ITAT Chennai Judgments — November 2016

The Tribunal held that M/s. Stewarts & Lloyds Ltd. was a good comparable and should be included in the list. The TPO was directed to rework the Profit Level Indicator (PLI) and recompute the Arms Length Price adjustment.

The Tribunal, relying on its own previous orders and the Madras High Court's judgment in the assessee's own case, held that the assessee is a credit society eligible for deduction under Section 80P. Therefore, the order of the lower authority was confirmed.

The Tribunal held that translation services, requiring only proficiency in languages, do not fall under the definition of 'fees for technical services' as per Explanation 2 to Section 9(1)(vii). Therefore, the assessee was not obligated to deduct TDS on these payments.

The Tribunal held that the Double Taxation Avoidance Agreement between India and Malaysia was not brought to the notice of the lower authorities. Therefore, both issues were remitted back to the Assessing Officer for re-examination.

The Tribunal held that the CIT(Appeals) was justified in deleting the disallowance, relying on the jurisdictional High Court's judgment that reassessment proceedings consequent to initiation of rectification proceedings are not in accordance with law.

The Tribunal held that the maximum allowable limit under Section 54EC, as per the CBDT circular, is Rs. 50,00,000/-. The assessee's grievance regarding the limit itself should be addressed to the CBDT.

The Tribunal held that the assessee firm should be treated as a partnership firm, not an AOP, based on its partnership deed. However, the issue of expenditure claimed was remitted back to the AO for re-examination.

The Tribunal held that the addition of Rs. 6,00,000 was not warranted as the assessee's statement was approximate and made years after the purchase, and the conveyance deed is a registered document requiring strong evidence to disregard. The addition of Rs. 80,550 was also deleted as the variation between the declared cost and valuation was considered insignificant and due to estimation.

The Tribunal held that the addition of Rs. 6,00,000 was not warranted as the assessee's statement was approximate and made years after the purchase, and the conveyance deed is a registered document requiring strong evidence to disregard. The addition of Rs. 80,550 was also deleted as the variation between the declared cost and valuation was considered insignificant and due to estimation.

The Tribunal held that the CIT(A) erred in directing penalty under Section 271AAA as the conditions for its applicability were not met. The Tribunal found that the original penalty under Section 271(1)(c) was also not sustainable.

The Tribunal held that the CIT(A) erred in directing penalty under Section 271AAA as the conditions for its applicability were not met. The Tribunal found that the original penalty under Section 271(1)(c) was also not sustainable.

The Tribunal held that the CIT(A) erred in directing penalty under Section 271AAA as the conditions for its applicability were not met. The Tribunal found that the original penalty under Section 271(1)(c) was also not sustainable.

The Tribunal held that the CIT(A) erred in directing penalty under Section 271AAA as the conditions for its applicability were not met. The Tribunal found that the original penalty under Section 271(1)(c) was also not sustainable.

The Tribunal held that the assessee's activity of developing and letting out laboratory facilities to biotech industries constitutes a business activity. Therefore, the rental income derived from this is to be considered as income from business and eligible for deduction under Section 80IA.

The Tribunal held that warehousing rentals and transportation charges related to CFS activities are eligible for deduction under Section 80IA(4). However, depreciation on an un-operational warehousing facility was rightly disallowed. The revision order under Section 263 was set aside as the Assessing Officer's view was legally permissible.

The Tribunal held that the disallowance of investment expenses is not warranted if the investments are made in sister concerns, associate concerns, or companies owned by the Government. This decision was based on a prior ruling for the assessment year 2011-12.

The Tribunal held that the Assessing Officer erred by not referring the matter to the valuation officer for determining the market value and by not considering the claim for exemption under Section 54F.

The Tribunal held that higher depreciation at 30% is only applicable to motor lorries used in the business of running them on hire or in the business of transportation of goods. Since the assessee was not engaged in these activities, the lower rate of 15% was correctly applied.

The Tribunal held that additions cannot be made solely on the ground that the assessee could not produce creditors for examination, especially when the AO has the power to summon them. The lapse of time also rendered remanding the matter for fresh examination impractical.

The Tribunal held that additions cannot be made solely on the ground that the assessee could not produce creditors for examination, especially when the AO has the power to summon them. The lapse of time also rendered remanding the matter for fresh examination impractical.

The Tribunal held that additions cannot be made solely on the ground that the assessee could not produce creditors for examination, especially when the AO has the power to summon them. The lapse of time also rendered remanding the matter for fresh examination impractical.

The Tribunal held that warehousing rentals and transportation charges related to CFS activities are eligible for deduction under Section 80IA(4). However, depreciation on an un-operational warehousing facility was rightly disallowed. The revision order under Section 263 was set aside as the Assessing Officer's view was legally permissible.

The Tribunal held that warehousing rentals and transportation charges related to CFS activities are eligible for deduction under Section 80IA(4). However, depreciation on an un-operational warehousing facility was rightly disallowed. The revision order under Section 263 was set aside as the Assessing Officer's view was legally permissible.

The Tribunal held that profit cannot be estimated without rejecting the books of account. Since the books were not rejected and the Assessing Officer did not examine them to find reasons for not accepting the declared profit, the estimation was not justified.

The Tribunal found that the Assessing Officer had not examined the bank statements and sale deed submitted by the assessee. Therefore, the matter needed to be re-examined by the Assessing Officer to verify the claims of property sale and fund transfers.

The Tribunal held that the cross-hiring of vehicles between group concerns does not constitute a sub-contract. It further held that a shortfall in TDS deduction, as opposed to a complete failure, does not attract disallowance under Section 40(a)(ia).

The Tribunal held that the issue of additional depreciation was identical to a previous case decided by the Tribunal and a Karnataka High Court judgment. Therefore, the assessee was entitled to the additional depreciation claimed.

The Tribunal held that a chowkidar without technical knowledge cannot be considered an employee in the manufacturing process. Furthermore, a consultant not on the company's payroll and whose role in manufacturing is not established cannot be counted as an employee.

The Tribunal held that since the AO accepted the purchases and the creditor was hospitalized and later died, the AO should have summoned the creditor's books of accounts to verify the genuineness of the purchase. As the AO did not conduct a thorough inquiry, the issue was remitted back to the AO for re-examination.

The Tribunal held that replacing mosaic flooring with marble flooring and purchasing new machinery like ACs and dishwashers for a star hotel constitutes maintenance and is revenue in nature, aimed at improving ambiance and maintaining the business asset. Therefore, the expenditure was rightly treated as revenue by the CIT(A).

The Tribunal noted that while the assessee's claim for deemed registration under Section 12A, based on a Supreme Court judgment, could be valid if the application was pending, there was no material on record to prove the application was filed. Therefore, the matter was remitted back to the Assessing Officer for verification.

The Tribunal held that the reopening of assessment under Section 147 was valid. However, it found that the issue of whether the assessee continued its business activities after the RBI order needed re-examination, especially in light of previous tribunal decisions and a CBDT circular.

The Tribunal held that the assessee was not saved by the proviso to Explanation 5 of Section 271(1)(c) because the original return was filed before the search. The disclosure of 'on-money' in the return filed after the search notice was not considered voluntary but a consequence of the search.

The Tribunal found a lack of clarity regarding the assessee's books and loans, necessitating a fresh examination by the Assessing Officer. The CIT(A) was deemed to have adopted the peak credit method without sufficient inquiry into the money lending business claim.

The Tribunal held that Section 144C(13) of the Act was not applicable because the Dispute Resolution Panel (DRP) had issued directions to the Transfer Pricing Officer (TPO) and not to the Assessing Officer. This was considered a procedural defect, not a jurisdictional error.

The Tribunal found a lack of clarity regarding the assessee's books and loans, necessitating a fresh examination by the Assessing Officer. The CIT(A) was deemed to have adopted the peak credit method without sufficient inquiry into the money lending business claim.

The Tribunal held that the assessee is eligible for deduction under Section 80-IA even with captive consumption of electricity. It also ruled that losses cannot be excluded in light of the Madras High Court judgment.

The Tribunal held that the Assessing Officer did not properly examine the purchasers of the closing stock and the buyers of the jewellery. Therefore, the matter needs to be reconsidered by the Assessing Officer after examining the purchasers.

The Tribunal found that while the assessee is eligible to claim balance additional depreciation in subsequent years if the asset was used for less than 180 days, the Assessing Officer's disallowance was for a different reason. The case was remitted back to the Assessing Officer for verification of facts and correct application of law.

The Tribunal held that for determining capital gains on conversion of a capital asset into stock-in-trade, the fair market value on the date of conversion is crucial. The applicability of Section 50C was questioned as no registration document is involved in the conversion itself.

The Tribunal held that disallowances made under Section 14A read with Rule 8D cannot be added to the book profit computed under Section 115JB. The lower authorities' orders were set aside.

The Tribunal held that there was a reasonable cause for the delay in filing the audit report, considering the personal circumstances of the assessee. Therefore, the levy of penalty under Section 271B was not justified.

The Tribunal held that the assessee provided sufficient evidence of purchases, including sales tax registration and confirmations, and that the cash payments were justified under Rule 6DD(k) as the suppliers acted as agents. The penalty for delayed audit report was deleted due to reasonable cause.

The Tribunal held that the non-disclosure was an inadvertent mistake, not a conscious concealment, as evidenced by the assessee not claiming TDS credit. Therefore, the penalty levied was deleted.

The Tribunal held that once the CIT(Appeals)'s order was confirmed by the Tribunal, the Assessing Officer could not disturb it under Section 154. The CIT(Appeals) had rightly set aside the Assessing Officer's order.

The Tribunal held that the appeal of the Revenue would not lie before it as the tax effect was less than Rs. 10,00,000, as per CBDT Circular No. 21/2015.

The Tribunal held that the lower authorities had not properly addressed whether export incentives should be considered when computing profit for Section 80HHC, especially when the core export business incurred a loss. The matter was set aside for fresh consideration.

The Tribunal held that the CIT(A)'s direction to exclude investments that did not yield taxable income was in line with Rule 8D(2)(iii). Therefore, the Tribunal found no reason to interfere with the CIT(A)'s order.

The Tribunal held that depreciation is allowable only on assets used for business or profession as per Section 32 of the Income Tax Act. Assets used for charitable objects by a trust are not considered to be used for business or profession, hence depreciation is not admissible.

The Tribunal held that the marketing and brand promotion expenses were not allowable as they were incurred to evade sales tax or lacked supporting evidence. Similarly, vehicle maintenance expenses were disallowed due to insufficient proof. Therefore, the disallowances made by the lower authorities were upheld.