ITAT Delhi Judgments — April 2016

The Tribunal upheld the addition of Rs.7,34,06,339/- as royalty, following its own previous decisions and the Indo-France DTAA. However, the Tribunal decided in favor of the assessee regarding the chargeability of interest under Section 234B, finding it not sustainable.

The Tribunal held that the payer was obligated to deduct tax at source under Section 195 of the Act. Since tax was deductible, there was no failure on the part of the assessee in paying advance tax, and therefore, the assessee could not be burdened with interest under Section 234B.

The Tribunal held that the nomenclature of an expenditure is not determinative of its nature. The additional payment for sugarcane was essential for running the business and thus revenue in nature.

The Tribunal held that since the jurisdictional High Court admitted the assessee's appeal on substantial questions of law regarding the quantum additions, the issue was debatable. Therefore, no penalty was leviable under Section 271(1)(c) as the assessee acted under a bona fide belief.

The Tribunal held that valid service of notice under Section 148 is a mandatory precondition for reassessment proceedings. In the absence of proper service, the reassessment proceedings are void ab initio.

The Tribunal found that the CIT(A) did not consider the assessee's failure to provide details for certain expenses like interest and wages related to agricultural income. Therefore, the matter was remanded to the AO for re-computation of disallowance under Section 14A.

The Tribunal held that the issue of AMP expenses as an international transaction is settled by the Delhi High Court. The matter was restored to the TPO/AO to decide afresh in accordance with the High Court's directions, considering the bundling or de-bundling of AMP expenses with distribution activities.

The Tribunal held that goodwill is an intangible asset eligible for depreciation under Section 32 of the Income Tax Act, following the Supreme Court's decision in CIT vs. Smifs Securities Ltd. It also held that interest expenditure on loans advanced to a subsidiary for business expediency is allowable, especially when the assessee has sufficient interest-free funds.

The Tribunal held that if an assessee has sufficient interest-free funds, they are at liberty to make interest-free advances as deemed fit for business. The disallowances made by the Assessing Officer were not justified without verifying the availability of interest-free funds and the stated purpose of the advances.

The Tribunal held that the commission receipts were not business income as they arose from a practice of property dealers returning part of their commission to purchasers, which reduced the cost of acquisition. Regarding the sale price suppression, the Tribunal found the AO's additions were based on suspicion and conjecture without sufficient evidence.

The Tribunal held that for completed assessments, additions under Section 153A are only permissible if incriminating material is found during the search. Since no such material was found and the assessments were not pending, the additions were not legally sustainable.

The Tribunal held that the disallowance under Section 14A was made without due deliberation and analysis by the AO. They found that the AO and CIT(A) did not properly consider the assessee's submissions regarding the non-attraction of Section 14A.

The Tribunal held that the non-issuance of a notice under Section 143(2) after the Section 148 notice is an incurable defect. Therefore, the entire reassessment proceedings were bad in law and void ab initio.

The Tribunal held that the segregation of royalty and technical service fee transactions from other international transactions for ALP determination was justified. However, the matter was remitted to the AO/TPO for a fresh determination of ALP in accordance with the Tribunal's observations.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance of rental income, following the principle of consistency and previous ITAT rulings. It also upheld the deletion of the disallowance for loss on premature FDR encashment, deeming it not a prior period expense and to avoid double taxation.

The Tribunal noted that the quantum additions were significantly reduced by a previous ITAT order. It was also argued that a portion of the sustained addition was already disclosed or was a 'cut' amount. Therefore, the penalty order was set aside.

The Tribunal held that the payer was obligated to deduct tax at source under Section 195 of the Act. Since tax was deductible, there was no failure on the part of the assessee in paying advance tax, and therefore, the assessee could not be burdened with interest under Section 234B.

The Tribunal upheld the CIT(A)'s decision to delete the additions made by the AO. It found that the CIT(A) had correctly analyzed the facts and applied relevant legal precedents for each ground of appeal, leading to the deletion of the additions.

The Tribunal held that the Explanation to Section 73 of the Income Tax Act provides an exception for companies whose gross total income mainly comprises income from interest on securities, house property, capital gains, or other sources. Since the assessee had income from dividend, interest, and capital gains, the loss from share transactions was not to be treated as speculative.

The Tribunal held that the entire receipts of the assessee are chargeable to tax under Section 44BB, following previous ITAT and High Court decisions. The issue of interest under Sections 234B and 234C was remitted back to the Assessing Officer for a specific finding.

The Tribunal held that MAT credit includes surcharge and education cess. Therefore, the assessee is entitled to the full MAT credit claimed, including these components.

The Tribunal upheld the deletion of additions related to unexplained cash credit and unexplained liability, finding that the assessee had provided sufficient evidence of genuineness and creditworthiness of creditors, and the liability was genuine due to government acquisition. The issue of web designing expenses was rejected as it was not properly raised.

The Tribunal allowed the assessee's grounds concerning transfer pricing adjustments for trademark fees and AMP expenses, following its prior decisions. The issue of netting off rebate/discount from the cost of goods sold was remanded for verification.

The Tribunal admitted additional evidence and set aside the issue to the CIT(A) for fresh adjudication. This was because the additional evidence was crucial to determining the bona fides of the assessee's actions.

The Tribunal upheld the CIT(A)'s decision to delete the additions. The Tribunal found that the assessee had provided sufficient evidence, including confirmations from parties and evidence of transactions in earlier and subsequent years, which were accepted by the Revenue.

The Tribunal held that the AO failed to record objective satisfaction before invoking Rule 8D and that disallowance under Section 14A cannot exceed the exempt income earned. The disallowance was restricted to the exempt income.

The Tribunal held that service tax collected by the assessee is not includible in gross receipts for computing presumptive income under Section 44BB, as it does not have an income element and the assessee acts as a collection agent. The issue of interest under Section 234B/234C was restored to the Assessing Officer.

The Tribunal held that for completed assessments, additions under Section 153A are only permissible if incriminating material is found during the search. Since no such material was found and the assessments were not pending, the additions were not legally sustainable.

The Tribunal held that the CIT(A) had upheld the addition based on suspicion without disproving the documentary evidence provided by the assessee and PCSL. The Tribunal noted that PCSL had accepted the advance in its own assessment proceedings, and the revenue failed to provide cogent material to contradict the assessee's claim.

The Tribunal held that the issue of applicability of the principle of mutuality to bank interest income is covered by a previous decision of a coordinate bench in the assessee's own case. Consequently, the revenue's appeal was dismissed.

The Tribunal restored both issues to the Assessing Officer for de novo consideration. The assessee was directed to be given a proper opportunity to present their case and cooperate with the proceedings.

The Tribunal found that the CIT(A)'s exclusion of comparables based solely on turnover or profit/loss was unsustainable. The issue of comparability for the three companies was not properly adjudicated by the lower authorities.

The Tribunal deleted the addition, holding that the dispute regarding the year of accrual of income was academic as the tax rates for companies remained the same across the years. The Revenue would not lose any tax as it would be collected in a subsequent year.

The Tribunal held that for completed assessments, additions under Section 153A are only permissible if incriminating material is found during the search. Since no such material was found and the assessments were not pending, the additions were not legally sustainable.

The Tribunal held that the matter of transfer pricing adjustment should be remanded to the AO/TPO for fresh determination, including consideration for working capital adjustment. The Tribunal also directed the grant of deduction under Section 10AA, overturning the AO's denial.

The Tribunal held that an addition cannot be made solely on the basis of a statement recorded under Section 133A, as such statements do not have evidentiary value without corroborative material. Following previous judgments and CBDT instructions, the addition was deleted.

The Tribunal held that Explanation 7 to Section 271(1)(c) provides an exception where penalty is not leviable if the assessee proves good faith and due diligence in determining the ALP. The Tribunal found that the assessee acted in a bona fide manner and the TPO's determination of Nil ALP was not tenable, thus deleting the penalty.

The Tribunal dismissed the Revenue's appeal as the tax effect was below the revised monetary limit of Rs. 10 lakhs. The dismissal was based on the CBDT circular and Section 268A of the Income-tax Act, without going into the merits of the case.

The Tribunal held that the payment to the consolidator was part of the cost of land and was included in purchases and closing stock, not claimed as a deduction in the profit and loss account. Therefore, Section 40(a)(ia) was not applicable.

The Tribunal upheld the CIT(A)'s decision to cancel the penalty. It found that the assessee's decision to forgo the loss was not due to concealment of income or inaccurate particulars, but because the loss had become infructuous.

The Tribunal admitted additional evidence related to agricultural land holdings and income, deeming it crucial to the case. The issue of unexplained cash deposits was set aside to the AO for fresh adjudication.

The Tribunal held that the reassessment proceedings were initiated without proper application of mind by the AO, similar to a previous identical case. Therefore, the reopening of assessment was quashed as being bad in law.

The Tribunal upheld the CIT(A)'s deletion of additions, finding that the payments were duly reflected in the assessee's books or that the seized document entries were not sufficiently linked to the assessee's income for the relevant assessment years.