Recent Tax Tribunal Rulings: Key Takeaways for Taxpayers

 Recent decisions from Income Tax Appellate Tribunates (ITATs) across India provide crucial clarity on common tax disputes. Here’s a simplified look at the key rulings:

1. Delhi: CPC Cannot Decide Debatable Matters
The Delhi ITAT quashed an adjustment made by the Centralized Processing Center (CPC). It ruled that the CPC, while processing a return, overstepped by disallowing a deduction under Section 80M and raising a GST mismatch. The Tribunal clarified that such debatable issues, which require deeper examination, cannot be touched at the initial processing stage.

2. Hyderabad: Home Loan Investment Trumps Registration Delay
In a relief to homebuyers, the Hyderabad ITAT held that a taxpayer can claim capital gains exemption under Section 54F if a substantial investment in a new house is made within the legal deadline. The fact that the final property registration happened after the deadline is not a bar, as the law focuses on the investment intent.

3. Bangalore: No Switching Presumptive Schemes Later
The Bangalore ITAT dismissed an appeal where a taxpayer filed a revised return to switch from the presumptive tax scheme for professionals to the more beneficial one for small businesses. The Tribunal ruled that such a change is invalid, especially since the taxpayer was in an agency business, which is ineligible for the small business scheme.

4. Ahmedabad: Full Interest on TDS Refunds Protected
The Ahmedabad ITAT ruled that if you file your original return on time and are due a TDS refund, you are entitled to interest from the first day of the financial year. Filing a revised return later to correct a mistake does not reduce your right to interest on the refund you originally claimed.

5. Jaipur: Purpose of Pre-Operative Deposits is Key
The Jaipur ITAT clarified that the tax treatment of interest earned on deposits before a project commences depends entirely on the purpose. If the funds are surplus, the interest is taxable as income. However, if the deposit is crucial for setting up the project (like a bank guarantee), the interest reduces the project's cost. The case was sent back to the tax officer to verify the actual purpose.