ITAT Delhi Judgments — January 2019

The Tribunal held that the book adjustment due to change in depreciation method is not taxable income and directed its deletion. Regarding Section 14A, the Tribunal restricted the disallowance to Rs. 2,70,481/-, agreeing with the assessee's offered disallowance of indirect expenses.

The Tribunal found that the CIT(A) had failed to adjudicate a crucial legal ground raised by the assessee. Therefore, the matter was set aside to the CIT(A) for fresh adjudication.

The Tribunal found that the assessee was not given a proper opportunity to present their case before either the AO or the CIT(A). Therefore, in the interest of justice, the matter was remanded back to the AO for a fresh assessment.

The Tribunal held that the reassessment proceedings initiated under Section 147 were not in accordance with law and were without jurisdiction. The Tribunal quashed the reassessment.

The Tribunal observed that the assessee's consistent non-appearance indicated a lack of interest in prosecuting the appeal. Consequently, the appeal was dismissed for want of prosecution.

The Tribunal held that the disallowance in quantum proceedings does not automatically warrant penalty for furnishing inaccurate particulars. The assessee had discharged its primary onus by providing evidence, and the failure of parties to appear did not render the evidence false.

The Tribunal held that the show cause notice for penalty was invalid as it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. Therefore, the penalty was not leviable.

The Tribunal noted that the issue was decided in previous years and directed the Assessing Officer to re-calculate the disallowable expenditure based on specific rates for different components of the lease rent, including allowing depreciation on the capital portion.

The Tribunal held that the CIT(A) erred in enhancing the income by treating the sale consideration as unexplained income under Section 68 without proper justification. The Tribunal also found that the CIT(A) lacked the jurisdiction to introduce a new source of income not considered by the AO.

The Tribunal held that the disallowance in quantum proceedings does not automatically warrant penalty for furnishing inaccurate particulars. The assessee had discharged its primary onus by providing evidence, and the failure of parties to appear did not render the evidence false.

The Tribunal held that the appeal filed by the Revenue was not maintainable as the tax effect involved was below Rs. 20 lakhs, citing CBDT Circular No. 03/2018. Furthermore, the Tribunal found that the issue had been decided in favour of the assessee by the Hon'ble Supreme Court in CIT vs. Rajasthan and Gujarati Charitable Foundation Poona. The Supreme Court held that depreciation is allowable on assets even if their entire cost was treated as application of income under Section 11(1)(a), as normal depreciation is a legitimate deduction in computing the real income on commercial principles. The Tribunal noted that the amendment to Section 11(6) of the IT Act, effective from Assessment Year 2015-16, was prospective and not applicable to the impugned assessment year (2012-13). Consequently, the Tribunal affirmed the CIT(A)'s order allowing the depreciation claim of Rs. 63,14,679/-. The grounds raised by the Revenue were dismissed.

The Tribunal held that payments made prior to the sale of the old property are eligible for deduction under Section 54. It also found that substantial investment within three years constituted compliance, allowing the claim.

The Tribunal held that rejection of books of accounts and estimation of net profit solely based on a lower profit rate compared to previous years, without pointing out any specific defects or discrepancies in the audited books, is not sustainable. The AO was directed to re-compute the income based on the declared net profit rate.

The Tribunal found that the purchases were not fully verifiable and the book results were unreliable. However, it also noted that the assessed income of 12.33% of turnover was excessively high compared to comparable cases.

The Tribunal upheld the CIT(A)'s order, stating that the cash found was explained by the cash balance in the books and the jewellery was explained by the wealth tax records. The AO erred in making additions without sufficient evidence of the assets being unaccounted.

The Tribunal held that the interest received on enhanced compensation for compulsory acquisition of land is in the nature of compensation and is exempt under Section 10(37) of the Income Tax Act. Therefore, the addition made by the Assessing Officer is not sustainable.

The Tribunal held that the CIT(A) erred in enhancing the income by introducing a new source of income not considered by the AO. The Tribunal also found that the CIT(A) incorrectly placed the burden of proof on the assessee regarding the source of funds for the vendee.

The Tribunal held that the appeal filed by the Revenue was below the revised monetary limit for filing appeals to the ITAT as per CBDT Circular No. 3/2018. Therefore, the appeal was dismissed on this ground.

The Tribunal held that the issue was covered by a previous decision of the ITAT in the assessee's own case for AY 2008-09, where the royalty payment was allowed. Therefore, the disallowance made by the AO was not sustainable.

The Tribunal found that the CIT(A) order was passed in a slip-shod manner without providing proper reasoning. Therefore, the matter was remitted back to the CIT(A) for a fresh decision.

The Tribunal held that the commission payments were commercially expedient and similar rates were accepted in prior years. It also found that the incentive payment was in the nature of salary to an ex-employee, whose income was below the taxable limit, thus not requiring TDS.

The Tribunal noted that the lower authorities, including the CIT(A) who passed an ex parte order, did not properly examine the evidence submitted by the assessee. Therefore, the Tribunal set aside the issue back to the CIT(A) for fresh adjudication.

The Tribunal held that the AO failed to conduct proper inquiries into the suspicious LTCG transactions, especially in light of information from the investigation wing and CBDT guidelines on penny stocks. Therefore, the PCIT's order setting aside the assessment and directing fresh inquiry was upheld.

The Tribunal held that assessments for AY 2003-04 and 2004-05 were beyond the scope of Section 153C as they were time-barred. For subsequent assessment years, the additions were set aside and restored to the AO for fresh adjudication.

The Tribunal held that the receipts from BGEPIL were business receipts chargeable to tax in India, not mere reimbursements. However, it agreed with the assessee that the income should be taxed under Section 44BB of the Income-tax Act, not Section 44DA.

The Tribunal held that the appeal should not have been filed or should have been withdrawn given the low tax effect. The appeal was dismissed without going into the merits of the case.

The Tribunal held that the apportionment of common expenses is an estimate and a difference of opinion on the methodology does not amount to furnishing inaccurate particulars. Relying on High Court and Apex Court judgments, it was concluded that an incorrect claim in law does not attract penalty under Section 271(1)(c).

The Tribunal held that assessments for AY 2003-04 and 2004-05 were beyond the scope of Section 153C as they were time-barred. For subsequent assessment years, the additions were set aside and restored to the AO for fresh adjudication.

The Tribunal held that the assessee's claim to consider the sale value at Rs. 16 lakhs was not justified, upholding the CIT(A)'s direction to use Rs. 34 lakhs. However, the Tribunal remanded the issue of deduction under Section 54/54F back to the Assessing Officer for fresh consideration.

The Tribunal held that assessments for AY 2003-04 and 2004-05 were beyond the scope of Section 153C as they were time-barred. For subsequent assessment years, the additions were set aside and restored to the AO for fresh adjudication.

The Tribunal held that assessments for AY 2003-04 and 2004-05 were beyond the scope of Section 153C as they were time-barred. For subsequent assessment years, the additions were set aside and restored to the AO for fresh adjudication.

The Tribunal held that assessments for AY 2003-04 and 2004-05 were beyond the scope of Section 153C as they were time-barred. For subsequent assessment years, the additions were set aside and restored to the AO for fresh adjudication.

The Tribunal held that the assessee had discharged its onus by providing the identity, creditworthiness, and genuineness of the transaction. The investor had provided his Aadhar Card, ITR, statement of affairs, and confirmed account, showing withdrawal from his capital in a firm and reflecting the investment in his balance sheet.

The Tribunal noted that similar issues for prior assessment years were remanded for detailed enquiry. Following a coordinate bench's decision, the Tribunal set aside the impugned order and remanded the matter to the CIT(A) for fresh consideration along with other pending appeals.

The Tribunal held that the receipts from BGEPIL were business receipts chargeable to tax in India, not mere reimbursements. However, it agreed with the assessee that the income should be taxed under Section 44BB of the Income-tax Act, not Section 44DA.

The Tribunal held that the word 'payable' in Section 40(a)(ia) includes 'paid' expenses, citing a Supreme Court judgment. The Tribunal also noted the assessee failed to provide evidence that the payees had already paid tax on the amounts received.

The Tribunal held that the repayment of the liability in cash installments was done with a bona fide and reasonable belief that it was not prohibited by law, and the transaction was not for tax evasion. Therefore, penalty under Section 271E was not leviable.

The Tribunal held that the receipts from BGEPIL were business receipts chargeable to tax in India, not mere reimbursements. However, it agreed with the assessee that the income should be taxed under Section 44BB of the Income-tax Act, not Section 44DA.

The Tribunal upheld the DRP's decision to exclude the seven comparable companies, finding that they were either government-owned or functionally dissimilar to the assessee's business. The Tribunal noted that the High Court had previously dismissed the Revenue's appeal on similar grounds.

The Tribunal held that the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable in law. However, the matter was restored to the AO to pass a fresh order if the decision of the Hon'ble Apex Court modifies or reverses the jurisdictional High Court's decision.

The Tribunal upheld the CIT(A)'s decision to delete the penalty. It found that all facts were disclosed, the loan and interest were genuine, and the treatment of interest was revenue neutral, thus not amounting to concealment or furnishing inaccurate particulars.

The Tribunal held that the receipts from BGEPIL were business receipts chargeable to tax in India, not mere reimbursements. However, it agreed with the assessee that the income should be taxed under Section 44BB of the Income-tax Act, not Section 44DA.

The Tribunal held that the long-term capital loss was a disclosure in the P&L account, and the failure to add it back in the computation of income was a mistake by the accountant, not a deliberate attempt to conceal income. Regarding entertainment expenses, the Tribunal noted that a mere disallowance of a claim does not automatically attract penalty.

The Tribunal upheld the deletion of additions for AY 2004-05, following its prior decision that buying agency commission is not fee for technical services. The penalty for AY 2007-08 was also deleted as the assessee had a bonafide belief that reimbursements were not taxable and offered other income in a revised return.

The Tribunal held that the CIT's power under Section 12AA is to either register or refuse registration, not to qualify the trust's category. The assessment of whether activities fall under charitable purposes is for the Assessing Officer each year.

The Tribunal held that the provision for expenditure was an allowable deduction as it represented a crystallized liability incurred during the financial year, even if paid after the year-end but before account finalization. The Tribunal relied on the Supreme Court decision in Bharat Earth Movers.

The Tribunal held that depreciation on assets acquired by a charitable institution, where the cost was treated as application of income, is allowable. For provisions for gratuity and leave encashment, the matter was restored to the CIT(A) for a reasoned order, following a previous year's order.

The Tribunal held that adding both estimated profit and peak credit of bank deposits amounts to double addition and is not permissible. It also held that penalty under Section 271(1)(b) cannot be levied if service of notice is not proven, especially when the name on the notice differs from the assessee's name.

The Tribunal held that depreciation on assets cannot be denied even if their expenditure was treated as application of income in the year of acquisition. Depreciation must be allowed for computing income from those assets in subsequent years.

The Tribunal held that adding both estimated profit and peak credit of bank deposits amounts to double addition and is not permissible. It also held that penalty under Section 271(1)(b) cannot be levied if service of notice is not proven, especially when the name on the notice differs from the assessee's name.