ITAT Delhi Judgments — July 2018

The Tribunal held that the compensation received for transferring the management rights was taxable as capital gains. It reasoned that the amended Section 55(2)(a) of the IT Act, which deems the cost of acquisition of goodwill to be nil if not incurred, was applicable, overriding the earlier Supreme Court decision.

The Tribunal held that as per CBDT Circular No. 21/2015, the Department should not file appeals where the tax effect does not exceed Rs. 10 lakhs. The Revenue's appeal was therefore not maintainable.

The Tribunal held that for completed assessments, additions under Section 153A can only be made if there is incriminating material found during the search. Since no such material was found for the unexplained loans/advances, the deletion of the addition by the CIT(A) was upheld.

The Tribunal dismissed the appeal for non-prosecution, citing the assessee's failure to appear and address defects. The assessee was granted liberty to file an application for recall of the order.

The Tribunal decided to remit the penalty proceedings to the Assessing Officer. This was because the quantum additions, on which the penalties were based, had already been remitted back to the Assessing Officer for fresh determination.

The Tribunal held that the payments for the transponder facility did not constitute royalty under Article 12 of the India-USA DTAA. Consequently, the assessee was not obligated to deduct tax at source under Section 195 of the Income Tax Act.

The Tribunal held that the payments for the transponder facility did not constitute royalty under Article 12 of the India-USA DTAA. Consequently, the assessee was not obligated to deduct tax at source under Section 195 of the Income Tax Act.

The Tribunal held that the DTAA between India and Sweden had been substituted, and the previous AAR ruling needed to be reconsidered in light of the new DTAA and its Protocol. The matter of expense allocation was also remitted due to insufficient documentation.

The Tribunal held that the dominant activity of the assessee was the promotion of golf, and the receipt of sponsorship fees was incidental. Following the Delhi High Court's decision in India Trade Promotion Organization, the Tribunal ruled that mere receipt of fees does not negate charitable character if the dominant objective is not profit-making.

The Tribunal held that the Revenue's appeal should not have been pressed or should have been withdrawn as per CBDT guidelines. Consequently, the Revenue's appeal was dismissed, and the assessee's cross-objection was allowed.

The Tribunal decided to remit the penalty proceedings to the Assessing Officer. This was because the quantum additions, on which the penalties were based, had already been remitted back to the Assessing Officer for fresh determination.

The Tribunal held that the CIT erred by not providing the assessee an opportunity to respond to the AO's adverse report before rejecting the registration. This violated the principles of natural justice.

The Tribunal held that the PCIT wrongly assumed jurisdiction under Section 263. The PCIT's assumption that the assessee had added back the loss while computing normal taxable profit and treated it as a provision for diminution in value of shares was factually incorrect.

The Tribunal noted that as per CBDT Circular No. 21/2015, appeals with a tax effect below Rs. 10 lakhs should not be pressed by the Revenue. Therefore, the appeal was dismissed.

The Tribunal held that since the assessees had declared income and investment in gold bars before the Settlement Commission in 2009, and the Settlement Commission's order had attained finality, the Assessing Officer could not make a fresh addition for the gold bars found in the later search. The Tribunal accepted the explanation that the gold bars found were a replacement of those declared earlier.

The Tribunal held that the payments for the transponder facility did not constitute royalty under Article 12 of the India-USA DTAA. Consequently, the assessee was not obligated to deduct tax at source under Section 195 of the Income Tax Act.

The Tribunal held that the facts and circumstances were similar to previous years where exemption under Section 11(1) was allowed, and the jurisdictional High Court had upheld those decisions. The Tribunal also followed previous rulings to delete the addition of notional interest and allow depreciation on assets purchased from application of income.

The Tribunal held that the facts and circumstances were similar to previous years where exemption under Section 11(1) was allowed, and the jurisdictional High Court had upheld those decisions. The Tribunal also followed previous rulings to delete the addition of notional interest and allow depreciation on assets purchased from application of income.

The Tribunal held that the partnership deed clearly specified the remuneration and interest payable to partners, and the payments were in accordance with these terms. Therefore, the disallowances of working allowance and interest were incorrect.

The Tribunal held that the facts and circumstances were similar to previous years where exemption under Section 11(1) was allowed, and the jurisdictional High Court had upheld those decisions. The Tribunal also followed previous rulings to delete the addition of notional interest and allow depreciation on assets purchased from application of income.

The Tribunal held that the reopening of assessment was bad in law as it was done after four years without any failure on the part of the assessee to disclose material facts, and it was based on a change of opinion. Therefore, the reassessment orders were quashed.

The Tribunal held that the reopening of assessment was bad in law as it was done after four years without any failure on the part of the assessee to disclose material facts, and it was based on a change of opinion. Therefore, the reassessment orders were quashed.

The Tribunal affirmed the CIT(A)'s decision, holding that the assessee's educational activities, including coaching and financial assistance to needy students, are charitable in nature. The proviso to Section 2(15) was deemed inapplicable as the activities were primarily educational, not 'advancement of any other object of general public utility'.

The Tribunal decided that the interest claimed as deduction under the One Time Settlement Scheme (OTS Scheme) was not allowable. The assessee had not waived off any principal amount but only interest, which was not in line with the scheme's intent.

The Tribunal held that the reassessment proceedings were bad in law as there was no fresh tangible material before the AO. The information regarding prior period income was already available during the original assessment, and the reopening was based on a mere change of opinion, which is not permissible.

The Tribunal held that the assessee was not interested in prosecuting the appeal. Therefore, the appeal was dismissed for want of prosecution.

The Tribunal noted that CBDT Circular No. 21 of 2015 instructs that departmental appeals with a tax effect below Rs. 10 lacs should not be filed or pressed. As this appeal falls within that limit and is not an exception, it is not maintainable.

The Tribunal set aside the impugned order and remitted the matter back to the Assessing Officer. The AO is to decide the issues of income from Indian concerns for technical services and expense allocation based on the Tribunal's order for the preceding year.

The Tribunal held that the date of business set up was a debatable issue with differing opinions among authorities. Following the Supreme Court's decision in Reliance Petro Products, mere disallowance of expenses does not automatically trigger penalty proceedings.

The Tribunal held that the appeal was not maintainable as it was filed against the CBDT's circular regarding the monetary limit for appeals. The Revenue's appeal was dismissed as not pressed.

The Tribunal held that the payments for the transponder facility did not constitute royalty under Article 12 of the India-USA DTAA. Consequently, the assessee was not obligated to deduct tax at source under Section 195 of the Income Tax Act.

The Tribunal held that the issue of adjustment on account of high depreciation and the consideration of cash profits for TNMM needed to be decided afresh by the TPO. The Tribunal relied on previous coordinate bench decisions regarding these specific points.

The Tribunal held that the CIT(A) is required to decide appeals on merits and provide reasons, even if the assessee is unrepresented. The ex-parte dismissal without merit-based reasoning is unsustainable.

The Tribunal held that there was no concealment of income or furnishing of inaccurate particulars. The explanation provided by the assessee for the cash transactions and salary provision was not disproved, and the contravention of Section 40A(3) alone did not constitute concealment. Therefore, the penalty was unwarranted.

The Tribunal held that the cash found with the assessee was unexplained income as the assessee failed to discharge the onus of proving its source. However, the undated cheque was considered a piece of paper with no monetary value, and thus no addition was warranted.

The Tribunal held that Infosys Ltd. cannot be considered a comparable company due to significant differences in risk profile, nature of services, and revenue. The assessee's appeal was partly allowed, and the revenue's appeal was dismissed.

The Tribunal, following established legal precedents, decided that the appeal should be dismissed for want of prosecution. The assessee was informed they could pray for a recall of the order if serious about pursuing the appeal.

The Tribunal held that the Resale Price Method (RPM) was the most appropriate method for benchmarking the taxpayer's trading segment transactions, overturning the TPO's substitution with TNMM. Regarding AMP expenses, the Tribunal found that the taxpayer was not afforded an opportunity of being heard before adjustments were made, thus remitting this issue back to the TPO.

The Tribunal held that the Resale Price Method (RPM) was the most appropriate method for benchmarking the taxpayer's trading segment transactions, overturning the TPO's substitution with TNMM. Regarding AMP expenses, the Tribunal found that the taxpayer was not afforded an opportunity of being heard before adjustments were made, thus remitting this issue back to the TPO.

The Tribunal held that the CIT(A) is required to decide appeals on merits and provide reasons, even if the assessee is unrepresented. The ex-parte dismissal without merit-based reasoning is unsustainable.

The Tribunal held that Infosys Ltd. cannot be considered a comparable company due to significant differences in risk profile, nature of services, and revenue. The assessee's appeal was partly allowed, and the revenue's appeal was dismissed.

The Tribunal followed the principle of consistency, referring to its own prior decision in the assessee's own case for AY 2009-10. In that prior case, the AO had accepted the declared rental income after the matter was remitted back by the Tribunal.

The Tribunal allowed the appeal regarding customs duty on leased machines, finding it should not have been capitalized. However, it dismissed the ground related to the disallowance of countervailing duty paid in earlier years and written off in the current year, deeming it a prior period expense.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance of sundry creditors, finding the AO's reasoning flawed and the exercise revenue neutral. It also upheld the deletion of disallowance for non-deduction of TDS, stating hotel payments are not 'work' under Section 194C. The addition to capital gains was deleted as it was revenue neutral, and the restriction of personal expenses was also upheld.

The Tribunal held that the CIT(A) is required to decide appeals on merits and provide reasons, even if the assessee is unrepresented. The ex-parte dismissal without merit-based reasoning is unsustainable.