Income Tax Act Doesn't Mandate That Specific Money Deposited In Capital Gain Account Scheme Shall Be Utilized Towards New Investment: Chennai ITAT

The Chennai ITAT held that there is no requirement that specific money as deposited in capital gain account scheme should be utilized towards new investment, and the assessee may make investment from other funds as available with him and the same would not jeopardize the claim of the assessee. Referring to the decision of Sohanlal Mohanlal Bhandari vs. ACIT (104 Taxmann.com 161), the Bench of Mahavir Singh (Vice President) And Manoj Kumar Aggarwal (Accountant Member) reiterated that...

Only Requirement To Be Fulfilled For Claiming Expenses U/s 57(Iii) Is That They Must Be Incurred Wholly For Earning Income From Other Sources: Ahmedabad ITAT

The Ahmedabad ITAT held that in the absence of the Assessing Officer pointing out as to how despite the assessee's explanation, there was no nexus between the interest-bearing funds and their utilization for making advances for earning interest income, no disallowance u/s 57(iii) of the Income tax Act was tenable. The ITAT explained that the only requirement to be fulfilled for claiming expenses u/s 57(iii) is that they must have been incurred wholly and exclusively for the purpose of...

Failure To Record Satisfaction Before Initiating Penalty U/s 271(1)(C) In Gross Violation Of CBDT Circular, Vitiates Penalty Order: Chennai ITAT

The Chennai ITAT clarified that the Assessing Officer has to record his satisfaction before initiating penalty under section 271D of the Income tax Act in respect of violation of the provisions of section 269SS of the Act. As per the provision of Section 269SS, the assessee had to explain the bonafide or genuineness of the cash transaction towards payment of interest in cash, added the ITAT Bench. The Bench of V. Durga Rao (Judicial Member) and Manoj Kumar Aggarwal (Accountant...

AO Can Make Addition Of Unexplained Cash Credit U/s 68 Only In Previous Year In Which Such Cash Credit Was Made And Assessee Fails To Explain Same: Mumbai ITAT

The Mumbai ITAT clarified that as per the provisions of Section 68 of the Income tax Act, the Assessing Officer is required to make addition of unexplained cash credit only in the previous year in which such cash credit has been made and the assessee is not in a position to offer satisfactory explanation relating thereto. The Bench of Vikas Awasthy (Judicial Member) and Padmavathy S. (Accountant Member) observed that “the addition under section 68 could be made only during the year in...

If Employees' Contributions Are Not Paid Within Due Dates Specified Under PF Act, Then Employer Is Not Entitled To Deduction U/s 36(1)(Va): Bangalore ITAT

The Bangalore ITAT reiterated that the distinction between an employer's contribution which is its primary liability under law, in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it is crucial. The former forms part of the employers' income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) - unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied i.e., depositing such...

Typographical Error In Mentioning Incorrect Amount Of Expenses In Form 3CD Doesn't Permit AO For Any Addition To Assessee's Income: Chennai ITAT

The Chennai ITAT explained that a typographical error in mentioning incorrect amount of expenses in Form 3CD does not call for any addition by the Assessing Officer to assessee's income. The Bench of Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) observed that “details were available before the CIT(A) at the time of hearing and complete details which are available is only supportive of the order of the CIT(A). Hence, we find that the CIT(A) erred in...

Ahmedabad ITAT Explains Difference Between Letter Of Credit From Corporate Guarantee

While upholding ALP adjustment on LOC in case of Axis Bank, the Ahmedabad ITAT rules on difference between letter of comfort (LOC) and guarantee commission. With respect to LOC being equated to bank guarantees, the Bench comprising Annapurna Gupta (Accountant Member) and T.R Senthil (Judicial Member) explains that bank guarantee is a kind of guarantee from a lending organization to cover a debtor's liabilities if they fail to meet them, thus, serving as a promise to pay off a...

Volume Discount & Geography Adjustments Shall Be Considered While Determining TP Adjustment: Ahmedabad ITAT

The Ahmedabad ITAT remitted the issue of granting business volume discount adjustment and geographical difference adjustment for determination of ALP in case of company engaged in the business of manufacturing chemicals like dyes, agro chemicals, bulk drugs, commodity chemicals and intermediates. While referring to the Coordinate bench ruling in assessee's own case for AY 2006-07, the Bench comprising Annapurna Gupta (Accountant Member) and T.R. Senthil (Judicial Member) reiterated...

Database Capturing Market Volatility Shall Be Considered For Making ALP Adjustment Qua Bullion Purchase: Mumbai ITAT

The Mumbai ITAT rules on TP-adjustments w.r.t administrative support services in relation to interbank indemnities, provision of IT-enabled services, and purchase of precious metals in case of company carrying out banking activities. With respect to purchase of precious metals like gold & silver imported from London branch, the Bench comprising Vikas Awasthy (Judicial Member) and Amarjit Singh (Accountant Member) found that even though assessee justified transaction price by making...

Notional Interest Income Credited To P/L A/C As Per Accounting Standard Requirement Is Not Liable For Tax Under Real Income Principle: Mumbai ITAT

While referring to the decision of Chennai Bench of Tribunal in the case of M/s. Shriram Properties Limited (ITA No. 431/Chny/2022), the Mumbai ITAT held that the notional interest income credited by the assessee to the profit and loss account as per the requirement of Indian Accounting Standard has not actually accrued to the assessee and hence the same is not liable for taxation under Real Income principle. The Bench of B.R. Baskaran (Accountant Member) and Sandeep Singh Karhail...

No ALP Adjustment Is Permitted On Notional Amount Of Royalty Paid By Overseas Subsidiary, Reiterates Mumbai ITAT

The Mumbai ITAT confirmed the CIT(A)'s action in deleting the addition made on account of waiver of royalty received from two subsidiaries. The Bench comprising Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) observed that considering the financial position of subsidiaries located in Bangladesh and Sri Lanka, the assessee agreed to waive part of the royalty and thereby credited 1% of the royalty amount to the P&L account instead of 3% as per the...

ITAT Cases Monthly Round Up: April 2024

Jaipur ITAT Directs Dept. To Allow Taxpayer To File Revised Appeal Memo In Form No. 35 For Removal Of Deficiency Case Title: Zila Parisad verses Addl. CIT, TDS While relegating the taxpayer to file a revised appeal memo in Form No. 35 either on the e-filing portal of the department or physical form, the Jaipur ITAT restored the matter back to the file of the CIT(A) to adjudicate the matter of rectification application for removal of deficiency, afresh, as per law. Incorrect...