ITAT Chennai Judgments — September 2025

The Tribunal held that the application should be considered under the newly amended provisions of Section 80G(5) which allow applications to be filed at any time after commencement of activities. The CIT(E) was directed to re-evaluate the application based on these amended provisions.

The Tribunal held that the assessee is factually and legally entitled to a capacity utilization adjustment for both AY 2017-18 and AY 2018-19. The Tribunal reasoned that the under-absorption of fixed costs due to low capacity utilization (20.31% and 35.39% in the relevant years) is a recognized commercial reality that materially affects profitability. The assessee's methodology of adjusting its own margins to account for idle capacity is reasonable and in accordance with law, specifically Rule 10B(1)(e) read with Rule 10B(3), which permits adjustments for differences materially affecting profit margins. The Tribunal found the contention that adjustments can only be made to comparables and not to the tested party to be misplaced and contrary to judicial precedent, citing decisions of the Bombay High Court in Petro Araldite Pvt. Ltd. and Radhashir Jewellery Pvt. Ltd., and coordinate benches of the ITAT in Mando India Steering Systems, Terex India, and IKA India Pvt. Ltd. The reliance on the Supreme Court's decision in SAP Labs was deemed misplaced as it dealt with substantial questions of law, not the merits of idle capacity adjustments. The Tribunal noted that the TPO neither sought additional data under Section 133(6) nor attempted to reasonably evaluate the assessee's adjustment methodology. Therefore, the Tribunal directed the TPO to recompute the arm's length price (ALP) after granting appropriate idle capacity adjustment. The general grounds of appeal regarding violation of natural justice and lack of adequate inquiries were not specifically addressed in the 'held' section of the judgment.

The Tribunal held that the assessee is factually and legally entitled to a capacity utilization adjustment for both AY 2017-18 and AY 2018-19. The Tribunal reasoned that the under-absorption of fixed costs due to low capacity utilization (20.31% and 35.39% in the relevant years) is a recognized commercial reality that materially affects profitability. The assessee's methodology of adjusting its own margins to account for idle capacity is reasonable and in accordance with law, specifically Rule 10B(1)(e) read with Rule 10B(3), which permits adjustments for differences materially affecting profit margins. The Tribunal found the contention that adjustments can only be made to comparables and not to the tested party to be misplaced and contrary to judicial precedent, citing decisions of the Bombay High Court in Petro Araldite Pvt. Ltd. and Radhashir Jewellery Pvt. Ltd., and coordinate benches of the ITAT in Mando India Steering Systems, Terex India, and IKA India Pvt. Ltd. The reliance on the Supreme Court's decision in SAP Labs was deemed misplaced as it dealt with substantial questions of law, not the merits of idle capacity adjustments. The Tribunal noted that the TPO neither sought additional data under Section 133(6) nor attempted to reasonably evaluate the assessee's adjustment methodology. Therefore, the Tribunal directed the TPO to recompute the arm's length price (ALP) after granting appropriate idle capacity adjustment. The general grounds of appeal regarding violation of natural justice and lack of adequate inquiries were not specifically addressed in the 'held' section of the judgment.

The Tribunal held that a new clause (iv) was added to Section 80G(5) by the Finance Act, 2024, effective from October 1, 2024, allowing applications at any time post-commencement of activities. The CIT(E) order was passed after this amendment.

The Tribunal followed the jurisdictional High Court's decision in TVS Credit Services Ltd. which held that notices issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessment Officer (FAO) were invalid. Consequently, the notice under Section 148 and consequential orders were set aside.

The Tribunal found that the CIT(A) had not given a specific finding on the goodwill depreciation issue due to the assessee's failure to provide necessary documents. Therefore, the issue was set aside to the CIT(A) for fresh adjudication.

The Tribunal held that a new clause (iv) had been added to the first proviso of Section 80G(5) by the Finance Act, 2024, allowing applications at any time after commencement of activities. Since the CIT(E)'s order was passed after this amendment took effect, the application should be considered under the new provision.

The Tribunal held that the CIT(E) rejected the application based on the old timeline. However, the amendment allowing applications anytime post-commencement became effective before the CIT(E)'s order. Therefore, the application should be considered under the new provision.

The Tribunal found that the CIT(A) had not given a specific finding on the goodwill depreciation issue due to the assessee's failure to provide necessary documents. Therefore, the issue was set aside to the CIT(A) for fresh adjudication.

The Tribunal held that the FAA passed the order on a deceased person and admitted additional evidence which was crucial for substantial justice. The matter was restored to the AO for fresh examination.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal noted that the Ld.CIT(A)'s order was ex parte and lacked details regarding notices issued. Finding a violation of natural justice, the Tribunal set aside the order and restored the appeal to the Ld.CIT(A)'s file for fresh adjudication.

The Tribunal held that the CIT(A) ought not to have disposed of the appeal while the condonation application was pending before the CCIT. The impugned order was set aside, and the appeal was restored to the CIT(A) for a fresh decision after the CCIT decides the condonation application.

The Tribunal held that the ex-gratia payment received was voluntary and not a compensation for services or in lieu of employment, hence not taxable under Section 17(3)(i) of the Act. It was considered a capital receipt.

The Tribunal held that interest on delayed payment of compensation, whether under Section 28 or 34 of the Land Acquisition Act, partakes the character of the principal compensation itself. Therefore, it should be treated as 'Capital Gains' and would be exempt under Section 10(37) if the land is agricultural.

The Tribunal held that the notice issued by the JAO was invalid and bad in law because it contravened the mandatory provisions of the e-Assessment Scheme, 2022, which required such notices to be issued through the Faceless Mechanism. Consequently, the assessment order was deemed null and void.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to the absence of book rejection and reliance on incomplete data. The addition on account of stock difference was sustained as the assessees did not contest it beyond reiterating earlier submissions.

The Tribunal held that the estimation of net profit at 20.90% was not sustainable due to reliance on incomplete data and the absence of rejection of books. The addition on account of stock difference was sustained as it was accepted by the assessee.

The Tribunal held that the estimation of net profit ratio was not sustainable as it was based on incomplete data and there was no rejection of books of account. The addition on account of stock difference was sustained as it was accepted by the assessee.

The Tribunal held that the estimation of net profit by the CIT(A) was not sustainable as it was based on incomplete data and the books of account were not rejected. The addition on account of stock difference was sustained.

The Tribunal noted that the CIT(A) confirmed the additions based on non-submission of written arguments without adequately addressing the merits of the case. In the interest of justice, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication after giving the assessee an opportunity to be heard.

The Tribunal noted that the mistake in declaring the insurance claim in duplicate was likely due to software complexity. In the interest of justice, the appeal was set aside and restored to the JAO for verification.

The Tribunal allowed the assessee to withdraw the appeal as the respondent did not oppose it. The appeal was accordingly dismissed as withdrawn.

The Tribunal held that while the assessee's compliance at the assessment stage was unsatisfactory, they made good the deficiencies during the appellate stage. The burden of proof shifted to the Revenue, which failed to conduct independent inquiries despite opportunities. The AO's conclusion was based on examining the "source of source," which is not permissible.

The Tribunal noted that the assessee failed to provide necessary details of rental income and interest payments to both the AO and the CIT(A). Consequently, the Tribunal set aside the order of the CIT(A) and remitted the issue back to the jurisdictional AO for verification of rental income and interest on housing loans claimed as deduction.

The Tribunal noted that the assessee failed to produce substantial proof or sufficient cause for the inordinate delay in filing the appeal. Consequently, the condonation of delay was rejected.

The Tribunal held that the assessee, being a PACS engaged in providing financial assistance, is entitled to claim deduction under Section 80P for interest income earned from its business activities, including deposits with other cooperative banks. The Tribunal distinguished the Totgars case, stating the assessee's principal business was financial assistance, not trading.

The Tribunal condoned the delay due to bonafide reasons. The Assessing Officer had added 10% of the total transaction value, which was contested by the assessee. The Tribunal found that 5% of the total transaction would be a reasonable addition.

The Tribunal held that the estimation of net profit ratio was not sustainable as it was based on incomplete data and relied on the stock difference addition which was already accepted. Therefore, the estimated profit additions were deleted.

The Tribunal held that the estimation of net profit ratio was not sustainable as it was based on incomplete data and there was no rejection of books of account. The addition on account of stock difference was sustained, but further estimation of profit was considered excessive.

The Tribunal held that the AO cannot make additions or disallowances on issues not mentioned in the reasons recorded for reopening the assessment. The Ld. CIT(A) was correct in quashing the reassessment order.

The Tribunal held that the estimation of net profit was not sustainable, especially as the books of account were not rejected and the estimation relied on incomplete data. The addition on account of stock difference was sustained.

The Tribunal held that as per Section 151A of the Income Tax Act and subsequent notifications, reassessment notices under Section 148 should be issued by a faceless assessing officer. Since the notice in this case was issued by the jurisdictional assessing officer, it was deemed invalid.

The Tribunal upheld the CIT(A)'s directions regarding the disallowance under Section 14A and the verification of TDS credit. The Tribunal found no infirmity in the CIT(A)'s order and confirmed it.

The Tribunal condoned the delay in filing the appeal, noting the assessee's explanation and the lack of willful delay. It was held that the case involves an addition for unexplained cash credits and that the orders passed by the lower authorities were ex-parte without sufficient opportunity for the assessee to be heard.

The Tribunal noted that both the AO's order and the CIT(A)'s order were not speaking orders. The Tribunal restored the matter to the AO for de novo adjudication, directing the AO to give the assessee an opportunity to present their case and evidence.

The Tribunal condoned the delay, noting that the issue of cash deposits in Specified Bank Notes (SBNs) was not objectively analyzed by the lower authorities. The case was remitted back to the Assessing Officer (AO) for fresh adjudication.

The Tribunal condoned the delay, finding it was not willful or wanton. The Tribunal held that the CIT(E) passed a stereotyped order without giving the assessee an opportunity to be heard and without passing a speaking order.

The Tribunal held that interest paid to Palaniappa Corporation for investment in the firm amounting to ₹.20,09,219/- is allowable. However, interest paid to Bajaj Finance amounting to ₹.5,90,819/- is not allowable as it was incurred for earning income from house property.

The Tribunal condoned the delay in filing the appeal. It was held that the issue of salary income and expenses were not objectively analyzed by the lower authorities, and therefore, the matter was remitted back to the Assessing Officer for fresh adjudication.

The Tribunal held that the assessee failed to discharge the onus under Section 68 of the Act to prove the genuineness, identity, and creditworthiness of the loan transactions and the source of own savings. The conduct of the assessee at all stages was found to be wanting.

The Tribunal held that the notice u/s 148 was invalid due to the absence of a DIN number and because it was issued by the jurisdictional AO, not a faceless AO, as mandated by subsequent notifications and judicial precedents. Consequently, the reassessment order was also deemed invalid.

The Tribunal held that the ITAT's order for de-novo consideration meant the matter should be examined from the beginning. The assessee had raised arguments regarding product mix and market mix during original assessment proceedings, and the quantitative details submitted as additional evidence before the CIT(A) could not be rejected. The Tribunal noted that the eligible Pantnagar unit catered significantly to the 'Replacement markets' yielding higher margins (about 60% of sales), unlike other units with only about 10% sales in replacement markets. Furthermore, the Pantnagar plant produced more high-margin Cam chains and kits, contributing to its higher profitability. The Tribunal also found that the comparable companies identified by the TPO were not truly comparable due to differences in their products compared to the assessee's. The Tribunal agreed with the CIT(A) that the assessee had consistently followed the 'Cost plus method' at cost plus 10% as the Most Appropriate Method (MAM), while the TPO considered TNMM. Therefore, the CIT(A) rightly considered the assessee's submissions and allowed the appeal. The Tribunal found no need for interference.