ITAT Chennai Judgments — May 2023

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal deleted the addition towards inadequate drawings, finding it to be without basis. The Tribunal also noted that the assessee's agricultural land was acquired by the Highway Department, and the assessee computed Long Term Capital Gain based on the fair market value as on 01.04.1981.

The Tribunal found that the CIT(A) had not adjudicated the issues on merits. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication.

The Tribunal held that the Assessing Officer erred in making additions for cash deposits as unexplained investment. The Tribunal found that the assessee had explained the source of deposits as ordinary business sales accounted for in its books, and there was no significant deviation in cash deposits during the demonetization period compared to earlier periods.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal upheld the additions made by the AO/TPO on account of transfer pricing adjustments for agency commission. However, it allowed the deduction under Section 80JJAA for subsequent assessment years, remanding the issue to the AO for verification.

The Tribunal held that the downward transfer pricing adjustment made by the AO/TPO, reducing the assessee's claim under Section 80IA, was erroneous. The Tribunal noted that an identical issue had been considered in the assessee's own case for Assessment Year 2011-12, where the Tribunal, following judicial precedents including decisions of the Bombay High Court in Reliance Industries Ltd. and Chhattisgarh High Court in Godavari Power and Ispat Ltd., held that for computing deduction under Section 80IA for generation of power for captive consumption, the rate at which the electricity board supplies power to its consumers should be considered, rather than the rate at which power generating companies supply power to the electricity board. The Tribunal further observed that the CIT(A) had deleted additions made by the AO by holding that the market value of captively consumed power should be computed considering the rate to a consumer in the open market, not the rate at which power could be sold to SEBs. Therefore, the Tribunal found no error in the CIT(A)'s deletion of additions and directed the AO to delete the additions made towards TP adjustment in respect of the deduction claimed under Section 80IA. The appeal filed by the assessee was allowed.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal held that transfer under Section 2(47)(v) of the Income Tax Act, read with Section 53A of the Transfer of Property Act, occurs when possession is taken by the transferee. Since possession was handed over in FY 2014-15 (relevant to AY 2015-16), the capital loss claim for AY 2015-16 was valid.

The Tribunal addressed multiple issues. Regarding the transfer pricing adjustment on agency commission, the Tribunal upheld the findings of the DRP/Ld. CIT(A), finding no error in their reasons to sustain the additions made by the AO/TPO. Thus, the grounds taken by the assessee for AYs 2009-10, 2011-12, and 2014-15 concerning this issue were rejected. For the disallowance under Section 80JJAA concerning additional wages paid to newly appointed employees, the Tribunal noted that the law allows a deduction of 30% of additional employee cost for three assessment years. The AO had erred by not allowing the deduction for subsequent years. The Tribunal set aside this issue to the file of the AO for all three assessment years (2011-12, 2014-15, and 2015-16) with directions to verify the assessee's claim and allow it if the conditions specified in sub-section (2) of Section 80JJAA are satisfied. The grounds related to disallowance under Section 36(1)(v)(a) (employee's contribution to PF & ESI) for AY 2011-12 and additional depreciation on Air Circuit Breakers under Section 32(1)(iia) for AYs 2011-12 and 2014-15 were treated as dismissed as withdrawn by the assessee. The Tribunal did not expressly leave any issue undecided.

The Tribunal condoned the delay in filing the appeal due to reasonable cause. It set aside the CIT(A)'s order and remitted the matter back to the CIT(A) to provide the assessee with another opportunity to be heard.

The Tribunal held that the mistakes were inadvertent errors by the accountant and a bonafide belief regarding the head of income. Since there was no difference in tax liability when income was offered under the correct head, penalty under Section 270A was not warranted.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal addressed multiple issues. Regarding the transfer pricing adjustment on agency commission, the Tribunal upheld the findings of the DRP/Ld. CIT(A), finding no error in their reasons to sustain the additions made by the AO/TPO. Thus, the grounds taken by the assessee for AYs 2009-10, 2011-12, and 2014-15 concerning this issue were rejected. For the disallowance under Section 80JJAA concerning additional wages paid to newly appointed employees, the Tribunal noted that the law allows a deduction of 30% of additional employee cost for three assessment years. The AO had erred by not allowing the deduction for subsequent years. The Tribunal set aside this issue to the file of the AO for all three assessment years (2011-12, 2014-15, and 2015-16) with directions to verify the assessee's claim and allow it if the conditions specified in sub-section (2) of Section 80JJAA are satisfied. The grounds related to disallowance under Section 36(1)(v)(a) (employee's contribution to PF & ESI) for AY 2011-12 and additional depreciation on Air Circuit Breakers under Section 32(1)(iia) for AYs 2011-12 and 2014-15 were treated as dismissed as withdrawn by the assessee. The Tribunal did not expressly leave any issue undecided.

The Tribunal found that the assessee had filed additional evidence before it. Therefore, the Tribunal set aside the orders of the lower authorities and remitted the matter back to the Assessing Officer for re-examination of the additional evidence.

The Tribunal held that additions made by the Assessing Officer towards unexplained investment in the building cannot be sustained as they were not supported by any incriminating material found during the search. Since the assessments for the relevant years were completed and unabated at the time of the search, no additions could be made without such material.

The Tribunal held that no disallowance under Section 14A is permissible when the assessee has not earned any exempt income. The CIT(A)'s order to delete the addition was upheld, following the jurisdictional High Court's decision in CIT v. Chettinad Logistics Pvt. Ltd.

The Tribunal upheld the additions made by the AO/TPO on account of transfer pricing adjustments for agency commission. However, it allowed the deduction under Section 80JJAA for subsequent assessment years, remanding the issue to the AO for verification.

The Tribunal held that additions made by the Assessing Officer towards unexplained investment in the building cannot be sustained as they were not supported by any incriminating material found during the search. Since the assessments for the relevant years were completed and unabated at the time of the search, no additions could be made without incriminating evidence.

The Tribunal held that neither the AO nor the assessee could fully justify their positions regarding the sale price of plots. Therefore, the Tribunal directed the AO to estimate the sale price based on the higher selling price received by the assessee during these assessment years, specifically Rs. 400 per sq. ft.

The Tribunal dismissed the appeal as the assessee was absent for multiple hearings. The grounds regarding assessment reopening and movie loss were also dismissed on merits.

The tribunal held that the disallowance made under Section 36(1)(va) is specific and cannot be claimed alternatively under the residuary Section 37(1). The assessee's appeal was not accepted.

The Tribunal found that the CIT(A) did not adjudicate the appeal on merits and may not have considered the assessee's written submissions. The matter was set aside and remanded back to the CIT(A) for fresh adjudication.

The tribunal remitted the issue of difference between gross total income and Form 26AS to the AO for reconciliation. The disallowance for want of TDS on rental payments was also restored to the AO for substantiation. The addition for legal expenses was upheld.

The Tribunal held that filing of Form 67 is directory and not mandatory. The assessee was directed to furnish Form 67 to the AO for verification and grant of tax credit if found in order.

The Tribunal held that substantial compliance of law was made by the assessee as the Tax Audit Report was obtained within the extended time and furnished during assessment proceedings. Therefore, the penalty was not fit for levy.

The Tribunal held that the authorities should have waited for the decision on the assessee's condonation petition filed before the CBDT. The matter was set aside and remitted back to the CIT(A) to await the CBDT's decision.

The Tribunal held that the authorities should have waited for the decision on the assessee's condonation petition filed before the CBDT. The matter was set aside and remitted back to the CIT(A) to await the CBDT's decision.

The Tribunal held that the royalty payments made to M/s. Chevron Oronite Company LLC USA are revenue expenditure, not resulting in the acquisition of intangible assets. This decision was based on the consistent view of the Tribunal in the assessee's own case for earlier assessment years, where it was held that running royalty, payable only upon sales, has no direct nexus with the manufacture of the product and is thus revenue expenditure. The Tribunal respectfully followed the coordinate bench's decision and upheld the CIT(A)'s order, dismissing the Revenue's ground on this issue. Consequently, the addition made on account of royalty payment for all four assessment years was directed to be deleted. The Tribunal also upheld the CIT(A)'s deletion of additions towards royalty, dismissing the Revenue's appeal on this point. The appeals filed by the assessee for AYs 2011-12, 2012-13, and 2013-14 were partly allowed, and the appeals filed by the Revenue for AYs 2011-12 to 2013-14 were dismissed. The judgment does not explicitly record a decision on the transfer pricing adjustment or the depreciation disallowance, implying these issues were either resolved in favor of the assessee by the CIT(A) or not pressed/decided by the Tribunal in the context of the final outcome.

The Tribunal held that the royalty payments made to M/s. Chevron Oronite Company LLC USA are revenue expenditure, not resulting in the acquisition of intangible assets. This decision was based on the consistent view of the Tribunal in the assessee's own case for earlier assessment years, where it was held that running royalty, payable only upon sales, has no direct nexus with the manufacture of the product and is thus revenue expenditure. The Tribunal respectfully followed the coordinate bench's decision and upheld the CIT(A)'s order, dismissing the Revenue's ground on this issue. Consequently, the addition made on account of royalty payment for all four assessment years was directed to be deleted. The Tribunal also upheld the CIT(A)'s deletion of additions towards royalty, dismissing the Revenue's appeal on this point. The appeals filed by the assessee for AYs 2011-12, 2012-13, and 2013-14 were partly allowed, and the appeals filed by the Revenue for AYs 2011-12 to 2013-14 were dismissed. The judgment does not explicitly record a decision on the transfer pricing adjustment or the depreciation disallowance, implying these issues were either resolved in favor of the assessee by the CIT(A) or not pressed/decided by the Tribunal in the context of the final outcome.

The Tribunal held that royalty payments made to Chevron Oronite Company LLC USA were revenue expenditure, not resulting in the acquisition of intangible assets. The Tribunal also upheld the Commissioner of Income Tax (Appeals)'s decision to delete additions made on account of royalty payments.

The Tribunal held that royalty payments made to Chevron Oronite Company LLC USA were revenue expenditure, not resulting in the acquisition of intangible assets. The Tribunal also upheld the Commissioner of Income Tax (Appeals)'s decision to delete additions made on account of royalty payments.

The Tribunal held that the show-cause notice for penalty was vague and did not specify the exact charge (concealment of income or furnishing inaccurate particulars). This failure to frame a specific charge vitiates the penalty proceedings.

The Tribunal held that the CIT(A) was correct in deleting the addition. The assessee had sufficient cash in hand as per the books, and the deposits were made within the government-allowed period, thus not constituting unexplained credit.

The Tribunal held that for the 'peak credit theory' to apply, the assessee must demonstrate the necessity for its adoption and provide evidence for periodical cash deposits and withdrawals. Since the assessee failed to establish this before the AO, the matter was remanded.

The Tribunal held that disallowing salary expenses solely because payment was made later in the month or that employees were agricultural laborers was flimsy. For canteen expenses, while the assessee did not provide complete evidence, disallowing the entire amount without factual findings was unjustified.

The Tribunal held that for the 'peak credit theory' to apply, the assessee must demonstrate the necessity for its adoption and provide evidence for periodical cash deposits and withdrawals. Since the assessee failed to establish this before the AO, the matter was remanded.

The Tribunal held that Section 41(1) is not applicable as the share application money is in the nature of a capital receipt and not a trading liability. The assessee had not claimed any deduction or allowance related to this amount in earlier years.

The Tribunal held that the Assessing Officer failed to frame a specific charge against the assessee in the show-cause notice and the penalty order. Consequently, the penalty was not sustainable in law.

The Tribunal decided the issues as follows: 1. **Employee Contribution to PF:** The judgment does not explicitly record a decision on this issue. However, the facts state that the DRP upheld the disallowance, and the final assessment order included this addition. The grounds of appeal mention this issue, but the operative part of the judgment does not address it directly. Therefore, it appears this issue was not decided on merits or was decided in line with the DRP's directions. 2. **Imputation of Interest on Outstanding Receivables:** The Tribunal held that the delay in realization of receivables from an AE constitutes an international transaction. It directed the AO/TPO to adopt LIBOR + 200 basis points as the appropriate rate for imputing interest. Furthermore, the AO was directed to allow a normal credit period allowed by the assessee or an agreed credit period between the assessee and AE, and if no agreed period exists, then the standard credit period allowed in the industry. This decision follows the assessee's own case and the principle that a credit period should be considered. 3. **Corporate Guarantee:** The Tribunal held that corporate guarantee given by an entity to its AE falls under the definition of international transactions in terms of Section 92B of the Act and needs to be benchmarked. Following the decision in Mega Soft Ltd vs DCIT and the Bombay High Court in CIT vs Everest Kanto Cylinders Ltd, the Tribunal directed the AO to benchmark the corporate guarantee commission at 0.5% on the total corporate guarantee given by the assessee to its AE. The Tribunal found the AO's rate of 1% to be arbitrary and followed the precedent of 0.5% for benchmarking. **Operative Directions:** The AO is directed to recompute the interest on overdue receivables and the corporate guarantee commission as per the Tribunal's directions.

The Tribunal held that royalty payments made to Chevron Oronite Company LLC USA were revenue expenditure and not capital expenditure eligible for depreciation. The TPO's downward adjustment for transfer pricing was also considered in light of previous year's treatment.

The Tribunal held that the royalty payments made to M/s. Chevron Oronite Company LLC USA are revenue expenditure, not resulting in the acquisition of intangible assets. This decision was based on the consistent view of the Tribunal in the assessee's own case for earlier assessment years, where it was held that running royalty, payable only upon sales, has no direct nexus with the manufacture of the product and is thus revenue expenditure. The Tribunal respectfully followed the coordinate bench's decision and upheld the CIT(A)'s order, dismissing the Revenue's ground on this issue. Consequently, the addition made on account of royalty payment for all four assessment years was directed to be deleted. The Tribunal also upheld the CIT(A)'s deletion of additions towards royalty, dismissing the Revenue's appeal on this point. The appeals filed by the assessee for AYs 2011-12, 2012-13, and 2013-14 were partly allowed, and the appeals filed by the Revenue for AYs 2011-12 to 2013-14 were dismissed. The judgment does not explicitly record a decision on the transfer pricing adjustment or the depreciation disallowance, implying these issues were either resolved in favor of the assessee by the CIT(A) or not pressed/decided by the Tribunal in the context of the final outcome.

The Tribunal held that royalty payments made to Chevron Oronite Company LLC USA were revenue expenditure, not resulting in the acquisition of intangible assets. The Tribunal also upheld the Commissioner of Income Tax (Appeals)'s decision to delete additions made on account of royalty payments.

The Tribunal condoned the delay in filing the appeal. Regarding the additions for cash deposits of Rs. 27 lakhs and Rs. 9.7 lakhs, the Tribunal found that the assessee's explanations and evidence required further verification by the AO.

The Tribunal upheld the PCIT's order, finding that the Assessing Officer (AO) had failed to conduct proper inquiries regarding the diversion of interest-bearing funds to group companies. This lack of inquiry rendered the assessment order erroneous and prejudicial to the revenue's interest.