ITAT Chennai Judgments — January 2023

The Tribunal held that while negative net worth should be considered for capital gains computation, it is only applicable when there is a positive sale consideration. Since the sale consideration was zero, no capital gain arose, and therefore, no prejudice was caused to the revenue.

The Tribunal held that the assessee failed to comply with the mandatory provisions of Section 54(2) by not depositing the unutilized capital gains in the prescribed account. Therefore, proportionate exemption was rightly denied for the unutilized amount.

The tribunal held that late payment charges to a broker are not 'interest' under Section 2(28A) and thus TDS under Section 194A is not applicable, leading to deletion of disallowance. The issue of classifying share trading profits/losses as speculative or business income was remanded to the AO for further verification.

The tribunal held that late payment charges to a broker are not 'interest' under Section 2(28A) and thus TDS under Section 194A is not applicable, leading to deletion of disallowance. The issue of classifying share trading profits/losses as speculative or business income was remanded to the AO for further verification.

The Tribunal held that the assessee had satisfied the conditions for claiming deduction under Section 10B, as steps were taken for ratification of the STPI Director's approval. The ratio of the Supreme Court decision in CIT vs Yokogawa India Ltd. regarding computation of eligible profit was also applied.

The Tribunal held that the assessee had satisfied the conditions for claiming deduction under Section 10B, as steps were taken for ratification of the STPI Director's approval. The ratio of the Supreme Court decision in CIT vs Yokogawa India Ltd. regarding computation of eligible profit was also applied.

The Tribunal noted that the assessees had submitted bills, vouchers, and wealth tax declarations for the gold. To verify these submissions, the Tribunal remanded the appeals back to the AO for detailed examination.

The Tribunal noted that the assessees had submitted bills, vouchers, and wealth tax declarations for the gold. To verify these submissions, the Tribunal remanded the appeals back to the AO for detailed examination.

The Tribunal noted that the assessees had submitted bills, vouchers, and wealth tax declarations for the gold. To verify these submissions, the Tribunal remanded the appeals back to the AO for detailed examination.

The Tribunal held that the assessee trust falls under the category of education as per Section 2(15). Letting out the auditorium was considered incidental to the educational purpose, and the income generated was within the permissible limits for such activities under the 'education' category.

The tribunal held that late payment charges to a broker are not 'interest' under Section 2(28A) and thus TDS under Section 194A is not applicable, leading to deletion of disallowance. The issue of classifying share trading profits/losses as speculative or business income was remanded to the AO for further verification.

The Tribunal confirmed the disallowance of connectivity charges paid to TATA UK, following the jurisdictional High Court's decision in Verizon Communications Singapore Pvt. Ltd. The payments were held to be in the nature of royalty for the use of process and assured bandwidth.

The Tribunal held that substantial investment in the new asset within the stipulated period is sufficient for claiming deduction under Section 54F, even if construction is delayed due to the contractor. It was also held that depositing the unappropriated capital gains in the Capital Gains Account Scheme before the due date of filing the return is not mandatory if a substantial portion is invested.

The Tribunal found that the matter required further verification from the Assessing Officer (AO) due to the reconciliation provided by the assessee. The AO was directed to re-consider the issue in light of the assessee's explanation.

The Tribunal held that reassessment proceedings under Section 147 are primarily for the benefit of the revenue. Therefore, the assessee cannot make a fresh claim that is detrimental to the revenue's interest, especially when such claims were not part of the original assessment and were not the reason for reopening.

The Tribunal confirmed the addition of Rs. 5.25 lakhs as unexplained investment. The assessee failed to provide sufficient documentary evidence to substantiate the source of the cash deposits, such as past savings or tuition income.

The Tribunal held that converting loans into donations, when paid through proper banking channels and acknowledged by the trust with proper receipts, constitutes a valid donation for the purpose of Section 80G deduction. The AO and CIT(A) had misunderstood the nature of the transaction.

The Tribunal held that the assessee failed to provide necessary evidence, including confirmations and financial statements of the creditors, to establish the genuineness of the unsecured loans. Notices issued to the creditors were returned unserved.

The Tribunal held that the assessee is a primary agricultural credit society and not a cooperative bank engaged in banking business. Therefore, the deduction under Section 80P(2)(a)(i) is allowable even for associate members, reversing the lower authorities' orders.

The Tribunal held that the PCIT erred in exercising powers under Section 263 as the AO had already conducted necessary inquiries regarding the interest expenditure during the assessment. The PCIT cannot assume jurisdiction on the same issue if the AO has made proper verification.

The Tribunal held that cash deposits made during the demonetization period can be accepted if the source is explained. Since the assessee provided evidence for the source of the deposits, the remaining addition sustained by the CIT(A) should be deleted.

The Tribunal held that the basic factual matrix is not in dispute, with the assessee operating as a contract manufacturer supplying goods to its AE (GLO), which then sells to Nike. The revenue sharing is 90% to the assessee and 10% to GLO. The Tribunal found that the TPO's proposed overall adjustment of Rs. 60.50 Crores for all three years significantly exceeded 100% of the revenue ultimately realized by the group from Nike. This was deemed unjustified, especially considering the APA for subsequent years, which agreed that the ALP would not exceed 100% of the sale consideration receivable from the ultimate customer. Therefore, the Tribunal directed the TPO to restrict the TP adjustment for all three years to 100% of the sale consideration receivable from Nike, which the assessee's tabulation indicated as Rs. 31.49 Crores. The TPO was instructed to verify these figures and restrict the adjustment accordingly. The Tribunal also held that no economic adjustment would be available to the assessee. The ratio decidendi is that TP adjustments should be capped at the ultimate revenue realized by the group from the independent customer, especially when an APA for subsequent years sets such a precedent, and the proposed adjustments are disproportionately high.

The Tribunal held that the basic factual matrix is not in dispute, with the assessee operating as a contract manufacturer supplying goods to its AE (GLO), which then sells to Nike. The revenue sharing is 90% to the assessee and 10% to GLO. The Tribunal found that the TPO's proposed overall adjustment of Rs. 60.50 Crores for all three years significantly exceeded 100% of the revenue ultimately realized by the group from Nike. This was deemed unjustified, especially considering the APA for subsequent years, which agreed that the ALP would not exceed 100% of the sale consideration receivable from the ultimate customer. Therefore, the Tribunal directed the TPO to restrict the TP adjustment for all three years to 100% of the sale consideration receivable from Nike, which the assessee's tabulation indicated as Rs. 31.49 Crores. The TPO was instructed to verify these figures and restrict the adjustment accordingly. The Tribunal also held that no economic adjustment would be available to the assessee. The ratio decidendi is that TP adjustments should be capped at the ultimate revenue realized by the group from the independent customer, especially when an APA for subsequent years sets such a precedent, and the proposed adjustments are disproportionately high.

The Tribunal held that the basic factual matrix is not in dispute, with the assessee operating as a contract manufacturer supplying goods to its AE (GLO), which then sells to Nike. The revenue sharing is 90% to the assessee and 10% to GLO. The Tribunal found that the TPO's proposed overall adjustment of Rs. 60.50 Crores for all three years significantly exceeded 100% of the revenue ultimately realized by the group from Nike. This was deemed unjustified, especially considering the APA for subsequent years, which agreed that the ALP would not exceed 100% of the sale consideration receivable from the ultimate customer. Therefore, the Tribunal directed the TPO to restrict the TP adjustment for all three years to 100% of the sale consideration receivable from Nike, which the assessee's tabulation indicated as Rs. 31.49 Crores. The TPO was instructed to verify these figures and restrict the adjustment accordingly. The Tribunal also held that no economic adjustment would be available to the assessee. The ratio decidendi is that TP adjustments should be capped at the ultimate revenue realized by the group from the independent customer, especially when an APA for subsequent years sets such a precedent, and the proposed adjustments are disproportionately high.

The Tribunal found that the Revenue was unclear about the applicable section for the addition. Since the nature of the transaction was not clearly established by the Revenue, the addition could not be sustained.

The Tribunal held that substantial investment in the new asset within the stipulated period is sufficient for claiming deduction under Section 54F, even if construction is delayed due to the contractor. It was also held that depositing the unappropriated capital gains in the Capital Gains Account Scheme before the due date of filing the return is not mandatory if a substantial portion is invested.

The Tribunal held that substantial investment in the new asset within the stipulated period is sufficient for claiming deduction under Section 54F, even if construction is delayed due to the contractor. It was also held that depositing the unappropriated capital gains in the Capital Gains Account Scheme before the due date of filing the return is not mandatory if a substantial portion is invested.

The Tribunal held that substantial investment in the new asset within the stipulated period is sufficient for claiming deduction under Section 54F, even if construction is delayed due to the contractor. It was also held that depositing the unappropriated capital gains in the Capital Gains Account Scheme before the due date of filing the return is not mandatory if a substantial portion is invested.

The Tribunal held that converting loans into donations, when paid through proper banking channels and acknowledged by the trust with proper receipts, constitutes a valid donation for the purpose of Section 80G deduction. The AO and CIT(A) had misunderstood the nature of the transaction.

The Tribunal held that converting loans into donations, when paid through proper banking channels and acknowledged by the trust with proper receipts, constitutes a valid donation for the purpose of Section 80G deduction. The AO and CIT(A) had misunderstood the nature of the transaction.

The Tribunal held that the assessee had satisfied the conditions for claiming deduction under Section 10B, as steps were taken for ratification of the STPI Director's approval. The ratio of the Supreme Court decision in CIT vs Yokogawa India Ltd. regarding computation of eligible profit was also applied.

The Tribunal dismissed the assessee's appeal regarding freight expenses and travelling expenses due to lack of evidence. The appeal by the Revenue was dismissed as not maintainable due to a CBDT circular on tax effect.

The Tribunal held that the CIT(A) violated Rule 46A by not calling for a remand report before deciding issues based on assessee submissions. Therefore, the issues of understatement of income, lease rental income, and prior period expenses were remitted back to the Assessing Officer for fresh adjudication.

The Tribunal held that the CIT(A) violated Rule 46A by not calling for a remand report before deciding issues based on assessee submissions. Therefore, the issues of understatement of income, lease rental income, and prior period expenses were remitted back to the Assessing Officer for fresh adjudication.

The Tribunal found that the CIT(A) had violated Rule 46A by not calling for a remand report before deciding issues based on detailed submissions. Therefore, the matters related to understatement of income, lease rental income, and prior period expenses were remitted back to the Assessing Officer for fresh adjudication.

The Tribunal allowed the appeal on the issue of capital introduction, finding the explanation sufficient. On the disallowance of notional interest, the Tribunal deleted the addition, stating no evidence of diversion of interest-bearing funds was presented. However, the interest on TDS was confirmed as not deductible.

The Tribunal dismissed the assessee's appeal regarding freight expenses and travelling expenses due to lack of evidence. The appeal by the Revenue was dismissed as not maintainable due to a CBDT circular on tax effect.

The Tribunal found that the CIT(A) granted relief without properly appreciating the facts and directed a fresh adjudication. The issue of Rs. 100 Lacs given to another trust is consequential and needs re-adjudication.

The Tribunal held that the CIT(A) violated Rule 46A by not calling for a remand report before deciding issues based on assessee submissions. Therefore, the issues of understatement of income, lease rental income, and prior period expenses were remitted back to the Assessing Officer for fresh adjudication.

The Tribunal held that since the cash deposits were already assessed in the hands of the father, a joint account holder, making a protective addition in the assessee's hands was not warranted. The AO had taken a possible view by not making an addition in the assessee's case, which could not be considered erroneous.

The Tribunal held that the assessee's explanation for accepting specified bank notes after the demonetization date was reasonable, considering the nature of the business. The Tribunal also noted that there was no blanket prohibition on receiving demonetized currency notes until December 31, 2016.

The Tribunal upheld the CIT(A)'s decision to tax advance storage fees in the year of receipt, finding no error in the reasoning. Regarding scientific research expenditure, the Tribunal confirmed the AO's disallowance of amounts not certified by the competent authority and upheld the CIT(A)'s partial relief.

The Tribunal held that the appeal should be partly allowed. While acknowledging the assessee's submission that credit periods ranging from 60 to 120 days were negotiated and mentioned on invoices, the Tribunal did not fully accept the assessee's claim for a 120-day credit period. Instead, the Tribunal directed the Ld. TPO to allow a credit period of 60 days and re-compute the impugned adjustment. The reasoning was that the assessee's plea for a 120-day credit period was not fully substantiated, but the TPO's adoption of a 30-day credit period was also not considered appropriate. The ratio decidendi is that in the absence of a clear contractual agreement, a reasonable credit period, considering past practices and invoice mentions, should be allowed for transfer pricing adjustments on overdue balances. The operative direction is to re-compute the adjustment by allowing a 60-day credit period.

The Tribunal held that the provision for leave encashment, if already disallowed by the assessee in computation of income, should not be added back to book profits. Ex-gratia payments were allowed based on jurisdictional High Court decisions. The classification of rural branches for deduction under Section 36(1)(viia) was to be done based on published census data, including provisional figures.

The Tribunal held that the provision for leave encashment, if already disallowed by the assessee, should not be added back to book profits. Ex-gratia payments were allowed based on High Court decisions. The classification of rural branches for deduction under Section 36(1)(viia) was to be done based on published census data, even if provisional. Deduction under Section 36(1)(viii) was to be computed consistently with earlier years.

The Tribunal held that the replacement of a distinct piece of machinery like the HF Reactor constitutes capital expenditure, not revenue expenditure or current repairs. The accounting treatment by the assessee also indicated its capital nature.

The Tribunal held that deduction under Section 80IAB is only available if the gross total income includes profits and gains derived from the specific business activity, which was not the case here as the income was solely from 'other sources' (interest income). The disallowance under Section 14A was upheld but could not be added back while computing book profits.

The Tribunal held that the assessee had sufficient sources to explain the investment in property, as evidenced by a cash flow statement showing available funds exceeding the investment. The CIT(A) had rightly deleted the addition made by the AO.

The Tribunal upheld the CIT(A)'s deletion of additions related to unexplained jewellery and expenditure, finding no error in the reasoning. The addition related to unexplained investment in property was dismissed as infructuous due to settlement under the Vivad Se Vishwas scheme.

The Tribunal held that while Section 201(3) prescribes time limits for payments to residents, no specific time limit exists for payments to non-residents. However, orders must be passed within a reasonable time to uphold principles of natural justice.