Top Stories ITAT Weekly Round-up By Aparna. M – On April 22, 2024 1:26 pm – 13 mins read This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal ( ITAT ) reported at Taxscan.in during the previous week from April 13 to April 20 ITAT Directs Readjudication with respect to Interest paid to Related Persons and Family Members for Availing of Unsecured Loans Gallant Freight And Travels Pvt. Ltd. vs Asstt. Commissioner of Income Tax Circle–9(3)(2) CITATION: 2024 TAXSCAN (ITAT) 564 The  Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) recently directed readjudication with respect to interest paid to the related persons and family members for availing of unsecured loans The tribunal bench comprising  Sandeep Singh Karhail ( Judicial Member ) and Om Prakash Kant ( Accountant Member ) observed that the loans received from the related parties are unsecured loans.

It is further pertinent to note that though the AO considered the rate of interest charged by the bank @12%, however, did not provide the name of such bank and the terms of such loan for comparing the same with the unsecured loans received by the assessee. ITAT allows Bad Debts claimed u/s 36(1)(vii) in respect of Identified Debts E-oriental Bank of Commerce vs ACIT CITATION: 2024 TAXSCAN (ITAT) 563 The  Delhi bench  of Income Tax Appellate Tribunal ( ITAT ) allowed the bad debts claimed under Section 36(1)(vii) of Income Tax Act in respect of identified debts. Astha Chandra, ( Judicial Member ) and  N.K. Billaiya ( Accountant Member ) observed that an identical issue was brought up for consideration before the Coordinate Bench of the Tribunal in assessee’s case for AY 2015-16. According to the decision the bench observed “that deduction under Section 36(1)(vii) of Income Tax Act will be limited only in those cases where such bad debt exceeds provision under Section 36(1)(viia) of Income Tax Act . That means there should be a debt against which a provision under Section 36(1)(viia) Income Tax Act should exist and such debt is a subject matter of write off under Section  36(1)(vii). Under such circumstances only the excess will be allowed. “ Purchase and Sale of Shares Transactions cannot be considered bogus when Documentary Evidence Genuinely Established :

ITAT Chirag Tejprakash Dangi vs ITO CITATION: 2024 TAXSCAN (ITAT) 562 The  Mumbai bench  of Income Tax Appellate Tribunal ( ITAT ) recently ruled that purchase and sale of shares transactions could not be considered bogus when documentary evidence genuinely established. the bench comprising Justice ( Retd. ) C.V. Bhadang ( President ) and B.R. Baskaran ( Accountant Member ) relied upon the decision of CIT vs. Jamnadevi Agarwal observed that the transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the assessee establish genuineness of the claim Relief to Tata Steel Limited: ITAT rules Perpetual Non-convertible Debenture is an allowable Expenditure u/s 36 (1) (iii) of Income Tax Act Tata Steel Limited vs Income-tax Officer CITATION: 2024 TAXSCAN (ITAT) 561 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) granted relief to Tata Steel Limited, ruling that perpetual non-convertible debentures are allowable expenditure under Section 36(1)(iii) of the Income Tax Act,1961.

the tribunal comprising M. Balaganesh ( Accountant member ) and Vikas Aswathy ( Judicial member ) found that in AY 2011-12 and 2012-13, the PCIT had invoked revisional jurisdiction on the same issue, It is not disputed by the Department that the PNCD on which the assessee has paid interest are the same that were subject matter of dispute in AY 2011-12 and 2012-13 in proceedings under Section 263 of the Income Tax Act Thus, in the light of the decision of Co-ordinate Bench on same issue in assessee’s own case in preceding assessment year. ITAT directs Matter to CIT(E) citing Form No.10AB Application should be Construed u/s 12A(1)(ac)(i) of Income Tax Act Santiniketan Sishutirtha vs Commissioner of Income Tax (Exemptions) CITATION: 2024 TAXSCAN (ITAT) 560 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) directed the matter to Commissioner of Income Tax ( Exemption ), emphasizing that the application in Form No.10AB should be construed under Section 12A (1)(ac)(i) of the Income Tax Act, 1961. The two-member bench of the tribunal, comprised of Sanjay Garg ( Judicial member ) and Girish Agarwal ( Accountant member ), meticulously reviewed the records. It became apparent that the assessee’s application should have been made under section 12A, sub-clause (1)(ac)(i), entitling them to regular registration for a period of five years. Dismissal of the applications occurred solely due to the erroneous mention of the clause in the application form.

Given the opportunity within the system, the assessees could have rectified this mistake and correctly referenced Section 12A(1)(ac)(i) of the Income Tax Act. ITAT allows Capital Gain Deduction for Additional Compensation Paid to Vendors for Land Acquisition Costs, Finding no grounds for doubt Prime Maxi vs ACIT CITATION: 2024 TAXSCAN (ITAT) 559 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) allowed capital gain deduction for additional compensation of Rs. 25 lakhs paid to vendors for land acquisition costs, finding no grounds for doubt. The tribunal comprising Astha Chandra ( Judicial member ) and M. Balaganesh ( Accountant member ) directed the AO to grant deduction of Rs. 25 lakhs while computing capital gain on sale of lands. Accordingly, the ground raised by the assessee was allowed. Management Fees for Sale of Securities is allowable Expenditure u/s 48 of Income Tax Act: ITAT Krishnamurthy Thiagarajan vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 558 The two member bench of the Income Tax Appellate Tribunal ( ITAT ), Mumbai, ruled that management fees for sale of securities is allowable expenditure under Section 48 of the Income Tax Act, 1961

The two member bench of Amarjit Singh ( Accountant member ) and Vikas Aswathy ( Judicial member ) observed that there are contrary decisions of the Tribunal on allowability of Management Fee under Section 48 of the Income Tax Act. It is a well settled proposition that when two views are possible, the view in favor of assessee, thus the appeal of the assessee was allowed. Filing Audit Report in Form 10CCB before filing ITR is only directory Not Mandatory: ITAT allows S.80IA Deduction Sanjay Kukreja vs ACIT CITATION: 2024 TAXSCAN (ITAT) 557 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed Section 80IA deduction as it considered filing the Audit Report in Form 10CCB before filing the Income Tax Return as merely directory and not mandatory for the year under consideration. The two member bench of the tribunal comprising G.S.Pannu ( Vice President ) and C.N.Prasad ( Judicial member ) held that filing of audit report in Form 10CCB  before the due date for filing of return of income under Section 139(1) is only directory and not mandatory for the year under consideration. Thus, ITAT directed the AO to allow deduction claimed under Section 80IA of the Income Tax Act. Accordingly, the appeal of the assessee was allowed. Form 26 AS or Form 16 Essential for TDS Credit Claim: ITAT Directs Re-adjudication Shri Ajit Chandrashekar Dighe vs The DCIT CITATION: 2024 TAXSCAN (ITAT) 556 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has directed re-adjudication, stating that either Form 26AS or Form 16 is essential for claiming Tax Deducted at Source ( TDS ) credit. The two member bench of the tribunal comprising S. Rifafur Rahman ( Accountant member ) and Narendar Kumar Choudhry ( Judicial member ) observed that the assessee by filing TDS working which is though initialed by somebody but the same is neither on proper letter head nor there is a name of the person who signed such document and even otherwise, the assessee has also failed to file any document, wherefrom it can be reflected that the Assessee has received any particular amount of salary  on which TDS has been deducted and therefore, in absence of relevant documents, the Commissioner correctly held that the AO has not made any mistake in non-granting of credit of TDS, since, the assessee did not furnish any salary slip or Form No.16. Income already declared by Wife: ITAT quashes Addition as ‘Undisclosed Income’ at the Hands of Husband

The Rajkot bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the addition of income as ‘undisclosed income’ at the hands of the husband, citing that the income was already declared by the wife. The two member bench of the tribunal comprising Suchithra R Kamble ( Judicial member ) and Annapurna Gupta ( Accountant member ) found that there was  no case with the Revenue now to tax the same income in the hands of the assessee also in terms of the clubbing provisions of Section 64(1)(ii) of the Income Tax Act. Having accepted the said income as belonging to the assessee’s wife in scrutiny assessment, the Department is now debarred from taking a contrary view and taxing it in the hands of the assessee on the ground that his wife was not actually carrying out any business. Accordingly, the appeal filed by assessee was allowed. Surrender of Additional Professional Income Covering Expenditure Incurred on Building: ITAT deletes Addition u/s 69 of Income Tax Act Shri Jaspreet Singh Mauj vs The DCIT/ACIT CITATION: 2024 TAXSCAN (ITAT) 554 The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition under Section 69 of the Income Tax Act, 1961 citing the surrender of additional professional income to cover the expenditure incurred on building. The two member bench of the tribunal comprising Vikram Singh Yadav ( Accountant member ) and Sanjay Garg ( Judicial member ) observed that the addition made by the AO of Rs. 2,11,600/- on account of addition in the value of building cannot also be held to be justified as the assessee in clear terms has surrendered the additional professional income covering the expenditure incurred on building also. The addition made by the AO cannot be held to be justified and the same is, accordingly, set aside. Accordingly, the appeal of the assessee was treated as allowed. Jurisdictional notice u/s 143(2) of Income Tax Act issued beyond prescribed limitation period: ITAT quashes Assessment Order Aark Infosoft Private Limited vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 553 In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the assessment order due to the jurisdictional notice under Section 143(2) of the Income Tax Act, 1961 being issued beyond the prescribed limitation period. The two member bench of the tribunal comprising Suchithra Kamble ( Judicial member ) and Annapurna Gupta ( Accountant member ) quashed the assessment order finding the jurisdictional notice under Section 143(2) of the Income Tax Act being issued beyond limitation prescribed under the Act

. Accordingly, the appeal of the assessee is allowed. Sponsorship Fee paid to Trust found more Personal Obligation of Director, Not a Business Expenditure: ITAT confirms Disallowance of Rs.15L Yala Construction Co. Pvt. Ltd vs Addl. CIT CITATION: 2024 TAXSCAN (ITAT) 552 The Income Tax Appellate Tribunal ( ITAT ) confirmed the disallowance of Rs. 15 lakhs for sponsorship fees paid to a trust, as it was deemed to be a personal obligation of the director rather than a legitimate business expenditure. The two member bench of the tribunal comprising Yogesh Kumar US ( Judicial member ) and Dr. B.R.R Kumar ( Accountant member) held that the assessee could not prove anything contrary to the adjudication of the CIT(A) and hence declined to interfere with the order of the CIT(A). Accordingly, the ground was dismissed. Determination of Income in Assessment Order cannot be basis for Filing of ITR u/s 139 (1): ITAT Quashes Penalty u/s 271 F of Income Tax Act Maheshbhai Prabhudas Gandhi vs Ld. AO, CIT(A) CITATION: 2024 TAXSCAN (ITAT) 551 The Income Tax Appellate Tribunal ( ITAT ) quashes penalty under Section 271F of the Income Tax Act, stating that determination of income in the assessment order cannot serve as the basis for filing Income Tax Return under Section 139(1) of the Income Tax Act, 1961 The two member bench of the tribunal comprising Wassem Ahemed ( Accountant member ) and Madumitha Roy ( Judicial member ) concluded that the levy of penalty seems not only harsh but also not sustainable in the eyes of law under Section 271F of the Income Tax Act and hence quashed.

Accordingly, the appeal filed by the assessee was allowed. Relief to Indian Oil Employees Welfare: ITAT rules Interest Income to Cooperative Society from Investment with any Other Cooperative Society Deemed allowable u/s 80P Indian Oil Employees Welfare Cooperative Society Ltd vs ACIT 23(1) CITATION: 2024 TAXSCAN (ITAT) 550 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that interest income to a cooperative society from investments with any other cooperative society is deemed allowable under Section 80P, providing relief to Indian Oil employees’ welfare. The two member bench of the tribunal comprising Amit Shukla ( Judicial member ) and Prashanth Maharishi ( Accountant member ) directed  the  lower authorities to allow the deduction to the assessee on interest income earned from various cooperative banks under Section 80P(2)(d)  of the  Income Tax Act. Accordingly, the appeals of the assessee were allowed. Labor Expenses Capitalised in Land value, No Deduction claimed in P & L Account: ITAT deletes Addition of 1.74 crore Sunil Dhirubhai Patel vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 549 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of 1.74 crore after finding that labor expenses capitalized in land value did not warrant deduction claimed in the Profit & Loss Account. The bench of T.R. Senthil Kumar ( Judicial member ) and Waseem Ahemed ( Accountant member ) noted that the question of making disallowance arises when the assessee claimed the deduction. In the present case, undeniably the assessee has not claimed any deduction in the year in dispute and therefore on this count as well as such expenses cannot be disallowed in the year under consideration. Form No. 10AB Timeline Extension for S.12A Recognition is Deemed Extension for Approval Renewal u/s 80G (iii) First Provison of Income Tax Act:

ITAT M/s. CIT-1982 Charitable Trust vs The Commissioner of Income Tax (Exemption) CITATION: 2024 TAXSCAN (ITAT) 548 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) noted that the extension timeline provided in Form No. 10AB for Section 12A recognition was deemed to be an extension for the approval renewal under the first provision of Section 80G(iii) of the Income Tax Act, 1961 The two member bench of the tribunal comprising Manoj Kumar Agarwal ( Accountant member ) and Mahavir Singh ( Vice President ) set aside the order of CIT ( Exemption ) on the same reason and remand the matter back to the file of the CIT ( Exemption ) for deciding the issue on merits as per law. The appeal of the assessee was allowed. CPC Lacked Authority for Preliminary Deduction u/s  80P of Income Tax Act Pre-April 2021: ITAT Bisharpara Kodalia Cooperative Credit Society Ltd. vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 547 The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that the Centralized Processing Centre (CPC) lacked authority for preliminary deduction under Section 80P of the Income Tax Act, 1961, prior to April 2021. Therefore, the two member bench consisting Rajpal Yadav ( Vice President ) and Girish Agarwal ( Accountant member) set aside the order of the  CIT(A) and allowed the grounds of appeal raised by the assessee for the claim of deduction under Section 80P of the Income Tax Act at Rs.19,42,264/-. Accordingly, appeal of the assessee was allowed. ITR Filing within Due Date is Mandatory for Claiming Deduction u/s 80IB (10) of Income Tax Act:

ITAT The DCIT vs Umang Hiralal Thakkar CITATION: 2024 TAXSCAN (ITAT) 546 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the Income Tax Return filing within due date in mandatory for claiming deduction under Section 80IB (10) of Income Tax Act, 1961. the two member bench of the tribunal comprising Waseem Ahemed ( Accountant member ) and Suchithra Kamble ( Judicial member ) observed that the assessee was claiming deduction under Section 80IB (10) and the Income Tax Statute under Section 80IB (10) is also uses the word “shall” and therefore the condition of filing the return of income within the due date was mandatory in nature. Accordingly, appeal of the assessee was dismissed. Explanation 3 to Section 147 of Income Tax Act cannot be extended to make New Addition beyond Initial Reopening Assessment Reasons: ITAT quashes Order M/s Vishram Sahakari Awas Samiti Limited vs ITO CITATION: 2024 TAXSCAN (ITAT) 545 The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order as no addition was made based on the reason to believe recorded by the Assessing Officer ( AO ) for reopening the assessment under section 148 of the Income Tax Act, 1961. The two member bench of the tribunal comprising Anubhav Sharma (Judicial member) and Shamim Yahya (Accountant member) found that the issue is squarely covered in favour of the assessee, and the assessment order was liable to be quashed.

Therefore, the same was quashed accordingly.  The appeal of the assessee stands allowed. Taxpayer without Shareholding cannot be Deemed ‘Dividend’ Receiver u/s 2(22) of Income Tax Act: ITAT Apeejay Surrendra Management Services Pvt. Ltd vs DCIT, Circle-8(1) CITATION: 2024 TAXSCAN (ITAT) 544 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the taxpayer without shareholding cannot be deemed ‘dividend’ receiver under Section 2(22) of Income Tax Act, 1961. The two member bench of the tribunal comprising Sanjay Garg ( Judicial member ) and Girish Agarwal ( Accountant member ) concluded that by invoking second limb of section 2(22)(e) of Income Tax Act, accrual of income and its taxability cannot be held to be in the hands of the assessee i.e. ASMSPL. ITAT  thus, set aside the findings of CIT(A) and deleted the addition of Rs.5,50,11,501/- added in the hands of the assessee ( ASMSPL ) by treating the amount of loan and advance as deemed dividend under Section (22)(e) of the Income Tax Act. Accordingly, ground taken by the assessee was allowed.

Taxpayer’s Document Validates Identity and Transaction Genuineness: ITAT deletes Addition u/s 68 Brightstar Vincom Pvt. Ltd vs ITO CITATION: 2024 TAXSCAN (ITAT) 543 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition under Section 68 of the Income Tax Act, 1961 after validating the taxpayer’s document, affirming the identity and genuineness of the transaction The two member bench of the  tribunal comprising Girish Agarwal ( Accountant member ) and Sanjay Garg ( Judicial member ) held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same. Loan Transaction Validated by Furnishing Identity and Creditworthiness of Creditors: ITAT deletes Addition u/s 68 of Income Tax Act DCIT vs Alom Extrusions Ltd CITATION: 2024 TAXSCAN (ITAT) 542 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under Section 68 of the Income Tax Act, 1961 as the loan transaction validated by duly furnishing the identity and creditworthiness of the creditors. The two member bench of the tribunal comprising Rajesh Kumar ( Accountant member ) and Sanjay Garg ( Judicial member ) observed that no incriminating material was found during the course of search action. Even all the creditors have duly confirmed the transactions and also established the source of the credits and the loan being also repaid in a short span of time. The CIT(A), therefore, has rightly held that the addition made by the Assessing Officer was not justified. Deduction u/s 80 IA of Income Tax Act not allowed to Enterprise carrying Civil Contract Work for Developer of Infrastructure facility: ITAT M/s. Bharat Engineering Construction Co. Pvt. Ltd vs The Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 541 In a recent ruling the Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the deduction under Section 80 IA of the Income Tax Act, 1961 is not allowed to enterprise carrying civil contract work for developer of infrastructure facility.

The two member bench of the tribunal comprising Manohan Das ( Judicial member ) and Manju Natha G ( Accountant member )  set aside the order of the CIT(A) on this issue and restore the issue back to the file of the Assessing Officer and direct the Assessing Officer to re-examine the claim of deduction under Section 80- IA(4) of the Income Tax Act, in light of necessary evidences including agreement entered into by the appellant with various departments and ascertain the nature of works executed by the assessee, in order to consider for the purpose of section 80-IA(4) of the Income Tax Act, and decide the issue in accordance with law. Accordingly, the appeal of the assessee allowed Non-cooperation with Income Tax Assessment Proceedings, Relevant Details and Records Not Produced: ITAT Directs Re-Adjudication The Indore bench of the Income Tax Appellate Tribunal ( ITAT ) has directed re-adjudication due to non-cooperation with income tax assessment proceedings and failure to produce relevant details and records The two-member bench of B.M.Biyani ( Accountant member) and Vijay Pal Rao ( Judicial member) observed that the addition made by the AO since the assessee has not cooperated during the assessment proceedings and relevant details and records were not produced consequently, the AO has made the addition for want of the explanation, relevant details and record to explain the source of investment.

No Adverse Findings on Purchases or Stock: ITAT deletes 39.2 Lakhs cash credit u/s 68 of Income Tax Act Bharat Agro Industries vs DCIT CITATION: 2024 TAXSCAN (ITAT) 539 The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted Rs. 39.2 Lakhs Cash Credit Under Section 68 of the Income Tax Act, 1961, citing absence of adverse findings on purchases or stock. A single member bench of the tribunal comprising Kul Bharath (Judicial member) observed that invoking the provision of Section 68 of the Income Tax Act, would not be justified. It is not a case of inflated purchases but AO treated cash sales being bogus without disturbing the book results. Therefor it was held that the authorities below have committed error in making impugned addition without bringing any adverse material in respect of purchases and stock of assessee. The impugned order was set aside and the AO was directed to delete the impugned addition. Thus, grounds raised by the assessee was allowed. To Read the full text of the Order CLICK HERE