Bogus Capital Gain By Sale Of Shares, Assessee Not A Beneficiary, ITAT Deletes Addition

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition on account of bogus capital gain by the sale of shares of a penny stock company in the absence of incriminating material.The bench of Siddhartha Nautiyal (Judicial Member) and Waseem Ahmed (Accountant Member) has held that no material has been brought on record to suggest that the assessee was involved in any price rigging and that the case of the assessee has not been mentioned in the list of beneficiaries by...

Presumptive Taxation, Income From Profession Can’t Be In Absence Of Notified Professional Qualification: ITAT

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that income from professions against which TDS is deducted cannot be taxed at 50% in the absence of notified professional qualification.The bench of Narender Kumar Choudhry (Judicial Member) and B.R. Baskaran (Accountant Member) has observed that the assessee is just a 10th grader who passed matriculation and does not fall under Section 44ADA, and therefore, the addition is liable to be deleted.Section 44ADA states that...

There Can Be No Protective Addition In Absence Of Substantive Addition: ITAT

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that protective addition presupposes the existence of substantive additions; there can be no protective addition in the absence of substantive addition.The bench of Yogesh Kumar U.S. (Judicial Member) and Pradip Kumar Kedia (Accountant Member) has observed that the assessment order was passed against the assessee on December 28, 2016, by making additions in the hands of the assessee firm on a protective basis to protect the...

Tax Cases Weekly Round-Up: 17 September To 23 September, 2023

Delhi High Court Tax Authority Based In Delhi Lacks Jurisdiction On Withholding Tax Liability On Share Purchase Transaction: Delhi High Court Quashes Tax Demand Against Sumitomo Case Title: Sumitomo Mitsui Financial Group Inc. Versus CIT The Delhi High Court has deleted the tax demand against Sumitomo Mitsui Financial Group on the grounds of lack of jurisdiction. Delhi High Court Directs VAT Dept. To Refund Rs. 6.62 Crores To Flipkart Case Title: Flipkart India Private...

Fee Paid By TCS Towards The Brand To Tata And Sons Ltd. Is Not Capital In Nature, Royalty Not Chargeable: ITAT

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the fee paid by the assessee, Tata Consultancy Services (TCS), towards the brand to Tata and Sons Ltd. is not capital in nature for the reason that the brand is not owned by the assessee.The bench of Vikas Awasthy (Judicial Member) and Padmavathy S. (Accountant Member) has observed that there cannot be any royalty that needs to be charged on the brand since the assessee is not the owner of the brand, and there cannot be any...

ALP Adjustment Falls Within Tolerance Band Of +/- of 5%: ITAT Deletes TP-Adjustment On Payment For Consultancy, Professional Fees

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the TP adjustment on payment for consultancy and professional fees and other services by the assessee to its Associated Enterprises (AEs).The bench of Anubhav Sharma (Judicial Member) and M. Balaganesh (Accountant Member) has observed that ALP adjustment falls within the tolerance band of +/- of 5% as per the second proviso to section 92C(2) of the Income Tax Act, 1961.One of the viable solutions for regulating Transfer Pricing...

AO Can’t Ask Assessee To Prove Non-Occurring Of An Event, ITAT Deletes Income Tax Addition Worth Rs. 2 Crores

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the income tax addition worth Rs. 2 crores and held that the AO cannot ask the assessee to prove the non-occurring of an event.The bench of Anubhav Sharma (Judicial Member) and Shamim Yahya (Accountant Member) has observed that it is not proper on the part of the AO to ask the appellant to prove with witnesses and documentary evidence the non-occurring event. The witnesses and documentary evidence are called upon to prove the...

Capital Gain Exemption Not Available For A Residential House Purchased Abroad After April 1, 2015: ITAT

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that capital gain exemption is not available for a residential house purchased abroad after April 1, 2015.The bench of N. K. Choudhry (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that for the period prior to AY 2015-16 or to the introduction of the words “in India” in Section 54 of the Act vide Finance Act No. 2 of 2014, which came into effect on April 1, 2015, the assessee would get the benefit of...

Payment To UK-Based Company For Preparing Candidate Written Report By CAE Simulation Training Is Not A Royalty: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that payment to a UK-based company for preparing candidate written reports by CAE Simulation Training is not a royalty.The bench of G.S. Pannu (President) and Astha Chandra (Judicial Member) has observed that the candidate’s report is delivered to the assessee electronically, which is in the nature of a copyrighted product, and mere access to use the server or software to download the reports cannot be regarded as a transfer of any...

‘Non-Cooperative Attitude’ Cannot Be The Basis Of Imposing Penalty: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that a ‘non-cooperative attitude’ as such in itself cannot be the basis for imposing penalties without specifically bringing on record the specific notices and their specific non-compliances.The bench of Anubha V Sharma (Judicial Member) and N.K. Billaiya (Accountant Member) has observed that unless it is established in the assessment order or even under the penalty order that at the time of the assessment proceedings itself, AO...

TNMM Should Be Applied In Respect Of International Transaction Of `Sale Of Finished Goods’: ITAT

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the Transactional Net Margin Method (TNMM) should be applied in respect of international transactions of `Sale of finished goods’.The bench of R.S. Syal (Vice President) and S.S. Viswanethra Ravi (Judicial Member) has observed that, in view of huge quantitative differences, one cannot say that the price charged for a product sold in huge quantities can be taken as a comparable price for the sale of lower units of the same...

Employee Stock Option Expenses Revenue In Nature: ITAT Deletes Disallowance Against Cleartrip

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that employee stock option expenses are revenue in nature.The bench of Sandeep Singh Karhail (Judicial Member) and Prashant Maharishi (Accountant Member) has directed the assessing officer to delete the disallowance of employee stock option expenditure of Rs. 6,064,232 against Cleartrip.The appellant/assessee has debited a sum of Rs. 6,065,232 to the profit and loss account because of employee stock option scheme costs.The AO...