ITAT Chennai Judgments — May 2025

The Tribunal held that the CIT(A) had not fully appreciated the facts regarding the share valuation and the transactions involving the assessee's wife. The matter of long-term capital gains was remitted to the AO for re-adjudication.

The Tribunal allowed the assessee's appeal for deduction on pre-existing liability for statistical purposes. It dismissed grounds related to depreciation on goodwill and other issues as already decided in favour of the assessee in previous years. The revenue's appeal was partly allowed for statistical purposes.

The Tribunal held that the CIT(A) had not fully appreciated the facts regarding the share valuation and the transactions involving the assessee's wife. The matter of long-term capital gains was remitted to the AO for re-adjudication.

The Tribunal noted that the primary issue is the determination of the assessee's residential status under Section 6 of the Income Tax Act. The decision hinges on whether the assessee stayed in India for more than 182 days and other related factors concerning foreign income.

The Tribunal decided the issues as follows: Regarding notional interest on outstanding trade receivables (Issue 1): Following its own decision for AY 2020-21, the Tribunal directed the AO to recompute the interest by adopting the Average LIBOR as the basis for imputation. This implies that the delay in receivables was considered an international transaction requiring interest imputation, but the rate was adjusted. Regarding corporate guarantee (Issue 2): Following its decision for AY 2020-21, the Tribunal directed the AO to adopt a corporate guarantee commission of 0.5% on the total corporate guarantee given to AEs. This indicates that corporate guarantee was considered an international transaction, but the rate was reduced. Regarding notional interest on short-term advances (Issue 3): The Tribunal directed the AO to compute interest by adopting Average LIBOR as the basis for imputation on short-term advances, after adjustment of trade payables, similar to AY 2020-21. This confirms the imputation of interest but with an adjusted rate and consideration of payables. Regarding Section 80G deduction (Issue 4): The judgment does not explicitly record a finding or decision on this issue. The grounds related to Section 80G were listed for AY 2020-21, but the specific adjudication for this issue is not detailed in the provided extract for the final decision. Operative directions: The AO is directed to recompute interest on trade receivables and short-term advances using Average LIBOR and to apply a 0.5% commission for corporate guarantee. The appeals were partly allowed.

The Tribunal allowed the assessee's ground regarding deduction on pre-existing liability for statistical purposes. It dismissed grounds related to depreciation on goodwill, disallowance of leave encashment, and irrecoverable advances as decided against the assessee in prior appeals. Other grounds were either dismissed as withdrawn or allowed/remanded based on previous rulings.

The Tribunal allowed the assessee's appeal for deduction on pre-existing liability for statistical purposes. It dismissed grounds related to depreciation on goodwill and other issues as already decided in favour of the assessee in previous years. The revenue's appeal was partly allowed for statistical purposes.

The Tribunal held that the issue of customs duty adjustment is no longer res integra, having been decided in favour of the assessee in its own case by the Tribunal in ITA No. 3061/Chny/2017. The Tribunal noted that the previous decision allowed for suitable adjustment in respect of customs duty while determining the ALP, citing several precedents. Therefore, the Tribunal directed the Assessing Officer to allow the customs duty adjustment. Regarding the segregation of royalty and technical fee payments, the Tribunal found that the assessee had indeed received technical services from its AE, and the genuineness of these services was not in doubt. The Tribunal agreed with the assessee's contention that these transactions are inextricably connected with core business operations and cannot be segregated. Following the jurisdictional decision in Siemens Gamesa Renewable Power (P.) Ltd, the Tribunal directed the Assessing Officer to aggregate technical fee payments and benchmark them under TNMM, after allowing customs duty and working capital adjustments. Similarly, for royalty payments, the Tribunal held that they should be considered as operating expenses while determining margins under TNMM, and should only be excluded if disallowed. The Tribunal remitted these issues to the TPO for redetermination of the arm's length price. Some grounds of appeal were noted as academic and not pressed, hence dismissed.

The tribunal condoned the delay after considering the assessee's explanation. The tribunal noted that the lower authorities had passed non-speaking orders without proper discussion on merits and that the disallowances were made on items not prohibited by Section 40 of the Act. Therefore, the tribunal set aside the orders and directed the AO to adjudicate the matter de novo.

The Tribunal decided the issues as follows: Regarding notional interest on outstanding trade receivables (Issue 1): Following its own decision for AY 2020-21, the Tribunal directed the AO to recompute the interest by adopting the Average LIBOR as the basis for imputation. This implies that the delay in receivables was considered an international transaction requiring interest imputation, but the rate was adjusted. Regarding corporate guarantee (Issue 2): Following its decision for AY 2020-21, the Tribunal directed the AO to adopt a corporate guarantee commission of 0.5% on the total corporate guarantee given to AEs. This indicates that corporate guarantee was considered an international transaction, but the rate was reduced. Regarding notional interest on short-term advances (Issue 3): The Tribunal directed the AO to compute interest by adopting Average LIBOR as the basis for imputation on short-term advances, after adjustment of trade payables, similar to AY 2020-21. This confirms the imputation of interest but with an adjusted rate and consideration of payables. Regarding Section 80G deduction (Issue 4): The judgment does not explicitly record a finding or decision on this issue. The grounds related to Section 80G were listed for AY 2020-21, but the specific adjudication for this issue is not detailed in the provided extract for the final decision. Operative directions: The AO is directed to recompute interest on trade receivables and short-term advances using Average LIBOR and to apply a 0.5% commission for corporate guarantee. The appeals were partly allowed.

The Tribunal allowed the assessee's appeal for deduction on pre-existing liability for statistical purposes. It dismissed grounds related to depreciation on goodwill and other issues as already decided in favour of the assessee in previous years. The revenue's appeal was partly allowed for statistical purposes.

The Tribunal held that the addition of Rs. 15,18,466/- needs to be verified as the husband of the assessee, an NRI, claimed to have transferred the amount directly to the seller via foreign remittances. For the addition of Rs. 5,56,500/-, the Tribunal directed the AO to refer the case to a registered valuer as per Section 50C(2) of the Act.

The Tribunal condoned the delay in filing the appeals. For ITA No. 460/Chny/2025, the matter was remanded to the CIT(A) for fresh adjudication on merits after considering evidence, as the AO's additions had not attained finality. For ITA No. 461/Chny/2025, the penalty was deleted as the underlying additions were remanded.

The Tribunal noted the Assessing Officer's failure to conduct an inquiry into the assessee's claim of funds from HUF partition, alongside the assessee's failure to provide necessary confirmations. Consequently, the Tribunal restricted the addition to 50% of the original amount, i.e., ₹8,37,500, confirming the remaining half. A cost of ₹1,000 was also imposed on the assessee.

The Tribunal held that the assessee had furnished sufficient details and evidence regarding sales promotion expenses, which were considered by the CIT(A). The Assessing Officer's observation that no details were provided was incorrect.

The Tribunal condoned the delay in filing the appeal, finding the reasons to be bonafide. The Tribunal decided to remand the matter back to the CIT(A) for fresh adjudication, subject to the assessee paying a cost of Rs. 25,000.

The Tribunal held that the assessee, being a cooperative society engaged in the manufacturing and sale of sugar from sugarcane supplied by its members, is entitled to deduction under Section 80P(2)(a)(iii) of the Act. The Tribunal relied on the decision of the Punjab & Haryana High Court in Budhewal Co-op. Sugar Mills Ltd.

The Tribunal held that the amendment to Section 43D of the Act, while notified to be effective from 01.04.2018, should be treated as retrospective in nature. This was based on the object of the amendment to provide a level playing field and cure an omission, citing the Supreme Court decision in Allied Motors (P.) Ltd. v. CIT.

The Tribunal observed that the assessee consistently failed to provide any documentary evidence to substantiate their claim before both the CIT(A) and the Tribunal. Consequently, the Tribunal upheld the addition confirmed by the CIT(A), finding no alternative given the lack of evidence. The appeal filed by the assessee was dismissed.

The Income Tax Appellate Tribunal concurred with the Ld. CIT(A)'s finding that the appeal was invalid. The appeal before the CIT(A) was filed against a recovery demand notice and not against a specific order passed under Section 200A of the Act. Therefore, the Tribunal dismissed the grounds raised by the assessee.

The Tribunal noted that the quantum appeal was settled under the DTVSV Scheme, and immunity was granted from penalty. Therefore, the penalty appeal was no longer sustainable.

On the first issue, the Tribunal held that the subject lands are agricultural lands and exempt from taxation under Section 2(14)(iii)(b) of the Act. The Tribunal relied on the distance of the lands from municipalities (approximately 16 kms, supported by Google Maps data), the classification in revenue records (Patta, Chitta Adangal, certificate from VAO), and decisions of the Madras High Court in cases like Sakunthala Vedachalam, which held that classification as agricultural land and satisfying other conditions of Section 2(14) are sufficient, even if the land is put to commercial use. The Tribunal set aside the CIT(A)'s order confirming the addition on account of long-term capital gains. On the second issue, following the decision of the Madras High Court in PCIT v. Envestor Venture Ltd., the Tribunal directed the Assessing Officer to restrict the disallowance under Section 14A to the extent of the exempted income earned by the assessee.

The Tribunal held that the CIT(A) was justified in allowing the exemption. The assessee filed the ITR and Form 10B within the time allowed, and due to the COVID-19 pandemic, the period for limitation was excluded.

The Tribunal condoned the delay in filing the appeals. For ITA No. 460/Chny/2025, the matter was remanded to the CIT(A) for fresh adjudication on merits after considering evidence, as the AO's additions had not attained finality. For ITA No. 461/Chny/2025, the penalty was deleted as the underlying additions were remanded.

The Tribunal found that the CIT(A) had granted partial relief. The Tribunal directed the AO to take income from other sources at Rs.4,05,885/-, estimating agricultural income on par with a previous year. Section 115BBE was held not applicable.

The Tribunal found that the Ld.CIT(E) erred in not considering the documents filed by the assessee, as there was still time available before the statutory deadline. Consequently, the Tribunal set aside the impugned order and restored the application to the CIT(E) for fresh processing in accordance with law, directing both the assessee and the CIT(E) to act diligently.

The Tribunal condoned the delay of 1418 days due to the managing partner's severe illness. It directed the CIT(A) to verify the tax payment of Rs. 5,08,57,893/- which was claimed to be in excess of the tax payable (Rs. 4,65,49,181/-). If verified, the CIT(A) should admit the appeal and decide on merits.

The Tribunal held that while the CIT(A) correctly allowed a portion of expenses, the 15% allowed was on the lower side. Considering the nature of the business, 25% of the unaccounted receipts should be allowed as expenditure.

The Tribunal held that while the CIT(A) correctly allowed a portion of expenses, the 15% allowed was on the lower side. Considering the nature of the business, 25% of the unaccounted receipts should be allowed as expenditure.

The Tribunal held that while the CIT(A) correctly allowed a portion of expenses, the 15% allowed was on the lower side. Considering the nature of the business, 25% of the unaccounted receipts should be allowed as expenditure.

The Tribunal held that while the CIT(A) correctly allowed a portion of expenses, the 15% allowed was on the lower side. Considering the nature of the business, 25% of the unaccounted receipts should be allowed as expenditure.

The Tribunal held that while the CIT(A) correctly allowed a portion of expenses, the 15% allowed was on the lower side. Considering the nature of the business, 25% of the unaccounted receipts should be allowed as expenditure.

The Tribunal held that the addition made by the AO under Section 68 was unsustainable as it was not based on any incriminating material found during the search. The assessment was considered unabated and completed without issuing a notice under Section 143(2).

The Tribunal held that while the CIT(A) correctly allowed a portion of expenses, the 15% allowed was on the lower side. Considering the nature of the business, 25% of the unaccounted receipts should be allowed as expenditure.

The Tribunal held that while the CIT(A) correctly allowed a portion of expenses, the 15% allowed was on the lower side. Considering the nature of the business, 25% of the unaccounted receipts should be allowed as expenditure.

The Tribunal held that interest income earned by the assessee, a registered NBFC, from its lending activities and bank deposits is to be treated as business income. It was also noted that no exempt income was earned, thus disallowance under Section 14A was not applicable.

The Tribunal held that the assessee was not granted sufficient opportunity to present supporting evidence for the cash deposits and customs duty additions. Therefore, the matter was remitted back to the AO for fresh adjudication.

The Tribunal held that the cash payments were made in violation of Section 40A(3) and that none of the exceptions under Rule 6DD were applicable. The Tribunal also noted that employees had bank accounts for salary credits, making cash payments unnecessary.

The Tribunal agreed that the entire stock difference could not be added as income. However, it found the 10% profit margin estimated by the CIT(A) to be excessive and directed the AO to re-compute the income by applying an 8% profit margin.

The Tribunal held that the assessment order was passed under Section 153C read with Section 143(3), not solely under Section 143(3). The assessee's challenge to jurisdiction based on the Supreme Court judgment in CIT Vs. Jasjit Singh was found not applicable. Regarding the additions sustained by CIT(A), the Tribunal found that the AO did not provide sufficient opportunity for explanation or conduct further inquiry, directing the AO to delete the addition.

The Tribunal held that notional interest income recognized as per IND AS standards, but not actually received or accrued, is not taxable. The addition made on account of notional interest was directed to be deleted.

The Tribunal noted that the Ld.CIT(A) had dismissed the appeals without addressing the merits. Therefore, the Tribunal set aside the ex-parte order and restored the appeals back to the Ld.CIT(A) with a direction to decide them on merits after providing an opportunity to the assessee.

The Tribunal condoned the delay in filing the appeals, noting that the Ld.CIT(A) dismissed them without considering the merits and without proper verification of the delay. The Tribunal set aside the impugned orders and directed the Ld.CIT(A) to decide the appeals on merits.

The Tribunal held that the addition was unsustainable as the net worth statement at market value was prepared solely for obtaining a bank loan and not for declaring income. The Tribunal also noted that the properties were acquired through registered settlement deeds from relatives, which are not taxable under Section 56(2)(x).

The Tribunal held that notional interest income recognized as per IND AS standards, but not actually received or accrued, is not taxable. The addition made on account of notional interest was directed to be deleted.

The Tribunal held that the source of the cash deposits from relatives and friends was adequately explained with supporting evidence. Therefore, the addition under Section 69A was not sustainable.

The Tribunal held that the rejection of the revised Form No. 10 solely due to an inadvertent error in the original filing was not acceptable. The revised form was filed before scrutiny selection and the accumulated amount was properly invested as per law.

The Tribunal held that the payments made by the company for the purchase of properties were not for the benefit of the assessee shareholder but for the commercial use of the company. Therefore, Section 2(22)(e) was not attracted.

The Tribunal set aside the impugned order of the Ld.CIT(A) and restored the assessment to the file of the AO for de novo assessment. The AO was directed to provide a proper opportunity to the assessee to present documents and evidence.

The Tribunal held that the Assessing Officer (AO) failed to provide the assessee with a reasonable opportunity of being heard before passing the rectification orders, which enhanced the assessment. This violation of statutory procedure under Section 154(3) rendered the rectification orders invalid.