#Tax Exemption

The ITAT ruled that money spent on rebuilding an uninhabitable house can be treated as part of the purchase cost of a new residential property under Section 54F. This expands the pool of deductible expenses, allowing sellers of capital assets to claim a larger exemption on capital gains. Home-buyers and investors reinvesting sale proceeds in residential housing benefit.

ITAT Surat bench rules BSNL VRS 2019 compensation as exempt under Section 10(10B) of the Income-tax Act, 1961, treating it as retrenchment compensation. The ruling allows appeals and directs refund of TDS deducted on such payments.

ITAT Delhi rules sale of milk by a gaushala trust is incidental to its charitable purpose under Section 2(15) proviso, affirming Section 12A registration. The ruling clarifies that receipts from milk sales do not disqualify trusts from tax exemptions if aligned with primary charitable objectives.

The ITAT Pune has ruled that a mistaken selection of clause in Form 10AB under Section 80G-such as filing under clause (ii) instead of (iii)-does not invalidate the application if the error is inadvertent. This sets a vital precedent for charitable trusts and NGOs, ensuring administrative oversights don't derail tax exemptions when substance and intent are intact.

The ITAT Delhi has ruled that an educational institution qualifies for tax exemption under Section 12A(1)(ac)(ii) even without formal affiliation to a university or board, provided its objects and activities are exclusively educational and non-profit. This clarifies a critical ambiguity for small schools, nurseries, and alternative education trusts seeking tax status without institutional ties, reinforcing that substance overrides formality under the Income-tax Act.

CESTAT rules that meeting fees paid to whole-time directors are exempt from service tax under the Reverse Charge Mechanism, as they qualify as employer-employee remuneration per Section 65B(44)(b) of the Finance Act, 1994. This decision clarifies the tax liability for companies paying directors' fees, impacting corporate tax compliance and remuneration structures.

CESTAT Chandigarh holds that Special Economic Zone units are not bound by the one-year limitation period in Finance Act notifications for service tax refunds, as their entitlement arises from statutory exemption provisions under the SEZ Act. This clarifies that SEZ-specific refund rights operate independently of general time bars, benefiting exporters and SEZ-based service recipients with delayed claims.

ITAT Delhi ruled that an ex parte order under Section 80G(5)(ii) of the Income Tax Act, 1961, violates principles of natural justice if passed without affording a fair hearing. The Tribunal set aside the order and directed a fresh adjudication, emphasizing compliance with procedural fairness for tax exemption registrations.

The ITAT Mumbai has ruled that Inland Haulage Charges received by non-resident shipping companies are exempt under Article 8 of the India-China DTAA because they are inseparable from the operation of ships in international traffic. This clarifies that ancillary land-based logistics supporting global shipping routes qualify for treaty protection, significantly benefiting foreign container lines operating in India.

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 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 Kolkata has ruled that once a case is selected for scrutiny under Section 143(2), any intimation under Section 143(1) issued thereafter is legally void. This sets a critical precedent for taxpayers and CPCs, reinforcing that procedural sequencing is mandatory and that adjustments to exemptions like Section 10(23C)(VI) cannot be made through automated intimations after scrutiny is triggered.

The ITAT Delhi has ruled that denying a charitable institution the opportunity to respond to a tax exemption questionnaire because notices were sent to an incorrect email address violates the fundamental principle of natural justice. This sets a critical precedent: government authorities must use officially registered contact details when issuing procedural notices, ensuring fair hearing rights in tax exemption proceedings under Sections 12A and 80G of the Income Tax Act.

Primary credit cooperative societies are entitled to claim deduction under Section 80P(2)(d) for interest earned from cooperative banks, overturning the tax officer’s disallowance. This ruling clarifies that such income is intrinsic to the cooperative’s core function of providing credit to members, reinforcing tax exemption for rural financial cooperatives operating under state cooperative laws.

CESTAT rules that sales of MS scrap to SEZ units are exempt from customs duty under Section 26(1)(e) of the SEZ Act, 2005. The tribunal set aside the demand, interest, and penalties, holding that the department violated principles of natural justice by not providing a fair hearing to the appellant.