ITAT Delhi Judgments — May 2016

The Tribunal held that the appeal was not maintainable in view of CBDT Circular No. 21/2015, which stipulates that appeals shall not be filed where the tax effect does not exceed Rs. 10,00,000/- before the Appellate Tribunal. The Department should have withdrawn or not pressed the appeal.

The Tribunal held that the Department's appeal was not maintainable due to the low tax effect, as per CBDT Circular No. 21/2015. The Department should have withdrawn or not pressed the appeal.

The Tribunal held that the selection of comparable companies under TNMM requires functional similarity, not just broad category similarity. It also found that Global Procurement Consultants Ltd. and Apitco Limited were not comparable due to significant functional dissimilarity.

The Tribunal considered the assessee's request to withdraw the appeal. Based on the statement and the written application, the Tribunal decided to dismiss the appeal as withdrawn.

The Tribunal held that when an assessee has sufficient interest-free funds, the presumption should be that these were used for interest-free advances. The disallowance of interest under Section 36(1)(iii) was set aside to the AO for verification, applying the ratio of the Reliance Utilities & Power Ltd. case.

The Tribunal upheld the CIT(A)'s order, finding no infirmity in restricting the disallowance. The CIT(A) had accepted the assessee's working and noted that the AO had not found fault with the quantum of disallowance in previous years with similar facts.

The Tribunal held that the appeal of the department was dismissed. The reasoning was based on the findings of the CIT(A) that the operating profit/total cost ratio in the case of the assessee was better than the average margin on cost of the two comparables. Specifically, after correcting the TPO's error of using the succeeding financial year's data, the average margin of the comparables was found to be -7.58%, while the assessee's margin was -4.55%. This indicated that the assessee's margin was better. Furthermore, the Gross Profit (GP) rate disclosed by the assessee at 26% was also better than the average GP earned by the two comparables at 23.68%. The Tribunal noted that the department had not challenged the CIT(A)'s observation regarding the GP rate being better for the assessee. Therefore, considering the totality of the facts, the Tribunal found no valid ground to interfere with the CIT(A)'s findings.

The Tribunal held that the assessee's failure to appear or seek adjournment indicates a lack of interest in prosecuting the appeal. Therefore, the appeals are liable to be dismissed for non-prosecution.

The Tribunal held that the assessee's failure to appear or seek adjournment indicates a lack of interest in prosecuting the appeal. Therefore, the appeals are liable to be dismissed for non-prosecution.

The Tribunal held that the assessee's failure to appear or seek adjournment indicates a lack of interest in prosecuting the appeal. Therefore, the appeals are liable to be dismissed for non-prosecution.

The Tribunal held that the assessee's intention to treat IPOs as investments was clear, supported by separate registers and limited frequency of transactions. Previous rulings in the assessee's own case also supported this classification.

The Tribunal held that when an assessee has sufficient interest-free funds, the presumption should be that these were used for interest-free advances. The disallowance of interest under Section 36(1)(iii) was set aside to the AO for verification, applying the ratio of the Reliance Utilities & Power Ltd. case.

The Tribunal, citing the principle that law aids the vigilant and not those who sleep on their rights, and following various High Court and Supreme Court judgments, dismissed the appeal for non-prosecution.

The Tribunal held that the Department's appeal was not maintainable due to the low tax effect, as per CBDT Circular No. 21/2015. The Department should have withdrawn or not pressed the appeal.

The Tribunal held that the repayment of liabilities attached to the gifted property by the assessee, which improved his title and interest, should be considered as cost of improvement. Consequently, the interest incurred on borrowings for this purpose is allowable under Section 24(b) of the Act.

The Tribunal held that accounted sales should be reduced from total sales found in seized annexures to arrive at unrecorded sales. The Tribunal also confirmed the extrapolation of unrecorded sales and the profit rate applied by the AO. However, it allowed telescoping of the additions against the assessee's surrender in the subsequent year.

The Tribunal held that the provision for productivity-linked reward was an ascertained liability based on past experience and government guidelines, and therefore deductible. It also held that prior period expenses, particularly legal expenses, were deductible in the year they crystallized or when the judgment was delivered.

The Tribunal held that the satisfaction note recorded by the Assessing Officer was invalid as it did not meet the requirements of Section 153C. Specifically, it failed to demonstrate satisfaction by the AO of the searched person and the proper handover of documents.

The Tribunal held that the satisfaction note recorded by the Assessing Officer was invalid as it did not meet the requirements of Section 153C. Specifically, it failed to demonstrate satisfaction by the AO of the searched person and the proper handover of documents.

The Tribunal held that the satisfaction note recorded by the Assessing Officer was invalid as it did not meet the requirements of Section 153C. Specifically, it failed to demonstrate satisfaction by the AO of the searched person and the proper handover of documents.

The Tribunal held that the satisfaction note recorded by the Assessing Officer was invalid as it did not meet the requirements of Section 153C. Specifically, it failed to demonstrate satisfaction by the AO of the searched person and the proper handover of documents.

The Tribunal held that the satisfaction note recorded by the Assessing Officer was invalid as it did not meet the requirements of Section 153C. Specifically, it failed to demonstrate satisfaction by the AO of the searched person and the proper handover of documents.

The Tribunal held that the satisfaction note recorded by the Assessing Officer was invalid as it did not meet the requirements of Section 153C. Specifically, it failed to demonstrate satisfaction by the AO of the searched person and the proper handover of documents.

The Tribunal held that the satisfaction note recorded by the Assessing Officer was invalid as it did not meet the requirements of Section 153C. Specifically, it failed to demonstrate satisfaction by the AO of the searched person and the proper handover of documents.

The Tribunal held that commission paid to directors, if approved by the Annual General Meeting and part of their remuneration for services rendered, is not covered by Section 36(1)(ii). It also held that royalty paid for the use of technical know-how, on a recurring basis tied to sales, is revenue expenditure.

The Tribunal held that the addition made by the AO and confirmed by the CIT(A) was not sustainable in law. This was because the assessee was not provided with the opportunity to cross-examine the witnesses whose statements formed the basis of the addition, violating the principles of natural justice.

The Tribunal held that the reopening of the assessment was bad in law as the AO failed to apply his mind to the material and form an independent belief that income had escaped assessment. The reasons recorded were vague and not based on tangible material.

The Tribunal held that commission paid to directors, if approved by the Annual General Meeting and part of their remuneration for services rendered, is not covered by Section 36(1)(ii). It also held that royalty paid for the use of technical know-how, on a recurring basis tied to sales, is revenue expenditure.

The Tribunal held that commission paid to directors, if approved by the Annual General Meeting and part of their remuneration for services rendered, is not covered by Section 36(1)(ii). It also held that royalty paid for the use of technical know-how, on a recurring basis tied to sales, is revenue expenditure.

The Tribunal deleted the penalty related to undisclosed property consideration as the addition was deleted in the quantum appeal. For share application money, the penalty was set aside as the quantum issue was restored to the AO for fresh adjudication.

The Tribunal upheld the CIT(A)'s decision to delete the disallowances for common expenses and under Section 14A, finding no justification for the AO's disallowances. However, it confirmed the disallowance of interest income on FDRs from Section 80-IA deduction, following Supreme Court precedents.

The Tribunal inferred that the assessee was not interested in prosecuting its appeals due to non-appearance. Following established rules and decisions, the Tribunal treated the appeals as unadmitted.

The Tribunal inferred that the assessee was not interested in prosecuting its appeals due to non-appearance. Following established rules and decisions, the Tribunal treated the appeals as unadmitted.

The Tribunal held that working capital adjustment should be allowed in principle and remanded the matter to the AO/TPO for recalculation. It also held that transfer pricing adjustment should only be made for international transactions with associated enterprises, not for transactions with non-AEs, and vacated the impugned order on this issue.

The Tribunal held that the compensation received was a reimbursement of costs incurred by the assessee for constructing buildings for its holding company. Since there was no transfer of capital assets and the compensation was less than the cost incurred, it could not be treated as short-term capital gain.

The Tribunal held that the appeal was not maintainable due to the low tax effect, citing CBDT Circular No. 21/2015. The Department should have withdrawn or not pressed the appeal.

The Tribunal observed that the appellant had lost interest in pursuing the appeals. Consequently, the appeals were dismissed in default.