ITAT Mumbai Re-characterises Investment in Mauritius Subsidiary as Loan, Denies ₹146.73 Crore Interest To Tata Chemicals

The Income Tax Appellate Tribunal has upheld a Rs. 146.73 crore interest disallowance against Tata Chemicals Ltd and affirmed a Rs. 3.62 crore transfer pricing adjustment, ruling against the company on the two biggest issues in its 2015-16 assessment. A Bench of Judicial Member Rahul Chaudhary and Accountant Member Om Prakash Kant said, “In view of the foregoing discussion, we find no infirmity in the order of the Dispute Resolution Panel affirming the action of the Transfer Pricing Officer in...

ITAT Mumbai Holds CSR Donations Deductible Under Section 80G, Allows Aditya Birla's PF Contributions

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 6 February, observed that CSR donations to approved institutions qualify for deduction under Section 80G of the Income Tax Act, 1961. The Bench also clarified that employees' provident fund contributions cannot be disallowed if deposited within the statutory due date. In the consolidated appeals filed by Aditya Birla Sun Life AMC Limited, the Bench of Judicial Member Amit Shukla and Accountant Member Makarand Vasant...

Entire Accommodation Entry Purchases Cannot Be Treated as “Unexplained Cash”: ITAT Mumbai

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 23 February, held that even if purchases are accommodation entries, once they are recorded in regular books of account and routed through banking channels, they cannot be treated as “unexplained expenditure” under Section 69C of the Income Tax Act. The Bench, comprising Accountant Member Om Prakash Kant and Judicial Member Ms. Kavitha Rajagopal, was hearing cross-appeals in the case of Balaji Bullions and Commodities India Pvt....

ITAT Ahmedabad Deletes ₹9.65 Crore Addition On Demonetisation Cash Deposits Backed by Recorded Sales

The Ahmedabad Bench of the Income Tax Appellate Tribunal recently held that once purchases are accepted and stock is not disputed, sales cannot be treated as unexplained cash credits merely because the cash was deposited during the demonetisation period. A bench of Judicial Member Sanjay Garg and Accountant Member Annapurna Gupta deleted an addition of Rs.9,65,97,834 made under Section 68 of the Income Tax Act, holding, “Once the purchases are accepted and the stock is not disputed, the sales...

TDS Not Required Where Income Not Chargeable To Tax In India: ITAT Ahmedabad

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of a Rs. 5.63 crore disallowance made against Jagson Colorchem Limited, holding that commission paid to foreign agents for services rendered outside India is not chargeable to tax in India. The Bench of Judicial Member T R Senthil Kumar and Accountant Member Narendra Prasad Sinha, observed: “Once the income is not chargeable to tax in India, the question of deducting TDS thereon under the provision of...

Delhi ITAT Deletes ₹175.03 Crore Tax Addition, Holds Livestock Supplier's Deals With HMA Agro Genuine

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue's appeals and upheld deletion of a protective addition of Rs.175.03 crore and an estimated commission addition of about Rs.1.75 crore made against a livestock supplier on allegations of providing accommodation entries to HMA Agro Industries Ltd. The Bench of Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman held that once the transactions were found to be genuine business transactions, the...

'Cannot Wear Cap of A Businessman': ITAT Delhi Deletes ₹53.30 Lakh Disallowance Against Zeta

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has granted relief of Rs. 53.30 lakh to Zeta Buildtech Pvt. Ltd., a distributor of liquor and beverages, by deleting disallowances on payments to independent service providers and holding that the Revenue cannot question the commercial wisdom of such expenditure. For Assessment Year 2020–21, Zeta had declared total income of ₹98.48 lakh.The Assessing Officer had disallowed Rs. 31.80 lakh paid to S.P. Jindal Financial Services Limited...

ITAT Chennai Deletes Penalty for Under-Reporting Of Income After Finding 99% Tax Covered by TDS

The Chennai Bench of the Income Tax Appellate Tribunal has recently deleted a Rs. 2.57 lakh penalty imposed under Section 270A of the Income Tax Act (penalty for under-reporting of income) on an individual salaried taxpayer. The tribunal noted that TDS (tax deducted at source) on the assessee's salary had almost covered 99% of the total tax demand and held that, “When tax liability is covered by TDS, there is no manafide intention on the part of the assessee to conceal any particulars of...

ITAT Delhi Quashes Revision Order Against Studds, Flags Lack of Clear Findings

The Delhi Bench of the Income Tax Appellate Tribunal has recently set aside a revision order passed against Studds Accessories Limited for Assessment Year 2020–21, holding that the Principal Commissioner failed to show how the assessment was “erroneous as well as pre-judicial to the interest of the revenue.” Studds Accessories Limited is a popular two-wheeler helmert manufacturer. Allowing the appeal, the Bench of Judicial Member Raj Kumar Chauhan and Accountant Member S. Rifaur Rahman said...

ITAT Mumbai Upholds Fresh Examination of Ambuja Cements' AY 2019–20 Assessment For Lack Of Inquiry

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed Ambuja Cements Limited's appeal against a revision order that had set aside its completed tax assessment for fresh verification, holding that the original assessment was passed “without due examination and verification.” The company had challenged the Principal Commissioner of Income Tax's order under Section 263 revising and setting aside its Assessment Year 2019–20 assessment on the ground that the Assessing Officer...

ITAT Delhi Quashes Tax Revision Against Senior Advocate Mukul Rohatgi For AY 2020–21

The Delhi Bench of the Income Tax Appellate Tribunal on Monday quashed a revision order passed against Senior Advocate Mukul Rohatgi for Assessment Year 2020–21, holding that the Income Tax Department lacked material to exercise its revision powers for an assessment of Rs.133.46 crore. Section 263 allows a senior tax officer to revise a completed assessment if it is found to be erroneous and prejudicial to the interests of the Revenue. In Rohatgi's case, the Tribunal held that these...

Reopening Of Assessment Invalid If AO Fails To Show Reason To Believe: ITAT Chennai

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) on 2 February quashed the reopening of assessment against a SEBI-registered stock broker, holding that the Assessing Officer failed to satisfy the “reason to believe” requirement under Section 147 of the Income Tax Act, 1961. Judicial Member Abhy T. Varkey and Accountant Member S.R. Raghunatha observed that the recorded reasons were “extremely scanty and vague.” They further held: “According to us, the reasons recorded should be...