ITAT Chennai Judgments — October 2016

The Tribunal held that the assessee's Malaysian branch did not constitute a permanent establishment in Malaysia, and the income earned from investments was taxable in India as 'income from other sources'. The Tribunal also confirmed that foreign exchange fluctuation losses are notional and not taxable, and expenses incurred for bank guarantees for business purposes are allowable.

The Tribunal held that it is not competent to decide on the constitutionality of the Act's provisions. It also noted that the assessee had already received the allowed deduction and that further deduction would require additional investment. The assessee was advised to pursue remedies with the CBDT for removal of difficulties.

The Tribunal held that the assessee's Malaysian branch did not constitute a permanent establishment in Malaysia, and the income earned from investments was taxable in India as 'income from other sources'. The Tribunal also confirmed that foreign exchange fluctuation losses are notional and not taxable, and expenses incurred for bank guarantees for business purposes are allowable.

The Tribunal held that the assessee's Malaysian branch did not constitute a permanent establishment in Malaysia, and the income earned from investments was taxable in India as 'income from other sources'. The Tribunal also confirmed that foreign exchange fluctuation losses are notional and not taxable, and expenses incurred for bank guarantees for business purposes are allowable.

The Tribunal upheld the CIT(A)'s decision, stating that the loss arising from shares in a liquidated company is an allowable capital loss. The tribunal followed its own previous binding decision on a similar matter.

The Tribunal held that the sales tax arrears paid were indeed the liability of the transferor-company and not the assessee, thus disallowing the claim for Rs. 23 lakhs. However, the matter of the Rs. 11.04 lakhs payment was remanded for further examination.

The Tribunal upheld the CIT(A)'s decision, stating that the loss arising from shares in a liquidated company is an allowable capital loss. The tribunal followed its own previous binding decision on a similar matter.

The Tribunal held that the matter required a fresh examination by the Assessing Officer to verify if the reimbursements had any element of fees for technical services. It was noted that the assessee could not claim the expatriates were employees of both entities simultaneously.

The Tribunal upheld the CIT(A)'s decision, stating that the loss arising from shares in a liquidated company is an allowable capital loss. The tribunal followed its own previous binding decision on a similar matter.

The Tribunal deleted the addition for unsecured loans, finding the transactions bona fide as the assessee provided names and addresses of lenders and the AO did not investigate. The addition for unexplained investment in house construction was also deleted based on the mother's confirmation of providing retirement benefits and agricultural income.

The Tribunal held that the quantum of deduction for weighted deduction under Section 35(2AB) is to be determined by the Assessing Officer, not solely by the DSIR approval. The issue of weighted deduction on revenue expenditure was remitted back to the Assessing Officer for fresh consideration.

The Tribunal held that excise duty and sales tax should be excluded from total turnover as per the Apex Court decision in CIT vs. Laskhmi Machine Works. Similarly, scrap sales proceeds should not be considered turnover if scrap is a byproduct of manufacturing, following CIT vs. Punjab Stainless Steel Industries.

The Tribunal held that the rebate received from premature payment of deferred sales tax at a discounted rate does not attract Section 41(1) of the Income Tax Act. The benefit received is not income but rather a discharge of liability at a reduced amount.

The Tribunal held that losses from one unit must be set off against profits of another unit for the purpose of calculating eligible deduction under Section 80IA. Therefore, the CIT(A)'s order was not upheld.

The Tribunal held that the write-off of bad debts was not reflected in the books of accounts at the time of the survey, except for one entry. The subsequent write-offs were considered artificial and not genuine, thus not allowable.

The Tribunal held that the assessee's Malaysian branch did not constitute a permanent establishment in Malaysia, and the income earned from investments was taxable in India as 'income from other sources'. The Tribunal also confirmed that foreign exchange fluctuation losses are notional and not taxable, and expenses incurred for bank guarantees for business purposes are allowable.

The Tribunal held that the assessee's Malaysian branch did not constitute a permanent establishment in Malaysia, and the income earned from investments was taxable in India as 'income from other sources'. The Tribunal also confirmed that foreign exchange fluctuation losses are notional and not taxable, and expenses incurred for bank guarantees for business purposes are allowable.

The Tribunal held that the assessee's Malaysian branch did not constitute a permanent establishment in Malaysia, and the income earned from investments was taxable in India as 'income from other sources'. The Tribunal also confirmed that foreign exchange fluctuation losses are notional and not taxable, and expenses incurred for bank guarantees for business purposes are allowable.

The Tribunal held that the write-off of bad debts was not reflected in the books of accounts at the time of the survey, except for one entry. The subsequent write-offs were considered artificial and not genuine, thus not allowable.

The Tribunal held that the appeal was not validly transferred as there was no order from a competent authority. However, since the CIT(A) did not decide the appeal on merits and the assessee did not appear, the case was remitted back for a fresh decision.

The Tribunal held that the jurisdiction of the Bench is determined by the location of the Assessing Officer. Since the Assessing Officer was in Pune, the Chennai Bench lacked jurisdiction.

The Tribunal allowed the expenditure for trademark license fees by following its own previous decisions. Regarding Section 14A disallowance, the Tribunal remitted the issue back to the Assessing Officer to exclude investments in subsidiary companies from the calculation. The Revenue's appeal concerning guarantee commission was dismissed.

The Tribunal allowed the expenditure for trademark license fees by following its own previous decisions. Regarding Section 14A disallowance, the Tribunal remitted the issue back to the Assessing Officer to exclude investments in subsidiary companies from the calculation. The Revenue's appeal concerning guarantee commission was dismissed.

The Tribunal noted that the assessee had filed an application with the CBDT under Section 119(2)(b) for condonation of delay. Relying on a co-ordinate bench's decision in a similar case, the Tribunal remitted the issue to the Assessing Officer to pass an order based on the CBDT's directions.

The Tribunal held that as per CBDT circulars, appeals with a tax effect below Rs. 10,00,000/- are not maintainable. Therefore, the revenue's appeal was dismissed.

The Tribunal held that the AO's comparison of estimated figures with actual financial statements was flawed, as the figures were not comparable. It also ruled that the presence of banking facilities was not a pre-condition for applying Rule 6DD(e) for cash payments for fish purchases. However, it noted that some purchases were made through limited companies, not directly from cultivators/producers.

The Tribunal held that the AO's comparison of estimated figures with actual financial statements was flawed, as the figures were not comparable. It also ruled that the presence of banking facilities was not a pre-condition for applying Rule 6DD(e) for cash payments for fish purchases. However, it noted that some purchases were made through limited companies, not directly from cultivators/producers.

The tribunal, in accordance with Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, dismissed the appeal for non-prosecution. The assessee can apply for recall of the order if sufficient cause for non-appearance is shown.

The Tribunal held that the brand acquisition was a valid transaction between separate entities, eligible for depreciation. It also ruled that the derivatives transactions were not speculative but were hedging activities linked to the assessee's business.

The Tribunal held that foreign currency expenses should be excluded from both export and total turnover to maintain consistency. It also held that the reference to the TPO was contrary to CBDT instructions and therefore invalid.

The Tribunal held that the lower authorities did not properly examine the genuineness of the confirmation letter and the payment details. Without proper enquiry, the addition made by the Assessing Officer was not justified.

The Tribunal held that the statement recorded during the survey had no evidentiary value as no oath was administered. Since the assessee filed the return within the due date and disclosed income based on the impounded P&L account, there was no concealment of income.

The Tribunal held that bad debts to the extent of ₹1,03,09,119/- were established and deleted the disallowance for this amount, while confirming the disallowance for ₹32,68,147/- due to lack of evidence. The issue of staff advances was remitted back to the Assessing Officer.

The Tribunal held that the brand acquisition was a valid transaction between separate entities, eligible for depreciation. It also ruled that the derivatives transactions were not speculative but were hedging activities linked to the assessee's business.

The Tribunal held that a charitable institution not engaged in business activities cannot claim depreciation under Section 32 of the Income-tax Act. Section 32 falls under the computation of business income, which is not applicable to charitable trusts.

The Tribunal, in accordance with Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, dismissed the appeal for non-prosecution. However, the assessee was given the liberty to move the Tribunal for recall of the order if sufficient cause for non-appearance was shown.

The Tribunal held that the unaccounted cash and stock were explained by the disclosed receipts. Regarding property on-money payments, it was held that since the properties were not in the firm's name, additions could not be made to the firm's income.

The Tribunal held that the Assessing Officer had not considered the relevant High Court judgment regarding the inclusion of unrealized sale proceeds in total turnover for Section 10A deduction. Therefore, the issue was remitted back to the Assessing Officer for reconsideration.