ITAT Chennai Judgments — July 2026

The Tribunal held that an appropriate adjustment for underutilization of resources, specifically excess employee cost, ought to be granted, acknowledging that the assessee was in its first year of full operations and might not have fully utilized its costs. The Tribunal relied on the jurisdictional Tribunal's decision in Eversendai Constructions Pvt Ltd vs. DCIT, which allowed idle capacity adjustments. However, the Tribunal found the assessee's method of calculating the adjustment (percentage of employee cost to total revenue) to be incorrect. The Tribunal directed the TPO to re-determine the margin by calculating the differential percentage between employee cost to total cost of the assessee and the average employee cost to total cost of the comparable companies. This differential percentage should be considered excessive employee cost and reduced from the operating cost. The issue was remitted to the TPO for re-determination. The assessee was granted liberty to press alternate arguments if the margin remained outside the arm's length range after the adjustment. Ground no. 4 was partly allowed for statistical purposes.

The Tribunal decided the following: 1. **Capacity Utilization Adjustment:** The Tribunal did not explicitly rule on this specific ground in the provided extract, as the assessee's appeal grounds were listed but not all were adjudicated in detail in the excerpt. However, the general context suggests that the assessee's arguments regarding the first year of operation and underutilization were presented. 2. **Packing Material Cost:** This specific ground was not explicitly ruled upon in the provided excerpt. 3. **Initial Startup Expenses:** This specific ground was not explicitly ruled upon in the provided excerpt. 4. **Exclusion of Naman Plastic Processor Ltd.:** This specific ground was not explicitly ruled upon in the provided excerpt. 5. **Working Capital Adjustment:** This specific ground was not explicitly ruled upon in the provided excerpt. 6. **Other Economic Adjustments (Cash Profits):** This specific ground was not explicitly ruled upon in the provided excerpt. 7. **Depreciation on UPS:** The Tribunal upheld the CIT(A)'s decision to allow depreciation on UPS at 60%. The reasoning was that UPS is an integral part of the computer system and supports its functions, making it eligible for the higher depreciation rate applicable to computers. The Tribunal relied on the judicial precedents of Hon'ble Madras High Court in CIT vs. Cactus Imaging India Pvt. Ltd. and Hon'ble Delhi High Court in Nestle India Ltd. The Assessing Officer was directed to allow depreciation at 60%. Regarding the exclusion of comparable companies Arcee Industries Ltd. and Synthetic Moulders Ltd., the Tribunal held that a company cannot be rejected on the ground of persistent loss-making if it has made profits in one or two out of the three relevant years. Since both companies had made profits in at least one year, their exclusion was not justified. The Tribunal upheld the CIT(A)'s order in this regard, dismissing the Revenue's grounds of appeal concerning these exclusions. **Ratio:** A UPS is an integral part of a computer system and eligible for depreciation at the higher rate applicable to computers. A company cannot be considered a persistent loss-making company for comparability purposes if it has made profits in one or two out of the three relevant years.

The Tribunal held that the penalty order had merged with the CIT(A)'s order in the quantum appeal, as the CIT(A) had already decided the eligibility of expenses in favor of the assessee. Therefore, the PCIT's revision under section 263 was not maintainable.

The Tribunal found that the CIT(A)'s order was based on incorrect facts and a misapprehension of the assessee's case. Consequently, the appeal was allowed for statistical purposes.

The Tribunal held that a mistake in filing the return form should not lead to the denial of legitimate entitlements. The disallowance under Section 40A(3) was also held to be inapplicable for the assessment year in question.

The Tribunal partially allowed the appeal, directing that the tax rate under Section 115BBE should be 30% and not 60%, as the higher rate was applicable from AY 2018-19. The quantum of addition was sustained.

The Tribunal held that additions based solely on entries in third-party software, without independent corroborative evidence and without allowing cross-examination of the statement makers, are not sustainable. The AO failed to establish the veracity of the entries independently.

The Tribunal held that the additional evidence was crucial for a fair adjudication of the dispute. Therefore, the matter was remanded to the CIT(A) for fresh consideration of these documents.

The Tribunal noted that both the assessment and the first appeal were decided ex parte due to the assessee's non-compliance. Since the merits of the case were not examined, the matter was restored to the Assessing Officer for a fresh assessment.

The Tribunal observed that the assessee had already furnished the required information and the CIT (Exemptions) had not addressed the delay issue. Therefore, the matter was restored to the CIT (Exemptions) for reconsideration.

The Tribunal held that the foreign exchange fluctuation loss arising on restatement of ECB, which was utilized for capital purposes and converted into equity, is capital in nature and not allowable as a revenue deduction. The Tribunal followed its own earlier decisions on identical issues.

The Tribunal observed that the assessee had already furnished the required information and the CIT (Exemptions) had not addressed the delay. Therefore, the matter was restored to the CIT (Exemptions) for reconsideration.

The Tribunal set aside the order of the CIT (Exemption) and directed the issuance of registration certificates under Section 12AB and 80G(5). The Tribunal relied on the principle of consistency, noting that there were no changes in the assessee's objects, revenue stream, or operational model since its inception and that a similar certificate was issued by the same officer previously.

The Tribunal set aside the order of the CIT (Exemption) and directed the issuance of registration certificates under Section 12AB and 80G(5). The Tribunal relied on the principle of consistency, noting that there were no changes in the assessee's objects, revenue stream, or operational model since its inception and that a similar certificate was issued by the same officer previously.

The Tribunal held that the three flats received under a single JDA, located in the same complex at the same address, constitute one residential house for the purpose of Section 54F. Therefore, the assessee is entitled to deduction for all three units.

The Tribunal held that additions based solely on entries in third-party software, without independent corroborative evidence and without allowing cross-examination of the statement makers, are not sustainable. The AO failed to establish the veracity of the entries independently.

The Tribunal held that additions based solely on entries in third-party software, without independent corroborative evidence and without allowing cross-examination of the statement makers, are not sustainable. The AO failed to establish the veracity of the entries independently.

The Tribunal held that additions based solely on entries in third-party software, without independent corroborative evidence and without allowing cross-examination of the statement makers, are not sustainable. The AO failed to establish the veracity of the entries independently.

The Tribunal held that additions based solely on entries in third-party software, without independent corroborative evidence and without allowing cross-examination of the statement makers, are not sustainable. The AO failed to establish the veracity of the entries independently.

The Tribunal held that the omission of mandatory particulars like the Unique Registration Number renders the registration certificate incomplete. The CIT(E) was directed to issue a fresh, complete registration certificate.

The Tribunal held that the delay in furnishing the tax audit report was a technical or venial breach, as the report was available to the AO at the time of assessment completion. Therefore, the penalty levied under Section 271B was not warranted.

The Tribunal held that the delay in furnishing the tax audit report was a technical or venial breach, as the report was available to the AO at the time of assessment completion. Therefore, the penalty levied under Section 271B was not warranted.

The Tribunal held that the delay in furnishing the tax audit report was a technical or venial breach, as the report was available to the AO at the time of assessment completion. Therefore, the penalty levied under Section 271B was not warranted.

The Tribunal held that a cooperative bank is considered a non-scheduled bank and is therefore eligible for the deduction under Section 36(1)(viia) for 10% of aggregate average advances made by rural branches. The Assessing Officer's denial of this claim was incorrect.

The Tribunal held that the appeal filed by the Revenue was not maintainable. This was due to the omission of sub-sections (2A) and (3A) of Section 253 of the Income Tax Act, 1961, by the Finance Act, 2016.

The Tribunal held that a mere disallowance of a claim, even if ultimately inadmissible, does not amount to furnishing inaccurate particulars or concealment of income. The levy of penalty under Section 271(1)(c) was found unsustainable as the assessee had disclosed all primary facts and the dispute was on legal interpretation.

The Tribunal held that the CIT(A)-NFAC order was without jurisdiction as the appeal had already been adjudicated and attained finality. The Faceless Appeal Scheme is procedural and cannot confer jurisdiction to re-adjudicate a concluded appeal.

The Tribunal held that interest on NPAs is not taxable on accrual basis as per RBI guidelines and judicial precedents, and the disallowance of a claim does not automatically attract penalty under Section 271(1)(c).

The Tribunal held that interest on NPAs is not taxable on accrual basis if there is no certainty of realization, following various High Court and Supreme Court decisions. The penalty under Section 271(1)(c) was also deleted as the disallowance was due to interpretation of statutory conditions, not concealment of income.

The Tribunal held that interest on NPAs is not taxable on accrual basis as per RBI guidelines and judicial precedents, and the disallowance of a claim does not automatically attract penalty under Section 271(1)(c).

The Tribunal held that interest on NPAs is not taxable on accrual basis as per RBI guidelines and judicial precedents, and the disallowance of a claim does not automatically attract penalty under Section 271(1)(c).

The Tribunal held that interest on NPAs is not taxable on accrual basis as per RBI guidelines and judicial precedents, and the disallowance of a claim does not automatically attract penalty under Section 271(1)(c).

The Tribunal held that interest on NPAs is not taxable on accrual basis as per RBI guidelines and judicial precedents, and the disallowance of a claim does not automatically attract penalty under Section 271(1)(c).

The Tribunal held that interest on NPAs is not taxable on accrual basis as per RBI guidelines and judicial precedents, and the disallowance of a claim does not automatically attract penalty under Section 271(1)(c).

The Tribunal held that interest on NPAs is not taxable on accrual basis as per RBI guidelines and judicial precedents, and the disallowance of a claim does not automatically attract penalty under Section 271(1)(c).

The Tribunal held that a mere disallowance of a claim, even if ultimately inadmissible, does not amount to furnishing inaccurate particulars or concealment of income. The levy of penalty under Section 271(1)(c) was found unsustainable as the assessee had disclosed all primary facts and the dispute was on legal interpretation.

The Tribunal held that a mere disallowance of a claim, even if ultimately inadmissible, does not amount to furnishing inaccurate particulars or concealment of income. The levy of penalty under Section 271(1)(c) was found unsustainable as the assessee had disclosed all primary facts and the dispute was on legal interpretation.

The Tribunal held that the delay in furnishing the tax audit report was a technical or venial breach, as the report was available to the AO at the time of assessment completion. Therefore, the penalty levied under Section 271B was not warranted.

The Tribunal held that the delay in furnishing the tax audit report was a technical or venial breach, as the report was available to the AO at the time of assessment completion. Therefore, the penalty levied under Section 271B was not warranted.

The Tribunal condoned the delay, acknowledging the genuine reasons provided by the assessee. The ex-parte orders of the CIT(A) were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal held that the notice issued under Section 148 beyond three years required approval from the Principal Chief Commissioner of Income Tax (PCCIT), not just the Principal Commissioner of Income Tax (PCIT). Since the approval was obtained from the PCIT, the notice and subsequent reassessment were invalid.

The Tribunal held that since the tax audit report was available to the AO before the completion of reassessment proceedings and no addition was made, the delay in furnishing the report constituted a technical or venial breach. Therefore, the penalty was not justified.

The Tribunal acknowledged the difficulties faced during the pandemic and the assessee's efforts to provide documentation like PAN and TDS details. It found that the matter required a fresh assessment to ensure fairness and proper opportunity for the assessee.

The Tribunal held that the appeal was not maintainable as there was no appealable order before it. The assessee had not exhausted the proper appellate remedies, and therefore, the grounds raised were dismissed.

The Tribunal condoned the delay in filing the appeal, noting sufficient cause. It held that the appeal could not be treated as deemed withdrawn without Form No. 4 evidencing payment under the Vivad Se Vishwas Scheme.

The Tribunal condoned the delay in filing the appeal before the CIT(A), stating that the assessee intended to pursue the matter and deserved a substantial hearing. The case was restored to the CIT(A) for a de-novo hearing.

The Tribunal, while acknowledging the delay and the CIT(A)'s decision to dismiss the appeal, allowed the appeal on merits. It held that only real income should be taxed, even if benefits under Sections 11 and 12 were denied due to late filing. The Tribunal directed the CPC to revise the intimation under section 143(1) to allow the set-off of application of receipts.

The Tribunal held that the notice issued under Section 148 was time-barred. Consequently, all subsequent actions taken by the authorities were deemed to be without legal authority and unsustainable.

The Tribunal condoned the delay, acknowledging the genuine reasons provided by the assessee. The ex-parte orders of the CIT(A) were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal held that the assessee had a bona fide belief that Section 44AB was not applicable due to the principle of mutuality. This bona fide belief constituted a reasonable cause under Section 273B, making the penalty unsustainable.