Income Tax Appellate Tribunal judgments

ITAT Delhi rules that reassessment notices under Section 148 of the Income Tax Act for AY 2015-16 issued after 01.04.2021 are barred by limitation, as TOLA provisions do not apply. The decision reinforces the Supreme Court’s concession in Union of India v. Rajiv Bansal and sets a precedent for taxpayers challenging belated reopening proceedings.

ITAT Bangalore holds that BSNL VRS employees absorbed from the Department of Telecommunications qualify as Central Government employees, entitling them to full tax exemption on leave encashment and ex gratia payments under Sections 10(10AA) and 10(10B) of the Income Tax Act. The ruling clarifies eligibility for tax benefits, impacting thousands of former DoT employees transitioned to BSNL.

ITAT Delhi sets aside a ₹40,000 penalty under Section 272A(1)(d) for non-compliance with notices u/s 142(1) and 143(2), ruling that penalties are unwarranted if no revenue prejudice is established. The decision reinforces that procedural lapses alone cannot justify penalties absent demonstrable harm to tax authorities.

The ITAT Delhi has ruled that maintenance charges collected by a realty company from tenants constitute business income under the Income Tax Act, not income from house property. This allows the assessee to claim full deductions under Section 37, significantly impacting real estate firms that bundle maintenance fees with rentals and altering how such income is reported and taxed across the sector.

ITAT Delhi sets aside a ₹12.91 lakh penalty under Section 271(1)(c) for failing to specify whether the charge was for concealment of income or furnishing inaccurate particulars. The ruling reinforces that tax authorities must clearly articulate the limb of the penalty provision invoked, impacting all penalty proceedings under the Income Tax Act.

ITAT Raipur ruled that revenue authorities cannot alter their position on identical factual matrices across assessment years without material change, setting aside a ₹64.32 lakh addition. The decision reinforces the binding nature of the 'principle of consistency' for tax assessments, protecting assessees from arbitrary reassessments.

The ITAT Bangalore has set aside a CIT(A) order for violating natural justice by dismissing an appeal without examining the assessee’s written submissions or evidence, reinforcing that appellate authorities must engage with arguments presented - not merely rubber-stamp assessments. This ruling protects taxpayers from summary rejections and mandates reasoned appellate decision-making under the Income Tax Act.

The ITAT Delhi has ruled that tax authorities cannot impose additions for accommodation entries based on mere suspicion or circumstantial links to search-seized entities. Concrete, verifiable proof of fictitious transactions is mandatory, protecting businesses from arbitrary assessments grounded in procedural shortcuts rather than substantive evidence.

ITAT Delhi has ruled that foreign exchange gains arising from international transactions must be treated as operating income for transfer pricing purposes, and expense allocation must be calibrated using gross profit margins to determine the arm's length price. This sets a critical precedent for multinational enterprises using TNMM, forcing a reevaluation of how forex volatility and cost allocation impact their TP documentation and compliance strategy.

ITAT Delhi rules that charitable trusts not claiming benefits under Section 11 are not subject to the Maximum Marginal Rate, even if structured as AOPs, and must be taxed at individual slab rates - affirming CBDT Circular No. 320 of 1982. This clarifies a critical tax liability distinction for non-exempt trusts receiving dividend income, impacting compliance strategies for trusts with substantial passive earnings.

The ITAT Delhi has ruled that employers cannot claim deduction for delayed contributions to PF/ESI merely because the tax department processed the return under Section 143(1) without prior notice. This clarifies that compliance deadlines under labor laws are non-negotiable for tax deductions, impacting all employers relying on automatic processing for compliance. The ruling reinforces strict adherence to payment timelines, regardless of procedural automation.

ITAT Kolkata rules that disallowance of brokerage expenses under Section 37(1) of the Income Tax Act requires concrete evidence of non-service, not mere suspicion. TDS compliance and books of accounts are sufficient to substantiate claims, shifting the burden of proof to the revenue authorities.

ITAT Bangalore ruled that the reasonableness of honorarium paid to trustees of a charitable trust must be determined on a case-by-case basis under Section 13(1)(c) of the Income Tax Act. The tribunal remanded the matter to the Assessing Officer, emphasizing that blanket disallowance of trustee remuneration is impermissible without evaluating the duties performed and evidence submitted.

The ITAT Bangalore has ruled that capital gains from the sale of multiple residential properties qualify for Section 54 exemption on a per-property basis, allowing taxpayers to reinvest gains from each sold flat into separate residential purchases without being capped at one house. This clarifies a long-standing ambiguity and benefits high-net-worth individuals and real estate investors who liquidate multiple units in a single financial year.

ITAT Bangalore holds that a delayed Form 67 submission does not automatically disqualify a taxpayer from claiming foreign tax credit under Section 90, provided the credit was claimed in the return. The ruling clarifies that procedural delays in filing Form 67 should not override substantive entitlement to relief under Double Taxation Avoidance Agreements.

Payments for onsite software services to foreign entities do not attract TDS under Section 195 unless the assessee gains access to proprietary technical knowledge or know-how. ITAT Bangalore clarifies that mere presence of foreign personnel in India for implementation or support does not satisfy the 'make available' condition, significantly narrowing the scope of deemed fees for technical services and offering relief to IT firms relying on global onsite teams.

ITAT Bangalore rules that assessees filing tax appeals within 90 days from 01.03.2022 are not barred by limitation, citing COVID-19 suo motu directions. The tribunal remands the case for merit-based adjudication, reinforcing the applicability of pandemic-related extensions in tax litigation.

ITAT Bangalore has ruled that a valid medical certificate constitutes sufficient cause to condone an 84-day delay in filing an income tax appeal, rejecting technical dismissal on procedural grounds. This sets a clear precedent for taxpayers facing genuine health-related obstacles, reinforcing liberal interpretation of limitation periods in tax litigation.

ITAT Delhi has ruled that even if an industry association earns commercial receipts, it retains eligibility for tax exemption under Section 11 if its core activities advance a General Public Utility, provided the 20% threshold is not exceeded. This clarifies that revenue nature alone cannot override statutory charitable intent - a critical precedent for trade bodies and professional societies seeking tax exemption.

ITAT Delhi rules that the holding period for long-term capital gains on residential flats commences from the date of allotment, not possession, overturning the Assessing Officer’s short-term capital asset treatment. This decision clarifies tax liability for property investors and aligns with jurisdictional precedents, impacting capital gains calculations under the Income Tax Act.

ITAT Delhi has ruled that the Resale Price Method is the most appropriate transfer pricing method for distributors who merely resell imported goods without any value addition, affirming that gross profit margin analysis best reflects arm's length pricing in such cases. This sets a clear precedent for multinational distributors in India, reducing reliance on less suitable methods like TNMM when the distribution function is purely operational.

ITAT Bangalore holds that claiming exemption under Section 54F does not require unutilized capital gains to be deposited in the Capital Gains Account Scheme if the new residential house is fully constructed within three years of sale, even if construction costs were incurred after the return filing deadline. This clarifies that actual completion, not mere deposit, is the decisive factor - benefiting taxpayers who reinvest gains in self-built homes with staggered payments.

The ITAT Delhi has ruled that payments for software subscriptions do not constitute Fees for Technical Services under Article 12 of the India-US DTAA, distinguishing them from payments for professional services that do. This clarifies the tax treatment for global SaaS providers operating in India and reinforces the Engineering Analysis Centre precedent, offering critical relief to tech companies structured around subscription models.

ITAT Delhi holds that the 10% tolerance limit under Section 50C of the Income Tax Act applies retrospectively, deleting a Rs. 4.47 lakh addition for a minor valuation discrepancy in property sales. The ruling clarifies that valuation differences within the tolerance limit cannot justify additions to capital gains, impacting taxpayers contesting stamp duty-based assessments.