Income Tax Appellate Tribunal judgments

ITAT Delhi rules that under the India-UAE DTAA, capital gains from debt mutual funds are exempt in India if the assessee is a UAE tax resident, even if UAE does not levy personal income tax. The ruling clarifies that 'liable to tax' under the treaty refers to residence-based jurisdiction, not actual tax payment, impacting cross-border investors and tax planners.

ITAT Bangalore condones a 92-day delay in filing an appeal after the assessee failed to receive the CIT(A) order due to service on incorrect email IDs. The Tribunal emphasized that substantial justice prevails over procedural technicalities, directing authorities to ensure proper service of orders to avoid prejudice to taxpayers.

ITAT Ahmedabad rules that the Central Processing Centre (CPC) cannot unilaterally reclassify an assessee's status from an Association of Persons (AOP) to a cooperative society under Section 143(1) of the Income Tax Act without documentary evidence. The ruling reinforces that status reclassification requires proof, protecting assessees from arbitrary tax demands.

ITAT Delhi allows assessees to set off 50% of unexplained cash deposits against unaccounted on-money receipts from prior years, limiting additions under Section 68. The ruling provides relief to real estate developers facing tax scrutiny for cash transactions, clarifying the scope of telescoping benefits in search assessments.

ITAT Delhi rules that Long Term Capital Gains exemption under Section 10(38) cannot be denied without concrete evidence linking the assessee to bogus transactions. The tribunal set aside additions made solely on departmental investigations, reinforcing the need for direct proof in tax disputes.

ITAT Delhi rules that assessment proceedings initiated against a merged entity post-merger are void ab initio, as the jurisdictional defect cannot be rectified under Sections 154 or 292BB of the Income Tax Act. The ruling underscores that tax authorities must verify entity existence before initiating assessments, impacting merged companies and tax practitioners.

ITAT Bangalore rules that interest earned by co-operative societies on surplus funds parked in banks is attributable to their credit business under Section 80P(2)(a)(i), entitling them to tax exemption. The ruling overturns the revenue's restrictive interpretation, clarifying that such income cannot be reclassified as 'income from other sources' for co-operatives engaged in lending operations.

ITAT Ahmedabad rules that additions under Section 145(3) of the Income Tax Act cannot be sustained based solely on VAT discrepancies without verifying rectified reports. The tribunal emphasises that bona fide errors must be reconciled before imposing tax additions, protecting taxpayers from arbitrary penalties.

ITAT Ahmedabad ruled that cash deposits backed by documented bank withdrawals and marriage gifts cannot be treated as unexplained under Section 69A. The tribunal reduced the addition by Rs.7.46 lakh, emphasizing the need for corroborative evidence rather than mere suspicion in tax assessments.

The ITAT Delhi has ruled that failure to file Form 67 by the due date under Section 139(1) is a procedural lapse, not a substantive bar to claiming Foreign Tax Credit. This decision affirms that Rule 128(9) is directory, not mandatory, protecting taxpayers who meet all other eligibility criteria despite technical delays.

ITAT Delhi sets aside a ₹2.23 crore addition under Section 68, ruling that unexplained income additions cannot stand if an identical addition in the co-party’s case has been deleted. The decision reinforces consistency in tax adjudication and limits arbitrary additions based on demonetization-era cash deposits.

ITAT Mumbai rules that the 10% tolerance band under Section 56(2)(x)(b) of the Income Tax Act applies retrospectively, deleting additions where the fair market value excess is below the threshold. This holding clarifies the retrospective applicability of the tolerance band, impacting tax assessments involving stamp duty valuations.

The ITAT Delhi has ruled that tax authorities cannot impose a mechanical 2% income estimation on businesses with a demonstrably lower and consistent gross profit margin of just 0.29%. This sets a binding precedent for traders and pass-through entities, ensuring estimated income assessments must reflect commercial reality, not arbitrary benchmarks, and deletes penalties imposed on such taxpayers.

The ITAT Delhi has ruled that any reassessment notice issued under Section 148 after three years from the end of the assessment year is void unless prior approval is obtained from the Principal Chief Commissioner of Income Tax, as mandated by Section 151(ii). This reinforces strict procedural compliance, protecting taxpayers from arbitrary reopening of closed assessments and setting a binding precedent for all assessing officers handling delayed reassessments.

The ITAT Mumbai ruled that a 140-day delay in filing an income tax appeal is excusable when the assessee received no intimation of the assessment order from either the department or their chartered accountant. This reinforces that procedural fairness under the Income Tax Act requires active communication - not passive vigilance - from taxpayers, protecting individuals from punitive dismissal due to administrative silence.

Non-residents earning no income in India cannot be held liable for advance tax obligations, and the ITAT Mumbai has ruled that dismissing appeals under Section 249(4) without examining the merits is procedurally illegal. This decision protects NRIs from arbitrary tax enforcement and reinforces due process in income tax appeals, setting a critical precedent for foreign taxpayers with minimal India ties.

ITAT Mumbai has ruled that corporate social responsibility donations qualify for deduction under Section 80G of the Income Tax Act if made to an approved entity, regardless of whether the expense was claimed as a business deduction under Section 37. This clarifies that CSR spending can be treated as charitable contribution for tax purposes, opening a critical pathway for companies to optimize compliance without double-counting expenditures.

ITAT Kolkata rules that prior period expenses crystallising in the current assessment year are deductible under the mercantile system if evidence of crystallisation is furnished. The ruling clarifies that disallowance is unwarranted where the liability becomes certain during the year, impacting tax assessments for businesses with deferred liabilities.

ITAT Delhi clarifies that income from Renewable Energy Certificates (RECs) is directly linked to the eligible business of power sale and qualifies for deduction under Section 80IA. The ruling sets a precedent for infrastructure financing, ensuring tax benefits for renewable energy projects where RECs are part of the revenue stream.

ITAT Dehradun rules that State Public Works Department rates must replace Central PWD rates for property valuation under Section 69 of the Income Tax Act, and a 15% self-supervision deduction is compulsory. The ruling eliminates additions for negligible variances, impacting tax assessments for construction costs across states.

The ITAT Delhi has ruled that an investigation wing’s report identifying a company as bogus is insufficient to sustain additions under Sections 68 and 69C unless corroborated by independent, verifiable evidence such as bank trails, stock records, or third-party confirmations. This reinforces the burden of proof on the Revenue and protects taxpayers from speculative assessments based solely on departmental assertions.

The ITAT Dehradun has ruled that when a business voluntarily discloses excess stock as part of its declared business income during a survey under Section 133A, it cannot be later reclassified as unexplained investment under Section 69A and taxed at the punitive rate of 60% under Section 115BBE. This protects legitimate traders from arbitrary reclassification and reinforces that disclosure in good faith during survey proceedings must be treated as business income, not hidden wealth.

ITAT Ahmedabad rules that charitable trusts can claim deductions under Sections 11 and 12 of the Income Tax Act even if Form 10B is filed after the due date, provided it is submitted with the return and the audit is completed. The ruling emphasizes substantive compliance over rigid procedural timelines, offering relief to trusts facing disallowances for minor delays.

ITAT Nagpur rules that a reassessment notice under Section 148 of the Income Tax Act must bear a manual or digital signature to be valid. The absence of such signature renders the notice void ab initio, stripping the Assessing Officer of jurisdiction to proceed, and this defect cannot be cured under Sections 292B or 292BB. The ruling reinforces strict compliance with statutory mandates under Section 282A, impacting all pending and future reassessment proceedings.