ITAT Chennai Judgments — February 2025

The Tribunal noted that the application for registration under Section 12AB of the Act was already remitted back to the CIT(Exemption) in a separate appeal. Considering this, and in the interest of justice and equity, the present appeal for approval under Section 80G(5) is also remitted back to the files of the CIT(Exemption) for fresh consideration on merits, with a direction to provide a reasonable opportunity of being heard to the assessee.

The Tribunal condoned a 4-day delay in filing the appeal and set aside the ex-parte order of the Ld.CIT(E), restoring the application to the Ld.CIT(E) for adjudication on merits after giving the assessee an opportunity of being heard.

The Tribunal held that the assessment proceedings were conducted in violation of natural justice, with the assessee not being given adequate time and opportunity to respond. The ITAT set aside the orders of the lower authorities and remitted the matter back to the Assessing Officer for fresh adjudication.

The Tribunal condoned the delay, holding that the notices were sent to an incorrect email address, violating natural justice. The impugned order was set aside, and the application was restored to the Ld.CIT(E) for fresh consideration.

The Tribunal condoned the delay, citing the assessee's rural background and lack of familiarity with technology, which led to them being unaware of the proceedings. The Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A) for a decision on merits.

The Tribunal noted that the assessee has opted for resolution under the DTVSV Scheme and therefore treated the appeal as dismissed as withdrawn. Liberty was granted to restore the appeal if the DTVSV resolution fails.

The Tribunal held that the reassessment proceedings were legally initiated as per amended provisions. However, the addition made under Section 56(2)(vii) was not justified because the stamp duty was paid based on the declared nature of the land as agricultural, and the difference between sale consideration and market value was less than 5%.

The Tribunal noted that the assessee had opted for the DTVSV Scheme and therefore treated the appeal as dismissed as withdrawn. Liberty was granted to restore the appeal if the DTVSV resolution failed.

The Tribunal held that the assessee failed to provide sufficient evidence to prove the non-taxability of freight payments in India. Reliance on certain board instructions and case laws was found to be misplaced due to differing facts. The addition made by the AO was upheld.

The Tribunal held that the assessee did not constitute a PE in India. Firstly, the hiring of the dredger on a bareboat charter basis did not qualify as a PE under the relevant provisions of the DTAA. The Tribunal noted that the term 'royalty' under Article 12 of the India-Netherlands DTAA (and by extension, the India-Belgium DTAA, considering the context and cited cases) does not include payments for the use or right to use industrial equipment. The Tribunal referenced judgments in Van Oord ACZ Equipment BV, DDIT v. Nederlandsche Overzee Baggermaatsehappiji BV, and M/s International Seaport Dreding Ltd., which supported the argument that bareboat charter hire charges do not constitute 'royalty'. The Tribunal also acknowledged a typographical error in the India-Belgium DTAA where 'plant' was likely intended to be 'plan' in Article 12, as per a notification. Furthermore, the Tribunal found that the AO's reliance on survey statements was misplaced, as such statements are not conclusive evidence, especially when the deponents were not subjected to cross-examination by the assessee. The Tribunal concluded that the assessee had no business connection or PE in India, rendering the attribution of profits to a PE unnecessary. Therefore, the appeal of the assessee was allowed.

The Tribunal noted the withdrawal letter and the assessee's decision to opt for the Vivad Se Vishwas Scheme. Consequently, the appeal was dismissed as withdrawn, with liberty granted to seek revival if the scheme settlement is unsuccessful.

The Tribunal noted that the assessee has opted for the resolution of dispute under the DTVSV Scheme, 2024, and therefore, treated the appeal as dismissed as withdrawn.

The Tribunal held that for completed/unabated assessments, additions under Section 153A must be based on incriminating material found during a search. Since the additions were not based on such material, they were deleted.

The Tribunal held that additions under Section 153A in respect of completed/unabated assessments must be based on incriminating material found during the search. Since the additions under Section 68 were not based on such material, they were deleted.

The Tribunal held that for completed/unabated assessments, additions under Section 153A must be based on incriminating material found during a search. Since the additions were not based on such material, they were deleted.

The Tribunal held that for completed/unabated assessments, additions under Section 153A must be based on incriminating material found during a search. Since the additions were not based on such material, they were deleted.

The Tribunal held that additions under Section 153A in respect of completed/unabated assessments must be based on incriminating material found during the search. Since the additions under Section 68 were not based on such material, they were deleted.

The Tribunal, taking into consideration the additional evidence filed by the assessee and the lack of opportunity for a hearing, decided to restore the matter to the AO. The AO is to re-examine the payments claimed as deductions under section 37.

The assessee had opted for the Vivad-se-Vishwas Scheme 2024 and filed the necessary form. Considering this, the appeal filed by the assessee was dismissed, with liberty to approach the Tribunal if any prejudice arises from the settlement.

The Tribunal allowed the provision for warranty expenses, following its own previous decisions. It also upheld the deletion of disallowance for engineering charges paid to a foreign entity, as the services were utilized outside India and not deemed to accrue or arise in India.

The Tribunal noted that the CIT(A) passed ex-parte orders without effective notice and that the facts were similar to a previous case where appeals were set aside. Considering the principle of natural justice, the Tribunal restored the appeals to the CIT(A) for fresh adjudication.

The Tribunal held that the advertisement and sales/product promotion expenses incurred by the assessee towards third parties do not constitute an international transaction with Associated Enterprises. The Tribunal relied on its co-ordinate bench's decision in the assessee's own case for Assessment Year 2012-13, which had held that such expenses do not lead to an international transaction. The reasoning was that the expenses were incurred for the assessee's own business with domestic unrelated parties and not for brand building for its AEs, especially in the absence of any specific agreement. The Tribunal also noted that the decision in Maruti Suzuki India Ltd. was relevant, and while an SLP was pending, the Tribunal was bound by its co-ordinate bench's order. Therefore, no Arm's Length Price adjustment could have been carried out on the advertisement and marketing expenditure. The grounds relating to the upward TP adjustment for AMP expenses were allowed. Grounds 4 & 5 became academic as the transactions were not considered international. The appeal was partly allowed.

The Tribunal found that the agreement for sale and the statements of third parties were crucial and needed to be confronted to the assessee. The assessment proceedings were not abated, and the AO had jurisdiction. The assessment under Section 153A was valid, and additions were rightly made in the hands of the partners as the firm's name was not in the sale documents.

The Tribunal allowed the assessee's appeals. The Tribunal noted that a coordinate bench in the assessee's own case for assessment years 2010-2011 and 2011-2012 had allowed the balance provision claimed as provision for warranty. The Tribunal reiterated its view that warranty is an integral part of a sale transaction, representing a quality assurance. It acknowledged the difficulty in precisely estimating warranty commitments and the need for a scientific method as postulated by the Hon'ble Apex Court in 314 ITR 62. The Tribunal found that the commercial expediency of allowing warranty, including scientifically calculated provisions, is well-recognized. It specifically referred to a coordinate bench decision in ITA No.953/Chny/2015, which held that provisions for warranty are allowable business expenditure because the assessee has a present obligation as a result of past events, leading to an outflow of resources with a reliable estimate of the obligation. Therefore, the disallowances made by the AO and confirmed by the CIT(A) were deleted.

The Tribunal found that the agreement for sale and the statements of third parties were crucial and needed to be confronted to the assessee. The assessment proceedings were not abated, and the AO had jurisdiction. The assessment under Section 153A was valid, and additions were rightly made in the hands of the partners as the firm's name was not in the sale documents.

The Tribunal, following its own previous decisions in similar cases, held that warranty is an integral part of a sale transaction and provisions for warranty are allowable business expenditure. The Tribunal also directed the AO to re-examine the issue of foreign TDS credit in light of the DTAA.

The Tribunal held that the revenue is empowered to impose a 60% rate of tax only for transactions from April 1, 2017, onwards, and not prior to that date. For prior transactions, the revenue is empowered to impose only a 30% rate of tax. Respectfully following the Madras High Court's decision in S.M.I.L.E. Microfinance Ltd. vs. ACIT, the Tribunal directed the AO to accept the claim of the assessee as per the return of income, as the income was already offered to tax at normal rates. The judgment noted that no argument was made on the agricultural income. Therefore, the addition of Rs.320 Lacs at the higher rate of 60% u/s 115BBE was not sustained, and the assessee's claim to offer it at normal rates was accepted. The issue regarding agricultural income was not adjudicated due to the absence of arguments.

The Tribunal noted that the CIT(A) passed ex-parte orders without effective notice and that the facts were similar to a previous case where appeals were set aside. Considering the principle of natural justice, the Tribunal restored the appeals to the CIT(A) for fresh adjudication.

The Tribunal held that disallowance under Section 14A should only consider investments yielding exempt income and that such disallowances cannot be made while computing book profits under Section 115JB. The amendment to Section 14A by the Finance Act, 2022, was held to be prospective.

The Tribunal held that the CIT(A) was correct in deleting the disallowance of interest. The investment in subsidiaries was considered to be for the purpose of business expediency, aligning with established judicial precedents.

The Tribunal found that the agreement for sale and the statements of third parties were crucial and needed to be confronted to the assessee. The assessment proceedings were not abated, and the AO had jurisdiction. The assessment under Section 153A was valid, and additions were rightly made in the hands of the partners as the firm's name was not in the sale documents.

The Tribunal held that the Assessing Officer mechanically made additions without verifying the evidence provided by the assessee. The excess stock and cash were adequately explained by the assessee through purchase bills, job work, and subsequent sales, which were already offered to tax.

The Tribunal held that disallowance under Section 14A should only consider investments yielding exempt income and that such disallowances cannot be made while computing book profits under Section 115JB. The amendment to Section 14A by the Finance Act, 2022, was held to be prospective.

The Tribunal held that the loose sheets were 'dumb documents' as they lacked dates, the assessee's name, or specific land details. Without corroborative evidence, these documents could not be used to fasten tax liability on the assessee.

The Tribunal held that since the cash sales were reflected in the assessee's books of accounts and offered to tax, adding the same amount again would amount to double taxation. The Tribunal found that the assessee had discharged the burden of proving the source of the cash deposits with documentary evidence, and the AO failed to rebut this.

The Tribunal held that disallowance under Section 14A should only consider investments yielding exempt income and that such disallowances cannot be made while computing book profits under Section 115JB. The amendment to Section 14A by the Finance Act, 2022, was held to be prospective.

The Tribunal held that the additions made by the AO were not based on incriminating material found during the search or sworn statements that could be confronted to the assessee. The CIT(A) had rightly deleted the additions. Consequently, the Tribunal set aside the impugned order and restored the assessments to the file of the AO for de novo adjudication.

The Tribunal condoned the delay in filing the appeal before the CIT(A), considering the administrative issues faced by the assessee. The Tribunal directed the CIT(A) to adjudicate the appeal on merits, subject to the assessee substantiating its case with evidence.

The Tribunal acknowledged that the assessee made a technical mistake in selecting the wrong sections in the applications. Following a similar precedent, the Tribunal held that the CIT(E) should provide an opportunity to rectify such errors. Consequently, the Tribunal set aside the CIT(E)'s orders and remanded the matters for fresh adjudication, allowing the assessee to file subsequent or fresh applications.

The Tribunal condoned the delay, citing sufficient cause and the principle of natural justice. The ex-parte orders of the AO and CIT(A) were set aside, and the appeal was restored to the AO for a denovo assessment. The assessee was directed to provide all evidence regarding fresh capital introduction.

The Tribunal held that the additions made by the AO were not based on incriminating material found during the search or sworn statements that could be confronted to the assessee. The CIT(A) had rightly deleted the additions. Consequently, the Tribunal set aside the impugned order and restored the assessments to the file of the AO for de novo adjudication.

The Tribunal held that the additions made by the AO were not based on incriminating material found during the search or sworn statements that could be confronted to the assessee. The CIT(A) had rightly deleted the additions. Consequently, the Tribunal set aside the impugned order and restored the assessments to the file of the AO for de novo adjudication.

The Tribunal condoned the delay in filing the appeal and decided to give the assessee one more opportunity to present their case before the CIT(E), as the trustee was not familiar with online procedures. The appeal was set aside.

The Tribunal held that in the interest of justice, the assessee should be given one more opportunity to present their case before the Id. CIT(A). The appeal is set aside for denovo adjudication, with the direction for the assessee to substantiate their case properly.

The Tribunal held that the loose sheets were 'dumb documents' as they lacked dates, the assessee's name, or specific land details. Without corroborative evidence, these documents could not be used to fasten tax liability on the assessee.

The Tribunal held that the additions made by the AO were not based on incriminating material found during the search or sworn statements that could be confronted to the assessee. The CIT(A) had rightly deleted the additions. Consequently, the Tribunal set aside the impugned order and restored the assessments to the file of the AO for de novo adjudication.

The Tribunal found that the withdrawals from the son's NRE account were genuine, but lacked confirmation. Therefore, the issue of Rs. 45,50,000/- was set aside to the AO to obtain an affidavit from the son. Regarding the interest income, the AO was directed to verify the assessee's claim that the interest was credited after 31.03.2017.

The Tribunal allowed the assessee's request to withdraw the appeal as it had opted for the Direct Tax Vivad-se-Vishwas Scheme. The appeal was dismissed as withdrawn.

The Tribunal held that the proceedings were void ab initio. The TPO was required to pass an order in writing under section 92CA(3), but only a draft order was passed on January 14, 2016. A final order under section 92CA(3) was never passed. Consequently, the transfer pricing order dated December 20, 2018, and the final assessment order dated December 31, 2018, passed under section 143(3) r.w.s. 144C(5) r.w.s. 254 of the Act, were quashed as void ab initio. The Tribunal also noted that there is no specific time limitation or provision in section 144C for the DRP to pass directions within a certain time in a set-aside matter to the DRP by the Tribunal. Since the appeal was allowed on these additional grounds, other grounds raised by the assessee became academic and infructuous. The Tribunal relied on the judgment of the Hon'ble Delhi High Court in the case of Undercarriage and Tractor Parts (P.) Ltd. Vs. Dispute Resolution Panel, which held that the DRP can only give directions in pending assessment proceedings and has no power after the assessment order is passed. The Tribunal also noted that section 144C(5) had not been complied with.

The Tribunal held that the provision released was not an income item but a reduction from earlier provisions and thus erred in its addition. The Tribunal also found the disallowance of 5% of other expenditure to be adhoc without cogent reason.