June 2026

This case involves two appeals by the Revenue against the CIT(A)’s order restricting addition under section 68 to the profit element from commodity transactions involving client code modification, and deleting the associated penalty. The Tribunal upheld the CIT(A)’s decision, relying on its own earlier order in the assessee’s case for the same assessment year. The key principle established is that in cases of client code modification, where the assessee has not participated in the modification and the transactions are otherwise genuine, only the profit element embedded in the trades is taxable under section 68, not the gross purchase value. The assessee had already offered the profit in its return, so no further addition was warranted. Consequently, the penalty was also deleted.

In this ITAT case, the assessee challenged the addition of Rs.32,15,040 as undisclosed income from cash deposits during a search. The appeal was filed with 422 days delay. The Tribunal condoned the delay due to reasonable cause, citing precedents. On merits, noting the assessee’s non-compliance before the lower authorities, the Tribunal remanded the case to CIT(A) for fresh adjudication, allowing the appeal for statistical purposes.

The ITAT Bangalore dismissed the revenue’s appeals for AYs 2017-18 to 2020-21. It upheld CIT(A)’s order deleting additions under section 153A for lack of incriminating material, following the Supreme Court’s ruling in PCIT v. Abhisar Buildwell. For AY 2020-21, the tribunal held that capital gains from a pre-2018 Joint Development Agreement cannot be taxed under the prospective section 45(5A). The decision was consistent with the coordinate bench’s order in the assessee’s spouse’s case.

The Income Tax Appellate Tribunal, Delhi Bench ‘E’, heard cross appeals regarding assessment year 2018-19 for Health Care at Home India Pvt. Ltd. The assessee challenged the ad-hoc disallowance of 30% (later reduced to 15% by CIT(A)) of sales promotion expenses of Rs.8.04 crore, and the revenue challenged the CIT(A)’s deletion of addition under section 69C for intangible assets. The Tribunal, after considering submissions, found that while the assessee could not fully establish nexus for certain expenditures, a complete disallowance was unwarranted. It reduced the disallowance to 5% of the total sales promotion expenses, to cover any loopholes, with a caveat that it shall not be treated as a precedent. Regarding the intangible assets, the Tribunal upheld the CIT(A)’s deletion, noting that the expenses were duly recorded and supported by evidence, and the AO failed to bring any contrary material. Consequently, the assessee’s appeal was partly allowed and the revenue’s appeal dismissed.

IMAX Theatre Services Ltd., a Canadian resident, appealed against additions for alleged Permanent Establishment (PE) in India. The ITAT allowed the appeal, holding that the assessee did not have a fixed place PE as remote access did not constitute a place of business at disposal, and no service PE existed since services were provided for only 67 days, below the 90-day threshold. The concept of a virtual PE was not recognized under the India-Canada DTAA. The court rejected the Revenue’s reliance on a LinkedIn profile to establish employment, as an affidavit from the actual employer was provided. No profit attribution was warranted.

The appeal by Blazing Star Marketing Private Limited challenged the assessment order for AY 2013-14 passed by the National Faceless Assessment Centre (NFAC) on the ground of lack of jurisdiction. The Tribunal admitted an additional ground that section 151A of the Income Tax Act, enabling faceless assessment of income escaping assessment, was notified only on 29.03.2022, whereas the NFAC had issued notices under section 142(1) on 17.02.2022 and 29.12.2021. The Tribunal held that the assessment proceedings were initiated without valid jurisdiction and quashed the assessment order. Consequently, the appeal was allowed on the preliminary legal issue without going into the merits of the additions.