Tribunals and Commissions judgments

ITAT ruled that the rebate under Section 87A can be claimed on tax payable on short-term capital gains taxed under Section 111A even when the assessee opts for the new tax regime (Section 115BAC). The decision confirms eligibility for AY 2024-25, benefiting taxpayers with STCG.

The ITAT ruled that an unsecured loan taken and fully repaid within the same financial year cannot be treated as unexplained income under Section 68, provided the assessee furnishes satisfactory documentary evidence. This prevents automatic tax additions on short-term loans and safeguards businesses from unwarranted tax liability.

Delhi ITAT quashed a Rs 9.70 million transfer-pricing addition, holding that a zero arm’s-length price for intra-group management and support services breaches transfer-pricing rules. Taxpayers must demonstrate a tangible benefit to justify pricing. The ruling affects firms using NIL-price intra-group services under the Income Tax Act.

CESTAT affirmed the importer’s classification of mixed polyester warp-knitted fabrics under tariff item 6005 9000 and upheld the 10 % concessional BCD, because the revenue could not produce technical evidence of mis-classification. The ruling shifts the evidential burden to customs authorities in similar classification disputes, benefiting textile importers.

The tribunal held that a section 148 notice dated 12-April-2023 was time-barred under section 149(1)(a) because the income escaping assessment was below Rs 50 lakh, and therefore quashed the assessment disallowing the claimed deduction under 80GGC for a bogus political donation. The ruling underscores that reopening notices beyond three years are invalid when the escaped income does not exceed the Rs 50 lakh threshold.

The Tribunal confirmed that fees collected by STPI for certifying SOFTEX forms and issuing No Objection Certificates constitute a taxable business support service under the Finance Act, 1994. This makes such charges liable to service tax, affecting all software parks and entities seeking SOFTEX certification.

The Delhi ITAT held that interest payable on compensation under the Land Acquisition Act is exempt under Section 10(37) of the Income-Tax Act, overturning the earlier assessment that taxed it as 'other income'. This relief applies to all individuals and entities receiving acquisition compensation.

CAT ruled that a valid No-Objection Certificate obliges the railway to grant an immediate relieving order, barring discretionary refusal. The decision curtails administrative discretion in spouse-ground inter-railway transfers, requiring employees to be relieved within the NOC’s validity.

The Cuttack Bench of the CAT held that a candidate with 40 % visual loss meets the Category-I benchmark disability, setting aside UPSC’s rejection. The decision clarifies the visual-disability threshold for all Civil Services aspirants.

NCLAT quashed the liquidation order of Jeppiaar Cements, revived the corporate insolvency resolution process and permitted withdrawal of the Sec 12A application even though the Committee of Creditors failed to meet the 66 % voting threshold prescribed by Sec 33. The ruling affirms a resolution professional’s discretion to deem a Sec 12A withdrawal viable, protecting creditor interests and keeping restructuring options open for the debtor.

The Delhi ITAT set aside assessment orders for AY 2016-17 and 2017-18, ruling that a single omnibus satisfaction note under Sec 153C is invalid without year-wise linkage of seized material to income. It also declared that notices served after the statutory 15-month limitation are void. Taxpayers must ensure separate satisfaction notes for each year and timely notices.

ITAT Delhi held that the discount on employee stock options is a deductible expense under Section 37(1) of the Income Tax Act, treating it as a composite expense under Section 57. Companies can now claim the ESOP discount against taxable income, reducing tax outgo. This benefits firms that grant ESOPs.

Taxpayers whose total income does not exceed Rs 7 lakh can claim the Section 87A rebate even on short-term capital gains that attract the special 15 % rate under Section 111A. The Jaipur ITAT reversed the CIT(A)’s refusal, confirming that the rebate applies to the computed tax liability irrespective of the special-rate provision. This benefits individual investors with modest incomes who realise short-term gains.

The ITAT Surat Bench set aside assessment orders for AY 2011-14 because the Commissioner of Income-Tax (Appeals) failed to obtain the mandatory prior approval of the Joint Commissioner under Section 153D. The ruling makes it clear that any assessment under special provisions is invalid without such approval, impacting both taxpayers and revenue officials.

The CAT ruled that Delhi Police constables appointed on compassionate grounds may be transferred from the New Pension Scheme to the Old Pension Scheme when the recruitment process started before the OPS cut-off date, even if they joined after 1 January 2004. The tribunal held that laches and lack of prior notice do not defeat the entitlement. This benefits all compassionate-appointment employees seeking OPS benefits.

The Securities Appellate Tribunal ruled that the 15-day period for a rival bid under SEBI’s Regulation 20(1) is triggered by the acquirer’s Detailed Public Statement and cannot be shortened by any exemption. This strict timing applies to all takeover contests, affecting bidders and target companies alike.

The Delhi ITAT ruled that export incentives and cash discounts form part of a taxpayer’s operating revenue for the purpose of the Transactional Net Margin Method, requiring comparables to be selected on a fully adjusted basis. This clarifies the treatment of such items in transfer-pricing documentation and impacts exporters relying on TNMM benchmarks. Assessors must now ensure FAR-based comparables reflect these revenue components.

Bank deposits, including current-account balances, are deemed ‘another capital asset’ under Section 11(1A) of the Income-Tax Act. This allows charitable trusts to claim full exemption on capital-gain income reinvested in such deposits, expanding the range of tax-free investment options for trusts.

ITAT held that the limitation clock for a Section 153C assessment begins on the date the assessing officer records the satisfaction note, not on the earlier Section 127 order. This narrows the time-bar for revenue to finalize assessments in multi-entity search cases, affecting taxpayers facing delayed notices.

CESTAT Kolkata ruled that 12% interest on delayed customs refunds accrues from the expiry of three months after the refund application is filed, not from the re-assessment order date, affirming the higher statutory rate and clarifying the starting point for interest calculation under Section 27.

The ITAT Bangalore ruled that a disallowance of delayed PF/ESI contributions under section 143(1)(a) for AY 2019-20 is invalid, ordering deletion of the addition. Employers cannot be penalised for late employee-share contributions for that year, aligning with the Supreme Court’s Checkmate Services precedent.

The ITAT Bangalore ruled that interest earned on deposits by a credit cooperative is an allowable deduction under Sec 80P(2)(a)(i), interpreting ‘attributable’ to mean income arising from the society’s credit activities. This clarifies that such interest can be claimed as business income, benefiting credit co-operatives seeking tax relief on deposit earnings.

CESTAT ruled that a refund of service tax paid under a mistake of fact attracts interest at 12% per annum, superseding the earlier 6% rate. This higher rate applies to any taxpayer seeking restitution for erroneous service tax payments, enhancing compensation for delayed refunds. The decision sets a binding precedent for future service tax refund claims.

Customs officials must possess a reasonable belief before seizing goods, and the onus under Sec 123 cannot be shifted to the accused without proper justification. This ruling curtails arbitrary confiscation of gold and safeguards importers from unjust seizure.