AO Must Pass Draft Assessment If He Proposes Variation In Returned Income: Chennai ITAT Explains Scope Of Sec 144C

The Chennai ITAT held that the AO must pass a draft assessment order to the eligible assessee in case he proposes to make any variation in the income or loss returned which is prejudicial to the interest of such assessee. Section 144C of the Income Tax Act provides that in case of certain eligible assessees, viz., foreign companies and any person in whose case transfer...

Obsolete Inventory Prepared In Accordance With Accounting Standards And Audited By Independent Auditor, Can Be Written Off: Delhi ITAT

Referring to the decision in case of Gillette India Ltd. Vs. ACIT (66 Taxman.com 221), the New Delhi ITAT held that once assessee had given details about inventory written off along with ledger codes, then assessee would be eligible for deduction on written-off obsolete inventory. The Bench of Yogesh Kumar U.S (Judicial Member) and Pradip Kumar Kedia (Accountant Member) reiterated...

No Arm's Length Addition Is Warranted On Account Of Corporate Guarantee If Guarantee Fee Is Lower Than Bank's Quoted Interest Rate: Ahmedabad ITAT

Finding that the TPO did not present compelling evidence to establish that the guarantee fee was unwarranted, the Ahmedabad ITAT held that benefits derived, as seen in lower interest rates and favorable operating margins, substantiate the transaction's arm's length nature. The ITAT added that the effective borrowing cost, including the guarantee fee, was lower than the bank's...

Cash Sales Can't Take Place Before Commencement Of Business: Delhi ITAT Deletes Addition U/s 69A On Receipts From Such Sale

The New Delhi ITAT held that a business man deposits consideration from sale of his products on respective dates of sales as per his needs and prudence, and therefore, the AO cannot tax the receipts and income embedded therein together. Hence, the ITAT deleted the addition made u/s 69A on account of cash sales during demonetization. As per Sec 69A of Income tax Act, where in...

Indexation Benefit Shall Be Given To Taxpayer Based On Cost Of Acquisition Of Property Sold By Him: Delhi ITAT

The New Delhi ITAT held that the assessee is entitled to avail the benefit of carry forward of long-term capital loss on sale of residential property against long term capital gain computed on sale of commercial property. The Bench of Saktijit Dey (Vice-President) and M. Balaganesh (Accountant Member) observed that “as on the date of the conveyance deed, the value of the property is...

AO Can't Make Additions Solely Based On Retracted Statement Of Third-Parties If Assessee Has Claimed Opposite: Chennai ITAT

Referring to the decision of Madars High Court in case of P.V. Kalyanasundaram (155 Taxman 454), the Chennai ITAT held that once the assessee had denied payments made by it, then he cannot be expected to prove the negative. Going further, the Bench held that the AO cannot make additions solely based on retracted statement of third-parties, if assessee had claimed otherwise. The...

Block Period Of Six AYs For Purpose Of Sec 153C Has To Be Reckoned From Date Of Receipt Of Documents By AO: Delhi ITAT

The New Delhi ITAT held that for purposes of assessment u/s 153C, the date of recording of satisfaction of AO will be deemed date for the possession of seized documents. Section 153C of Income tax Act empowers the Assessing Officer of the person searched to handover the money, gold, jewellery, or other relevant articles/things or books of account or documents belonging to the other...

Statutory Authority Must Not Grant Approval U/s 153D Mechanically: Delhi ITAT Criticizes On Unjust Exercise Of Discretion By AO

While emphasizing that the obligation of granting approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO, the New Delhi ITAT held that approval granted u/s 153D should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. The...

Payments Made To Overseas Company For Services Utilized Abroad, Does Not Warrant Tax Deduction At Source U/s 195: Delhi ITAT

The New Delhi ITAT held that when the taxpayer company has utilized the service of a company outside India and payment has also been made outside India, then taxpayer company would not be liable for deduction of tax at source u/s 195. As per Section 195 of the Income Tax Act, TDS must be deducted at the time of credit or payment on certain payments made to non-residents, and it applies...

Technical Error In Making Application For Final Approval Is No Basis To Deny Benefit Of Sec 80G: Kolkata ITAT

Referring to the decision in case of Anudip Foundation for Social Welfare vs. CIT(Exemption), Kolkata – ITA No. 1341/Kol/2023, the Kolkata ITAT held that assessee will not be deprived of the benefit of Sec 80G due to technical errors occurred in making application because of the confusion and misunderstanding on in properly interpreting the relevant provision. Section 80G of Income...

Assumption Of Jurisdiction Based On Wrong Facts Can't Form Basis For Initiating Reopening: Mumbai ITAT

The Mumbai ITAT there is no question of concealment of fact when the assessee had itself declared the income in its return which was assumed by the AO to be an escaped income. Hence, the ITAT clarified that assumption of jurisdiction based on wrong facts, cannot form basis for initiating reopening. The Division Bench of Anikesh Banerjee (Judicial Member) and Prashant...

Loans Brought Forwarded Can't Form Basis For Addition In Current Year if Genuineness Is Established: Mumbai ITAT

Finding that the genuineness of loan transactions is not verified by the Income tax Authorities, the Mumbai ITAT held that no additions are permitted on account on unsecured loans by disregarding the confirmations & identity of loan creditors produced by assessee. The Divisional Bench of Anikesh Banerjee (Judicial Member) and Prashant Maharishi (Accountant Member) observed...