ITAT Chennai Judgments — September 2018

The Tribunal held that the assessee had provided sufficient details about the creditor, including financial statements and income tax returns. The Revenue failed to make further inquiries, and therefore, the addition was unjustified.

The Tribunal held that the appeal filed by the Revenue was not maintainable as the tax effect was below the monetary limit of Rs. 20 lakhs prescribed by CBDT Circular No. 3/2018.

The Tribunal condoned the delay in filing the appeals. However, it noted that the tax effect was less than ₹20 lakhs, and as per CBDT Circular No. 3/2018, such appeals should be withdrawn.

The Tribunal noted that CBDT Circular No.3/2018 instructs officers to withdraw appeals where the tax effect is less than ₹20 lakhs. The Tribunal considered this circular binding on the Department.

The Tribunal held that the lower authorities relied on investigation reports and statements without providing them to the assessee for rebuttal, violating principles of natural justice. The issue was remitted back to the Assessing Officer for fresh consideration.

The Tribunal held that the lower authorities relied on investigation reports and statements without providing them to the assessee for rebuttal, violating principles of natural justice. Therefore, the issue of whether the capital gains were real or sham requires reconsideration.

The Tribunal held that the CBDT Circular No. 3/2018, which instructs withdrawal of appeals with a tax effect less than Rs. 20 lakhs, is binding on the Revenue. Therefore, the appeal could not proceed.

The Tribunal held that the statements and reports relied upon by the lower authorities were not provided to the assessee, violating principles of natural justice. The issue of whether the transactions were real or sham requires reconsideration.

The Tribunal found that the method of accounting regularly followed by the assessee needs verification. Therefore, the matter was remitted back to the Assessing Officer for re-examination.

The Tribunal upheld the CIT(Appeals)'s deletion of disallowance for consultancy charges paid to non-residents as services were rendered outside India. However, a disallowance of ₹16,36,225/- regarding leased line charges was remitted back to the Assessing Officer for re-examination due to lack of discussion in the lower appellate order.

The Tribunal found the facts to be identical to previous assessment years where similar issues were remanded. Therefore, the Tribunal set aside the orders of the lower authorities and directed the Assessing Officer to reconsider the disallowances.

The Tribunal held that robotix kits are not computers, even if operated by them, and thus not eligible for 60% depreciation. Regarding the addition, the Tribunal decided to remit the issue back to the Assessing Officer for re-examination upon production of bills by the assessee.

The Tribunal held that when the assessee claims the market value is less than the guideline value, the Assessing Officer must refer the matter to the Departmental Valuation Officer as per Section 50C(2). The CIT(Appeals) was not justified in not referring the matter.

The Tribunal found that M/s Acropetal Technologies Ltd. had a significantly high and inconsistent operating profit, making it an unreliable comparable. The matter was remitted back to the AO for fresh examination by the TPO after the assessee files TP documentation for engineering design services.

The Tribunal held that the assessee had maintained quantitative records of stock, purchases, and sales, and the sales were not disbelieved. It was reasoned that sales could not be effected without corresponding purchases, and disbelieving purchases without rejecting the books of accounts was an error. The Tribunal relied on previous judgments where similar disallowances were deleted.

The tribunal confirmed the disallowance of pre-paid expenses as they were unascertained provisions. It also upheld the denial of Section 10B deduction, relying on a High Court judgment regarding the ten-year period for reckoning manufacturing commencement.

The Tribunal held that the TPO and DRP should consider the information about the selected comparable case brought to their notice subsequently. It also directed the exclusion of foreign currency expenditure from both export and total turnover, and inclusion of foreign exchange gain in export profit.

The Tribunal considered the assessee's request and dismissed the appeal as withdrawn. No objection was raised by the Revenue.

The Tribunal held that since the payment to the wife was not disputed and her qualification was not disputed, it could not be considered concealment of income or furnishing inaccurate particulars. The penalty was deleted.

The Tribunal held that the shares were held for more than 12 months, thus qualifying for long-term capital gains. It also found that the notice under Section 143(2) was not validly served, rendering the consequential assessment invalid.

The Tribunal found that the Assessing Officer relied heavily on an investigation report without providing it to the assessee or the Tribunal. Therefore, the matter was set aside for re-examination.

The Tribunal held that the shares were held for more than 12 months, thus qualifying as long-term capital gains. It also found that the notice under Section 143(2) was not served within the prescribed time, rendering the assessment invalid.

The Tribunal held that the activity of preparing potato chips from raw potatoes and packing them constitutes manufacturing, even if raw materials are supplied by another entity. However, details of the installed machinery were missing.

The Tribunal held that marketing of agricultural commodities by a co-operative society is eligible for deduction under Section 80P(2)(iii). It also found that interest paid to a company established by the government is not subject to TDS.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. The appeal was admitted for further consideration on its merits.

The Tribunal held that since the payment to the wife was not disputed and her qualification was not disputed, it could not be considered concealment of income or furnishing inaccurate particulars. The penalty was deleted.

The Tribunal found that a 15% disallowance of the total claim would meet the ends of justice, considering the nature of the business and other circumstances.

The Tribunal held that the shares were held for more than 12 months, thus qualifying for long-term capital gains. It also found that the notice under Section 143(2) was not validly served, rendering the consequential assessment invalid.

The Tribunal held that while filing the audit report is mandatory, the time limit is discretionary. Since the audit report was available before the assessment was completed and there was no impediment in determining taxable income, levying penalty was not justified.

The Tribunal held that the Assessing Officer's order was consequential to a Section 263 order which had been set aside by the Tribunal. Since the Section 263 order was not in existence, the consequential order could not stand independently. The pending High Court appeal did not justify allowing the Revenue's appeal.

The Tribunal held that an alternative claim under Section 10A can be made before the CIT(A) when the original claim under Section 10B was examined in a reopened assessment. The Apex Court's judgment in Sun Engineering Works Pvt. Ltd. was cited in support.

The Tribunal held that the assessee had sufficient non-interest bearing funds to advance loans to sister concerns, following the decisions in S.A. Builders Ltd. and CIT Vs. Hotel Savera. The Revenue failed to disprove these facts.

The Tribunal held that the lower authorities relied on investigation reports and statements without providing them to the assessee for cross-examination, violating principles of natural justice. The matter was remitted back to the Assessing Officer for fresh consideration.

The Tribunal held that the assessee had sufficient non-interest bearing funds to advance loans to sister concerns, following the decisions in S.A. Builders Ltd. and CIT Vs. Hotel Savera. The Revenue failed to disprove these facts.

The Tribunal condoned the delay in filing the appeals. However, it found merit in the assessee's submission that the appeals were not maintainable as the tax effect was below the prescribed monetary limit.

The Tribunal condoned the delay in filing the appeals. However, it found merit in the assessee's submission that the appeals were not maintainable as the tax effect was below the prescribed monetary limit.

The Tribunal noted that the tax effect was below the threshold limit specified by CBDT Circular No. 3/2018. The Departmental Representative also agreed that the appeal should not be pressed.

The Tribunal upheld the order of the CIT(Appeals), stating that Section 14A is not applicable when the assessee has not claimed any exempt income. They relied on a previous tribunal decision and a High Court ruling.

The Tribunal dismissed the Revenue's appeal regarding deemed dividend, upholding the CIT(A)'s deletion. The Tribunal also dismissed the assessee's appeals concerning deemed dividend and cash credit, confirming the additions made by the AO.

The Tribunal restored the appeal to the file of the Assessing Officer for re-adjudication. The assessee was granted an adequate opportunity to substantiate their case, with liberty to the Assessing Officer to pass an ex-parte order if the assessee failed to cooperate.

The Tribunal held that the disallowance was made on generalized allegations without specific reference to the assessee's transactions. The investigation report and statements were not furnished to the assessee, violating principles of natural justice.

The Tribunal dismissed the Revenue's appeal regarding deemed dividend, upholding the CIT(A)'s deletion. The Tribunal also dismissed the assessee's appeals concerning deemed dividend and cash credit, confirming the additions made by the AO.

The Tribunal condoned the delay in filing the appeals. However, it found merit in the assessee's submission that the appeals were not maintainable as the tax effect was below the prescribed monetary limit.

The Tribunal held that statements recorded behind the assessee's back, without providing an opportunity for cross-examination, cannot be the sole basis for disallowing the claim. The matter was remitted back to the Assessing Officer for fresh adjudication.

The Tribunal held that the assessee had sufficient non-interest bearing funds to advance loans to sister concerns, following the decisions in S.A. Builders Ltd. and CIT Vs. Hotel Savera. The Revenue failed to disprove these facts.

The Tribunal condoned the delay in filing the appeal before the CIT(A) as there was no evidence of service of the penalty order. The appeal was restored to the CIT(A) for adjudication on merits.

The Tribunal held that for AY 2011-12, regarding Section 50C, while the AO is generally bound by the stamp duty value, the assessee can claim before the AO that this value exceeds the fair market value, and the AO may refer it to a Valuation Officer. However, the Tribunal found that the assessee's valuer's report did not adequately address nearby infrastructure. The Tribunal did not decide the issue of Section 50C valuation definitively but focused on other issues. Regarding the land levelling cost of ₹3,10,000, the Tribunal noted the contractor's certification and the lack of contrary material from the AO, suggesting it should be allowed. The brokerage of ₹3,00,000 was also to be considered. For AY 2010-11, the Tribunal allowed the exemption under Section 54F, holding that dual ownership is permissible and investment in a husband's property, especially for additional construction forming an independent unit, should be construed as the assessee's investment. The disallowance of development charges of ₹3,20,000 was confirmed as the quotation was obtained after the property sale. The appeal for AY 2011-12 was partly allowed, and the appeal for AY 2010-11 was allowed.

The Tribunal held that a statement recorded during a survey operation without administering an oath has no evidentiary value. Since the cash was found in a subsequent financial year, it could not be assessed in the year under appeal.

The Tribunal held that for AY 2011-12, regarding Section 50C, while the AO is generally bound by the stamp duty value, the assessee can claim before the AO that this value exceeds the fair market value, and the AO may refer it to a Valuation Officer. However, the Tribunal found that the assessee's valuer's report did not adequately address nearby infrastructure. The Tribunal did not decide the issue of Section 50C valuation definitively but focused on other issues. Regarding the land levelling cost of ₹3,10,000, the Tribunal noted the contractor's certification and the lack of contrary material from the AO, suggesting it should be allowed. The brokerage of ₹3,00,000 was also to be considered. For AY 2010-11, the Tribunal allowed the exemption under Section 54F, holding that dual ownership is permissible and investment in a husband's property, especially for additional construction forming an independent unit, should be construed as the assessee's investment. The disallowance of development charges of ₹3,20,000 was confirmed as the quotation was obtained after the property sale. The appeal for AY 2011-12 was partly allowed, and the appeal for AY 2010-11 was allowed.

The Tribunal noted that the issue was covered by an earlier order of the Tribunal in the assessee's own case for a different assessment year. Therefore, there was nothing further to adjudicate.