funds: ITAT upholds disallowance Krystal Integrated Services Pvt Ltd Krystal House vs DCIT CITATION: 2023 TAXSCAN (ITAT) 2154

The Income Tax Appellate Tribunal (ITAT) Mumbai bench upheld the disallowance made by the lower authority towards the delayed remittance of employees contribution by reason of mis-utilization of funds.

After considering the facts submitted by both parties, the two member bench of Padmavathy S (Accountant Member) and Vikas Awasthy (Judicial Member) held that assessee is not entitled for claim of deduction qua the amount deposited towards employees contribution on account of provident fund / ESI after due date prescribed under the respective Act.

Penalty u/s 271B not Leviable when Audit Completed within Reasonable Time of Appointment of Auditors by Regulatory Authority: ITAT Directs Re- Adjudication M/s.Gramin Sewa Sahakari Samiti Maryadit vs The Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 2149

The Raipur Bench of Income tax Appellate Tribunal (ITAT) has directed re-adjudication as penalty under Section 271B of the Income Tax Act,1961 would not be leviable when audit has been completed within a reasonable time by the appointment of auditors by the regulatory authority.

The two-member Bench of Ravish Sood, (Judicial Member) and Arun Khodpia, (Accountant Member) observed that there was nothing on the part of assessee which made assessee responsible for the delay. The appeal filed by the assessee was partly allowed restoring the issue to the files of AO to verify the documents and accordingly, in terms of our aforesaid observations herein either enforce or vacate the penalty imposed under Section 271B of the Income Tax Act in the present case.

Addition cannot be Deleted merely for Mentioning Section 68 Instead of Section 69 of Income Tax Act when Cash Deposit of Rs. 49,000/- Found Each Time in Bank Account: ITAT Smt. Gloria Eugenia Rynjah Banerji vs ITO CITATION: 2023 TAXSCAN (ITAT) 2130

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the addition could not be deleted merely for mentioning Section 68 instead of Section 69 of the Income Tax Act , 1961 when the cash deposit of Rs.49,000/-had been found each time in the bank account of assessee.

The two-member Bench of N. K. Billaiya, (Accountant Member) and Yogesh Kumar Us, (Judicial Member) dismissed the appeal filed by the assessee holding that “The logic behind deposit of cash of Rs. 49,000/- each time in the bank account was also not justified. To sum up, the factual matrix is not commensurate with human probability. On such unbelievable facts the additions cannot be deleted merely on technical ground that the AO mentioned section 68 instead of section 69 of the Act.”

Income Tax Deduction U/S80P cannot be denied on ground of Delay in Submitting Audit Report by Govt Auditor: ITAT Uttam Dairy Staff Co-operative Credit & Supply Society Limited vs AO CITATION: 2023 TAXSCAN (ITAT) 2151

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) he that CIT(A) was unjustified in denying right to claim deduction under Section 80P of the Income Tax Act on grounds of Government auditor failing to give audit report on time.

The single member bench consisting of Suchritra Kamble held that the Assessing Officer as well as the CIT(A) was not right in disallowing the claim of deduction under Section 80P of the Income Tax Act to the assessee only on the ground of delay in filing the return. Thus the appeal was allowed.

Deletion of Income Tax Addition on successful Demonstration of Source of Cash Deposits to bank during Demonitization: ITAT dismisses Revenue Appeal The DCIT vs M/s. Atulah Contractors and Construction Pvt. Ltd CITATION: 2023 TAXSCAN (ITAT) 2152

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the assessee has successfully demonstrated source of cash deposit of Rs. 2,40,00,000 to its bank account during demonetization period thus upheld the order of Commissioner of Income Tax (Appeals) [CIT(A)], in deleting the addition made by Assessing Officer (AO) on account of unexplained cash deposits under Section 68 of the Income Tax Act,1961.

The Two member Bench comprising of Chandra Mohan Garg, Judicial Member and Dr. B.R.R. Kumar, Accountant Member held that the assessee has successfully demonstrated source of cash deposit of Rs. 2,40,00,000/- to its bank account during demonetization period and hence no addition can be made. The Tribunal upheld the decision of CIT(A) and dismissed the appeal of the Revenue.

AO cannot step in the shoes of businessman to decide curtailing of excessive expenditure unless brought evidence of fraud: ITAT deletes addition Trak Services (P) Limited vs Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 2153

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that Adoption of value by AO on the date of transfer being hypothetical makes the addition non tenable under section 48 of the Income Tax Act.

The two member bench consisting of Astha Chandra (Judicial member) and Shamim Yahya (Accountant member) held that the lower authorities have been completely wrong in making and sustaining the addition of Rs. 1,07,66,220/- on account of increase in sale consideration of shares, which needs to be deleted. Thus the appeal was allowed.

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