The Tribunal held that a 12.5% disallowance could not be sustained when the Assessing Officer neither rejected the books of account nor disputed the sales. The key takeaway is that additions must be supported by proper findings and evidence.
Despite a significant gap between the agreement and registration dates, ITAT granted relief under the first and second provisos to Section 56(2)(vii). The key takeaway is that timely banking-channel payments pursuant to the agreement are crucial for claiming the benefit.
The Tribunal ruled that premium rooms, higher tariffs, and specialized medical facilities cannot by themselves establish a profit motive. Charitable status must be tested on statutory criteria rather than perceptions of affordability or luxury.
The Tribunal held that no interest disallowance under Rule 8D(2)(ii) could be made where the assessee’s interest-free funds substantially exceeded its investments. It reaffirmed that the Revenue must establish a direct nexus between borrowings and exempt-income investments.
The Tribunal found that none of the purchasers examined by the Department had admitted making cash payments to the assessee. In the absence of statements, receipts, diaries, or other incriminating material, the allegation of on-money remained unsubstantiated. The addition based on presumptions was therefore set aside.
The Tribunal found that the assessee had duly complied with statutory requirements by obtaining approval after modifying its objects. The CIT(E)’s finding of non-compliance was therefore contrary to the record. Renewal of registration was directed in the absence of any adverse findings on charitable activities.
The Mumbai ITAT held that no separate addition for alleged bogus purchases was warranted where contract receipts were accepted, substantial gross profit had already been disclosed, and there was no evidence of cash being returned to the assessee.
Mumbai ITAT noted that the rejection of registration under Section 12AB solely due to the absence of an express irrevocability clause in the trust deed no longer survived after subsequent registration was granted.
Mumbai ITAT held that if part consideration for additional area was paid through banking channels before the agreement date, the assessee may claim the benefit of the provisos to Section 56(2)(x).
Mumbai ITAT held that an order labelled as a draft assessment order loses its character if accompanied by demand notices and penalty initiation. Failure to comply with Section 144C renders the assessment void and without jurisdiction.
