ITAT Chennai Judgments — October 2023

The Tribunal found that neither the AO nor the assessee had fully proven their case. While the CIT(A) rejected the gift affidavit without cogent reasons, the assessee also failed to substantiate the gift with other evidence. Therefore, the Tribunal directed the AO to estimate the income for the cash deposit.

The Tribunal directed the assessee to file fresh condonation petitions with affidavits before the CIT(A). The CIT(A) was instructed to consider these petitions and pass orders in accordance with the law.

The Tribunal directed the assessee to file fresh condonation petitions with affidavits before the CIT(A). The CIT(A) was instructed to consider these petitions and pass orders in accordance with the law.

The Tribunal directed the assessee to file fresh condonation petitions with affidavits before the CIT(A). The CIT(A) was instructed to consider these petitions and pass orders in accordance with the law.

The Tribunal held that the CIT(A) dismissed the appeal without affording a reasonable opportunity of hearing, violating principles of natural justice. The order of the CIT(A) was set aside.

The Tribunal held that the CIT(A) should have decided the appeal on merits, even if the assessee was not diligently pursuing it. The order of the CIT(A) was set aside.

The Tribunal held that the assessee failed to prove the source of the cash deposits, as no land purchase agreement was produced and the cash book indicated a negative balance. The explanation provided was not acceptable.

The Tribunal upheld the CIT(A)'s decision, dismissing the assessee's appeal. The Tribunal found that the assessee failed to provide evidence for the registration charges and the higher cost of acquisition claimed, agreeing with the lower authorities.

The Tribunal accepted the submissions of both parties and dismissed the appeal. The appeal was dismissed solely on the grounds of being a duplicate filing.

The Tribunal held that the issue was covered by previous decisions of the Tribunal in the assessee's own case, where it was established that when interest-free funds (like accumulated profits) exceed interest-free loans, the loans are presumed to be from such interest-free funds. Therefore, the disallowance of proportionate interest was deleted.

The Tribunal found that the assessee had not produced sufficient evidence before the AO. While the CIT(A) accepted additional evidence, the Tribunal felt a fresh examination was necessary. Therefore, both issues were remanded back to the AO for fresh adjudication.

The Tribunal held that the issue was covered by previous decisions of the Tribunal in the assessee's own case. It was observed that the accumulated profits and reserves exceeded the interest-free loans, implying the advances were from non-borrowed funds.

The Tribunal found that neither the AO nor the CIT(A) properly considered the claim for deduction under Section 11 and the additions made under Section 69B. Since the assessee was not given a proper opportunity to be heard and the CIT(A)'s order was non-speaking, the matter was remanded.

The Tribunal held that the cash deposits were sufficiently explained by the cash sales made during October and early November 2016, which were supported by invoices, stock records, and GST returns. The tribunal found no evidence to suggest the cash sales were not genuine.

The Tribunal noted that the assessee had substantial interest-free funds exceeding the investments made in shares. It also considered the revised working provided by the assessee for disallowance. The Tribunal found that the disallowance computed by the AO was excessive.

The Tribunal held that the addition for the shortage of sources of Rs. 6,62,783/- was justified as the assessee admitted to the shortage. However, the addition of Rs. 20,40,000/- received as advance was deleted, following a precedent where such deposits backed by business receipts and identifiable persons were allowed.

The Tribunal held that the Assessing Officer and the CIT(A) violated the principles of natural justice by not providing a reasonable opportunity of being heard to the assessee. The orders were set aside.

The Tribunal condoned the delay due to its small nature and reasonable cause. It found that no proper hearing notice was issued by the CIT(A) and the appeal was not discussed on merits, thus violating principles of natural justice.

The Tribunal held that the Erode District Central Co-operative Bank is governed by the Tamil Nadu Co-operative Societies Act and not solely by RBI regulations in a manner that would disentitle the assessee to the deduction. Therefore, the assessee is eligible for the deduction under Section 80P(2)(d).

The Tribunal noted that the assessee had substantial interest-free funds exceeding the investments made in shares. It also considered the revised working provided by the assessee for disallowance. The Tribunal found that the disallowance computed by the AO was excessive.

The Tribunal held that additions cannot be made solely on the basis of a statement recorded during a survey unless supported by corroborative evidence. The CIT(A) had rightly deleted the additions made by the AO.

The Tribunal held that additions cannot be made solely on the basis of a statement recorded during a survey unless supported by corroborative evidence. The CIT(A) had rightly deleted the additions made by the AO.

The Tribunal held that additions cannot be made solely on the basis of a statement recorded during a survey unless supported by corroborative evidence. The CIT(A) had rightly deleted the additions made by the AO.

The Tribunal held that while STPI approval is necessary, ratification by the Board appointed by the Central Government is also mandatory for Section 10B exemption. The assessee failed to provide evidence of this ratification for both units.

The Tribunal held that additions cannot be made solely on the basis of a statement recorded during a survey unless supported by corroborative evidence. The CIT(A) had rightly deleted the additions made by the AO.

The Tribunal found that the Assessing Officer's estimation of 6% profit was not justified by comparable cases. While the assessee claimed 2-3% commission income, no evidence was provided. The Tribunal directed the Assessing Officer to estimate 3% income on total cash deposits as a reasonable profit.

The Tribunal held that for AY 2012-13 and 2013-14, the assessee's interest-free funds were sufficient to cover the investments yielding exempt income. The Tribunal noted that the assessee provided revised working showing a significantly lower disallowance under Section 14A read with Rule 8D(2)(ii) and 8D(2)(iii). The Revenue's representative could not controvert the revised figures and requested a remand to the AO for considering the availability of interest-free funds. The Tribunal accepted the revised working and restricted the disallowance. For AY 2009-10, the Tribunal held that the compensatory charges paid for the credit period were not in the nature of 'interest' contemplated under Section 194A for TDS purposes. Following the jurisdictional ITAT's order on the same issue for the same assessee, the Tribunal confirmed the CIT(A)'s deletion of disallowance. Regarding the transfer pricing issue for AY 2013-14, the Tribunal, having decided a similar issue for AY 2009-10, confirmed the CIT(A)'s order deleting the addition. The operative direction for AY 2012-13 and 2013-14 regarding Section 14A was to restrict the disallowance based on the revised working. For AY 2009-10, the disallowance under Section 40(a)(ia) was deleted. For AY 2013-14, the transfer pricing addition was deleted.

The Tribunal held that for AY 2012-13 and 2013-14, the assessee's interest-free funds were sufficient to cover the investments yielding exempt income. The Tribunal noted that the assessee provided revised working showing a significantly lower disallowance under Section 14A read with Rule 8D(2)(ii) and 8D(2)(iii). The Revenue's representative could not controvert the revised figures and requested a remand to the AO for considering the availability of interest-free funds. The Tribunal accepted the revised working and restricted the disallowance. For AY 2009-10, the Tribunal held that the compensatory charges paid for the credit period were not in the nature of 'interest' contemplated under Section 194A for TDS purposes. Following the jurisdictional ITAT's order on the same issue for the same assessee, the Tribunal confirmed the CIT(A)'s deletion of disallowance. Regarding the transfer pricing issue for AY 2013-14, the Tribunal, having decided a similar issue for AY 2009-10, confirmed the CIT(A)'s order deleting the addition. The operative direction for AY 2012-13 and 2013-14 regarding Section 14A was to restrict the disallowance based on the revised working. For AY 2009-10, the disallowance under Section 40(a)(ia) was deleted. For AY 2013-14, the transfer pricing addition was deleted.

The Tribunal noted that the assessee had substantial interest-free funds exceeding the investments made in shares. It also considered the revised working provided by the assessee for disallowance. The Tribunal found that the disallowance computed by the AO was excessive.

The Tribunal held that the assessee is entitled to deduction on average aggregate rural advances as computed under Rule 6ABA, not just incremental advances. This decision was based on favorable rulings from the Madras High Court and Karnataka High Court.

The tribunal held that no TDS was required on reimbursement of secondment costs as tax was already deducted under Section 192. It also held that software is an integral part of the computer system and eligible for the same depreciation rate as computers.

The Tribunal held that the advances given for procuring marine products, which were returned in cash, constituted a valid source for the cash deposits. The Tribunal also accepted the assessee's method of calculating peak credit across all bank accounts.

The Tribunal held that the Ld. CIT(A) did not err in directing the AO/TPO to reconsider the annual reports of certain comparable entities, as this was a direction to reconsider and re-compute margins, not a set aside. Regarding the inclusion/exclusion of comparables for Market Support Services: (i) Power Systems Operations Corp. Ltd. was rightly excluded by the CIT(A) due to its governmental nature, high turnover, and primary function of power grid integration, which is dissimilar to the assessee's limited marketing support services. (ii) Apitco Ltd. was rightly excluded as it provides high-end consultancy services, dissimilar to the assessee's functions, as supported by the decision in Philip Morris Services India S.A. (iii) Global Procurement Consultants Ltd. was rightly excluded because it provides high-end technical consultancy to institutions like the World Bank, which is different in magnitude and objective from the assessee's marketing functions. (iv) SEL and ARMS segments of India Tourism Development Corporation Ltd. were rightly included by the CIT(A) as per the cited decision in Eli Lilly & Co. (India) P. Ltd., focusing on comparable segments. (v) EDCIL Ltd. and In House Production Ltd. were rightly included as they were accepted as comparables by the TPO in earlier Assessment Years (2009-10 and 2010-11) and no change in their functional profile was demonstrated. The Tribunal concurred with the CIT(A)'s deletion of disallowance of 50% of Advertisement and Publicity expenses, as it was covered by the decision in the assessee's own case for AY 2008-09, holding the expenditure to be revenue in nature. The Tribunal also concurred with the CIT(A)'s deletion of disallowance of management fees paid to the AE, holding that once ALP is determined by the TPO, no separate disallowance by the AO is permissible. The appeal by the Revenue was dismissed.

The Tribunal held that the assessee had indeed written off individual debtors in the Bad Debts Written-off ledger, and the aggregate figure was debited to the Profit and Loss Account. Therefore, the disallowance was not sustainable.

The Tribunal held that since the cars were part of a larger block of assets eligible for depreciation and the sale consideration was reduced from the block, the profit on the sale of the cars could not be treated as the assessee's income.