Income Tax Appellate Tribunal judgments

ITAT Ahmedabad ruled that the Transactional Net Margin Method (TNMM) remains the most appropriate transfer pricing method where functional profiles remain unchanged, deleting a ₹3.88 crore adjustment. The decision reinforces judicial precedent, binding tax authorities to prior rulings for identical facts, offering relief to multinational enterprises facing repetitive TP disputes.

ITAT Mumbai rules that Section 14A disallowance cannot apply without exempt income, and actual rent under genuine agreements prevails over notional Annual Letting Value (ALV). The decision reinforces that tax disallowances must be grounded in real income, not hypothetical valuations, impacting tax assessments for commercial property owners.

ITAT Mumbai has set aside a Rs. 603 crore ex-parte reassessment order against Simcement Private Limited, holding that even procedural lapses cannot override the fundamental right to a fair hearing under natural justice. This ruling reinforces that tax authorities must provide a genuine opportunity to respond before invoking Section 144, impacting all corporate taxpayers facing reassessments based on incomplete compliance.

ITAT Ahmedabad rules that capital gains tax under Section 2(47)(v) of the Income-tax Act crystallizes upon registration of the sale deed, irrespective of delayed payment or retention of possession. The ruling clarifies that the transfer date for tax purposes is the registration date, impacting taxpayers and advisors on timing of tax liability recognition.

ITAT Mumbai rules that co-operative societies earning interest from deposits with co-operative banks qualify for deduction under Section 80P(2)(d), reinforcing the co-operative character of such banks under tax law. The decision clarifies eligibility for co-operative societies, impacting tax assessments for similar entities.

ITAT Mumbai rules that immunity under Section 270AA of the Income Tax Act confers absolute finality on assessment orders, barring subsequent rectification under Section 154 to convert assessed losses into taxable income. The ruling protects assessees from post-immunity adjustments, reinforcing the binding nature of immunity grants.

ITAT Lucknow sets a precedent by recognizing acute depression and dehydration from Ramadan fasting as valid 'reasonable cause' under Section 273B of the Income Tax Act, deleting a ₹20,000 penalty. This ruling expands the scope of medical exemptions for tax compliance, offering relief to assessees facing health-related non-compliance.

ITAT Delhi condones a 744-day delay in filing a tax appeal, ruling that the assessee’s bona fide belief-based on their CA’s advice regarding abatement post-search-constitutes 'sufficient cause' under Section 5 of the Limitation Act. The decision reinforces that professional reliance, if reasonable, can override strict limitation bars in tax proceedings.

ITAT Pune rules that unaccounted cash receipts ('on-money') must be assessed under the unified peak credit method, striking down separate additions under Section 69A. The decision mandates a single peak computation for undisclosed income, preventing double taxation and ensuring consistency in tax assessments for real estate developers.

ITAT Ahmedabad rules that penalty under Section 43 of the Black Money Act cannot be imposed if foreign assets are disclosed in a return filed under Section 153A, even if omitted in the original return. The decision shields taxpayers from penalties for voluntary disclosures made post-search, reinforcing procedural fairness in foreign asset reporting.

ITAT Delhi rules that reassessment proceedings under Section 147 initiated by ACIT for corporate assessees with returned income below ₹30 lakh are jurisdictionally void, as CBDT Instruction 1/2011 mandates assessment by ITO. The ruling reinforces jurisdictional compliance for reassessment, impacting corporate taxpayers in metro cities.

The ITAT Delhi ruled that offshore supply of goods by a UK-based company, with no physical presence or control in India, cannot be taxed under Section 44BB’s presumptive regime. The Revenue failed to prove a permanent establishment under the India-UK Tax Treaty, reinforcing that mere contract execution or remote supervision does not create taxable nexus. This sets a critical precedent for multinational energy and engineering firms operating across borders without local infrastructure.

The ITAT Delhi has ruled that the discount on shares issued under Employee Stock Option Plans qualifies as a revenue expenditure deductible under Section 37(1) of the Income Tax Act, aligning with Delhi High Court precedents in Lemon Tree Hotels and NDTV. This clarifies that such accounting entries-though non-cash-are legitimate business costs tied to employee compensation, not capital infusions, impacting all companies offering ESOPs in India.

ITAT Mumbai rules that discounts and margins earned by pharmaceutical distributors on resale are trading income, not commission, exempting them from TDS under Section 194H. This clarifies a widespread industry practice and shields distributors from wrongful TDS demands, impacting thousands of pharma supply chain entities nationwide.

The ITAT Mumbai has ruled that land classified as agricultural in revenue records and located beyond municipal limits qualifies for capital gains tax exemption under Section 2(14)(iii), regardless of whether the owner reports agricultural income or actively cultivates the land. This affirms that statutory classification, not economic use, governs the exemption - a vital precedent for landowners in peri-urban areas facing development pressure.

The ITAT Delhi has struck down an ex parte order passed under Section 250 of the Income Tax Act, holding that failure to grant a meaningful opportunity to file written submissions and documentary evidence violates natural justice. The tribunal has mandated a fresh hearing with a 60-day window for the assessee to respond, reinforcing that procedural fairness cannot be sacrificed even in cases of apparent non-cooperation.

The ITAT Delhi has held that a reassessment under Section 147 is legally invalid when the Assessing Officer departs from the reason initially proposed for reopening, establishing that procedural consistency is mandatory-not optional. This ruling binds tax authorities to their stated grounds, protecting taxpayers from arbitrary reassessments based on shifting justifications.

The ITAT Dehradun has ruled that a single, mechanical approval covering multiple assessees under Section 153D lacks legal validity, quashing assessments issued without individualized sanction. This sets a critical precedent for tax officers: blanket approvals cannot substitute statutorily mandated personal scrutiny, impacting all pending and future joint assessments under the Income Tax Act.

The ITAT Mumbai has struck down the practice of imposing automatic 10% disallowance on short-term borrowings under Section 68, ruling that tax authorities must conduct a substantive verification of the lender’s identity, genuineness, and creditworthiness. This sets a critical precedent for businesses relying on third-party loans, ensuring assessments are grounded in evidence, not arbitrary percentages.

ITAT Delhi sets aside assessments under Section 153C where no incriminating material connects the assessee to alleged commission receipts. The ruling invalidates protective additions when substantive additions fail, reinforcing that jurisdictional validity under Section 153C hinges on direct evidence linking the assessee to undisclosed income.

ITAT Delhi has ruled that reassessment notices issued under Section 148 after 1 April 2021 for assessment years prior to 2017-18 are time-barred if the original assessment was never completed under Section 143(3), reinforcing that the amended limitation period applies retroactively to protect taxpayers from stale reassessments. This decision impacts thousands of pending cases where notices were issued based on old procedural norms.

ITAT Delhi rules that reimbursement of salary costs for seconded employees-where the Indian entity is the real employer-does not constitute Fee for Technical Services (FTS) under the India-Japan DTAA, even without markup. The decision clarifies the tax treatment of cross-border secondment arrangements, impacting multinational corporations and tax compliance strategies.

ITAT Delhi rules that mere delay in filing Form 10-IC does not invalidate the concessional tax rate under Section 115BAA if the assessee’s eligibility and intent are established. The ruling reinforces that procedural lapses cannot override substantive rights when compliance is otherwise demonstrable.

ITAT Delhi rules that the Revenue cannot reopen settled tax positions for identical facts across assessment years without a material change in circumstances. The tribunal upheld a 1% addition on gross bank transactions, rejecting arbitrary reassessment attempts, reinforcing binding precedent for taxpayers and tax authorities.