ITAT Delhi Judgments — February 2019

The Tribunal upheld the addition of Rs. 14,62,636/- on account of undisclosed closing stock, stating that it was not derived from manufacturing activities eligible for Section 80JJA deduction. The addition of Rs. 4,70,000/- for unsubstantiated expenses was also confirmed.

The Tribunal upheld the decision of the CIT(A) by following its own earlier decision in the assessee's own case for a preceding assessment year. The Tribunal found no distinguishing factors for the current year and noted that the issue of commission on sales to government undertakings was decided in favor of the assessee by the Hon'ble Delhi High Court.

The Tribunal held that the CIT(A)'s reliance on an old inspection report for the current assessment year was not sufficient to prove free medical aid. Therefore, the case was remanded back to the CIT(A) for fresh adjudication after conducting an inquiry into whether the assessee provided free medical aid to the poor during the assessment year.

The Tribunal held that the penalty notice was bad in law as it did not specify under which limb of Section 271(1)(c) the penalty was being levied. Therefore, the penalty was cancelled.

The Tribunal held that the appeal was not maintainable before the Delhi Bench as the Assessing Officer's location determined jurisdiction, and the tax effect was below the monetary limit for appeals as per CBDT circular.

The Tribunal held that the transfer pricing adjustment for management fees was incorrect as the services were interlinked with freight forwarding and the TPO erred in treating the transaction value as Nil. The disallowance under Section 14A was also allowed in some years due to no new investments and dividend reinvestment, while in other years it was remanded.

The Tribunal held that the assessee unconditionally withdrew 2/3rd of the compensation amount without any security, indicating certainty of income. Therefore, this portion was crystallised as income in the year under consideration.

The Tribunal held that the MOU did contain a clause for interest payment on the refund of the deposit. It also noted that the interest was paid as per the terms of the contract, the recipient offered it to tax, and TDS was deducted.

The Tribunal held that the rejection of the application by the CIT(E) was not sustainable. Since the assessee had already been granted registration under Section 12A, indicating satisfaction with its charitable objects and activities, the denial of 80G approval was unwarranted.

The Tribunal agreed with both parties to set aside the issue to the CIT(E) for fresh consideration. The CIT(E) is directed to independently examine the application based on the details furnished as of the application date and verify the basic conditions for registration.

The Tribunal held that the transfer pricing adjustment for management fees was incorrect as the services were interlinked with freight forwarding and the TPO erred in treating the transaction value as Nil. The disallowance under Section 14A was also allowed in some years due to no new investments and dividend reinvestment, while in other years it was remanded.

The Tribunal held that the partnership deed specified the manner of quantifying remuneration by stating it would be the amount allowable under Section 40(b)(v) and shared in the profit-sharing ratio. The Tribunal also noted the principle of consistency, as a similar disallowance was deleted in the preceding assessment year without departmental appeal.

The Tribunal held that penalty under Section 271(1)(c) is not leviable as the assessee's claims were bona fide and supported by contractual clauses or necessary for sale execution. The penalty order was set aside.

The Tribunal held that the AO did not apply his mind independently to the information received from the Investigation Wing. The reasons recorded for reopening were merely a reproduction of the investigation report and lacked tangible material, constituting a borrowed satisfaction. Therefore, the reopening of assessment was quashed.

The Tribunal held that the payments received under the BREW agreements and test tools agreements do not constitute royalty income under the Income Tax Act or the India-US DTAA. The Tribunal distinguished between the right to use a copyrighted article and the right to use the copyright itself.

The Tribunal held that the interest expenses incurred on borrowed capital for acquiring land treated as stock-in-trade are deductible. It also noted that similar expenses were allowed in previous assessment years, and the reliance on Supreme Court decisions for disallowance was misplaced.

The Tribunal held that the transfer pricing adjustment for management fees was incorrect as the services were interlinked with freight forwarding and the TPO erred in treating the transaction value as Nil. The disallowance under Section 14A was also allowed in some years due to no new investments and dividend reinvestment, while in other years it was remanded.

The Tribunal held that the interest expenses incurred on borrowed capital for acquiring land treated as stock-in-trade are deductible. It also noted that similar expenses were allowed in previous assessment years, and the reliance on Supreme Court decisions for disallowance was misplaced.

The Tribunal held that additional depreciation is an integral part of depreciation under Section 32(1) and Explanation 5 applies, making it mandatory. The issue regarding depletion of producing properties was decided in favour of the assessee based on prior year's ruling.

The Tribunal upheld the addition of Rs. 8,64,221/- made under Section 40(a)(ia) for non-deduction of TDS on labour payments. The Tribunal found that the assessee contravened Section 194C and Section 40(a)(ia) of the Act.

The Tribunal held that the interest expenses incurred on borrowed capital for acquiring land treated as stock-in-trade are deductible. It also noted that similar expenses were allowed in previous assessment years, and the reliance on Supreme Court decisions for disallowance was misplaced.

The ITAT held that the CIT(A) erred by dismissing the appeal solely for non-prosecution without deciding on merits. The CIT(A) is required to provide reasons for the decision, even in the absence of the assessee.

The Tribunal held that the MOU did contain a clause for interest payment on the refund of the deposit. It also noted that the interest was paid as per the terms of the contract, the recipient offered it to tax, and TDS was deducted.

The Tribunal held that the receipts were not taxable as FTS under Section 44D but were taxable as business income under the normal provisions of the Income Tax Act. This decision was based on the principle of consistency and prior ITAT judgments on similar facts.

The Tribunal held that for most creditors, the assessee had sufficiently proved the identity, creditworthiness, and genuineness of the transactions. However, for one creditor, Smt. Kamini Ahluwalia, the Tribunal confirmed the addition due to unexplained cash deposits prior to the loan.

The Tribunal held that the transfer pricing adjustment for management fees was incorrect as the services were interlinked with freight forwarding and the TPO erred in treating the transaction value as Nil. The disallowance under Section 14A was also allowed in some years due to no new investments and dividend reinvestment, while in other years it was remanded.

The Tribunal held that the CIT(A) erred in deleting the addition without proper verification of the facts. The assessee failed to discharge its onus under Section 68 by not proving the identity, creditworthiness, and genuineness of the share transaction. The matter was set aside to the AO for fresh adjudication.

The Tribunal held that the booking rights constituted a capital asset and their sale was a transfer. The AO correctly treated the income as STCG in AY 2008-09 as the holding period was less than 36 months. The indexation based on installment payments was also upheld.

The Tribunal held that the denial of cross-examination and the failure to provide the investigation wing's reports violated the principles of natural justice. Consequently, the additions made by the AO and confirmed by the CIT(A) were deemed invalid and bad in law.

The Tribunal held that the denial of cross-examination and the failure to provide the investigation wing's reports violated the principles of natural justice. Consequently, the additions made by the AO and confirmed by the CIT(A) were deemed invalid and bad in law.

The Tribunal held that the denial of cross-examination to the assessee and the failure to provide the investigation wing's report violated the principles of natural justice. Consequently, the additions made by the AO were deemed invalid.

The Tribunal held that the denial of cross-examination to the assessee and the failure to provide the investigation wing's report violated the principles of natural justice. Consequently, the additions made by the AO were deemed invalid.

The Tribunal held that the Assessing Officer (AO) is mandated to dispose of objections to a reassessment notice with a speaking order before proceeding with the assessment. The CIT(A), having co-terminus powers with the AO, also failed to adjudicate these objections. Therefore, the reassessment order is unsustainable.

The Tribunal held that the denial of cross-examination and the failure to provide the investigation wing's reports violated the principles of natural justice. Consequently, the additions made by the AO and confirmed by the CIT(A) were deemed invalid and bad in law.

The Tribunal found that the CIT(A) did not adequately verify whether the NGOs had declared the payments in their income returns. Therefore, the deletion of penalty was not justified without such verification. The matter was restored to the CIT(A) for a fresh decision.

The Tribunal held that the issue of AMP expenditure being an international transaction and the jurisdiction of the TPO to re-characterize it needed to be reconsidered. For AY 2012-13, certain grounds were allowed for statistical purposes, and one issue was remitted to the AO for verification. For AY 2013-14, similar issues were set aside to the TPO for fresh determination.

The Tribunal held that the Department should not file appeals before the Tribunal when the tax effect does not exceed Rs. 20 lakhs, as per CBDT Circular No. 3/2018. The Revenue's appeal was therefore not maintainable.

The Tribunal held that the assessee's non-appearance indicated a lack of interest in pursuing the appeal. Following established precedents, the appeal was dismissed as un-admitted.

The Tribunal held that the CIT(A) should have decided the appeal on merits, even in the absence of the assessee, by providing reasons for the decision. Simply dismissing for non-prosecution is not sustainable.

The Tribunal held that the assessee was no longer interested in pursuing the appeal due to non-appearance. Following established precedents, the appeal was dismissed as un-admitted.

The Tribunal held that the denial of cross-examination to the assessee and the failure to provide the investigation wing's report violated the principles of natural justice. Consequently, the additions made by the AO were deemed invalid.

The Tribunal dismissed the appeal, noting that the issue had been decided against the assessee by the jurisdictional High Court in earlier assessment years. However, liberty was granted to the assessee to take appropriate action if the Supreme Court decides the pending SLP in their favor.

The ITAT held that the CIT(A) should have decided the appeal on merits, even in the absence of the assessee, by providing reasons for the decision. Simply dismissing for non-prosecution is not sustainable.

The Tribunal held that the CIT(A) erred by dismissing the appeals for non-prosecution without deciding them on merits. The CIT(A) is required to provide reasons for the decision, even if the assessee is absent.

The ITAT held that the CIT(A) was required to decide appeals on merits with reasons, even in the absence of the assessee. Dismissing for non-prosecution without deciding on merits is not sustainable in law.

The Tribunal held that the mere disallowance of a claim, even if not challenged in appeal, does not automatically imply concealment or furnishing of inaccurate particulars. The penalty was quashed as the assessee had disclosed all necessary details.

The Tribunal upheld the decision of the CIT(A), stating that the assessee had discharged its onus under Section 68 by providing documentary evidence, including confirmations, balance sheets, and bank statements of the lender companies. The AO's adverse inferences were found to be baseless.

The Tribunal held that the services rendered by the non-resident company were inextricably connected with the prospecting, extraction, or production of mineral oil and thus fell under the purview of Section 44BB, not FTS. The CIT(A)'s order was upheld.

The Tribunal held that the issue of AMP expenditure being an international transaction and the jurisdiction of the TPO to re-characterize it needed to be reconsidered. For AY 2012-13, certain grounds were allowed for statistical purposes, and one issue was remitted to the AO for verification. For AY 2013-14, similar issues were set aside to the TPO for fresh determination.

The Tribunal held that the assessee failed to provide the rehabilitation scheme as directed by BIFR and the Tribunal. Arguments regarding working capital loan interest and write-back under Section 41(1) were not raised before lower authorities and thus not maintainable. The disallowance under Section 43B was upheld.