ITAT Chennai Judgments — December 2022

The Tribunal held that the assessee cannot be expected to deduct TDS on payments made to non-residents based on a subsequent retrospective amendment to the law. It also upheld the CIT(A)'s direction regarding disallowance under Section 14A concerning investments yielding exempt income.

The Tribunal noted that the issue of reopening of assessment in light of the High Court's decision in 'Auro Lab' was not examined by the lower authorities. Therefore, the matter was remanded to the AO to decide on merits after the High Court's decision and to re-examine the reopening issue.

The Tribunal held that the issue before the AO during reassessment was identical to the issue examined by the PCIT under Section 263. Therefore, the PCIT's order revising the assessment was affirmed.

The Tribunal noted that the issue of reopening of assessment in light of the High Court's decision in 'Auro Lab' was not examined by the lower authorities. Therefore, the matter was remanded to the AO to decide on merits after the High Court's decision and to re-examine the reopening issue.

The Tribunal held that the disallowance of deduction under Section 80JJAA made by the AO while processing the return under Section 143(1)(a) was incorrect. Such an issue is debatable and requires deliberation and verification of documents, which cannot be done at the 143(1) stage.

The Tribunal found that the AO had not consistently applied the weighted average method to the opening stock. Therefore, the issue was remanded back to the AO for re-evaluation of the opening stock using the weighted average method.

The Tribunal condoned the delay in filing the appeals, citing valid reasons related to CIRP and the pandemic. Several issues, including disallowances of depreciation, license fees, and deductions, were set aside to the Assessing Officer for re-examination.

The Tribunal found that the lower authorities had not adequately examined the facts of the case or considered the assessee's submissions. Therefore, the matter was remanded back to the Assessing Officer for fresh adjudication with a proper opportunity for the assessee to present evidence.

The Tribunal held that the origin of the asset determines its nature. Since the land was acquired in lieu of a business loan foregone, it was considered a business asset, and the gains arising from its sale were treated as business income.

The Tribunal noted that the assessee's affidavit seeking condonation of delay was not supported by any documents and lacked cogent reasons. Therefore, the delay was not condoned.

The Tribunal admitted the additional evidence and remanded the case back to the AO. The AO is directed to verify the payment of additional consideration and the cost of improvement, and allow the claims if proven as per law.

The Tribunal held that the re-opening of assessment was valid as there was a reasonable belief of escapement of income. However, the addition made by the AO was partly sustained, allowing credit for Rs. 8,50,000/- from retirement benefits.

The Tribunal condoned the delay in filing the appeals, citing valid reasons related to CIRP and the pandemic. Several issues, including disallowances of depreciation, license fees, and deductions, were set aside to the Assessing Officer for re-examination.

The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned in the relevant assessment year. The amendment to Section 14A by the Finance Act, 2022, was held to be prospective.

The Tribunal held that the AO had applied its mind to the facts and documents, and its view that Section 194LC was applicable was a possible and plausible interpretation. Therefore, the revision order by the CIT was not sustainable.

The Tribunal held that the disallowance of interest paid to the outgoing partner's account was erroneous. It ruled that the expenditure should be allowed as a deduction in the year the Tax Deducted at Source (TDS) was deducted and paid, irrespective of the accounting method followed.

The Tribunal upheld the disallowance of rent paid to M/s. DRS Industries Ltd. as the agreement did not materialize and the rent agreement was not in the assessee's name. The Tribunal also upheld the disallowance of the net advertisement expenses as there was no valid agreement for the assessee to incur such expenses.

The Tribunal held that while DCF is a prescribed valuation method, it must be based on reasonable estimations, which were lacking in this case. The projections were adopted from management without independent evaluation and showed significant discrepancies. Therefore, the Tribunal upheld the CIT(A)'s decision to tax the premium exceeding the face value.

The Tribunal held that the cash deposits were explained by the cash balance available in the assessee's regularly maintained books of accounts, which reflected all business transactions. The disallowance under Section 14A was also rightly deleted as the assessee earned no exempt income.

The Tribunal held that the assessee is eligible for deduction under Section 54F for all 7 flats, as the delay in possession was beyond the assessee's control and the flats were acquired from a single development agreement. The reassessment proceedings were also found to be valid.

The Tribunal held that while DCF is a prescribed valuation method, it must be based on reasonable estimations, which were lacking in this case. The projections were adopted from management without independent evaluation and showed significant discrepancies. Therefore, the Tribunal upheld the CIT(A)'s decision to tax the premium exceeding the face value.

The Tribunal held that the AO failed to record objective satisfaction regarding the correctness of the assessee's claim before applying Rule 8D. Therefore, the disallowance made by the AO was not sustainable in law.

The Tribunal held that the Principal Commissioner could not revise the assessment order on issues outside the scope of limited scrutiny, as there was no credible material to justify expanding the inquiry. The revision order was deemed invalid.

The Tribunal directed the exclusion of certain comparable companies based on previous years' orders and allowed the benefit of a 5% tolerance range for transfer pricing adjustments. The issue of notional interest on overdue receivables was partly allowed, directing benchmarking at LIBOR+3% for delayed remittances beyond the credit period.

The Tribunal held that the assessee's belief that capital gains would be nil due to substantial investment in land was bona fide. Therefore, it was not a fit case for confirming the penalty, and the penalty was deleted.

The Tribunal held that the Pr. CIT's invocation of Section 263 was justified as the AO failed to consider the current investments as per the prescribed formula under Rule 8D. However, the Tribunal did not express any opinion on the merits of the case.

The Tribunal directed the exclusion of certain comparable companies based on previous years' orders and allowed the benefit of a 5% tolerance range for transfer pricing adjustments. The issue of notional interest on overdue receivables was partly allowed, directing benchmarking at LIBOR+3% for delayed remittances beyond the credit period.

The Tribunal held that the reopening of assessment was bad in law as the original assessment had already scrutinized the transport hire charges and there was no failure on the part of the assessee to disclose material facts. Therefore, the disallowance made by the AO was quashed.

The Tribunal held that the AO had not properly examined the exceptional and extraordinary items, making the assessment order erroneous and prejudicial to the revenue. Therefore, the PCIT was justified in revising the order.

The Tribunal upheld the CIT(A)'s deletion of additions under Section 40(a)(i) based on its own case law, stating that payments for services rendered outside India without a permanent establishment are not taxable in India. The Tribunal also noted that the issue of Section 80IC deduction was to be re-considered by the AO.

The Tribunal held that the CIT(A) should not have summarily rejected the affidavits without further inquiry. Since the assessee did not fully justify the source and the CIT(A) did not conclusively prove it as unexplained income, the Tribunal directed the AO to estimate 20% profit on the cash deposits.

The Tribunal held that the PCIT erred in revising the assessment order. The AO had conducted inquiries regarding the cash balance and accepted the assessee's explanation. Regarding unabsorbed depreciation, the issue was not relevant for AY 2015-16 as the assessee had declared 'nil' income and no set-off was claimed.

The Tribunal held that the appeal filed by the Revenue had become infructuous due to submissions made by the assessee regarding the finality of the closing stock issue for a different assessment year.

The Tribunal, following the Supreme Court's decision in M/s. Checkmate Services P. Ltd., held that timely deposit of employee's PF contribution is mandatory for claiming deduction. The disallowance was upheld.

The Tribunal held that depreciation on fixed assets can be claimed by a trust even if the capital expenditure was treated as application of income. For current assessment years, depreciation was allowed. For prior years, the claim was restricted to six years preceding the assessment year in which the claim was made.

The Tribunal held that depreciation on fixed assets can be claimed by a trust even if the capital expenditure was treated as application of income. For current assessment years, depreciation was allowed. For prior years, the claim was restricted to six years preceding the assessment year in which the claim was made.

The Tribunal held that depreciation on fixed assets can be claimed by a trust even if the capital expenditure was treated as application of income. For current assessment years, depreciation was allowed. For prior years, the claim was restricted to six years preceding the assessment year in which the claim was made.

The Tribunal upheld the CIT(A)'s deletion of additions under Section 40(a)(i) based on its own case law, stating that payments for services rendered outside India without a permanent establishment are not taxable in India. The Tribunal also noted that the issue of Section 80IC deduction was to be re-considered by the AO.

The Tribunal upheld the CIT(A)'s deletion of additions under Section 40(a)(i) based on its own case law, stating that payments for services rendered outside India without a permanent establishment are not taxable in India. The Tribunal also noted that the issue of Section 80IC deduction was to be re-considered by the AO.

The Tribunal upheld the CIT(A)'s deletion of additions under Section 40(a)(i) based on its own case law, stating that payments for services rendered outside India without a permanent establishment are not taxable in India. The Tribunal also noted that the issue of Section 80IC deduction was to be re-considered by the AO.

The Tribunal held that depreciation on fixed assets can be claimed by a trust even if the capital expenditure was treated as application of income. For current assessment years, depreciation was allowed. For prior years, the claim was restricted to six years preceding the assessment year in which the claim was made.

The Tribunal upheld the CIT(A)'s deletion of additions under Section 50C, finding that the difference between the stated consideration and guideline value was less than 10%, making the amendment curative and retrospective. The appeal was dismissed.

The Tribunal upheld the Assessing Officer's action of reopening the case under Section 147, stating that Section 153C applies only when incriminating documents 'belonging' to the assessee are seized. Since no such documents were found, the assessment under Section 147 was deemed in order.