ITAT Delhi Deletes ₹15 Crore Share Premium Addition, Says AO Cannot Reject Company's DCF Valuation

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that an Assessing Officer cannot reject a company's chosen Discounted Cash Flow (DCF) method for valuing shares merely because its actual financial performance differs from projections. Allowing MI Industries (India) Pvt. Ltd.'s appeal in part, the tribunal observed, “We are therefore of the considered view that rejection of DCF method adopted by the assessee by the AO is unwarranted and against the law.” A bench of...

ITAT Delhi Deletes ₹9.16 Crore Bogus Purchase Addition Over Retrospective GST Registration Cancellation

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of a ₹9.16 crore addition over alleged bogus purchases after finding that the taxpayer had produced extensive documentary evidence to support the transactions, despite the Revenue relying, among other things, on the retrospective cancellation of the supplier's GST registration. The tribunal also noted that the Assessing Officer had accepted the corresponding sales and had not rejected the books of account...

FAR Analysis Mandatory For TP Comparables, Mere “Functional Comparability” Insufficient: ITAT Delhi

On 3 July, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that in transfer pricing analysis, a company cannot be included as a comparable merely on the basis of a general assertion that it is “functionally comparable”, and that a proper Functions, Assets and Risks (FAR) analysis is mandatory before inclusion. Accountant Member Ramit Kochar and Judicial Member Raj Kumar Chauhan partly allowed an appeal by A. Hartrodt India Private Limited for statistical purposes and restored...

ITAT Delhi Allows Paper Company's Appeal In Captive Power Transfer Pricing Dispute

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has allowed an appeal filed by K.R. Pulp & Papers Ltd. against transfer pricing adjustments that had denied the company a tax deduction on profits earned from transferring electricity and steam from its captive power plant to its manufacturing unit.The tribunal held that electricity generated by the company's eligible captive power unit and supplied to its non-eligible manufacturing unit should be valued at the tariff charged by the...

Interest On Unspent Government Grants Cannot Be Treated As Separate Income: ITAT Chandigarh

The Income Tax Appellate Tribunal (ITAT) has recently held that interest earned on unspent government grants parked in fixed deposits retains the same character as the grants themselves. It cannot be treated as an independent source of income while determining whether an educational institution is substantially financed by the government. A Chandigarh tribunal comprising Judicial Member Laliet Kumar and Accountant Member Manoj Kumar Aggarwal allowed the appeal filed by Hydro Engineering...

ITAT Delhi Quashes Reassessment Based Solely On Investigation Wing Report

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently quashed reassessment proceedings against V & S International Pvt. Ltd., a readymade garments manufacturer and exporter. It held that the Assessing Officer reopened the completed assessment solely on information received from the Investigation Wing, without independently examining the material. The tribunal observed that the absence of a "live link" between the information and the reasons recorded made the reopening...

Jharkhand High Court Upholds Conviction For False Income Tax Refund Claim Based On Forged Documents

The Jharkhand High Court has upheld the conviction of an Eastern Coalfields Limited employee for claiming an income tax refund of ₹35,875 on the basis of forged documents. The court found no reason to interfere with the concurrent findings of the trial and appellate courts. Justice Pradeep Kumar Srivastava dismissed the criminal revision filed by Sashi Bhusan Prasad Bhuian. The court directed him to surrender before the trial court within two months to undergo the remaining sentence. The court...

ITAT Delhi Restores ₹1.43 Crore Addition Over Alleged Cash Salary Payments

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently upheld an addition of ₹1.43 crore towards alleged unexplained cash salary payments. It held that the Commissioner of Income Tax (Appeals) deleted the addition without carrying out any inquiry or seeking a remand report despite the material relied upon by the Assessing Officer. A bench of Judicial Member Madhumita Roy and Accountant Member Kriwant Sahay allowed the Revenue's appeal and dismissed the assessee's...

ITAT Mumbai Deletes ₹572.83 Crore Brand Royalty Transfer Pricing Adjustment Against Vodafone Idea

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has deleted a ₹572.83 crore transfer pricing adjustment on Vodafone Idea Ltd.'s payment of brand royalty. It held that the controlled transaction relied on by the tax department could not be used as a comparable under the Comparable Uncontrolled Price (CUP) method. A bench of Accountant Member Om Prakash Kant and Judicial Member Anikesh Banerjee observed: "The Coordinate Benches of the Tribunal, while dealing with identical transfer...

ITAT Mumbai Holds Tax Appeals Infructuous After Company's Liquidation And Sale As Going Concern

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that no effective adjudication survives in income tax appeals filed by EMI Transmission Limited after the company underwent liquidation under the Insolvency and Bankruptcy Code (IBC). It noted that the company had been sold as a going concern and the liquidation proceedings had been closed by the National Company Law Tribunal (NCLT). A bench of Judicial Member Amit Shukla and Accountant Member Girish Agrawal was hearing EMI...

ITAT Jaipur Upholds CA Student's Claim For Section 87A Rebate On Short-Term Capital Gains Tax

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) on 25 June held that a resident individual who opts for the new tax regime under Section 115BAC of the Income Tax Act and whose total income falls within the prescribed threshold is entitled to claim rebate under Section 87A even against tax payable on short-term capital gains under Section 111A. Accountant Member Annapurna Gupta allowed an appeal filed by Priyamvada Singhal, a CA student and directed the Revenue to grant the...

Holding Company Cannot Issue Shares On Behalf Of subsidiary To Claim Demerger Tax Benefit: ITAT Mumbai

A holding company cannot issue shares on behalf of its subsidiary to satisfy the conditions for claiming tax benefits arising from a demerger, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held. "The Holding company cannot issue shares on behalf of the subsidiary and its obligations are restricted to its own legal liabilities and obligations under the law," the tribunal observed. A bench of Vice President Saktijit Dey and Accountant Member Prabhash Shankar partly allowed...