ITAT Delhi Judgments — May 2020

The Tribunal held that the AO should grant set-off for additional income declared in the 153A return against undisclosed income. It also directed the AO to adjudicate the issue of TDS non-deduction on interest expenses, restoring it to the CIT(A).

The Tribunal held that the AO should grant set-off for additional income declared in the 153A return against undisclosed income. It also directed the AO to adjudicate the issue of TDS non-deduction on interest expenses, restoring it to the CIT(A).

The Tribunal held that the assessee had a business connection and a Permanent Establishment (PE) in India. However, it found merit in the assessee's argument that 100% of the profit could not be attributed to the PE.

The Tribunal held that the AO should grant set-off for additional income declared in the 153A return against undisclosed income. It also directed the AO to adjudicate the issue of TDS non-deduction on interest expenses, restoring it to the CIT(A).

The Tribunal held that as per Article 14(4) of the India-Cyprus Double Taxation Avoidance Agreement (DTAA) applicable at the time, gains from the alienation of shares (other than those covered by specific articles) were taxable only in the country of residence of the alienator. Therefore, the capital gains were taxable only in Cyprus, and no TDS was required to be deducted by the Indian company.

The Tribunal held that the assessee had discharged the onus of proving the genuineness of the business loss. The Tribunal found that the cancellation of purchase orders by buyers and subsequent sale at a loss was a genuine business event, and the AO failed to establish that the loss was not genuine.

The Tribunal held that the date of purchase for Section 54F purposes is when the full consideration is paid and possession is obtained, not the date of the buyer's agreement. Therefore, the assessee was eligible for the exemption.

The Tribunal upheld the lower authorities' decision to treat capital gains as business income, citing previous ITAT rulings in the assessee's own case. The disallowance under Section 14A was also confirmed, and the ad-hoc disallowance of business expenses was upheld due to the assessee's admission.

The Tribunal held that the reassessment proceedings were wrongly initiated as the AO did not possess any fresh material. The issues raised were already considered during the original assessment, and the reassessment amounted to a mere change of opinion.

The Tribunal held that the assessee's activities qualify as 'education' under Section 2(15) and are not business. The CIT(E) erred in revising the assessment order, as the AO had conducted a proper inquiry. The revision order was set aside.

The Tribunal allowed Ground No. 6, finding that the AO had picked words and phrases from trustee statements without considering them holistically. The Tribunal noted that one trustee was elderly and had memory issues, and his access to papers was denied. Another trustee was appointed after the trust's creation and had no relation to the companies involved. The Tribunal held that the AO had not presented evidence to suggest EL was the real trustee. Regarding the AO's and CIT(A)'s view that trustees acted notionally and EL was the real trustee, the Tribunal held that the trust was formed to hold EL shares for the sole beneficiary, EL. Dividend income was directly credited to the trust and paid to the beneficiary, with minimal expenses. The Tribunal found no legal basis for the allegation that EL's facilities were utilized. The Tribunal also held that Clause 4.6.2 of the trust deed, which allows the beneficiary to give written instructions for selling shares, is not repugnant to the creation of an irrevocable trust, especially when the trust is for the beneficiary's benefit. The Tribunal referred to a similar clause in the Indian Oil Corporation case, which was accepted. Therefore, the Tribunal found no reason to draw adverse inferences about the trust not being irrevocable or the trustees acting notionally. Grounds 1 and 4 were treated as dismissed as no arguments were advanced by the appellant. The appeal was partly allowed.

The Tribunal held that issuing the notice under Section 143(2) on the same day the return was filed, without examining the return and other financial documents, indicated a mechanical approach by the AO. This rendered the assessment order without jurisdiction.

The Tribunal held that providing hostel facilities to students and staff is incidental to the main object of providing education and cannot be considered a business activity. Therefore, the surplus generated from hostel operations should not be treated as taxable business income.

The Tribunal held that passing a draft assessment order is mandatory under Section 144C, especially in remand proceedings. The AO's failure to do so rendered the assessment order bad in law and void ab initio.

The Tribunal held that for unabated assessments, additions cannot be made without incriminating material found during a search. Since no such material was found for the disallowances, the additions were deleted.

The Tribunal held that passing a draft assessment order is mandatory under Section 144C, especially in remand proceedings. The AO's failure to do so rendered the assessment order bad in law and void ab initio.

The Tribunal held that for unabated assessments, additions cannot be made without incriminating material found during a search. Since no such material was found, the additions were deleted.

The Tribunal held that for unabated assessments, additions cannot be made without incriminating material found during a search. Since no such material was found, the additions were deleted.

The Tribunal held that the land in question was agricultural land, exempt from capital gains tax, based on revenue records and accepted agricultural income in prior years. The additions made by the Assessing Officer were therefore unsubstantiated.

The Tribunal held that the land in question was agricultural land, exempt from capital gains tax, based on revenue records and accepted agricultural income in prior years. The additions made by the Assessing Officer were therefore unsubstantiated.

The Tribunal directed the exclusion of certain comparable companies from the TPO's list due to functional dissimilarity, super normal profits, or lack of adequate data. Consequently, the assessee's grounds related to other issues became academic.

The Tribunal held that the assessment under Section 153A was made based on third-party documents, not incriminating material found from the assessee's premises. Therefore, the assessment was bad in law and void ab initio.

The Tribunal held that while the reopening of assessment was valid, the addition for bogus purchases could not be the entire amount. The addition was restricted to 2% of the purchase amount for commission and 5% for investment in goods sold.

The Tribunal held that while the reopening of assessment was valid, the addition for bogus purchases could not be the entire amount. The addition was restricted to 2% of the purchase amount for commission and 5% for investment in goods sold.

The Tribunal held that the agricultural land sold was not a capital asset as it was situated beyond 5.5 km from the municipal limits of Samalkha. Therefore, no capital gains were taxable.

The Tribunal held that the agricultural land sold was not a capital asset as it was situated beyond 5.5 km from the municipal limits of Samalkha. Therefore, no capital gains were taxable.

The Tribunal held that the reopening of assessment was valid. However, the addition on account of bogus purchases was restricted to 2% of the purchase amount (for commission) and 5% of the investment in goods sold, as the sales and gross profit were already accounted for.

The Tribunal held that the reassessment proceedings were null and void. It found that the assessee had duly intimated the change of address to the department, and this change was incorporated in the PAN database. Furthermore, the Assessing Officer was aware of the changed address, as evidenced by subsequent notices under Section 142(1) being sent to the new address. The issuance of the Section 148 notice at the old address, without verifying the updated records, was a critical flaw. The Tribunal distinguished the present case from the precedent cited by the revenue (Sukhdev Industrial Ltd. vs. CIT), noting that in that case, the notice was served at the correct address and responded to. Here, the notice was sent to a wrong address, and the assessee had not received it nor was aware of the proceedings. The Tribunal concluded that the non-service of notice under Section 148 in accordance with law is a condition precedent for acquiring jurisdiction. Since jurisdiction was not acquired, the entire reassessment proceedings initiated under Section 147/148 were quashed. The issue of addition of Rs. 75 lacs on account of unexplained share capital was not adjudicated on merits as the reassessment proceedings were quashed.

The Tribunal directed the exclusion of certain comparable companies from the TPO's list due to functional dissimilarity, super normal profits, or lack of adequate data. Consequently, the assessee's grounds related to other issues became academic.

The Tribunal held that the income from technical handling services rendered to other airlines is covered under Article 8 of the India-France DTAA, similar to the 'operation of aircraft' in international traffic. The revenue's appeal was dismissed due to low tax effect, while the assessee's appeals for earlier years were partly allowed.

The Tribunal held that the income from technical handling services rendered to other airlines is covered under Article 8 of the India-France DTAA, similar to the 'operation of aircraft' in international traffic. The revenue's appeal was dismissed due to low tax effect, while the assessee's appeals for earlier years were partly allowed.

The Tribunal upheld the CIT(A)'s decision that the appeal was not maintainable due to non-electronic filing. However, in the interest of justice, the assessee was granted liberty to file a fresh electronic appeal with a condonation of delay application.

The Tribunal held that the income from technical handling services rendered to other airlines is covered under Article 8 of the India-France DTAA, similar to the 'operation of aircraft' in international traffic. The revenue's appeal was dismissed due to low tax effect, while the assessee's appeals for earlier years were partly allowed.

The Tribunal held that a protective assessment cannot be made without a substantive assessment. It also directed that additions for unaccounted purchases should be restricted to the profit element.

The Tribunal held that the income from technical handling services rendered to other airlines is covered under Article 8 of the India-France DTAA, similar to the 'operation of aircraft' in international traffic. The revenue's appeal was dismissed due to low tax effect, while the assessee's appeals for earlier years were partly allowed.

The Tribunal restored the issue of notional interest on advances and transportation/HRA expenses to the AO for further substantiation. The addition on account of low household expenses was deleted, and the addition for unexplained opening cash balance was also deleted. The addition for loans from friends and relations was upheld. The issue of property income was restored to the AO to allow statutory deduction.

The Tribunal held that there was an apparent error in the return of income due to the discrepancy between the quarterly figures and the stated total fringe benefits. The assessee should not be taxed on an incorrect computation.

The Tribunal held that the AO's attempt to enhance the assessed income through a rectification order under Section 154 was beyond its scope. Furthermore, the Tribunal found no evidence to support the AO's initial 20% disallowance of purchases, confirming the CIT(A)'s decision.

The Tribunal held that if the employee's contribution to PF and ESI was deposited before the due date of filing the return of income, the assessee cannot be held in default. The matter was remanded for verification of this aspect.

The Tribunal held that the transaction was not a case of deemed dividend under Section 2(22)(e) as the receipt and payment occurred on the same day, citing precedent. Consequently, the demand and penalty were deleted.

The Tribunal held that the AO/TPO erred in segregating the international transaction of guarantee commission and benchmarking it separately. Since the combined approach using the TNMM method for all international transactions was accepted by the AO, and the assessee's margins were found to be at arm's length, the adjustment for guarantee commission was not justified.

The Tribunal held that the appeals should be admitted due to the peculiar circumstances, including the assessee's demise and the subsequent payment of taxes. It further held that bank charges incurred for managing foreign bank accounts and earning interest income are allowable as expenses.

The Tribunal held that the AO's addition on account of commission income earned by the assessee for providing accommodation entries is confirmed. However, other additions made by the AO were deleted due to non-application of mind.

The Tribunal held that the departmental appeal was not maintainable due to the low tax effect, as per the CBDT circular. The Revenue's counsel could not provide any exceptions to this rule.

The Tribunal held that the AO's addition on account of commission income earned by the assessee for providing accommodation entries is confirmed. However, other additions made by the AO were deleted due to non-application of mind.

The Tribunal held that the AO's attempt to enhance the assessed income through a rectification order under Section 154 was beyond its scope. Furthermore, the Tribunal found no evidence to support the AO's initial 20% disallowance of purchases, confirming the CIT(A)'s decision.

The Tribunal noted that the assessee was not given sufficient opportunity to produce the directors of the share applicant companies. Therefore, the appeals were allowed, and the issues were set aside to the file of the AO for fresh adjudication.

The Tribunal held that the same turnover cannot be taxed in the hands of both the partnership firm and the proprietary concern. It directed the AO to reduce the addition to the extent of turnover already taxed in the hands of the partnership firm. The Tribunal also directed the AO to adopt a profit ratio of 8% instead of 10%.

The Tribunal upheld the Dispute Resolution Panel's (DRP) directions. The DRP had correctly directed the subvention fee to be considered in the distribution segment and deleted the adjustment for intra-group services, deeming it a double addition.

The Tribunal upheld the addition made under Section 43B concerning the brought forward liability from previous years. It also upheld the addition for registration fees collected from customers, finding them to be statutory liabilities not paid within the prescribed time.