ITAT Chennai Judgments — January 2017

The Tribunal condoned the delay in filing both the appeal and the cross-objection. However, it dismissed the Revenue's appeal as un-admitted due to the low tax effect and consequently dismissed the assessee's cross-objection as infructuous.

The Tribunal held that the AO disallowed the expenses without verification, and the CIT(A) confirmed the addition without giving the assessee an opportunity to prove the genuineness of the expenditure. The Tribunal decided to give the assessee one more opportunity.

The Tribunal held that the cost inflation index should be adopted from the year in which the original owner (the mother) acquired the property, following the Bombay High Court's decision in CIT Vs. Manjula J Shah. The pendency of a Special Leave Petition against this judgment was not considered a reason to deviate.

The Tribunal held that if software is developed under the direct supervisory control of the assessee, even if outsourced, it amounts to manufacturing by the assessee. Therefore, the assessee is eligible for exemption under Section 10A.

The Tribunal held that the assessee's claim of expenditure being present in the impounded documents was incorrect, as the authorized representative had previously clarified that no such expenditure details were found. Therefore, the lower authorities' orders were confirmed.

The Tribunal held that if the land is indeed agricultural and situated beyond the prescribed limit from the city/municipality, the profit on its sale cannot be taxed. The matter was remitted back to the Assessing Officer for re-examination.

The Tribunal held that the assessee had a bona fide belief that rental income could be offered on a cash basis, especially since she admitted the entire income on receipt basis in the current or subsequent years. Therefore, there was no intention to conceal income.

The Tribunal held that it was unreasonable to expect the assessee to produce bills and vouchers for renovation work entrusted to a contractor. The cost of renovation to make a building habitable can be considered part of the cost of acquisition or construction for Section 54F.

The Tribunal held that the assessee had provided sufficient evidence like bank payments, insurance, and photographs to prove the existence and possession of the machinery, thus allowing depreciation. For loan creditors, the Tribunal found that the assessee had discharged their onus by providing confirmations, PAN, and bank statements.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that for determining the fair market value (FMV) of the land as on 01.04.1981, the average of the estimated guideline value and the fair market value as valued by the Registered Valuer appears to be reasonable and justified, as both parties have agreed for such estimation. The Tribunal noted that the AO's adopted value of Rs. 11.45 per sq.ft. was the guideline value and not the fair market value, and it was significantly lower than the fair market value. The Registered Valuer's valuation of Rs. 54 per sq.ft. was based on a transaction and adjustments. Considering these factors, the Tribunal directed the Assessing Officer to adopt Rs. 35 per sq.ft. as the FMV as on 01.04.1981 and re-compute the capital gains. Accordingly, Grounds Nos. 2 & 3 of the assessee were partly allowed. Regarding Ground No. 4, concerning the additional cost of construction, the Tribunal held that the Valuation Report submitted by the assessee valued the entire superstructure. Since no separate valuation was made for the additional construction, it was implied that the cost of construction was included in the valuer's overall valuation. Allowing it separately would amount to double deduction. Therefore, this ground of appeal was dismissed. The Tribunal did not expressly leave any issue undecided.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that even if the land belonged to the children, the agricultural income generated from it, when introduced as capital by the assessee and not disclosed by the children, could be a valid basis for the increase in capital.

The Tribunal held that for payments to Fuji Asia Co Ltd and Auto Alliance Co Ltd, the India-Thailand DTAA does not specifically cover FTS. Following the jurisdictional High Court's decision in Bangkok Glass Industries, FTS cannot be taxed as 'other income' under Article 22 of the treaty. Therefore, the assessee was not liable for TDS on these payments.

The Tribunal held that the resolution passed by the majority of trustees was valid, even in the absence of one trustee who was hospitalized. The Tribunal confirmed the CIT(Appeals) order, stating that the trust was eligible for benefits under Section 161 and not liable for assessment at the maximum marginal rate under Section 167.

The Tribunal partially allowed the appeal concerning grounds 2 and 3. It held that the AO's adoption of Rs. 11.45 per sq.ft. based on guideline values was not necessarily the fair market value (FMV). The Registered Valuer's valuation of Rs. 54 per sq.ft. was also an estimate. In the absence of definitive proof for either, the Tribunal considered the average of the estimated guideline value and the Registered Valuer's estimate to be reasonable. It directed the AO to adopt Rs. 35 per sq.ft. as the FMV as on 01.04.1981 for re-computing capital gains, citing the jurisdictional High Court's decision in Shri J. Chelladurai. For ground 4, the Tribunal dismissed the appeal. It found that the Registered Valuer had valued the entire superstructure, implying the cost of construction was included. Allowing additional deduction for construction cost would amount to double deduction, as the AO had duly considered the building's value as per the valuation report. No separate deduction for additional construction cost was allowed.

The Tribunal held that the assessee had discharged his burden by providing explanations and documentary evidence. The Revenue failed to disprove the evidence or shift the burden back to the assessee, making the penalty unsustainable.

The tribunal upheld the reopening of assessment, stating it was not a mere change of opinion. It also confirmed the disallowance of exemption for interest income as the principle of mutuality did not apply to transactions with banks, and the employee salary was an operational cost, not an expenditure for earning interest.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The tribunal upheld the reopening of assessment, stating it was not a mere change of opinion. It also confirmed the disallowance of exemption for interest income as the principle of mutuality did not apply to transactions with banks, and the employee salary was an operational cost, not an expenditure for earning interest.

The tribunal upheld the reopening of assessment, stating it was not a mere change of opinion. It also confirmed the disallowance of exemption for interest income as the principle of mutuality did not apply to transactions with banks, and the employee salary was an operational cost, not an expenditure for earning interest.

The Tribunal held that for payments to Fuji Asia Co Ltd and Auto Alliance Co Ltd, the India-Thailand DTAA does not specifically cover FTS. Following the jurisdictional High Court's decision in Bangkok Glass Industries, FTS cannot be taxed as 'other income' under Article 22 of the treaty. Therefore, the assessee was not liable for TDS on these payments.

The Tribunal held that for payments to Fuji Asia Co Ltd and Auto Alliance Co Ltd, the India-Thailand DTAA does not specifically cover FTS. Following the jurisdictional High Court's decision in Bangkok Glass Industries, FTS cannot be taxed as 'other income' under Article 22 of the treaty. Therefore, the assessee was not liable for TDS on these payments.

The Tribunal held that for payments to Fuji Asia Co Ltd and Auto Alliance Co Ltd, the India-Thailand DTAA does not specifically cover FTS. Following the jurisdictional High Court's decision in Bangkok Glass Industries, FTS cannot be taxed as 'other income' under Article 22 of the treaty. Therefore, the assessee was not liable for TDS on these payments.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that the assessee's claim of expenditure being present in the impounded documents was incorrect, as the authorized representative had previously clarified that no such expenditure details were found. Therefore, the lower authorities' orders were confirmed.

The Tribunal held that the reopening of assessments for AY 2002-03 and 2003-04 was barred by limitation, as no specific direction was issued by the ITAT for these years. For AY 2004-05, the cost of construction should be estimated based on State PWD rates.

The Tribunal held that the reopening of assessments for AY 2002-03 and 2003-04 was barred by limitation, as no specific direction was issued by the ITAT for these years. For AY 2004-05, the cost of construction should be estimated based on State PWD rates.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that an admission or additional income offered for one assessment year cannot be the basis for making additions for a separate assessment year without specific material.

The Tribunal held that the omission to declare the profit was an inadvertent error and not a deliberate concealment. Therefore, the penalty levied under Section 271(1)(c) was not justified.

The Tribunal held that the resolution passed by the majority of trustees was valid, even in the absence of one trustee who was hospitalized. The Tribunal confirmed the CIT(Appeals) order, stating that the trust was eligible for benefits under Section 161 and not liable for assessment at the maximum marginal rate under Section 167.

The Tribunal held that the rental income should be assessed as income from house property after examining the rental agreement, finding it to be a case of letting out property rather than exploitation of a business asset. The High Court's prior decision in the assessee's own case was considered binding.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that the allowability of lease equalization charge as revenue expenditure under Section 37 needs to be examined. The factual matter regarding the assessee's method of accounting requires verification.

The Tribunal found the registered valuer's report to be flawed due to inconsistencies in construction details and lack of physical inspection. It held that the value of the building as agreed upon in the sale deed, which was also adopted by the DVO, should be considered correct.

The ITAT dismissed the Revenue's appeal, affirming that no disallowance under Section 14A read with Rule 8D can be made when the assessee has not earned any exempt income. It also held that disallowance is not applicable for strategic investments made to acquire controlling interest.

The Tribunal held that an admission or additional income offered for one assessment year cannot be the basis for making additions for a separate assessment year without specific material.

The tribunal upheld the reopening of assessment, stating it was not a mere change of opinion. It also confirmed the disallowance of exemption for interest income as the principle of mutuality did not apply to transactions with banks, and the employee salary was an operational cost, not an expenditure for earning interest.

The Tribunal held that the disallowance under Section 14A and the expenditure on impairment of molds should be allowed as revenue expenditure, following its own previous decisions on identical facts. The CIT(A)'s orders were confirmed.

The Tribunal held that the allowability of lease equalization charge as revenue expenditure under Section 37 needs to be examined. The factual matter regarding the assessee's method of accounting requires verification.

The Tribunal held that for persons other than the searched individual, assessments under Section 153C can only be based on material found during the search. Since no material was found during the search in some cases, additions made under Section 68 were deleted. In other cases, where the explanation for credits was found to be unsubstantiated or the stock difference was rightly treated as business income, the additions were upheld.

The Tribunal held that the assessee's predominant activities, such as conducting seminars and collecting delegate fees and advertisement income, were akin to business or trade. These activities exceeded the threshold specified in the second proviso to Section 2(15), thus disqualifying the assessee from claiming charitable exemption.

The Tribunal held that since the assessee could not furnish details of borrowed funds and interest paid, the claim for expenditure to earn interest income cannot be allowed. No purpose would be served by remitting the matter back as the assessee stated they had no information.

The Tribunal observed that the CIT(A) had not adjudicated the ground challenging the validity of the reopening. Therefore, the matter was remitted back to the CIT(A) for fresh adjudication on this issue.

The Tribunal held that while the assessee did not appear before the CIT(A) despite opportunities, one more opportunity should be given in the interest of justice, especially since the tax on the quantum addition was paid. The matter was remitted back to the CIT(A) for a fresh decision.

The Tribunal upheld the denial of exemption under Section 11, finding that the trust's primary activity was the business of printing and selling books, which did not qualify as 'education' under Section 2(15). However, the issue of miscellaneous expenditure written off as bad debts was remanded for verification.

The Tribunal held that if software is developed under the direct supervisory control of the assessee, even if outsourced, it amounts to manufacturing by the assessee. Therefore, the assessee is eligible for exemption under Section 10A.