ITAT Chennai Judgments — November 2024

The Tribunal condoned the delay of 1603 days, accepting the assessee's reason that its staff were not well-trained in tax matters and that there was a lapse in filing the appeal on time. The Tribunal also noted the pandemic-related relaxations for condonation of delay.

The Tribunal held that the appeal filed by the Revenue is not maintainable as the tax effect involved is less than the threshold limit prescribed by the latest CBDT circular. The objections raised by the assessee's AR were found to be correct.

The Tribunal held that the assessee received the rent amounts in subsequent years and offered them to tax in the year of receipt. Regarding Mobivil Technologies India Pvt. Ltd., it was noted that actual rent received and TDS deducted were not disputed. The Tribunal found that the Assessing Officer erred in considering the agreed rent instead of the actual rent received.

The Tribunal noted that the tax effect in the appeal was less than the revised monetary limit of Rs. 60 Lakhs. Therefore, the appeal was dismissed as withdrawn or not maintainable, in light of the CBDT circular. The Cross Objection was dismissed as infructuous.

The Tribunal held that the AO's order was based on an inspector's report that was not confronted to the assessee, thus violating the principles of natural justice. The Tribunal also noted that the additional evidence submitted by the assessee was crucial for deciding the appeal and that the AO had not properly examined the facts of the case. The distribution of food packets was considered a valid application of income for a charitable trust.

The Tribunal condoned the delay in filing the appeal considering the assessee's status as a cooperative society and the training limitations of its staff. The appeals were remitted back to the CIT(A) for adjudication on merits, subject to the assessee paying a cost of Rs. 5,000/-.

The Tribunal held that the AO's approach was hasty and lacked application of mind, as he did not properly examine the submissions and evidence provided by the assessee. The Tribunal also noted that the CIT(A) merely confirmed the AO's findings without independent analysis. For the unsecured loans, the Tribunal found that the AO's and CIT(A)'s conclusions were not based on thorough investigation, and the assessee had not been given a fair opportunity to present its case.

The ITAT noted that the assessee is an NRI and had not participated in previous appellate proceedings due to her husband's demise and her NRI status, leading to previous orders being passed ex-parte. The Tribunal acknowledged the undertaking by the assessee's AR to participate diligently in future proceedings.

The Tribunal noted that the assessee had opted for the Direct Tax Vivad Se Vishwas Scheme, 2024. Consequently, the appeal was dismissed with a liberty to reinstate it if the scheme application was not accepted.

The Tribunal noted that the assessee had maintained proper books of accounts, which were audited and not rejected by the lower authorities. The assessee had also provided cash flow statements and opening cash balances to support the source of the deposited funds. The Tribunal found that the AO had failed to rebut the evidence provided by the assessee and that the allegations were based on suspicion rather than concrete evidence. The Tribunal also considered previous judgments that supported the assessee's claim.

The Tribunal heard both parties and, in light of Circular No. 9/2024 dated 17.09.2024, found the revenue's appeal to be not maintainable.

The Tribunal observed that the CIT(A) reproduced the AO's findings without discussing the submissions and case laws relied upon by the assessee, and did not specifically address the disallowance under Section 40A(3). Therefore, the matter was remanded.

The Tribunal held that the Assessing Officer (AO) had applied his mind and conducted enquiries before concluding that there was no nexus between the R&D expenditure and the operations of the Assam unit, thus no allocation was required. The PCIT's invocation of Section 263 powers was not justified as it was based on a change of opinion and not a lack of inquiry by the AO. Numerous judicial precedents were cited to support this view.

For AY 2009-10, the CIT(A) allowed weighted deduction under Section 35(2AB) to the extent of Rs. 507.63 Lakhs against a claim of Rs. 551 Lakhs, and also allowed 100% deduction for revenue expenditure under Section 37(1). The disallowance under Section 14A was restricted to Rs. 1.73 Lakhs. For AY 2014-15, the deduction under Section 80IC was not allowed due to issues with R&D expenditure allocation. The Revenue's appeal was dismissed as withdrawn/not maintainable due to low tax effect.

The Tribunal held that the assessee was unable to substantiate the source of cash deposits. While the AO estimated business income at 8% of the deposits, the CIT(A) reduced it to 5%. The Tribunal found this estimation reasonable and directed the AO to apply the same 5% estimation to the demonetization deposits as well, considering the transactions occurred throughout the year and were similar in nature.

The Tribunal noted the considerable delays in filing the appeals and the failure of the assessee to provide proper documentation or representation, despite being given opportunities. Consequently, the appeals were deemed not maintainable.

The Tribunal noted that the assessee had filed written submissions explaining the mistake and sought an adjournment to upload Form 10B. Considering the facts and the interest of natural justice, the Tribunal decided to remand the matter back to the CIT(A) for fresh consideration.

The Tribunal condoned the delay, acknowledging the assessee's bonafide reasons. The Tribunal noted the assessee's undertaking to furnish documentary evidence and decided to remand the matter back to the Assessing Officer for fresh consideration.

The Tribunal found that the Assessing Officer disallowed 30% of miscellaneous expenses on estimation basis without examining the details. The CIT(A) also failed to adequately examine the details of cash payments for garden maintenance, printing & stationery, and subscriptions. The Tribunal accepted the assessee's submissions regarding these cash payments.

The Tribunal found merit in the assessee's argument that the Assessing Officer should have applied the percentage method, as pleaded before the CIT(A). Therefore, the Tribunal set aside the order of the CIT(A) and remanded the matter back to the Assessing Officer.

The Tribunal noted that the assessee had grounds for condonation of delay but the Id. CIT(A) dismissed the appeal. Considering the submissions and in the interest of justice, the Tribunal decided to remand the matter.

The Tribunal noted that the assessee neither appeared nor filed any adjournment application, leading to them being set ex parte. Furthermore, the appeals were filed beyond the prescribed limitation period without proper condonation, and defects were not rectified. The assessee also failed to file a Vakalat/Power of Attorney.

The Tribunal observed that the assessee was not given sufficient opportunity to file submissions with necessary documents by the CIT(A). Therefore, the Tribunal decided to remand the matter to the CIT(A) for fresh consideration.

The Tribunal, by following its own earlier decisions and those of other benches, held that the logo charges incurred by the assessee are revenue expenditure. The usage of the logo was for displaying on manufactured products for a limited period in lieu of payment, and the assessee did not acquire any capital asset or ownership rights.

The Tribunal held that the PCIT was not justified in invoking Section 263. The AO had already examined the issue, accepted the assessee's claim based on submitted evidence, and it was not a case of lack of inquiry. The land was recorded as agricultural, and the initial assessment, though reopened, eventually accepted the return without additions, indicating the issue was considered.

The Tribunal noted that the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt Ltd held that payments for the use/resale of off-the-shelf software are not royalty. Following this precedent, the Tribunal decided that the expenditure incurred by the assessee is not royalty, and therefore, TDS deduction was not required.

The Tribunal held that the addition on account of TDS not deposited to the government account is to be decided afresh by the Assessing Officer. Regarding the disallowance of interest payment, the Tribunal found that since no interest was actually paid but was a notional book entry capitalized into work-in-progress, the addition for non-deduction of TDS was not justified and was set aside.

The Tribunal noted that the assessee claimed the invalid currencies could not be treated as income. The assessee also submitted that due to circumstances beyond their control, they could not provide documentary evidence. The Tribunal considered remanding the matter for fresh consideration.

The Tribunal held that the CIT(A)'s decision to allow weighted deduction under section 35(2AB) only to the extent certified by DSIR was not infirm. Regarding the section 80IC claim, the Tribunal confirmed the CIT(A)'s order regarding the apportionment of R&D expenditure. The Revenue's appeal was dismissed as withdrawn/not maintainable due to low tax effect, as per CBDT Circular No. 09 of 2024.

The Tribunal held that the Assessing Officer erred in computing the total income by relying on the CIT(A) order instead of the ITAT order. The Tribunal directed the AO to recompute the total income based on the loss of Rs. 1,10,49,731/- as per the ITAT order. Additionally, the AO was directed to recompute the interest u/s. 234B, considering the regular assessment date and taxes paid.

The Tribunal held that the pooja expenses of Rs. 1,03,372/- were a legitimate business expenditure, which had been claimed by the assessee and allowed by the Assessing Officer in both the original assessment and the reassessment. The Tribunal found that the PCIT's initiation of revision proceedings under Section 263 was without basis and therefore, quashed the revision order.