Notice Issued By Officer Without Jurisdiction Cannot Sustain Assessment: ITAT Quashes Assessment

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 26 February quashed an assessment against taxpayer Jagruti Kirti Shah, holding that the notice under Section 143(2) of the Income Tax Act was issued by an officer lacking jurisdiction as per the Central Board of Direct Taxes (CBDT) Instruction No. 1 of 2011. Instruction 1 prescribes the officer-level jurisdiction for issuing scrutiny notices based on the assessee's income and category.The Bench, comprising Judicial Member Rahul...

Air India SATS Entitled To Tax Benefits On Ground & Cargo Handling Income: ITAT Delhi

On 26 February, the New Delhi Income Tax Appellate Tribunal (ITAT) held that Air India SATS Airport Services Pvt. Ltd.'s income from airport ground handling and cargo handling operations qualifies for tax incentives available to eligible infrastructure-related service providers. A Bench of Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra heard the Revenue's appeal, which challenged the deduction claimed by Air India SATS under Section 80-IA of the Income Tax Act on...

Income Tax Authority Must Record Prima Facie View On Taxability Before Issuing Withholding Certificate: Delhi High Court

The Delhi High Court has held that while issuing a certificate for lower deduction of tax at source under Section 197 of the Income Tax Act, 1961, the competent authority is required to record a prima facie view on the taxability of the receipts, and that such certificates cannot be issued mechanically or without reasons.A division bench of Justices Dinesh Mehta and Vinod Kumar made the observation while disposing of a writ petition filed by Ireland-based Workday Limited, which had challenged a...

No Disallowance Of Interest In Absence of Nexus Between Borrowed Funds And Advances: ITAT New Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 27 February, held that interest disallowance under Section 36(1)(iii) of the Income-tax Act, 1961 cannot be sustained in the absence of a nexus between borrowed funds and interest-free advances, particularly where such advances were granted in years preceding the borrowings and were supported by commercial expediency. A Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Amitabh Shukla deleted the addition of...

ITAT Delhi Deletes ₹3.42 Crore Transfer Pricing Addition On Loans and Receivables In Relief To Varun Beverages

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that no transfer pricing adjustment is warranted where the interest charged on loans advanced to associated enterprises exceeds the internal Comparable Uncontrolled Price (CUP). The bench comprising Judicial Member Yogesh Kumar U.S. and Accountant Member Manish Agarwal deleted the entire transfer pricing adjustment of Rs 3,42,31,778 for Assessment Year 2017-18 in the case of Varun Beverages Limited, including Rs 2,84,45,221...

'No Whisper Of Tangible Material': ITAT Delhi Quashes Reassessment Against Vedanta For AY 2010-11

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings against Vedanta Limited for Assessment Year 2010-11. It held that the reopening beyond four years was without jurisdiction as it was not based on any fresh tangible material. A coram of Judicial Member Pawan Singh and Accountant Member Brajesh Kumar Singh observed that “there is no whisper of any tangible material which came to the possession of the assessing officer subsequent to the passing of the...

Continuing Look Out Circular After Tax Proceedings Conclude Violates Fundamental Rights: Delhi High Court

The Delhi High Court has held that failure of tax authorities to obtain information about an assessee's assets in foreign jurisdictions cannot be used to keep a Look Out Circular (LOC) alive indefinitely, particularly when income tax proceedings have already concluded and no demand is outstanding against the assessee.A Division Bench of Justices Dinesh Mehta and Vinod Kumar thus allowed writ petitions filed by the assessees and observed,“If for one reason or the other, the respondents are not in...

Delhi High Court Directs 2% Withholding Tax Certificate For US Software Firm DocuSign

The Delhi High Court has directed the Income Tax Department to issue a withholding tax certificate at the rate of 2% in favour of a US-based software company, after finding that the transactions prima-facie look to be not exigible to tax.A division bench of Justices Dinesh Mehta and Vinod Kumar passed the order while hearing DocuSign's writ petition challenging a certificate issued under Section 197 of the Income Tax Act, 1961.DocuSign provides electronic signature and digital transaction...

Delhi High Court Quashes Draft IT Assessment Order Passed Before Upload Of Transfer Pricing Relief Order

The Delhi High Court has recently quashed a draft assessment order passed by the Faceless Assessing Officer (FAO) against Lindstrom Services India, after noting that it was issued without knowledge of the Court's order quashing transfer pricing, due to delay in uploading the High Court direction on its website.The division bench of Justices Dinesh Mehta and Vinod Kumar clarified that while the FAO could not be faulted personally, an assessment order passed in ignorance of a subsisting High Court...

Delhi ITAT Deletes Rs 11.32 Lakh Addition On Payments Towards Credit Card Dues After Source Explained

The New Delhi Income Tax Appellate Tribunal (ITAT) has recently held that payments towards credit card dues cannot be added as unexplained expenditure under Section 69C of the Income Tax Act when the assessee is able to satisfactorily explain the source of such payments with supporting evidence.Section 69C of the Income Tax Act, 1961, deals with unexplained expenditure. If an assessee incurs expenses for which they cannot provide a satisfactory explanation regarding the source of funds to the...

Demonetisation Cash Sales Supported by Books and VAT Returns Cannot Be Treated as Unexplained Income: ITAT Delhi

The New Delhi Income Tax Appellate Tribunal (ITAT) has held that cash sales recorded during the demonetisation period cannot be treated as unexplained income merely on the basis of suspicion or human probabilities, when such sales are duly reflected in audited books of account and supported by stock records, invoices, and VAT returns.The bench consisting of Judicial Member Anubhav Sharma and Accountant Member Manish Agarwal, was dealing with an appeal filed by M/s KP Diamonds (P) Ltd.,...

Delhi ITAT Restricts Verizon Transfer Pricing Adjustment, Says Revenue Cannot Reject Consistent Model

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the Transfer Pricing Officer (TPO) could not reject a taxpayer's limited risk model without citing any comparable uncontrolled transactions and partly set aside a transfer pricing adjustment of Rs. 83.49 crore against Verizon Communications India Pvt. Ltd., restricting the adjustment to Rs. 23.81 crore. A Bench comprising Accountant Member S. Rifaur Rahman and Judicial Member Anubhav Sharma upheld the company's claim for...