Income Tax Appellate Tribunal judgments

ITAT Delhi ruled that a limited risk service provider is entitled to cost-plus remuneration, rejecting transfer pricing adjustments where benchmarking was inconsistent and DRP directions were ignored. The decision reinforces the consistency principle in transfer pricing, impacting multinational enterprises and tax compliance strategies.

ITAT Kolkata rules that when an assessee fails to prove the existence of suppliers, delivery, or transactional genuineness, the entire purchase amount is taxable as unexplained expenditure under Section 69C. The ruling underscores the burden of proof on taxpayers to substantiate transactions, even with banking evidence, to avoid full disallowance.

ITAT Kolkata rules that cash repayments of prior advances do not constitute 'deposits' under Section 269SS of the Income Tax Act, setting aside penalties imposed under Section 271D. The Tribunal emphasized the violation of natural justice principles, remanding the case for a fresh hearing with an opportunity for the assessee to present evidence.

ITAT Bangalore condoned a 114-day delay in filing an appeal and restored the assessment to the Assessing Officer, emphasizing that ex-parte additions under Section 144 without considering the assessee’s health constraints violate procedural fairness. The ruling underscores the assessee’s right to submit evidence and mandates fresh adjudication where unexplained income additions were made without proper opportunity.

ITAT Bangalore rules that a charitable trust’s exemption under Section 11 cannot be denied solely due to a lost trust deed. The tribunal permits reinstatement of registration through a sworn affidavit and condonation of delay, ensuring trusts are not penalized for procedural lapses beyond their control.

ITAT Mumbai rules that the acquisition date for capital gains computation under Section 2(42A) of the Income Tax Act is the date of final, binding allotment and registration, not the issuance of provisional letters. This precedent clarifies the holding period calculation, impacting property transactions and tax liability assessments for taxpayers.

ITAT Delhi rules that Section 56(2)(viib) of the Income Tax Act applies only when consideration is received in the assessment year of share allotment. Funds received earlier via Compulsorily Convertible Debentures (CCD) conversion do not attract tax on share premium, even if valuation is based on prior balance sheets. The ruling clarifies the timing of receipt for tax applicability under this provision.

ITAT Delhi holds that failure to pay tax under the Income Declaration Scheme 2016 within the stipulated time renders the declaration invalid, making the disclosed income taxable in the year of declaration rather than the original assessment year. This ruling underscores the strict compliance requirement for availing amnesty benefits under the scheme.

ITAT Mumbai rules that issuing two reassessment orders under Section 147 for the same transaction in a single assessment year is legally impermissible. The second order renders the first infructuous, setting a precedent against procedural duplication in tax reassessment proceedings.

ITAT Mumbai ruled that the absence of a CBDT notification under Section 10(46) of the Income Tax Act does not preclude a de novo assessment of exemption claims. The Tribunal set aside the denial of exemption and directed fresh adjudication, keeping all grounds open, including the assessee's claim of being a 'State' instrumentality under Article 289. This ruling clarifies that procedural pendency cannot defeat substantive rights to exemption.

ITAT Delhi quashes reassessment notices for AYs 2013-14 and 2014-15, ruling that notices issued under the old Section 148 provisions after 31.03.2021 are time-barred. The Tribunal relied on the Supreme Court’s decision in Union of India v. Rajeev Bansal, reinforcing strict compliance with limitation periods in tax reassessment proceedings.

ITAT Delhi quashed Rs. 49.5L and Rs. 54.5L additions under Section 68, ruling that additions cannot stand without incriminating material or opportunity for cross-examination. The decision reinforces natural justice principles in income tax assessments, impacting taxpayers facing similar allegations of accommodation entries.

ITAT Ahmedabad clarifies that notional interest entries found in seized diaries do not constitute taxable income under Section 56 of the Income Tax Act, preventing double taxation. The ruling reinforces that only real accrual of income, not hypothetical accounting entries, can be taxed, offering relief to assessees facing arbitrary additions based on seized documents.

ITAT Delhi rules that Section 115BBE of the Income Tax Act applies only post-01.04.2017, reducing a Rs. 1.49 crore addition to Rs. 5 lakh for cash deposits during demonetisation. The tribunal emphasised that regular business activities and cash sales in unorganised sectors justify a lower addition, setting a precedent for similar assessments.

ITAT Bangalore holds that reassessment proceedings under Section 151 of the Income Tax Act are invalid without a duly signed sanction order, quashing assessment orders for AY 2015-16 to 2017-18. The ruling reinforces strict compliance with procedural safeguards, impacting taxpayers facing arbitrary reassessment notices.

ITAT Delhi rules that advertisement, marketing, and sales promotion expenses incurred by a subsidiary are revenue in nature, even if they enhance the parent company’s brand. The ruling dismisses the Revenue’s appeal, reinforcing that such expenses cannot be capitalized under transfer pricing norms, offering clarity for multinational corporations on tax treatment of AMP costs.

ITAT Delhi quashes assessments for AY 2014-15 and 2015-16, ruling that satisfaction notes under Section 153C must be recorded within six assessment years to validate proceedings. The tribunal reaffirms the Delhi High Court’s holding in Ojjus Medicare, emphasizing strict procedural compliance to prevent time-barred assessments.

ITAT Ahmedabad sets aside a revision order under Section 263, ruling that mere disagreement with the Assessing Officer’s findings does not justify revision if the AO conducted thorough inquiries. The decision reinforces that revisional powers cannot be exercised on a change of opinion alone, safeguarding assessees from arbitrary reassessments.

ITAT Delhi rules that if an assessee’s own funds surpass the value of dividend-yielding investments, disallowance under Section 14A read with Rule 8D is unwarranted-even without separate books of accounts. The ruling clarifies that the Assessing Officer must demonstrate nexus between borrowed funds and investments before invoking Rule 8D, offering relief to entities with surplus liquidity.

ITAT Mumbai rules that mere book adjustments between group companies, without actual cash flow or proof of genuineness, do not constitute unexplained income under Section 68 of the Income Tax Act. The assessee’s failure to substantiate creditworthiness and transaction authenticity led to the deletion of additions.

ITAT Delhi rules that disallowance under Section 14A of the Income Tax Act cannot exceed the exempt income earned, quashing a Rs. 3.44 crore addition in Panacea Biotec Ltd. The judgment reinforces that Rule 8D calculations must align with actual exempt income, impacting tax assessments for companies with mixed investment portfolios.

ITAT Delhi rules that depositing sale proceeds in Capital Gains Account Scheme (CGAS) and initiating partial construction are sufficient to claim Section 54F exemption, even for jointly owned property and despite court-imposed delays. The ruling clarifies that co-owners need not complete construction within the prescribed timeline to retain tax benefits, reinforcing a pragmatic approach to capital gains exemptions.

ITAT Delhi holds that charitable trusts not availing exemption under Section 11 of the Income Tax Act must be taxed at individual slab rates, not as Associations of Persons (AOPs) under Section 167A. The ruling clarifies that trusts without defined beneficiaries or members are not AOPs, impacting tax liability calculations for non-exempt charitable entities.

ITAT Delhi rules that statutory urban development authorities like Hapur Pilukhuwa Development Authority qualify as charitable institutions under Section 2(15) of the Income Tax Act, entitling them to exemption under Section 11. The tribunal affirms that development activities for public purposes fall within the ambit of 'charitable purpose,' rejecting the Revenue's argument on commercial receipts.