Top Stories ITAT Weekly Round-Up By Aparna. M – On April 1, 2024 5:26 pm – 12 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 March 26 to march 30, 2024. Depreciation Claim allowable on Vehicle used Commercially for Business Purpose: ITAT Deputy Commissioner of Income Tax vs Avichal Buildcon Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 445 The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) determined that a vehicle exclusively used by a business entity qualifies for depreciation claims. It was noted  by the two member bench of Waseem Ahmed ( Accountant Member ) and Madhumita Roy (Judicial Member) noted that, “purchase of a car was made by the appellant company which is also reflected in the books of account of the appellant company and therefore it can be well said that the car is commercially used for the purpose of business of the company and the depreciation thereon cannot be denied; moreso, the interest on car loan and car insurance was allowed by the department.”

Payments towards Marketing and Distribution Rights of Google Ad words not Royalty: ITAT Google Ireland Ltd vs The DCIT (IT) CITATION: 2024 TAXSCAN (ITAT) 473 The Bangalore Income Tax Appellate Tribunal ( ITAT ) Bench held that the payment made by Google India to the assessee does not fall under the category of royalty or Fees for Technical Services (FTS). The tribunal bench of Accountant Member Laxmi Prasad Sahu and Vice President Geroge George K held that the payments made by Google Ireland Limited to the assessee cannot be taxed in the hands of the assessee as royalty. ICSI Income Tax Exemption Claim: ITAT orders to Carry Out Necessary Verification The Institute of Company Secretaries of India vs DCIT CITATION: 2024 TAXSCAN (ITAT) 472 The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has directed a reassessment of the Institute of Company Secretaries of India’s ( ICSI ) income tax exemption claim.

The Tribunal Bench of Astha Chandra (Judicial Member) and N.K. Billaiya (Accountant Member) has partially upheld the appellant’s appeal and remanded the case to the Assessing Officer for further examination, acknowledging the intricacies and nuances involved. ICSI Income Tax Exemption Claim: ITAT orders to Carry Out Necessary Verification The Institute of Company Secretaries of India vs DCIT CITATION: 2024 TAXSCAN (ITAT) 472 The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has directed a reassessment of the Institute of Company Secretaries of India’s ( ICSI ) income tax exemption claim. The Tribunal Bench of Astha Chandra (Judicial Member) and N.K. Billaiya (Accountant Member) has partially upheld the appellant’s appeal and remanded the case to the Assessing Officer for further examination, acknowledging the intricacies and nuances involved. Assessee demonstrates Reasonable Cause for Cash Loan Availment u/s 273 B: ITAT deletes Penalty u/s 271D M/s. SVT Wholesale Pvt. Ltd vs JCIT CITATION: 2024 TAXSCAN (ITAT) 470 The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271D of the Income Tax Act, 1961 emphasizing a reasonable cause for cash loan availment and demonstrating compliance with Section 273B of the Income Tax Act. The two member bench of the tribunal comprising Laxmi Prasad Sahu (Accountant member) and George George K. (Vice President) observed that the matter needs fresh examination by the AO. Accordingly, the matter is restored to the file of the AO. The AO was directed to examine whether there is “reasonable cause” as mandated under section 273B of the Act, for assessee to avail cash loans from its Directors. Accordingly appeal of the assessee was allowed Genuineness of Purchase and Sale of Shares Proved by Producing Documentary Evidence: ITAT deletes addition u/s 68 Amarjit Kaur Surinder Singh Kochhar vs ITO Ward-12(1)(1) CITATION: 2024 TAXSCAN (ITAT) 469 In recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted addition under Section 68 of Income Tax Act as genuineness of purchase and sale of shares is proven by producing documentary evidence.

The single-member bench of the tribunal, comprising Pavan Kumar Gadale ( Judicial member ) directed AO to delete the additions and allow the grounds of appeal in favor of the assessee, resulting in the allowance of the appeal filed by the assessee. No Enquiry by AO: ITAT upholds Revision of Bad Debts allowed u/s 36(1) (vii) of Income Tax Act ICICI Bank Ltd vs The Dy. Commissioner of Income- tax CITATION: 2024 TAXSCAN (ITAT) 468 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has upheld the revision of bad debts allowed under Section 36(1)(vii) of the Income Tax Act, 1961 as there was no enquiry conducted by the Assessing Officer (AO). The two member bench of the tribunal comprising Sandeep Singh Karhail (Judicial member) Prashanth Maharishi (Accountant member) observed that “During the course of assessment proceedings neither there is any discussion not there is any detail called for by the assessing officer and therefore we do not find infirmity in the order of the learned principal Commissioner of income tax in holding that not making any enquiry by the learned assessing officer on this aspect makes the order of the learned AO erroneous so far as judicial to the interest of the revenue.”

ITAT upholds CIT (A)’s Decision Deleting Sales Tax Refund Addition of Rs. 11.6L made by AO u/s 43B of Income Tax Act DCIT vs M/s. Flax Apparels Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 467 The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) upheld the Commissioner of Income Tax (Appeals) [CIT(A)]’s decision to delete the addition of Rs. 11.6 lakhs pertaining to sales tax refund, which was made by the Assessing Officer (AO) under section 43B of the Income Tax Act, 1961. The Coram of T.R.Senthil Kumar (Judicial member) and Annapurna Gupta (Accountant member) do not see any reason to interfere with the order of the CIT(A) holding the assessee’s claim of sales tax refund waived during the year amounting to Rs. 11,68,847/- as allowable expenditure. ITAT restores Trust’s 80G (5) Registration Application back to CIT (E) despite 6-Year Delay Freepathshala vs Commissioner of Income-tax (Exemptions), Chandigarh CITATION: 2024 TAXSCAN (ITAT) 466 The Delhi bench of the Income Tax Appellate Tribunal (ITAT) restored the trust’s 80G(5) Registration Application back to the Commissioner of Income Tax (Exemption) (CIT (E)) despite a 6-year delay.

The two-member bench of the tribunal comprising Pradip Kumar Kediya (Accountant member) and Kul Bharat (Judicial member) set aside the order and restored the application before CIT(E) for decision afresh in accordance with the law. Accordingly, the assessee’s appeal stands allowed for statistical purposes. Unutilized CENVAT credit requires to be included in Closing Stock Value as u/s 145 of Income Tax Act: ITAT confirms Addition Dr. Raveendra M. Madraki vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 464 The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) confirmed the addition of unutilized Central Value added Tax (CENVAT) credit, mandating its inclusion in the closing stock value as per Section 145 of the Income Tax Act. The two member bench if the tribunal comprising Pavan Kumar Gadale ( Judicial member) and  Prashanth Maharishi ( Accountant member) find any infirmity in the order of the  lower authorities in including the above sum in the closing stock of the assessee and thereby increasing the total income. Accordingly, the appeal was dismissed. Taxpayer Fails to Prove CA’s Advice to Transfer Case to Advocate and his Negligence to File Timely Appeal: ITAT Denies to Condone Delay of 310 Days

Dr. Raveendra M. Madraki vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 464 The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) refused to grant condonation for a 310-day delay, citing the taxpayer’s inability to substantiate the Chartered Accountant’s (CA) recommendation to transfer the case to an advocate and the advocate’s subsequent negligence in filing the appeal on time. The two member bench of the tribunal comprising Beena Pillai (Judicial member) and Chandra Poojari (Accountant member) found no merit in the application for condonation of delay. Accordingly, ITAT considered the view that the assessee has failed to make out a sufficient and reasonable cause for condonation of delay and rejected the petition for condonation of delay. Non-striking of Irrelevant Matter would Render Income Tax Penalty Notice Defective: ITAT Jatin Enterprises vs ACIT-19(2) CITATION: 2024 TAXSCAN (ITAT) 463

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) recently quashed a pre-drafted penalty notice that included both concealed and inaccurately furnished income particulars. The bench, comprising Vikas Awasthy (Judicial Member) and S. Rifaur Rahman (Accountant Member), noted that when the Assessing Officer indicates satisfaction for imposing penalties based on Section 271(1)(c) of the Act, failure to strike out irrelevant portions renders the notice defective. This defect would compromise the penalty proceedings No Interest Cost cannot be claimed as Business Expenditure when borrowed amount utilized for making Investment in Shares: ITAT directs to recompute STCG from Shares JPR Investments and Trading Private Limited vs Asstt. Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 462 The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT )  while making directions  to recompute the Short Term Capital Gain( STCG ), held that interest cost can not be claimed as business expenditure when the borrowed amount was utilized for making investment in shares. After analyzing the submission of both parties, the bench comprising Narender Kumar Choudhry, ( Judicial Member ) & I Amarjit Singh, ( Accountant Member ) directs the assessing officer to treat the interest cost of Rs.122,26,476/- as cost of investment made towards purchasing the shares of M/s India Bull Real Estate Ltd. and re-compute the short term capital gain. No TDS Deduction Required on Commission Income earned by Foreign Agents Outside India: ITAT deletes Disallowance Globe Textiles (India) P.Ltd vs The DCIT CITATION: 2024

TAXSCAN (ITAT) 461 The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ), after deleting the disallowance made by the assessing officer, held that Tax Deduction at Source ( TDS ) should not be deducted on account of commission income earned by foreign agents outside India. The two-member bench of Annapurna Gupta ( Accountant Member ) and Pavan Kumar Gadale ( Judicial Member ) held that commission income earned by the agents cannot be termed to have incurred or arisen in India, and therefore, was not taxable in India. No Disallowance on payments towards PF and ESI made before due date of filing Income Tax Return u/s 139(1) of Act: ITAT Coronation Cigar Co vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 460 The Mumbai bench Income Tax Appellate Tribunal (ITAT) held that there was no disallowance on   payment towards the Provident Fund and Employee State Insurance (ESI) made before the due date of filing Income Tax Return under Section 139(1) of the Income Tax Act, 1961. After analyzing the submission of both parties, the two member  bench of Vikas Awasthy (Judicial Member) and Pramod Kumar (Vice President)held that disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1) of Income Tax Act.

Liability of Directors continue even though after dissolving Company u/s 248(5) of Companies  Act: ITAT upholds Notice u/s 148 of Income Tax Act M/s. Chandan Realtors Pvt. Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 459 The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) while upheld the notice issued under Section 148 of the Income Tax Act,1961 observed that liability of directors continues even after dissolving the company under Section 248(5) of the Companies Act, 2013. the two-member bench of Annapurna Gupta, ( Accountant Member ) and  Pavan Kumar Gadale,( Judicial Member ) held that upheld the notice issued under Section 148 of the Income Tax Act, 1961 observed that liability of directors continues even though after dissolving the company under Section 248(5) of the Companies Act, 2013. ITAT deletes deduction claimed u/s 35(1)(ii) of Income Tax Act towards Donation made to ineligible Scientific Research Trust C K Zipper Private Limited vs The ACIT CITATION: 2024 TAXSCAN (ITAT) 458 The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) deleted the deduction claimed under Section 35(1)(ii) of the Income Tax Act, 1961 towards donation made to the ineligible scientific research trust. The two member  bench of Ramit Kochar, ( Accountant Member ) and Madhumita Roy, ( Judicial Member ) deleted the deduction claimed under Section 35(1)(ii) of Income Tax Act towards Donation made to ineligible Scientific Research Trust. ITAT directs Re adjudication with respect to Source Of Money Trail related to Unsecured Loan BMM Ispat Limited vs ACIT Circle-1(1)(2) Bangalore CITATION: 2024 TAXSCAN (ITAT) 457 The Bangalore bench Income Tax Appellate Tribunal (ITAT) directed education with respect to the source of money trail related to unsecured loan. The two member bench of Chandra Poojari, ( Accountant Member ) and George George K.( Vice President ).The tribunal observed that the onus on the assessee is not only limited to establish the identity of the person making the advance but also his capacity to make advances and it has to be proved that it had actually been received as a loan from the creditor. Bad Debts arising out of Business of Credit Card Services is part of Banking Activities:

ITAT allows deduction claimed by HDFC Bank u/s 36(1)(vii) of Income Tax Act HDFC Bank Ltd. vs The DCIT-2(3)(1) CITATION: 2024 TAXSCAN (ITAT) 456 The Mumbai bench, Income Tax Appellate Tribunal ( ITAT ) while allowing the deduction claimed by the HDFC Bank under Section 36(1)(vii) of the Income Tax Act, 1961 held that bead debts arising out of the business of credit card services is part of banking activities. the two member  bench comprising Kuldip Singh, (Judicial Member) & Padmavathy S, (Accountant Member) held that  bad debts arising out of the business of credit card services is part of the banking activities and the loss arising on account of unrecovered balance is arising out of the normal course of banking business. Accordingly, the same shall be allowed as a deduction under section 36(1)(vii) of the Income Tax Act. Absence of cogent material to prove Cash Transaction with respect to Purchase of Chemicals:

ITAT directs readjudication Polyspin Filteration India Pvt. Ltd. vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 455 The Delhi bench Income Tax Appellate Tribunal (ITAT) directed readjudication in absence of cogent material to prove the cash transactions with respect to purchase of chemicals The bench observed that  the payments made  to M/s Krishna Enterprise out of its regular banking channels In such a situation the revenue had not brought any material on record to prove that subsequent to payment by banking channels to the supplier, the supplier had in turn given back the cash to the assessee after reducing his / her commission if he / she is an accommodation entry provider. Therefore the entire addition has been made in the hands of the assessee only on suspicion. The bench comprising M. Balaganesh, (Accountant Member)  directs readjudication in absence of cogent material to prove the cash transactions with respect to purchase of chemicals . Failure to establish Legal Expenses incurred from Trading Loss as Civil Expenditure: ITAT directs Readjudication M/s. AC Chokshi Share Brokers Pvt Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 454

The Mumbai bench Income Tax Appellate Tribunal ( ITAT ) directed readjudication on account of failure to establish legal expenses incurred from the trading loss as civil expenditure. The tribunal observed that the assessee is a stock broker and was in the business as stock broking services and due to trading in the clients account, the client has filed the criminal case. However  the  assessee could not establish with the supporting evidence that the claim of the assessee is a civil expenditure allowable under the Income Tax Act. ITAT deletes disallowance made towards Staff Welfare Expenses without giving opportunity The Ahmedabad bench Income Tax Appellate Tribunal (ITAT)  deletes disallowance made towards the staff welfare expenses without giving opportunity. The tribunal observed that during the course of hearing, the AO had rejected the books of accounts of the assessee and estimated the income of the assessee by applying 10% to the gross turnover of the assessee.

Therefore it was observed after examining the order of CIT(A) did not find any merit in the anomaly of salary mismatch between that reflected in the bank and that claimed by the assessee in its books as noted by the AO. ITAT quashes Ex-Parte Assessment Order passed without considering Valuation Report u/s 12A of Income Tax Act The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the ex parte assessment order passed without considering the Valuation report under Section 12A of the Income Tax Act, 1961. The single-member bench of Laliet Kumar (Judicial Member)quashed the ex parte assessment order passed without considering the Valuation report under Section 12A of the Income Tax Act, and the appeal of the assessee is remanded back to the file of the CIT(A) to call for the remand report from the AVO and estimate the correct value of the property. ITAT quashes Assessment Order passed on Violation of Principles of Natural Justice Kanchan Vanijya Pvt. Ltd. vs ACIT CITATION: 2024 TAXSCAN (ITAT) 451 The Mumbai bench Income Tax Appellate Tribunal ( ITAT )quashed the assessment order passed on violation of principle of natural justice.

The Two member bench of Girish Agrawal, ( Accountant Member ) & Sanjay Garg ( Judicial Member )observed that dherence to principles of natural justice is recognized by all civilized States and is of supreme importance when a quasi judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences is in issue. Natural Justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental.“ Section 155(14) of Income Tax Act cannot limit TDS Credit if Income disclosed in ITR: ITAT allows Full Credit as per Form 26AS Dassault Systems Simulia Corp vs DCIT CITATION: 2024 TAXSCAN (ITAT) 449 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that the Section 155(14) of the Income Tax Act, 1961 cannot restrict the Tax Deduction at Source ( TDS ) credit if the income is properly disclosed in the Income tax Returns ( ITR ). The bench of V. Durga Rao (Judicial member) and Manoj Kumar Agarwal (Accountant member) directed the AO to allow full TDS credit to the assessee which is otherwise available as per Form 26AS.

Accordingly the appeal of the assessee was allowed. 857 days delay, including 56 Pre-Covid days Properly Explained: ITAT directs CIT(A) to Condone Delay in Appeal Filing C. Ramasamy Gounder HUF vs Income Tax Officer Ward 1(5) CITATION: 2024 TAXSCAN (ITAT) 448 The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Commissioner of Income Tax (Appeals) [(CIT(A)] to condone the 857-day delay in filing the appeal a the assessee has given proper explanation provided for the delay, encompassing 56 pre-COVID days. e bench of Justice C.V. Bhadang and Manjunatha G. (Accountant member) considered the view that the CIT (A) ought to have condoned the delay in filing of appeal to advance substantial justice. ITAT directed the first appellate authority to condone the delay in filing of appeal and admit the appeal for hearing and decide the issues involved on merit, after providing reasonable opportunity of hearing to the assessee.

Accordingly, appeal filed by the assessee was allowed. Installment Payments for Immovable property Purchase via cheque on different dates: ITAT deletes Addition u/s 56(2)(x) Bijay Kumar Agarwal vs ITO CITATION: 2024 TAXSCAN (ITAT) 447 The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ), deleted addition under Section 56(2)(x) of the Income Tax Act, 1961 as the orders of both the lower authorities are not sustainable because the assessee has demonstrated that it has made payment for purchase of this property through account payee cheque in installments on different dates. The two member bench consisting Girish Agrwal ( Accountant member ) and Rajpal Yadav ( Vice President ), while deleting the addition, sets aside the file back to the assessing officer for reconsideration Sale of Software Products does not Constitute Royalty Income, Not taxable under Article 12 of India- Japan DTAA: ITAT DCIT vs Dassault Systems Biovia K.K CITATION: 2024 TAXSCAN (ITAT) 446 In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the sale of software products does not constitute royalty income and is not taxable under Article 12 of India- Japan Double Taxation Avoidance Agreement ( DTAA ). The two member bench of the tribunal comprising Dr.B.R.R Kumar ( Accountant member ) and Anubhav Sharma ( Judicial member ) observed that the CIT (A) had fallen in error in making the deletion.

It was observed that “After the judgement of Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited vs CIT (supra), the issue with regard to taxability of the income from the sale of Software licenses subscription, stands settled and same is followed by ld. CIT(A), so there is no infirmity in the impugned orders, requiring interference.” ITAT allows Depreciation claim u/s 80IC for Building, Factory, Furniture and Plant Machinery Blocks Deputy Commissioner of Income Tax vs Avichal Buildcon Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 445 The Income Tax Appellate Tribunal ( ITAT ) of Delhi, allowed depreciation claim under Section 80IC of Income Tax Act, 1961, for building, furniture, and plant machinery blocks. The bench of Pradip Kumar Kediya (Accountant member) and Saktijit Dey (Vice president) opined that the assessee’s claim of depreciation was allowable. Even, otherwise also, the disallowance of depreciation would only enhance the profit of the assessee, which was otherwise eligible for claim of deduction under Section 80IC of the Income Tax Act.