ITAT Delhi Judgments — July 2016

For AY 2002-03, the Tribunal allowed the appeal for statistical purposes, remitting the issue of Rs. 2 lac share application money to the AO for fresh decision, subject to the AO deciding the legal issue against the assessee. For AY 2005-06, the Tribunal held that the assessment was not completed before the search, thus the additional ground failed, and the matter was remitted to the AO for allowing cross-examination.

The Tribunal found that neither the AO nor the CIT(A) properly appreciated the facts. The Tribunal set aside the issue to the AO to decide afresh, directing that if the recovery was as per contract terms for materials/expenses utilized by the assessee, the deduction should be allowed.

For AY 2002-03, the Tribunal allowed the appeal for statistical purposes, remitting the issue of Rs. 2 lac share application money to the AO for fresh decision, subject to the AO deciding the legal issue against the assessee. For AY 2005-06, the Tribunal held that the assessment was not completed before the search, thus the additional ground failed, and the matter was remitted to the AO for allowing cross-examination.

The Tribunal held that the Principal Commissioner of Income Tax was not justified in cancelling the registration granted to the assessee under Section 12A of the Act by invoking the provisions of Section 12AA of the Act. The Tribunal noted that a search was conducted, but no evidence of receipt of donation or capitation fee was found. The presumption under Section 292C of the Act was rebutted by the assessee's denial, and the purchases for building construction and laptops were made through associated concerns at reasonable rates, even lower than market rates. The banks had granted term loans after proper verification, and the assessee was repaying them without default. Crucially, the Tribunal found that the Pr. CIT had not recorded any finding that the activities of the assessee trust were not genuine or were not being carried out in accordance with its objects, which is a precondition for cancellation under Section 12AA(3). The Tribunal relied on the High Court judgments in CIT vs. Babu Mohan Lal Arya Smarak Educational Trust, CIT vs. Varansai Catholic Education Society, and CIT vs. Ved Niketan Dham, Public Charitable Trust, which emphasized the requirement of specific findings regarding genuineness and adherence to objects for cancellation. The appeal of the assessee was allowed.

The Tribunal held that the appeal was not maintainable as it violated the CBDT circular regarding pecuniary limits for filing appeals. The appeal was dismissed on this technical ground.

The Tribunal deleted the disallowance on purchases, salaries, and workmen expenses, finding no justification. For conveyance and telephone expenses, a 10% disallowance was sustained due to the possibility of personal element. The lump sum addition to sales was deleted as it was based on surmises.

The Tribunal held that while personal use of facilities cannot be ruled out, the disallowance should be restricted to 3% of total expenses. Regarding commission, the Tribunal acknowledged market competition but found the assessee's substantiation lacking, restricting the allowable expenditure to 1% of gross sales.

The Tribunal held that the AO imposed penalty based on wrong facts and figures, ignoring earlier assessment orders where similar claims were allowed. The CIT(A) also failed to adjudicate the factual discrepancy and confirmed the penalty mechanically.

The Tribunal held that the AO had taken a plausible view in allowing both advertisement and CSR expenses. The CIT wrongly assumed jurisdiction under Section 263 as the AO's order was not unsustainable in law, and no contrary decisions were pointed out.

The Tribunal held that the disallowance under Section 14A cannot exceed the amount of exempt income earned by the assessee. Following the Delhi High Court's decision, the disallowance was restricted to the extent of the dividend income.

The Tribunal found that the CIT(A) passed an ex-parte order without clarity on whether the assessee was properly served and heard. Therefore, the matter was set aside to the CIT(A) for fresh adjudication after providing a reasonable opportunity of being heard.

The Tribunal upheld the deletion of the notional interest disallowance. It agreed with the CIT(Appeals) that since the funds were embezzled and not intentionally advanced, the question of charging or forgoing interest did not arise, and the assessee had surplus funds.

The Tribunal held that the appeal was filed in violation of CBDT Circular No. 21/2015, which prescribes a pecuniary limit for filing appeals before the ITAT. The circular was made applicable retrospectively.

The Tribunal upheld the deletion of the notional interest disallowance. It agreed with the CIT(Appeals) that since the funds were embezzled and not intentionally advanced, the question of charging or forgoing interest did not arise, and the assessee had surplus funds.

The Tribunal upheld the CIT(A)'s order, stating that the rejection of books of accounts was not justified as no defects were pointed out by the AO. A mere fall in GP rate from the preceding year, especially with increased sales, is not a sole reason for rejection.

The ITAT, in the interest of justice, decided to remit the matter back to the CIT(A) for a decision on merits. The CIT(A) was directed to provide a proper hearing to the assessee.

The Tribunal held that while the objects of the trust appeared charitable, the assessee could not establish the genuineness of its activities before the CIT(E). However, the CIT(E) dismissed the application without providing a sufficient opportunity for the assessee to explain and establish its claim.

The Tribunal held that making an unsustainable claim does not automatically amount to furnishing inaccurate particulars. Since the penalty order was silent on how satisfaction was reached and a significant portion of the addition was deleted in quantum appeal, the penalty was set aside.

The Tribunal held that additions under Section 68 cannot be made in the hands of conduit companies when the Settlement Commission and Additional CIT have directed that such transactions should be taxed in the hands of beneficiaries. The order of the Settlement Commission was considered binding.

The Tribunal held that the assessee is eligible for the benefit of Section 44BB for hire charges of the drilling rig, applying the deemed profit rate of 10%. It was also held that receipts from providing drilling rigs on hire were not royalty and were taxable under Section 44BB, not Section 44DA or 115A.

The Tribunal held that the assessee had disclosed all particulars and provided bonafide explanations, and there was no concealment of income or furnishing of inaccurate particulars. Therefore, the penalty was not leviable.

The Tribunal held that the AO and CIT(A) erred in making the addition in the assessee's hands as the bank account and deposits clearly belonged to the firm. The evidence provided by the assessee was not properly considered.

The Tribunal upheld the deletion of the notional interest disallowance. It agreed with the CIT(Appeals) that since the funds were embezzled and not intentionally advanced, the question of charging or forgoing interest did not arise, and the assessee had surplus funds.

The Tribunal found that the CIT(A) order was ex parte and that the assessee claimed not to have been given a proper opportunity to present evidence. Considering the business of the assessee and the high profit rate implied by the additions, the Tribunal restored the issue to the CIT(A) for fresh adjudication.

The Tribunal held that the disallowance under Section 14A should be restricted to the amount of exempt income received. It also directed the AO to recompute book profits under Section 115JB based on the revised Section 14A disallowance. The Tribunal dismissed the Department's appeal regarding notional interest.

The Tribunal held that the additions made by the AO and confirmed by the CIT(A) were not sustainable as they were based on suspicion and inadequate evidence. The documents relied upon lacked crucial details like the assessee's name, handwriting, or proof of payment.

The Tribunal held that the additions made by the AO and confirmed by the CIT(A) were not sustainable as they were based on suspicion and inadequate evidence. The documents relied upon lacked crucial details like the assessee's name, handwriting, or proof of payment.

The Tribunal upheld the deletion of the notional interest disallowance. It agreed with the CIT(Appeals) that since the funds were embezzled and not intentionally advanced, the question of charging or forgoing interest did not arise, and the assessee had surplus funds.

The Tribunal held that the appeal was filed in violation of CBDT Circular No. 21/2015, which sets a pecuniary limit of Rs. 10 lakh for filing appeals before the ITAT. The circular was made applicable retrospectively.

The Tribunal upheld the CIT(A)'s decision to estimate the net profit at 8% of gross receipts, finding it reasonable. It also affirmed that once income is estimated, no further disallowances from expenses are warranted.

The Tribunal noted that similar issues in preceding assessment years were remitted to the AO for fresh decision. Following this precedent, the Tribunal set aside the impugned order and sent the matter back to the AO.

The Tribunal upheld the deletion of the notional interest disallowance. It agreed with the CIT(Appeals) that since the funds were embezzled and not intentionally advanced, the question of charging or forgoing interest did not arise, and the assessee had surplus funds.

The Tribunal held that the department ought not to have filed the appeal given the low tax effect, as per CBDT circulars and Section 268A of the Income Tax Act. The appeal was dismissed without going into the merits of the case.

The Tribunal upheld the CIT(A)'s order, noting that the Revenue had accepted similar orders in previous assessment years. The Tribunal found no reason to interfere with the CIT(A)'s justification for the disallowance of proportionate interest.

The Tribunal held that depreciation is an allowance, not an expenditure, for the purpose of Section 10(29). Therefore, it should not be excluded from gross receipts when computing the deductible income.

The Tribunal held that the disallowance under Section 14A should be restricted to the amount of exempt income received. It also directed the AO to recompute book profits under Section 115JB based on the revised Section 14A disallowance. The Tribunal dismissed the Department's appeal regarding notional interest.

The Tribunal held that the loss due to embezzlement is an allowable business loss if it arises out of and is incidental to the business. It found that the assessee had provided a scientific basis for a portion of the loss (Rs. 37,59,297/-) through stock reconciliation and FIR filing.

The Tribunal held that since the addition, which formed the basis for the penalty, was deleted, the penalty could not be sustained. Therefore, the penalty was cancelled.

The Tribunal upheld the deletion of the notional interest disallowance. It agreed with the CIT(Appeals) that since the funds were embezzled and not intentionally advanced, the question of charging or forgoing interest did not arise, and the assessee had surplus funds.

The Tribunal held that the assessee is eligible for the benefit of Section 44BB for hire charges of the drilling rig, applying the deemed profit rate of 10%. It was also held that receipts from providing drilling rigs on hire were not royalty and were taxable under Section 44BB, not Section 44DA or 115A.

The Tribunal held that reassessment proceedings initiated beyond four years were not valid as there was no failure on the part of the assessee to disclose material facts. The AO had previously treated the amount as business income and dropped rectification proceedings, indicating a change of opinion.

The Tribunal held that the assessee is eligible for the benefit of Section 44BB for hire charges of the drilling rig, applying the deemed profit rate of 10%. It was also held that receipts from providing drilling rigs on hire were not royalty and were taxable under Section 44BB, not Section 44DA or 115A.

The Tribunal held that expenses like security charges, water, electricity, and salaries for an accountant and office boy are necessary for maintaining the corporate structure and assets, especially when licenses are being kept active. Therefore, these expenses should be allowed.

The Tribunal upheld the deletion of the notional interest addition, agreeing that the funds were embezzled and not intentionally advanced. It also held that furnishing inaccurate particulars for penalty under Section 271(1)(c) requires more than just a claim not accepted by the revenue.

The Tribunal admitted additional evidence furnished by the assessee, which was relevant to the controversy. It found that these documents were not available during the lower authorities' proceedings and remitted the case back to the AO/TPO for fresh adjudication.