No Addition Is Permitted U/s 68 Without Linking Alleged Entries Of Cash With That Of Material Seized During Course Of Search: Mumbai ITAT

On finding that the AO has failed to prove that the seized documents were related to the assessee, the Mumbai ITAT held that the addition made by the AO u/s 68 of the Income Tax Act, without bringing any concrete evidence on record incriminating the assessee is not sustainable, and deserves to be deleted. The ITAT went on to hold that the order passed is an un-reasonable order and in cryptic manner, as the entire loan pertaining to assessee was added as unexplained credit without...

Cash Deposits During Demonetization Can't Be Treated As Unexplained Without Rejecting Books Of A/C: Delhi ITAT

On finding that Department had acted without any evidence to make disallowance u/s 69 r.w.s 115BBE of the Income Tax Act, the New Delhi ITAT held that treating the cash deposit as unexplained cash without rejecting the books of account, is legally not permissible. As per Section 69 of Income tax Act, where in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any...

Deduction Of Amount Equal To And Not Exceeding “Dividend Distributed” On Or Before Due Date Is Allowable U/s 80M On Receipt Basis: Kolkata ITAT

While referring to the provisions of section 80M of the Income Tax Act, that the assessee company would be allowed a deduction of an amount equal to and not exceeding the amount of dividend “distributed” on or before the due date, the Kolkata ITAT held that assessee is rightly within law to claim deduction u/s 80M. Section 80M of the Income Tax Act, was introduced by the Finance Act 2020 to exempt inter-corporate dividends from tax when received from a domestic company before 1st April...

Every Payment Made By Taxpayer For Violation Of Environmental Norms Is Not Penal In Nature: Kolkata ITAT Deletes Addition

Finding that the AO has nowhere examined the order of the Pollution Control Board asking the assessee to make the payment, the Kolkata ITAT held that every payment made by the assessee to the Board for violation of environmental norms would not be penal, and hence, deleted the addition made by AO. The Bench of the ITAT comprising of Rajpal Yadav (Vice-President) and Rajesh Kumar (Accountant Member) observed that “The Assessing Officer has nowhere examined the order of the Pollution...

Not Deducting TDS U/S 194J On Account Of Bonafide Belief, Does Not Attract Levy Of Penalty U/S 271C: Delhi ITAT

On finding that the assessee has a valid reason to consider the payments on account of 'transactional charges' to be not covered by section 194J(1)(ba) of the Income Tax Act, the New Delhi ITAT ordered to delete the penalty order passed by the CIT(A) u/s 271C. As per Section 194J(1)(ba) of Income Tax Act, any payment made to the director like sitting fees, remuneration, or any other sum other than those on which tax deductible u/s 192 is to be considered for deduction of tax at source...

No Addition Is Permitted U/s 68 On Account Of Share Premium Once Taxpayer Has Proved Identity & Creditworthiness Of Share Subscribers: Kolkata ITAT

On finding that the CIT(A) has failed to point out any defect and discrepancy in the evidence and details furnished by the assessee but simply upheld the order of the AO in a mechanical manner, the Kolkata ITAT held that once the assessee has proved the identity and creditworthiness of the share subscribers, the burden shifts upon the AO to examine the evidence and made independent inquiries. Since the AO has failed to conduct proper examination of evidences relating to share premium,...

Equal Amount Of Investment In Equity Of Other Entity Was Made Against Credits In Form Of Share Capital & Premium: Kolkata ITAT Justifies Addition U/s 68

Noticing that against the alleged credits in the form of share capital & share premium, an equal amount of investment in equity of other entity has been made, the Kolkata ITAT confirmed the addition made u/s 68 of the Income Tax Act. Section 68 of the Income Tax Act, aims to ensure individuals and corporations transparently disclose their income by addressing unexplained cash credits in their books of accounts, placing the responsibility on the taxpayer to prove the legitimacy of ...

No Addition Is Permitted U/S 41(1) In Absence Of Evidence Showing Cessation Of Liability: Delhi ITAT

The New Delhi ITAT held that unless and until there is evidence to show that the liability has ceased to exist, there cannot be any addition u/s 41(1) of the Income Tax Act, and hence, deleted the addition made by AO. As per Section 41(1) of the Income tax Act, where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee, and subsequently during any previous year the assessee has obtained,...

Mere Difference Of Opinion With AO Is No Basis To Exercise Revisionary Power U/s 263: Chandigarh ITAT Confirms Sec 80P Deduction Granted By AO

The Chandigarh ITAT quashed the revision order u/s 263 holding that application of mind is discernible from examination of the record and that “the power under Section 263 of the Act was exercised on the basis of a mere difference in opinion with the AO, rendering such exercise of revisionary power to be invalid”. Section 263 of the Income Tax Act is a provision that empowers the Commissioner of Income Tax to revise any order passed by an assessing officer if the Commissioner believes...

Payment Made Overseas For Providing Information On Tariff Change Is Not 'FTS' And Hence Does Not Warrant TDS Deduction U/s 195: Delhi ITAT

The New Delhi ITAT held that no tax is deductible at source u/s 195 on payments made to overseas logistics company for rendition of logistics services, as such services cannot be treated as fees for technical services (FTS) as defined in Explanation 2 to Section 9(1)(vii). Finding that the sole basis of the Revenue for holding that the payment made to overseas logistics company is towards consultancy services is that as per one of the terms of contract executed between Assessee and the...

Impact Of Working Capital Adjustment On Outstanding Trade Receivable Must Be Verified Before Making ALP Adjustment Qua Notional Interest: Ahmedabad ITAT

The Ahmedabad ITAT remitted the issue of transfer pricing adjustment regarding interest on overdue trade receivables in case of entity engaged in manufacturing of pharmaceutical products, while emphasizing that no further adjustment is warranted on outstanding receivables from AEs once working capital adjustment is already factored in. The credit period means the time period provided to the AEs/Non-AEs to clear their outstanding dues towards the export proceeds. The dispute over trade...

Rectification Order Passed In Name Of Non-Existent Entity Despite Having Knowledge Of Its Merger, Is Invalid: Mumbai ITAT

The Mumbai ITAT held that rectification order passed in the name of a non-existent entity, despite informing Revenue regarding its merger, is non-est in the eyes of law. The Division Bench comprising Prashant Maharishi (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that “the internal correspondence of the Revenue also shows that the Assessing Officer was aware about the merger. Still the Assessing Officer chooses to pass the rectification order in the name of a...